US futures stall as focus shifts to key weeks ahead

U.S. stock futures rose below the surface on Monday as investors regrouped after a busy week ahead of new inflation data looking for prospects for a rate cut and the start of the first quarter earnings season. Ta.

Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) futures remained flat. The contract for the tech-heavy Nasdaq 100 (^NDX) was also little changed.

Stocks rose on Friday after a positive jobs report, but were unable to avoid a weekly decline as doubts about the Federal Reserve's determination to cut interest rates persisted.

This uncertainty led to a sell-off in US Treasuries last week, and the pressure continued on Monday, with the 10-year Treasury yield (^TNX) rising slightly to above 4.45%. This would move the benchmark closer to the key 4.5% level, seen by some as a potential tipping point for a rise towards last year's highs.

Other concerns about the mood include divided views on policy among Fed speakers, growing noise over the upcoming U.S. presidential election, and rising oil prices due to escalating tensions in the Middle East that could fuel inflationary pressures. spurred on.

All of this brings attention to Wednesday's release of the consumer price index, a key input in the Fed's decision-making and a clue to the continued resilience of the U.S. economy. Investors will be watching for signs of a return to a downward trend in inflation in March after showing signs of solidity earlier this year.

At the same time, the market is bracing for another earnings season, with Delta Air Lines (DAL) on Wednesday gearing up for Friday's big bank results. Wall Street broadly expects the first quarter to set the tone for solid profit growth for S&P 500 companies, raising hopes for a big jump in March's jobs report.

Against this backdrop, gold rose above $2,350 an ounce, hitting a new record before paring its gains. Meanwhile, oil prices have fallen from recent months' highs as geopolitical tensions eased slightly after Israel withdrew more troops from southern Gaza. Brent crude oil futures (BZ=F) fell to $90.40 a barrel, and West Texas Intermediate futures (CL=F) traded around $86.20.

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Monday, April 8, 2024 04:32 PDT
Jamie Dimon talks about why the number of publicly traded companies continues to decline

Gold nuggets for investors continue today on page 35 from Jamie Dimon's latest annual letter.

The head of JPMorgan (JPM) points out that the role of public companies in the US financial system is declining, as evidenced by the fact that the number of public companies in the US has reached 4,300. In 1996, that number was 7,300.

Conversely, the number of privately held U.S. companies backed by private equity firms has jumped from 1,900 to 11,200 over the past 20 years, Dimon said.

“This trend is serious and is likely to increase further as more regulations and lawsuits emerge. We need to take this seriously, along with an honest assessment of the regulatory landscape. “Is this the outcome we want?” Dimon wrote.

Dimon points to several factors for this disparity.

Enhanced reporting requirements (see ESG).

Litigation costs will be high.

Costly regulation.

“Root-cookie-cutter” board governance.

Active activities of shareholders.

Low capital flexibility.

Increased public scrutiny.

“Relentless pressure” on quarterly profits.

But I wonder if private companies have been the driving force behind stock price gains since Mr. Dimon became CEO in the early 2000s. Less supply of assets means more competition for those assets – no?
Monday, April 8, 2024 4:05am PDT

Those watching Daimon's succession may appreciate this

I'm very interested in what JP Morgan (JPM) is doing in the area of artificial intelligence.

Dimon said in today's annual letter that the company currently has 2,000 AI/machine learning experts and data scientists. He said the company has 400 use cases in production in areas such as marketing, fraud and risk that are “increasingly driving value for retail businesses across our operations and functions.” he added.

I'm equally fascinated that Dimon included the name of COO Daniel Pinto (long seen as Dimon's successor) in his key comments on AI. Dimon believes his AI is critical to his JPM's future success and has created a new role called chief data analytics officer. This role will sit on the company's steering committee and report directly to Dimon and Pinto.

Dimon says:

“Elevating this new role to steering committee level (reporting to Daniel Pinto and myself) is a great example of how important this role will be going forward, and how seriously we anticipate the impact AI will have on our business.” This will ensure that data and analytics are integrated into our decision-making. We are not just looking at the technical aspects of AI, but also how all executives can use AI. The main focus is on where and why they should be used. Each of our business units has a corresponding data and analytics role, so we can share best practices and solve multiple business problems. We will develop reusable solutions to solve problems and continuously learn and improve as AI evolves in the future.”
Monday, April 8, 2024, 3:50 a.m. (Pacific Daylight Time)

Watch JP Morgan CEO Jamie Dimon's money-making masterclass in one graph

Want to know why JPMorgan (JPM) investors want Jamie Dimon to remain CEO for another 50 years?

Sure, this guy is the face of banking with some of the best relationships in the game, but at the end of the day, he just knows how to make money for his shareholders.

Mr. Dimon's annual letter, published this morning, says it perfectly. See this graph on page 8. It has been shown that JP Morgan's net income has increased approximately six times since his 2005.

A money machine called JP Morgan. (JP Morgan)
Monday, April 8, 2024 03:28 PDT

Here are Jamie Dimon's latest thoughts on where interest rates are headed.

JPMorgan (JPM) CEO Jamie Dimon has withdrawn his latest annual letter to shareholders. You can read the full text here. Yahoo Finance's David Hollerith provides an analysis of the letter here.

Mr. Dimon is not wasting any time considering the outlook for interest rates, and appears to be repeating what we've heard from some hawkish FOMC members in recent weeks (which has weighed on stock prices).

“Despite volatile conditions, including last year's local banking turmoil, the U.S. economy remains resilient, consumers are still spending, and markets are now expecting a soft landing for the economy. “It is important to remember that the United States is supported by a large economy.” As we fight against this, there is also an increasing need to increase spending. This could lead to more persistent inflation and higher interest rates than markets expected.. Furthermore, you need to be careful about downside risks. Quantitative tightening drains over $900 billion of liquidity from the system annually, but we have never really experienced the full effects of quantitative tightening on this scale. Moreover, the ongoing wars in Ukraine and the Middle East continue to have the potential to disrupt energy and food markets, migration, military and economic relations, in addition to a horrific human toll.With these significant and somewhat unprecedented forces, we cautious. ”

Interestingly, JPMorgan strategists said this morning that they expect bond yields to fall.

“In terms of the direction of bond yields, our call last October was that bond yields had likely peaked and were here to stay for an extended period. Yields are likely to fall again. Our fixed income team expects the US and German 10-year bond yields to be lower than they are now with three-month, six-month, and nine-month terms. We agree in principle with this, especially given the current heightened geopolitical risks, but are mindful of the risk that inflation remains high. ”