Postcards from the Florida Republic - May 28, 2022

• Market Prediction:?Dead Cat Bounce through June 10
• Odds of Recession Within 12 Months:?66%
• Current Mood:?Calmer Than You Are

Watchlist

• Short-Term Bullish: ARKK, BYND, CHPT, NKLA, UPST, DASH
• Long-Term Bullish: FRD, TFSL, CRGY, X, VET (crypto)
• Selling OTM Put Spreads on: XOM, DVN, MRO, VLO, MU, BMY?
• Long Contrarian Short: ZIM, ESEA, MATX (Container Ships)

Good evening,

Last week the Dow Jones and S&P 500 experienced their best week since November 2020.

It happened…?fast.

Did you miss the rally?

Markets made a big bet Wednesday afternoon that the Fed would flinch. While I don't believe that will happen, I can't follow my own bias. I have to look at capital flows.

At least for the short term.

S&P 500 momentum turned positive on Thursday, helping buck the trend of Thursday downturns and fueling a monster breakout that day.?

The last line of defense for the bears broke Friday morning when PCE Inflation Data came in at expectations and helped reduce fears of a more hawkish Fed.

Broad market momentum turned positive Friday at 1 pm.?

Over the last six weeks, the market trend has been lower highs and lower lows. We’ve seen multiple bull traps and dead cat bounces.

We’ve awaited a nice rug-pulling Bear rally.?

This week screams that a big Bear Rally is in play.

I cut the remaining shorts on Friday (a little late) and slashed a bet against long-term bonds for early June.?

I still expect the markets to finish the year lower than where we are today. So I’m cautious and deploying about half my cash right now. I’m ready to dump every single long trade if momentum turns back…

But we must look at the short-term rallies after January 28 and March 15 of this year for clues.?That is when we saw momentum switch and produce sizeable rallies.

Here are key metrics that caught my attention.

1. INSIDER BUYING

The?“Insider buying to selling filing ratio” hit its strongest levels since March 2020, amplified by the data in SECForm4.com. I’ve discussed this all week.?

The dollar-for-dollar buying to selling number wasn’t strong (there is still ample selling of overvalued stocks in this market). But insiders are bullish…

There existed an aggregative bullishness not seen since January 27, which preluded a reversal then.?

The five-day moving average (Blue Line) for buying-to-selling filings surpassed January 2022 levels… However, remember that a short-term rally transpired after that period.

Executives – particularly at the small-cap and mid-cap level – were buying due to beaten-down valuations.?

In many cases, certain stocks traded as if we were already in a recession. On the other hand, since April, insider buying has been robust in the banking space.?

2. MOMENTUM MEASURES

S&P 500 momentum turned positive Thursday. Volumes picked up, and capital flowed back at stronger levels.?

The RSI and the MFI of the S&P 500 and the Nasdaq 100 turned positive midweek. Those metrics weren't the only key indicator to turn positive.

The moving average convergence divergence (MACD) 12-26- 9 “Buy” signal traced by @fallondpicks turned positive on Wednesday for the S&P 500 and the NASDAQ.

It’s been a good indicator so far this year and has aligned well with broad momentum switches 48 hours before or after an official switch in our readings.?

3. EXTREME SELLING HALTED

With momentum, we focus heavily on price and volume.?

Look at the number of stocks falling by more than 5% per day on the S&P 500 and compare them to the number of stocks up 5%.?

Since January, hedge funds have been selling into strength over and repeatedly. However, it appears that this selling has taken a timeout. Either the funds are just taking a break to allow the markets to move higher – and then pull the rug out from under the buyers… or they have sold enough to neutralize their portfolios.

It will take a few weeks to answer that question when we start to read Second Quarter investor letters from many of these shops. It's been the worst start to a year for hedge funds (and the worst start for the markets since 1939), and I doubt their selling is over.

That said, here’s evidence the selling has calmed. The number of stocks on the S&P 500 that fell more than 5% on Friday was zero. The number up 5% on Friday was 36.

