• And the bounce continues – traders go on a shopping spree.

  • Better earnings from a range of industries help to support the mood.

  • TSLA did not disappoint – stock up in the pre-market.

  • TXN suggests better days ahead for chips.

  • Oil and Gold hold steady.

  • Try the Soy Garlic Chicken Thighs.

Stocks roared higher – it’s all about earnings and guidance (an oversold condition)…..…..early morning ‘better than expected’ earnings reports from the likes of GE Aerospace, GM, DHR, PHM, RTX, PM, KMB, LMT & UPS all setting the tone….for what was to be a good day – the oversold RSI Indexes for both the S&P and Nasdaq (never mind some individual names) didn’t hurt either….….In fact 17 of the 19 companies (89%) that reported before 8 am – beat the estimates and laid the groundwork for yesterday’s rally….Tech names – which have been under pressure on earnings and AI concerns as well as the realization that the FED has no intention of cutting rates – joined in the fun – rallying hard in anticipation of the coming earnings this week.  The weakness that we have seen over the past 3 weeks has taken some stocks to oversold levels and so the better-than-expected earnings helped to change that story.

At 4 pm – investors were celebrating….the Dow rose 265 pts or 0.7%, the S&P up 60 pts or 1.2%, the Nasdaq rallied by 255 pts or 1.6%, the Russell up 35 pts or 1.8%, the Transports gained 212 pts or 1.4% while the Equal Weight S&P added 56 pts or 0.9%.

The excitement ran across 10 of the 11 sectors…. with tech – XLK in the lead + 1.5%, Semis’ – SOXX +2%, Expanded Tech – IGM +2%, Disruptive Tech – ARKK + 3%, Cyber’tech’ +2%, AI tech - +3%, Communications (tech) – XLC + 1.5% even Biotech participated – XBI + 1.1%.

Industrials – XLI +1.4%, Healthcare – XLV -which has been underperforming – rallied by 1.3%, Consumer Discretionary -XLY + 1.2%, Real Estate – XLRE + 0.9%, Financials – XLF + 0.6%, Energy – XLE + 0.55%, Utilities – XLU + 0.4%, Consumer Staples – XLP + 0.3% while Basic Materials – XLB lost 0.8%.

And this makes sense – right?  After beginning the year strong – investors began to sour on the move – when it became clear that JJ and the FED may not be cutting rates anytime soon….we had a bit of a repricing…..the broader market under a bit of pressure – while individual names have come under more pressure…….but the move has actually made those names more attractive because the pullback has taken some of the ‘froth’  out of the prices letting investors refocus on earnings and fundamentals.  The industries represented in yesterday’s reports (Life Sciences, Aerospace & Defense, Autos, Courier Services, Aircraft & Parts, Homebuilders, EV & Tech) span the spectrum – and the results suggest that the US economy IS in good condition…. even with rates at 5.25%! 

NDVA – which IS the poster child for the AI boom had gained more than 100% thru late March – but gave up about 20% of that move during the first 3 weeks of April….as concerns rose about the US economy and the coming earnings season.  Yesterday – traders and investors found new value in NVDA – taking that stock up 3.6% or $30/sh during the trading day.  (NVDA earnings due out on May 22).  Other names in the Mag 7 group – which have also come under some pressure over the past 3 weeks also rallied…. AAPL +0.7%, META +3%, MSFT +1.6%, AMZN +1.3%. 

UPS +2.4% – while not nearly as exciting as AI and Tech – is an economic barometer concerning the state of the economy and their upbeat earnings report helped to put the focus back on the broader economy and the state of our union and that allowed investors to feel more comfortable to put money to work outside of just tech.

Investors/traders and algo’s awaited results from TSLA – which has gotten absolutely crushed this year, down 46%.  – Market participants expecting something good – took the stock up 1.8% during the trading day, counting down the time until Lonnie took to the stage. And then he did. And while earnings missed the estimates – reporting 45 cts/sh vs. the expected 52 cts/sh – there was some good news…. first – the earnings were NOT as bad as feared – Next - gross margins, delayed capital spending, mass layoffs were also NOT as bad as expected…. New product launches, less expensive cars, robotaxi’s and more detail on his ride hailing app all adding to the excitement and so – the stock surged in the post market trading…and this morning it is quoted up 10% or $14/sh at $159.  

