Here are five things you must know for Monday, April 17:
1. -- Stock Futures Slip As Risk Appetite Wanes, Treasury Yields Rise
U.S. equity futures were edged lower Monday, while the dollar extended gains against its global peers, as investors looked to form a path between the impact of rising Treasury yields and a hawkish Federal Reserve against the potential for a near-term boost from the first quarter earnings season.
The Fed's signaling on rates, which will likely deliver another seven or eight rate hikes this year, has boosted the odds of a near-term recession to around 35%, Goldman Sachs has cautioned, as policymakers fight imbedded inflation pressures in the world's biggest economy.
Last week's reading of retail sales growth for the month of March suggested that both soaring inflation, as well as record high gas prices, trimmed discretionary spending power and could add to signals of a slowdown in the broader economy in the months ahead.
Still, with earnings season moving into full swing, there remains plenty of chances for stocks to find their footing over the coming weeks, particularly if Treasury yields stall. Benchmark 10-year note yields, however, are back close to their 2019 peaks in overnight trading, at 2.866% but are firmly 38 basis points higher than 2-year notes, suggest bond traders aren't as concerned over recession risks as they were a few weeks ago.
Risk aversion, however, is spreading through asset markets around the world, with bitcoin prices falling to a one-month low of $38,580 in overnight trading, pulling the value of global crypto currencies below $2 trillion, and the dollar index rising another 0.355% against a basket of six global currencies to a two-year high of 100.673.
The dollar's gain pulled global oil prices modestly lower in overnight trading, with WTI crude futures falling 25 cents to $106.70 per barrel, following data from China showing March refinery runs fell 2% from last year as demand waned amid the country's ongoing Covid lockdown.
On Wall Street, futures contacts tied to the Dow Jones Industrial Average indicating a 100 point opening bell decline while those linked the S&P 500, which is down 3.04% for the month, are priced for a 22 point retreat. Futures linked to the tech-focused Nasdaq are looking at a 100 point opening bell pullback.
2. -- Week Ahead: Earnings and Housing Data In Focus
The first quarter earnings season will kick-in to full gear this week with around 70 S&P 500 companies reporting over the next five days, with investors focused on near-term outlook assessments following a mixed set of profit reports from the country's biggest banks last week.
Collective S&P 500 profits are expected to rise 6.3% from last year to $408.3 billion over the first quarter, according to Refinitiv data, before improving only modestly to a growth rate of 6.4% over the three months ending in June.
This week's parade includes after-the-bell updates from Netflix (NFLX) on Tuesday, Tesla (TSLA) on Wednesday as well as pre-market releases from bluechips such as Johnson & Johnson (JNJ), Procter & Gamble (PG), AT&T (T), Verizon (VZ) and American Express (AXP).
Beyond earnings, investors will also be closing tracking data from the housing market, which is suffering from both a lack of new inventory and the first bump for mortgage rates over the 5% market in nearly a decade.
The Commerce Department will publish March housing starts data on Tuesday, with the National Association of Realtors following-up with existing home sales on Wednesday.
3. -- Twitter Drama Continues As Musk Hints At Tender Offer, Board Mulls $43 Billion Takeover
Twitter (TWTR) shares moved higher in pre-market trading, but still sit well below the takeover price offered by Tesla CEO Elon Musk last week, as the world's richest man digs in for what could be a messy and protracted battle with the social media group's board of directors.
Last week's drama, highlighted by Musk's surprise $43 billion takeover bid -- around a week after he had filed papers with the Securities and Exchange Commission claiming to be a passive investor -- was followed by Twitter's move to adopt a so-called poison pill defense, which allows existing shareholders to buy more Twitter stock at a discount should any one, or a group of, investors gain control of 15% of the company without board approval.
Musk hinted late Saturday, in a typically cryptic Twitter message, that he may take his $54.20 per share offer directly to shareholders, but also indicated during a TED talk in Vancouver last week that "“I’m not sure that I will actually be able to acquire it."
Other buyers are reportedly looming, as well, including buyout firm Thoma Bravo and private equity group Silver Lake, which helped Twitter on a convertible bond financing deal in 2020.
Twitter shares were marked 2.1% higher in pre-market trading to indicate an opening bell price of $46.01 each.
4. -- Tesla Shares Edge Higher Amid Reports of Shanghai Factory Re-Start
Tesla shares edged higher in pre-market trading amid reports that the carmaker is reading to re-start production at its Shanghai gigafactory following a three-week shutdown triggered by China's ongoing Covid crisis.
Tesla's Shanghai factory, which was closed during a Covid lockdown in the country's biggest city on March 28, is perhaps the group's most important manufacturing base, producing around 180,000 cars over the first three months of the year, many of them bound for markets in Europe and Asia as it absorbed the impact of the delayed opening of Tesla's Berlin gigafactory and supply chain disruptions that have hindered production in California.
The March closure wasn't enough to damage first quarter deliveries -- Tesla notched a record 310,048 units globally -- but it will certainly have an impact on the group's second quarter outlook, which management is expected to detail after the close of trading on Wednesday.
Tesla shares were marked 0.5% higher in pre-market trading to indicate an opening bell price of $990.00 each.
5. -- Alex Jones' Infowars Files For Chapter 11 Bankruptcy
Infowars, the far-right media group controlled by Alex Jones, filed for Chapter 11 bankruptcy protection late Sunday following a court ruling in that found him liable for defamation in a lawsuit brought by the families of the victims of the 2012 school shooting in Newton, Connecticut.
Jones, who also faces payments linked to a similar case in Texas, filed to protect three different companies from litigation, citing estimated liabilities of around $10 million, in the U.S. Bankruptcy Court for the Southern District of Texas.
Texas state court Judge Maya Guerra Gamble ruled last year that Jones has failed to comply with court orders to hand over financial documents linked to a defamation suit that challenged the radio host's assertion that the Sandy Hook school massacre, which killed 20 school children and six school employees, was a 'hoax'.
