Dow dropped 223, decliners over advancers 2-1 & NAZ was off 73. The MLP index crawled higher in the 226s & the REIT index fell 4+ to the 365s. Junk bond funds were lower & Treasuries were being sold, raising yields. Oil rose in the 82s & gold sank 47 to 2007.
AMJ (Alerian MLP Index tracking fund)
Americans pulled back on spending at retail stores in Mar as demand
cooled sharply in the face of banking turmoil, persistent inflation &
high interest rates. Retail sales,
a measure of how much consumers spent on a number of everyday goods,
including cars, food & gasoline, tumbled 1% in Mar, the Commerce
Dept reported. That is well below the 0.4% decline projected & a marked drop from Feb, when sales fell
0.2%. It is the biggest decline since Dec. Excluding the more
volatile measurements of gasoline & autos, sales fell 0.3% last
month. The figures are not adjusted for inflation. Consumers spent less on big-ticket items like cars, electronics &
appliances, furniture, clothing & at-home improvement projects
including garden equipment. Gas sales slid 5.5% in Mar, the most since
Apr 2020, as the cost of fuel plunged. Spending
rose in just 5 of 13 retail categories last month, including bars
and restaurants, online retailers, miscellaneous store retailers, health & personal care stores & specialty hobby stores that sell items
like sporting goods, musical instruments & books. The slump in retail sales is mostly attributed to nearly 2 years of
high inflation that has eroded Americans' savings, as well as the Federal Reserve's campaign
to crush price pressures with a rapid series of interest-rate hikes. The data adds to growing evidence that the economy is quickly cooling
off as borrowing costs rise. Staff at the Fed
anticipate that higher interest rates, coupled with recent upheaval in
the banking system, will tip the economy into a "mild" recession that
takes about 2 years for recovery.
Retail sales tumble more than expected as consumers pull back on spending
The latest batch of economic data shows positive developments on the inflation front, but the Federal Reserve’s job is not over yet, Chicago Federal Reserve Pres Austan Goolsbee said. Goolsbee, who succeeded Charles Evans in the pres role earlier this year, is a member of the Federal Open Market Committee, which sets the federal funds rate. “When you see the producer prices coming in as big negative numbers and you see these negatives on retail sales, you don’t want to overreact to short-run news, but it feels like that’s moving in the right direction,” he said. Data on retail sales today showed consumer spending slowed in Mar amid concerns related to the bank crisis & potential for a recession. The data showed a 1% decline in Mar, which is larger fall than the 0.5% expected. Mar marked the biggest month-over-month fall since Nov. Excluding autos, retail sales fell 0.8% in the month. That's also a larger drop than the 0.4% anticipated. Yesterday, the Mar producer price index, a measure of prices paid by companies, declined 0.5% from the prior month, despite the forecast to stay the same. Excluding food & energy, the index shed 0.1% from the prior month, while the estimate for a 0.2% month-to-month increase. Still, he noted there’s “clear stickiness” in some areas of pricing. And with current economic conditions, Goolsbee said the US could experience a recession. “There’s no way you can look at current conditions around the world and in the U.S. and not think that some mild recession is definitely on the table as a possibility,” Goolsbee added. The data this week has bolstered hopes of those predicting the Fed could change course on its interest rate hike campaign. The central bank has raised interest rates in a bid to cool inflationary pressures, but Goolsbee warned against following “lagging” indicators like wages. “The one thing that I think we’re spending too much time looking at is wage growth as an indicator of prices,” Goolsbee said. “There’s research out by two Chicago Fed researchers reflecting a longer tradition of research that shows wages do not serve as a leading indicator for price inflation. They’re a lagging indicator.”
Chicago Fed President Goolsbee says recent reports show inflation is moving in the right direction
JPMorgan (JPM), a Dow stock, posted record Q1 revenue that topped expectations as net interest income surged almost 50% from a year ago on
higher rates. Profit jumped 52% to $12.6B ($4.10 per share). That figure includes $868M in losses
on securities; excluding those losses lifts earnings by 22¢ per
share, resulting in adjusted EPS of $4.32. Companywide
revenue rose 25% to $39.3B, driven by a 49% rise in net
interest income to $20.8B, thanks to the Federal Reserve's most
aggressive rate-hiking campaign in decades. That topped expectations for interest income by more than a B $s. The
bank also boosted a key piece of guidance that bodes well for the near
future. Net interest income will be about $81B this year, about
$7B more than their previous forecast of $74B, CFO Jeremy
Barnum said. The change was mostly driven by expectations
that JPM will have to pay less to depositors later this year if the
Fed cuts rates, he said. JPM saw “significant new account opening activity” & deposit inflows in its commercial bank, Barnum added. The
money flows implied “an intra-quarter reversal of the recent outflow
trend as a consequence of the March events,” Barnum said. “We estimate
that we have retained approximately $50 billion of these deposit inflows
at quarter-end.” The stock jumped 9.72 (8%).
If you would like to learn more about JPM, click on this link:
club.ino.com/trend/analysis/stock/JPM_aid=CD3289&a_bid=6aeoso5b6f7
JPMorgan Chase posts record revenue on higher interest rates; shares jump 7%
The retail sales data was very disappointing, especially because it signals that higher interest rates are dragging the economy into a recession. However JPM's report was encouraging & signals bank earnings reports may be well received by investors.
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