Stock Market Today: May 13th - 17th, 2024

Welcome StonkForums to the trading week of May 13th!

This past week saw the following moves in the S&P:


S&P Sectors End of Week:


Major Indices End of Week:



Major Futures Markets End of Week:


Economic Calendar for the Week Ahead:


What to Watch in the Week Ahead:
(N/A.)

 

Stocks End Week On Muted Note As Stagflation Fears Mount
FRIDAY, MAY 10, 2024 - 04:01 PM

Late Friday afternoon, US main equity indexes showed little change, with the S&P 500 on track for a 2% weekly gain after investors digested new concerns about a slowing economy and elevated inflation, rekindling fears of stagflation.

During the session, Treasury yields increased due to persistent inflationary pressures, complicating Federal Reserve Chairman Jerome Powell's plan to cut interest rates later this year. Although most of the earnings season has concluded (prepare for Nvidia ER later this month), the continued strength from Corporate America remains a positive highlight. However, companies are increasingly signaling that low-income consumers are starting to crack.

Let's begin with the biggest macro news in the session: This morning's consumer confidence survey from the University of Michigan pointed to an implosion of Bidenomics. The report was a total disaster. The index "unexpectedly" plunged from 77.2 to 67.4, a 9.8-point drop, the biggest since August 2021.



... and was only a 7-sigma miss to expectations of a 76.2 print...



... but it was the biggest miss on record!



The consumer confidence report was released at 10:00 AM ET. Immediately afterward, US equity indexes gave up most of the gains and fell, moving sideways in afternoon trading.



Among the US main equity indexes, the Russel 2000 was the biggest loser in the session. This is mainly because of economic weakness.



There was little notable sector performance across the S&P500 besides tech, which was marginally higher, and energy, down half a percent.



NYSE TICK showed selling pressure after 10:00 AM and persisted into early afternoon.



Most shorted stocks are running out of steam to end the week.



Treasury yields extended gains after the report as stubborn inflationary pressures reminded traders of the higher-for-longer theme. 2-year yields reached weekly highs while Fed-dated OIS adjusted to price out rate cut expectations for this year.



The Treasury 10-year Yield climbed above 4.5%.



Today's stagflationary warning is a new challenge to the outlook of the Fed's interest rate cutting cycle. Fed swaps for '24 immediately sank from 1.77 cuts to about 1.63 cuts by late afternoon. Nasdaq futures tracked lower on fewer rate cuts.



"Our economists continue to forecast two rate cuts from the Fed this year beginning with the July meeting. And yields on 10-year Treasuries have come off recent highs following last week's soft Payrolls report," Goldman's Chris Hussey wrote in a note this afternoon.

Citi's US Economic Suprise Index slides to the lowest since January 2023.



Whoops.

What to expect next week.

Which will reverse again next week when CPI is a huge miss https://t.co/8rjS34FLYL

— zerohedge (@zerohedge) May 10, 2024
Bitcoin and Ethereum were clubbed like a baby seal after the report, sending the dollar soaring in a more hawkish environment.



Meanwhile, JPM gets bullish on ETH.

In commodities, WTI was whacked from the near $80bbl handle, tumbling down to a low $78 after the report. Gold and silver slid on a strong dollar.



Looking ahead, next week will be packed with macro data points, including the release of CPI, PPI, retail sales, and industrial production in the US.

 

Highest and Lowest Price to Sales (P/S) Ratios
Fri, May 10, 2024

In the S&P 1500, which encompasses the large-cap S&P 500, the Mid Cap 400, and the Small Cap 600, there are just under 1,175 stocks that have positive next-year EPS estimates and trailing 12-month revenues of more than $1 billion. We wanted to see which stocks of this group currently have the highest and lowest forward price-to-sales ratios. For those that aren't familiar with the price-to-sales ratio, it's simply a stock's current market cap divided by annual sales (in this case, forward 12-month consensus sales estimates).

