HI Market View Commentary 04-15-2024
I don’ want anything to do with that guy, he’s having a bad day, he wasn’t getting any returns this year and lost his butt last year due to bonds, don’t want to be his client, time to retire,
Gratitude – IF you aren’t happy with who you are, with the situation you are in, or with whatever circumstances you are in = CHANGE IT !!!! OR enjoy the small wins, small details, small building blocks.
The Key to investing : Making your best educated decision, adjusting if you are wrong and protecting the majority of your capital
We are approaching earnings season again BUT, the three indexes are now bearish
Earnings Season:
AAPL 05/02 AMC
BA 04/24 BMO
BABA 05/16
BAC 04/16 BMO
BIDU 05/16
DG 05/30
DIS 05/07 BMO
F 04/24 AMC
GM 04/23 BMO
GOOGL 04/25 AMC
JCI 05/01 BMO
KEY 04/18 BMO
KO 04/30 BMO
LMT 04/23 BMO
META 04/24 AMC
MU 06/26
MRO 05/01 AMC
O 05/06 AMC
SQ 05/02 AMC
TGT 05/22 BMO
UAA 05/09
V 04/23 AMC
VZ 04/22 BMO
ZION 04/22 BMO
NFLX 04/18 AMC
https://www.briefing.com/the-big-picture
The Big Picture
Last Updated: 12-Apr-24 15:29 ET | Archive
Shed some risk
“Everything is okay today, but we need to be prepared for a range of outcomes.”
Those were the words spoken by JPMorgan Chase CEO Jamie Dimon in the Q&A portion of the company’s March quarter earnings conference call. He said a lot more than that of course, but these words resonated as a guide, not just for JPMorgan, but for investors in general.
Taken by Surprise
The March Consumer Price Index caught the market by surprise this past week. That was plain to see in the sharp rise in Treasury yields following the release, the fed funds futures market pushing back the likelihood of the first rate cut to the July/September FOMC meetings, and stock prices seeing some knee-jerk selling.
There was heightened nervousness in the market this past week, too. The CBOE Volatility Index spiked as much as 17% from last week’s closing level. The entirety of that move came on Friday following press reports that said intelligence officials think Iran could launch an attack on Israel soon.
A concurrent spike in oil prices above $87.00 per barrel and a sharp increase in the U.S. Dollar Index above 106.00 underscored the market’s attention to this risk factor.
That was surprising, but only in the sense that the market hasn’t been overly risk-minded since last October when it started its run to the new record high it set only a few weeks ago.
Actually, we should clarify that. The stock market for its part has been very risk-minded, having adopted what has been an indefatigable risk-on demeanor. Perhaps that will change… or perhaps it should change.
Seeing Less Risk
The equity risk premium (ERP), which the New York Fed defines as the expected return on stocks in excess of the risk-free rate, is plumbing its lowest levels in the last 20 years.
When equity risk premiums fall, investors see less risk. The chart above, then, could be construed as a contrarian signal. The less risk seen in the stock market, the more risk there is for a surprise factor to upset things.
In any case, an equity risk premium just north of 30 basis points doesn’t seem to offer a lot of incentive to take on the added risk of investing in the stock market relative to risk-free Treasuries. That doesn’t mean stocks have to underperform bonds; however, it does suggest the return incentive for investing in stocks isn’t as attractive as it used to be.
The same assertion is embedded in the premium valuation at which the market-cap weighted S&P 500 is trading. At 20.3x forward 12-month earnings (versus 20.7x when the past week began), the S&P 500 is trading at a 14% premium to its 10-year average.
The equity risk premium is still positive, so the incentive to invest in the stock market is still there, only the risk to achieve the excess return is now much greater than it used to be, which is exactly why one should be prepared for a range of outcomes that includes the prospect of a larger pullback.
What It All Means
The stock market has had a fantastic run, bolstered by some favorable economic outcomes, lower rates, and better-than-expected earnings.
The economy is still faring well, and the earnings outlook (based on consensus estimates) has yet to shift in any meaningful way. That’s a good thing. The interest rate picture, however, has shifted in a manner that poses more risk for stocks trading at premium valuations.
It is prudent, in light of the premium valuations and deteriorating equity risk premium, to take some profits, which isn’t the same as selling everything.