Across the entire market, 1,068 stocks of 8,500 finished Friday up more than 5%. The number of stocks off 5% or more: Just 107, with dozens in the biotech, drug, and medical device space. It takes a lot of volume and buying at higher prices to push MANY stocks up at once.?

4. ETF INFLOWS

Refinitiv Lipper reports investors bought a net $6.16 billion worth of global equity funds last week. This was the first week we've seen net buying since April 6, which is coincidentally the last major downturn in market momentum. There was a lot of money on the sideline after six weeks of selling.?

5. KENNY GLICK

My friend Kenny turned bullish.

When a Bear turns Bullish, you need to pay attention.

“I’ve never been this bullish…” Kenny said on Friday, May 27 at 8:46 am.

The previous day, while the SPY traded at 398 at 9:30 am, he predicted that the SPY would hit 405 by Thursday afternoon. It did with ease.

The day he said we'll rip higher, we hit 415. ?

THE BIG STORY

One of the things I have preached over the last few months – in this bearish market – is to focus on stocks that are doing well.?

Shipping, the entire energy supply chain, and packaging have been among the three industries with solid returns over the last month. But let’s look ahead.

There’s now a reason to worry about shipping.?

Inventory levels at the retail level are out of control right now.

Companies now have TOO MUCH inventory.

During the recent quarter, the Gap Stores (GPS) had a 34% increase in inventories. Costco saw a 26% jump in inventories during its May-ending quarter. Walmart saw a 32% jump in inventory. Target’s inventory levels year-over-year increased by a staggering 43%.?

Citi said in a recent report that inventories are growing at a faster pace than sales growth.

Not good.

As companies bought lots of stuff to account for supply chain concerns and inflationary woes, consumer buying patterns shifted during the first few months of 2022.

The result is higher storage and inventory management costs, which dramatically impact margins. To offset those inventory management costs, companies will have to sell things for cheaper just to clear the deck and start fresh. So, get ready for some sales this summer.?

This affects more than just retailers’ margins.

It will affect their suppliers… it will affect the companies that sent the product and now must wait even longer for payment because of inventory delays… it impacts upstream materials markers.?

This situation creates The Bull Whip Effect.

And it can get hideous.

One of the hardest classes I had in business school was operations.

No one did well on the supply chain simulations because there would always be a weird month where a sudden spike in demand would fuel you to try to increase your inventory.

And if you did that, you'd end up with too much like three months later and have too much that you'd have to sell things at a discount.

The retail leadership at the COO levels today are all MBAs - and they have struggled...

Walmart has something north of $56 billion in inventory.

That figure is worth more than the GDP of 120 nations.

This will impact shipping companies – mainly container ships. A sizeable chunk of cargo comes from the top retailers in the nation that currently have too much inventory.

TRENDS

FREE CASH FLOW AND SHARE REDUCTION

This week on the All-In Podcast, the hosts highlighted the importance of actual balance sheet analysis at Silicon Valley firms and growth-focused funds.?

They noted that Free-Cash-Flow is what board rooms are seeking… not “Growth.” "What is the green stuff that I can take out of a business and put under my mattress," Brad Gerstner asks. "And how much per share."?

A great point:?"Stock is an expense for companies, and the more shares that exist, the lower the price."

It’s an expense to everyone when companies don’t reduce the number of shares on their balance sheet. Companies get one point on the F Score by reducing the number of outstanding shares each year. It's good for the stock.

Meanwhile, price-to-free-cash-flow is a critical measurement in valuation right now.?

There are plenty of good companies with tangible assets that trade at cheap cash flow after the recent selloff.?

And money will rotate into them because they have good balance sheets, cheap cash flow, and the capacity to buy back stock and reduce that share risk.?

We’re moving away from a growth-based market toward a hunkered-down market – a real market that focuses on cash flow and sound business management. It’s not sexy.?

But it’s going to make you rich if you pay attention…

WHAT’S WORKING, WHAT’S NOT?

It was an interesting week as we saw an incredible number of stocks hit their 52-week low on Monday and Tuesday. However, ONLY 85 stocks hit 52-week lows on Friday.

