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Defense spending is on the rise around the globe. That’s good for Lockheed Martin’s business, but investors should still brace for a sales “miss” when the company reports first-quarter earnings on Tuesday morning.
Wall Street is looking for per-share earnings of $6.05 from $15 billion in sales. A year ago,
Lockheed
(ticker: LMT) reported per-share earnings of $6.44 from sales of just under $15 billion.
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During a period of high interest rates, it might be more difficult to impress investors with dividend stocks. But the stocks can have an important advantage over the long term. The dividend payouts can increase over the years, helping to push share prices higher over time.
When considering stocks for dividend income, yield shouldn’t be the only thing you consider. If a stock’s price has tumbled because investors are worried about the company’s business prospects, the dividend yield might be very high. A double-digit yield might mean investors expect to see a cut to the dividend soon.
There are many ways to look at companies’ expected ability to maintain or raise their dividend payouts. But one can also take a simple approach to begin researching stock choices.
At the moment, you can get a bank CD with a yield of close to 5% pretty easily. Here’s a look at current yields for CDs and U.S. Treasury securities and an approach for laddering them not only to protect your cash but to hedge against interest-rate risk.
For investors who would rather aim for long-term growth to go along with dividend income, or take a relatively conservative approach to growth while reinvesting dividends, a screen of stocks in the S&P 500
SPX,
produces only 10 stocks with dividend yields of 4.5% or higher with majority “buy” or equivalent ratings among analysts polled by FactSet. Here they are, sorted by dividend yield:
| Company | Ticker | Dividend Yield | Expected payout increase through 2025 | Share “buy” ratings | April 16 price | Consensus price target | implied 12-month upside potential |
| Comerica Inc. |
CMA, |
6.56% | 10% | 58% | $43.30 | $60.53 | 40% |
| Citizens Financial Group Inc. |
CFG, |
5.77% | 12% | 74% | $29.10 | $39.29 | 35% |
| Healthpeak Properties Inc. |
PEAK, |
5.71% | 9% | 60% | $21.01 | $27.69 | 32% |
| Hasbro Inc. |
HAS, |
5.34% | 8% | 69% | $52.40 | $69.27 | 32% |
| Philip Morris International Inc. |
PM, |
5.11% | 11% | 67% | $99.48 | $113.56 | 14% |
| Realty Income Corp. |
O, |
5.04% | 7% | 56% | $60.77 | $70.00 | 15% |
| Fifth Third Bancorp |
FITB, |
4.99% | 3% | 72% | $26.44 | $34.55 | 31% |
| VICI Properties Inc. |
VICI, |
4.82% | 12% | 95% | $32.35 | $37.73 | 17% |
| Organon & Co. |
OGN, |
4.71% | 5% | 55% | $23.80 | $31.89 | 34% |
| Iron Mountain Inc. |
IRM, |
4.69% | 15% | 78% | $52.76 | $56.00 | 6% |
| Source: FactSet | |||||||
Click on the ticker for more about each company.
Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
The dividend yields for this group of 10 companies are based on current annual regular payout rates, with all paying quarterly except for Realty Income Corp.
O,
which pays monthly.
These two oil and natural gas producers would have passed the above screen based on their most recent dividend payments and analysts’ sentiment, however, they pay a combined fixed-plus-variable dividend every quarter, with the fixed portion relatively low:
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U.S. stocks just touched their highest levels in two months. Yet, signs of a looming selloff are piling up, according to Jonathan Krinsky, chief technical strategist at BTIG.
The S&P 500
SPX,
and Russell 3000
RUA,
are both trading just shy of their highs from mid-February, but market breadth hasn’t recovered, as index gains over the past month have largely relied on megacap names like Microsoft Corp.
MSFT,
and Apple Inc.
AAPL,
helping to offset weakness in other areas of the market.
As of Friday, only 45% of Russell 3000 stocks were trading above their 200-day moving averages, according to data cited by Krinsky. By comparison, when the broad-market gauge was trading at its highest level of 2023 back in February, 70% of the individual stocks included in the index were trading above their 200-day moving average. Technical analysts use moving averages as a gauge of a stock or index’s momentum.
Lackluster breath is looking like more of an issue analysts say, especially now that the Nasdaq’s outperformance appears to be fading after leading markets higher since the start of the year.
Over the last two weeks, the Dow Jones Industrial Average
DJIA,
has outperformed the Nasdaq Composite
COMP,
by the widest margin since the two-week period ending Dec 30, according to FactSet data.
Krinsky cited exchange-traded funds that feature megacap technology names, including the iShares Expanded Tech-Software ETF
IGV,
the Communications Services Select Sector SPDR Fund ETF
XLC,
and Consumer Discretionary Select Sector SPDR Fund ETF
XLY,
as examples of emerging weakness in this critical sector of the market. Meanwhile, regional bank stocks, small-cap stocks and shares of retailers, all of which have lagged behind the market this year, look weak.
See: Are tech stocks becoming a haven again? ‘It is a mistake,’ say market analysts.
Krinsky summed up this dynamic thus: “The weak parts of the market remain weak, while the strong parts now appear vulnerable,” the BTIG analyst said in a Sunday note to clients.
Furthermore, “[i]n absolute and relative terms, the tech sector looks like a poor risk/reward to us here,” Krinsky added.
Low implied volatility is another issue for markets, Krinsky said. That can mean investors have gotten too complacent and markets may be heading for a selloff, analysts say.
The Cboe Volatility Index
VIX,
otherwise known as Wall Street’s “fear gauge,” finished Friday at its lowest end-of-day level since Jan. 4, according to Dow Jones Market Data. The Cboe S&P 500 9-Day Volatility Index, which tracks implied volatility over a shorter time horizon, has also fallen to January lows, FactSet data show.
Such low levels mean volatility could be poised to “mean revert,” Krinsky said, which may portend a selloff in the months ahead for the S&P 500, the most liquid and most closely watched gauge of U.S. stock-market performance.
Implied volatility gauges measure activity in option contracts linked to the S&P 500 to gauge how volatile traders expect markets to be over the coming days and weeks. Typically, implied volatility advances when U.S. stocks are falling.
The greenback has shown some signs of life in recent sessions, although the U.S. dollar remains well below the multi decade highs it reached back in September. That the buck bounced off its February lows late last week suggests that momentum could be skewed toward the upside for the dollar, Krinsky said, which could create more problems for stocks given the dollar’s tendency to weigh on markets during 2022.
The ICE U.S. Dollar Index
DXY,
a gauge of the dollar’s strength measured against a basket of rivals, was up 0.7% in recent trade at 102.22.
All of these factors support the notion that stocks could be headed for what Krinsky called the “reverse October playbook.”
Just as the S&P 500 bottomed following the hotter-than-expected September report on consumer-price inflation, the market’s monthslong rebound rally may have peaked following last week’s CPI report for March, which showed consumer prices rose a scant 0.1% last month, less than the 0.2% increase that had been forecast by economists polled by MarketWatch.
Not everybody agrees with this assessment. Marko Papic, chief strategist at Clocktower Group, cited market data going back to 1934 to show that U.S. stocks tend to rally after inflation peaks. Consumer-price inflation reached its highest level in more than four decades when the CPI headline number showed prices up 9.1% year-over-year in June.
U.S. stocks look set to decline for a second day in a row on Monday, with the S&P 500 off 0.3% at 4,126, while the Nasdaq Composite was down by 0.4% at 12,070, and the Dow Jones Industrial Average traded marginally lower at 33,881.
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As the fire at an Indiana plastics-recycling storage facility burned over several days and officials scrambled to calm evacuated residents and measure air quality, larger safety questions emerged across a nation that relies on recycling to help offset the impact of teeming landfills and littered waterways.
Authorities in the eastern part of the state on Sunday finally lifted a dayslong evacuation order after it was determined immediate environmental concerns related to the fire had passed.
But the man-made disaster had already done its part, leaving many wondering if recycling centers — challenging to regulate because they range from small community-led efforts to major industrial facilities — are as safe as Americans think they are?
Public health experts told MarketWatch the nation needs to take a harder look at how we store and dispose of chemicals-heavy plastics in particular, along with other recycled materials that can act as a tinderbox in certain conditions. It may be a wakeup call to the scores of Americans who embrace recycling as one of the longest-tested and straightforward solutions to help the environment. What happens after recyclable materials leave the home can be quite another story, however.
