- Enthusiasm for stocks couldn't be higher, with individual investors holding more equities than ever before, fueled by a blowout earnings season, the prospect of an economic recovery and extra savings like stimulus checks. Stockholdings among U.S. households even rose to 41% of their total financial assets in April, the highest level on record, according to data from JPMorgan and the Federal Reserve. That kind of optimism has led the S&P 500 to hit 25 records this year alone, while logging its third straight month of gains in April by adding more than 5% to the index.
Sell in May and go away? The investment strategy posits that equities tend to underperform in the six months through October, so investors should convert to cash at the start of May and then buy into a dip later in the fall. "With stocks at record highs, some investors may be tempted to follow the old adage," UBS wrote in a research note. "In the U.S., a stay invested strategy has tended to outperform, particularly in recent years. Market composition, with the U.S. market more tilted towards growth stocks, partly explains the outperformance."
Others, like billionaire investor Leon Cooperman, have "an eye on the exit." The self-described "fully invested bear" is worried about market valuations and thinks "we should recognize were pulling demand forward and the longer-term outlook is not particularly favorable." He also expects an upcoming rise in taxes and inflation, which may force the central bank to signal action before the end of 2022.
Starting the new month: U.S. stock index futures climbed overnight, with the Dow up 0.6%, and the S&P 500 and Nasdaq ahead by 0.4% and 0.2%, respectively. The Manufacturing PMI and ISM Manufacturing data for April will be released this morning, shedding light on the economic situation before Friday's big non-farm payrolls report. Investors will also be watching the next batch of corporate earnings, including Q1 results today from Enterprise Products Partners (EPD), ON Semiconductor (ON), Realty Income (O) and Omega Healthcare (OHI).
| | Top News  Shutterstock Enthusiasm for stocks couldn't be higher, with individual investors holding more equities than ever before, fueled by a blowout earnings season, the prospect of an economic recovery and extra savings like stimulus checks. Stockholdings among U.S. households even rose to 41% of their total financial assets in April, the highest level on record, according to data from JPMorgan and the Federal Reserve. That kind of optimism has led the S&P 500 to hit 25 records this year alone, while logging its third straight month of gains in April by adding more than 5% to the index.
Sell in May and go away? The investment strategy posits that equities tend to underperform in the six months through October, so investors should convert to cash at the start of May and then buy into a dip later in the fall. "With stocks at record highs, some investors may be tempted to follow the old adage," UBS wrote in a research note. "In the U.S., a stay invested strategy has tended to outperform, particularly in recent years. Market composition, with the U.S. market more tilted towards growth stocks, partly explains the outperformance."
Others, like billionaire investor Leon Cooperman, have "an eye on the exit." The self-described "fully invested bear" is worried about market valuations and thinks "we should recognize were pulling demand forward and the longer-term outlook is not particularly favorable." He also expects an upcoming rise in taxes and inflation, which may force the central bank to signal action before the end of 2022.
Starting the new month: U.S. stock index futures climbed overnight, with the Dow up 0.6%, and the S&P 500 and Nasdaq ahead by 0.4% and 0.2%, respectively. The Manufacturing PMI and ISM Manufacturing data for April will be released this morning, shedding light on the economic situation before Friday's big non-farm payrolls report. Investors will also be watching the next batch of corporate earnings, including Q1 results today from Enterprise Products Partners (EPD), ON Semiconductor (ON), Realty Income (O) and Omega Healthcare (OHI).
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| Tech A high-profile legal battle set to begin today between Apple (NASDAQ:AAPL) and Fortnite creator Epic Games will determine how a "market should be classified in the digital age." It's one of the biggest cases brought against Apple since the company was founded in 1976, and the consequences could be huge. A verdict could see developers no longer having to do app "checkouts" with Apple, or having to pay a 30% "app tax" to the tech giant, which would dent its fastest-growing Services business segment.
Backdrop: The legal fight started last year when Epic created its own direct payment method within Fortnite, circumventing fees paid for App Store purchases. Apple then issued a warning to Epic regarding the workaround, but the latter refused to remove it, and Apple kicked the developer off its platform. A lawsuit then emerged, which is finally seeing its day in court. Executives testifying at the trial will include Epic CEO Tim Sweeney and Apple CEO Tim Cook, though neither side wanted a jury trial, leaving the decision to U.S. District Judge Yvonne Gonzalez Rogers.
Epic's argument: With over 1B users across the globe, the iPhone market - is itself a market. Meaning, developers can only reach this massive demographic via the App Store. Apple is essentially "forcing" them to use its mechanism (to have the app downloaded) and its app payment system (to have people pay for purchases).
Apple's defense: The company feels it built an ecosystem where app developers of all sizes formed multi-million or even billion dollar businesses over the last decade. Anyone that doesn't want to pay the 30% commission is asking for a free ride in a market it created, which it updates and maintains via new features and security details.
Apple seems to have the edge in terms of legal precedent, but the tech giant ended the week with an antitrust warning from the EU, which said Apple "abused its dominant position for the distribution of music streaming apps through its App Store." That decision, which followed a complaint from Spotify (SPOT), was preliminary and Apple will have time to respond. But if the finding holds in the final decision, Apple could face a fine of up to 10% of its annual revenue and be forced to make changes to its App Store business model.
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| Cryptocurrency Continuing to set fresh record highs, ether (ETH-USD) climbed above $3,000 on Sunday for the first time in history, and was last changing hands at $3,097.87, up 6.1% over the last 24 hours. Only a year ago, it traded for around $208, an increase of 1,359%, and this year alone, the crypto is up 310%. Adding to the gains... Ether surged 25% over the past week and the digital asset now has a market cap of about $350B, according to CoinMarketCap.com.
What's driving recent demand? Crypto analysts are pointing to a broader awareness of ether's smart contract platforms, which are powering the landscape for NFTs, Web 3.0 apps and decentralized finance (DeFi). In fact, the amount of capital locked in DeFi protocols just crossed $68B, which is up thousands of percent compared to the beginning of the year. Last week, the European Investment Bank even announced that it had issued €100M in two-year notes, using the ethereum blockchain for the first time.
"Flippening" has also re-entered the crypto conversation - a term that refers to the belief that ether's market cap might soon top that of bitcoin (BTC-USD). Many bitcoin believers maintain that is outside the realm of possibility, though daily transaction count on Ethereum's blockchain has increased by 22% to 1.376M this year. Market research firm Fundstrat further wrote in a recent research note that ether could hit above $10K by the end of this year, driven by a crypto narrative that's shifting to ethereum from bitcoin, but it also expects the latter to reach $100K before 2022.
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