Morning Market Feed May 13th

As the consumer sentiment numbers were released after the markets opened on Friday, the markets followed the same direction, down. Let’s dive into some market news and how I expect this new wave of bearishness to continue in the markets.

S&P500 0.13% | Dow Jones 0.30% | Nasdaq 0.24% | Russell2000 -0.75% | 10-Year yield 4.50%
(Index changes as of May 10th close)

- Let’s not get to sentimental
The consumer data release missed the mark by quite a bit, as this number came in at 67.4 whilst analysts expected 76.
The numbers themselves sound quite meaningless or empty, but these numbers tell us that people have become far less optimistic about the economy as inflation frustration starts to upset the surveyed. The previous survey came in at 79.4 and this newest result is equal to September ‘23 when markets tanked until the end of November.
Not too great when looking at it this way, but if CPI were to come in soft on Wednesday, sentiment should come around quite quickly as this is what the decrease of sentiment is based on.
Source 1: Surveys of Consumers (umich.edu)
Source 2: University of Michigan: Consumer Sentiment (UMCSENT) | FRED | St. Louis Fed (stlouisfed.org)

Expected unemployment, dotted line actual number, line representing 3-month average

Consumer Sentiment numbers reported in Michigan Consumer Sentiment survey

- Tesla is buying customers
As interest rates keep being tough on Tesla, and the bad news cycle is reshaping after the earnings that were seen as a positive spin, Tesla’s latest incentive to create demand is basically buying them for the Model Y. The company is now offering internal interest rates of 0.99%, compared to a previous 6.49%. Having this lower interest rate is good for the buyer, it can help to push towards growth of volumes again, but Tesla is paying for it. This deal is only on the Tesla Model Y, after a downpayment of $4.250

Source Tesla Just Offered a New Deal on Its Model Y - Barron's (barrons.com)

- How can you justify being a bear?
Of course, being a bear isn’t what is paying of in the long term, but sometimes it’s good to be slightly bearish for a small period of time. Currently, there are some arguments that could be seen as a reason to be on the bear side. The main argument is that CPI refuses to come down, as the first three CPI releases have not been very good, and pointing towards a sticky inflation problem.
Another argument that added fuel to the bear argument is the sudden drop in non-farm payrolls. All jobs data releases pointed towards a better-than-expected jobs market, until we saw a crack in the most recent JOLTs data, with job openings coming down to the lowest level since February 2021, but still at levels never seen before the Covid pandemic. The recent data first mentioned for this argument, the non-farm payrolls, came in 175.000, where the creation of 240.000 jobs was expected. A significant miss.
Finally, we have the 10-year interest rate. As bond yields stay elevated, this is seen as a headwind for equities and although we have been coming down from recent highs, the 10-year is still very elevated when compared to recent history. The trend in this chart is also not your friend when hoping for a more favourable environment for stocks as can been seen in the picture below.

10-year govenment bond yield

Source 1: Job Openings: Total Nonfarm (JTSJOL) | FRED | St. Louis Fed (stlouisfed.org)
Source 2: Jobs report April 2024: U.S. job growth totaled 175,000 in April (cnbc.com)

- So what comes next?
Next, we will be looking for market catalysts that are coming in the upcoming week, because there are some.

Monday:
Consumer Inflation Expectation Survey, this number comes from a survey and has been coming down from 3.7% in October, to 3% in the April release. It is a 1-year forward looking number.

Tuesday:
PPI numbers, and FED Powell speech. The latter being very closely watched due to the tsunami of data coming Wednesday.

Wednesday:
CPI Data, Retail Sales, Business Inventories, FED Kashkari, and Bowman speeches.
CPI is expected to come in at 0.3% MoM, and 3.4% YoY. (Prior 0.4% MoM, 3.5% YoY)
Core CPI is expected at 0.3% MoM, 3.6% YoY. (Prior 0.4% MoM, 3.8% YoY)
Last CPI release was mostly concerning around Super Core as this was near levels seen in the period when the FED started ramping interest rates.

Thursday:
Building Permits (preliminary), Export/Import Prices, Housing Starts, (Continuing) Jobless Claims, FED Speeches: Barr, Harker, Mester, Bostic.

Friday:
Fed Waller Speech.

Plenty of market action this week which may set a course for the coming weeks to either continue pushing the S&P to new highs, or to support the growing bearish concerns. We will see what happens and see what the data will look like.

