• Bumpy week, is Facebook gonna bring us down?

• The data supports the “profit taking” view (META notwithstanding)

• Weakening Housing data, but New Homes Sales are still the bright spot

• Business Surveys turn lower

• Will oil sanctions ever have teeth?

• Where did all the crypto money go?...and Chart Crime of the week!

• Chart Crime of the week

It was a bumpy week as the profit taking accelerated into Friday.  The once-strong momentum names were unraveling at a manic pace.  The Fed narrative had certainly shifted.  The first rate cut is now only expected in September.  And it is a toss-up if the Fed will do two cuts by the end of the year.  Ironically, nerves calmed a bit with some weaker economic data.  The largest 2-year Treasury auction of all time ($69b) was well received.  The ECB is slated to cut European interest rates in June.  The Bank of England might do the same (more split).  Earnings have been good even if the stock reactions have not been so hot. Geopolitics have cooled with (or maybe despite?) the passage of the three-pronged aid bill (Israel, Taiwan, and (the) Ukraine).  Tesla’s disastrous earnings were received warmly.  While probably foolish, the reaction at least proves animal spirits are alive and well. 

All of this might have come to an end tonight.  Meta (Facebook) reported strong earnings with just modestly softer guidance.  But the stock was slammed in the aftermarket (circa -15%).  Maybe it was the higher expenses going forward.  Maybe it was an end to the virtuous cycle of beating strong expectations and revising guidance much higher.  While this still might fit the “profit taking” narrative we have been describing/believing, this might make for a tougher road to hoe.  There was some chatter that Meta’s ad business had started to slow in late March and into April.  According to the reports, this was isolated at Facebook.  We must wait and see what the rest of Big Tech reports (and guides).  Of course, the higher capex is a positive for Nvidia and others ahead of Meta in the supply chain.  Nonetheless, we are inclined to be more cautious.