Of the 1,150+ stocks that fit our initial criteria, the average stock currently has a forward price-to-sales (P/S) ratio of 2.59, but the median is significantly lower at 1.73.

Notably, 31 stocks currently have forward P/S ratios greater than 10, meaning their market cap is 10x larger than projected annual sales. That's a very high P/S ratio, and the company better be growing significantly if it hopes to maintain that type of multiple. Collectively, these 31 stocks are up an average of 43.34% over the last year! Below is the list for those interested.

NVIDIA (NVDA) currently has the highest forward price-to-sales ratio at 18.9. Its shares are up 211.7% over the last year.

Five other stocks have P/S ratios above 15: Fair Isaac (FICO), Eli Lilly (LLY), Cadence Design (CDNS), Intuitive Surgical (ISRG), and Monolithic Power (MPWR). Credit card companies Visa (V) and Mastercard (MA) both have 14x P/S ratios, and a few other very notable large-caps that have 10+ P/S ratios include Microsoft (MSFT), Broadcom (AVGO), and Texas Instruments (TXN). Clearly, many of the Tech stocks on this list have seen massive gains since late 2022 from the current AI boom, and investors are still expecting BIG things in the years ahead to justify these kinds of multiples. They have a lot to live up to indeed.



On the flip side are the stocks with the lowest price-to-sales ratios. There are currently 338 stocks with forward P/S ratios that are less than one, meaning their market caps are lower than annual sales estimates. When sales are greater than market cap, companies typically have very low (and usually declining) margins. Many of the names below with P/S ratios of 0.20 or lower come from slow and steady groups like wholesale food distributors, big box retail, or large health care insurance providers.

Whereas the 31 stocks with 10+ P/S ratios are up 43% over the last year, the group of stocks below are only up an average of 6% YoY. While many of these names are and will continue to be on a downward trajectory in the coming years, we're confident that a few will end up turning around their margin situations, especially if we see a disinflationary environment. Now go dig deeper and find them!



The Year of the Utes?
Fri, May 10, 2024

The Utilities sector has been the second best of the eleven S&P 500 sectors so far in 2024, and it's the best performing sector so far in May.

The sector has been on fire.

Below is a look at eight charts from our daily Sector Snapshot that gets sent to Bespoke Premium and Bespoke Institutional clients daily.

Pretty much all readings are now very extended to the upside, including P/E ratio!



Below is a look at the individual stocks in the S&P 500 Utilities sector from our Trend Analyzer tool (also available to Bespoke Premium and Bespoke Institutional clients). As shown, every single stock is overbought, with the large majority in "extreme" overbought territory.

With AI and other new technologies demanding so much more electricity, have investors woken up to the fact that the companies providing it stand to benefit?



Stocks Make Mom Happy Before & After Mother’s Day

Remember to take time out this Sunday for all the Mother’s in your world. Over the last 29 years on the Friday before Mother’s Day Dow has gained ground 19 times. On Monday after, DJIA has advanced 18 times. Average gain on Friday has been 0.25% and 0.23% on Monday. However, Monday following Mother’s Day has been down 8 of the last 12 years. In 2019, DJIA suffered its worst post Mother’s Day loss going back to 1995, off 2.38%.


Claims Fine In Spite of Superlatives
Thu, May 9, 2024

Today's data slate was light with the only release of note being initial jobless claims. The release is perhaps more in focus than normal given it comes on the back of weaker-than-expected labor data last week in the form of the nonfarm payrolls and JOLTS reports. Just like last week's data, the weekly jobless claims number was a disappointment with seasonally adjusted initial claims totaling 231K. That was handily above the estimate of 212K and last week's reading of 209K. As frequently quoted today, that results in the highest reading since last summer. Additionally, the 22K week-over-week jump marks one of the larger sequential increases of the past few years.