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Morning Market Feed May 10th, 2024

As jobless numbers came in, the markets looked with one eye to the last comments Powell made during the speech after his rate hike/less discision. We also had markets tacking wild swings at initial earnings reaction, basically saying “Yeahhhh, we ain’t doing non of that” to ARM Holdings, and Robinhood. Did we see any other interesting articles? Let’s dive straight into it to find out.

S&P500 +0.58% | Dow Jones +0.90% | Nasdaq +0.22% | Russell2000 +1.02% | 10-year 4.46%
(Numbers as of market close May 9th)

- Jobless numbers
Initial Jobless Claims came in higher than expected, this made for a change in the fact that this number has usually been coming in below expectations over the last few times. Why did markets react favorably to higher-than-expected jobless data? Well perhaps you remember my comments on Wall Street getting a little too excited about the possibility of rate cuts even if you shouldn’t want them. Powell commented that the only way to do sudden cuts in the FED Federal Funds Rate is by rapidly rising joblessness, so increasing jobless data gives renewed hope for rate cuts.
I don’t think you should want rate cuts, because that would mean a deteriorating economy, but lower interest rates generally improve profitability so short-sighted street gets to excited about it.

- Putting the Hood back on
After posting incredible earnings, absolutely smashing it out the park, the stock was up about 10% on it’s peak. This however turned out to be slightly to good to be true. In my opinion this sell-off was unjustified, as I thaught it to be all very impressive, but I do see some less positive things surrounding this company. You can find my full article here as I give my fair opinion about the earnings

- Learning the language of analysts
This might be the perfect next course for Duolingo, the stock got swept as it dropped >20% on earnings before the markets opened. What did stand out about the earningscall is that it was held on Zoom, the good old classic. There were many more unusual things about this earnings call however which you can read more about in this article.

- Solar Edge, Green energy deep in the red
Solar Edge posted revenues of $204.4 million, which beats analysts’ expectations of $196 million. This however is down from $943.9 million in the year-ago quarter. The stock is down 42.5%, not from its peak, no that would be way too optimistic, the stock is down that amount YTD. From its peak, the stock is down about 87%. Solar Edge, just like Enphase, has overshipped products as demand fell and is now in a position where it has to clear channel inventory. This caused EPS to come in at -$1.90, where analysts expected -$1.57. Guidance also came in lackluster, as the company expects to have sales of $250, to $280 dollars, analysts expected this number to be $305.99 million.
The disappointing numbers aren’t what is the worst news about this report, however, I was a bit surprised as well when I saw it could become worse. The company has cash of $316.3 million at the end of Q1’24. This is cash, cash equivalents, bank deposits, and restricted bank deposits, this is a very low amount but where the bad news hits is that the company burned cash worth $217 million during the last quarter. They may need to raise capital if the supply, and demand don’t get back into balance quickly.

Source, Benzinga Article

- So what to look for today?
There will not be any interesting earnings that I’m expecting today, so we don’t really have to look there, but we do have some economic data coming in today. Namely, the Michigan Consumer Sentiment number. This will be the preliminary release, but it is expected to come in at a 76 number, slightly down from the previous 77.2 number.

Furthermore, there will be three FED speeches, Bowman will be the first, followed by Goolsbee, and Barr will be last to speak somewhere today.

That was it for today, I hope the week will close out in a positive and I hope to see you again on Monday!

Morning Market Feed May 9th, 2024

Markets yesterday may be best described as directionless. You can also see it in the changes from the indices, mixed. A lot of stocks sold off reasonably well without a valid reason, although some surely had all the reasons to do so. Now without further ado, let’s dive straight into it.

S&P500 0.01% | Dow Jones 0.45% | Nasdaq -0.06% | Russell2000 -0.58% | 10-year yield 4.50%
(Numbers as of market close May 8th)

- Basically the worst company in the world now
Sounds interesting right? Well, it’s not as bad as it sounds, although that isn’t surprising either. Shopify reported earnings and the stock basically collapsed as it ended the day down about 20%. In this article I go over the earnings to see what happened to it and why Shopify all of a sudden isn’t the Wall Street darling it was the day before yesterday.

- The biggest drop since May ‘22
Tuesday after the bell, Palantir reported earnings, and those sparked the reactions that could have been expected. As the stock dropped 15%, the retail community became as outspoken as Alex Karp, Palantir CEO is on political matters. You can read my full, in-depth analysis here.

