Arturo Holmes
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Iger and Peltz face off in Disney annual shareholder meeting. (0:20) March payrolls seen up by 200,000. (1:13) Microsoft and OpenAI to build Stargate supercomputer. (4:04)
The following in an abridged transcript of the podcast:
The top stories to look out for
The battle for the House of Mouse comes to a head on Wednesday.
Walt Disney (NYSE:DIS) holds its annual shareholders meeting and investors are expected to cast their votes to elect a 12-member board, ending the months-long fight between Nelson Peltz’s Trian Fund Management, which is vying for control, and Disney CEO Bob Iger.
The proxy battle took a new turn this week as the California Public Employees Retirement System (known as CalPERS) told Reuters it “believes Walt Disney Co. will benefit from fresh eyes on its board of directors and voted its company shares in favor of candidates Nelson Peltz and (former Disney CFO) Jay Rasulo.”
Trian’s campaign, officially launched in early 2024, has drawn support from key stakeholders, including influential proxy advisory firm Institutional Shareholder Services, which has backed Peltz’s candidacy but not Rasulo’s.
CalPERS, the biggest public pension plan in the U.S., owned 6.65M Disney shares as of the end of 2023.
Friday brings the March jobs report. Currently, economists expect nonfarm payrolls to post a rise of 205,000, with the unemployment rate staying steady at 3.9%. Average hourly earnings are forecast to have risen 0.3% on the month, with the annual rate ticking down to 4.1%.
Pantheon Macro says “The NFIB hiring intentions measure has been the best single indicator of payrolls over the past year-and-a-half, and it points unambiguously to a sharp slowdown in job growth in the spring.”
But Goldman Sachs believes that “the US economy is still poised for a soft landing – meaning a return to 2% inflation without a recession.”
“Recent growth and employment numbers have reinforced our economists’ view that the supply-demand imbalances in the economy are abating. Favorable weather is part of the reason for February’s strong jobs report, and the January figures were revised lower. A slowdown in wage growth suggests that the recent rebound in services inflation is likely to reverse.”
Looking to earnings
PVH (PVH) reports on Monday. Tuesday brings results from Cal-Maine Foods (CALM), Paychex (PAYX) and Dave & Buster’s (PLAY).
Levi Strauss (LEVI) weighs in on Wednesday. And Lamb Weston (LW) and Conagra Brands (CAG) report earnings on Thursday.
Among the top stories of the long weekend
The markets were closed for Good Friday, but as it’s not a federal holiday there were still economic indicators and Fed speak.
The headliner was the February personal income and spending numbers that include the core PCE price index – known as the Fed’s favorite inflation gauge.
The index rose 0.3% last month, in line with the consensus and slowing from +0.5% in January, which was revised from +0.4%. On a year-over-year basis, core PCE increased +2.8%, also matching forecasts.
The “big takeaway here is that service sector inflation is easing back in line with trend following turn of the year seasonal issues,” Joseph Brusuelas, chief U.S. economist at RSM, said. He adds that he expects “this slowing to accelerate in coming months in both the PCE and CPI which will support call for relaxation of a restrictive policy rate by the Fed.”
Speaking on Friday at a conference in San Francisco, Fed Chairman Jay Powell said the PCE report was “more or less in line with want we want to see,” noting that he still wants to see more “good” inflation data.
“Growth is strong right now,” and the Fed will be careful about its decisions. The strong growth means the central bank doesn’t need to be in a hurry, Powell said.
The market is pricing in about a 60% chance that the Fed will cut rates by a quarter point in June.
AT&T (T) said Saturday that some company data-specific fields had been released on the dark web about two weeks ago, impacting about 7.6 million current account holders and around 65.4 million former account holders. AT&T said it was not yet known whether the data in those fields originated from the company or one of its vendors.
“With respect to the balance of the data set, which includes personal information such as social security numbers, the source of the data is still being assessed,” the company said.
And Microsoft (MSFT) and OpenAI have been in talks to invest as much as $100 billion for a data center project that would contain a supercomputer, the biggest in a series of installations the companies plan to establish over the next six years. That’s according to The Information.
The planned supercomputer, referred to as “Stargate,” will be designed to house millions of specialized server chips to boost OpenAI’s artificial intelligence capabilities
And in the Wall Street Research Corner
Roth MKM analysts are out with their best investing ideas in the mid-cap universe from a charts perspective.
Since late January, the S&P 400 (SP400) has returned 7.5%, and analysts said they have seen a risk-off rotation as utilities and staples became the best performing sectors at the mid-cap level.
The strongest performing stocks came from the industrial sector. Among the picks are Nexstar Media (NXST), Columbia Sportswear (COLM), Western Union (WU), JetBlue (JBLU) and Silicon Labs (SLAB).