Taking some profits is simply preparing for a range of outcomes, one of which or several of which could leave you with more risk and less premium on the equity side of your portfolio.
—Patrick J. O’Hare, Briefing.com
Earnings dates:
Where will our markets end this week?
Lower
DJIA – Bearish
SPX – Bearish signals and breaking the 50 day SMA usually means more sell orders are
COMP – Bearish signals and breaking the 50 day SMA usually means more sell orders are coming
Where Will the SPX end April 2024?
04-15-2024 +0.0%
04-08-2024 +2.0%
04-01-2024 +2.0%
Earnings:
Mon:
Tues: JNJ, MS, UNH, UAL, BAC
Wed: ABT, FHN, USB, AA, DFS, CSX
Thur: KMX, FAST,
Fri: BLK, WFC, JPM
Econ Reports:
Mon: Retail Sales, Retail ex-auto, Business Inventories, NAHB Housing Market Index,
Tue Housing Starts, Building Permits, Industrial Production, Capacity Utilization
Wed: MBA,
Thur: Initial Claims, Continuing Claims, Existing Home Sales, Leading Indicators,
Fri: Monthly OPTION EXPIRATION
How am I looking to trade?
Mostly protected for earnings
www.myhurleyinvestment.com = Blogsite
info@hurleyinvestments.com = Email
Questions???
Israel says 300 Iranian drones and missiles downed in ‘unprecedented’ attack
PUBLISHED SUN, APR 14 20244:56 AM EDTUPDATED SUN, APR 14 20249:59 AM EDT
KEY POINTS
- Israel said it identified 300 “threats of various types” and eliminated “99%” of those bound for Israeli soil, according to an update from an Israel Defense Forces spokesperson, Rear Admiral Daniel Hagari.
- Iran’s chief of staff of the armed forces, Major General Mohammad Baqeri, said that Tehran’s operation had now concluded and would involve no further actions.
- S. President Joe Biden also denounced the Iranian strike on Saturday as “unprecedented” and asked to convene G7 leaders to “coordinate a united diplomatic response to Iran’s brazen attack,” according to a White House statement.
Iran rained a deluge of drones and missiles on Israel on Saturday night in response to a suspected Israeli strike that killed top Iranian officials in Syria, in a deep escalation of Middle East tensions.
Israel said it identified 300 “threats of various types” and eliminated “99%” of those bound for Israeli soil, according to an update from an Israel Defense Forces spokesperson, Rear Admiral Daniel Hagari. He said a 10-year-old girl was “severely injured by shrapnel” but reported no additional casualties, adding that “several launches” were also made toward Israel from Iraq, Yemen and Lebanon.
Last night marked the first instance of a direct attack on Israel from Iranian territory. Iran-backed factions – such as Palestinian militant group Hamas, Lebanon’s Hezbollah, Yemeni Houthi and Bashar al-Assad’s Syrian administration – have engaged militarily with the Jewish state.
Earlier on Saturday, Iran’s Revolutionary Guards had seized a cargo ship in the Strait of Hormuz, claiming a connection to Israel.
Iran’s chief of staff of the armed forces, Major General Mohammad Bagheri, said that Tehran’s operation had now concluded and would involve no further actions, in comments carried by Iran’s state-owned Islamic Republic News Agency.
“At this juncture, the Islamic Republic of Iran has no intention of continuing defensive operations, but if necessary, it will not hesitate to protect its legitimate interests against any new aggression,” Iran’s Foreign Minister Hossein Amir-Abdollahian said on social media on Sunday, according to a Google translation.
Israel and Iran have been on the cusp of direct conflict since the start of Israel’s military campaign in the Gaza Strip, which came in response to Hamas’ terror attack of Oct. 7. Iran vowed revenge after a suspected Israeli strike on an Iranian consulate in Damascus, Syria, on April 1, which killed several top Iranian military commanders.
“We will not be able to comment on the claims regarding a strike in Damascus,” an Israeli foreign ministry spokesperson told CNBC by email, adding, “Iran’s attack on Israel on the night of April 14th is a direct attack on a sovereign nation, its use of proxies for the last decades and the destabilizing effect of the Ayatollah regime in the region and beyond must end.”
