Monday, June 26, 2023

😊 A Cooling Summer – But the Economy May Yet Avoid a Recession

Good morning. Production data continues to suggest a slowing economy. However,...
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. Production data continues to suggest a slowing economy. However, other trends, such as the labor market and declining inflation rates, suggest that things are strong. Overall, it points to a mixed picture. That will likely cool the stock market's returns over the next few months. The good news? It likely means avoiding a recession.

Indeed, we may have already had one. The first two quarters of 2022 saw negative economic growth in the U.S., which has historically been the definition of a recession. If we avoid one now, many more may point to the slightly negative growth last year as a reason why things have fared better now.

For now, traders can expect some downside, but it may mostly be limited to stocks that have seen the biggest move higher in the first half of the year. Investors focused on the long term may find some better buying opportunities in the coming months.

Now here's the rest of the news:

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MARKETS
DOW 33,727.43 -0.65%
S&P 4,348.33 -0.77%
NASDAQ 13,492.52 -1.01%
*As of market close
Stocks closed lower on Friday, capping off a down week for the markets.
Oil declined 0.3 percent, closing at $69.32 per barrel.
Gold rose 0.3 percent, ending at $1,929 per ounce.
Cryptocurrencies rallied, with bitcoin at $30,897 at the stock market close.

Today's TOP TIPS
For Big Trend Profits, Follow the Money
Investors often follow big trends. And by investing in those trends when they're out of favor, they stand to make a fortune. That's especially true when the big trend involves support from the government, whether in the form of tax credits, direct payments, or loans.

For instance, Tesla Motors (TSLA) grew in part due to tax incentives for buyers of electric vehicles. That benefit still exists today, giving EV buyers a potential $7,500 advantage over buying a traditional gas vehicle.

» FULL STORY

Insider Activity Report: Epsilon Energy (EPSN)
Jason Stabell, CEO at Epsilon Energy (EPSN), recently bought 11,300 shares. The buy increased his stake by 14 percent, and came to a total cost of $57,856.

This is the third buy from the CEO in recent months. In early June, he bought 18,000 shares, paying just over $90,100. And in May, he bought an initial stake of 24,200 shares at a cost of $123,178. Otherwise, a major holder of shares was a big seller last year.

» FULL STORY

Unusual Options Activity: Warner Bros. Discovery (WBD)
Media conglomerate Warner Bros. Discovery (WBD) is down about 12 percent over the past year. One trader sees the potential for a rebound in the next two months.

That's based on the August $17.50 calls. With 53 days until expiration, 9,264 contracts traded compared to a prior open interest of 116, for an 80-fold rise in volume on the trade. The buyer of the calls paid $0.10 to make the bullish bet.

» FULL STORY

IN OTHER NEWS
Powell Suggests Smaller Banks May Be Exempt from Higher Capital Requirements

As the Federal Reserve looks to apply higher capital requirements to banks under the Basel III international standards, the central bank sees little need for banks with assets under $10 billion to comply with the latest standards. The Basel III guidelines would require higher capital requirements from banks, which could reduce profitability but provide some resilience from rapid client withdrawals.
Wall Street Lawyers Earn More than Bankers

Over the past few years, banker pay on Wall Street has stagnated. But attorneys have seen a big bump in take home pay, with the top superstars in the space making as much as $15 million per year. The trend reflects the rising costs of legal issues, and a myriad of regulations that companies have to navigate to stay profitable.
3M Reaches Settlement Agreement on "Forever Chemicals"

Industrial conglomerate 3M (MMM) has reached a settlement for the remediation of PFAS, otherwise known as "forever chemicals," with public water providers across the US. The settlement comes to about $10.3 billion, and ends waves of potentially endless litigation from several defendants.
Vice Media to Exit Bankruptcy In $350 Million Deal

Digital media firm Vice Media is being bought out of bankruptcy in a deal valued at $350 million. The buyers are three of the company's largest creditors, and the purchase price is a fraction of the over $5 billion the company was valued at during its peak.
TikTok Unveils E-Commerce Initiative

Social media platform TikTok is working on a shopping section in the app. Known as "Trendy Beat," it's being tested in the U.K. right now. The section offers popular items appearing in trending videos. In the U.S., TikTok is focusing on adding merchants to its shop platform to let brands sell directly there.

S&P 500 MOVERS
TOP
KMX 10.074%
GNRC 3.413%
CE 2.175%
DGX 1.945%
CRL 1.783%
BOTTOM
AIZ 5.69%
RXO 4.273%
AXON 4.169%
VFC 3.749%
QRVO 3.663%

Quote of the Day
Markets are weaker because I think that they're realizing that not just the Federal Reserve, but global central banks are not done, and are still actually fully committed to their inflation fight and will sacrifice economic growth if they need to.
- Megan Horneman, chief investment officer at Verdence Capital Advisors, on the market's move lower in the past week as investors price in the potential for slightly higher interest rates in the months ahead.

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