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Mint
2 days ago
- Business
- Mint
‘It Is Going to Happen': JPMorgan CEO Jamie Dimon Warns of Crack in Bond Market
JPMorgan Chase CEO Jamie Dimon warned of a crack in the bond market and said the U.S. should be stockpiling military equipment instead of Bitcoin at an economic forum on Friday. Dimon, who was interviewed on stage at the Reagan National Economic Forum in Simi Valley, Calif., prompted some market jitters during Friday's sideways trading session. Asked if he thought so-called 'bond vigilantes" that sell U.S. Treasuries due to worries about growing deficits have returned, Dimon replied 'Yeah." The bank executive pointed to trillions of dollars in borrowing and spending in the wake of the Covid-19 pandemic, which he described as 'huge sums of money, and we don't really know the full effect of that." 'You are going to see a crack in the bond market," Dimon said. 'It is going to happen. And I tell this to my regulators, some of you who are in this room, I'm telling you it's going to happen, and you're going to panic." 'I'm not gonna panic," he added. 'We'll be fine. We'll probably make more money, and then some of my friends will tell me 'We like crises because it's good for JPMorgan Chase.' Not really." Government debt has been in focus after the U.S. lost its last perfect Aaa rating earlier this month when Moody's downgraded U.S. sovereign debt to AA+. The yield on the 30-year Treasury note jumped 0.25 percentage point in May, its largest one-month gain since December, according to Dow Jones Market Data. It set a 52-week high north of 5% on May 21. Dimon also warned of the 'enemy within" in the U.S., calling for a unified front and fixes to things like permitting, regulations, immigration, taxation, schools, and healthcare, among other issues. But he argued the most important issue was maintaining military alliances and the strongest military in the world. 'If we are not the preeminent military and the preeminent economy in 40 years, we will not be the reserve currency," Dimon said. 'That's a fact. Just read history." He said the U.S. has to 'get our act together, and we have to do it very quickly." He also weighed in on the Trump administration's Bitcoin efforts to amass large quantities of the cryptocurrency and the U.S. dollar's current status as the world's reserve currency. 'We shouldn't be stockpiling Bitcoin," Dimon said. 'We should be stockpiling guns, bullets, tanks, planes, drones, you know, rare earths." Write to Connor Smith at
Yahoo
20-05-2025
- Business
- Yahoo
Strong earnings keep stock-market bulls in charge. What could bring the rally to a halt?
U.S. stocks have mounted a strong comeback, with the S&P 500 and the Dow Jones Industrial Average wiping out their 2025 losses last week. But lurking behind that optimism is one of the market's old problems: Stocks are pricey once again. Within just a few weeks, investors went from trimming exposure to risky assets to chasing the relief rally on solid first-quarter earnings and easing trade tensions between the U.S. and some of its major trading partners. As a result, stocks are back to being expensive, which raises questions about how far this rally can really go from here. 'They will drown you too': My coworker found out I inherited money — and harassed me to give him a loan Recession indicators are out of control. When will this madness end? My husband will inherit $180K. I think we should invest the money. He wants to pay off his $168K mortgage. Who's right? My wife and I paid off my stepdaughter's $415K mortgage in exchange for her house, but it's now worth $310K. Should we sue? I'm 57 and ready to retire next year on $7,500 a month, but my wife says no. Who's right? The forward price-to-earnings (P/E) multiple of the S&P 500 SPX, calculated by dividing its current price by Wall Street analysts' consensus estimate for its earnings per share (EPS) for the next 12 months, surged to 21.5 as of Thursday afternoon, from 18.02 on April 8. The forward P/E ratio was also at the highest level since Feb. 28, and above the five-year average of 20.25, according to Dow Jones Market Data. U.S. stocks on Friday wrapped up a strong week on Wall Street as investors breathed a sign of relief after officials from Washington and Beijing agreed on a 90-day pause in their tariffs, easing concerns that escalating global trade tensions could hurt the world's two largest economies. What's more, a batch of softer-than-expected inflation data also showed tariff policies haven't added to price pressure in the U.S. economy — at least for now. Also see: Stock futures fall after Moody's strips U.S. of its top credit rating The S&P 500 rose 5.3% last week, while the Dow DJIA jumped 3.4%, after both indexes clawed back to positive territory for the year to seal a stunning comeback just over a month after they had tumbled to recent lows amid President Donald Trump's aggressive and far-reaching tariff plans. The tech-heavy Nasdaq Composite COMP also popped 7.2% to score its best week since April 11, according to Dow Jones Market Data. 