Read: Recycling is confusing — how to be smarter about all that takeout plastic
Worker safety in the handling of large recycling machinery remains a priority of the Occupational Safety and Health Administration (OSHA) and other agencies, but less scrutiny may be given to the emissions those workers breathe in, and in the case of the Indiana emergency, what pollution community members near a recycling center may be exposed to.
“Any company, regardless of its intentions, must be held accountable for regulations, not only for the safety of its employees, but for the communities around it,” Dr. Panagis Galiatsatos, a pulmonologist, who is the national spokesperson for the American Lung Association, told MarketWatch.
“This [Indiana crisis] is alarming — a good deed [such as recycling] undone by the consequences of not having sound safety precautions,” said Galiatsatos, who is also an assistant professor at the Johns Hopkins School of Medicine and helps lead community engagement for the Baltimore Breathe Center.
As for the fire in Richmond, Ind., a college town and county seat of about 35,000 people near the Ohio border, the city’s fire chief, Tim Brown, made clear that there were known code violations by the operator of the former factory that had been turned into plastics storage for recycling or resale. This dangerous fire was a matter of “when, not if,” Brown said in the initial hours that the fire, whose origin is not yet known, burned.
The city of Richmond’s official site about the disaster described the fire as initially impacting “two warehouses containing large amounts of chipped, shredded and bulk recycled plastic, [which] caught fire.” The site does offer cleanup help advice.
Brown, the fire chief, reported that just over 13 of the 14 acres which made up the recycling facility’s property had burned, according to nearby Dayton, Ohio, station WDTN. Brown told reporters the six buildings at the site of the fire were full of plastic from “floor to ceiling, wall to wall,” along with several full semi-trailers. He said Sunday that fire fighters would continue to monitor for flare-ups, according to the Associated Press.
Richmond Mayor Dave Snow said the owner of the buildings has ignored citations that dinged his operation for code violations, and the city has continued to go through steps to get the owner to clean up the property, including preventing the operator from taking on additional plastic.
“We just wish the property owner and the business owner would’ve taken this more serious from day one,” Snow said, according to the report out of Dayton, which cited sister station WXIN. “This person has been negligent and irresponsible, and it’s led to putting a lot of people in danger,” the mayor added.
But some environmental groups say lax enforcement puts citizens at risk.
“Indiana is already top in the nation for water and air quality violations, but the consequences are too negligible here for industry to adhere to the laws,” said Susan Thomas, communications director at Just Transition Northwest Indiana, a climate justice group based in the state.
“We need real solutions to the climate crisis, not more false ones that shield chronic polluters from justice,” she said.
The Environmental Protection Agency (EPA) had collected debris samples from the Richmond fire and searched nearby grounds for any debris, which will be sampled for asbestos given the age of the buildings housing the recycling facility. Residents have been warned not to touch or mow over debris until the sample results are available. Testing was also carried out on the Ohio side of the border.
No doubt, the catastrophe had impacted daily life. Wayne County, Ind., health department officials and fire-safety officials told residents to shelter in place and reduce outdoor activity if they even smelled smoke. According to the health department’s help line, symptoms that may be related to breathing smoke include repeated coughing, shortness of breath or difficulty breathing, wheezing, chest tightness or pain, palpitations, nausea or lightheadedness.
When a lens on recycling is widened, it comes to light that how facilities handle their plastic and other materials may not involve much more care than that given to chemical-emitting plastic left to break down in a landfill, say the concerned public health officials.
Of the 40 million tons of plastic waste generated in the U.S., only 5%-6%, or about two million tons, is recycled, according to a report conducted by the environmental groups Beyond Plastics and The Last Beach Cleanup. About 85% went to landfills, and 10% was incinerated. The rate of plastic recycling has decreased since 2018, when it was at 8.7%, per the study.
Generally speaking, when plastic particles break down, they gain new physical and chemical properties, increasing the risk they will have a toxic effect on organisms, says the environmental arm of the United Nations. The larger the number of potentially affected species and ecological functions, the more likely it is that toxic effects will occur.
And although the conditions of the Indiana fire differ from those experienced earlier this year when a Norfolk Southern Corp.
NSC,
freight train carrying hazardous materials in several cars derailed near East Palestine, Ohio, the public’s concern for that event — which also sparked an evacuation after a chemical plume from a controlled burn — spread widely on social media.
Now, add in Richmond. The public, at large, is increasingly wondering if officials are doing their job to prevent such disasters, and whether the full extent of chemical exposure is known.
“This [fire in Indiana] overlaps in a general sense the chemical safety question raised by the Ohio derailment — and it shouldn’t have just been raised by that one event, but that certainly brought it into focus,” said Dr. Peter Orris, chief of occupational and environmental medicine at the University of Illinois – Chicago.
Orris said lasting solutions pushing awareness and safety around the storage and transportation of chemicals and chemical-based plastic must span political differences over the reach of regulation. He recalled a time just after the 9/11 terror attacks when a fresh look at the transportation of toxic chemicals and the storage and shipment of ammonia and other substances that can have nefarious uses in the wrong hands drew support from unusual partners.
“Shortly after 9/11 a rather broad coalition, including environmental interests such as Greenpeace, and consumer groups, with congressional support, alongside Homeland Security all pushed a model bill about where and how you could transport toxic chemicals, especially going through populated areas,” he said. “Dealing with new concerns around chemicals and recycling plastic may require the same breadth of interests.”
Already, the Biden administration has shown the will to target chemical exposure in U.S. water. Earlier this year, the EPA moved to require near-zero levels of perfluoroalkyl and polyfluoroalkyl substances, part of a classification of chemicals known as PFAS, and also called “forever chemicals” due to how long they persist in the environment. Both the chemical companies and their trade groups have pushed their own steps toward reducing risk, they say. Exposure to some of the chemicals has been linked to cancer, liver damage, fertility and thyroid problems, as well as asthma and other health effects.
Read more: Cancer-linked PFAS — known as ‘forever chemicals’ — could be banned in drinking water for first time
And, Orris stressed, regulating recycling with a one-size-fits-all approach may not work.
Surprisingly, it can be the smaller recycling facilities that take bigger steps in curbing emissions than their larger counterparts. Orris in recent years reported on efforts of a San Francisco recycling plant that made emissions reduction a priority, including by banning incineration. The same research trip turned up issues with a Los Angeles-area plant, exposing “real problems with its policies and procedures beginning with the neighborhood smell from organic materials to other issues with toxins.”
Specifically, the chemicals that help fortify plastic for its many uses present their own unique conditions.
As plastic is heated at high temperatures, melted and reformed into small pellets, it emits toxic chemicals and particulate matter, including volatile gases and fly ash, into the air, which pose threats to health and the local environment, says a Human Rights Watch paper, citing environmental engineering research. When plastic is recycled into pellets for future use, its toxic chemical additives are carried over to the new products. Plus, the recycling process can generate new toxic chemicals, like dioxins, if plastics are not heated at a high enough temperature.
There are other concerns. Plastic melting facilities can emit volatile organic compounds (VOCs) and carcinogens, which in higher concentrations can pollute air both inside facilities and in areas near recycling facilities.
“Plastics, the way they burn, put out dangerous toxins. And plastic can create its own unique chemistry even when it comes into interaction with benign chemicals,” said Galiatsatos of Johns Hopkins.
“There are the lung issues from people breathing in these chemicals and the toxins associated with them. But there is more: systemic inflation from breathing in chemicals, and that can lead to heart disease,” he said.
“I wish we would pay the same amount of attention to plastics, their recycling and their disposal, as we do with sewer systems. When was the last time we heard of a waste system-based cholera outbreak in the U.S.?” he asked rhetorically. “Exactly. That we care about. Yet plastics, especially the burning of chemicals, we treat too lightly.”
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SpaceX scrubbed the eagerly anticipated test launch of its giant Starship rocket minutes before blastoff Monday.
The launch from SpaceX’s Starbase facility in Boca Chica, Texas, would have been the first flight test to integrate SpaceX’s Starship and Super Heavy rockets. The largest rocket ever built, Starship is designed to play a key role in returning humans to the Moon, as well as in future Mars exploration.
