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Market Headlines 👀 

• Microsoft (MSFT) announces new PCs integrating its AI into their surface laptops; Copilot+PC unveiled today at its build developer conference.

• JP Morgan (JPM) Dimon company CEO says succession plan is in place and he will not be there longer than 5 years.

• Nasdaq composite closes at an all time high led by tech names rallying again.

• Target (TGT) announces they will cut prices on these 5,000 items in its stores.

Earnings 💸

• Palo Alto Networks (PANW)

  • EPS: $1.32 beats (exp. $1.25)

  • Revenue: $2b beats (exp. $1.97b)

• Zoom (ZM)

  • EPS: $1.35 beats (exp. $1.19)

  • Revenue: $1.14b beats (exp. $1.13b)

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Newsletter recommendation 📣

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S&P 500 Heatmap 🔥 

Recap Around the Street 🧠

Even though the inflation/Fed factor has been far less important for equity returns than growth expectations, we should not ignore this factor completely, as it could be a source of near-term volatility in both equity and fixed income. Further, inflation driven Fed expectations could even lead to changes in GDP/EPS forecasts if analysts were to see Fed policy as truly restrictive (it’s hard to agree with assertions that policy has been “sufficiently restrictive” given financial conditions are at 2021 easy levels and economic growth has been above trend for nearly a year).(Contributed by Cameron Dawson, CIO at NewEdge Wealth).

As we wrote at the end of 2023, positioning and sentiment are important drivers of medium-term equity returns.

At that time, we noted that sentiment and positioning were “stretched but not extreme”, suggesting more room for these measures to get extended (as the market rallied) before becoming an impediment to near term returns.

Today, we have a similar assessment, where sentiment and positioning measures look more stretched than they were to start the year, but still not at prior extreme peaks (like in early 2018 or late 2021/early2022).

The following two charts show this positioning and sentiment dynamic for institutional investors, which now have their highest equity allocations and lowest cash allocations since 2021, but not at extremes. (Contributed by Cameron Dawson, CIO at NewEdge Wealth).

Market Preview 🎞️ 

• Tuesday earnings: Lowes (LOW), Monday.com (MNDY), Macys (M), and Toll Brothers (TOL)

• Wednesday, May 22nd: MBA mortgage applications; May FOMC minutes release; Existing home sales

• Wednesday earnings: Nvidia (NVDA), Snowflake(SNOW), and Target (TGT)

• Thursday, May 23rd: Weekly jobless claims; US new home sales

• Thursday earnings: Workday (WDAY),and Bjs (BJ)

• Friday, May 24th: US durable goods; University of Michigan consumer sentiment

Enjoy reading?👇

That’s all for today, folks! We’ll be back around the same time Wednesday with a curated list of important news, economic data and market highlights. 

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