'A lot of this rally was short-covered by hedge funds and institutions that were very convinced that the economy was in trouble and the market was going down,' said Andrew Slimmon, head of applied equity advisors and lead senior portfolio manager at Morgan Stanley Investment Management. But in fact, the solid first-quarter earnings from American companies showed 'the fundamentals looking backwards didn't validate,' he told MarketWatch in a phone interview. Indeed, with 92% of the S&P 500 companies releasing quarterly results as of Friday, 78% of which have reported a positive EPS surprise, while 62% of which have reported a positive revenue surprise. The blended annual earnings growth rate for the S&P 500 in the first quarter is 13.6%, which marks the second-straight quarter of double-digit earnings growth reported by the large-cap benchmark index, according to FactSet data. See: The 'Magnificent Seven' are back in the stock market's driver's seat — but are they still a buy? Despite the widespread earnings beats in the first quarter, Wall Street analysts still seem to be spooked by what company management said on the conference calls about the rampant uncertainty and pessimism on how Trump's tariff policies could squeeze corporate profit margins. Of all the companies that conducted earnings conference calls over the past month, 411 have cited the term 'tariff' or 'tariffs' during their calls for the first quarter. This marks the highest number of the S&P 500 companies commenting on tariffs on quarterly earnings calls over the past 10 years, according to FactSet data. As a result, full-year earnings expectations for the S&P 500 have softened over the past month, with Wall Street now seeing the 2025 consensus EPS estimate at around $263.40, down from $271.05 in mid-March, according to FactSet data. See the problem here? An elevated forward P/E multiple combined with downgrades to earnings expectations for the S&P 500 suggests stock prices are becoming even more stretched. Adding to the concern is the tension between stocks and the U.S. government debt, which has resurfaced as Treasury yields gained traction last week with the 10-year rate BX:TMUBMUSD10Y on Monday breaking the 4.5%-level for the first time since February. The yield on the 30-year Treasury bond BX:TMUBMUSD30Y also hovered right below the 5%-level, threatening to hurt the stock market's return. Despite backing off slightly from those levels on Friday, both the 10- and 30-year yields still rose over 6 basis points last week. It was the largest weekly yield gain since April 11, according to Dow Jones Market Data. See: Powell signals return toward inflation-first strategy However, the high valuation of the S&P 500 may also suggest that the U.S. economy is expected to avoid a recession, according to Yardeni Research. 'Usually in recessions, the forward P/E of the S&P 500 falls into the single digits. It hasn't done so this time because the stock market isn't pricing in a recession. Neither are industry analysts, according to their latest EPS estimates,' said a team of Yardeni's strategists led by Ed Yardeni, president and chief investment strategist. 'During the previous bear market, the forward P/E bottomed at 15.1 on October 22, 2022. That too was a relatively high P/E and occurred because the most widely anticipated recession of all times was a no-show,' they said. 'History may already be repeating itself in the performance of the stock market and the economy so far this year.' See: Stock-market recovery suggests equities must fall this far to spark a 'Trump put' or pivot Another way to assess the health of the economy is through the lens of consumer strength. Last week, retail giant Walmart Inc.'s WMT quarterly results beat Wall Street estimates on every key metric, but the company will still push prices higher because they said they are not able to absorb all the pressure 'given the reality of narrow retail margins.' 'There's consumer pressure and consumers have been through a really difficult inflationary period,' said Marta Norton, chief investment strategist at Empower. 'There's enough discernment in the consumer that companies need to be careful in pricing.' That makes earnings from other major retailers some of the key market-moving events this week in an otherwise quiet calendar on the economic data front. Home Depot Inc. HD is due to report its quarterly result on Tuesday before the opening bell, followed by Lowe's Companies, Inc. LOW and Target Corporation TGT on Wednesday morning. It's worth noting some of the consumer stocks — much like Big Tech — have already traded at pretty lofty levels. The S&P 500's consumer staples sectorXX:SP500.30 is one of the top performers among the large-cap index's 11 sectors this year, up 6% while the S&P 500 has risen 1.3% year to date, according to FactSet data. 