(Justin Vaughn, Editor, Options Trading Report)
Friday was a Bull…All indices scored higher, with reassurances that…maybe the bear is pausing, or even backing off. As was expected positive earnings and good news in general ‘pushed’ the investor into a comfort zone for the first time in many months–all the way back to November 2020. This is good news in several sectors such as household spending, the liberal use of pent-up savings accounts, and of course good inflation news. The slight easing of inflation as seen in April has given investors a hint of optimism and it showed on Friday. Even with higher gasoline prices (reaching $5.00 a gallon) the consumer seems willing to pay for the privilege of driving as seen this past Memorial Day weekend, as cooped up Americans ‘hit the road.’ The Covid starved America is lashing out and striking back. “We have finally reached the point where households are dipping into their $4 trillion of excess savings,” said Stephen Stanley, chief economist at Amherst Pierpont. “The surge on fateful Friday gave investors a sign that just maybe the worst is behind them.” The benchmark 10-year U.S. Treasury note dropped to 2.748% Friday, for the fourth straight week. As we have mentioned several times, “yields and prices move in opposite directions.” The indices responded well, the Dow Jones Industrial Average was strong, finishing up 6.2% for the week, with much of the positive coming Friday, closing at 33,212.96 after several negative weeks in the ‘bear’ mood. The benchmark S&P 500 also rose significantly climbing 6.6% and finishing at 4158.24, a good solid response for the week. The ‘hot’ Nasdaq Composite, loaded with popular high-flyers tacked on the biggest percentage of the ‘three,’ with a 6.9% gain. The more conservative Russell 2000 index, comprised of a multitude of smaller value stocks reacted positively, up 49.66 points or 2.70%, finishing at 1887.90, lagging the ‘big’ indexes, but still on the positive. The oft-forgotten Russell 2000 is is a good barometer when looking for market direction and trends and is a helpful index, unlike the ‘other three.’ “Stocks finally enjoyed a strong bounce this week,” writes Canaccord Genuity analyst Martin Roberge. “Simply said, just like a rubber band that was stretched too much, pessimism forces are being worked off, hence the snapback rally.”
The number one oil…Palm Oil, oils just about everything and it is not…black. Palm oil prices are soaring higher, every day skyrocketing beyond all expectations. Used for a multitude of foods, consumer health products, and the industrial markets, Palm Oil is an important oil. The Ukraine War, extended stretches of bad weather, and the export ban by Indonesia have literally slowed the availability of the product. Big users are scrambling to find alternate sources, which are not easily available. The ‘oil’ is nearly irreplaceable, and a ‘fixture’ in the food and consumer products areas. Restaurants, supermarkets, and industrial users are walking a tightrope…the magic of palm oil is hanging in balance-just ask any chef!
Finally, Putin’s mistress-girlfriend, former Russian gymnast and mother of his three children, Alina Kabaeva, is being taken to task. She controls much of his wealth and has massive political clout. England has alleged Ms. Kabaeva has close ties with Putin, as his financial confidant, and with a close group to Bank Rossiya, previously sanctioned by the U.S. and England for its close association with the Russian government. Ms. Kabaeva is also deeply involved in Putin’s ruling political party. The U.S. is moving closer to leveling sanctions against her, as they have been slow to enforce any activity so far in fear that Putin would react violently in his war in Ukraine.
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RUMBLINGS ON THE STREET
Eswar Prasad, Cornell University Professor, Barron’s “It’s going to take a lot to convince the SEC to move forward on a Bitcoin EFT under chairman Gary Gensler.”
Randall W. Forsyth, writer, Barron’s, UP &DOWN WALL STREET, Barron’s “The Fed’s task is to throttle back demand in an economy constrained by the limited supply of labor and commodities, such as energy. The markets’ resurgence suggests that this process won’t involve more pain. But that’s far from assured.”
Anne Richards, chief international, Fidelity, Barron’s “I think that there’s possibility we could be seeing the peak of the bearishness. But we’re not quite through it yet.”
Ed Clissold, chief U.S. strategist at Ned Davis Research, Barron’s “In order for pessimism to reach true panic levels, investors need to fear there’s no place to hide,” say’s Mr. Clissold. “And that includes even some viewed as untouchable companies.”
BY THE NUMBERS – Barron’s
$9.4B – The volume of share buybacks by U.S. shale drillers this year, 54% more than investments in new drilling.
591K – Seasonally adjusted number of new U.S. homes sold in April, 16.6% below March’s total.
$4.5M – The winning auction price of a Fender Mustang electric guitar played by Nirvana’s Kurt Cobain in 1991. The buyer: Indianapolis Colts owner Jim Irsay.
62M – Number of barrels of Russian oil sitting in ships awaiting buyers.