US Consumers All In – by Justin Vaughn

(Justin Vaughn, Editor, Options Trading Report)

All the indexes Friday, the Dow Jones Industrial Average, the S&P 500, the Nasdaq Composite and the Russell 2000 reflected the market’s uneasiness, the ‘worst’ in over a year. After a blazing three months this year that followed nearly 6 strong months last year, extending the ‘bull,’ the market turned obstinate, struggling with stubborn CPI’s, lingering military wars and pricey oil, not to mention Mr.Powell and the Fed. Mounting pressures on investors and traders have ‘set’ the markets awry harnessing the ‘bull. The 10-year Treasury note has continued to rise, edging up last week, from 4.327% to 4.499%, a silent force in the cost of borrowing. Consumer sentiment according to the University of Michigan’s latest survey fell dramatically “from mid March to mid April,” adding to the market stalemate. “The market is digesting and getting used to the fact that actually, the Fed is going to be higher for longer,” said Jim Smigiel, chief investment officer at SEI. Friday’s Dow Jones closed down 435 points, leading a broad decline. Hopefully Monday will trend higher after a weekend of ‘bad news.’

Monday opened Treasury’s yields climbing to new levels (near 5% reached last October) reaching 4.6278%, up from 4.499% on Friday, reflecting the sour condition of the market. As stocks tend to weaken, and fall from favor, treasuries gain traction with stronger yields. March retail sales were up, rising 0.7% over the previous month of February, beating economists expectations. It is evidence that the U.S. consumer is continuing to satisfy their needs, spending first and saving second. Stocks continued weaker Tuesday and Wednesday as investors lost hope that rate cuts were coming near term. As the economy chugs along, with the consumer leading optimistically, and labor consistently showing no signs of weakening, Mr. Powell is forced to constantly adjust rate-cut thinking. “We had forecast two rate cuts this year, now we’re at just one in December, which is very different from what markets had expected” at the start of the year, said Sinead Colton Grant, chief investment officer at BNY Mellon Wealth Management.

Several leading large banks led by JPMorgan Chase have released first quarter earnings, far surpassing economists expectations, and dispelling concerns that the economy is tightening. Other market sectors also had quarterly releases, with the majority beating estimates. Wednesday ‘s market appeared to be shaking off the previous three days’ trends, however by the closing bell, indexes had drifted lower as almost every sector was negative. Thursday opened lively, as the averages were up slightly as investors were pointed to earnings releases rather than inflation’s stubborn resistance. Bonds came off their highs, giving stocks an ‘easier-road’ as indices eased slightly higher.

Gold peaked on Friday at $2,448.80 finishing the session at $2,374.10, up 14% for the year. Heavy central bank accumulation and investor ‘safe-haven’ buying has pushed gold prices higher. Warring in Israel, Ukraine and upheaval in several African countries have put a strong focus on gold accumulation. Gold settled higher on Thursday at $2.378.53 as pressure from the Middle East intensified over retaliation by Israel in response to Iran’s missile attack. As interest rates increase and stocks struggle, the demand for gold has increased. The shiny metal is at center stage-performing as it has for the ages.


Richard Saperstein, chief investment officer at Treasury Partners, WSJ “If you travel 1000 miles to go fishing, the most important aspect is the last 30 feet where you’re presenting the fly to the fish. Inflation has come down, yet the final stage in moving it towards their anticipated goal of 2% is not occurring.”

Jamie Dimon, CEO JPMorgan Chase, WSJ “Huge fiscal spending, the trillions needed each year for the green economy, the remilitarization of the world and the restructuring of global trade–are all inflationary.” Dimon wrote in an annual letter to JPMorgan Chase shareholders released Monday. He added: “Under many different scenarios, our company would continue to perform at least okay,” he wrote.

Will Rhind , chief executive of Granite Shares and issuer of the Bar physical gold ETF, in a note, WSJ “With markets hovering around all time highs, investors are increasingly looking to assets like gold to provide a hedge against any risk of a stock fall.”

Walt Chancellor, an energy strategist at the Australian bank Macquarie, WSJ “We ‘ve been surprised how long they have kept these cuts. With all things OPEC and Saudi Arabia, you got to approve it humbly,” speaking of the cuts in oil production.