Stocks fluctuate with the start of the big week of inflation data and the start of earnings

US stocks were volatile on Monday as investors kicked off a big week that will see inflation data again test interest rate cut views and the start of first-quarter earnings season.

The Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) hesitated around the flat line after opening with slight gains.

A strong jobs report helped lift stocks on Friday but was unable to stave off weekly losses as doubts about the Federal Reserve's intention to cut interest rates clouded minds.

US bonds sold off last week amid this uncertainty, and the pressure continued on Monday with a slight rise in the 10-year Treasury yield (^TNX) to above 4.45%. While the index pared its gains, it remains close to the key level of 4.5% that some see as a potential turning point for a rise towards last year's highs.

Other concerns added to the unsettled mood: divided views on policy among Fed spokesmen, growing hype around the upcoming US presidential election, and rising oil prices due to escalating tensions in the Middle East that could stoke inflationary pressures.

All of this puts more focus on the release of the Consumer Price Index on Wednesday, a key input into the Fed's decision-making process and evidence of the US economy's continued resilience. Investors will be watching for signs that inflation is returning to its downward trend in March after signs of stabilization in readings earlier this year.

Meanwhile, the market is gearing up for the new earnings season, with Delta Air Lines (DAL) setting the stage on Wednesday for major bank results on Friday. Overall, Wall Street expects the first quarter to set the tone for a strong year of earnings growth among S&P 500 companies, hopes boosted by strong March employment numbers.

Against this background, the price of gold rose above $2,350 per ounce to record a new record high. Meanwhile, oil was reaching recent multi-month highs as the market assessed easing tensions in the Middle East. Brent crude futures (BZ=F) were slightly lower at $90.80 per barrel, while West Texas Intermediate crude futures (CL=F) were slightly higher at just under $87.

He lives7 updates

  • Amazon stock is hovering around an all-time closing high

    Amazon (AMZN) shares rose on Monday, briefly surpassing its all-time 2021 closing high of $186.57.

    The stock rose after Morgan Stanley analyst Brian Nowak raised his price target on Amazon to $215 from $200. Shares have soared over the past year as the company has cut costs in many areas of its business — from cloud giant Amazon Web Services to the e-commerce giant's retail footprint.

    The stock is up about 22% year to date.

  • Stocks are up, and inflation data is on deck this week

    Stocks rose at the open on Monday as investors awaited new inflation data later this week. The Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) rose slightly. The Nasdaq Composite (^IXIC) rose 0.3%.

    A new CPI report due Wednesday may give investors clues about the Federal Reserve's intent to cut interest rates this year. A strong monthly jobs report helped lift stocks on Friday, but stocks remained lower during the week on concerns that Federal Reserve officials may delay interest rate cuts.

    This week, JPMorgan (JPM), Wells Fargo (WFC), BlackRock (BLK), and Citi (C) are all scheduled to report earnings, along with Delta Air Lines (DAL).

  • Disney potentially ramps up password sharing campaign

    Disney (DIS) has a lot of password sharing tools that need to be cracked down on.

    The media giant is expected to begin tightening its grip on password sharing for Disney+ and Hula next June, CEO Bob Iger teased in a TV interview on Friday.

    A new chart from EvercoreISI analyst Vivant Jayant (below) highlights how the password-sharing campaign is impacting the streaming division's profitability.

    Disney will follow Netflix and crack down on password sharing.Disney will follow Netflix and crack down on password sharing.

    Disney will follow Netflix and crack down on password sharing. (EvercoreEasy)

  • Jamie Dimon on why the number of public companies continues to shrink

    Golden nuggets for investors from Jamie Dimon's latest annual letter today Continues on page 35.

    The head of JPMorgan notes the “dwindling role of public companies in the US financial system,” as seen in the number of US public companies numbering 4,300. In 1996, this number reached 7,300.

    By contrast, the number of U.S. private equity firms backed has risen to 11,200 from 1,900 over the past two decades, Dimon notes.