Weakness remains in the biotech sector.?

Here capital is drying up, and a record number of small- to mid-cap biotech stocks are trading for less than the cash on their balance sheet.?

Other losing sectors are in the healthcare space, focusing on drug manufacturers, medical equipment, and diagnostics.?

Insider selling has been extreme at Quest Diagnostics (DSX), one of my top trades in 2020 and 2021 but has seen its F score drop sharply.

More than 150 companies hit 52-week highs on Friday.?

The biggest beneficiaries remain in the energy production, energy midstream, and energy refining spaces. But regional banks, insurance, and specialty chemical producers remain very strong.?

One of my deepest discount stocks from a few months ago – NAACO Industries (NC), has ripped from $32 per share to $58 per share thanks to coal and lithium demand.

There is ample opportunity to sell credit spreads on stocks that you want to own at a lower price and generate some income on them.?

I’m focused on XOM, DVN, MRO, VLO, MU, and BMY.

RECESSION WATCH

This is just a reminder, sourcing data from Global Financial Data, that recession odds should be higher. Of course, no one wants to freak out Americans, so they lie instead.

A massive upturn in oil prices (and thus gasoline and distillate prices) has always happened before a U.S. recession. I’m citing Jeremy Grantham, who has pointed this out on more than one occasion. Back in April:

‘In the West, historically, major spikes in the price of oil like today’s have always preceded or triggered recession,” he said in April. “A recession would likely interrupt the rise in commodity prices temporarily, but in the longer term, it seems nearly certain that the trend in resource prices will continue to rise.”

We will likely see a short-term drop due to recessionary problems unless we emphasize supply-side economics- incentivizing crude production and bringing it to market.

We'll then see high prices as the markets and consumers must adjust to these prices. With a failing grid and high EV commodity prices, high energy prices will push this economy into a recession even without consumers cutting back.

I am sure that the solution of Congress will be to try to introduce more stimulus or reintroduce the Build Back Better plan. If it had added another $4 trillion in new capital to our economy, that latter deal probably would have pushed inflation over 15%.

Congress proves each day how little they understand.

WHAT I’M WATCHING

TROUBLE IN THE BELL TOWERS

From a macro perspective, it doesn't take ONE BIG event to create global chaos. Mohamed A. El-Erian?pointed out?that a series of small fires – food shortages, high energy prices, inflation, war, debt, and more – could threaten those in power. It won't take much to bring populism and protectionism to the polls.

Everyone is looking for one big event. I continue to explain that compounding issues, all 18 of which I'm watching – can do far more damage together than a single event somewhere in the world. Stay liquid, okay?

CATHIE WOOD WATCH

St. Cathie has received a reprieve from the great market this week, with momentum turning positive.?

Wood has now piled into NVIDIA (NVDA) because it's innovative and will change the world "because of Meta."?

Forget the fact that Intel's new processor will be faster in two years and ignore that this stock is trading above 16x sales. Just believe in it, okay

The only thing that matters is that momentum has turned positive in what could be a two-week dead cat bounce.?

I see an upside on ARK Innovation Fund (ARKK) up to $53.50 by June 10. It's currently trading at just over $45 a share.

That weekend, after the ETF has increased by roughly 60% from its May bottom, some stupid publication will ask: “Is Cathie Wood Back?” Maybe she'll have her arms crossed in the picture to let everyone know "she means business." Perhaps they'll cite me as a critic of ARKK.

And then, after the Fed commits to two rate hikes and its Quantitative Tightening during its June meeting, ARKK will fall back to the low $30s by late summer.?

The lesson of this is simple.?

Cathie Wood wasn't great at her job.

Jerome Powell was just horrible at his.

Fed missed a chance to stop all of this when they first had a bad CPI number in 2021.

And now, this market is driven by speculation about the Federal Reserve's monetary policy.

No other factor comes close.?Not even the potential of a global war.

QUANTITATIVE TIGHTENING STARTS

I’m still cautious ahead of Wednesday, June 1. This is the date that the Federal Reserve said it would begin to sell bonds back into the market.?

