Morning Reads



Notable open interest changes for May 15th
Tuesday's total option volume of 44.9 million contracts resulted in net open interest growth of 5.72 million calls and 4.47 million puts. AMC Entertainment (AMC), GameStop (GME), BlackBerry (BB) and Tesla (TSLA) saw the greatest growth. Top five new positions opened include 54k Amazon (AMZN) Sep-24 175 calls, 45k AMC Entertainment (AMC) Jan-26 20 calls, 39k AMC Entertainment (AMC) May-24 12.5 calls, 36k Sunrun (RUN) May-24 14 calls and 35k Faraday Future Intelligent Electric (FFIE) May-24 0.5 calls.



With inflation staying hot in every reading of 2024, the first expected Federal Reserve rate cut in more than four years keeps pushing later in the calendar, with some wondering if the central bank will reduce its benchmark rate at all this year. Investors will get another glimpse of the inflation picture today when the U.S. Department of Labor releases the Consumer Price Index for April. With it, expect a new round of predictions as to when the Fed will finally ease its policy rate.

By the numbers: The CPI is expected to increase by 0.4% M/M in April, matching the same rate of growth seen in March and February. On a Y/Y basis, that translates to a 3.4% rise vs. 3.5% in the previous month. Stripping out the volatile categories of food and energy, core CPI is expected to increase by 0.3% M/M vs. 0.4% in March, and 3.6% Y/Y, compared with a prior 3.8%. Also pay special attention to categories like rent, housing, transport costs, and insurance.

With the January, February, and March CPI reports coming in hotter than expected, central officials have been hammering home the "higher-for-longer" message. That includes yesterday's speech from Jay Powell, who reiterated a wait-and-see approach on monetary policy. The Fed will "need to be patient and let restrictive policy do its work," he declared, adding that "my confidence is not as high as it was" but expects "inflation will move back down on a monthly basis to levels that were more like the lower readings we were having last year."

Data dependent: Wholesale inflation came in hot on Tuesday, notching its highest level in a year, albeit with some prior revisions. The Nasdaq (COMP:IND) hit a fresh all-time record despite the reading, along with a NY Federal Reserve survey that showed consumers seeing stickier inflation ahead. The latest retail sales report will be released at the same time as today's CPI, at 8:30 AM ET, and that could also be a significant data point for the broader economy as mentioned on yesterday's Wall Street Breakfast. (8 comments)

Meme revival

The meme trade redux is continuing for the third day in a row, although the big names are notching smaller gains in the premarket session... for now. GameStop (GME) and AMC (AMC) saw a combined 37 volatility trading halts on Tuesday, eventually closing +60.1% and +32%, respectively, after Keith Gill, known as Roaring Kitty, tweeted for the first time in nearly three years. GameStop also climbed near the top of Interactive Brokers’ (IBKR) weekly list of most active assets on its platform, with many looking to make money off of GME options. Are we going to see a repeat of 2021's meme frenzy? Only time will tell. (215 comments)

Bundle everything

As streaming services crowd the market, they are now racing to form alliances that offer "choice and value" for customers. The latest is Comcast (CMCSA), which will launch a new streaming bundle that'll include Peacock, Netflix (NFLX), and Apple TV (AAPL) at a "vastly reduced price." That's "everyday pricing, not an introductory pricing," Comcast CEO Brian Roberts announced, saying the StreamSaver bundle will be available this month. Disney (DIS) and Warner Bros. Discovery (WBD) unveiled their own streaming bundle only a week ago, following their partnership with Fox (FOX) to build a joint sports streamer. (7 comments)

Under the sea

Red Lobster will reportedly file for bankruptcy as soon as next week, as the largest U.S. seafood chain works to reach a deal with its creditors and negotiate concessions from landlords. It also just closed around 99 locations, with over 50 restaurants and their equipment being auctioned off. Red Lobster has been struggling with financial troubles for some time, on account of less foot traffic during the pandemic, higher interest rates, and a failed all-you-can-eat shrimp promotion. Majority owner Thai Union Group (OTCPK:TUFBY) previously said it would exit the chain due to "prolonged negative financial contributions."

Today's Markets

In Asia, Japan +0.1%. Hong Kong closed. China -0.8%. India -0.2%.
In Europe, at midday, London +0.3%. Paris -0.2%. Frankfurt +0.4%.
Futures at 7:00, Dow flat. S&P flat. Nasdaq -0.1%. Crude -0.2% at $77.85. Gold +0.5% to $2,371.80. Bitcoin +1.7% to $62,775.
Ten-year Treasury Yield -2 bps to 4.42%.

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Consumer Price Index
8:30 Retail Sales
8:30 Empire State Mfg Survey
10:00 Business Inventories
10:00 Housing Market Index
10:30 EIA Petroleum Inventories
12:00 PM Fed's Kashkari Speech
3:20 PM Fed's Bowman Speech
4:00 PM Treasury International Capital

Companies reporting earnings today »

What else is happening...

Gemini era: Google (GOOGL) reveals new AI-powered products.

Following the release of GPT-4o, OpenAI chief scientist steps down.

U.S. senators push for $32B in emergency spending on AI.

Novo Nordisk (NVO) to test obesity drugs in alcohol use.

Baidu (BIDU) robotaxi unit may turn profitable in 2025.

Auto drama: BYD (OTCPK:BYDDF) unveils new hybrid pickup truck.

Boeing (BA) ran afoul of criminal settlement on 737 crashes - DOJ.

IEA cuts 2024 oil demand outlook, copper hits record high.

Cleveland-Cliffs (CLF) CEO: 'Almost zero chance' of Nippon/US Steel.

NYCB to sell $5B in mortgage warehouse loans to JPMorgan (JPM) unit.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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