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Morning Commentary


By Charles Payne, CEO & Principal Analyst
5/16/2024 9:40 AM

Well, folks, this is your captain speaking – the market is now on autopilot.

The good news is good news.

The bad news is good news.

Mixed news is good news.

Just sit back and relax.

Only One Red Arrow

All major equity indices were higher yesterday, led by the NASDAQ Composite, which once again proved that new highs beget new highs.

Same Tide

All eleven sectors finished higher, with Tech (XLK) leading the way and “new tech” Utilities (XLU) coming on strong.  Real Estate (XLRE) is the most undervalued but could make a big move if the ten-year yield gets below 4.0%. 

Why Is Wall Street So Cautious?

Guests come on my show each successive day to pronounce their newfound bullishness and then offer a puny year-end target.

Many are conservative by nature and would never be confused with one of those bros on TikTok, but how can anyone be so excited about the market and only see 100 points higher through the remainder of the year?

The Relative Strength Index (RSI) indicators hint at near-term overbought, but the Rate of Change (ROC) remains positive, and volume is picking up.

There is a worry that is not reflected or spoken out loud among the talking heads or the so-called ‘Fear Index.’

Barely Greedy

A week ago, the Fear & Greed Index was stuck in ‘fear.’ While it's made a noticeable move, there should be a lot more ‘greed.’

You can ride this until the wheels come off, or you can make sure you are balanced enough not to take unnecessary damage when that happens. By most measures, the market is overbought (on a short-term basis). 

I say, get in there and make money, but don’t lose your head.

Today’s Session

If you like bad news, you will be thrilled.

Housing starts and permits came in below consensus, but it was the revision to March starts that caught my eye.  Initially reported at an annualized pace of 1.32 million, the new number is 1.287 million.

Message from Earnings

Walmart (WMT) beat consensus on revenue and earnings and offered better guidance, but things have slowed a lot since last year.

Transactions picked helped in part, but the average ticket was flat.

Deere (DE) crushed Wall Street consensus on revenue and earnings, but it offered subpar guidance.

To underscore why the earnings game is a racket – most financial media outlets will highlight the “beats,” but this was an ugly quarter.

The Philly Fed came down and missed consensus, but it is still positive. But prices are going one way and employment the other. In addition, the manufacturing component of the Industrial Production release this morning was -0.3% down from a revised +0.2, and the street was looking for +0.1%.

Today’s Federal Reserve Speakers

There’s a chance these speakers will move the needle; although, I think Bostic’s recent candor makes him most likely to help or dash hopes on rate cuts. 

That’s probably why he’s speaking at 3:50.

I still remain a bit caucus around the inflation numbers. Not out of the woods yet, based on what played the main roles in the overall CPI number reduction, x-energy and food.
Autos and the contraction in manufacturing, in my mind doesn't plant a rosy picture of how expectations of a fed-cut, is on the table.
It seems like the only ones attempting to cut back on perhaps extra spending, are the same ones in the lower to middle-class range trying to make ends meet and/or no longer able to offset making up for it on expanded credit debt.
What am I missing on how the market reacts to meeting estimated inflation numbers or a single .1% +/- swing here or there?

Terry Dowler on 5/16/2024 11:19:20 AM
“While it's made a noticeable move, there should be a lot more ‘greed.’” You and the analysts on your show keep saying the market is due for a correction, yet it never comes. We are told that once a year the market corrects up to 10%, yet it has not happened. Will there be no substantial corrections this year with all the turmoil and overbought conditions? People are cautious because we are told something is suppose to happen, yet it continues to be elusive. Just like the calls for a recession, a pullback seems to be right around the corner, but never happens. 🙃

Shaun on 5/16/2024 12:20:51 PM

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