Wednesday Morning Reads

Wednesday  Morning Reads






Retail earnings parade

Futures movement overnight suggests another down day for the U.S. stock market as inflation fears continue to weigh on sentiment and prompt investors to cut exposure to riskier assets. At the time of writing, contracts linked to the Nasdaq are 1.3% lower, while the Dow and S&P 500 are off 0.7% and 0.9%, respectively. Minutes published today from the Fed's April meeting could shed some light on recent price pressures, while bubble risks may be surfacing across a number of speculative asset classes, including crypto, SPACs and meme stocks.

Don't forget about earnings season! While we're on the tail end of Q1 quarterly results, this week is a big one for the retail sector. Walmart (WMT), Home Depot (HD), Macy's (M) already announced sets of impressive results on Tuesday, though their accompanying stock performances were varied (see Key Earnings section below). Retail earnings shift into high gear today, with reports from Lowe's (LOW), Target (TGT), TJX Companies (TJX) and L Brands (LB).

Target is attracting a lot of attention ahead of its quarterly report. Deutsche Bank named Target a top idea into the earnings print and UBS is predicting a resounding earnings beat. Target laps some easy compares in the apparel and home furnishing categories for the quarter and is likely to have seen a stimulus boost. Also watch the earnings call for commentary on inflation and wage pressures (see Wall Street Breakfast: The Week Ahead)

It doesn't end there: Kohl's (KSS), Ralph Lauren (RL), Ross Stores (ROST), Petco (WOOF) and Foot Locker (FL) are set to release earnings tomorrow and Friday. "We are about to enter one of the strongest prints on a quarterly basis," said Adrienne Yih, senior e-commerce analyst at Barclays. "I think this is just the beginning of a four to six quarter very successful run for these retailers, especially given the child tax credits and stimulus on the way."

Crypto crash

The crypto craze is no longer ablaze as the traders assess recent happenings in the volatile market. Over the last 24 hours, Bitcoin (BTC-USD) plunged another 12.6% to $39,407, while Ether (ETH-USD) - which is linked to the ethereum blockchain network - dropped 16% to $2,924. Bitcoin has even fallen below its 200-day moving average and is now down 40% from its all-time high of $64,895.22 on April 14.

Are 2020's big trades unwinding? The popular winners of yesteryear, including Tesla/growth stocks and Bitcoin/crypto, have been under pressure in recent months and weeks as money continues to move elsewhere. While a rotation has been seen into reopening and cyclical plays, as well as more stabler names, several headline stories have shaken the cryptosphere in the last few days.

Warning from Beijing: Besides environmental concerns sparked by Elon Musk - and Tesla (TSLA) stopping to take payment in Bitcoin - the People's Bank of China has banned financial institutions from facilitating cryptocurrency transactions. The statement was coupled with a warning to investors against "speculative crypto trading," which "seriously infringes on the safety of people's property and disrupts the normal economic and financial order."

Caution from the SEC: "Investors should understand that Bitcoin, including gaining exposure through the Bitcoin futures market, is a highly speculative investment," the regulator wrote in a recent notice, adding it will "closely monitor" whether mutual funds that invest in Bitcoin futures comply with federal securities laws. That kind of thinking may not bode well for some highly anticipated Bitcoin ETFs, according to Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research. "I view the additional concerns about how an ETF cannot close to new investors and that it could become big over a short period of time to make it unlikely that the SEC approves a dedicated Bitcoin ETF in 2021."

Mining concerns: Nvidia is reducing the hash rates on the new GeForce RTX 3080, 3070, and 3060 Ti graphics cards that will start shipping before the end of May. The decision will make more supplies available for the core gaming audience amid a widespread GPU shortage. Back in February, Nvidia also announced its GeForce RTX 3060 graphics cards would ship with a reduced hash rate to discourage Ethereum mining. (43 comments)

Lightning strikes

"The future of the auto industry is electric. There's no turning back," President Biden said during a visit to Ford's (F) new Rouge Electric Vehicle Center in Dearborn, Michigan. He later jumped into the all-new F-150 Lightning, driving around an empty lot that's used as a test track. "This sucker's quick," Biden told reporters, saying the electric truck goes 0 to 60 mph in about 4.4 seconds before speeding away.

Quote: "The real question is if we'll lead or fall behind in the race to the future, or whether we'll build these vehicles or the batteries that go in them here in the United States or rely on other countries. We used to invest more in research and development more than any country in the world... and China was no. 9. We are now no. 8 and China is no. 1. We have to move fast."