Despite those superlatives, one week does not make a trend. The chart below shows the four-week moving average of claims, which helps smooth out week-to-week fluctuations. By this reading, not much has happened. The moving average remains relatively flat with current levels consistent with those from the few years before the pandemic as well as those levels since the start of 2022 when pandemic era programs expired.



On a non-seasonally adjusted basis, claims totaled 290K. As shown below, for the comparable week of the year that is somewhat higher than the past several years (outside of the elevated 2020 and 2021 readings), but that is far from any alarmingly high level. The current week of the year did see claims rise week-over-week which is a bit unusual, though not without precedent having happened 39% of the time historically and is likely the reason for the big jump in the adjusted number.



As for seasonally adjusted continuing claims, it is a similar story. Claims matched expectations rising to 1.785 million versus 1.768 million the previous week. Once again, those levels are well within the range of readings of the past year and are little cause for concern.



When Bullish April Is Down Stocks Often Struggle Until Q4

April was the first down month in 6 months. Almanac readers know April is the best Dow month by average percent change and #2 for S&P. It’s ranked fourth for average percent change on NASDAQ and Russell 2000.

In general, April is a notoriously bullish market month overall with a high average percent and plurality of gains across the board. A negative April is cause for concern. When the #1 Dow month is down that could be significant.

Digging into the data in the tables below of all down Aprils since 1950 there is a plethora of red in May and through Q2 and Q3. There are several steep drops scattered throughout these 21 down April years. May, Q2 and Q3 show consistent and average losses.

Q4 however delivered solid gains except for four years: 1973 (Watergate, Vietnam, Oil Embargo), 1987 (Crash), 2000 (Undecided Election) and 2012 (ZIRP, QE3, Operation Twist, Big Q1 & Q3). You can see why we expect the market to struggle for the next several months.

Typical May Up Early, Weak Middle, Strong Finish

Over the last 21 years, the first three days of May have historically traded higher, and the S&P 500 has been up 18 of the last 26 first trading days of May. Bouts of weakness often appear around or on the fourth, sixth/seventh, and twelfth trading days of the month while the last four or five trading days have generally enjoyed respectable gains on average, but the last day of May has weakened noticeably with only NASDAQ gaining ground.

Monday before May monthly option expiration is much stronger than monthly expiration day itself albeit weaker for small caps. S&P 500 has registered only ten losses in the last thirty-four years on Monday. Monthly expiration day is a loser nearly across the board except for Russell 2000 with a slight average gain (+0.01%). The full week had a bullish bias that is fading in recent years with DJIA down seven of the last eight and S&P 500 down six of the last seven. The week after options expiration week now tends to favor tech and small caps. NASDAQ has advanced in 24 of the last 34 weeks while Russell 2000 has risen in 26 of the last 34 with an average weekly gain of 0.88%.

Six Reasons This Bull Market Is Alive and Well


“Sometimes the questions are complicated and the answers are simple.”

-Dr. Seuss

2024 came out swinging, with the S&P 500 up more than 10% in the first quarter on the heels of adding more than 11% in the fourth quarter of ’23. Back-to-back double-digit quarters are quite rare, but the good news is they tend to happen in bull markets, something we’ve been saying we are in for a long time.

April is usually a bullish month, but it saw the S&P 500 fall 4.2%, which included a well-deserved 5.5% mild correction mid-month. The economy remains on firm footing, but there are potential cracks forming. What could be next for stocks? We’ve been overweight equities since December ’22 and remain there today, as we expect to see stocks move to new highs this summer and the bull market to continue.

Here are six reasons we think the bull market is alive and well.

Big Starts to a Year Are Bullish
Listen, after a five-month win streak we were probably due for at least a pause. We also saw some of the same bears who mocked us last year for being bullish turn into bulls themselves. With that kind of setup, it makes sense that some type of volatility was necessary to shake the tree. Even though the S&P 500 pulled back just over 5%, many of the former highfliers saw much larger corrections.

