Next week’s inflation data will be the first major test for markets after the Federal Reserve took a dovish stance on interest rates, at a time when bond yields also look to be stabilizing. Stocks have been churning higher lately after Fed Chair Jerome Powell indicated rate hikes are likely off the table , a position that investors expect is a bullish event for equities. A strong earnings season, as well as some cooler labor data , also have investors more optimistic in this year’s outlook. The Dow Jones Industrial Average on Friday registered its eighth straight day of gains, or its longest win streak going back to December, as well as its strongest week of 2024. At the same time, the 10-year Treasury yield has also pulled back from its highs, last at about 4.5% after recently topping 4.7%. .DJI 1M mountain Dow Jones Industrial Average But stocks face a key hurdle next week with the release of April’s consumer price index, which is due out Wednesday. A reading that comes in line with expectations could signal further upside ahead for stocks, while a significantly hotter print could spook investors who worry Fed policymakers will have to revisit their rate expectations. “The Fed has made it clear that they think that CPI is noisy, or just inflation is noisy,” said Mike Dickson, head of research and quantitative strategies at Horizon Investments, adding, “However, if inflation comes in materially higher, that’ll have a pretty big impact on what the Fed is going to do.” On Friday, all three major averages posted a winning week, with the 30-stock index gaining more than 2%. The S & P 500 and Nasdaq Composite were higher by more than 1%, each. The market reaction Inflation data has been crucially important this year for investors. Not only have investors tried to decipher the moves of a data-dependent Fed, but the inflation reports themselves have been less than encouraging as of late. Stocks fell from their highs of the year as investors accepted the likelihood that it may take the Fed longer to get back to its 2% inflation target. But investors are more hopeful about the upcoming slate of data, with UBS saying this week that it anticipates a “renewed fall in U.S. inflation in the coming months.” The April CPI set for release next week is anticipated to show a rise of 0.4% and 3.4% on a monthly and yearly basis, respectively, according to FactSet consensus estimates. That would be from increases of 0.4% and 3.5% the prior month, respectively. Core CPI is expected to show increases of 0.3% on the month and 3.7% on the year. That would be lower from respective increases of 0.4% and 3.8% in the prior month. However, some investors say they will pay special attention to how markets react to the CPI data, more than they will to the report itself. Of note, Horizon Investments’ Dickson said he will be keeping an eye on the ICE BofAML MOVE Index , a gauge that measures volatility in the fixed income market much like the CBOE Volatility Index, or VIX , tracks volatility in stocks. A reading above 100 in MOVE indicates more uncertainty in the interest rate outlook, and can be a bearish signal for equities. Recently, the MOVE index dipped back below 100 after last week’s central bank meeting. But Dickson is hoping the index continues to stay relatively benign after the CPI print comes in as expected, or even a bit higher, as that would indicate the market is counting on the Fed to remain dovish. “That would be a great outcome because it would say the market has confidence in what the Fed said last week,” Dickson said. “And so, that would be an important statistic to keep an eye on.” ‘Fear the cut, not the pause’ Getting past CPI could mean further upside ahead for stocks, especially as more investors come around to the idea that a Fed pause spells good news for equities . In fact, the S & P 500 has averaged a 6% gain during previous pauses over the past 50 years, according to Jeff Buchbinder, chief equity strategist at LPL Financial. But that advance actually jumps to 13.1% on average over the last six pauses going back to 1989, as gains have accelerated in more modern market history. “Long pauses are typically good for stocks, and the gains achieved since the Fed’s last hike in July 2023 are consistent with recent history,” Buchbinder wrote in a recent note. Elsewhere, Strategas’ Jason De Sena Trennert told investors in a note this week that they should “fear the cut, not the pause,” as Fed easing is “usually associated with economic and market stress.” Unless, of course, the central bank manages to achieve a soft landing. For investors hopeful the S & P 500 could end the year higher from here, even after an already stellar start, that could mean a buying opportunity. Growth investor Ken Mahoney, CEO at Mahoney Asset Management, anticipates investors can now buy back into the megacap tech stocks, except Tesla, after their recent declines. “Big-cap tech were tested in April,” Mahoney said. “But after earnings, I think … the balance sheets, the buybacks, the growth potential, the AI potential, and so on, all those headwinds are still intact.” If anything, the investor said the ability of stocks to make it over the recent wall of worry could mean the gains from here on out are more sustainable. “In April, the market, I think, got hit three different times, and held on very nicely,” Mahoney said. “So I think that’s another reason why there’s a sense of bullishness again.” Consumer earnings reports are also on deck next week. Home Depot reports Tuesday, as does Charles Schwab. Walmart and Deere report Thursday. Week