Podcast Summary
Focus on Macro Data: CPI, Retail Sales, and Key Earnings Reports: Expected CPI increase of 0.4% monthly and 3.4% annually, core CPI to rise 0.3% and reach 3.6% annual rate. Shelter inflation may decrease, potentially lowering core inflation. Fed to keep interest rates unchanged in June. Walmart and Home Depot to report earnings.
This week, the focus shifts to macroeconomic data with over 80% of S&P 500 companies reporting Q1 earnings. Two key reports to watch are the April Consumer Price Index (CPI) on Wednesday and the April retail sales report also due on that day. The CPI is expected to show a 0.4% monthly increase and a 3.4% annual rate for headline inflation, while core CPI, excluding food and energy, is predicted to rise 0.3% and reach a 3.6% annual rate. Steve Englehart of Standard Chartered believes that shelter inflation could decrease soon, potentially lowering core inflation. The Fed's optimism regarding housing costs may be justified, according to Englehart, as a regression analysis suggests a significant decline in owner equivalent rent (OER) in the upcoming months. The Fed is expected to keep interest rates unchanged at their June meeting, with a 95% chance of no move according to Fed Funds futures. Other notable reports include the April PPI on Tuesday and earnings from Walmart and Home Depot. Walmart is predicted to report a profit of 52¢ per share on revenue of $158 billion, while Home Depot is expected to report revenue of $36.7 billion and EPS of $3.61.
Weak retail sales and earnings reports from various companies: Consumer spending has been weak, causing earnings misses for retailers like McDonald's, Starbucks, Lululemon, and Nike, but overall earnings have surpassed estimates for companies like Home Depot, Alibaba, and Walmart. The market is up 9.5% YTD and is showing promise for continued growth in May.
Consumer spending has been a concern lately, as indicated by weak earnings reports from companies like McDonald's, Starbucks, Lululemon, Nike, and others. This trend was particularly noticeable in April, which saw a notable slowdown and was one of the worst months for retail sales. The gap between earnings estimates and actual results was significant for many companies, including American Eagle Outfitters and Bath and Body Works, and extended to names like Dollar General, Target, and others. Despite these challenges, overall earnings have been beating estimates, with companies like Home Depot, Alibaba, and Walmart reporting strong results. The broader market is up 9.5% year to date and is coming off a three-week winning streak, making May a promising month for continued growth. Amidst this volatility, it's important for investors to evaluate their portfolios and seek expert advice. Seeking Alpha is hosting its first investing summit on June 18th in New York, where attendees can learn from top executives and industry experts on how to navigate market uncertainty.
Learning from Experienced Investors at Seeking Alpha's Conference: Attendees can enhance investment skills, engage with peers, and learn about new tech like Microsoft's AI search tool and Elon Musk's SpaceX updates.
Seeking Alpha's investing conference offers a valuable opportunity for subscribers to learn from and network with experienced investors. At the conference, attendees can enhance their investment skills and engage with like-minded individuals. Microsoft-backed OpenAI is expected to announce an AI search tool that could challenge Google on Monday, while Google's annual IO conference is set for Tuesday. Elon Musk reported that SpaceX's Starlink satellites are holding up during a major solar storm. A large advisory team from Bank of America's Merrill Lynch joined JPMorgan Chase's wealth management unit in a significant recruitment move. Delta Airlines, Microsoft, Marathon Petroleum, and Honeywell all go ex-dividend this week. Barclays warns that businesses with strong pricing power during periods of high inflation are most at risk in a slowing demand and inflationary environment. The bank identified 44 such stocks using a pricing power screen.
Stocks Analysis: Nucor, Deere, Costco, Target, Union Pacific, Hershey, P&G, and Kroger: Nucor and Union Pacific were seen as buys, Costco and Target as solid long-term investments, Deere as a hold, Hershey as a hold with potential margin pressure, P&G as a buy, and Kroger as a hold due to ongoing competition.
Key takeaway from today's Wall Street Brunch discussion is the analysis of several stocks including Nucor, Deere, Costco, Target, Union Pacific, Hershey, P&G, and Kroger. While the full analysis can be found in the linked story on Seeking Alpha, some key points were highlighted. For instance, Nucor's stock was seen as a potential buy due to its strong earnings report and positive industry trends. Deere's stock, on the other hand, was considered a hold due to its valuation and ongoing supply chain challenges. Costco and Target were seen as solid long-term investments due to their strong financial positions and consumer appeal. Union Pacific's stock was seen as a buy based on its solid earnings and potential for growth in the transportation sector. Hershey's stock was seen as a hold due to its current valuation and potential for margin pressure. P&G's stock was seen as a buy based on its solid financials and potential for growth in emerging markets. Lastly, Kroger's stock was seen as a hold due to its current valuation and ongoing competition in the grocery sector. Overall, the discussion provided insights into the current state and future prospects of these companies, and investors are encouraged to do their own research and consider their own investment objectives before making any investment decisions.