TXN also reported (after the bell) and they beat the estimates – but the excitement here for them as well as the chip industry is that they are projecting strong sales (so the assumption is that we will see more positive results across the sector)…traders took the stock up 1.2% during the day and up 7.25% in the pre-mkt – currently trading at $177/sh.  The semiconductor ETF – SOXX was up 2% during the day and is up 1.7% in the pre-mkt. Names in this group include: NVDA, AVGO, QCOM, AMD, INTC, MU, AMAT etc…

Bond prices rose – after a ‘successful’ $69 billion worth of 2 yr. notes….2 yr. yields which started the day at 4.98% fell 8 bps by 12:30 to yield 4.905% before ending the day yielding 4.93%.  10 yr. also lost 8 bps during the day going from 4.64% to 4.56% before ending the day yielding 4.60%.  Today we will get a 5 yr. note auction while tomorrow brings us a 7 yr. note auction.

Oil – which had traded down to the trendline ($80.50) on Monday and Tuesday – as the conflict in the Mid–east appears to be calming down - bounced off of that level and is trading back at $83/barrel.  The API (American Petroleum Institute) reported that US crude inventories fell by 3.23 mil barrels last week vs. the expected rise of 800k barrels. Today – traders will await the EIA official data on stockpiles due out at 10:30 am to see if it confirms a drawdown – which would suggest that demand is healthy…. Capisce?  Oil remains in the $80/$90 range.

Gold continues to trade in the $2330 range. Down from their most recent high of $2450…as global tension eases.  Higher rates for longer – will also add some pressure, but I suspect it will find support at the $2300 level.  Only because I do not believe the geo-political tension will continue to ease.  I think we remain in the $2300 - $2350 range until a new catalyst forces us into a new range – up or down.  

US futures are mixed…. Dow futures – 14, S&P’s up 7, the Nasdaq up 102 and the Russell is - 5.  Earnings this morning from HLT, SYF, TEL, TMO, BG, GD, ODFL, HAS, BA, T, NSC – companies representing hotels/lodging, consumer finance, electrical components, life sciences, agriculture, defense, trucking, aircraft parts, wireless communications and rails).  After the bell look for META, IBM, F. WHR, RJF.

Eco data today includes Mortgage apps, Durable Goods and Cap Goods Ordered and Shipped.

Across Europe – markets are higher – FTSE +0.5% while Spain is the underperformer – flat on the day. Joachim Nagel – Pres of Germany’s Bundesbank – told us that he supports a June rate cut IF THE ECONOMIC DATA supports it.  Beyond that, he did not suggest that one rate cut would mean a second or third rate cut saying.

“Given the current uncertainty, we cannot pre-commit to a particular rate path.”  In the end – he remains solidly on the fence. 

The S&P closed at 5070 – up 60 pts. This after testing a high of 5076.  And while the action was exciting – we are still below the short term trendline at 5116. My sense is that we will test 5116 – but not pierce it (yet).  The market needs to regroup a bit, churn in the $4950/$5116 range before breaking out – which doesn’t mean there isn’t any opportunity. It just means be strategic and stick to your plan. If earnings are what they are expected to be – then I think we push up, but if there is any sense of weakness – then it turns it on its head again and I would expect us to test 4950 fairly quickly. 

A push up and thru 5116 will ignite the buy algo’s while a failure to hold 4950 will ignite the sell algo’s…. anything in between will be company specific.

Pay close attention to the headlines today…listen to what the C-suite says about the future and where they see potholes (if they see potholes).  Sometimes doing nothing is an investment decision…. let this play out.  Give me a call to discuss.

Soy garlic chicken thighs over rice

Simple to make and an easy mid-week meal.

For this you need:  4 Boneless thighs, corn starch, chopped garlic, chopped ginger, s&p, soy sauce, brown sugar, butter, Olive oil & scallions.

Start by rinsing and patting dry your chicken.  Dredge them in seasoned corn starch – you can season with s&p, (I use adobo).  Next pans fry the chicken in olive oil until golden brown on both sides.  Remove and set aside.

In the same pan – now melt a stick of butter.  Add in the chopped garlic and ginger. Add in ½ c of soy sauce, 1 tblspn of brown sugar and let it blend and turn into a glaze.  Add back the chicken pieces and coat with the glaze. Garnish with the chopped scallions and serve over white rice.

General Disclosures

Information and commentary provided by ButcherJoseph Asset Management, LLC (“BJAM”), are opinions and should not be construed as facts. The market commentary is for informational purposes only and should not be deemed as a solicitation to invest or increase investments in BJAM products or the products of BJAM affiliates. The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. There can be no guarantee that any of the described objectives can be achieved. BJAM does not undertake to advise you of any change in its opinions or the information contained in this report. Past performance is not a guarantee of future results. Information provided from third parties was obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness.

Different types of investments involve varying degrees of risk and there can be no assurance that any specific investment will be profitable. The price of any investment may rise or fall due to changes in the broad markets or changes in a company’s financial condition and may do so unpredictably. BJAM does not make any representation that any strategy will or is likely to achieve returns similar to those shown in any performance results that may be illustrated in this presentation. There is no assurance that a portfolio will achieve its investment objective.

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