SpaceX scrubbed the uncrewed launch attempt about nine minutes before blastoff, apparently because of an issue related to its stage 1 rocket.
“A pressurant valve appears to be frozen, so unless it starts operating soon, no launch today,” tweeted SpaceX CEO Elon Musk.
Related: Elon Musk’s SpaceX pulls another $1.7 billion in funding
“Standing down from today’s flight test attempt; team is working towards next available opportunity,” SpaceX tweeted.
When it scrubbed the launch, SpaceX transitioned to a “wet dress rehearsal,” continuing to load propellant. SpaceX also continued its countdown to T-minus 40 seconds.
“Learned a lot today, now offloading propellant, retrying in a few days,” tweeted Musk.
“Unfortunately, due to needing to recycle the propellant, we’re looking at a minimum of 48 hours until we are able to attempt this flight test again,” said Kate Tice, SpaceX’s quality systems engineering manager, during the launch livestream.
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NEW YORK — The Delaware judge overseeing a voting machine company’s $1.6 billion defamation lawsuit against Fox News announced late Sunday that he was delaying the start of the trial until Tuesday. He did not cite a reason.
The trial, which has drawn international interest, had been scheduled to start Monday morning with jury selection and opening statements.
The case centers on whether Fox defamed Dominion Voting Systems by spreading false claims that the company rigged the 2020 presidential election to prevent former President Donald Trump’s reelection. Records produced as part of the lawsuit show that many of the network’s hosts and executives didn’t believe the allegations but aired them, anyway.
Representatives for Dominion and for the two entities it’s suing — Fox News and its parent company, Fox Corp.
FOX,
— did not immediately return requests for comment on the delay. In his statement, Delaware Superior Court Judge Eric Davis said only that the trial, including jury selection, would be continued until Tuesday and that he would announce the delay in court on Monday.
That’s when Fox News executives and the network’s star hosts were scheduled to begin answering for their role in spreading doubt about the 2020 presidential election and creating the gaping wound that remains in America’s democracy.
Jurors hearing the $1.6 billion lawsuit filed against Fox by Dominion Voting Systems would have to answer a specific question: Did Fox defame the voting machine company by airing bogus stories alleging that the election was rigged against then-President Donald Trump, even as many at the network privately doubted the false claims being pushed by Trump and his allies?
Yet the broader context looms large. A trial would test press freedom and the reputation of conservatives’ favorite news source. It also would illuminate the flow of misinformation that helped spark the Jan. 6, 2021, insurrection at the U.S. Capitol and continues to fuel Trump’s hopes to regain power in 2024.
Fox News stars Tucker Carlson and Sean Hannity and founder Rupert Murdoch are among the people who had been expected to testify.
Barring a settlement, opening statements are now scheduled for Tuesday.
“This is Christmas Eve for defamation scholars,” said RonNell Andersen Jones, a University of Utah law professor.
If the trial were a sporting event, Fox News would be taking the field on a losing streak, with key players injured and having just alienated the referee. Pretrial court rulings and embarrassing revelations about its biggest names have Fox on its heels.
Court papers released over the past two months show Fox executives, producers and personalities privately disbelieved Trump’s claims of a fraudulent election. But Dominion says Fox News was afraid of alienating its audience with the truth, particularly after many viewers were angered by the network’s decision to declare Democrat Joe Biden the winner in Arizona on election night in November 2020.
Some rulings by the judge have eased Dominion’s path. In a summary judgment, Davis said it was “CRYSTAL clear” that fraud allegations against the company were false. That means trial time won’t have to be spent disproving them at a time when millions of Republicans continue to doubt the 2020 results.
Davis said it also is clear that Dominion’s reputation was damaged, but that it would be up to a jury to decide whether Fox acted with “actual malice” — the legal standard — and, if so, what that’s worth financially.
Fox witnesses would likely testify that they thought the allegations against Dominion were newsworthy, but Davis made it clear that’s not a defense against defamation.
New York law protects news outlets from defamation for expressions of opinion. But Davis methodically went through 20 different times on Fox when allegations against Dominion were discussed, ruling that all of them were fully or partly considered statements of fact, and fair game for a potential libel finding.
“A lawsuit is a little bit like hitting a home run,” said Cary Coglianese, law professor at the University of Pennsylvania. “You have to go through all of the bases to get there.” The judge’s rulings “basically give Dominion a spot at third base, and all they have to do is come home to win it.”
Both Fox and Dominion are incorporated in Delaware, though Fox News is headquartered in New York and Dominion is based in Denver.
Fox angered Davis this past week when the judge said the network’s lawyers delayed producing evidence and were not forthcoming in revealing Murdoch’s role at Fox News. A Fox lawyer, Blake Rohrbacher, sent a letter of apology to Davis on Friday, saying it was a misunderstanding and not an intention to deceive.
It’s not clear whether that would affect a trial. But it’s generally not wise to have a judge wonder at the outset of a trial whether your side is telling the truth, particularly when truth is the central point of the case, Jones said.
The lawsuit essentially comes down to whether Dominion can prove Fox acted with actual malice by putting something on the air knowing that it was false or acting with a “reckless disregard” for whether it was true. In most libel cases, that is the most difficult hurdle for plaintiffs to get past.
Dominion can point to many examples where Fox figures didn’t believe the charges being made by Trump allies such as Sidney Powell and Rudolph Giuliani. But Fox says many of those disbelievers were not in a position to decide when to air those allegations.
“We think it’s essential for them to connect those dots,” Fox lawyer Erin Murphy said.
If the case goes to trial, the jury will determine whether a powerful figure like Murdoch — who testified in a deposition that he didn’t believe the election-fraud charges — had the influence to keep the accusations off the air.
“Credibility is always important in any trial in any case. But it’s going to be really important in this case,” said Jane Kirtley, director of the Silha Center for the Study of Media Ethics and the Law at the University of Minnesota.
Kirtley is concerned that the suit may eventually advance to the U.S. Supreme Court, which could use it as a pretext to weaken the actual malice standard that was set in a 1964 decision in New York Times Co. v. Sullivan. That, she feels, would be disastrous for journalists.
Dominion’s lawsuit is being closely watched by another voting-technology company with a separate but similar case against Fox News. Florida-based Smartmatic has looked to some rulings and evidence in the Dominion case to try to enhance its own $2.7 billion defamation lawsuit in New York. The Smartmatic case isn’t yet ready for trial but has survived Fox News’ effort to get it tossed out.
Many experts are surprised Fox and Dominion have not reached an out-of-court settlement, though they can at any time. There’s presumably a wide financial gulf. In court papers, Fox contends the $1.6 billion damages claim is a wild overestimate.
Dominion’s motivation may also be to inflict maximum embarrassment on Fox with the peek into the network’s internal communications following the election. Text messages from January 2021 revealed Carlson telling a friend that he passionately hated Trump and couldn’t wait to move on.
Dominion may also seek an apology.
The trial has had no apparent effect on Fox News’ viewership; it remains the top-rated cable network. Fox’s media reporter, Howard Kurtz, said earlier this year that he had been banned from covering the lawsuit, but the network has since changed direction. Kurtz discussed the case on his show Sunday, saying he would be in Wilmington for the beginning of the trial.
“The real potential danger is if Fox viewers get the sense that they’ve been lied to. There’s a real downside there,” said Charlie Sykes, founder of the Bulwark website and an MSNBC contributor.
There’s little indication that the case has changed Fox’s editorial direction. Fox has embraced Trump once again in recent weeks following the former president’s indictment by a Manhattan grand jury, and Carlson presented an alternate history of Capitol riot, based on tapes given to him by House Speaker Kevin McCarthy, R-Calif.
Just because there has been limited discussion of the Dominion suit on Fox doesn’t mean its fans are unaware of it, said Tim Graham, director of media analysis at the conservative watchdog Media Research Center.
“There’s a certain amount of tribal reaction to this,” Graham said. “When all of the other networks are thrilling to revealing text messages and emails, they see this as the latest attempt by the liberal media to undermine Fox News. There’s going to be a rally-around-Rupert effect.”