ahead calendar All times ET. Monday May 13 No notable events Tuesday May 14 8:30 a.m. Producer Price Index (April) Earnings: Home Depot , Charles Schwab Wednesday May 15 8:30 a.m. Consumer Price Index (April) 8:30 a.m. Hourly Earnings (April) 8:30 a.m. Average Workweek (April) 8:30 a.m. Empire State index (May) 8:30 a.m. Retail Sales (April) 10 a.m. Business Inventories (March) 10 a.m. NAHB Housing Market Index (May) Earnings: Progressive , Cisco Thursday May 16 8:30 a.m. Building Permits preliminary (April) 8:30 a.m. Continuing Jobless Claims (05/04) 8:30 a.m. Export Price Index (April) 8:30 a.m. Housing Starts (April) 8:30 a.m. Import Price Index (April) 8:30 a.m. Initial Claims (05/11) 8:30 a.m. Philadelphia Fed Index (May) 9:15 a.m. Capacity Utilization (April) 9:15 a.m. Industrial Production (April) 9:15 a.m. Manufacturing Production (April) Earnings: Take-Two Interactive Software , Applied Materials , Walmart , Deere Friday May 17 10 a.m. Leading Indicators (April)
Tag: Take-Two Interactive Software Inc
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Hollywood writers strike declared over after boards approve new contract with studios
LOS ANGELES — Leaders of the screenwriters union declared their nearly five-month-old strike over Tuesday after board members approved a contract agreement with studios, bringing Hollywood at least partly back from a historic halt in production.
The governing boards of the eastern and western branches of the Writers Guild of America and their joint negotiating committee all voted to accept the deal, two days after the tentative agreement was reached with a coalition of Hollywood’s biggest studios, streaming services and production companies. After the vote they declared that the strike would be over and writers would be free to start on scripts at 12:01 a.m. Wednesday.
Late-night talk shows — the first to go dark when writers walked out on May 2 — are likely the first shows that will resume. Scripted shows will take longer to return, with actors still on strike and no negotiations yet on the horizon.
The writers still have to vote to ratify the contract themselves in early October, but lifting the strike will allow them to work during that process, the guild told members in an email.
After Tuesday’s board votes, the contracts were released for the first time to the writers, who had not yet been given any details on the deal, which their leaders called “exceptional.”
The three-year agreement includes significant wins in the main areas writers had fought for — compensation, length of employment, size of staffs and control of artificial intelligence — matching or nearly equaling what they had sought at the outset of the strike.
The union had sought minimum increases in pay and future residual earnings from shows of between 5% and 6%, depending on the position of the writer. The studios had wanted between 2% and 4%. The compromise deal was a raise of between 3.5% and 5%.
The guild also negotiated new residual payments based on the popularity of streaming shows, where writers will get bonuses for being a part of the most popular shows on Netflix
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Max and other services, a proposal studios initially rejected. Many writers on picket lines had complained that they weren’t properly paid for helping create heavily watched properties.The writers also got the requirement they sought that shows intended to run at least 13 episodes will have at least six writers on staff, with the numbers shifting based on the number of episodes. They did not get their desire for guaranteed staffs of six on shows that had not yet been ordered to series, settling instead for a guaranteed three.
Writers also got a guarantee that staffs on shows in initial development will be employed for at least 10 weeks, and that staffs on shows that go to air will be employed for three weeks per episode.
On artificial intelligence, the writers got the regulation and control of the emerging technology they had sought. Under the contract, raw, AI-generated storylines will not be regarded as “literary material” — a term in their contracts for scripts and other story forms a screenwriter produces. This means they won’t be competing with computers for screen credits. Nor will AI-generated stories be considered “source” material, their contractual language for the novels, video games or other works that writers may adapt into scripts.
Writers have the right under the deal to use AI in their process if the company they are working for agrees and other conditions are met. But companies cannot require a writer to use AI.
Still-striking members of the Screen Actors Guild-American Federation of Television and Radio Artists returned to the picket lines earlier Tuesday for the first time since the writers struck their tentative deal, and they were animated by a new spirit of optimism.
“For a hot second, I really thought that this was going to go on until next year,” said Marissa Cuevas, an actor who has appeared on the TV series “Kung Fu” and “The Big Bang Theory.” “Knowing that at least one of us has gotten a good deal gives a lot of hope that we will also get a good deal.”
Writers’ picket lines had been suspended, but they were encouraged to walk in solidarity with actors, and many were on the lines Tuesday, including “Mad Men” creator Matthew Weiner, who picketed alongside friend and “ER” actor Noah Wyle as he has throughout the strikes.
“We would never have had the leverage we had if SAG had not gone out,” Weiner said. “They were very brave to do it.”