'Investors who turn to these areas for defensiveness might find that there's very little margin of safety for those types of consumer companies,' Norton told MarketWatch via phone on Thursday. 'That doesn't mean they won't do well if markets collapse, but I have less enthusiasm about their future given where their valuations are.' Bond yields jump after Moody's downgrade of U.S. credit. Why it matters for consumers — and Congress. My second wife says her 2 kids should inherit our estate, but I also have 2 kids. Is that fair? 'I am scared to death that I'll run out of money': My wife and I are in our 50s and have $4.4 million. Can we retire early? The U.S. just lost its last pristine credit rating. What that means for markets. My husband and I spend more money on our daughter and her family than on my single son. Do we compensate him? Sign in to access your portfolio
Yahoo
17-05-2025
- Business
- Yahoo
Why Friday's options expiration could send this historic stock-market rally skidding to a halt
After a wild month for the market, investors are sitting on a heap of bullish call options that will expire on Friday as monthly contracts for May come due. Options dealers' hedging of these long positions has helped push stocks higher over the past couple of weeks, according to Brent Kochuba, founder of SpotGamma, an options data and analytics company. Why Friday's options expiration could send this historic stock-market rally skidding to a halt My husband and I spend more money on our daughter and her family than on my single son. Do we compensate him? The U.S. just lost its last pristine credit rating. What that means for markets. Warren Buffett's Berkshire Hathaway dumps Citigroup stake, trims Bank of America, Capital One 'We're not wealthy': My niece is marrying out of state and she has a honeymoon fund. Is that cheeky? But once they are no longer active, the market's torrid rebound could stall out. 'I argue that the unwinding of the call values both lead to bearish hedging flows, but also a stalling in momentum. This is more skewed towards calls than I've ever seen it,' Kochuba said in response to questions from MarketWatch via email. Just how skewed toward calls can be seen in the table below, courtesy of SpotGamma. SpotGamma's calculations adjust each contract for how close it is to being profitable at expiration, based on current market prices. Another popular methodology used by investment banks like Goldman Sachs puts the total value of contracts expiring on Friday at $3.4 trillion, a fairly average amount for a monthly expiration, Kochuba said. Investors' shift toward call buying has become more pronounced over the past couple of weeks as stocks continued to climb. As of Wednesday's close, the Cboe total put-call ratio has fallen back to 0.7, its lowest level since Feb. 14, according to Dow Jones Market Data. Back then, stocks were trading just shy of record highs. When investors' buying is more heavily slanted toward calls, options market makers typically need to hedge their exposure by buying more stocks or stock futures. Following a burst of volatility in April provoked by President Trump's aggressive tariff agenda, the Cboe Volatility Index VIX has retreated at the fastest pace on record. Meanwhile, the S&P 500 SPX has risen by more than 18% since its April 8 closing low, FactSet data showed. See: Wall Street's fear gauge just dropped with striking speed. What historically comes next for stocks? Danny Kirsch, head of options at Piper Sandler, offered up a similar interpretation to Kochuba. Kirsch said he expected to see more volatility seep back into stocks starting next week once options dealers no longer needed to hedge so much long exposure. 'Next week should open back up,' he told MarketWatch via email. After seeing modest weakness earlier in the session, U.S. stocks had bounced back in afternoon trading Thursday. The S&P 500 was up by 21 points, or 0.4%, at 5,914, while the Dow Jones Industrial Average DJIA was up by 166 points, or 0.4%, at 42,218. The Nasdaq Composite COMP was up by 20 points, or 0.1%, at 19,167. Call options give the holder the right, but not the obligation, to buy an underlying asset at an agreed-upon price, known as the strike price, before an agreed-upon time, known as the expiration date. Similarly, a bearish put option gives the holder the right to sell an asset at an agreed-upon strike price before a given date. How Europe's best investor picks stocks including GE Aerospace and Microsoft These $5,000 bonds can help you fix a stock-heavy portfolio The retail buy-the-dip move paid off. What that crowd of investors is doing now, according to JPMorgan. 'I am scared to death that I'll run out of money': My wife and I are in our 50s and have $4.4 million. Can we retire early? I have $50,000 in credit-card debt after my divorce, but received $30,000 after a car wreck. Do I buy a used Lexus? Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
