Highlights

Wall Street Breakfast

Author: bmotrader   |   Latest post: Thu, 6 May 2021, 9:43 AM

 

Wall Street Breakfast: Retail Rebound

Author:   |    Publish date:


The market will get some insight into how much the consumer is participating in the economic recovery with the latest retail sales numbers today. S&P futures (SPX), Nasdaq futures (NDX:IND) and Dow futures (INDU) are all in the green.

The Commerce Department will release March retail sales at 8:30 AM ET. Economists, on average, are looking for a strong rebound, with sales rising 5.9%, compared with a 3% drop in February. Core retail sales, which exclude autos, are forecast to rise 5%, reversing a 2.7% decline the month before. Retail sales have posted gains in just four months since the lockdown measures took hold last year, the most recent being a 5.3% gain for January.

If sales rise as anticipated, that would be a good indication that the latest round of $1,400 direct checks are making their way into the economy, providing the stimulus intended by the White House. A miss may indicate that the money is being channeled to other avenues, such as savings or asset purchases. The New York Fed said last week that 42 cents of every stimulus dollar were being saved, while 25% of funds are being spent and the rest is being used to pay down debt.

Reflation trade: For the stock market, a strong retail sales number could kick-start the reflation trade that favors cyclicals, which has lost steam of late. Despite a number of market-moving events, the S&P (NYSEARCA:SPY) has struggled to gain traction in either direction and is down 0.1% for the week.

“The reflation trade has been taking a spring break,” says UBS Global Wealth Management CIO Mark Haefele. “We believe investors should continue to position for reflation” as vaccinations roll out and economies recover, he adds, according to Bloomberg. Financials (NYSEARCA:XLF), Industrials (NYSEARCA:XLI) and Energy (NYSEARCA:XLE) are likely to outperform.

Barclays strategist Emmanuel Cau says value is attractive as a hedge to overheating, but he's less positive on leisure, food retail and autos.

Economy accelerating, but still moderate: The Fed's Beige Book, out yesterday, said the U.S. economy is accelerating to a moderate pace, while some of the sectors hit hardest by the pandemic are showing signs of recovery.

"Reports on tourism were more upbeat, bolstered by a pickup in demand for leisure activities and travel which contacts attributed to spring break, an easing of pandemic-related restrictions, increased vaccinations, and recent stimulus payments among other factors," the report said.

Economic growth and consumer spending "accelerated over the last 6 weeks and pent-up demand for leisure activity and travel are starting to materialize," DataTrek Research writes. "Inflation has picked up and companies face both labor shortages and supply chain disruptions. In the end, we continue to agree with the Fed that near-term inflation is transitory rather than structural, so we don’t think Chair Powell will view these inflationary pressures as a major red flag."

"Moreover, the latest Fed Beige Book reports continue to show employers’ challenge of pulling workers back into the labor force," DataTrek adds. "That will take time as vaccines roll out and childcare becomes more accessible, factors that are out of Chair Powell’s control. That’s why he and the Fed continue to signal holding rates near zero through at least 2022 to let the economy run hot enough to achieve their dual mandate."

Trending - ARK Invest snaps up Coinbase

ARK Investment Management bought shares of newly-public Coinbase Global (NASDAQ:COIN) for three different funds, while selling some of its Tesla (NASDAQ:TSLA) holdings.

Cathie Wood bought 89,589 shares of Coinbase for the ARK Fintech Innovation ETF (NYSEARCA:ARKF). She bought 512,535 shares of the crypto trading platform for the flagship ARK Innovation ETF (NYSEARCA:ARKK). And she added 147,081 COIN shares to the ARK Next Generation Internet ETF (NYSEARCA:ARKW). That was about $246M worth of Coinbase shares.

"There are going to be great opportunities from now and five years to buy (Coinbase) on dips," Wood told Bloomberg. ARK thinks institutional interest could add $500K to the price of Bitcoin (BTC-USD). ARK sold 185,712 shares of Tesla from ARKK and 57,043 shares of the automaker from ARKW. Tesla is the top holding in ARKW and ARKK. Coinbase rose 30% in its debut yesterday, but closed down from where it opened the day.

SpaceX valued at $74B - SpaceX (SPACE) increased the size of its last equity raise, according to an SEC filing. The company brought in another $314M to add to the $850M previously reported. The new total equity raise of $1.16B values SpaceX at around $74B.

Investors in SpaceX are likely to be looking for a payoff from the Starlink (STRLK) Internet satellite business. There is speculation that Starlink will be set free in an IPO at some point. Looking at SpaceX's launch plans, a trip to the moon is planned for as early as 2022 with the Falcon 9 rocket slated to deliver an exploration rover on behalf of the United Arab Emirates.

IPOs - Self-driving truck startup TuSimple is said to have raised $1.35B in IPO.

Self-driving truck startup TuSimple (TSP) is said to have raised $1.35B in an IPO, pricing the shares at $40, above an earlier range. TuSimple and a selling shareholder sold 34M shares at $40 each, above an estimated price of $35-$39, according to a Bloomberg report.

The company is backed by strategic investors, including Volkswagen AG’s (OTCPK:VLKAF) heavy-truck business The Traton Group, Navistar (NYSE:NAV), Goodyear (NASDAQ:GT), U.S. Xpress (NYSE:USX), NVIDIA (NASDAQ:NVDA) and United Parcel Service (NYSE:UPS).

Consumer - Lucid Motors says its new electric vehicle is ready for the cold stuff

Lucid Motors (LUCIDM) updates on a cold weather test run on the Lucid Air at -40 degrees Celsius.

"Lucid Air hit all its cold weather testing targets from quickly warming up, to starting, charging, and more. And despite cold temperatures, the quietness of the cabin was notable. Typically, interior components of a vehicle get noisier as its temperature drops. Not Lucid Air. Its NVH aspect - or Noise, Vibration, and Harshness rating - tested exceptionally well. And for luxury vehicle owners, that's a crucial outcome."

Share this

  Be the first to like this.
 


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
 
 

4447  2408  456  3380 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 SNDL 0.757+0.044 
 OCGN 9.32-0.26 
 ACST 0.485+0.08 
 TLRY 16.12+1.97 
 SQQQ 11.29-0.23 
 NOK 5.075+0.205 
 CTRM 0.442+0.027 
 AAPL 129.95+0.43 
 CIDM 1.307+0.087 
 PTON 83.51-0.27 

TOP ARTICLES

1. Daily Futures Trading Strategy 7 May 2021 Where Futures Lies
2. Dollar Lost Steam As Sentiments Stalled State of The Markets
3. CryptoNews of the Week CryptoNews
4. Wall Street Breakfast: Vaccine Chatter Wall Street Breakfast
5. Daily Futures Trading Strategy 6 May 2021 Where Futures Lies