The Alliance of Motion Picture and Television Producers, which represents the studios in negotiations, chose to deal with the longer-striking writers first, and leaders of SAG-AFTRA said they had received no overtures on resuming talks. That’s likely to change soon.
Actors also voted to authorize their leadership to potentially expand their walkout to include the lucrative videogame market, a step that could put new pressure on Hollywood studios to make a deal with the performers who provide voices and stunts for games.
The Screen Actors Guild-American Federation of Radio and Television Artists announced the move late Monday, saying that 98% of its members voted to go on strike against videogame companies if ongoing negotiations are not successful. The announcement came ahead of more talks planned for Tuesday.
Acting in videogames can include a variety of roles, from voice performances to motion capture work as well as stunts. Video game actors went on strike in 2016 in a work stoppage that lasted nearly a year.
Some of the same issues are at play in the video game negotiations as in the broader actors strike that has shut down Hollywood for months, including wages, safety measures and protections on the use of artificial intelligence. The companies involved include gaming giants Activision Blizzard
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Electronic Arts
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Epic Games, Take 2 Productions
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as well as Disney
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and Warner Bros.′
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videogame divisions.“It’s time for the videogame companies to stop playing games and get serious about reaching an agreement on this contract,” SAG-AFTRA President Fran Drescher said in a statement.
Audrey Cooling, a spokesperson for videogame producers, said they are “continuing to negotiate in good faith” and have reached tentative agreements on more than half of the proposals on the table.
So far this year, U.S. consumers have spent $34.9 billion on videogames, consoles and accessories, according to market research group Circana.
The threat of a videogame strike emerged as Hollywood writers were on the verge of getting back to work after months on the picket lines.
The alliance of studios, streaming services and producers has chosen to negotiate only with the writers so far, and has made no overtures yet toward restarting talks with SAG-AFTRA. That will presumably change soon.
SAG-AFTRA leaders have said they will look closely at the writers’ agreement, which includes many of the same issues, but it will not effect their demands.
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Cramer: This is my game plan for the week ahead after Friday’s surprise rally
US President Joe Biden, accompanied by Speaker of the House Kevin McCarthy, Republican of California, arrives for the annual Friends of Ireland luncheon on St. Patrick’s Day at the US Capitol in Washington, DC, on March 17, 2023.
Saul Loeb | AFP | Getty Images
What the heck really did happen on Friday, when the Dow jumped 700 points on a strong jobs reading? Why such a viscerally positive reaction to an employment number that was hotter than expected? Was it because wages didn’t spike? Was it all that perfect — a Goldilocks report?
Here’s my take on Friday’s rally. Going into the debt ceiling crisis, there was a belief that House Speaker Kevin McCarthy couldn’t control his own Republican party. Senate Majority Leader Charles Schumer wasn’t much better off with the Democrats. Both had lost control of their parties to the extremists. That meant the United States would default on its debt. It seemed pretty logical.
I truly believe the extremists never believed a default would mean more than a few weeks of setbacks and more brinkmanship. Who can blame them? President Joe Biden lamely floated that he could invoke the 14th Amendment to avoid this and any future debt limit fights; the amendment includes a clause that some legal scholars say overrides the statutory borrowing limit set by Congress.
No matter what, it was pretty clear that chaos was our destiny. But when McCarthy and Biden agreed to temporarily suspend the debt ceiling and cap some federal spending in order to prevent a default, we got a deal that was even less contentious than the 2011 bargain. (The coming together brought to mind the legendary coalition of President Ronald Reagan and House Speaker Tip O’Neil in the 1980s, memorialized in Chris Matthews’ “Tip and the Gipper: When Politics Worked.”)
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Stocks making the biggest moves after hours: Take-Two Interactive, Cisco Systems and more
Check out the companies making headlines in extended trading.
Take-Two Interactive Software — Shares jumped 8.1% Wednesday during after hours trading. The video game company reported $1.39 billion in adjusted revenue in the fiscal fourth quarter, topping analysts’ estimates of $1.34 billion, according to Refinitiv. Meanwhile, the company’s estimates for bookings in the first-quarter and full-year missed Wall Street’s expectations.
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Boot Barn Holdings — Shares of the cowboy boot company tumbled almost 16% after revenue fell short of analysts’ expectations for the fiscal fourth quarter. Boot Barn reported earnings of $1.51 per share, excluding items on revenue of $425.7 million. Meanwhile, analysts polled by FactSet had expected earnings of $1.44 per share and $441.2 million in revenue. The boot retailer’s full-year guidance also fell below analysts’ estimates.
Synopsys — The software company’s stock gained 1.9% Wednesday evening. Synopsys’ fiscal second-quarter earnings and revenue came above Wall Street’s expectations, according to FactSet. The company reported $1.4 billion in revenue, while analysts had estimated $1.38 billion. Synopsys also reported an earnings beat of $2.54 per share, excluding items, topping analysts’ estimates of $2.48 per share. Synopsys also raised its full-year guidance for earnings and revenue growth.
