Smith (DS) Share News (SMDS)

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Main U.S. equity indexes end slightly green
  
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Real estate leads S&P 500 sector gainers; energy weakest group 
  
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Dollar up; gold, crude, bitcoin decline
  
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U.S. 10-Year Treasury yield rises to ~3.60%
  
 
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U.S. STOCKS SKITTISH, BUT STILL SCORE GAINS (1605 EDT/2005 GMT) 
Major U.S. stock indexes edged up on Monday as higher bond yields weighed on tech and growth stocks and investors braced 
for a heavy week of corporate results and comments from Federal 
Reserve officials that could give more insight into the path of 
interest rates. 
After a subdued open, the S&P 500 index spent much of the day trading around the flat line. However, the benchmark 
index strengthened enough late in the session to end up 0.33%, 
essentially on the day's high at 4,151.40. 
Of note, the SPX's intraday range as a percentage of the prior day's close was just 0.69%. That's its fourth tightest 
reading so far this year. The lowest reading was last Tuesday at 
0.53% so there appears to be a sudden level of indecision. Last 
Tuesday's 0.53% print was the tightest since Nov. 25 of last 
year, which was the holiday shortened session, the day after 
Thanksgiving. 
Sudden skittishness is coming just as traders are wondering if the SPX is about to see a break in the clouds. Cloud 
resistance resides around 4,155. 
In any event, on Monday, yields rose, and bank stocks were among outperformers. 
Here is where markets stood just moments after the 4 p.m. EDT close: 
 
 
CAN STOCKS BOTTOM AHEAD OF A RECESSION? (1330 EDT/1730 GMT)
Many U.S. equity investors wonder if the stock market has ever bottomed before a recession actually got underway. 
Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, has been highlighting the belief that the S&P 500 
priced in a recession at its October 2022 low, down roughly 25% 
from its record high. 
According to Calvasina, there actually is one period in history when the stock market appeared to ignore a recession – 
1945. This was the recession that occurred as World War 2 came 
to an end. 
"It was brief, lasting from February 1945 to October of 1945, and was driven by the pivot from a wartime economy to a 
peacetime economy in which government spending dried up quickly. 
Unemployment remained low despite the fact that soldiers 
returning home were competing with civilians for jobs," writes 
Calvasina in a note. 
She adds that stock market conditions were volatile before 
the recession of 1945. 
While there are clear differences between 1945 and today, 
Calvasina believes that one thing that both have in common is 
that "unprecedented historical events caused dramatic shifts in 
the economy that required a tough transition back to more normal 
conditions." 
In the case of 1945, this resulted in a technical recession that the stock market was able to endure, perhaps due to all the 
pain it had already taken. 
"Time will tell whether the stock market can look past any recession that occurs in 2023-2024 as the US economy completes 
its transition into the post-COVID era. It’s worth keeping in 
mind that while this would be rare, it wouldn’t be entirely 
unprecedented." 
 
TAKING STOCK OF SOME RARE BULLISH TRIGGERS (1222 EDT/1622 GMT) 
Stocks have staged an impressive rally off their mid-March lows, so much so that, Ryan Detrick, chief market strategist at 
The Carson Group, says he sees multiple rare and potentially 
bullish signals. 
Detrick notes that the S&P 500 had its best first quarter since 2019, up 7.0%, which came on the heels of 7.1% gain the 
prior quarter. 
What happened after previous big first quarters? Detrick says that there were 16 other first quarters that gained at 
least 5% and the final three quarters of the year finished 
higher 15 times. 
Next, Detrick addresses the breadth issue, that only a few stocks are leading the overall market higher. Detrick cites a 
recent sign of extreme buying pressure across many sectors and 
stocks. Using data from Ned Davis Research, Detrick says that 
more than 93% of the stocks in the NDR universe were recently 
above their 10-day moving average. 
"All you need to know here is this is a rare sign of broad-based strength and a year later stocks were higher 23 out 
of 24 times with some very solid returns along the way," Detrick 
writes. 
Lastly, Detrick points to a recent rare trigger of the Zweig Breadth Thrust (ZBT) indicator, which was developed by legendary 
trader Marty Zweig. The signal looks at all the stocks on the 
NYSE and it looks for periods of extreme oversold readings 
moving to periods of extremely overbought conditions in a short 
timeframe. In other words, a quick transition from washout to 
heavy buying. 
According to Detrick, with the previous 14 ZBTs, the S&P 500 was higher a year later every single time (14 out of 14 times 
and up 23.3% on average). 
"It would be quite rare for this signal to trigger and for stocks to simply drop right back to new lows. In fact, usually 
it happens ahead of periods of strength." 
 