Israel’s Ambassador to the U.N., Gilad Erdan, has also called an emergency meeting of the U.N. Security Council and “demanded that they condemn Iran’s attack on Israel and designate the Iranian Revolutionary Guard Corps as a terror organization.”
The European Union has blasted Tehran’s offensive: “The EU strongly condemns the unacceptable Iranian attack against Israel,” EU High Representative Josep Borrell said late Saturday on social media. “This is an unprecedented escalation and a grave threat to regional security.”
‘Brazen attack’
U.S. President Joe Biden also denounced the Iranian strike on Saturday as “unprecedented” and asked to convene G7 leaders to “coordinate a united diplomatic response to Iran’s brazen attack,” according to a White House statement.
“While we have not seen attacks on our forces or facilities today, we will remain vigilant to all threats and will not hesitate to take all necessary action to protect our people,” he added.
Relations between stalwart allies Washington and Israel had appeared to slightly chill in recent weeks, with Biden warning further support would hinge on Israel taking steps to protect civilians and humanitarian aid workers in the Gaza enclave.
But the U.S. – alongside the U.K. and France, according to Israeli military – intervened to mitigate last night’s Iranian attack and the assault could reignite urgency to pass a key $95 billion bill including funding for Israel and Ukraine, which has passed the Senate but stagnated on Republican opposition in the U.S. House of Representatives.
“In light of Iran’s unjustified attack on Israel, the House will move from its previously announced legislative schedule next week to instead consider legislation that supports our ally Israel and holds Iran and its terrorist proxies accountable,” said House leader Steve Scalise on social media.
“Congress must also do its part. The national security supplemental that has waited months for action will provide critical resources to Israel and our own military forces in the region,” Mitch McConnell, Senate Republican leader, said in a statement. “We cannot hope to deter conflict without demonstrating resolve and investing seriously in American strength.”
Ramifications
Oil futures prices are in focus after intermittently swelling in recent months on trade disruptions and delays caused by Red Sea maritime attacks from Yemen’s Houthi, who claim solidarity with the Palestinian people.
Iran is also home to vast oil resources, which it has been largely routing toward China since the U.S. reimposed sanctions during Donald Trump’s administration.
The Iranian currency fell to a record low of 705,000 rials / USD on the unofficial market around 10:30 a.m. local time on Sunday, according to data from foreign exchange monitoring site Bonbast.
The Tel Aviv Stock Exchange’s flagship index, the TA-35, was down 0.38% at 10:23 a.m. London time.
In aviation, several airlines grounded or diverted service through the Middle East, following the Iranian attack. Jordan, Iraq and Lebanon have reopened their airspaces after brief closures on Saturday in the wake of the offensive, Reuters reports.
— CNBC’s Emma Graham contributed to this report
‘Prelude to World War III’: World leaders react to Iran’s air attack against Israel
PUBLISHED MON, APR 15 20246:49 AM EDTUPDATED 21 MIN AGO
Sam Meredith@IN/SAMUELMEREDITH@SMEREDITH19
KEY POINTS
- World leaders called for calm and an “utmost degree of restraint” in the aftermath of Iran’s large-scale air attacks on Israel.
- Iran’s attack, which involved the launch of more than 300 drones and missiles against military targets in Israel, has ratcheted up fears of a spillover conflict in a region already grappling with the ongoing Israel-Hamas war.
- S. President Joe Biden said on Saturday that he strongly condemned Iran’s unprecedented air attack against military facilities in Israel.
World leaders have called for calm in the aftermath of Iran’s large-scale air attacks on Israel on Saturday, with many expressing deep concern over the prospect of a broader regional conflict.
Iran’s strikes, which Israel’s defense forces say involved more than 300 drones and missiles against military targets in Israel, has ratcheted up fears of a spillover conflict in a region already grappling with the ongoing war in the Gaza Strip.
The assault only resulted in limited damage, with Israel’s military saying its Iron Dome defense system intercepted 99% of the drones and missiles launched by Iran.
Iran says its air offensive came in response to a suspected Israeli strike on its embassy compound in the Syrian capital of Damascus earlier this month.
“We will not be able to comment on the claims regarding a strike in Damascus,” an Israeli foreign ministry spokesperson told CNBC on Sunday.
