What to know today

  • March CPI data is out on Wednesday.
  • Tesla, Musk make more headlines.
  • Energy is No. 1.
markets

Good News Is Good News

Stocks surge on solid jobs data.

There’s always something fascinating happening somewhere in the vast global financial system, which is why writing about it is such a privilege.

People and money make a great foundation for story-telling.

Friday’s report from the Bureau of Labor Statistics on the US employment market in March fueled a big rally, with good news met with a positive reaction from investors, traders, and speculators despite the fact that a rate cut probably won’t happen until July or even September.

The economy added 303,000 jobs last month, surpassing a consensus forecast for a 214,000 increase, and the BLS revised upward its counts for January and February.

Payroll growth averaged 276,000 per month in the first quarter compared to 212,000 in the fourth quarter of 2023 and 166,000 in 2019.

The unemployment rate ticked down to 3.8 percent from 3.9 percent, having risen from 3.4 percent in April 2023, and both the labor force participation rate and hours worked were up.

It’s good when good news is good news. It makes sense.

The US economy beat expectations by adding 303,000 jobs in March, according to the Bureau of Labor Statistics.

And there is even positive underlying inflation data in the report, as the underlying disinflation trend for wages accelerated, with growth of 4.23 percent versus 4.57 percent in February.

This is exactly what the Federal Reserve wants to see.

We have a relatively light week of Fed speakers ahead after a relatively heavy one last week.

But we will get Consumer Price Index data for March on Wednesday morning and the minutes from that month’s Federal Open Market Committee in the afternoon.

Bond yields, which have been creeping up all year despite talk of rate cuts, continue to push higher, with the benchmark US 10-year higher than it’s been since late November and on a path toward 4.5 percent.

It’s hard to describe persistent job growth as anything but a good thing; economies are about people, people, and when people are working good things are happening, generally, and when people are not working bad things are happening, again very generally.

Wage growth is good too, and it actually looks like we’re seeing the best of its kind: not too fast, not too slow.

deep dive

Is Tesla Losing Voltage?

Its top models are getting old.

Tesla $TSLA had another terrible, horrible, no good, very bad day to end last week, Reuters reporting that Elon Musk’s EV producer has pulled the plug on a project to build a more affordable model and the stock shedding more than 3 percent.

Musk responded quickly on Friday, posting on X that Reuters is both “lying” and “dying.”

This latest public display is only another drag on TSLA’s share price, which is down nearly a third so far in 2024 and is among the worst performers in the S&P 500 Index.

Analysts are taking note of a substantial year-over-year sales decline, the company’s first since before the pandemic, and asking whether the stock deserves to be valued as a hyper-growth play on EVs.

Tesla deliveries declined on a year-over-year basis in the first quarter for the first time since before the pandemic.

Here’s what Reuters said in its exclusive report:

Tesla has canceled the long-promised inexpensive car that investors have been counting on to drive its growth into a mass-market automaker, according to three sources familiar with the matter and company messages seen by Reuters.
The automaker will continue developing self-driving robotaxis on the same small-vehicle platform, the sources said.

Reuters noted that Musk once defined TSLA’s primary mission as designing and producing affordable EVs for the masses. The first step in his 2006 master plan was to build and sell luxury models to eventually fund a “low cost family car.”

The Model 3 is seven years old, the Model Y five. The Cybertruck went into production in November 2023, and Musk is still committed to the robotaxi concept.

But the delivery data don’t lie, and they tell a dire story right now.

deep dive |
April 8, 2024

Is Tesla Losing Voltage?

ENERGY

Energy Is a Big Story

In fact it might be the biggest thing happening right now.

Perhaps it’s overkill to talk about energy again.

Perhaps not. There’s a lot happening on the geopolitical front, with Mexico announcing production cuts and increasing upward pressure on the per-barrel price of crude oil already intense due to more tension in the Middle East.

Energy was the worst performer among the 11 sector groups inside the S&P 500 during the fourth quarter, with a loss of 7.25 percent. Things changed during the first quarter, with energy mounting a 12.61 percent gain to lead the market.

Despite the evident quarter-to-quarter volatility, there’s nothing to suggest current momentum will dissipate anytime soon.

The energy subindex of the S&P 500 was the top performer in the first quarter and is breaking out to new all-time highs.

The Energy Sector SPDR $XLE added another 1.07 percent on Friday and is up 16.98 percent so far in 2024.

Technology still added more than 8 percent during the first quarter, versus 17.42 percent in the fourth. But consumer discretionary stocks added just 2.84 percent from January through March after rising 11.08 percent from October through December.

As Alfonso Depablos of All Star Charts noted last week, this price action is about healthy sector rotation, “the lifeblood of any bull market.”

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