CHRIS VERSACE: Good morning, Action Alerts Plus members. As we explained during yesterday's rundown and in your alerts, we were closely watching the April SLOOS report yesterday for a read on the tightening credit environment-- and for good reason. But before we get into that, we don't often give as much focus to this particular report. So for those who might be scratching their heads at home, the Senior Loan Officer Opinion Survey, or SLOOS report, is the Federal Reserve's quarterly survey of up to 80 US banks and 24 US branches or agencies of foreign banks.

Now, given recent bank failures, it's become a bigger part of the data the Fed analyzes as it looks to chart the course of monetary policy. As we've shared before, the thinking is tighter credit will act as a de facto rate hike, slowing the economy, doing-- excuse me-- part of the Fed's job for it. However, the unknown is how many rate hikes will tighter credit equate to.

Now, let's turn to the April SLOOS report that was published yesterday. It showed tighter credit, but not as extreme as some had been thinking or fearing. As we shared in our note, most of the movement found in this latest survey fell into the "tightened somewhat" category, not the "tightened considerably" category. But let's remember the timing of all of this.

The Silicon Valley Bank failure occurred on March 10 and Signature Bank on March 12. As such, the April SLOOS report may not show the full impact of tightening just yet as it relates to those events. Now, with the Fed boosting the fed funds rate even further in March and again last week, plus First Republic failing just a few days ago, we could see even further movement for credit standards in the next SLOOS report that's due out in July.

We suspect the Fed will be thinking about this when it holds its next monetary policy meeting in mid-June. As far as the April SLOOS report and the AAP portfolio, weakening demand for auto loans is adding to our concern about Ford shares. Here's the thing, lower-than-expected volume will make it even harder for the company to realize its cost savings and other synergies.

And as you know, we weren't exactly thrilled with the profit guidance it gave as part of its March quarter-earnings report. Now, all of this simply reinforces our plan to trim back the portfolio's exposure as the Ford shares get closer to the $13 level. Now, let's move on and talk about some earnings that were out this morning, starting with Clear Secure.

Top and bottom-line results were simply better than expected, and the cherry on top in Clear's report was the $0.20 special dividend. Enrollment growth for its identity offerings continued, growing both on a quarter-over-quarter and year-over-year basis as the company continues to expand its airport footprint. That led the company to guide the current quarter above consensus expectations.

Clear also shared it targets a mid-2023 soft launch for its TSA precheck service, which should add to bookings and revenue in the second half of the year. Our thinking remains that, as Clear further expands its airport footprint, we should see further membership growth in the coming quarters. We'll have more after the company's earnings call this morning.

And we also heard from Coty, as well, which delivered top and bottom-line beats and lifted its guidance for 2023 due to continued strength in its prestige business. The strength in Coty's March quarter, as we suspected, was largely had in its US and European businesses, while its-- excuse me-- Asia-Pac segment was down slightly year over year-- but far better than the results discussed by competitor Estee Lauder.

All in all, it was an earnings report that keeps us bullish on Coty's shares, and similar to Clear Secure, we'll have more in-depth comments on Coty once we've digested this morning's earnings conference call. So, please, be sure to check your email inboxes today. That'll do it. JD and I will be back tomorrow to answer some of your biggest questions of the week. Thanks for watching.