Wednesday, May 5, 2021

πŸ‘‚ Record Earnings? Roaring Economy? Here’s How the Market Goes From Here

Good morning. It's been a great earnings season. But companies like Amazon (AMZN) are now in..
It's the monthly jobs numbers today and they're not going to be pretty and will be possibly the tip of the iceberg as we head into May.

Good morning. It's been a great earnings season. But companies like Amazon (AMZN) are now in correction territory, down 10 percent, since reporting record blowout numbers. Other big tech names are in the same spot. And smaller tech plays? They're likely already in a bear market.

It's a combination of factors at work. The first is rising inflation numbers. The second is the prospect of higher interest rates to curb inflation. And finally there's the fact that companies are coming off of earnings that look great compared to a year ago at the start of the pandemic. All these factors suggest some caution, as a further selloff may be ahead. But if history is any guide, a modest correction in the 10 percent range is likely the maximum.

Now here's the rest of the news:

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MARKETS
DOW 34,133.03 +0.06%
S&P 4,164.68 -0.67%
NASDAQ 13,633.50 -0.88%
*As of market close
Stocks traded down on Tuesday, with the Dow making a last-minute push slightly higher.
Oil rose 1.9 percent, to $65.71 per barrel.
Gold declined 0.8 percent, closing at $1,777 per ounce.
Cryptocurrencies traded mixed, with Bitcoin at $54,626.

Today's TOP TIPS
Global Recovery Points to Strong Logistics Returns
The pandemic's effect on the economy can be measured in many ways. One simple way to track its effects is by looking at the level of global commerce. A number of companies can provide a one-stop look at this information as they report earnings.

That may be why shipping companies like UPS (UPS) and FedEx (FDX) have been in rally mode the past few months. They reflect a hot economy.

» FULL STORY

Insider Trading Report: Greenbrier Companies (GBX)
William Furman, chairman and CEO of Greenbrier Companies (GBX), recently bought 10,000 more shares. The buy increased his stake by just under 2 percent, and came to a total purchase price of just over $48,000.

Furman also made a 50,000 share buy back in February. Insiders have generally been sellers of shares in dribs and drabs over the past few years, making these insider buys stand out. Overall, company insiders own just 3 percent of shares.

» FULL STORY

Unusual Options Activity: Beyond Meat (BYND)
Shares of plant-based protein alternative Beyond Meat (BYND) have been in a downtrend. At least one trader sees the company turning around as it reports earnings later this week.

That's based on the May 14th $150 call options. With 9 days until expiration, over 2,840 contracts traded against a prior open interest of 108, for a 26-fold rise in volume. The buyer of the option paid about $0.86 to make the trade.

» FULL STORY

IN OTHER NEWS
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Yellen Warns on Interest Rate Increases

Treasury Secretary Janet Yellen warned that interest rates may need to rise a bit to keep the economy from overheating. Economic growth has been partially driven by government stimulus programs in recent months, and talk of further stimulus plans and multitrillion dollar infrastructure and other spending packages is likewise leading to higher prices for goods.
Companies Plan for Higher Inflation

Higher prices for goods may lead to more shortages on top of issues created from supply chain disruptions in the past year. As a result, companies are working to shrink package sizes or raise prices to deal with the higher cost of goods. Some companies will be able to fully pass on the costs of inflation, others likely will not.
Gun Sales Surge

Firearms sales have been on the rise in recent moths thanks to rising crime rates and the possibility of national gun legislation or executive orders. Over 3.5 million background checks were made by the FBI in April, a reasonable indicator for gun sales. That number is 20 percent higher than the amount made in April 2020.
Acronis Raises $250 Million

Cybersecurity startup Acronis has raised $250 million in its latest funding. The company now has a valuation of $2.5 billion. The company offers "all-in-one" cybersecurity services including data recovery and backup, and plans to use the funds for internal growth as well as potential acquisitions.
Gores Continues SPAC Binge

Even as the rest of the market has soured on the space, billionaire investor Alec Gores has launched 13 SPACs. He's been invested in the space since 2015, well before the recent craze started and has since declined. He sees the process as a way to more efficiently bring privately-held companies to market, and views the process best as a franchise rather than a one-off strategy.

S&P 500 MOVERS
TOP
IT 14.224%
SEE 9.512%
HSIC 7.918%
LEG 5.894%
BEN 5.882%
BOTTOM
IPGP 10.436%
CTLT 7.407%
PAYC 6.493%
ENPH 6.29%
FANG 5.624%

Quote of the Day
I think the biggest mistake you can make in a market like this is to get too cute and get out too early. You're better off trying to stay a little longer than get out too early.
- Jonathan Golub, chief U.S. equity strategist at Credit Suisse, on why traders shouldn't "sell in May and go away," and stick with the market rally instead.

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