- Another new executive
When looking at the chart of PayPal, it may not really seem like it, however, PayPal has been very busy turning the business around. After changing 6 members of the C-suite, adding a Vice President, and replacing the board of directors, we can say that some moves have been made. The latest change isn’t counted in the 6 new C-Suite executives, so now it’s 7. So what happened?
On Tuesday, PayPal announced Steve Winoker as the new Chief Relations Officer. Winoker will be responsible for communications with the financial community. Winoker comes from GE where he has served as Chief Investor Relations Officer for the past 5 years. Before his tenure at GE is where it gets interesting as his last position was managing director of the industrial sector. Before that, he was managing director, svp, equity analyst. Many names, I will just put his resumé below, the point I am trying to make is that he is very conscious of what analysts want to hear and how to speak their language. Since January 2019 GE is up about 350%, helped by the company break-up. In his new position, Winoker will report to Jamie Miller.

Source: Dow Jones Newswire

- Steal from the rich, give to the poor
Can you guess what company I’m talking about here? Robinhood is up slightly over 4% in after hours trading after smashing analyst expectations. I will write a more in-depth article about the earnings at a later point today after listening to the earnings call which I will link in tomorrow’s Morning Market Feed, for now, let’s go over the core numbers as they were pretty good

Revenue: $618 million vs $552.74 million expected
EPS: $0.18 GÀAP EPS vs $0.06 GAAP EPS expected
Gold Subscribers up 41% Year-over-Year to 1.7 million

As I said, I will release a more in-depth article later today which I will link to tomorrow because there is a lot in these earnings, Robinhood is on a very good track although there are some issues.

Numbers according to Tradingview

- What to look for today?
Today should be a calmer day in terms of direct catalysts, however, ARM Holdings has reported earnings and the guidance it gave wasn’t really up to hope, tomorrow you will read more about this as I will dive deeper into those earnings later today. ARM is one of the AI leaders, and due to being so, it may indirectly impact markets due to impacting other AI stocks, such as Nvidia.

The catalysts we do have, are jobless data points. We are expecting to see Initial Jobless Data (212K expected), and Continuing Jobless Claims. In the afternoon, FED Daly is expected to speak, but it has to be said that the FED speakers have not managed to impress markets yet this week.

That was it for this morning market feed, I wish you a great day, and if you haven’t already, make sure to subscribe to my newsletter!

Morning Market Feed May 7th, 2024

Markets continued the strong push they made on Friday as bonds came down down slightly with the 10-year now at about 4.49%. Despite these market gains Gamestop seemed to not be as back as the traders thought, or maybe Palantir stole the spotlight. Let’s just dive straight into it and see what yesterday brought.

S&P500 +1.03% Dow Jones +0.43% Nasdaq +1.10% Russell2000 +1.29%
(Indices returns as of May 6th market close)

- We are sooo not as back as hoped

So yesterday I said that Gamestop (GME) pushed up 30% sparking bullish sentiment around the stock. The stock had a hard time staying up however as it was down 7% before the market open. Traders did manage to get the stock positive briefly before it plummeted about 20% peak-to-trough. As the stock fell over 10% it became easier to manipulate as it gets short-sale-restricted at that point, it’s a bit of a technical story but it comes down to a stock being easier to bid up in order for short sellers to not be able to push it down to much. The stock eventually came back to be flat on the day, still quite impressive.

- Palantir with high hopes

Before the markets opened, shares of Palantir (PLTR) were up 3% already. As there was no news, this was due to investors getting aroused by the idea of the profits they would make from the upcoming earnings report. Basically putting everything on black. See the logo, get it? Get it?! Okay bad joke, I’m sorry.

But as earnings came out, they weren’t as favored anymore after-hours as the stock has done an oopsie of 8.37%. Without the incredibly strong run yesterday, the stock would be down about 0.9% from Friday’s close, but what happened, well not to waste too much time. Revenues beat slightly, as EPS matched. Full-Year guidance was raised by about 2%. Cash from operations decrease YoY, (got to name the negatives, sorry) and net dollar retention keeps coming down slowly as well, now being 111%. Although up from the prior two quarters, not a great number for this business, this number used to be a lot higher. Stock-Based-Compensation was also quite elevated. The good things were very rapid growth. Margins expanded and revenue grew 21%. This number was kept down due to the government side of the business as commercial growth came in much stronger. This side of the business is seen as most important for the future of the company, so good thing it keeps setting the pace for the company.