IT'S TIME FOR DIVIDENDS RULE (1112 EDT/1512 GMT)
Corporate America is possibly going to keep a tight lid on costs amid a high interest rate environment, likely higher 
lending standards and slowing growth, with last month's turmoil 
in the banking sector adding to caution. 
The outlook of buybacks is less favorable in such times, while dividends have room to growth further, Goldman Sachs noted 
in its Weekly Kickstart note. 
As earnings reports pour in, latest results show first quarter S&P 500 dividend-per-share growth has already registered 
8% growth year-over-year, with strategists expecting further 
growth in 2023, GS said. 
Meanwhile, S&P 500 buyback executions fell by 11% in Q3 2022 from a year ago and 21% in 4Q 2022 and data suggests YTD 
activity could slow further in Q1, GS added. 
Indeed, Charles Schwab on Monday said it would pause its share repurchase program in light of recent uncertainty in the 
U.S. banking sector and the resulting concerns around new 
regulations. 
"Current cash spending outlook is supportive for stocks paying dividends over those focusing on repurchasing shares," GS 
strategist David Kostin said in a note late on Friday. 
The S&P 500 Buyback index, which measures the performance of the top 100 stocks in the index with the highest 
buyback ratios has edged up 2% this year. 
In comparison, the S&P 500 Dividends Aristrocrats index , which measures the performance of S&P 500 companies 
that have increased dividends every year for the last 25 
straight years, has eked out a 1% gain in 2023. 
Separately, Bank of America strategists noted on Monday that JPMorgan and Wells Fargo bought back stock in Q1 
and expect to continue to do so in 2023, a rare positive at a 
time of potentially slowing buybacks in general. 
Dividends are not completely out of the woods though.
If lending stress increases substantially and leads to a broader downturn, GS strategists expect regional banks to 
suspend dividends and REITs to reduce dividends. 
TURN THAT FROWN UPSIDE-DOWNISH: EMPIRE STATE, NAHB (1049 EDT/1449 GMT) 
Data released on Monday suggested the economic skies are a
tad less cloudy this month.
Factory activity in the Northeast bounced back to expansion this month. 
The New York Fed's Empire State index delivered a big upside surprise in April, landing at 10.8, having spent 
the previous four months in contraction (an Empire State number 
above zero signifies monthly expansion). 
Analysts expected a reading of -18.
The turnaround was driven by robust bounce-back in new orders - to 25.1 from March's -21.7 print. 
The index, which aggregates results from a survey sent to 200 manufacturing executives in New York State at the first of 
the month, also showed a cool-down in the inflation-related 
prices paid element, while the employment number remained in 
contraction. 
The manufacturing sector - accounting for about 11% of the U.S. economy - has been contending with higher input costs, a 
demand shift from goods to services and a worker shortage. 
But the sector's most formidable current bogeyman is tighter credit conditions - as the Fed continues to tighten the screws 
and regional banks confront a liquidity crunch. 
"On the face of it, this report suggests that the re-opening rebound in China’s manufacturing sector is providing a 
significant boost to activity in the U.S., offsetting any drag 
from tighter credit conditions," writes Kieran Clancy, senior 
U.S. economist at Pantheon Macroeconomics. 
"(But) capital spending is the lifeblood of U.S. manufacturing activity, and it is set to take an enormous hit as 
credit conditions tighten," Clancy adds. 
On Thursday, the Philly Fed will round out the Atlantic region manufacturing picture: 
Separately, the mood in the home construction market is a bit less gloomy in April, according to the National Association 
of Home Builders (NAHB). 
While NAHB's Housing Market index inched up to 45 from 44 - consensus saw it staying put - it marks its ninth 
straight month below 50, the line of demarcation between 
pessimism and optimism. 
Even so, the report also shows its fourth consecutive monthly improvement. 
"Currently, one-third of housing inventory is new construction, compared to historical norms of a little more than 
10%," says Robert Dietz, NAHB's chief economist, who also notes 
that "there is not significant evidence thus far" that tighter 
lending conditions amid regional banking turmoil are hitting 
builders and developers. 
"Builders note that additional declines in mortgage rates, to below 6%, will price-in further demand for housing," adds 
NAHB chair Alicia Huey. 
Indeed, traffic of would-be buyers, encouraged by recent down-tick in mortgage rates, appears to be on its way to 
recovery. 
Later in the week, housing starts/building permits, mortgage demand and existing home sales data will give housing market 
geeks more to chew on. 
U.S. STOCKS STEP GINGERLY IN EARLY TRADE (1015 EDT/1415 GMT) The main U.S. indexes are all roughly flat in early 
trade on Monday as investors await more bank earnings and views 
from Federal Reserve policymakers that could shape expectations 
around when the central bank would pause its monetary policy 
tightening. 
A majority of S&P 500 are in positive territory, with real estate posting the biggest rise. 
Communication services is down more than 1.5%, making it the only one of the 11 sectors with an absolute change 
of more than 1%. 
Here is an early trade snapshot: 
 