Fox Corp. and MarketWatch parent News Corp. share common ownership.
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For anyone watching Netflix, the streaming services’ recent moves to cut costs could mean fewer films, lower-budget shows and — depending on your subscription — more ads. For anyone buying a Tesla, its moves to cut prices will make it easier on customers, but harder on profit-seeking investors.
With both companies reporting results this week, Wall Street will get a look at who still wants a Tesla, amid growing competition, and what kind of growth and viewership anyone can expect from Netflix, as it recalibrates its streaming ambitions and focuses more on profitability following years of rapid growth.
Netflix Inc.
NFLX,
which reports first-quarter results on Tuesday, is trying to crack down on shared accounts, and analysts polled by FactSet see subscriptions coming in well below the average. However, BofA analyst Jessica Reif Ehrlich said that first-quarter results would likely “mark the low point” of the year, “reflecting the initial impact of password sharing efforts in select markets.”
Netflix will report as shareholders’ growing influence over the streaming universe raises questions over what shows and films get streamed, and for how long, as Wall Street tries to wring more bottom-line gains from an industry that boomed before and during the pandemic but burned cash and got crowded in the process. Netflix, along with Walt Disney Co.
DIS,
have laid off employees, while Warner Brothers Discovery Inc.
WBD,
fuses its streaming holdings together.
“We expect Netflix to continue reining in spending, particularly by seeking alternatives to its past practices,” Wedbush analysts Alicia Reese and Michael Pachter wrote in a research note on Thursday. “The company appears to us to be producing fewer feature length films, which we have always viewed as a poor investment, and appears focused on lower cost television content.”
“We are equally encouraged that Netflix is looking at low-cost content like workout videos, which we believe will present a lot of value to subscribers at very low cost,” they added later.
The analysts said that they felt Netflix was well positioned, as other streamers rethink their approach to expansion and financials. And they said Netflix “should be valued as an immensely profitable, slow-growth company.” They also said that Netflix’s decision to launch a cheaper ad-supported option was a “great decision” after growth stalled in the U.S. and Canada and the company’s business in Europe, the Middle East and Africa reaches the saturation point.
For Tesla Inc.
TSLA,
which reports results on Wednesday, the focus for investors will be on price-cutting and its impact on margins. Still, Potter, an analyst at Piper Sandler, has said Tesla is on a “warpath” and “maintaining its aggressive approach to pricing,” and said investors “should expect relentless price cuts to continue.”
Base prices for Tesla’s Model S and Model X have fallen by around $5,000, MarketWatch has noted, as the electric-vehicle maker tries to stimulate demand. The company is also selling a more affordable Model Y SUV.
“Tesla concerns on pricing and a race to the bottom persisted as general sentiment on the stock is souring given recent price cuts after a brief period of stabilization,” TD Cowen analyst Jeffrey Osborne said in a note.
Tesla will report as the Biden administration tries to take a harder stance on auto pollution. The EPA recently proposed new emissions restrictions intended to hasten electric-vehicle usage, by incrementally curtailing tailpipe emissions each year for vehicle model years 2027 through 2032. However, some analysts said the measures would push prices higher for regular and electric vehicles.
The first-quarter earnings reporting season will pick up steam in the week ahead, with 60 S&P 500 companies, including six from the Dow Jones Industrial Average
DJIA,
reporting quarterly results, according to FactSet. Those companies will report as Wall Street analysts remain pessimistic about results for the quarter, and the prospect of another so-called “earnings recession” in which profits contract for at least two straight quarters.
“As of today, the S&P 500 is reporting a year-over-year decline in earnings of -6.5% for the first quarter, which would mark the largest earnings decline reported by the index since Q2 2020 (-31.6%) and the second straight quarter the index has reported a decline in earnings,” FactSet Senior Earnings Analyst John Butters said in a report on Friday.
After investors cheered JPMorgan Chase & Co.’s
JPM,
quarterly results on Friday — despite Silicon Valley Bank’s collapse and broader recession anxieties — other banking giants, like Bank of America Corp.
BAC,
Goldman Sachs Group Inc.
GS,
and Morgan Stanley
MS,
report during the week ahead. So does Johnson & Johnson
JNJ,
after it agreed to pay as much as $8.9 billion to settle scores of lawsuits alleging that its talc baby powder was linked to cancer. Charles Schwab Corp.
SCHW,
United Airlines Holdings Inc.
UAL,
and AT&T Inc.
T,
also report during the week.
Supply-chain update, anyone? Shipping rates have fallen. Labor tensions have risen. Railroad safety is under scrutiny. Elsewhere in that industry, hedge funders are applying pressure. Memories of 2021’s supply-chain meltdown are still fresh after it led to shipping delays and put the low-work labor that fuels much of that distribution network under a spotlight.
At any rate, trucking and logistics company J.B. Hunt Transportation Services Inc.
JBHT,
reports on Monday, while railroad giant CSX Corp.
CSX,
reports on Thursday. Both companies report after a drop-off in demand for goods last year, as inflation remolded consumers’ buying habits. They also report after rail workers threatened to strike over what they said were inadequate sick-time policies. More recently, a group representing the terminal operators at the ports of Los Angeles and Long Beach alleged that dockworkers were disrupting daily operations at the two massive import gateways, as the workers’ union and the terminal operators try to work out a contract. The quarterly financial reports and earnings calls will offer a look at what the year ahead has in store.
Credit-card transactions, charge-offs: Credit-card providers Discover Financial Services
DFS,
and American Express Co.
AXP,
report Wednesday and Thursday, respectively. The companies will report after Discover took a hit in January after it forecast credit-card net charge-offs — a measure of debt a company doesn’t think it’ll get back — that were worse than what Wall Street expected. Similar to the results from the big banks, the results from American Express and Discover will tells us how much consumers are still spending, and whether more are falling behind on their bills, as recession anxieties prevail.
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Here’s a thought for investors: If the Federal Reserve raises interest rates to 5% or more would that wreck the economy and stock prices ?
The U.S. stock market has been rallying to start 2023, clawing back a big chunk of the painful losses from a year ago. The bullish tone has been linked to a view that the Federal Reserve will need to cut interest rates this year to prevent a recession, reversing one of its quickest rate-increasing campaigns in history.
Doomsday investors, including hedge-fund billionaire Paul Singer, have been warning against that outcome. Singer thinks a credit crunch and deep recession may be necessary to purge dangerous levels of froth in markets after an era of near-zero interest rates.
Another scenario might be that little changes: Credit markets could tolerate interest rates that prevailed before 2008. The Fed’s policy rate could increase a bit from its current 4.75%-5% range, and stay there for a while.
“A 5% interest rate is not going to break the market,” said Ben Snider, managing director, and U.S. portfolio strategist at Goldman Sachs Asset Management, in a phone interview with MarketWatch.
Snider pointed to many highly rated companies which, like the majority of U.S. homeowners, refinanced old debt during the pandemic, cutting their borrowing costs to near record lows. “They are continuing to enjoy the low rate environment,” he said.
“Our view is, yes, the Fed can hold rates here,” Snider said. “The economy can continue to grow.”
The Fed and other global central banks have been dramatically increasing interest rates in the aftermath of the pandemic to fight inflation caused by supply chain disruptions, worker shortages and government spending policies.
Fed Governor Christopher Waller on Friday warned that interest rates might need to increase even more than markets currently anticipate to restrain the rise in the cost of living, reflected recently in the March consumer-price index at a 5% yearly rate, down to the central bank’s 2% annual target.
The sudden rise in interest rates led to bruising losses in stock and bond portfolios in 2022. Higher rates also played a role in last month’s collapse of Silicon Valley Bank after it sold “safe,” but rate-sensitive securities at a steep loss. That sparked concerns about risks in the U.S. banking system and fears of a potential credit crunch.
“Rates are certainly higher than they were a year ago, and higher than the last decade,” said David Del Vecchio, co-head of PGIM Fixed Income’s U.S. investment grade corporate bond team. “But if you look over longer periods of time, they are not that high.”
When investors buy corporate bonds they tend to focus on what could go wrong to prevent a full return of their investment, plus interest. To that end, Del Vecchio’s team sees corporate borrowing costs staying higher for longer, inflation remaining above target, but also hopeful signs that many highly rated companies would be starting off from a strong position if a recession still unfolds in the near future.