As for the big start, we looked at other years that gained double digits in the first quarter and stocks were higher the rest of the year (so the final nine months) 10 out of 11 years. Yes, 1987 was the one year it was negative, but stocks were up 40% for the year in August back then, so we don’t see that repeating. The average return is skewed due to 1987, but the median return the rest of the year is a solid 8.2%, better than the median return for all years. Bottom line, a big start to a year shouldn’t be a reason to become bearish. In fact, historically it signals likely additional strength.



This Bull Market Is Still Young
The current bull market started in October ’22, which means it is now just under 19 months old. Would you believe that if the bull ended here and now this would make it the shortest bull market ever? That’s right, most bull markets last much longer, with the past 12 bull markets averaging more than five years in total. Taking this a step further, many bull markets started in the “bear market killer” month of October (this one included), and we found that those bull markets lasted even longer.



The current bull market is up more than 40%, which might feel like a lot, but looking at the four bull markets since 1990 shows they all at least doubled. The bottom line is history tells us to be open to a much longer bull market and potentially large gains along the way.

Stocks Like a President Up for Re-election
We noted in our Outlook 2024 that the past 10 times a President was up for re-election stocks finished the year higher. It was election years with a lame duck President where things didn’t go as well.



Taking this a step further, a surprise summer rally is normal when the President is up for re-election. This chart does a nice job of showing how strength the rest of this year is likely with a president up for re-election, while trouble brews when the President is a lame duck.



It’s All About Earnings
What drives long-term stock gains? It is earnings and the backdrop continues to look quite strong. The still healthy consumer, strong labor market, potentially lower rates helping housing, and improving manufacturing all suggest an economy that could surprise to the upside the rest of ‘24. Nominal GDP came in near 6% last year for one of the best years in recent memory, but the stage is set for similar growth this year. Remember, nominal GDP growth leads to profit growth and profits matter.

S&P 500 first quarter earnings are up more than 5.0% currently, from 3.2% expected at the start of the quarter, according to FactSet. This would be the best earnings growth in nearly two years, while revenue is higher for the 14th quarter in a row as well.

Corporate profits for the S&P 500 are expected to hit an all-time high this year, with a gain in ’24 of close to 11%. We’ve found that periods that have strong productivity (like we are seeing now) tend to come in even better than expected and we think 11% could be a tad low as a result. The mid-to-late ‘90s saw strong productivity, and also saw earnings and GDP consistently come in much better than was expected. It was the last decade, when productivity was low, that GDP disappointed consistently in the 2% range. Look at the quote at the top one more time, the easiest answer is earnings are strong and that is likely why stocks have been strong!

The other thing we’ve seen lately is analysts coming in too low with earnings estimates, as they are still too skeptical of this recovery. Looking out a year, forward 12-month S&P 500 earnings have soared from $243 at the start of the year to $254 currently. When companies post record profits you tend to see stock prices follow suit and we don’t think this time will be any different.



Profit margins and CAPEX Continue to Improve
A cousin to earnings is profit margins and stronger profit margins could be another reason to expect a stronger economy and bull market. Yes, profit margins are improving due to cost-cutting, but this will likely create a leaner and more agile corporate America the second half of this year.

We’ve been told for what feels like years now that profit margins have only one way to go and that is lower, but the opposite continues to happen. Improving profits and profit margins supported by continued economic growth next year would provide a strong tailwind for equities.



Higher capital expenditures (CAPEX) is another positive. In fact, forward 12-month CAPEX is at an all-time high as well. Companies investing in themselves should lead to continued stronger productivity growth, which will help economic growth likely exceed expectations.



Improvement on the Inflation Front
Lastly, and maybe most importantly, we’ve seen overall improvement on the inflation front over the past year, but the past few months have shown that the path lower won’t come without some bumps. We remain in the camp that inflation will continue to improve and the blip we’ve seen early this year is more seasonal quirks and outliers that are unlikely to persist (higher auto insurance and higher financial services fees for example).