Ahead of a war cabinet meeting on Monday, Israel has pledged to “exact a price” from Iran in response to the Saturday attack. Analysts have said they are unsure of the exact timing and extent of such a retaliation.
U.S. President Joe Biden on Saturday said that he condemned “in the strongest possible terms” Iran’s unprecedented air attack against military facilities in Israel.
Biden added that the U.S. “will remain vigilant to all threats and will not hesitate to take all necessary action to protect our people.”
His comments come as some top U.S. officials reportedly worry that Israel may soon respond to Iran’s drone and missile attacks and trigger a wider regional conflict, according to NBC News.
Biden, who affirmed the White House’s “ironclad” commitment to Israel’s security once again over the weekend, has privately expressed concern that Israel’s Prime Minister Benjamin Netanyahu is trying to drag the U.S. into a broader conflict, NBC News reported Sunday, citing three unnamed people familiar with the matter.
CNBC could not independently verify the report.
‘No one wants to see more bloodshed’
European leaders castigated Iran’s attack against Israel and vowed to work to de-escalate the situation.
“I condemn in the strongest terms the unprecedented attack launched by Iran against Israel, which threatens to destabilize the region,” French President Emmanuel Macron said on Sunday on social media platform X.
“France is working on de-escalation with its partners and calls for restraint.”
German Foreign Minister Annalena Baerbock on Saturday said that Germany “strongly” condemned the attack and warned that it could “plunge an entire region into chaos.”
“Iran and its proxies must stop this immediately. Israel has our full solidarity at this time,” Baerbock said via X, according to an NBC translation.
U.K. Prime Minister Rishi Sunak said Saturday that he condemned “in the strongest terms” the “reckless” Iranian attack against Israel, adding that the country would “continue to stand up” for Israel’s security.
“Iran has once again demonstrated that it is intent on sowing chaos in its own backyard,” Sunak said in a statement.
“Alongside our allies, we are urgently working to stabilise the situation and prevent further escalation. No one wants to see more bloodshed,” he added.
France and the U.K. intercepted some of Iran’s strikes on Israel on Saturday.
‘Utmost levels of restraint’
In the Middle East and North Africa region, Saudi Arabia’s Foreign Ministry expressed “deep concern” regarding the developments of military escalation in the region “and the seriousness of its repercussions.”
In a statement published via X on Sunday and translated by NBC News, the ministry called on all parties “to exercise the utmost levels of restraint” and urged the United Nations Security Council to prevent the escalation of a crisis that would have “serious consequences if it expands.”
Egypt said it expressed “deep concern” regarding the Iranian offensive and called for the “utmost degree of restraint to spare the region and its peoples from further factors of instability and tension.”
“Egypt considers that the dangerous escalation that the Iranian/Israeli arena is currently witnessing is nothing but a direct result of what Egypt has repeatedly warned about, about the dangers of expanding the conflict in the region as a result of the Israeli war on the Gaza Strip, and the provocative military actions being practiced in the region,” the ministry said on X, according to a translation.
‘Latest spillover of the Gaza conflict’
In Asia, a foreign ministry spokesperson for China said Sunday that Beijing expressed “deep concern” over the escalation of tensions in the region and called on relevant parties “to exercise calm and restraint.”
“The ongoing situation is the latest spillover of the Gaza conflict,” the spokesperson said in response to a question about Iran’s strikes.
“China calls on the international community, especially countries with influence, to play a constructive role for the peace and stability of the region.”
Japan’s Foreign Minister Yoko Kamikawa said the country was “deeply concerned about the attacks, which further deteriorate the current situation in the Middle East, and strongly condemns such an escalation.”
“Japan has been strongly urging the parties concerned to calm down the situation as peace and stability in the Middle East is extremely important for Japan as well,” Kamikawa said in a statement on Sunday.
‘Prelude to World War III’
In South America, Colombia’s President Gustavo Petro called on the United Nations to “meet urgently” and “immediately commit to peace.”
“It was predictable; we’re now in the prelude to World War III precisely when humanity should rebuild its economy towards the rapid goal of decarbonization,” Petro said.
“The support of the U.S., in practice, for a genocide, has ignited the world. Everyone knows how wars start, no one knows how they end.”
Argentina’s President Javier Milei said his office expressed its “solidarity and unwavering commitment” to Israel following the attacks by Iran.
