Monday, March 20, 2023

🦆If It Looks Like a Recession, and Talks Like a Recession…

Good morning. Leading economic indicators have dropped for an 11th straight month, and remain...
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. Leading economic indicators have dropped for an 11th straight month, and remain in negative territory. This data, which looks at several different components of the economy, doesn't include the latest problems coming from the banking sector.

It's clear that the move by policymakers to have a "soft landing" isn't going to happen. And while the market has been trending down for 15 months, there may be even more pain ahead… potentially compressed into less time to play out.

Traders should avoid looking at long-side trade unless it's to bet on a short-term oversold rally. Investors may want to look at taking some profits on their stock positions, or using tools like selling covered call options to increase their income in the months ahead.

Now here's the rest of the news:

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MARKETS
DOW 31,861.98 -1.19%
S&P 3,916.64 -1.10%
NASDAQ 11,630.51 -0.74%
*As of market close
Markets closed Friday lower, on continued fears over the strength of the banking system.
Oil dropped 3.1 percent, last going for $66.23 per barrel.
Gold jumped 2.9 percent, ending at $1,979 per ounce.
Cryptocurrencies trended higher, with bitcoin at $26,826 at the stock market close.

Today's TOP TIPS
The Higher Margin Player in an Oligopoly Always Wins
Many industries consolidate over time into just a handful of players. These oligopolies can jockey for market share. Chances are one of the players will move towards higher-end consumers to differentiate, and others may shift to the lower end.

Either way, the company that can sport the highest profit margin will typically be the best performer for shareholders over time. Higher profit margins provide more capital for reinvestment in the business, or for dividends or share buybacks for investors.

» FULL STORY

Insider Trading Report: Howard Hughes Corp (HHC)
Pershing Square Capital Management, a major owner of Howard Hughes Corp (HHC) has been adding shares in recent days. The fund bought 62,474 more shares, shelling out over $4.6 million, a buy that increased the fund's holdings by just under 1 percent.

This marks the first insider buy of the year. Last year, Pershing Square bought shares on 4 separate occasions, at prices close to where the stock trades today. There was only one insider sale from a company division president.

» FULL STORY

Unusual Options Activity: Vale (VALE)
Brazilian iron ore producer Vale (VALE) is down 17 percent in the past year, with most of that decline occurring in just the past few weeks. One trader sees a potential rebound in the coming weeks.

That's based on the April $15 calls. With 32 days until expiration, 62,023 contracts traded compared to a prior open interest of 1,004, for a 62-fold rise in volume on the trade. The buyer of the calls paid $1.12 to make the bullish bet.

» FULL STORY

IN OTHER NEWS
Home Building Rebounds in February

After declining for five months, home construction rose in February. Housing starts rose 9.8 percent compared to January, although the overall level was down 18.4 percent from February 2022. Starts hit a seasonally adjusted annual rate of 1.45 million, with single-family housing starts up 1.1 percent from January, for an annualized rate of 830,000.
Yellen Warns Not All Uninsured Depositors Will Be Protected

Treasury Secretary Janet Yellen stated on Friday that government protection for uninsured depositors at banks will not be extended to every bank that fails, only those that pose a systemic risk to the financial system. Lawmakers view the recent action by regulators as a backdoor bailout, and one that protects larger and more systemically important banks at the risk of smaller lending institutions.
First Republic Gets $30 Billion Rescue Package from Big Banks

First Republic Bank (FRC) is receiving $30 billion in deposits from a coalition of larger banks. The move is designed to stabilize the regional bank's base of deposits, and provide some relief from the move depositors have made in the past week to larger banks.
GE Cancels CEO Stock Awards for Poor Performance

The board of directors at General Electric (GE) is cancelling stock awards for CEO Larry Culp. The board cites the failure of the company to reach minimum performance thresholds. The move will wipe out about $5 million of the $8.2 million in expected compensation, and remove a tranche of shares initially awarded in 2020 at a valuation of $15 million. Other top executives also saw their stock bonuses cancelled.
Silicon Valley Bank Files for Chapter 11 Bankruptcy

Silicon Valley Bank has filed for chapter 11 bankruptcy, one week after regulators took control of the holding company and halted trading. The bank can now apply to courts to resume activities. The bank reports that it has $2.2 billion in liquidity and it may be able to wind down operations smoothly.

S&P 500 MOVERS
TOP
FDX  7.925%
NEM  5.363%
NVDA 1.817%
CBOE 1.815%
EBAY 1.677%
BOTTOM
FRC 31.602%
USB 9.227%
ENPH 9.06%
CMA 8.402%
LNC 8.028%

Quote of the Day
Over the last week, the developments in the banking sector certainly is adding another layer of skittishness around investor confidence. But ultimately, investors are tying that back to: What does it mean for Fed policy and interest rates?
- Greg Bassuk, CEO of AXS Investments, on why investors should focus primarily on the Federal Reserve's moves rather than on the daily news out of the banking sector to get an idea of where the markets are likely to trend.

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