We know that rents are falling in the private data, which gives a good estimate of prices for new or renewed leases. The rental price for a lease today is likely less than a similar lease over the last couple of years, but that has yet to flow to the government’s data, which includes all rents and shelter, even rent “attributed” to homeowners. Remember, shelter makes up more than 40% of the core Consumer Price Index (CPI), so any improvement here will quickly influence CPI data. But while we’re waiting for overall rents to catch up with changes in asking prices seen in private data like Apartment List and Zillow, keep in mind that if you remove shelter from CPI, inflation is actually running quite close to that 2% level the Fed targets.



There has also been concern over higher wages impacting inflation, but we expect improvements there as well over the coming months and quarters. The recent JOLTS data showed a healthy but normalizing labor market as wage growth slows. The Indeed Wage Tracker similarly showed slowing wage growth. Remember the 1970s saw wage growth up around 9%, which did flow through to overall inflation. Wages are still solid right now, but more in the range of what we saw pre-pandemic.



All of this matters, as it sets the stage for the Fed to cut rates this year, likely two times. We started the year with markets looking for 6-7 cuts, but it then fell to only one cut (with some vocally calling for a hike recently). Just as the pendulum had swung too far toward many cuts to start the year, we feel it has swung too far the other way now. With improving inflation data expected, the Fed should have the ammo to cut rates, likely starting in September, or at the very least to push back on the hawkish rhetoric. Either could be a nice tailwind for equities.

The April Employment Report Tells Us the Economy Is Strong, But Not Red Hot


The April employment report was the first one in months that went well against market expectations. Three blockbuster payroll reports in Q1 had conditioned sentiment towards expecting more of the same, but instead we got something less blockbuster(y). Payrolls grew 175,000 in April — below expectations of 240,000 and lower than the red hot Q1 monthly average of 269,000. This does shift the narrative from a “no-landing” scenario to “soft-landing,” i.e. a steady economy with inflation heading lower, which would allow the Federal Reserve to cut interest rates.

Perhaps the best evidence here is aggregate income growth across all workers in the economy. Ultimately, income growth drives consumption, and aggregate income growth is the sum of employment growth, wage growth, and the change in hours worked. Over the last three months (through April), overall income growth grew at an annualized pace of 5.9%. That’s strong and above the pre-pandemic pace of 4.7%, but it’s far from “red-hot.”



In short, there’s nothing in the employment data that suggests an overheating economy that will keep inflation persistently high and push the Federal Reserve to maintain policy rates as high as they are now (5.25-5.50%). If nothing else, this report makes the prospect of further rate increases even more unlikely, underlying what Fed Chair Jerome Powell said earlier this week. As discussed in my previous blog, Powell stated there’s not much risk of the dreaded “stagflation,” since unemployment is low and inflation has eased a lot.

Make No Mistake, This Economy Is Good for Stocks
Aggregate incomes running close to a 6% annual pace suggests nominal GDP is also running at 5-6%. That’s an environment that’s good for profit growth, which in turn is positive for stocks.

Yes, payrolls did come in well below expectations, but 175,000 is above the 2019 monthly average of 166,000. You always want to be a little careful with monthly job numbers, because they can be revised, but over the last three months payroll growth has averaged 242,000. The corresponding number exactly a year ago was 237,000. In other words, the labor market has remained strong, with not much acceleration or deceleration.





The unemployment rate did tick up from 3.8% to 3.9%, but April is the 27th month in a row in which the unemployment rate has clocked in below 4%. That’s the longest streak since the 1960s. I’ve mentioned in previous blogs how I prefer looking at the “prime-age” (25-54 years) employment-population ratio, since it gets around definitional issues that crop up with the unemployment rate (someone is counted as being “unemployed” only if they’re “actively looking for a job”) or demographics (an aging population with more people retiring and leaving the labor force every day). The prime-age employment population ratio rose in April to 80.8% — that’s only slightly below the high from last summer, and above anything we saw between 2001 and 2019 (when it peaked at 80.4%). In fact, the prime-age employment population ratio for women just hit an all-time record high of 75.5%. This by itself should tell you the labor market is strong, with more people participating in it.



