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Biden wants to address the debt ceiling, regional banks continue slumping, and companies fear the amount of jobs AI could replace in the coming years.

Let’s keep it concise.

Market Headlines 👀

• US President Biden calls for a meeting on May 9th with top officials regarding the US debt ceiling.

• International Business Machines (IBM) says it will pause hiring and expects up to 7,800 jobs could be replaced by AI.

• US Jolts jobs openings fell for a third straight month coming in at 9.59m est; 9.736m.

• US factory orders come in at 0.9%; est 1.3%.

• Eurozone inflation comes in at 7%; core CPI 5.6%.

  • first increase to headline inflation in 6 months..

• Coinbase (COIN) launches an international exchange as tensions with US regulators grow.

• Apple (AAPL) new savings account brings in almost $1b of inflows in four days.

• Google, Microsoft, OpenAI (GOOGL, MSFT) executives will meet with Vice President Kamala Harris and other officials over AI.

• Reserve Bank of Australia raises their benchmark rate 25bps.

• Vice Media Group prepares to file for bankruptcy.

•  Icahn Enterprises (IEP) shares slump as its hit with a short report by Hindenburg.

• Chegg Inc. (CHGG) stock plunges almost ~38% after CEO mentions the threat ChatGPT poses to the company.

Earnings 💸

• Uber Technologies (UBER)

  • EPS: $-0.08 beats (exp. $-0.09)

  • Revenue: $8.80b beats (exp. $8.70b)

• Advanced Micro Devices (AMD)

  • EPS: $0.60 beats (exp. $0.57)

  • Revenue: $5.40b beats (exp. $5.31b)

• Starbucks (SBUX)

  • EPS: $0.74 beats (exp. $0.65)

  • Revenue: $8.7b beats (exp. $8.42b)

• Pfizer (PFE)

  • EPS: $1.23 beats (exp. $0.98)

  • Revenue: $18.30b beats (exp. $16.64b)

• Ford (F)

  • EPS: $0.63 beats (exp. $0.44)

  • Revenue: $41.5b beats (exp. $37.42b)

S&P 500 Heap Map

Recap Around the Street 🧠

Regional banks came under renewed pressure ahead of tomorrow’s FOMC where the Fed is expected to hike its benchmark rate by another 0.25%. Investors remain concerned over deposit flight, unrealized losses due to higher rates, and building pressures on the loan book (namely commercial real estate). (contributed by Benjamin Lavine, CIO at 3D/L Capital)

Changes in below investment-grade spreads have historically led trends in overall default rates as high yield investors typically price in credit problems long before defaults are formally declared and recorded by the rating agencies.Default rates are expected to rise from the post-pandemic low levels under the pressures of a slowing economy and rising interest rate expense burdens. High yield debt is perceived as benefiting from a more secure position due to termed out maturity walls where issuers took advantage of locking in low rates prior to last year’s rise in interest rates as opposed to leveraged loans where borrowers are facing higher financing costs with Fed tightening. (contributed by Benjamin Lavine, CIO at 3D/L Capital)

Gauges implied expectations of technical default risk in the event the U.S. government does not raise the debt ceiling by the “X” date estimated to occur around July. In the past, the U.S. government has engaged in spending triage by prioritizing debt payments (interest, maturities), entitlement spending, and defense spending while the government enters temporary lockdown by withholding discretionary spending. This has led to contractors not receiving payments and employees placed on furloughs until the debt ceiling issue is resolved. (contributed by Benjamin Lavine, CIO at 3D/L Capital)

Central bank decisions around the world through this week…

Market Preview 🎞️

• Wednesday, May 3rd: US Federal Reserve rate decision; ISM services PMI; ADP employment report; MBA mortgage applications

• Wednesday earnings: CVS Health (CVS), Estee Lauder (EL), Qualcomm (QCOM), Mercado Libre (MELI), HubSpot (HUBS), and Etsy (ETSY)

• Thursday, May 4th: ECB rate decision; Jobless claims

• Thursday earnings: Apple (AAPL), Datadog (DDOG), Shopify (SHOP), Block (SQ), Coinbase (COIN), DraftKings (DKNG), Peloton (PTON), Atlassian (TEAM), Lyft (LYFT), Moderna (MRNA), Booking Holding (BKNG), Royal Caribbean Cruises (RCL), and ConocoPhillips (COP)

• Friday, May 5th: Non-farm payrolls; Consumer credit

• Friday earnings: AMC Networks (AMC)

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

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