59 - Explaining the Market Turbulence

NHL & NFL Playoff Previews and some more gardening tips

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• Plants Get Sunburned Too - Elyse Huskey

• Explaining Wednesday’s Market Sell-Off - Michael Huskey

• Sports Corner - Tom Davis

• Husk Fund (Premium Members Only)

Plants Get Sunburned Too

• It’s mid-May in Michigan, and like the good home-grown midwestern that I am, I ditched my coat and have been wearing shorts since late April.

• What’s more, my mom had to text me last weekend to remind me to wear sunscreen, and while we can laugh that this is such a “mom thing” to say, it was also some necessary encouragement since I am known to neglect sunscreen in favor of a good springtime base-burn.

• And similarly to how I am eager to soak in the sun after a dreary winter, I am also eager to transplant my veggie plants into the garden.

• Last Friday, in the mid-day sun and 85-degree weather, I put my tomato, pepper, and cucumber plants into my garden. At first, they looked thrilled to be there, especially after a good soaking! But a few days later, pale, flaky spots started to show on some of the leaves. The plants were sunburned!

• Read more at My Backyard Vegetable Garden

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Explaining Wednesday’s Market Sell-Off

• Wednesday was the largest market sell-off since 2020, and if you aren’t someone who has their ear on the pulse of the economy, you are probably wondering what could have happened to trigger such a sell-off. The last time there was a drop this steep, it was in response to a pandemic, not a bad earnings call from Target.

• Two sets of numbers were released on Wednesday that created a perfect storm for selling, and that was a bad earnings call by Target and weaker than expected mortgage numbers.

Bad Retail Earnings

• This week there were four earnings calls from America’s biggest retailers: Walmart, Target, Home Depot, and Lowes. Only one, Home Depot, beat expectations, but Walmart and Target told a story that spooked many investors.

• The Walmart team said that customers are passing on discretionary items and are looking to purchase generic instead of name brands. The Target team said they had excess inventory, which led to a need to mark down items. With rising costs in labor and energy, shrinking margins do not bode well for the retailers or for the companies that are supplying them with the inventory. One area both companies said there was strong demand was in luggage… people are ready to 🛩!

• Home Depot and Lowes told a different story. They said their customers are still buying, and they do not see downgrades but instead upgrades. The Home Depot team mentioned that because of the rise in home prices and interest rates. They see a demand for their products because it allows homeowners to upgrade their homes, which is necessary because of the cost of moving into a new house.

Mortgage Demand Falling

• The number of mortgage applications dropped 11% week to week. This was the first drop in mortgage demand since April.

• According to the National Association of Home Builders/Wells Fargo Housing Market Index, Builder sentiment fell to a two-year low.

• Housing, because of the many involved components, tends to be a leading indicator of economic conditions.

One-Two Punch

• The Recession alarm bells were already ringing, but this swift one-two punch definitely set the market back this week.

• The only silver lining is that these reports could help tamp down inflation. The concern is, will lower prices come with increased unemployment? Some companies have already announced layoffs, and with weakening, consumer demand for products could more be coming? Lower prices with a job are great, but lower prices on the unemployment line don’t have the same ring.

• If you are unsure how to navigate this market, try a 30-day free trial of the premium subscription, where I will give you insight into the trades that I am making with the Husk Fund.

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Sports Corner

Dallas Mavericks and the Golden State Warriors

• Luka Doncic’s playoff legend has grown immensely after his stellar performance last round taking down the #1 seed Phoenix Suns in epic fashion. The key to this series for the other Mavs to elevate their play. For Dallas to have any shot, Jalen Bruson will need to be Luka’s sidekick.

• Steph Curry, Klay Thompson, and Draymond Green still headline the Warriors. They have retooled their roster to reassert their championship level form, which features project players turned budding stars in Jordan Poole and Andrew Wiggins.

• Game 3 is in Dallas this Sunday at 9 pm ET on TNT.

Boston Celtics and the Miami Heat

• Celtics beat the defending champs to get to this point and now have the home-court advantage after splitting the first two games in Miami. Jayson Tatum and Jaylen Brown will need to lead the team in scoring, but if they can get similar consistent production out of their wily veteran, Al Horford, and the 2022 Defensive Player of the Year, Marcus Smart, expect Boston to make their 22nd NBA finals appearance.

• Although the Heat may not have a “superstar” (Jimmy Butler on that “star” tier below super), this team has so much depth that can more than makeup for it. Bam Adebayo is pretty much a point guard in a center’s body. Tyler Herro plays with irrational shooting confidence, and they even Victor Olidipo as a 3rd/4th option off the bench.

• Game 3 is in Boston this Saturday at 8:30pm ET on ABC.

NHL Playoffs - Conference Semifinals

East

• The Tampa Bay Lightning and Florida Panthers are battling it out in the Sunshine State. This series heads to Miami, Tampa Bay is currently up 2-0. The Lightning are looking to win their 3rd Stanley Cup in a row, which has not been done since the Islanders won 4 in a row in 1983. Game 3 will be Sunday at 1:30pm ET on ESPN.

• The New York Rangers and Carolina Panthers have played two grueling close games, with Carolina pulling out both. Expect a raucous Madison Square Garden crowd for game 3 this Sunday at 3:30pm ET on ESPN.

West

• The Saint Louis Blues and Colorado Avalanche are tied 1-1 heading into the weekend. The Avalanche have been one of the league’s best teams over the past five years, but they can not clear that second-round barrier, losing in the past three seasons. The Blues, on the other hand, last won the Stanley Cup in 2019. Game 3 is 8 pm ET tonight on TNT.

• The Calgary Flames and Edmonton Oilers are not only playing to advance but for the Battle for Alberta (white-collar Calgary vs. blue-collar Edmonton, Canadian cities’ rivalry). Game 1 featured a total of 15 goals scored in a Flames victory. This was the most goals in a playoff game since 1993. Edmonton was able to level the series to 1-1 in game 2. Game 3 is Sunday at 8pm ET on ESPN 2.

Golf Major: PGA Championship Leaderboard After Friday

1. Will Zalatoris (-9 shots under par)

2. Mito Pereira (-8)

3. Justin Thomas (-6)

4. Bubba Watson (-5)

5. Rory McIlroy (-4)

T-53. Tiger Woods (+3 shots over par)

Rounds 3 and 4 will be on Saturday and Sunday, with primetime coverage being on CBS starting at 1pm both days.