“Profit margins have been coming down (see chart), but they are coming off peak levels,” Del Vecchio said. “So they are still very, very strong and trending lower. Probably that continues to trend lower this quarter.”
Refinitiv, I/B/E/S
It isn’t hard to come up with reasons why stocks could still tank in 2023, painful layoffs might emerge, or trouble with a wall of maturing commercial real estate debt could throw the economy into a tailspin.
Snider’s team at Goldman Sachs Asset Management expects the S&P 500 index
SPX,
to end the year around 4,000, or roughly flat to it’s closing level on Friday of 4,137. “I wouldn’t call it bullish,” he said. “But it isn’t nearly as bad as many investors expect.”
“Some highly levered companies that have debt maturities in the near future will struggle and may even struggle to keep the lights on,” said Austin Graff, chief investment officer at Opal Capital.
Still, the economy isn’t likely to “enter a recession with a bang,” he said. “It will likely be a slow slide into a recession as companies tighten their belts and reduce spending, which will have a ripple effect across the economy.”
However, Graff also sees the benefit of higher rates at big banks that have better managed interest rate risks in their securities holdings. “Banks can be very profitable in the current rate environment,” he said, pointing to large banks that typically offer 0.25%-1% on customer deposits, but now can lend out money at rates around 4%-5% and higher.
“The spread the banks are earning in the current interest rate market is staggering,” he said, highlighting JP Morgan Chase & Co.
JPM,
providing guidance that included an estimated $81 billion net interest income for this year, up about $7 billion from last year.
Del Vecchio at PGIM said his team is still anticipating a relatively short and shallow recession, if one unfolds at all. “You can have a situation where it’s not a synchronized recession,” he said, adding that a downturn can “roll through” different parts of the economy instead of everywhere at once.
The U.S. housing market saw a sharp slowdown in the past year as mortgage rates jumped, but lately has been flashing positive signs while “travel, lodging and leisure all are still doing well,” he said.
U.S. stocks closed lower Friday, but booked a string of weekly gains. The S&P 500 index gained 0.8% over the past five days, the Dow Jones Industrial Average
DJIA,
advanced 1.2% and the Nasdaq Composite Index
COMP,
closed up 0.3% for the week, according to FactSet.
Investors will hear from more Fed speakers next week ahead of the central bank’s next policy meeting in early May. U.S. economic data releases will include housing-related data on Monday, Tuesday and Thursday, while the Fed’s Beige Book is due Wednesday.
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The outlook for
Netflix
‘s first-quarter earnings report, due after the close of trading on Tuesday, is a little muddled.
The company is still the clear leader in the streaming video market. But it is struggling to show meaningful growth given a weak economy, increasingly aggressive competition, and an apparently saturated U.S. market for streaming.
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The contest to become the Republican Party’s 2024 presidential nominee is heating up, with Nikki Haley, a former U.S. ambassador to the United Nations, and longshot candidate Vivek Ramaswamy each announcing runs since the beginning of the year, and former Arkansas Gov. Asa Hutchinson joining the fray in a Sunday-show appearance on April 2.
Another notable move has been the rollout of a campaign-style book by Florida Gov. Ron DeSantis, in which he argues that his approach to managing his state can provide a model for the rest of the country.
And former President Donald Trump appears to be getting a political lift from a Manhattan district attorney’s case against him, though some analysts don’t see the boost lasting.
Related: Trump’s presidential campaign raises $7 million after his indictment
So who are all the GOP politicians in the mix for 2024?
Below is MarketWatch’s list of the potential Republican presidential contenders and the status of their candidacies.
Meanwhile, President Joe Biden appears poised to announce this spring that he’ll seek re-election in 2024. Democrats seem to be closing ranks behind Biden, although author and activist Marianne Williamson said she’s seeking the party’s nomination again and vigorously defended her decision to challenge Biden in an extensive question-and-answer session with MarketWatch. Anti-vaccine activist Robert F. Kennedy Jr. also is mounting a longshot challenge to Biden, as he filed a statement of candidacy in early April.
Biden gave a fresh hint on Monday about his re-election bid at the annual White House Easter Egg Roll, saying in an interview with Al Roker of NBC’s “Today” show that he aims to take part in “at least three or four more Easter egg rolls. Maybe five. Maybe six.”
“I’m planning on running, Al, but we’re not prepared to announce it yet,” the president said.
Related: Biden criticizes DeSantis over his Medicaid stance while in Florida
And see: 5 things to know about Nikki Haley, the Republican candidate challenging Trump in 2024
Plus: Ron DeSantis skips CPAC, says Republicans act like ‘potted plants’ when facing ‘woke ideology’
| Name | Title | Reports or statements on candidacy |
| Greg Abbott | Texas governor | Abbott strategist said governor “will take a look at the situation” after state’s legislative session ends in late May |
| John Bolton | Former national-security adviser, former ambassador to United Nations | He has said he may run for president in 2024 |
| Liz Cheney | Former Wyo. congresswoman | She has said she hasn’t made a decision about a 2024 run |
| Chris Christie | Former N.J. governor | He said in late March that he’ll make decision on run in next 60 days |
| Ted Cruz | U.S. senator from Texas | He said he won’t seek the GOP presidential nomination, instead aiming for re-election in Senate |
| Aaron Day | Known in part for running against former N.H. GOP Sen. Kelly Ayotte | He announced his candidacy in February |
| Ron DeSantis | Florida governor | He hasn’t made a formal announcement, but his team has rolled out a book and talked to prospective campaign staff |
| Nikki Haley | Former ambassador to United Nations, former S.C. governor | She announced her run in February |
| Larry Hogan | Former Md. governor | He said he won’t run |
| Asa Hutchinson | Former Ark. governor | Having promised a decision in April, he said on April 2 that he’s running. |
| Perry Johnson | Businessman and former Mich. gubernatorial candidate | He announced his candidacy in early March |
| Brian Kemp | Ga. governor | He hasn’t ruled out running, but has said he’s “not focused on 2024“ |
| Steve Laffey | Former Cranston, R.I., mayor | He announced his candidacy in February |
| Kristi Noem | S.D. governor | She has said she hasn’t ruled out a presidential run |
| Mike Pence | Former vice president | He has beefed up his staff but said he doesn’t feel any rush to make an announcement |
| Mike Pompeo | Former CIA director and secretary of state | Announced on April 14 on Twitter that he has decided against a run |
| Vivek Ramaswamy | Entrepreneur and author known for criticizing ESG investing as “wokeism” | He announced his candidacy in February |
| Kim Reynolds | Iowa governor | A former RNC chair has said she should be considered for 2024 |
| Mike Rogers | Former Mich. congressman | He suggested an announcement on a run may come in “late spring, early summer“ |
| Tim Scott | U.S. senator for S.C. | He’s making trips to Iowa and New Hampshire, key primary states |
| Francis Suarez | Mayor of Miami, Fla. | He has said he’s considering a run |
| Chris Sununu | N.H. governor | He has said he’s considering a run |
| Donald Trump | Former president | He announced in November that he’s running |
| Glenn Youngkin | Va. governor | He hasn’t ruled out running, but said he’s focused on Virginia |
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It feels as if every day brings new price changes from
Tesla
Investors are getting used to them. The bigger deal now is the electric-vehicle company’s first-quarter gross profit margins are due to be reported in just a few days.
Reuters reported Friday that Tesla cut prices for its electric vehicles in Europe and some other countries. The price of a Model 3 and Y in Germany were reduced about 5% and 10%, respectively.
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Democrats largely have closed ranks behind President Joe Biden ahead of next year’s election, but he isn’t completely without challengers for the party’s nomination.
Author and activist Marianne Williamson has thrown her hat in the ring, pursuing a longshot bid that comes after her 2020 presidential campaign fizzled out before the Iowa caucuses.
Why isn’t she falling in line and supporting her party’s incumbent president? What’s her pitch to people who think she’s not a serious candidate? What are her top economic proposals?
Williamson, 70, tackled those questions and more in a phone interview earlier this week.
Our Q&A with the Democratic presidential hopeful has been edited for clarity and length.