- Putting the hood back on

Robinhood (HOOD)  had less favorable news as reports appeared that the retail investing favorite is being investigated by the SEC. The stock dropped 7% in pre-market trading but came back to being positive for most of the day. It couldn’t stay green though. You might have the question “What is the investigation about?” And that is what I will explain next.

The SEC is going to crypto brokers like they are their biggest fans, except for the fact that they are not. Instead of bringing gifts, they bring lawsuits. The SEC alleges that Robinhood sold securities on their platform that should have been registered with the SEC, something they also sued Coinbase and Binance for. Coinbase responded by saying that trading crypto is more like trading baseball cards. Good to know for crypto’s next use case, but not ideal for Robinhood as these lawsuits are quite serious.

- Howard Schultz has some advice for Starbucks executives

Howard Schultz, the founder of Starbucks, expressed some frustrations towards the current executives of the company he left a year ago. Schultz also stepped down from the board in September. In a letter, Schultz wrote that the company should be focused on being experiential, not transactional. Ouch. He recommends the executives to be more in touch with the customers and baristas of the business. This is also what Schultz famously did in 2008 when the business seemed to be in a tough spot.
Maybe Schultz has to come back a third time, as the stock is now down 30% since March last year, when he left the business as CEO.

- So what about today?

Today we will see earnings from a few interesting companies, we will also get numbers from the Economic Optimism Index, which are expected at 44.1, and FED member Kashkari is expected to speak.

As for the earnings, we expect the happiest place on earth to report, as well as one of the retail favorites Celsius Holdings. Let me put the earnings under one another with the expectations:

- Disney (DIS) $1.10 EPS on $22.121 billion of revenue
- Arista Networks (ANET) $1.74 EPS on $1.551 billion of revenue
- Datadog (DDOG) $0.34 EPS on $589.983 million of revenue
- Coupang (CPNG) $0.05 EPS on $6.946 billion of revenue
- Electronic Arts (EA) $1.52 EPS on $1.777 billion of revenue
- Celsius Holdings (CELH) $0.20 EPS on $390.375 million of revenue
- Toast (TOST) $0.05 EPS on $1.044 billion of revenue

That was it for today, I think you should be up to speed for the day to come and I hope to see you again tomorrow!

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

Growing Quality Morning Market Feed 05.03.24

During pre-market markets looked to be happy with the comments made by Powell. As we got closer to market open, bond yields started to tick up which resulted in a number of stocks giving back the nice green numbers shown before the markets opened. So what happened yesterday?

- Digesting Powell’s speech

As investors were busy digesting the comments made during the press conference after the rate decision, or perhaps lack thereof as they stayed flat, analysts started to look for takes that conformed their biases, so how good have they done their job?

We must say quite well, what I started seeing were reports stating how Powell dropped his comments about a rate cut this year, quietly quitting that stance. This is something I don’t find any bit surprising because during the last rate hike cycle to which the one we have been going through is compared, inflation came back for a second punishment. Expecting to go from almost 10% inflation, down to 2% without any bounce simply sounds absurd to me, but that doesn’t mean the bounce must be all too significant, or create new panic.

At the point of you reading this, I am fully done with the digestion and….. You can fill in what follows there. But I have taken my stance and my views on what I expect from the markets. I will tease you a little bit however and take you through the day first before I will give you my ideas, just so you can think of it over the day, or weekend.

- Moody’s Corporation

Moody’s Corporation posted earnings. These earnings beat estimates across the board, despite the beat across the stock initially fell some 3% when markets opened. This happened due to a slight increase in spending expectations.

- Yesterday’s Catalists

Yesterday, we saw some economic data coming out. Jobless data came in better than expected, with less job cuts, and less initial jobless claims.

As for earnings, before market open only Kellanova (Kellogs) gave a decent surprise, but this is not a stock that I want to look at before breakfast..

Now there has of course been 1 other apple that has reported, a sour one as analysts called it going into the release, but for comments on those earnings, you will have to go to my youtube channels as I will cover it in a video that will be released after the market closes, I will give one hint about them, they bought themselves out of bad headlines. If you know what I mean, check out the video.

- Wrapping up the FED comments

So as we are wrapping up this Morning Market Feed, it is time to come back on my promise and give my opinion about the recent comments by the Federal Reserve. Let me start by painting a picture so you know how I view the economic data points that are coming out. Then I will explain my stance on rate cuts, just to make it understandable. I will make it quick.

