Coffee With Greta: All Eyes on the Fed
Editor's Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here.
********
DJIA Futures: +17 (+0.1%)
SPX Futures: -7 (-0.2%)
NASDAQ Futures: -37 (-0.3%)
Good morning friends!
Futures are mostly lower as traders gear up for the start of May trade with a big week of economic data on the plate.
Let’s get right to it!
Eyes on the Fed
Traders are focused on Wednesday with the Fed decision scheduled for 2:00 p.m. ET.
CME Group’s FedWatch Tool shows traders see a 99.8% chance the bank will enact its first 0.5% rate hike.
The Fed meeting kicks off Tuesday and comes after the Core PCE Price Index, which is the bank’s favorite inflation gauge, jumped 5.2% year-over-year in March.
The market expects the Fed to get more aggressive on inflation moving forward, with 91.3% predicting a 0.75% rate hike in June.
Big Week of Economic Data
On top of the Fed meeting, traders will get a flood of key economic data this week.
It begins with both the S&P Global and ISM Manufacturing PMI surveys for April at 10:00 a.m. ET today.
The Commerce Department also releases its March construction spending report at 10:00 a.m.
Tuesday morning, the Labor Department releases its March Job Openings and Labor Turnover Survey (JOLTS) and the Commerce Department reports March factory orders.
Wednesday morning payroll firm ADP releases its April private jobs report and the Commerce Department releases the March trade deficit.
The S&P Global and ISM Services PMI surveys will also be released Wednesday.
On Thursday the Labor Department reports weekly jobless claims as well as Q1 productivity and unit labor costs.
And finally, the official April jobs report will be released Friday.
The week also includes more Q1 earnings reports with 150 S&P 500 companies scheduled to report.
Oil Prices Slip on China Growth Concerns
Oil prices are down today amid new concerns about weak economic growth in China.
West Texas Intermediate crude futures are down 3.9% to $100.50 bbl while Brent crude futures are down 3.6% to $103.30 bbl.
The drop comes after China released new data over the weekend taht showed its factory activity contracted in April.
That was the second straight monthly contraction and was the lowest level of activity since February 2020.
The EU is still considering a ban of Russian oil imports by the end of the year.
The European Commission held talks with EU member states about that proposal over the weekend.
Berkshire Hathaway Holds Annual Shareholders Meeting
Berkshire Hathaway (BRK.A) held its first in-person annual shareholder’s meeting since 2019 on Saturday.
Berkshire Chairman Warren Buffett bemoaned the stock market as a “gambling parlor” during his speech at the meeting.
Buffett said, “Wall Street makes money, one way or another, catching the crumbs that fall off the table of capitalism.”
Vice-chairman Charlie Munger said, “We have people who know nothing about stocks being advised by stockbrokers who know even less”.
Munger said the market is “almost a mania of speculation”.
The two also railed against cryptocurrencies, specifically Bitcoin, with Buffett saying it “doesn’t produce anything”.
“Assets, to have value, have to deliver something to somebody,” said Buffett. “And there’s only one currency that’s accepted. You can come up with all kinds of things. We can put up Berkshire coins, put up Berkshire money but in the end, this is money,” as he held up a $20 bill.
Munger discouraged Americans from investing their retirement money into Bitcoin.
“When you have your own retirement account, and your friendly adviser suggests you put all the money into bitcoin, just say no,” he said.
Berkshire Increases Stake in Activision Blizzard
Activision Blizzard (ATVI) shares are up 1.8% ahead of the open after Warren Buffett announced Berkshire increased its stake in the company.
Berkshire now owns about 9.5% of Activision shares as part of a merger arbitrage play.
The investment is a bet that Microsoft’s (MSFT) planned acquisition of Activision will go through.
Microsoft plans to buy the video game company for $95 per share.
Berkshire has been buying more shares as the stock trades below that price.
“If the deal goes through, we make some money,” said Buffett.
In Case You Missed It
- The Nasdaq logged its worst month since October 2008 in April and hit a fresh 2022 low at the close on Friday. The tech-heavy index tumbled 13.26% last month. The Dow finished April 4.9% lower while the S&P 500 tumbled 8.8%. The S&P is down 13.3% YTD, marking the worst start to a year since 1939. The Nasdaq is deep in bear market territory, down more than 22% from its most recent record.