MarketWatch: In a nutshell, could you explain why you’re running for president?
Williamson: I’m running for president because I believe that some things need to be said and some changes need to be made, in order to repair some serious damage that’s been done to our democracy, to our country, to our people and to our environment over the last 50 years.
MarketWatch: You’ve talked about running to address “systemic economic injustices endured by millions of Americans” because of the “undue influence of corporate money on our political system.” What do you see as the top examples of that?
Williamson: During the 1970s, the average American worker had decent benefits, could afford a home, could afford a yearly vacation, could afford a car and could afford to send their child to college. In the last 48 years, there has been a $50 trillion transfer of wealth from the bottom 90% to the top 1% of Americans. That transfer has decimated our middle class. We are now at a point where if you are among 20% of Americans, then the economy’s doing pretty well for you. But, unfortunately, that 20% is surrounded by a vast sea of economic despair. We have 60,000 people in the United States who die every year because they can’t afford healthcare
XLV,
one in four Americans living with a medical debt, and 18 million Americans unable to fill the prescriptions that their doctors give to them.
If you are in the club in America, if you are making it in America — and I have sold some books, so I understand the high side of the free market and have benefited, and I’m grateful for that — but no conscious persons wants to feel that they create wealth at the expense of other people having a chance. That is not American. It’s not what the American Dream is supposed to be.
I’m not trying to whitewash and romanticize American capitalism before this era. I’m not saying we were ever perfect, but it does seem to me that when I was growing up, the social consensus is that we were supposed to try. We knew that the higher good was that there would be this balance between individual liberty, including economic liberty, and a concern for the common good. But today concern for the common good has become almost derided as some quaint notion, and that we shouldn’t really give much more than lip service to it. And that’s a lot of human suffering that occurs because of that change in the social contract.
MarketWatch: Here’s kind of a two-part question. What would be your top economic priorities, and how in particular would you address high inflation and the recent banking
KBE,
crisis?
Williamson: I’d like to see universal healthcare. I want to see tuition-free college at state colleges and universities, which is what we had in this country until the 1960s. There should be free childcare. There should be paid family leave. There should be guaranteed sick pay and a livable wage. And I think Americans are waking up to the fact that those things that I just mentioned are considered moderate issues in every other advanced democracy. They should not be considered left-wing fringe issues. They are granted to the citizens of every other advanced democracy.
That was your first question. The second has to do with high inflation. A lot of that high inflation has to do with price gouging by huge corporations, whether it has to do with food companies, transportation companies and so forth. All of those CEOs should testify before Congress and talk about the ways that they have — for the sake of their own profits — gouged the American people, particularly at such a time as this. And this is what happens when we normalize such a lack of conscience and such a lack of ethics within our system.
In terms of what happened with the bank in Silicon Valley
SIVBQ,
which is what your third question was, right? I think the depositors should be made whole, but the bank executives who were taking multimillion-dollar bonuses for themselves, both before and right after the crash, they certainly should not get those bonuses. And also it’s concerning that some of the tech investors that would benefit the most from those deposits were the ones who caused the run on the bank. I don’t think that they should receive the benefit of what happens when those deposits are made whole. But the average depositor absolutely should be made whole in such cases.
MarketWatch: You mentioned free tuition and child care. Where would the funding for that come from?
Williamson: The funding should come, first of all, from taxation. The 2017 tax cut in this country was a $2 trillion tax cut, and 83 cents of every dollar went to the highest-earning corporations and individuals. Now that tax cut also included the middle-class tax cut, and the middle-class tax cut was good.
That tax cut for the highest earners should be repealed, but the middle-class tax cut should be put back in immediately.
Secondly, we should stop all the corporate subsidies. Why are we giving subsidies to these companies that are already making multibillions of dollars in profit and often then price gouging the American people?
Third, I believe there should be a wealth tax. If somebody has $50 million, I don’t have any problem with their paying an extra 2% tax. And if they have $1 billion, let them pay another 1%. Somebody with a $50 million portfolio, much less $1 billion in assets, would not even feel that change, but the changes in people’s lives that would be created by those shifts would be huge.
MarketWatch: Your campaign often gets described as a real longshot bid. Why are you running when so many people say you have a low chance for success?
Williamson: Well, certainly Donald Trump was considered a longshot. For that matter, when he began Barack Obama was considered a longshot. Surely we remember when Hillary Clinton was considered a shoo-in.
MarketWatch: A recent Monmouth University poll of Democratic voters found 11% had a favorable view of you, 16% had an unfavorable view, 21% had no opinion, and 52% had not heard of you. How do you win over those voters who have an unfavorable view, and how do you reach the folks who haven’t heard of you?
Williamson: Well, there was a poll that came out last week that put me at 10%, including 18% with independents and 21% with people under 30.
It’s very difficult for someone like myself to get the message out when you have such institutional resistance to my even being in the conversation, and that is displayed in various ways. But there is independent media today. God knows there’s TikTok, where my information seems to be doing quite well.
This early, no candidate should be allowing the polls to determine their path forward. I didn’t go into this expecting the approval of institutional forces. And I, as a matter of fact, expected the kind of resistance that I’ve received, but that doesn’t matter. What matters is that a certain agenda be placed before the American people, and I am providing that option — the option of that alternative agenda.
I believe that agenda is the way for the Democrats to win in 2024. But even more importantly, I think it’s the agenda that will lead to the repair of this country.
MarketWatch: You mentioned TikTok, and that has been a hot topic in Washington, D.C., in recent weeks. Do you have a view on the Democratic and Republican proposals to ban TikTok in the U.S.?
Williamson: I think the United States government does need to be concerned with tech
XLK,
surveillance, but I wish they were as concerned when it comes to American-run companies as when it comes to Chinese. It’s a serious issue, it’s a valid issue — the whole issue of surveillance. But it’s a gnarly issue as well, and rushing to shut something down, which is so obviously a platform depended on by millions and millions of Americans for information sharing, is never something that should be done lightly.
MarketWatch: Some Americans may know you only for your spiritual work, and these folks may not think you’re a serious presidential candidate. The White House press secretary indicated she’s in that camp. What’s your message to win those folks over?
Williamson: First of all, I don’t think of my campaign as quote-unquote trying to win anyone over. There’s something that I read years ago that has always guided my work: “If there’s something you genuinely need to say, there’s someone out there who genuinely needs to hear it.” I am speaking to people who I know agree with me. I wouldn’t be doing this if I weren’t aware that millions of people agree with me.
I think it’s very sad that the president would allow a presidential press podium to be used to mock a political opponent, and I think that many people were and are offended by that. This is a democracy. We should have as many voices out there as possible. We should have as many people running in an election as feel moved. Nobody has a monopoly on good ideas. There are ideas on the left and ideas on the right. There are ideas all across the spectrum, and this is a point in American history where we as Americans should hear them all.
MarketWatch: What do you think are some of the main things that President Biden has gotten right, and in what areas has he gone wrong?
Williamson: Well, the first thing he did right was he defeated Donald Trump. The president has taken an incremental approach to America’s problems, and I believe that he does wish to alleviate the suffering of many people whose lives are affected by some deeply unjust systems. But I don’t think that the alleviation of stress is enough right now. We need fundamental economic reform.
We also need a serious answer to climate change, and the president’s approval of the Willow project is not that. The president has said that he recognizes that climate change is an existential crisis, and yet he has given more oil
CL00,
permits than even Donald Trump did, and he has approved the Willow project.
He also said that there will be a raise in the minimum wage. He did that for federal workers, but when it came to the Senate parliamentarian saying that he couldn’t put that raise in a bill, then he conveniently stopped right there and simply acquiesced to what the parliamentarian had said.
The Democratic House and Senate — they did cut child poverty in half with the child tax credit, but then, when that expired six months later, they didn’t bother to permanentize it.
These are the kinds of half-measures and incremental measures which are not enough to change the fundamental economic patterns in this country that lead to so much chronic economic anxiety and despair.
AFP via Getty Images
MarketWatch: One thing that comes up often with President Biden is his age, which is 80, while you’re 70. Do you think his age should be a concern, or is it ageism to bring it up?
Williamson: I think the individual has to consider this themselves. I have a problem, of course, contributing to the conversation because of the issue of ageism. But on the other hand, everybody can see for themselves what they can see for themselves.