As mentioned before, I find it rather illogical that something can shoot up as inflation did, drop as it did, and fall flat on its face. In my mind, it simply doesn’t make sense. This is also a stance I hold going forward, I will keep a close eye on the economic data points, as I wouldn’t be surprised to see inflation get a second wave. I will however not fight the fed on this as I don’t know why people do this.

I also have the view that you generally shouldn’t want rate cuts. That might sound a bit strange, so why not? Cutting rates means 1 of 2 things, hopefully. Either inflation, at this point, jumps down to 2%, however seeing such a jump might not be ideal due to the likelihood of the number going down further, or the jobs market is diving into muddy waters.

Now, a soft landing can be possible, I have faith in Powell that he can pull this off, but it won’t be easy or a straight glide down in my opinion. So now that the FED has acknowledged these numbers, yet still expects to have the first-rate move be down, that sounds rather dovish in my ears, and made me turn bullish but cautious. As I also said, analysts have been looking for hawkish points to sell their headlines, and they found that Powell did not mention that he expects rate cuts this year. We could then draw the conclusion that he does not expect the economy to heat up too much, or fall flat on its face. Overall good, just need to wait for people trying to sell headlines greed, and fear to understand that as well, which may also not happen from one day to the next.

- Anything up today?

Trying to head into the weekend in ways which will boost Hershey’s earnings that will come out today will not come as relaxed as you might want, as we are expecting Average Hourly earnings numbers.
Economists are looking for a 0.3% MoM figure and 4% YoY. We will also have non-farm payrolls. Then as markets are opening, we will see the S&P Global Composite PMI and Services PMI final number, as well as the ISM services PMI, so if the markets start swinging after the 30 minutes of market open, check on these numbers.

That was it for this morning, if you want to check in for my video this afternoon which, amongst other subjects, goes over Apple earnings, I’ll see you then.
If not, have a great weekend and you will see my emails re-appear next Monday.

Bye!

Growing Quality Morning Market Feed 05.02.24

Yesterday marked an important day as recent economic data points came in less than ideal. FED Chairperson Powell has given his speech and I have to admit, it had me slightly nervous. We have seen Starbucks stock crashing from the sky as they bet big and absolutely missed. Besides these events, we also saw the AI trade slow down, so let’s look back at yesterday and see what happened.

S&P500 -0.32% Dow Jones: +0.20% Nasdaq: -0.72% Russell2000: +0.21%

Numbers as of market close May 1st

• Jerome Powell

Let’s start off with the most important part of the trading day. That was the FED rate decision, or better said the speech following it, and as I said, I was slightly nervous going into it as I was fearing a hawkish Powell due to recent data points.

One of these data points was the JOLTS report that was released yesterday. The job opening numbers came in at 8.48 million for March, down from 8.81 million in February. Expectations were for 8.68 million openings. The trend is starting to point downwards. The Associated Press (AP) however makes the point that this is still a historically high number as before 2021, the number has never been above 8 million. What has to be said is that it is the lowest number since February 2021. 

Quits also dropped, to the lowest level since August of 2020. The number came down to 2.1%.

Let’s take a look at what happened to some stocks before we take it back for some last comments regarding the FED.

• Mastercard earnings

Mastercard reported earnings and posted a rare miss as EPS came in at  $3.31 vs $3.25 expected. Net revenue came in at $6.3 billion, this is an increase of 10%, or 11% on constant currency, and was slightly ahead of expectations.
Advertising & Marketing, and provisions for litigations were cut sharp which contributed to about 1/3 of the increase in operating income

Mastercard slightly adjusted full-year revenue and adjusted earnings guidance downwards to the low end of low double-digit growth, previously expecting the high end of low double-digits.

• AMD & SMCI

Yesterday I already reported on AMD’s amazing earnings, *not*. This resulted in the stocks ending the day down about 9% for AMD, and 14% for SMCI. So why do I want to mention it again? In order to let you know that this has also been the reason why Nvidia and Arm had been somewhat dropping. The AMD, and SMCI drops were to such an extent that they took the big and mighty Nvidia with them.

• Carvana

The best stock in the world is soo back. Carvana reported earnings in which they managed to become net profitable, even if it was due to a 75 million dollar gain on the fair value of their warrants to acquire Root. This did not impact EBITDA, which came in at $235 million on an adjusted basis. The most riggable number in the earnings report.

So how did the company guide? “A sequential increase in our year-over-year growth rate”. Well, that’s great, now investors know what to expect.