The central bank plans to sell $47.5 billion back into the markets.

However, the markets are betting that the Fed will flinch on its rate hikes and potentially reduce its tightening efforts to prevent a liquidity crisis in the markets.?

Remember, the Fed typically engages in its Open Market Operations (buying and selling of assets) on Wednesday and announces these transactions on Thursday.?

But there’s a hidden qualifier about June 2022.?

There are five Wednesdays in the coming month. In a 30-day month, the odds of five Wednesdays is 2 in 7. So the fact that there is a fifth Wednesday, the Fed doesn’t have to come out of the box swinging.?

We might have two Wednesdays of light selling by the Fed leading up to the central bank’s meeting on June 14-15. Then, the market could effectively reset during this period of buying out of oversold territory. Combine this with the rounds of insider buying that we’ve seen, and a short-term rally that rivals the March 14 to March 30 rally appears possible.?

I remain bearish on the economic outlook.

But remember that the market is not the economy and the economy is not the market.

MILLENNIALS ARE STUPID, PART XIV

A survey tells us that half of the millennials think they will only need $300,000 to retire comfortably.?

You read that correctly.

After I read this number thrice, I poured a drink.

But according to actual forward accounting, millennials will need at least $1.8 million to ensure they can live off three-quarters of their current salary by the age of 67 if they make $68,000 a year.?

I don't blame the millennials, though. It's not them…

This survey is another massive sign of academic ignorance and the complete failure of financial literacy across our entire nation for 40 years.

The Transamerica?study shows that all generations are pretty ignorant about retirement needs.

LAYOFFS LOOM

The venture capital community has acknowledged that it’s time to play defense with capital in this economy.?

If you want to track where layoffs are happening in the startup world, check out Layoffs.fyi.

Seven hundred eighteen (718) startups?have laid off nearly 125,000 employees this year. It’s $$$ related.

That number of companies could easily hit 7,500 by the end of the year. But, again, look out to the public markets, and the layoffs are evident.?

The job market has just hit a new snag, as the number of new job postings, according to Revelio, slumped by a stunning 22.5% for the month. People are cutting back.

This is a real-time indicator and an alternative indicator from the official JOLTs report that comes out each week. So trust JOLTS… but verify.

Elon Musk made headlines this week with a Tweet noting that bankruptcies need to happen and that a recession could be healthy for the economy.?

He said that the recent years of free money have made “Americans lazy” and that we’re in for a rude awakening.?

He’s not the only one to make this statement. Leaders across the VC world feel this way. I certainly agree.?

The “fun-employed” era is over, everyone.?

BITCOIN BLOWUP

If Bitcoin falls to $21,000, we will see a margin call on?Micro Strategy and its CEO, Michael Saylor. And apparently, a bunch of the securitization of Saylor's position is… in Bitcoin. So at that level, we'd see a pretty large liquidation, which might awaken many whales that have said they will bail.

The excellent news for Saylor is that momentum is positive.

As this Dead Cat bounces, I wouldn't be surprised to see Bitcoin rise to $35,000 or higher over the next two weeks. But there's still downside here as investors fret about the Fed, interest rates, and liquidity.

Bitcoin is little more than a tech company trading at infinity times earnings. So if we see the NASDAQ 100 slide again, we’ll see the crypto sector follow.?

Bitcoin may be a place to store some wealth in the future, but for right now, it is following its fundamentals – or really – lack of them.?

CASH POOR

While delinquencies fell on housing payments last month, the average American isn’t doing too well with their bank account.?

Last month, the U.S. personal savings rate fell to 4.4%, the lowest since the collapse of Lehman Brothers.?

Yahoo! says that economists aren’t concerned about this right now.?

Why??

Because the government dropped $5 trillion from the sky back in April 2020. The general assumption is that wage growth will pick up in the second half of 2022.?

They are ignoring the possibility that we see cracks in the labor market – already happening – and layoffs are far larger than previously expected.?

Only a financial media outlet this foolish could create a chart like this and see a bullish outlook.?