    “This trend is dangerous and may increase as more regulation and litigation emerge. Beyond a frank assessment of the regulatory landscape, we really need to think: Is this the outcome we want?” Damon writes.

    Damon cites several factors for this disparity:

    • Extensive reporting requirements (see ESG).

    • High litigation expenses.

    • Expensive regulations.

    • Board Governance “Cookie”.

    • Shareholder activity.

    • Less capital flexibility.

    • Tightening public oversight.

    • “Relentless pressure” on quarterly earnings.

    However, I wonder if less public companies have been the driver of the rise in stock prices since Dimon took over as CEO in the early 2000s. Lower supply of assets, more competition for those assets – right?

  • Watchers of the Damon succession may enjoy this

    Consider me very impressed with what JPMorgan is working on in the field of artificial intelligence.

    Damon says in his book Annual message today The company now has 2,000 AI, machine learning and data scientists. He adds that the company has 400 use cases in production in areas such as marketing, fraud and risk – and is “increasingly driving retail business value across our businesses and functions”.

    I'm equally impressed that Dimon included the name of COO Daniel Pinto (long seen as Dimon's successor) in his important comments about AI. Damon sees AI as mission critical to JPM's future success, and has created a new role called chief data and analytics officer. This role is located within the company's Operating Committee and reports directly to Damon and Pinto.

    Damon says:

    “Elevating this new role to Operating Committee level – reporting directly to Daniel Pinto and myself – reflects how important this function is moving forward and how seriously we expect AI to impact our business. This will integrate data and analytics into our decision-making process At every level of the company. The primary focus is not only on the technical aspects of AI, but also on how all management is – and should – use it. Each of our business lines has corresponding data and analytics roles so we can share best practices Develop reusable solutions that solve multiple business problems, and continuously learn and improve as the future of AI emerges.”

  • JPMorgan CEO Jamie Dimon's money-making lessons, in one chart

    Want to know why JPMorgan investors hope Jamie Dimon stays CEO for another 50 years?

    Sure, the man is the face of banking and has the best relationships in the game, but at the end of the day, he just knows how to make money for shareholders.

    This was perfectly expressed in Damon's annual letter released this morning. See this chart on page 8, which shows how JPMorgan's net income has grown nearly six-fold since 2005.

    The money machine that is JP Morgan.The money machine that is JP Morgan.

    The money machine that is JP Morgan. (JP Morgan)

  • Here are Jamie Dimon's latest thoughts on where interest rates could go

    JPMorgan CEO Jamie Dimon has dropped his latest annual letter to shareholders. You can read it here entirely. Yahoo Finance's David Hollerith provides an analysis of the letter here.

    Dimon is wasting no time weighing in on the interest rate outlook, and seems to be echoing what we've heard from some FOMC members (who have pressured stocks) in recent weeks:

    “Despite a troubling landscape, including last year's regional banking turmoil, the US economy remains resilient, with consumers still spending, and markets currently anticipating a soft landing. It is important to note that the economy is fueled by massive amounts of leveraged government spending.” and previous stimulus, there is also a growing need to increase spending as we continue to transition to a greener economy, restructure global supply chains, boost military spending, and combat rising health care costs. This could lead to more persistent inflation and higher rates than markets expect.

    “Furthermore, there are downside risks to watch. Quantitative tightening drains more than $900 billion of liquidity from the system annually – and we have never seen the full impact of quantitative tightening on this scale. In addition to the ongoing wars in Ukraine, the Middle East and the East, the Disruption of energy and food markets, migration, military and economic relations, in addition to their horrific human cost. These large and somewhat unprecedented forces are pushing us to Remain cautious“.

    Interestingly, strategists at JP Morgan said this morning that they expect bond yields to decline:

    “In terms of the trend in bond yields, our call last October was to continue longer term, and bond yields have likely peaked. After bouncing year to date, We believe yields will resume moving lower. Our fixed income team expects US and German 10-year bond yields to be below the current rate over 3, 6 and 9 months. We fundamentally agree with this, especially given the high geopolitical risks at the moment, but we note the risks of inflation remaining too high.

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