Morning Toast April 11th

Job Market Slow Down = Fed winning (maybe).


Friday was a key day for labor-market data. Today we're taking a closer look. So far markets have responded well. But be careful out there, as almost 90% of the index’s gains this year is accounted for by just 20 stocks - Nvidia, Apple, and Meta among them - the Financial Times notes.

The job market is clearly starting to slow down. Friday's reading said the U.S. added 236,000 jobs in March, which was a lower number than the prior month. Data from earlier in the week showed that job openings tumbled by 632,000 in February to 9.9 million, while jobless claims ticked up in the last week.

Daniel Zhao, lead economist at Glassdoor, pointed out in a Twitter post that this signals "the first time since May 2021" that monthly job openings dipped below 10 million.

Stock Spotlight

The unfairly punished financial sector presents an opportunity for investors - according to BMO Capital Markets.

Financial institutions have enjoyed several weeks of calm following the shocking overnight demise of Silicon Valley Bank, which was the largest bank failure since the 2008 financial crisis.

As we have reported, some predict that storms are still on the horizon for the sector but according to BMO Capital Markets, that gloomy sentiment is nothing more than fear-mongering.

Their view is that bank stocks have been thrown out with the bathwater after plummeting 19% in March, which has dragged down financials broadly. After a strong start to the year, the sector slid nearly 10% last month and is currently trailing the S&P 500's year-to-date gain by 13 percentage points.

Most banks appear to be in solid shape after last month's chaos, investors' knee-jerk reaction to sell in the face of uncertainty has sent the group's valuations down to crisis levels, Belski noted. However, financials broadly are also historically cheap by any measure compared to the market, according to BMO, even though valuations aren't as heavily discounted as they were last fall.

Another sign of the sector's financial health is that the growth outlooks for both dividends and earnings look rosy. Financials are projected to grow dividends by 8.6% in the next year, which Belski noted is the second-highest rate across the 11 sectors in the S&P 500.

As such thirteen companies fit the bill for BMO to include in the firm's U.S. Tactical Equity portfolio and/or U.S. Dividend Growth portfolio. Here are five. Check out the Business Insider article here for the full list.

Quote of the Day

"We are making this transition where the stock market was obsessed with interest-rate risk to one that is concerned about credit risk."

Mohamed El-Erian

Sustainability News

Salesforce Pledges to Reduce Impact on Nature Across Operations, Products.

CRM solutions provider Salesforce announced the launch of a new “Nature Positive Strategy,” outlining a series of nature and climate-focused actions, including a new commitment by 2025 to measure, manage and develop an action plan to reduce the company’s impact and dependencies on nature across its value chain – including its data centers, offices, people, and products.

In addition to Salesforce’s action plan commitment, key focus areas of the new strategy include leading on nature restoration at scale through investments and partnerships, as well as expanding on solutions to help customers accelerate their own sustainability strategies, such as its greenhouse gas emissions data tracking, analysis and reporting solution, Net Zero Cloud.

The new strategy is the latest in a series of sustainability-focused initiatives by Salesforce, including a recent commitment to boost clean energy access in emerging markets, the launch of a new carbon credit marketplace, and a $100 million commitment in May 2022 to support technologies that remove carbon from the atmosphere, as part of the First Movers Coalition (FMC). Salesforce has also announced the introduction of climate obligations in its supplier procurement contracts, and the integration of ESG performance in its executive compensation programs. Last year, Salesforce added Sustainability as a “Core Company Value.”

Douugh, did you know?

We may have mentioned short-selling once or twice before when discussing Stock Lending, and accidentally left you scratching your head. If that’s the case, then let us set short selling straight.

Put as simply as possible, short selling is when an investor borrows shares (or any other securities) with the purpose of selling them immediately to return a profit and buying back later at a lower price. This may sound scary for a lender, but it's perfectly safe for them. In fact, they’ll still get earnings, they’ll just be paid out by the borrower instead of the company. Pretty sweet deal!

Start Investing Today!

Investing involves risk. You aren't guaranteed to make money, and you might lose the money you start with.

Douugh Australia Pty Ltd ABN 76 617 000 138 operates under Douugh Australia Pty Ltd AFS License No. 500063. Although we endeavour to ensure the accuracy of information we provide, we do not accept responsibility of liability for any errors or from any loss from its use. Any information provided is general advice only and has been prepared without considering your objectives, financial situation or needs. We don't provide personalised advice or recommendations. Before making any investment decision you should consider whether it is appropriate for your situation and seek appropriate taxation and legal advice. For more details, see our FSG, Terms of Service and other disclosures.

Stay informed with the Morning Toast

Save time with curated and delivered financial news and insights.