"Income." A perfectly imperfect economics term.

This term relates to the $2.3 trillion in government largesse that ended up in the pockets of Americans after the pandemic started.?

There’s just one problem.?

The bulk of the money ended up in the hands of the wealthiest Americans.?

Top-line data doesn’t tell us anything.?

Compared to excess cash levels in the fourth quarter of 2019, the bottom 20th?percentile of Americans by income is likely poorer now. So, all that policy was excellent…

And that's with bone-crushing inflation hammering their limited resources. As a result, the bottom 60% of Americans are likely less solvent than these economists think.?

So, great work Congress and Fed.?

The?80-20 Pareto Principle?wins again.

ROB FROM RICH, GIVE TO REDDIT

If you were a Robinhood user in 2020, you might be able to get some money after the app failed multiple times during pandemic-fueled volatility.?

The company said it would settle a proposed lawsuit against it.

Get your money from this hot garbage company before buying it from some Saudi prince for $2 per share.?

IT’S NEVER ENOUGH

President Biden wants to forgive $10,000 in student loans for every person who makes less than $150,000.

Married couples with earnings up to $300,000 could receive upwards of $20,000 in student loan forgiveness.?

Buying votes is expensive, but this somehow has angered all sides of the political spectrum.?

This impacts fewer people than one might expect, and the far-left wing believes that the forgiveness number must be at least $50,000. So why not $50 million instead?

Of course! Show me you don’t understand economics by not saying that you don’t understand basic economics.?

I'm not going to entertain their complaints because the government created the student loan crisis, amplified by educational institutions and abetted by do-nothing advocates who fail students by never helping them pre-calculate their degrees’ value.?

About 60% of these majors are worthless in a professional setting… unless you take a government job.

Study whatever you want, but at least double major in finance if you’re going to be an actor or novelist…?

Both industries are businesses, and finding a job one day as the CFO of a publishing company is probably a better way to become a best-selling author than writing a book as a barista and sending it to 100 agents.?

I am just saying…?from experience.

Student loan forgiveness would be a massive inflationary event regardless of what people like?Sen. Elizabeth Warren claim. Even Larry Summers agrees.

Does anyone think that handing someone a check or tax credit for $10,000 will make people believe that they have improved their balance sheet and should tighten their purse or create a rainy day fund?

No, people will spend half of that $10,000 bailout immediately. And then spend the rest on rent and food.

Think about how bad the average American is with money, and then realize that 50% of America is worse than that person (to adapt a statement by George Carlin).

Of course, I’d support a bailout under one condition.

Politicians need to fix the underlying problem behind higher education costs: The government has been giving away free money (loans) since the 1960s, which allowed an entrenched group of lenders to maximize profits. At the same time, universities continued to jack up tuition.?

The government caused incredible inflation since getting involved in three industries going back decades:?

Housing, advanced education, and pharmaceuticals.?

It is no coincidence that these are the three highest categories in terms of inflation from 1977 to 2020.?

And as you can see, the three sectors with the most interference and subsidies from the government are the ones that are well above the 33-year increase in the CPI.

These are distorted markets thanks to government bread.

QUICK HITS

• Joe Biden is allowing?Chevron to restart oil production in Venezuela. Yet, he’s canceling leases here in the United States. I do not understand his energy policy, and the high prices are on purpose.?
• Chelsea will no longer be owned by a Russian oligarch come Monday.?Todd Boehley is taking over, and he isn’t afraid to spend as much money as possible to win. I look forward to 4th?place.
• Russia is moving?closer and closer to default. As I noted, Putin is blackmailing the world by saying that we can end sanctions and have food from Ukraine, or he will continue the blockade on global exports. I remain long commodity prices.
• Japan is?reopening its borders?after two years. This may help the Yen in the short-term after a stunning downturn rattled the safe-haven asset since April. I have a long FXY position open as the Yen has always rallied during global crises.
• It has not taken long for the housing market to cool down.?Last week, inventory levels?increased by 9%, a sign that some sellers are trying to get in on any last gasp before rates become too high. Borrowing costs are up 27% year-over-year.