I can only say if I were 80, I wouldn’t be running. But you know, I will not take potshots at the president, and I think that veers into potshots.
MarketWatch: Let’s talk about taking on Donald Trump, Ron DeSantis or whomever the Republican nominee ends up being. Why do you think you’re the Democrat who could end up beating one of them?
Williamson: Republicans are going to throw some big lies at the Democrats in 2024, and the only way that we’re going to defeat them, in my opinion, is to tell some big truths. Franklin Roosevelt said we would not have to worry about a fascist takeover in this country as long as democracy delivered on its promises. Democracy has not delivered on its promises. The only way to beat Donald Trump or Ron DeSantis in 2024 is to propose an agenda in which democracy once again delivers on its promises to the majority of the American people. And that would mean the issues I mentioned before: universal healthcare, tuition-free college, free child care, a guaranteed livable wage and paid family leave. Those are given to the citizens in every other advanced democracy, and there is no good reason whatsoever why they are not delivered to the average citizen in the United States.
MarketWatch: There are Democrats who could be challenging President Biden for the party’s 2024 nomination, but they aren’t and instead they’re supporting him. Why aren’t there more efforts in the party to get people to run for president?
Williamson: Well, you’d have to ask them why they’re not running. But there’s clearly a trope that the field should clear, and everybody should simply get in line with the opinion of the Democratic establishment that Biden is the man because they have decided so. I don’t see it that way. I believe the Democratic primary voters — and independent voters and anyone else, if it’s an open primary — they should decide who the Democratic candidate is. To me, that’s what democracy is. That’s what elections are about.
MarketWatch: The Democratic Party is not expected to hold presidential primary debates for 2024. What can you do to change that and get some time on a debate stage?
Williamson: Well, I hope to have a successful campaign. I hope to have high poll numbers. I hope to have a lot of people in those primary states yelling foul. It’s a government of the people, by the people, for the people. The American people should hear what their options are, and that’s what a debate would be. If enough people realize that and believe it and make laws about it, then that is what will happen.
I think sometimes there’s a kind of learned powerlessness on the part of the American people today. We forget the radicalism of the American experiment, which is that the governance of this country is supposed to be in our hands. But the American people have been trained to expect too little and almost trained to give up the power of independent thought. I hope that my campaign and other things that occur in this campaign season will awaken people, and I think a certain kind of awakening is happening already.
MarketWatch: We’re a financially focused publication, so here’s a question along those lines. I looked at your financial disclosure from your 2020 presidential run. It showed some investments in big public companies like Apple
AAPL,
and Mastercard
MA,
…
Williamson: Wait, what are you talking about?
MarketWatch: That’s from your 2019 executive-branch personnel public financial disclosure report. It shows investments in various stocks and funds. The question — for our readers who are investors or people saving for retirement — is could you describe your own approach to investing and preparing for retirement?
Williamson: Socially responsible investing, and that’s why I said, “Whoa, what?” Because I believe in investing in socially responsible companies.
MarketWatch: One last question: What else would you like people to know?
Williamson: America has some serious problems, but we have infinite potential to solve those problems. We need to revisit our first principles, as John Adams said, and find that place in our hearts where, as Americans, as adults in this generation, we recognize that this profound idea of American democracy is put in our hands for safekeeping. And that doesn’t just give us rights; it gives us responsibilities. The political system in the United States speaks to us too often like we’re children, like we’re seventh-graders. Our public dialogue is too often on this kind of seventh-grade level. This is not a time to be an immature thinker, and it’s not a time to get into mean-spiritedness or cynicism either. If we allow ourselves to rise to the occasion, no matter what our politics are, we’re going to repair what has been broken, and we are going to initiate a new beginning. I think that’s possible. Other generations have done it, and we can do it, too.
MarketWatch: Thank you for being available to chat.
Williamson: Thank you very, very much.
Now read: Here are the Republicans running for president — or seen as potential 2024 candidates
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“‘It’s not like a credit crunch.’”
While it will be more expensive for banks to deploy capital this year, talk of a possible credit crunch tied to higher interest rates remains overblown, JPMorgan Chase & Co. CEO Jamie Dimon said Friday.
Although Dimon acknowledged that more challenging lending conditions are already being seen in the real-estate sector, he said bank credit overall will continue to flow despite concerns about a credit crunch voiced by Chicago Fed President Austan Goolsbee on Friday.
“Obviously, there’s going to be a little bit of tightening, and most of that will be around certain real-estate things,” Dimon said, according to a transcript of JPMorgan’s first-quarter earnings call with analysts. “You’ve heard it from real-estate investors already, so I just look at that as a kind of thumb on the scale. It just [means] the fast conditions will be a little bit tighter, [which] increases the odds of a recession. That’s what that is. It’s not like a credit crunch.”
In real estate, banks have been hit both by a drop in mortgage demand due to higher interest rates as well as a looming wall of debt from office properties affected by slack demand for space. For its part, JPMorgan said Friday that its office-sector exposure is less than 10% of its portfolio and is focused in dense urban markets.
Also read: JPMorgan Chase stock moves positive for the year after it blasts past earnings and revenue estimates
On the call, analyst John McDonald of Autonomous Research asked, “There’s a narrative out there that the industry could see a credit crunch. Banks are going to stop lending, and even [Federal Reserve Chair] Jay Powell mentioned that as a risk.”
Dimon responded: “Yeah, I wouldn’t use the word ‘credit crunch’ if I were you.”
Dimon was also asked about the regulatory landscape for banks after the collapse of Silicon Valley Bank and Signature Bank in March.
“Look, we’re hoping that everyone just takes a deep breath and looks at what happened and the breadth and depth of regulations already in place,” Dimon said. “Obviously, when something happens like this you should adjust, think about it.”
Down the road, Dimon said, he could see potential limitations on held-to-maturity assets and perhaps more total loss-absorbing capacity for certain banks, as well as more scrutiny around interest-rate exposure.
“It doesn’t have to be a revamp of the whole system — just recalibrating things the right way,” Dimon said. “The outcome you should want is very strong community and regional banks. And certain [drastic] actions … could actually make them weaker. So that’s all it is.”
JPMorgan is also expecting to absorb higher capital requirements under the so-called Basel IV international banking measures, as well as an assessment to banks of the costs of the collapse of Silicon Valley Bank and Signature Bank by the Federal Deposit Insurance Corp., he said.
Also read: JPMorgan Chase CEO Jamie Dimon says looser rules did not cause recent bank failures
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U.S. stocks closed lower Friday as investors digested strong big bank earnings, weak retail sales, and hawkish comments from a Federal Reserve official, but all three major benchmarks booked weekly gains.
For the week, Dow rose 1.2%, the S&P 500 gained 0.8% and the technology-heavy Nasdaq Composite edged up 0.3%. The Dow booked a fourth straight week of gains in its longest win streak since October, according to Dow Jones Market Data.
U.S. stocks ended modestly lower Friday, as investors digested retail sales data showing spending deteriorated again last month as well as Federal Reserve Governor Christopher Waller’s remarks that the Fed needs to keep hiking interest rates because inflation is still much too high.
“Because financial conditions have not significantly tightened, the labor market continues to be strong and quite tight, and inflation is far above target, so monetary policy needs to be tightened further,” Waller said Friday during a speech in San Antonio, Texas.
Waller’s comments were “pretty hawkish,” said Jackie Rogowicz, an investment analyst at Penn Mutual Asset Management, in a phone interview. She said she’s expecting the Fed to raise its benchmark interest rate by a quarter percentage point in May, and at least at this stage, sees some potential for another rate hike in June.
Inflation data released earlier in the week showed a larger-than-expected slowdown in wholesale prices, while so-called core consumer-price inflation remained stubbornly high as it ticked higher to a rate of 5.6% year-over-year.
Read: This ETF designed to protect against inflation is attracting inflows as price pressures persist
Marvin Loh, senior global strategist at State Street, said Waller’s comments were a departure from the more dovish tone evinced by other senior Fed officials since the Fed’s March policy meeting.
“This is one of the more hawkish comments over the past week. A lot of the Fed speak has leaned toward ‘one and done’ in terms of rate hikes,” Loh said during a phone call with MarketWatch.