“The Republic of Argentina recognizes the right of State-Nations to defend themselves and strongly supports the State of Israel in the defense of its sovereignty, in particular against regimes that promote terror and seek the destruction of western civilization,” Milei said.
Apple iPhone first-quarter shipments sink as Chinese challengers rise; Samsung regains top spot
PUBLISHED SUN, APR 14 202411:33 PM EDTUPDATED 6 HOURS AGO
Sheila Chiang@IN/SHEILACHIANG@SHEILACHIANG
KEY POINTS
- In the first quarter, Apple shipped 50.1 million units, down 9.6% from 55.4 million shipments in the same period a year earlier, IDC report showed.
- Among the top five smartphone brands, Apple recorded the sharpest year-on-year decline.
- “Xiaomi is coming back strong from the large declines experienced over the past two years and Transsion is becoming a stable presence in the Top 5 with aggressive growth in international markets,” said Nabila Popal, research director at IDC Worldwide Tracker team.
Apple iPhone shipments plunged nearly 10% globally in the first quarter of 2024, pressured by double-digit growth in shipments by Chinese challengers Xiaomi and Transsion, a report from International Data Corporation showed.
Apple shipped 50.1 million units In the first quarter, down 9.6% from the 55.4 million shipments in the same period a year earlier, according to the IDC report. Among the top five smartphone brands in the report, Apple recorded the sharpest decline year on year.
Samsung regained the top spot in the first quarter, after losing the crown to Apple last year, with a 20.8% market share, shipping nearly the same number of units as last year at 60.1 million. Its market share was 22.5% in the first quarter of 2023.
Apple, which surpassed Samsung as the largest smartphone maker in 2023, saw its market share drop to 17.3% from 20.7% a year earlier.
“While IDC expects these two companies to maintain their hold on the high end of the market, the resurgence of Huawei in China, as well as notable gains from Xiaomi, Transsion, OPPO/OnePlus, and vivo will likely have both OEMs looking for areas to expand and diversify,” said Ryan Reith, group vice president at IDC Worldwide Mobility and Consumer Device Trackers.
Xiaomi’s shipments rose 33.8% to 40.8 million units in the first quarter, while Transsion saw an 84.9% jump to 28.5 million units.
Shenzhen-based smartphone maker Transsion, which owns the Tecno, Itel, and Infinix brands, has quietly become the world’s fifth-largest smartphone manufacturer, according to several reports.
In terms of market share, Xiaomi (14.1%), Transsion (9.9%) and OPPO (8.7%) bagged the third, fourth and fifth spot, respectively, based on first-quarter shipments, the IDC report revealed.
“Xiaomi is coming back strong from the large declines experienced over the past two years and Transsion is becoming a stable presence in the Top 5 with aggressive growth in international markets,” said Nabila Popal, research director with IDC’s Worldwide Tracker team.
Chinese smartphone giant OPPO’s shipments, however, sank 8.5% to 25.2 million in the first quarter.
Tech giant Huawei and its spinoff, Honor, did not make it to the top five list. They were the best-performing smartphone brands for the first six weeks of 2024, according to Counterpoint Research.
Apple has been facing pressure in China, particularly from Huawei, whose consumer business is resurging after the launch of its Mate 60 smartphone.
Globally, total first-quarter smartphone shipments rose 7.8% year over year to 289.4 million units, recording the third consecutive quarter of shipment growth, according to IDC.
This is “a strong indicator that a recovery is well underway” despite macroeconomic challenges, the research firm said.
Yellen says U.S. plans to ‘underscore’ need for China to shift policy
PUBLISHED MON, APR 8 20243:13 AM EDTUPDATED MON, APR 8 202410:22 AM EDT
Evelyn Cheng@IN/EVELYN-CHENG-53B23624@CHENGEVELYN
KEY POINTS
- S. Treasury Secretary Janet Yellen said Monday that future discussions between the U.S. and China will focus on Beijing’s need to change its policy on industry and the economy.
- She noted U.S. conversations with the Chinese would continue later this month at the International Monetary Fund and World Bank Group spring meetings in Washington, D.C.
- Instead of global trade, Beijing’s oversupply concerns tend to focus on the deflationary aspects, detriments to banking sector health and local governments’ fiscal stress, said Yue Su, principal economist for China at The Economist Intelligence Unit.
