Markets React To Uncertainty

Todd Moses
April 16, 2024

U.S. stocks have come under pressure recently as earnings season got off to a lackluster start, and concerns persisted that inflation cooling to the Federal Reserve's 2% target has stalled.

Inputs that matter: Oil prices fell more than 1% on Monday after rising ahead of Iran's airstrike. West Texas Intermediate (WTI) crude futures were trading around $85 a barrel, while Brent futures slipped toward the $89 mark.

  • The S&P 500 rose slightly, while the Dow Jones Industrial Average (DJIA) gained 0.3% after ending the week with sharp losses.
  • Data released Monday (April 15) by the U.S. Department of Commerce showed retail sales rising 0.7% monthly and 4% since last year.
  • The most significant growth area during the month came from online sales, up 2.7% since February and 11.3% since March 2023.

The opportunity: Sales declined in several categories during the month: sporting goods, hobbies, musical instruments, and books fell by 1.8%, clothing stores were down 1.6%, and electronics and appliances dropped by 1.2%.

  • The monthly Consumer Price Index (CPI), which accelerated by 0.4% in March and 3.5% for the year, is growing faster than expected.
  • While consumer debt is at an all-time high, the Federal Reserve Bank of New York warns that defaults are almost inevitable.

Zoom in: "We continue to see strength in the U.S. economy," Wells Fargo CEO Charlie Scharf said during that bank's earnings call.

  • "Spending patterns and consumers using our debit and credit cards remain generally consistent and continue to grow year over year."
  • According to the Federal Reserve Bank of New York, mortgage balances shown on consumer credit reports increased by $112 billion during the fourth quarter of 2023. They stood at $12.25 trillion at the end of December.
  • Balances on home equity lines of credit (HELOC) increased by $11 billion, the seventh consecutive quarterly increase after 2022Q1.
  • At $1.13 trillion outstanding, credit card balances increased by $50 billion (4.6%).
  • Auto loan balances increased by $12 billion, continuing the upward trajectory since 2020Q2, and now stand at $1.61 trillion.

Between the lines: Tesla is the latest company to report a 10% layoff at a time of sluggish sales and slow stock performance.

  • "As we prepare the company for our next phase of growth, it is extremely important to examine every aspect of the company for cost reductions and increased productivity," Musk said in the memo obtained by CNBC.
  • Supply chain disruptions were partially to blame for the downsize.

Follow the money: According to the on-chain data provider, 370,000 new wallets holding at least one Bitcoin (BTC) have been created in the last six days, and the number of BTC holders now totals 52.94 million, growing by 0.1% since the beginning of the year.

  • BTC gained on Monday, adding 3% after dropping to as low as $61,300 over the weekend.
  • Germany's largest state-backed lender, Landesbank Baden-W├╝rttemberg (LBBW), is set to partner with Austrian exchange platform Bitpanda to offer crypto custody services.

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Read More

  1. https://finance.yahoo.com/news/stock-market-today-stocks-rebound-as-investors-shake-off-mideast-tensions-focus-on-earnings-133115235.html
  2. https://www.pymnts.com/economy/2024/ecommerce-helps-fuel-unexpected-climb-in-retail-sales/
  3. https://www.cnbc.com/2024/04/15/retail-sales-jumped-0point7percent-in-march-much-higher-than-expected.html
  4. https://www.nbcnews.com/business/business-news/tesla-will-lay-10-percent-global-workforce-read-elon-musk-memo-rcna147820
  5. https://www.newyorkfed.org/microeconomics/hhdc
  6. https://banananomics.co/the_panic_causation
  7. https://www.coindesk.com/markets/2024/04/15/first-mover-americas-hong-kong-spot-bitcoin-etf-applicants-claim-approval/