Equity markets rebounded on Monday to snap a 6-day losing streak. The rebound may extend into mid-week but is likely short-lived due to the expected economic data. The PCE price index is due on Friday and is unlikely to allow the FOMC to cut rates soon. The risk is that inflation will persist at current levels or accelerate, leading the FOMC to keep the base interest rate at its present levels through year’s end. The S&P 500 advanced more than 1.0% at the session’s high.
With May fast approaching, the question becomes whether this is a good year to sell in May and go away. Because the reality of inflation, interest rate cuts, and earnings growth does not align with the expectations at the start of the year, it is likely a good year to sit out the summer and wait until fall to reposition or add new money. The market may not sell off further, but there is little reason to think new highs will be sustained if reached or that volatility will subside.
Results from Taiwan Semiconductor (NYSE: TSM) set the semiconductor market up to fall, and all it took was a slim bit of news from Super Micro Computer (NASDAQ: SMCI) to spark the sell-off. Taiwan Semiconductor set it up by reducing its outlook for semiconductor growth this year, a fact that plays into the market valuation, which was high and driven by AI hype as much as reality. TSM still forecasts 10% industry-wide growth led by AI. Super Micro Computer sparked an industry-wide sell-off when it delayed its earnings report. That’s it; Super Micro delayed the report, which could have been for many reasons.
A crackdown on how some of the nation’s largest utilities spend customers’ money faces a do-or-die vote Monday in the California Legislature.Californians already pay some of the highest electricity rates in the country, in part because of the expensive work required to maintain and upgrade electrical equipment to reduce the risk of wildfires in a state with long, dry summers.As rates continue to climb, utilities like Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric have faced increasing scrutiny from consumer groups over how they spend the money they collect.Utilities aren’t allowed to use money from customers to pay for things like advertising or lobbying.
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