Podcast Summary
Small Business Optimism Hits 10-Year Low Amidst Stock Market Bulls: Small business owners face pessimism and rising prices, contrasting with stock market bulls' continued confidence and growth potential expectations.
While stock market bulls remain confident in the growth potential of AI and the bull market, small business owners are facing increasing pessimism and rising prices. The NFIB Small Business Optimism Index dropped to its lowest level since December 2012, with small business owners raising prices and lowering sales expectations. Economists like Oliver Allen of Pantheon Macro note the notable contrast between the small business outlook and the continued bullish sentiment in the stock market. The Investors Intelligence survey showed bulls at their highest level since early 2018, while the AAII weekly survey had bulls at 47.3% and bears at 22.2%. Despite concerns about inflation, some analysts like Jack Manley at JPMorgan argue that the Federal Reserve should start easing to help stabilize prices. The debate continues over whether higher interest rates are driving inflation or if it's a chicken and egg situation where meaningful downward pressure on inflation won't be seen until shelter costs decrease. Overall, the disconnect between the optimism in the stock market and the pessimism among small business owners highlights the complexities of the current economic landscape.
Latest PCE numbers suggest ongoing disinflation in core goods and shelter: The ongoing disinflation trend in core goods and especially shelter is continuing, but the CPI data is expected to remain on track for low two percent inflation. Individual company performances are also impacting specific sectors.
The latest PCE numbers suggest that the pause in disinflation seen in January and February was an anomaly, and the ongoing disinflation in core goods and especially shelter is continuing. The CPI data, which will be released on Wednesday, is expected to be in line with expectations and the path to low two percent inflation remains on track. However, there are some stock-specific movements, such as Tilray Brands revising down its full-year outlook and reporting lower than expected net revenue and loss per share, leading to pressure on cannabis stocks. On the positive side, Goldman Sachs initiated GE Aerospace with a buy rating, citing the company's high market shares in the aerospace engine oligopoly, great long-term cash flow characteristics, and rebounding demand for new airplanes. Norfolk Southern also reported preliminary Q1 results, delivering an adjusted operating ratio in line with guidance but slightly below consensus, and an anticipated EPS of 2.49 versus 2.59 consensus. Overall, the market is experiencing some back and forth action as traders position for the CPI data and individual company performances continue to impact specific sectors.
Google's New In-House Processors Address Rising Computing Costs and Dependence on External Vendors: Google introduces new in-house processors, Axion, to handle AI workloads, reduce dependence on external vendors, and address rising computing costs
CEO Alan Shaw of an unspecified company was able to achieve impressive results despite facing macroeconomic challenges and a revenue mix heavily weighted towards lower-rated traffic, including international intermodal. This sector continues to drive volume growth for the company. Meanwhile, Google has introduced new in-house processors, named Axion, to address rising computing costs, handle more artificial intelligence workloads, and reduce dependence on external vendors like NVIDIA. These central processing units, based on chip designs from ARM, are proficient in AI-related work in the data center, processing large amounts of data, and handling the vast usage of Google's services by billions of people. In the world of Wall Street research, silver is currently 45% below its 2011 peak, while gold is reaching new all-time highs. According to Roth MKM technical analysts, silver has the potential to catch up and outperform. They predict a price target of $35.50 if silver breaks above $30, followed by $37.50, $44.30, and ultimately $50. Their top-ranked silver miner stocks include Fresnio, Gold Resource, Core Mining, Gatas Silver, Pan American Silver, and Silver Corp Metals. For more information and to explore these stocks further, visit seekingalpha.com/screeners. Stay tuned for links to the full stories in the show notes section, and don't forget to join the community of serious investors for in-depth discussions on any stock or ETF at seekingalpha.com/subscriptions.