ELECTION BLUES

We're not 160 days until the midterm elections, and I'm praying there isn't a Corona Light shortage when I finish this diet on Labor Day.?

Gallup numbers?show that inflation is still the No. 1 problem plaguing Americans. So the economy will be the No. 1 issue in November, regardless of good public relations.

I am already over this entire experience.?

Here are Ten Things I Look More Forward to than the 2022 U.S. Election Season to get into the spirit of how much I dislike American politics.

1.?Pulling my headphones out of my bag on an airplane only to realize one speaker had been crushed and rendered useless.

2.?That feeling I get if I’m telling a story and suddenly realize that no one is listening.

3.?Having to listen to my friend talk about how the price of gold has never been worth zero (you have that friend, right?).

4.?Someone is eavesdropping over my shoulder at a coffee shop while I'm writing a personal email to family/friends.

5.?Joining a new company, only to realize they do all of their communication over Slack and Jira.

6.?Working on my laptop only to have it install computer updates less than 20 minutes before a deadline.

7.?Accidentally befriending a stranger who is convinced they are the center of the universe.

8.?Picking up my phone after my alarm goes off the following day, only to realize it wasn't plugged in and has just 6% battery.

9.?Slamming my bare pinkie toe into a bedframe while moving.

10.?Leaving the house and getting two miles down the road, only to realize I had forgotten the ONE thing that I needed to bring.

FUTURE OF THE FLORIDA REPUBLIC

A complete sidenote…

When this whole American experiment does come crashing down, I’ve long proposed the creation of the Florida Republic, a libertarian refuse economy centered on “leaded” gasoline, vodka, fertilizer, orange juice, imported canned wine, and NFTs of disappointed traders.

Let's talk about our future political system in the “FRP.”

In the Florida Republic, the President would serve for five years, with a maximum of 20 years.?

Before you get all worried about dictators, let me explain how this works.

Every five years, we have an election.?

The night before the election, we put the Republican in a boat off the coast of Captiva, and the Democrat in a ship out in the middle of the Bermuda triangle.?

This is important for social distancing. We hold a Google Hangouts call broadcast to all residences in the Florida Republic.?

We asked the two candidates how they would lead if they could serve four terms as leaders.

After whatever they offer in the form of a nonsensical answer, we ignore them, cut the power to the boat, and let them drift to the Tampico and Ponta Delgada, respectively.

Having jettisoned our two most politically ambitious people for good, we appoint an English Bulldog to serve the remainder of the victor’s term.?

In the Republic of Florida, the pursuit of political power is highly discouraged.?

We will repeat this process repeatedly, let people who ignore the Great Civic Documents of the Florida Republic foolishly run for office, and then hold a party after we let these people adrift.

QUOTE OF THE WEEK

"With the Fed tightening the monetary policy spigot with increased determination and the global economic outlook turning bleaker, the U.S. economy will grow more susceptible to a downturn in the coming months.”

Greg Daco,?chief economist at EY-Parthenon

Well, no?shit...

Did he just come out of a coma??

This quote was part of a recap that came out on May 27 and featured in an article: “US economy could be headed toward recession, economist warns: '100% odds' of global slowdown.”?

One month ago, this same economist wrote an article in Barron’s: "Yes, GDP Shrank. No, It Isn’t the Start of a Recession.”

A lot has changed in a month, huh??

For what it’s ironically worth, Daco won?the?2019 Consensus Economics Forecast Accuracy Award.?

This is such an imperfect science.

THE WEEK AHEAD

MONDAY

• The market is closed for Memorial Day. My thoughts are with all military members and their families.?

