It's been a remarkable three weeks, and the S&P 500 (SPX) is still below its 50—and 200-day moving averages. There are pockets of resistance up to 5750, where the smart money would have to blink and begin covering shorts and buying. There is so much going on this week, between earnings and economic data, and toss-in updates on potential tariff deals, and we could see a great game of tug-of-war.

Mega-Cap Tech

It seems like yesterday when Mega-Cap Tech steamrolled higher with little effort. Well, that locomotive is back, but there are questions about how far it can go or whether or not it has lost that oomph forever.

On Friday, growth and momentum continued carrying the load, but a barbell-like effect was also happening, and buyers also found core and quality names.

Consequential Week

This week, a ton of economic data could sway the Federal Reserve to favor cuts. We get their favorite inflation gauge and jobs report.

I am also very interested in consumer data, including personal income and spending. This week feels like finals week back in school. Oddly, I’m not sure what qualifies as a passing grade.

Portfolio Approach

On Friday, we closed a Technology position (PLTR) in the Hotline Model Portfolio.

Today’s Session

Coming into the week, there is the feeling of a much-anticipated boxing match. Like the instant classic in London, over this weekend, between Connor Benn and Chris Eubanks Jr.

There might be feeling out today, make no mistake bulls and bears are going for knockouts.

The upside bias shift is critical to maintain until all the data is out. That means we might not have a handle for the week until after the jobs report, on Friday.

Bears Present Their Case

Bears are playing up a report from Apollo, predicting recession this summer.

The report has 40 slides, half of which are about the consumer.

Here are my thoughts

I think the word “responding” is incorrect, since some of this evidence is about sentiment, and what may or may not happen. 

These are things people have little control over, like losing their jobs.

Slide observations:

• Six were thoughts about what’s going to happen – reaction not a response
• Two were the actions of foreigners
• Two were Vegas as a proxy – Americans have diversified their destinations considerably
• Consumer spending steadily and hotel books closer to high end range
• Corporate profits in China have nothing to do with US consumers

Then, there are the anecdotes.

I’m glad the CEO of Southwest Airlines (LUV) said we are already in recession.  The company’s quarter was over before tariffs kicked in.

Moreover, the company was a pioneer in the industry, but it hasn’t been a well-run business for many years.

Chipotle (CMG) mentions that folks are saving money, I think it is great and smart. I understand governments and business want folks spending money they don’t have, but from time to time, the former will print cash and give it out to seduce even more spending – and it always works.

With savings at historic low levels, it makes sense for people to cut back.

PepsiCo (PEP) is struggling with its supply chain and suggests it’s the reason for subpar execution.  That doesn’t explain why North America business was negative each quarter last year.  I didn’t see the mention of GLP-1s in the press release, although it was brought up on the call.

Management says it will fund disciplined commercial investments in North America.

The Apollo report also mentions International Business Machines (IBM), whose shares took a shellacking last week, as the company suffers from tariffs.

This morning, International Business Machines (IBM) announced a major investment in the United States.

This is great news, after they spend a decade only buying back their own stock.

This is also the goal of higher tariffs.

Buckle up for monster earnings season.

 

Comments

The impact of the previous Administration on our economy will continue for at least the first 18 months of a new Administration. When one thinks about all the Tax Dollars that have been spent on Immigration and benefits for Immigrants, it's easy to understand the Consumer Confidence levels. It will get worse before it get's better. Without Common Sense recovery timing cannot be predicted. P. Krueger on 4/28/2025 11:20:00 AM

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