Coffee With Greta: Tesla Wants to Split
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DJIA Futures: -24 (-0.1%)
SPX Futures: -2 (-0.1%)
NASDAQ Futures: -4 (-0.03%)
Good morning friends!
Futures are flat as the market gears up for a big week of economic data.
Let’s get right to it!
Tesla Wants to Split the Stock
Tesla (TSLA) shares are up 5.8% ahead of the open after a new SEC filing shows the electric automaker wants to split its stock.
That filing said the automaker will ask at the annual shareholders meeting “for an increase in the number of authorized shares of common stock… in order to enable a stock split of the Company’s common stock in the form of a stock dividend”.
Tesla split its stock 5-for-1 in August 2020 and shares have more than doubled since then.
Recession Fears Spike as Treasury Yields Invert
The 5-year and 30-year Treasury yields inverted today for the first time since 2006, spiking fears of a recession.
The yield on the 5-year Treasury note rose to 2.6361% while the 30-year yield dipped to 2.6004%.
But the spread between the 2-year and 10-year yields is still positive.
The 10-year Treasury yield is down about 2 basis points to 2.46% after spiking above 2.5% at the end of last week.
Traders Continue to Hike Fed Expectations
As the Fed is laser-focused on inflation over the labor market, traders are hiking their expectations for the next meeting.
CME Group’s FedWatch Tool shows 68.8% of traders believe the central bank will hike rates by 0.5% at the May 4 meeting.
63.2% also expect a 0.5% rate hike at the June meeting, while 13.2% now expect a 0.75% hike.
Oil Falls as China Locks Down Shanghai
Oil prices are down falling as new lockdowns in China prompt fears of weaker demand.
West Texas Intermediate crude futures are down 4.9% to $108 per barrel with Brent crude futures falling 4.7% to $115 per barrel.
The drop comes as Shanghai launched a two-stage lockdown of the city Monday amid a new Covid outbreak.
China is the largest imported of crude in in the world.
Experts say the oil market will likely turn bullish again later this week as OPEC is set to meet on Thursday.
The group is not expected to approve a faster output increase despite the drop in Russian supply.
Biden Budget Proposal
President Biden is set to release his 2023 budget proposal today.
The plan is expected to include a 20% “Billionaire Minimum Income Tax”.
That tax would impose a 20% minimum tax rate on U.S. households worth more than $100 million.
The White House says the plan would reduce the federal deficit by $360 billion over the next decade.
Households that already pay at least 20% would not owe any additional taxes but those paying less would owe a “top-up payment” to meet the minimum.
It’s unclear whether the tax plan would be able to pass in Congress.
A fact sheet from the White House says Biden’s budget proposal would trim $1.3 trillion off the deficit over the next 10 years.
The U.S. had a $2.8 trillion deficit in 2021.
Big Week of Economic Data
Wall Street is prepping for the release of key economic data for the Fed this week.
The Labor Department releases its Job Openings and Labor Turnover Survey (JOLTS) on Tuesday.
Then ADP’s private March payrolls report will be released Wednesday.
The Bureau of Economic Analysis releases the Personal Consumption Expenditures Index Thursday morning. That includes the Fed’s preferred inflation measure, the Core PCE Price Index.
And the official March jobs report will be released Friday morning.
This week of data will give the market a better gauge of the economy and the Fed’s plans to tackle inflation at future meetings.
Economists expect the jobs data to show the labor market is near full employment with inflation continuing to rise.
In Case You Missed It
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- Cannabis stocks rallied at the end of last week as the House gets ready to consider a legalization bill. Tilray (TLRY) shares ended the week 55% higher. The House Rules Committee is set to hold a hearing today on the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. The bill is then expected to be voted on by the full House later this week.