BEIJING — U.S. Treasury Secretary Janet Yellen said Monday that future discussions between the U.S. and China will focus on Beijing’s need to change its policy on industry and the economy.
“We intend to underscore the need for a shift in policy during these talks — building on the over two hours I spent on this topic with the Vice Premier last week,” she said in prepared remarks for a news conference Monday, as she wrapped up the fourth and final full day of her trip to China.
She arrived in Guangzhou on Thursday and is set to depart Beijing on Tuesday.
Yellen said her conversations with Chinese officials during the trip discussed plans Beijing had for its economy, but she did not elaborate. Yellen also declined to share what tools the U.S. might use to prevent China’s industrial policy from resulting in the loss of American jobs.
She noted U.S. conversations with the Chinese would continue later this month at the International Monetary Fund and World Bank Group spring meetings in Washington, D.C.
China’s industrial overcapacity — or excess production of goods that undercuts global competitors on price — has increasingly become a point of international concern. Other countries claim such production is often heavily subsidized.
China’s commerce minister said during a trip to Europe that accusations of “overcapacity” are “groundless” and that innovation, not subsidies, drove China’s EV industry.
In contrast to other countries’ focus on the impact of Chinese overcapacity on global trade, Beijing’s oversupply concerns tend to focus on the deflationary aspects, detriments to banking sector health and local governments’ fiscal stress, said Yue Su, principal economist for China at The Economist Intelligence Unit.
“We anticipate further anti-subsidy and anti-dumping investigations on Chinese manufacturing to take place throughout the remainder of the year, particularly as inflation becomes less of a concern for many developed economies,” Su said. “These investigations may extend to Chinese overseas factories, including those in ASEAN countries.”
A call to boost domestic demand
When asked about potential solutions, Yellen pointed to how China could boost domestic demand relative to supply by adding support for retirement or children’s education.
High costs of living, including housing and health care, have encouraged many Chinese to save rather than spend.
Yellen acknowledged that efforts to reduce industrial overcapacity or increase domestic demand would not be resolved quickly.
“This is a matter that we have discussed over more than a decade in China,” she told reporters.
Consumer demand in China didn’t rebound from the pandemic as quickly as many analysts had expected. In contrast to governments in the U.S. and Hong Kong, Beijing did not issue stimulus checks, but instead focused on cutting business taxes and fees.
National security talks
China has also sought to bolster its technological capabilities in the face of growing U.S. restrictions on how Chinese companies can access that tech.
Both Washington and Beijing have increasingly cited national security as the reason for new measures.
Yellen on Monday said both sides exchanged information on the use of economic tools in national security, and should continue to do so. “We are committed to no surprises,” she said.
During her trip, Yellen met with top Chinese officials including Premier Li Qiang in Beijing and Vice Premier He Lifeng in Guangzhou.
“Over the past year, we have put our bilateral relationship on more stable footing,” Yellen said in prepared remarks for her meeting with Li on Sunday.
“This has not meant ignoring our differences or avoiding tough conversations,” she said. “It has meant understanding that we can only make progress if we directly and openly communicate with one another.”
In a readout from China, Li said Beijing hoped the U.S. would abide by market economy norms and avoid politicizing trade issues. He said the development of China’s new energy industry will make important contributions to global carbon neutrality efforts.
The U.S. and China agreed to “intensive exchanges on balanced growth in the domestic and global economies,” according to a Treasury readout after Yellen’s meetings with Vice Premier He.
The two countries also agreed to “start Joint Treasury-PBOC Cooperation and Exchange on Anti-Money Laundering to expand cooperation against illicit finance and financial crime,” the readout said.
The Chinese side did not explicitly mention such agreements, but said both sides planned to maintain communication. Beijing also “expressed serious concerns” about U.S. trade restrictions.
The Chinese readout described the talks as “constructive,” and noted conversations about “balanced economic growth,” “financial stability” and “anti-money laundering.” That’s according to a CNBC translation.
The U.S. Treasury secretary also met Minister of Finance Lan Fo’an, the mayors of Beijing and Guangzhou, representatives of U.S. businesses, and professors and students at Peking University during the visit.
HI Financial Services Mid-Week 06-24-2014