Cisco Systems — Shares dipped nearly 4% despite the company reporting an earnings and revenue beat for the fiscal third quarter. Cisco posted adjusted earnings of $1 per share and $14.57 billion in revenue. Analysts had estimated 97 cents earnings per share and $14.39 billion in revenue, according to Refinitiv.
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Global spending on mobile games falls 5% as high inflation causes market to cool
The Candy Crush Saga logo displayed on a phone screen.
Jakub Porzycki | NurPhoto via Getty Images
Spending on mobile games declined last year as consumers got more frugal with their purchasing decisions in response to rising inflation, according to a report from app analytics firm Data.ai.
Mobile game spending fell 5% globally in 2022, to $110 billion, Data.ai, which was formerly known as App Annie, said in its “State of Mobile” report Wednesday. The report also looks at the broader state of sectors like mobile ads, retail and social media apps.
Nevertheless, first-time installs of mobile titles rose 8% to a record 90 billion, with so-called “hypercasual” titles leading the gains.
“We are seeing this major theme emerge of people being more price sensitive and financially more conservative,” Lexi Sydow, head of insights at Data.ai, told CNBC, adding that the “biggest hit” to spending on apps was in gaming.
Faced with economic headwinds such as higher prices and borrowing costs, people are cutting back on discretionary purchases. Gaming especially has come under pressure.
Global sales of games and services, including console and PC games, were expected to contract 1.2% year-on-year to $188 billion in 2022, according to a July research note from market data firm Ampere Analysis.
In recent years, growth in mobile gaming has been the dominant story in the games industry, with major publishers making big bets on mobile game developers.
Early last year, Take-Two bought mobile gaming firm Zynga for $12.7 billion. In 2016, the maker of Candy Crush Saga, King, was purchased by Activision Blizzard for $5.9 billion. U.S. tech giant Microsoft, meanwhile, is banking on continued growth in mobile gaming with its proposed $69 billion takeover of Activision Blizzard.
That growth has been challenged lately by a number of macroeconomic headwinds, however, including a rise in the cost of living and higher interest rates.
In 2020, Microsoft and Sony launched their respective next-generation gaming consoles, giving mobile more competition.
Last year also saw a return to in-person activities and a normalization of travel rules from the height of the Covid-19 pandemic in 2020, when much of the world was hunkering down at home.
Non-gaming apps proved more resilient in 2022, according to Data.ai’s research, with the value of purchases in such apps rising 6% year-over-year to $58 billion. The growth was driven mainly by subscriptions and in-app purchases in streaming platforms, dating apps and short-form video services like TikTok.
Downloads of non-gaming apps grew 13% from the previous year, to 165 billion.
That did little to offset the slump in mobile game spending, however, with spending across app stores slipping 2% to $167 billion. The figures include installs on third-party Android marketplaces in China, where Google’s official Play app store is banned.
The market faces further headwinds in 2023, with recently introduced privacy measures from Apple expected to place greater strain on app makers.
Apple launched its App Tracking Transparency feature, which gives users a prompt asking whether they wish to be targeted by advertisers, in 2021.
Data.ai expects global app spend on games specifically to drop a further 3% to $107 billion this year as a result of decreased disposable income and changes to privacy.
Google plans to adopt privacy curbs similar to Apple’s that would limit tracking across Android apps.
“With limitations on your targeting capabilities from an advertiser standpoint, it becomes harder to attract the big whales who spend the most in games,” Sydow explained.
The changes spell trouble for Meta, owner of the Facebook and Instagram social media platforms. Meta Chief Financial Officer David Wehner warned previously that Apple’s ATT could decrease its 2022 sales by $10 billion. The company made most of its $117.9 billion revenue in 2021 from advertising sales.
Meta faces tense competition from rival firm TikTok. The Chinese-owned short video app last year reached $6 billion in overall lifetime spending and is only the second non-game app to achieve that milestone after Tinder, according to Data.ai.
Sydow said the effects of Apple’s privacy measures hadn’t yet appeared in the 2022 numbers — with total spend dropping across both iOS and Google Play — but was likely to have a much greater impact this year.
Despite the overall spending slowdown in 2022, there was still “more demand for mobile service than ever before,” Sydow added. First-time app downloads grew 11% to 255 billion, Data.ai said, while hours spent in apps climbed 9% to a record 4.1 trillion.
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What Cramer is watching Thursday — OPEC+ surprise, Corona beer maker beat, Costco’s sales
OPEC+'s 2 million barrels-per-day oil production cut to boost prices. U.S. delivers an angry rebuke.