07-05-2025
- Business
- Yahoo
Why the stock rally may be in trouble after the White House ‘backtracked' on tariffs
President Trump announced so-called reciprocal tariffs on April 2. - Agence France-Presse/Getty Images The U.S. stock market has already priced in backtracking on the large and sweeping 'liberation day' tariffs announced by President Donald Trump on April 2, making it difficult for the market to keep up its recent rally, according to Sevens Report Research. 'The Trump administration has seriously backtracked on the April 2 announcement, including a delay while negotiations take place and exempting major categories of imports,' said Tom Essaye, founder and president of Sevens Report Research, in a note Monday. As an example of tariff exemptions, Essaye pointed to computer chips, electronics, pharmaceuticals and automobiles. Most Read from MarketWatch The S&P 500 SPX closed Monday down 0.6% at 5,650.38, FactSet data show. That's after ending Friday with a ninth straight day of gains, which marked its longest winning streak since November 2004, according to Dow Jones Market Data. 'The reality of the past month post-'liberation day' hasn't been as bad as feared and the market has recouped those losses,' said Essaye. 'However, I do not think these events are enough to sustainably propel the S&P 500 forward and I am sticking to my general 5,100-5,500-ish range.' Investors, worried that large tariffs will place a drag on the U.S. economy while increasing the cost of goods for consumers, have been monitoring the White House's negotiations with its trading partners. But with backtracking on tariffs already priced into the market, Essaye cautioned that 'we could even see a 'sell-the-news' move once some trade deals are announced.' The White House has paused the so-called reciprocal tariffs announced on April 2, as it works on negotiating trade deals with countries. As investors wait for deals, the stock market has recently responded positively to reports that trade tensions with China, the world's second-largest economy, may be softening. Still, 'tariffs will be substantially higher than they were on Jan. 2 and that is a headwind on growth,' said Essaye. 'And at this point, the market is susceptible to disappointing tariff news.' The S&P 500 had closed Friday up 0.3% since April 2, erasing post-'liberation day' losses, according to Dow Jones Market Data. But the index, which is a measure of U.S. large-cap stocks with an outsize weighting toward Big Tech, remained in the red for the year.
Economic Times
03-05-2025
- Business
- Economic Times
Microsoft tops m-cap table with $3.2 trillion; pushes Apple with $3.07 trillion to second spot
Nvidia came in third with a valuation of $2.76 trillion, according to The Information's newsletter. Microsoft shares have consistently outperformed Apple's throughout the year, reflecting growing investor confidence in its AI and cloud strategy. Meanwhile, Apple faces pressure from new tariffs, driving an 18% drop in its share price. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Popular in TechMore ≫ Microsoft ended the week as the world's most valuable company, reaching a market valuation of $3.235 trillion. It surpassed Apple, which had long held the top spot, closing Friday with a market cap of $3.07 came in third, with a valuation of $2.76 trillion, according to The Information's newsletter. Microsoft's stock jumped on Thursday after the company reported strong financial results for the March quarter, beating analyst expectations. Satya Nadella , Microsoft's CEO, said on a call with investors that demand for cloud and artificial intelligence (AI) remained shares have consistently outperformed Apple's throughout the year, reflecting growing investor confidence in its AI and cloud last time Microsoft saw such a big post-earnings stock surge was in October 2015, when revenue from its early Azure cloud business more than doubled, causing shares to soar by 10%, according to performance also beat expectations in the first quarter , driven by strong iPhone sales. However, new tariffs introduced under President Donald Trump have weighed heavily on the a supply chain that depends heavily on imported components, Apple is particularly exposed to the impact of tariffs. Its share price has dropped 18% since the start of the year—one of the steepest declines among major tech addition, chief executive Tim Cook said that unless conditions change, Apple expects an additional $900 million in costs this quarter due to the to Dow Jones Market Data, Apple's drop in market value is the largest for any company at the start of this year, as reported by the major tech firms, only Tesla has experienced a sharper fall, with its shares down 29% year-to-date.