 
 
 
 
(Terence Gabriel) 
 
***** 
 
 
 
 
 
WEDBUSH BELIEVES INDIA IS APPLE'S NEXT MARKET TO CONQUER 
(0925 EDT/1325 GMT) 
 
Wedbush believes Apple Inc's move to open its 
first retail store in India kicks off an aggressive push that 
could ramp up annual India revenue to $20 billion by 2025. 
This compares with Apple's revenues from the country touching $6 billion in the year through March 2023. 
"Apple, with price points across the board, plan to take a page out of their historically successful China strategy in 
penetrating India over the coming years and unseating 
traditional competitors," says Wedbush analyst Dan Ives. 
Apple is looking at India from both a production and a retail expansion point of view over the coming years - a 
strategic "poker move," says Ives. 
Market share gains are on the horizon as it opens in major cities and attempts to attract more Indian consumers into the 
Apple ecosystem. 
GREENER PASTURES AHEAD FOR EUROPE'S ESG (0904 EDT/1304 GMT)
After a rough 2022, it looks like sustainable investing is back in vogue. 
Environmental, social and governance (ESG) equity funds ended the first quarter of this year with net inflows, even 
after the March withdrawals sparked by the banking crisis, 
beating non-ESG equity funds, which lost money. 
Citi Research's equity strategy team said there are three main reasons to re-engage with ESG stocks this year - 
1. ESG earnings have been resilient to past profit recessions 
2. Real rates are stabilizing and ESG is a "growth trade" so subsiding valuation pressures should help these stocks 
3. Structural pro-ESG trends like the U.S. Inflation Reduction Act 
Stocks in Europe that could benefit from these trends, according to Citi, include luxury firms such as Richemont 
, and Kering and pharmaceutical firms like Novo 
Nordisk. 
Citi's list of resilient ESG stocks have gained 14% on average so far this year, outpacing the 10% gain in 2023 by the 
broader STOXX 600 index. 
Here's a full list of European ESG stocks, recommended by Citi with resilient EPS: 
RIC               Name 
 
YTD% 
 
 
Eiffage                    11.782 
Kone B                     2.9814 
Intertek Group             1.8344 
Teleperformance           -3.8616 
Amadeus It Group          27.1267 
Compass Group              8.2138 
Whitbread                 21.1284 
Nestle                     4.6722 
London Stock Exchange     10.6222 
Worldline                  8.4588 
Danone                    20.8816 
Prudential                 2.0399 
Kering                    20.0631 
Richemont N                22.769 
Air Liquide               20.6193 
Smith (DS)                 1.1527 
Publicis Groupe            25.143 
WPP                        16.435 
Lonza Group               30.5231 
Novo Nordisk 'B'          23.9232 
Inditex                   26.1569 
Ahold Delhaize            15.7601 
DSV                       17.5559 
EDP Renovaveis             1.0204 
 
S&P 500 INDEX: ABOUT TO BE A BREAK IN CLOUDS? (0900 EDT/1300 GMT) 
The S&P 500 index ended last week flirting some major chart barriers. Thus, bulls may soon learn whether their worries 
are just like passing clouds, or if instead, another storm may 
be brewing. 
The SPX hit a high on Friday of 4,163.19 before closing out the week at 4,137.64. 
Thus, the benchmark index flirted with the upper edge of the weekly Ichimoku cloud, which resides around 4,155. 
Ichimoku cloud is technical indicator which displays support and resistance, identifies trends, and measures momentum. 
Utilizing midpoints of ranges, a number of lines are generated. 
Two of these lines are used to create cloud boundaries. The 
entire cloud is shifted forward in time in order to provide a 
glimpse of future support and resistance: 
  
Once the SPX broke below the cloud in May of last year, it has failed to thrust back above it on a weekly closing basis. 
Indeed, rallies failed in early-June, mid-August, mid-December, 
and in early-February of 2023. 
Thus, the 4,155 level presents an important hurdle.
Add in additional resistance at the early-February high at 4,195.44, the 23.6% Fibonacci retracement of the March 
2020-January 2022 advance at 4,198.70, the Fed-Chair Powell 
August-26 Jackson Hole speech high at 4,203.04, and the 100-week 
moving average, which ended Friday at 4,203.49, and bulls may 
have their heads in the clouds if they expect the SPX will be 
able to continue to advance. 
That said, clearing these barriers will have the potential to add credence to the view that the SPX saw a major low in 
October, and suggest that its trend inflection is only 
strengthening.