The stopover came ahead of today's splashy introduction of the all-electric F-150 Lightning, which is the second mass-market EV from Ford (following the Mustang Mach-E). Ford says the pickup will bring stunning innovation, technologies and capabilities to the popular F-Series, without sacrificing power, payload and towing capability. CEO Jim Farley has also revealed that the F-150 Lightning will be able "to power your home during an outage, it's even quicker than the original F-150 Lightning performance truck, and it will constantly improve through over-the-air updates." Full pricing and specifications will come at 9:30 p.m. tonight.

Pitch for infrastructure: "We're going to put Americans to work, which will include 50,000 charging stations along our roads and highways, homes and apartments," Biden remarked. "We're also going to boost our manufacturing capacity, as well as grants and tax credits to boost manufacturing of these clean vehicles, batteries, semiconductors and small computer chips." His administration's recently unveiled $2T infrastructure package, known as the American Jobs Plan, includes $174B to "win the EV market."

Who is replacing Dimon?

JPMorgan (JPM) is shaking up its top leadership after Gordon Smith, co-president, chief operating officer and CEO of Consumer & Community Banking, said he would retire at the end of the year. The move will result in Daniel Pinto becoming the sole president and COO of the firm, but also leaves two executives battling to take over Jamie Dimon at some point in the future: Marianne Lake, CEO of Consumer Lending, and Jennifer Piepszak, JPMorgan's chief financial officer.

The two women, both 51 years old, will become co-heads of Consumer & Community Banking, effective immediately. The division services half of all U.S. households, accounts for roughly 40% of profits for America's largest bank and did over $50B in revenue in 2020. Jeremy Barnum, head of Global Research for the Corporate & Investment Bank, will also succeed Piepszak as CFO, effective immediately.

When will Dimon step down? The power CEO has led the bank since 2006 and is one of the last major investment bank chiefs still on the job from before the Global Financial Crisis. While the board has asked him to stay on for a "significant number of years," he did suffer a health scare in 2020 when he had emergency heart surgery. Whenever asked about his retirement plans, Dimon has also always given the generic "five years away."

What he's saying about the reshuffle: "We are fortunate to have two such superb executives in Marianne and Jenn - they both are examples of our extremely talented and deep management bench," Dimon said in a statement. "Both have proven track records of working successfully across the firm and both are well known and respected within the financial industry for their exceptional character and capabilities."

What else is happening...

#AMCSqueeze... 'Meme stock' trade gains renewed momentum.

Malone offers support to AT&T/Discovery (TDISCAmedia merger.

Shopify (NYSE:SHOP) jumps after Google (NASDAQ:GOOGL) touts partnership expansion.

Lumber futures, homebuilder stocks dip after housing starts slip.

Study shows AstraZeneca (NASDAQ:AZN) booster shot induces "high antibody response."

Microsoft (NASDAQ:MSFT) confirms that Windows 10X won't be released.

Lamborghini (OTCPK:VLKAF) to spend $1.8B to electrify range by 2024.

No new oil and gas projects for world to reach net-zero by 2050 - IEA.

Boeing (NYSE:BA), FAA records on 737 MAX pursued by House lawmakers.

Record prices? Palladium supply deficit could hit 1M oz.

Tuesday's Key Earnings

Baidu (NASDAQ:BIDU) -0.2% posting non-marketing sales gains.
Home Depot (NYSE:HD) -1% reversing after housing starts data.
Macy's (NYSE:M) -0.4% despite surprise profit, boosting guidance.
Walmart (NYSE:WMT) +2.2% holding the line on price.

Today's Markets

In Asia, Japan -1.3%. Hong Kong closed. China -0.5%. India -0.6%.
In Europe, at midday, London -1.1%. Paris -1%. Frankfurt -1.3%.
Futures at 6:20, Dow -0.7%. S&P -0.9%. Nasdaq -1.3%. Crude -2.1% to $64.12. Gold -0.6% at $1857.50. Bitcoin -12.6% to $39407.
Ten-year Treasury Yield +2 bps to 1.66%

Today's Economic Calendar

7:00 MBA Mortgage Applications
10:00 Fed's Quarles Testifies on Supervision and Regulation
10:00 Fed's Bullard: U.S. Economy and Monetary Policy
10:30 EIA Petroleum Inventories
1:00 PM Results of $27B, 20-Year Bond Auction
2:00 PM FOMC Minutes

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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