The Buzz on Business for April 24th, 2024

As regular listeners know, we are dubious, to put it mildly, about financial analysts and journalists, especially when they issue predictions. The idea that someone—anyone—could, in November of last year, confidently predict that the Federal Reserve would cut interest rates five times in 2024 is just outside the bounds of seriousness.

So, we try to stick to the Giant Quote Machine and report only on what has happened and not on what will. We also try to ignore financial analysts more generally, with one exception. Again, as regular listeners know, we are followers and fans of Scott Granis, an economist who blogs at Califa Beach Pundit.

For some time, we have been hyper-cautious and hyper-worried about inflation. Granis, not so much.

We’ve worried about a series of inflation reports that seem to point to higher, even accelerating, inflation and the trend in Gold.

Granis is out with a piece recently—we’ll put a link in the show notes—that makes the case that the only reason inflation APPEARS to be stubbornly high is housing costs and the only reason housing costs appear to be stubbornly high is because of the erroneous method the government uses to compute them.

In other words, the inflation problem is a calculation error.

Let’s be clear: Granis is a renowned economist, and we’re, well, ya know, a podcaster. Still, we’re not so sure. We very much hope that Granis is right but we can’t help but, well, PREDICT that inflation and interest rates will be materially higher before they are any lower.

Stock Market Report

A pretty good day on Wall Street on Tuesday, although we would have liked to have seen volume expand a bit more than it did. We’ll take it!

• The Dow Jones Industrial Average was up 264 points. That’s seven-tenths of 1%, and it closed at 38,504.
• The S&P 500 was up 1.2%. That’s 60 points, and it closed it at 5,071.
• The NASDAQ Composite closed at 15,697, up 245 points, or 1.6%.
• The Russell 2000 had a good day. It gained 1.8% on the day and closed back above 2,000 at 2,003, up 35 points.

Bond Market Report

Interest rates were mostly lower, but not by much.

• The yield on the 2-year treasury closed at 4.937%, that’s down three basis points.
• Once again, the 20-year was basically flat. It closed at 4.848%.

Oil, Gold, and Bitcoin

• A bit of a wild day in the oil patch. Oil sold off pretty dramatically in the overnight session but turned it around after 9:00 AM ET and rallied to a small gain. It was up $1.21 and closed at $83.29.
• Gold, which sold off hard on Monday, followed through with small losses yesterday. It was off $7.40 and closed at $2,335.90.
• Bitcoin was off $62.87 and, at 4:00 PM Eastern Time, stood at 66,558.49.

Excellent Earnings Except Tesla

Thirty-four of America’s biggest corporations reported earnings during the day on Tuesday. Just five missed earnings expectations. Although we saw many more red numbers in the top line column than we had been hoping for or expecting. Still, a good day on the earnings front.

One notable exception is Magnificent 7 member Tesla. Tesla’s stock is down almost 50% in 2024, and the company has a history of disappointing Wall Street. In the last 17 quarters, it has met or exceeded expectations for earnings per share in only seven. Tesla disappointed Wall Street once again on Tuesday.

The company announced it earned $0.45 per share. Expectations were for $0.49 per share. It also disappointed on the top line, coming in almost $1 billion below the $22.27 billion Wall Street was expecting. As we have come to ironically expect, the stock was trading higher in the after-hours session.

Mixed news on the economic calendar on Tuesday. Building permits and new home sales came in higher than expected. That’s good news. Housing continues to surprise us. But, the S&P US Manufacturing Purchasing Managers Index came in below expectations and below FIFTY, indicating contraction in the manufacturing sector. As we’ve said, these numbers tend to be volatile, but this result is indeed a disappointment.

More Earnings Reports, More Economic Reports

Later this morning, we get durable goods orders for March, the Atlanta Fed GDP Now report, and another busy day on the earnings front.

We will do what we do and report all of it to you tomorrow. All you need to do is keep it right here on the Buzz.