A Strong Labor Market Is Good for Productivity Growth
A theme of our 2024 Outlook was that we may be seeing a resurgence in productivity growth. Over the last year, productivity grew 2.9%. That is well above the 1.1% annualized pace between the first quarter of 2020 and the first quarter of 2023, or the 1.5% annual pace between 2005 and 2019.



A key piece of this is a strong labor market, which incentivizes businesses to invest more, and that’s what you need for productivity growth. Importantly, with productivity growth, workers can see strong wage growth without necessarily pushing up inflation. Falling inflationary pressures can allow the Fed to ease interest rates. Even if rates are shifted lower by a relatively small degree, that can further boost investment and keep the productivity growth engine running. This is something we saw in the mid-to-late 1990s. A similar situation bodes well for the economy and stocks.

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2024-



S&P sectors for the past week-

 

Here are the current major indices pullback/correction levels from 52WK highs as of week ending 5.10.24-


Here is also the pullback/correction levels from current prices


Here are the current major indices rally levels from 52WK lows as of week ending 5.10.24-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for May 10th, 2024
Video from AlphaTrends Brian Shannon


ShadowTrader Video Weekly 5/12/24
Video from ShadowTrader Peter Reznicek

 

StonkForumers! Come join us on our stock market competitions for this upcoming trading week ahead!-

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StonkForums Weekly Stock Picking Contest & SPX Sentiment Poll (5/13-5/17) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Monday (5/13) <-- click there to cast your daily market direction vote for this coming Monday ahead!

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It would be pretty sweet to see some of you join us and participate on these!

I hope you all have a fantastic weekend ahead!

 

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Here are the most anticipated Earnings Releases for this upcoming trading week ahead.

***Check mark next to the stock symbols denotes confirmed earnings release date & time***

Monday 5.13.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES!

Monday 5.13.24 After Market Close:

Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Tuesday 5.14.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Tuesday 5.14.24 After Market Close:

Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 5.15.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 5.15.24 After Market Close:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 5.16.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 5.16.24 After Market Close:

Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 5.17.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 5.17.24 After Market Close:

Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!

(NONE.)

 

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($BABA $WMT $NU $HD $AMAT $BIDU $NXT $CSCO $JD $STNE $TTWO $SE $DE $OTRK $MNDY $LEGN $OCGN $WULF $DT $LUNR $GRAB $PBR $PSFE $SONY $NICE $HUT $TME $MNSO $OGI $DFLI $CPA $DHT $BITF $BKKT $HUYA $NOTV $QUIK $MAXN $KOPN $LSPD $HBM $ARQT $DDL $CGAU $CRLBF $DOCS $DOLE $ACXP $AGYS $GROY)


If you guys want to view the full earnings post please see this thread here-

• Most Anticipated Earnings Releases for the week beginning May 13th, 2024 <-- click there to view!

 

Top of the morning StonkForumers! Happy Monday to all of you and welcome to the new trading week and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are under an hour from the US cash market open.

GLTA on this Monday, May the 13th, 2024!

 

Bespoke's Morning Lineup - 5/13/24 0 Meow!
Mon, May 13, 2024

Stock futures are higher to kick off the week as the S&P 500 looks to build on the last three weeks of gains and fully erase the declines of April. There will be a lot of news and events investors and traders will have to contend with this week, but so far, the pace of news has been slow. Where things aren't slow is in GameStop (GME). The stock has rallied sharply, but this morning, it is trading up about 40% on headlines that - wait for it - "'Roaring Kitty' returns from three-year hiatus!" That's right, "Roaring Kitty" returning to X for the first time in a long time with a sketch of someone leaning forward in a chair, is enough to push a stock up 40%!

