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Wild plunges in Bitcoin and other cryptos

Wild plunges in Bitcoin and other cryptos over the weekend indicate that we might not be done yet with market volatility, which doesn't necessarily mean stocks will go down.

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We could see big swings in either direction. Here’s what you need to know to navigate the week ahead.

THE WEEK AHEAD

As the weather heats up and Memorial Day approaches, the week ahead continues with retail earnings reports. On the data front, the economic calendar brings several key points, including the April Personal Income & Spending report.

The big question is: Will last week’s volatility continue into this week? If the decline in cryptocurrencies over the weekend is any indicator, we may be in for a bumpy ride. With bitcoin falling more than 50% from its high over the weekend, Coindesk’s (COIN) Consensus 2021 conference will be extra lively, with speakers including Bridgewater’s Ray Dalio, ARK Invest’s Cathie Wood, and even Lael Brainard from the Federal Reserve.

Market Activity Image - Bitcoin

Earnings

AutoZone (AZO): To what degree is the company benefitting from the current auto chip shortage that is idling new car and truck manufacturing, forcing people to extend the life of their current vehicle?
Construction activity and backlog levels at specialty contractor Dycom (DY), which counts AT&T (T) and Verizon (VZ) among its core customers, will tell us how quickly those 5G networks are being built and 4G ones are getting densified.
Retailers have been reporting sizable improvements in comparable-store sales year-over-year, and now it’s Nordstrom’s (JWN) turn. Are shoppers spending more at the flagship store or at Nordstrom Rack? To what extent is its business being impacted by supply chain issues?
Soaring housing prices should help drive significant year-over-year revenue improvement at Toll Brothers (TOL) but will the shortage of new homes for sales weigh on its outlook? How hard will rising lumber and other raw material costs hit its margins, or does it plan on boosting housing prices even further?
Wednesday, May 26

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Following the blowout results for sporting goods in the April Retail Sales report, will Dick’s Sporting Goods (DKS) boost their outlook? And does the company see the shift to working out at home abating as pandemic restrictions continue to be lifted?
Nvidia (NVDA) announced a four-for-one stock split, but it is the robust chip demand for gaming, AI and data centers that will drive its quarterly results and guidance.
While Williams-Sonoma’s (WSM) direct-to-consumer business boomed during the pandemic, what foot traffic pattern is the company seeing in its stores?

Last year consumers spent on connected devices and screens as the pandemic shifted how we work and play, and Best Buy (BBY) was a beneficiary. Is the company seeing a more balanced business mix, or has the strong housing market made its TV and appliance sales the driving force?


Comparing monthly sales reports from Costco Wholesale (COST) vs. the monthly Retail Sales reports show the company is winning consumer share, but the real earnings leverage is in its membership fee revenue. What are its 6 to 12 months plans for opening new warehouse locations? Any signs of a membership price increase?
After living in sweats and yoga pants much of the last year, shoppers will need to put some pizzaz back into their wardrobe, but are they doing it at one of Gap’s (GPS) retail portfolio stores that include Gap, Old Navy, Banana Republic and Athleta?

Consumers are spending on cosmetics, and other beauty products as mask mandates are lifted. We suspect consumers will want to look and smell good as they venture out and socialize, which should bode very well for Ulta Beauty’s (ULTA) quarterly results.
Economic Data

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April New Home Sales – Can it get any hotter?
May Consumer Confidence – As stimulus checks fade, how is outlook evolving?

Weekly and Continuing Jobless Claims – Last week, Initial claims fell for the fourth consecutive week, dropping to a new pandemic low, but Continuing Claims surprised to the upside.
April Durable Orders – This one was a big disappointment last month thanks to significant supply shortages impacting production.

1Q 2021 GDP – Second Estimate.
April Pending Home Sales – Any sign that the easing of pandemic restrictions and vaccination progress is leading to an increase in the inventory of homes for sale, which has been sitting at incredibly low levels.
Friday, May 28

April Personal Income & Spending – Last month saw the biggest increase on record in Personal Income thanks to the government stimulus efforts.
May Chicago PMI – Last month, this business barometer rose to the highest level since December 1983 at 72.1, way above expectations for 65.3, and is expected to drop to 69.5.
Expected IPOs & Other Major Events

Monday, May 24: A U.S. House Financial Services subcommittee plans to hold a hearing on SPACs and direct listings as Congress weighs a proposal to explicitly exempt special purpose acquisition companies from a 1995 law designed to reduce securities lawsuits.
Coindesk Consensus 2021 runs May 24-27.
Shares of ZipRecruiter (ZIP), Paymentus (PAY) and Flywire (FLYW) are expected to begin trading on May 26.
Wednesday, May 26, Ford Motor (F) will host a Capital Markets Day that will center on its Ford+ plan and likely focus on its electric vehicle plans following the success of its electric versions of the Mustang and F-150.

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FINANCE IN FOCUS

What is inflation?

Inflation is the general rise in price level of goods and services, which means your money will be worth less over time. Next time you take a visit to your local grocery store, you may notice that the cost of your everyday items like toilet paper and your favorite bag of chips has gone up.

The most common indexes for inflation are the Consumer Price Index (CPI) and the Wholesale Price Index (WPI). The CPI measures the change in price of consumer goods and services, whereas the WPI measures the price of goods traded in bulk between wholesale businesses.

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