Investors also digested commentary Friday from Chicago Fed President Austan Goolsbee, who said the U.S. economy could slip into recession. His remarks echoed Fed staff concerns expressed in the central bank’s March meeting minutes released on Wednesday.
Meanwhile, fresh economic data on Friday showed sales at retailers, a critical component of consumer spending, dropped 1% in March, declining for the fourth time in the past five months. The decline was sharper than the contraction that economists polled by the Wall Street Journal had anticipated.
A popular consumer-sentiment survey released Friday showed respondents’ outlook has risen slightly to 63.5 in April, rebounding from a four-month low, but also reflected slightly higher anxiety about inflation.
While consumer spending hasn’t fallen off a cliff, it has continued to weaken from the elevated levels seen in the aftermath of the COVID-19 pandemic, economists said.
“The cumulative effect of historically high inflation, rising interest rates, and reduced access to credit is already taking a toll on consumers’ ability and willingness to spend,” said Lydia Boussour, senior economist at EY Parthenon, in emailed commentary. “And the full effect of recent banking-sector turmoil and the associated tightening in credit conditions has yet to be felt.”
The first bank earnings reports since regional banks including Silicon Valley Bank failed last month offered some optimism though. Shares of JPMorgan Chase & Co.
JPM,
the U.S.’s biggest bank, jumped after it reported earnings and revenue well above forecasts.
JPMorgan CEO Jamie Dimon said the U.S. economy looked “generally healthy,” but warned the coast was not completely clear. “The storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks,” he said.
Need to Know: Bank earnings season is here. This popular value fund just bought Kroger and a regional lender.
Wells Fargo & Co.
WFC,
and Citigroup Inc.
C,
also beat forecasts for profits and revenue, while Pittsburgh lender PNC Financial Services Group Inc.
PNC,
reported higher earnings and deposits. BlackRock Inc.
BLK,
meanwhile, reported a decline in profit as assets under management fell 5%, although its shares ended higher.
The “big banks are well-capitalized,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial in a phone interview. “They benefited from some deposit inflows in March.”
Investors have been anxious to see how the banks would perform as analysts have been cutting earnings estimates for both large and regional banks in the wake of the crisis.
“So far it seems the numbers are coming in pretty good,” said State Street’s Loh. However, “we have to wait for more smaller lenders to start reporting” to get a better picture of how banks are doing in the wake of last month’s turmoil.
—Barbara Kollmeyer contributed to this report.
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There is currently no dispute over who wears the crown of world’s wealthiest person. It isn’t Tesla Chief Executive Elon Musk.
The net worth of Bernard Arnault, the founder and chairman and chief executive officer of LVMH Moet-Hennessy Louis Vuitton SE
MC,
stood at $210 billion as of Thursday, according to the Bloomberg Billionaire Index. That makes him the world’s richest person by that marker, with an increasingly comfortable lead over Tesla’s
TSLA,
Musk, who also leads SpaceX and Twitter and whose wealth stands at $180 billion. At times the two have been in a neck-and-neck race for that top spot.
LVMH shares closed at a record €883 on Thursday, helping lift the French CAC-40
PX1,
to an all-time high. That followed forecast-beating first-quarter sales from the luxury giant, thanks to returning China shoppers as COVID-19 restrictions eased, and rebounding international travel that drove duty-free sales. Up 7% so far this week, LVMH shares rose another 0.5% on Friday to €888.70.
The stock surge padded Arnault’s fortune by $11.6 billion on Thursday, the second-biggest single-day gain ever for him and a fresh record fortune, according to Bloomberg. Musk didn’t do badly.
He increased his wealth by $3.83 billion on Thursday, before Tesla and U.S. equities
SPX,
generally retreated a bit on Friday.
Read: Who is Bernard Arnault, the world’s richest person after surpassing Elon Musk?
LVMH owns jewelers Bulgari and Tiffany, alongside fashion houses Louis Vuitton and Dior. Results released late Wednesday showed the luxury standard-bearer beating expectations across every division, led by fashion and leather goods, the latter of which is significant, Berenberg analysts observed.
“As the most profitable division, this also bodes well for margin development,” said Berenberg analyst Graham Renwick, in a note to clients on Friday.
“This performance sets the standard for [first quarter] luxury reporting and gives encouragement on China’s recovery from pandemic disruption. Overall, we think these results continue to demonstrate LVMH’s strong momentum and best-in-class execution — again reaffirming its high quality and strong track record, which we believe investors are favoring in this uncertain macro environment,” said Renwick, who reiterated a buy rating on LVMH’s stock and lifted his share-price target to €960.
The luxury sector got another confidence boost on Friday, as Hermès International SCA
RMS,
revealed sales momentum in the first quarter, driven by a bump in tourism and new stores. The maker of the legendary Birkin handbag saw a 23% annual increase in first-quarter sales and backed “ambitious” organic revenue-growth targets.
Luxury stocks have seen an impressive rebound in 2023, after a weak 2022 — LVMH shares fell 6% in 2022 as travel restrictions in China and overall economic worries weighed on shoppers.
LVMH shares are up 30% so far in 2023, with Hermès up 36% and Christian Dior SE
CDI,
and Gucci owner Kering SA
KER,
up 26% and 21%, respectively.
As for Musk, his wealth is divided among his businesses. While Tesla accounts for $76 billion, Bloomberg estimates his share of SpaceX is worth $49 billion, and his share of Tesla is worth nearly $10 billion. He paid $44 billion for Twitter last year, after an attempt to wriggle out of the deal, and its current valuation is a matter of much speculation. Musk has fired thousands of employees and claimed this week that a return to profitability is now just around the corner.
Tesla is slated to report quarterly results next week, and some analysts aren’t optimistic due to persistent price cuts of its models.
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The numbers: Sales at retailers dropped 1% in March and declined for the fourth time in the past five months, reflecting a slowdown in the U.S. economy and a shift in consumer-spending habits.
Retail sales are a big part of consumer spending and offer clues about the strength of the economy. Sales had been forecast to drop 0.4%, based on a Wall Street Journal poll of economists.
Receipts shrank a smaller 0.3% if auto dealers and gas stations are excluded. Car and gasoline purchases exaggerate overall retail spending.
Key details: Sales in March posted the biggest decline in four months, largely because of lower auto and gasoline sales.
A late Easter holiday might have also shifted some sales into April that normally would have taken place in March, economists say.
Sales of new vehicles and parts, an up-and-down category, fell a sharp 1.6% last month.
Receipts at gas stations declined 5.5% largely because of lower oil prices. It’s a good thing when Americans spend less on gas, however.
Americans are likely to pay more for gas in April, though, after the oil cartel OPEC cut production and prices surged.
Even after setting aside car dealers and gas stations, retail sales were weak. Sales fell in most major categories, including home centers, electronics stores and department stores.
The only segment to stand out: Internet retailers. Sales jumped 1.9%.
One category economists watch closely is bars and restaurants, the only service sector in the retail report. Restaurant receipts rose a tepid 0.1% last month after a 1.6% decline in February.
Restaurant sales tend to rise when the economy is healthy and Americans feel secure in their jobs. Sales slack off during times of economic distress.
Big picture: Retail sales haven’t fallen off a cliff, but they also aren’t rising rapidly like they did in 2021 and early 2022.
How come? High inflation has eaten away at household incomes. Government pandemic stimulus has dried up. And rising interest rates have made purchases of big-ticket items such as cars more expensive.
Americans are still spending plenty to get out and about, however.
Americans have been spending more on services such as travel, hospitality and recreation and less on goods such as consumer electronics and home-office supplies. That’s a big reversal of what happened during the pandemic.
That’s helping to keep the economy afloat. If the economy continues to slow, however, spending on services could also go slack.
Looking ahead: “U.S. retail sales fell sharply in March as consumers became more cautious, adding to other recent data releases that have signaled a deterioration [in the economy],” said economist Katherine Judge of CIBC Economics.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
fell in Friday trades after Federal Reserve Gov. Chris Waller said interest rates need to keep rising to squelch high U.S. inflation.
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https://www.barrons.com/articles/stock-market-movers-6336691f
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