U.S. Treasury yields invert for the first time since 2006. Earlier on Monday, the yield on the 5-year Treasury note rose to 2.6361%, while the 30-year yield was down less than 1 basis point to 2.6004%. Historically, the yield curve has inverted prior to recessions, with investors selling out of short-dated government debt and buying into longer-dated bonds, indicating their concern about the health of the economy in the short term.
U.S. trade deficit in goods slips for the first time in 3 months. The gap stayed near an all-time high and is unlikely to fall dramatically in the near future. U.S. trade gap in goods fell to $106.6 billion in February from a record $107.6 billion in January. The big increases in retail and wholesale inventories add to GDP and signal the economy likely expanded at a solid pace in the first quarter. These trends are likely to remain in place for the foreseeable future.
Oil prices fall as the Shanghai lockdown triggers demand fears. Oil prices fell more than 5% early Monday. Following a spike in Covid cases over the weekend, authorities have imposed a two-stage lockdown in Shanghai. The eastern half of the city will be locked down from Monday until Friday, Apr.1, with the western half closing down from Friday until Tuesday, Apr.5. Read more here.
Apple reportedly cuts iPhone SE production by 20%. The company is scaling back production of its new budget iPhone SE due to weaker-than-expected demand. This decrease is reportedly an early sign of the Ukrainian war and inflation’s negative impact on electronics demand. Meanwhile, JPMorgan said iPhone SE sales may be limited in China where store pickup is unavailable due to Covid lockdowns. Read more here.
Ukraine war drives up the cost of wind, solar power. Renewable-energy projects are already facing supply-chain strains and raw-materials increases before the war. Renewable-energy projects are now being hit by soaring post-invasion prices for key materials such as aluminum and steel, as well as higher transportation costs stemming from higher oil prices, which have surged by more than 50% this year.
U.S. consumers are approaching a cracking point. Savings are falling. Food and energy prices account for an estimated 20% of household outlays. Monthly mortgage payments have risen to more than 20% of incomes: Natixis, RBC data.
Tech and healthcare are safer long-term investments than the S&P 500. Currently, the S&P 500 has a bunch of industries that are expected to be disrupted by technology. Tesla disrupting automotive is an example and the general view is that software/code will infiltrate industries as well (robots making drinks, landing airplanes, driving cars, etc). Read more here.
Commodities are the thing to own, says Jason Hartman. In times of inflation, you want to minimize your ownership of currencies and maximize your ownership of things. Especially those things that have universal needs. People all around the globe need food, clothing, and shelter. Any commodity related to these three is a safer investment in an inflationary environment. Source(32:19)
WHAT TO WATCH
HP to purchase Poly in a $3.3 billion deal, bets big on hybrid work. Poly makes a variety of products including headsets, conference phones, and videoconferencing tools. Through the deal, HP sees a wider opportunity to tap into a pandemic-driven wave of office redesigns, as businesses look to better outfit meeting rooms with videoconference offerings and other products that are compatible with hybrid work cultures.
Goldman cuts chip sector EPS estimates. Goldman’s overall concern is that it believes overall economic growth is set to slow because of rising inflation and rates. Semiconductor market growth has historically correlated with global GDP given its exposure to consumer spending as well as enterprise IT spending on server/compute, networking, and storage applications.
Tesla prepares to split its stock again. Tesla laid the groundwork on Monday to split its stock again, and investors looked pleased. The news came in a regulatory filing that indicated the company will request stockholder approval at its coming annual meeting to increase the number of authorized shares of common stock in order to enable a stock split. Read more here.
The next wave of AI is robotics: AI planning actions. Digital robots, avatars, and physical robots will perceive, plan, and act, and just as AI frameworks like TensorFlow and PyTorch have become integral to AI software, Nvidia's Omniverse will be essential to making robotics software. Omniverse will enable the next wave of AI. Read more here.
Elon Musk says he’s considering building a new social media platform. The billionaire made the remark after claiming that Twitter doesn’t allow for free speech. He did not share any specifics on what the hypothetical social media platform would look like or how it would work. Read more here.
Biden to propose a tax on the income of the ultra-wealthy. The aim of the minimum tax is to raise a lot of money from the least amount of people possible. The proposal would require US households worth more than $100 million to pay at least 20% in tax on their income. Controversially, this covers both traditional income and unrealized gains on investments. The White House said the plan would affect < 20,000 households. Read more here.