Thursday, May 11, 2023

☄️The Easy Part of the Battle For Inflation Is Over

Good morning. Yesterday's inflation read of a 4.9 percent year-over-year rise was well under...
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. Yesterday's inflation read of a 4.9 percent year-over-year rise was well under expectations in the low 5 percent range. That helped the market bounce higher at the open. The better news is that shelter costs are starting to come down. That's often the biggest cost for consumers after taxes.

The bad news? The rate of inflation's slowdown from its peak of 9.6 percent in 2022 is also slowing. Getting inflation down from about 5 percent to 2 percent will be much harder, especially with the stresses that the current jump in interest rates has had on the economy.

Chances are we'll see the Fed pause from here, and hope that inflation continues to trend down in the coming months. That's somewhat bullish, at least for now. After the strong market rally this year, it likely points to a sideways-trading summer until the data points to a clearer picture.

Now here's the rest of the news:

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MARKETS
DOW 33,531.33 -0.09%
S&P 4,137.64 +0.45%
NASDAQ 12,306.44 +1.04%
*As of market close
Stocks closed mixed on Wednesday, but off the lows amid a volatile day.
Oil dropped 1.3 percent, closing at $72.78 per barrel.
Gold slid 0.3 percent, ending the day at $2,037 per ounce.
Cryptocurrencies inched higher, with Bitcoin at $27,705 at the stock market close.

Today's TOP TIPS
Look for Companies Likely to Revert to the Mean
While the overall market has its ups and downs, individual stocks can have more extreme moves. When a company has an extreme rally higher, its shares may be more susceptible to a pullback. The reverse is true when a company has been falling relative to peers.

This concept is known as reversion to the mean. And it's a sign that investors might be able to find buying opportunities in beaten-down stocks. Or traders can find overpriced stocks to target for a drop.

» FULL STORY

Insider Trading Report: Albemarle (ALB)
Kristin Coleman, General Council at Albemarle Corp (ALB), recently added 1,373 shares. The buy is a new stake for the executive, and came to a total cost of $249,886.

She was joined by the company CEO, who bought 5,470 shares, increasing his stake by 12 percent, and paying just under $994,000 for the position. These two buys represent the first insider buys since February 2022. Otherwise, company insiders have been sellers of shares.

» FULL STORY

Unusual Options Activity: C3.ai (AI)
Artificial intelligence software company C3.ai (AI) has had a strong year, with shares up nearly 29 percent as interest in the space has exploded higher. One trader sees shares moving lower in the weeks ahead as that interest potentially wanes.

That's based on the June $25 puts. With 36 days until expiration, 13,509 contracts traded compared to a prior open interest of 342, for a 40-fold rise in volume on the trade. The buyer of the puts paid $6.31.

» FULL STORY

IN OTHER NEWS
Inflation Drops for 10th Straight Month

The latest consumer price index (CPI) shows that prices rose by 4.9 percent year-over-year through the end of April. That's the 10th month in a row that the data has showed a year-over-year decline. Gasoline prices rose overall, but a drop in housing costs helped fuel the move lower.
Mortgage Demand Rises After Fed Hints at Rate Hike Pause

Applications for a new home mortgage rose 5 percent in the past week, and applications to refinance rose 10 percent. That happened as 30-year fixed-rate mortgages dropped from 6.5 percent to 6.48 percent. This is the first week since the latest Federal Reserve meeting, when the central bank strongly hinted that it was done raising interest rates.
India Gains Ground Over China on Factory Production

Manufacturers looking to diversify their global supply chains outside of China have found that backup largely in India. The country has a large, well-trained, English-speaking population that is allowing it to gain global market share for manufacturing, even if its labor is not as cheap as that as China's.
Airbnb Reports Record Bookings

Hospitality company Airbnb (ABNB) has reported that bookings hit a new record in the most recent quarter, another sign that travel trends continue to remain strong. The company reported a 20 percent increase in revenues, and even had net income of $117 million, but shares sold off after the report.
Microsoft to Partner with Microsoft on Fusion Plant

Clean energy company Helion is on track to have an operating fusion power plant by 2028. The company has announced a partnership with Microsoft (MSFT) to buy electricity from that plant. Fusion power offers a form of clean, safe energy, and has been in development for over 60 years.

S&P 500 MOVERS
TOP
AKAM  8.443%
ILMN  7.84%
GOOGL 4.099%
GOOG 4.021%
MPWR 3.638%
BOTTOM
AXON 15.052%
NWL 4.805%
CTLT 4.138%
KEY 4.115%
PARA 4.114%

Quote of the Day
Investors believe that U.S. equity market rally is narrow, but they are not paying attention to the SPX A-D line, which is positioned to breakout from a big base. Although this A-D line hit a new high in August, which we viewed as bullish, the SPX could not sustain a rally beyond its 200-day MA and then fell to new cyclical bear market lows in September and October.
- Stephen Suttmeier, technical strategist at Bank of America, noting that the advance-decline line is showing a move higher, indicating that market breadth is increasing, as more stocks are now rising rather than falling.

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