Last week was another strong one for US stocks, but they took a backseat to Europe. As shown in our snapshot below, the S&P 500 tracking ETF (SPY) rallied a respectable 1.87%, but European equities took the pole position and rallied over 3%. While stocks on both sides of the Atlantic gained, performance in Asia and Emerging Markets was more subdued, and, in some cases, certain areas of those regions were even lower on the week.



Not only did Europe outperform the US last week, but the STOXX 600 managed to break out to a record high and fully roundtrip the declines of April.



The S&P 500 remains just shy of its March highs, and with a busy week of inflation data on tap, everything is going to have to go right in order for to follow Europe to new highs.



While the new high in European stocks is tempting, we’d note that on a relative strength basis, Europe still has more to prove than the US. The chart below shows the relative strength of the STOXX 600 versus the S&P 500, and during that time Europe has underperformed the US (as has been the case for well over ten years now). More recently, European stocks have shown slight signs of life after several months of sideways performance versus the S&P 500. While encouraging, less than a year ago we saw a similar pattern playout only to see European stocks pass the baton back to the US. That doesn’t mean Europe is doomed to the same fate again, but it still has more to prove.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Monday, May 13th, 2024.

 

Top of the morning StonkForumers! Happy Tuesday to all of you and welcome to the new trading day and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are over an hour into the US cash market open.

GLTA on this Tuesday, May the 14th, 2024!

 

Morning Lineup - 5/14/24 - Here Come the Inflation Reports
Tue, May 14, 2024

There's little change in futures this morning ahead of the April release of PPI, and the only action seems to be in the meme stocks where the rally in GameStop (GME) from an X post of a guy sitting in a chair has that stock up more than 100% on the week. The results of April's PPI showed a hotter-than-expected m/m reading with the headline reading rising 0.5% versus forecasts for a 0.3% increase, while the core reading also increased 0.5% compared to estimates for a 0.2% increase. That's the bad news. On a y/y basis, though, the readings were much closer to expectations as March's report was revised down to negative 0.1% on both a headline and core basis. The initial reaction from the market was for equities and bonds to both sell-off, but when you consider the revisions, the report was right around expectations.

Just when you think you have it all figured out, life has a way of changing. A lead story in the Wall Street Journal highlighted how Walmart (WMT) is laying off hundreds of employees in its corporate unit and asking staff in remote jobs and small offices throughout the country to relocate to larger central hubs. If we didn’t all live through and experience it we wouldn’t believe it, but less than four years ago the centralized hub approach to work seemed like a bygone relic of the pre-Covid world and companies couldn’t find enough workers to fill open roles. In June 2020, a story in Forbes titled “The Remote Office Is The New Normal” summed up the zeitgeist of the time. Some companies were even encouraging their employees to move wherever they wanted. That became awkward when the same companies ordered those workers back to California or Seattle (or wherever the corporate headquarters was). When times are good and the money’s flowing, the boss doesn’t care where you work, but when things start slowing down, that’s when it starts to get real.



We’ve all heard about complacency lately; investors are too bullish on the market and banking on a soft landing in the economy. Both those outcomes certainly aren’t out of the question, but don’t tell that to the 1,300 households comprising April’s Survey of Consumer Expectations (SCE) from the New York Fed released yesterday. We covered the report in more detail in yesterday’s Closer, but three charts are worth highlighting.

First, the stock market. Just 38.7% of those surveyed expect the stock market to be higher a year from now. That’s more than one percentage point below the survey’s historical average dating back to June 2013.



Sentiment towards the economy was even worse. Just over half of those surveyed said they could find a new job within three months if they lost their job. That reading hasn’t been this low since April 2021, and before Covid, you have to go back to 2014 to find a comparable reading.



While unemployment remains near historically low levels, consumers aren’t particularly confident regarding their finances. Just under 13% reported that they could not make the minimum payment required to keep current on their debts. It’s just one survey, but the results from this month’s SCE from the New York Fed didn’t show complacency towards the market or a ‘booming’ economy.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Tuesday, May 14th, 2024.