The AlphaInsight Daily

For our beach investors… drink a Frozen Margarita and get paid. 1M today could be around an extra 50k in one year with less risk than trading.

These are the best rates you can find in the fixed-income markets:

• C.D.s (New Issues): 5.40% (1-year term)

• U.S. Treasury Bonds: 5.24% (1-year period)

• U.S. Treasury Zeros: 5.15% (9-month period)

• Agency/GSE: 5.57% (1-year period)

• Corporate (Aaa/AAA): 5.01% (9-month period)

• Corporate (Aa/A.A.): 5.27% (1-year period)

• Corporate (A/A): 6.81% (9-month period)

• Corporate (Baa/BBB): 8.22% (9-month period)

• Municipal (Aaa/AAA): 4.30% (10-year term)

• Municipal (Aa/AA): 4.41% (10-year term)

• Municipal (A/A): 4.65% (10-year period)

• Taxable Municipal: 5.50% (10-year period)

For our street investors… face the wall with A.I. sentiment analysis and adjust your trading for Today (June 1, 2023):

1. Equity Market: The passing of the debt ceiling bill by the House of Representatives likely removes a significant uncertainty that's been overhanging the market. As a result, U.S. stock futures edged higher, suggesting a positive impact on broad-based index ETFs like SPY, DIA, and to a lesser extent, RUT. But the major indices, especially SPY and DIA, could remain range-bound as investors focus on forthcoming economic indicators, the tone of the Fed, and the impact of its aggressive interest rate-hiking cycle on the economy.

2. Sector Analysis:

   • Tech Sector: The lower-than-expected revenue forecast from C3.ai and Salesforce might lead to a sell-off in tech, putting pressure on QQQ and XLK. However, Nvidia's premarket rise could offset some of the bearish sentiment.

   • Retail Sector: Macy's and Dollar General's reduced full-year sales forecasts amid high inflation could weigh on retail sector ETFs like XRT, while Nordstrom's surprise profit may provide some balance.

   • Energy Sector: Crude oil futures are flat after Wednesday's decline, which could maintain recent trends in the energy sector, possibly keeping ETFs like XLE relatively stable.

3. Volatility: With companies like Salesforce and C3.ai posting disappointing earnings forecasts, the VIX may see an uptick as market participants hedge against the potential tech-sector downside. However, the passage of the debt ceiling bill and the anticipation of tamer inflation data could temper a rise in volatility.

4. Individual Stocks: The reported sharp declines in pre-market trading for companies like Okta, Lexicon Pharmaceuticals, Victoria's Secret, and CrowdStrike might present short opportunities, while the anticipated earnings reports from Hormel Foods, Dollar General, Macy's, Manchester United, and others could add to intraday volatility for those names.

5. Treasury Yields: The benchmark 10-year Treasury note yield has risen, which could put downward pressure on rate-sensitive sectors like utilities and real estate.

6. International Markets: Mixed performance in major Asian markets and positive sentiment in European stocks may have a limited impact on U.S. market performance, barring significant global events.

Overall, it seems like a day characterized by stock-specific action, as corporate earnings take center stage, with broader market moves likely influenced by incoming economic data and ongoing Fed policy interpretations.

Events

Earning reports today - pre-analysis: 

1. Broadcom (AVGO): The stock closed at $807.96, slightly increasing by 0.58%. It has performed well over the past year, with a return of 39.27%. High institutional ownership of 79.72% suggests confidence among sophisticated investors. It has a substantial market capitalization of $336.9B, highlighting its size and influence in the industry. It also offers a decent dividend yield of 2.28%.

2. VMware (VMW): This stock traded at $136.29, with an increase of 1.86%. Over the past 52 weeks, the stock has delivered a moderate return of 6.39%. The company has a lower level of institutional ownership than others on this list, at 46.04%. With a market cap of $58.4B, it's a notable player in the information technology sector but lacks dividend yield.

3. Dollar General (DG): The company's shares fell by 1.35%, closing at $201.09. This stock has underperformed over the past year, decreasing 8.74%. However, it has a high institutional ownership of 91.42%, the highest among these stocks. It also has a modest dividend yield of 1.17%. Its market cap stands at $44.1B.

4. Lululemon Athletica (LULU): This stock closed at $331.93, a decline of 1.40%. However, it has seen a solid performance over the past 52 weeks with a return of 13.41%. Institutional ownership is high at 87.13%. The market cap is $42.3B, but it currently offers no dividend yield.

5. Dell Technologies (DELL): The stock saw a significant decrease of 5.30%, closing at $44.81. Over the past year, the stock's performance has been disappointing with a decrease of 10.27%. Despite this, it has a reasonable level of institutional ownership of 73.09%. The company's market cap is at $32.7B and offers a compelling dividend yield of 3.30%, the highest on this list.

While all five stocks are from significant sectors, each has performed differently over the past year. AVGO and LULU have seen strong positive growth, while VMW has shown moderate growth. Conversely, DG and DELL have seen a decline in their stock prices over the past year.

Economic events:

1. Challenger Job-Cut Report: US companies have announced more job cuts this year than during 2022. Planned layoffs reached about 417,500 jobs through May, which is more than four times the job cuts during the same period last year​

2. ADP Employment Report: Private sector employment increased by 278,000 jobs in May, and annual pay was up 6.5 percent year-over-year​

3. Jobless Claims: The Department of Labor reported that the advance figure for seasonally adjusted initial claims was 232,000, an increase of 2,000 from the previous week's revised level​

4. PMI Manufacturing Final: The Manufacturing Purchasing Managers' Index (PMI) in the United States stood at 47.1 in April 2023, indicating a negative situation as an index value below 50 percent indicates a downturn in the manufacturing sector​

5. ISM Manufacturing Index: The ISM Manufacturing PMI is at a current level of 47.10, up from 46.30 last month and down from 55.40 one year ago, which indicates a continued negative situation in the manufacturing sector.

6. Construction Spending: US Construction Spending is currently at 1.835 trillion, up from 1.830 trillion last month and up from 1.768 trillion one year ago.