TUESDAY

• Short interest in Beyond Meat (BYND) increased last week. And there is likely going to be a very significant reckoning for anyone shorting this stock into a dead-cat bounce that might last two weeks. It will surprise everyone, but I am in on the June 10, 2022, $30 Call. I think it can hit $35.23 by June 10 if momentum stays positive…
• In the Midday Momentum Hot Long Shot section, we've had a few picks that have led to triple-digit gains. I had recommended the Charge Point June 17, 2022, $16 call for $0.20 two weeks ago. On Friday, it hit $0.48, or a 140% gain. The company does report earnings on Tuesday, so traders should take half the gains off the table before that event. I do not expect that the numbers will look great, and this stock could fall quickly.??
• Key Reports: Case-Schiller Home Price Index, European Inflation, Chinese Manufacturing, and various unemployment rates abroad. Look for a 20% increase in March housing prices year-over-year.
• Look for earnings from: Salesforce.com (CRM), Hewlett-Packard (HPQ), Digital Turbine (APPS), Ambarella (AMBA), ChargePoint (CHPT), and Sportsman’s Warehouse (SPWH).?

WEDNESDAY

• We'll receive monthly U.S. auto sales and delivery numbers from Chinese automakers. Pay attention to Ford (F), General Motors (GM), Li Auto (LI), Nio (NIO), and XPeng (XPEV). Ford is even more in focus as its CEO plans to speak at a conference on the company’s focus on electric vehicles. In addition, Bloomberg reports that?Ford is now stealing reservations?from would-be Tesla owners.?
• Dig deeper into light vehicle sales. There is a projection for about 14.5 million new vehicles for May, increasing from 14.3 last month. But there's a forecast by Ward's Auto of just 13.4 million.?
• Federal Reserve members James Bullard and John Williams will speak. The day coincides with the first Wednesday that the central bank could begin its tightening process. The Fed typically engages in open market operations on Wednesday and reports the information on a Thursday. I remind everyone that there are five Wednesdays in June when there usually are only four based on the schedule. Because the month has five Wednesdays, the Fed may take its time with its balance sheet tightening rollout. That would be short-term bullish.
• I’ll be watching the Bernstein Strategic Decisions banking conference. That day, we’ll hear from Bank of America CEO Brian Moynihan, Wells Fargo CEO Charlie Scharf, JPMorgan Chase CEO Jamie Dimon, and Morgan Stanley institutional securities head Ted Pick. The following day, Goldman's John Waldron will speak. Finally, on Friday, CEO Jane Fraser of Citigroup will speak.
• Look for earnings from MongoDB (MDB), UiPath (PATH), Capri Holdings (CPRI), Chewy (CHWY), and Veeva Systems (VEEV)

THURSDAY

• The Hart-Scott-Rodino (HSR) Act review of Elon Musk's proposed purchase of Twitter ends at the SEC. I don't care about this deal anymore.?
• We'll get the May numbers for private payrolls on a rare Thursday release. We'll also look at crude oil and natural gas inventories for the week.?
• OPEC+ hosts its 29th?meeting. In July, the cartel will likely stick to its plan to increase production by 432,000 barrels per day. OPEC+ remains well under its production targets (roughly 2.6 million barrels per day), thanks mainly to Russia. I still don't understand our policies here in the United States. While the U.S. is likely to fall into a recession while hindering our oil-and-gas sectors, Saudi Arabia could be one of the strongest economies in 2022, thanks to oil production.?
• Loretta Mester and Lorie Logan will speak from the Federal Reserve.
• Look for earnings from Lululemon Athletica (LULU), Crowdstrike (CRWD), Okta (OKTA), Hormel Foods (HRL), Asana (ASAN), RH (RH), CIENA Corp. (CIEN), and Designer Brands (DBI).?

FRIDAY

• Amazon will split its stock after the closing bell. Tech stocks that split their stock have experience rallies the following week. There is an excellent opportunity to purchase calls starting that Monday for the following Friday (or now, if you want).
• The U.S. Labor Department will release the May jobs report. The numbers call for 329,000 new jobs in May, with the unemployment rate rising to 3.6%. Wage growth should increase thanks to high quit rates, tight labor, and more than 1.9 jobs for every unemployed American.
• Look for earnings from Aurora Cannabis (ACB)

Enjoy your holiday weekend.?

I hope this gives you some great ideas.

Now then… it’s 8 pm on Saturday.?

Go Rangers!

-???Garrett