Growing Quality Morning Market Feed May 6th 2024
Last week has been volatile, as we have seen the indices sell down in the beginning of the week, only to come back incredibly strong after Powell sounded dovish, and Friday's jobs data. Let’s discuss the main things that happened Friday and over the weekend before we look ahead for the day/week to come.
S&P500 +1.24% Dow Jones +1.19% Nasdaq +2.01% Russell2000 +0.99%
(Indice changes from Friday, May 3rd)
What happened in my portfolio last week?
PYPL: PayPal released earnings which were surprisingly good to me, I discussed them in a previous Morning Market Feed. Last Friday, PayPal also received an analyst downgrade, from “Buy” to "Accumulate”… soooo from buy to slowing gathering of shares? So still a buy? You have to love the creativity of analysts, I have never seen such a rating before. But they said that the “Rule of 40” doesn’t add up at PayPal, good thing they don’t guide for it, so as you should always listen to the points made against your position, it looks a bit like the good old analyst pessimism for a stock not shooting up like Nvidia.
ENPH: Enphase shares we only up slightly for the week, even after a 7% jump on Friday after the jobs data release and reports of a filing that the company’s CFO had increased her stake in the company by buying an additional 4000 shares.
RACE: Ferrari announced a new V12 model over the weekend, with the perfectly fitting name, 12Cilindri. These Italians really get their brainstorming sessions right by developing such creative names, as this new model replaces the 812 Superfast. I do this the 12 Cilindri is gorgeous, but I must say, the 12-cylinder, front engine lay-out has always spoken to me and I think they have nailed every model from that line in terms of looks.
MCO: Moody’s Corporation posted earnings which beat across the board, the only downside was that the company expected slightly higher operating expenses. So in full rationality, the stock dropped 4% before recovering.
They Are Sooo Back
I’m not sure if you have seen it due to not getting too much news coverage from what I have seen, but “We’re gonna stick it to the suits”. If you don’t know what I’m talking about, Gamestop (GME) shot up about 30% on Friday, giving flashbacks from the meme stock saga, when Gamestop stock was pushed up >1500% in less than 2 weeks as retail investors from the subreddit Wallstreetbets got together to create a gamma-squeze. This latest move is most notable as there seemed to be no news. We will see if this remains at a one-day thing, or if the stock keeps running and spreads through the market.
Market Conditions
Going into the week, it is important to talk about the state of the market. As we look at the Fear and Greed Index, we can see a score of 40, in the Fear segment. On Friday it has ticked up as Thursday’s close was at 36, this makes sense as on Friday we received slow jobs data which gave back a little spark of hope for a rate cut this year. Last week, things JUnk Bond Demand still looked to be at “Extreme Greed”, but this has since come down to “Greed”.
Fear & Greed Index Before Markets Open May 6th, 2024
So what catalysts do we have for next week?
Economic: In the coming week we have a real lack of important economic data points coming out. This weeks grocery list of the slightly notable data points are:
Tuesday: Economic Optimism Index, 44.1 expected, prior number was 43.2. A very notable change as you can see (not), but we’ll have to see if this comes in line or if it shocks one way or the other.
Thursday: Initial Jobless claims. 210K expected vs prior 208K
Friday: Michigan Consumer Sentiment Preliminary. 77 expected, vs prior 77.2.
So this is of course a very short list, and as last week ended with very bullish sentiment on Friday, we can continue to run if these data-point simply come in line. We do have many FED speakers. 2 on Monday, 1 on Tuesday, 2 on Wednesday, 3 on Friday. These speakers can move markets if they take an excessively hawkish or dovish stand, but markets mostly know who they deal with and what to expect from certain FED members.
So what about earnings?
The company that has “the happiest place on earth”, but has less entertaining returns on their stock in recent years is the largest company reporting earnings this week. So let’s go down the list by market cap and see what is expected from the earnings:
- Disney: $1.10 EPS on $22.129 billion of revenues
- UBER: $0.22 EPS on $10.096 billion of revenues
- ARM Holdings: $0.29 EPS on $864.839 million of revenues.
Arm Holdings, one of the most fairly valued businesses of course after shooting up from ~$70 to ~$140 in about a week in February will have to come through on their earnings. Even as shares have dropped by a lot after SMCI earnings around 2 weeks ago, the share price is still very elevated.
- AirBNB: $0.23 EPS on $2.06 billion of revenues
- Shopify: $0.17 EPS on $1.855 billion of revenues
- Palantir: $0.08 EPS on 615.303 million of revenues
- Celsius Holdings: $0.20 EPS on 390.375 million of revenues
- Robinhood: $0.06 EPS on 545.651 million of revenues
- Duolingo: $0.27 EPS on $165.55 million of revenues
Good luck this Monday morning, on Wednesday a new stock analysis will be released, and let’s see if markets can continue to rally and turn from the last few weeks of rocky price-action