What is more likely is that the stock jumped 30% in after-hours trading due to the extreme amount of short sellers in the stock. According to Yahoo Finance, the stock still has a 31% short interest based on the company’s float, making it a very good short squeeze target.

• Starbucks

Shares of Starbucks increased their fall from grace as the CEO came on CNBC to discuss the earnings and let’s just say that it wasn’t a very pretty thing to look at. According to the CEO, the drop in demand was due to the weather, and some other factors they had no control over. When he was asked if it may had something to do with simply outpricing customers, he acted as if it was only customers who didn’t really go there anyways, and that they have action plans in place. These action plans are expanding more in Honduras, not fix the issues.

• Let’s just go back to the fed for a minute

Because what we have seen was a FED which took a surprisingly dovish stand. Although I thought he was going on a more hawkish path towards the end of his prepared remark, he started to respond a lot more dovish than I expected with the latest economic data points. The FED will slow the tapering of the balance sheet from 60 billion dollars, to 35 billion dollars. What else happened? Powell said that the first rate move would more likely be downwards, than upwards.
He did acknowledge the recent problems in the economic data points but expects this to improve towards the second half of the year. Although I am still fearful for a second wave of inflation, or a substantial bounce and short uptrend in inflation data, it makes no sense to fight the FED, which means that I have turned, although still cautious, substantially more bullish and have reduced my cash position by quite a margin.

• So what are we looking at today?

We are expecting job cut data, initial jobless claims, and continuing jobless claims. These will be important and may be a bit counter to what the FED has told us yesterday, but as long as these will not come in dramatically bad, it should not post too many issues at this point.

We are also looking at a bunch of interesting earnings, we will be looking for numbers from:

• Apple (AAPL): $1.51 EPS on $90.366 of revenues expected
  Apple is widely expected to have had a rough quarter, as they have seen market share decline in China, as well as a bunch of other demand problems that analysts have been giving comments on for the quarter. It would surprise me if Apple came in with disappointing numbers but if more uncertainty starts coming into the stock, it can see some downside.

• Booking Holdings (BKNG): $13.98 EPS on $4.254 of revenues expected

• Moody’s Corporation (MCO): $3.01 on $1.698 billion of revenues expected
  Expectations are high for the debt rating segment of the company as S&P Global posted a very nice rebound in this segment with a 29% rebound in this segment. As the two companies operate a duopoly in the segment, this will also be expected from Moody’s.

• Coinbase (COIN): $1.15 EPS on $1.36 of revenues expected
  What I will be looking at is the impact of the ETFs on their commissions. This was still very good during the last earnings release, where they were also hinting at enormous improvements in income.

• Block (SQ): $0.72 EPS on $5.829 billion of revenues expected
  With Block, it will be interesting to see if they make any comments regarding the Federal Prosecutors probe after an employee tipped them of lagging compliance practices which continued for years. What else I will be looking at is if they dilute the entire earnings away with SBC like they did with full-year 2023 numbers.

That was it from me for today, I hope you have a nice day and we’ll be in contact again tomorrow.

Growing Quality Morning Market Feed 01.05.24

It was an eventful day for stocks as the 4 big ETFs fell by a notable amount, we will take a look at what happened there and if this may have any further consequences. Furthermore, we have seen some earnings reports which we will take a look at, in Amazon, PayPal, AMD, and Starbucks. Finally, we will take a look ahead to the day to come as there will once again be a bunch of catalysts for the market to move.

S&P500: -1.58% Dow Jones: -1.48% Nasdaq: -1.89% Russell2000: -2.03%

(End of day 30.04.24)

What Happened To The Markets Today?

Before the markets opened yesterday we had some economic data coming out. Was it important data? Seeing what the market did we can surely assume it is. The Employment Cost Index was the data point that was released and expected to in at a 1% increase QoQ. In reality, the number came in at 1.2% QoQ, fueling the hotter-than-expected economic data points. Higher wages can be a problem as this can spark a wage-price spiral, where wages keep increasing in order to compensate for inflation, but by doing so, it increases inflation due to consumers having more money to spend.
Other data points that came in were the Case-Shiller Home Price YoY (+7.3% vs 6.7% exp), which came in hot with house prices increasing more than expected. Chicago PMI (37.9 vs 45 exp) meaning contraction was more than expected. CB Consumer Confidence (97 vs 104 exp).

Amazon earnings

Amazon reported earnings that made the stock increase 1.2% in after-hours trading. When we look at Amazon earnings we must first run to see AWS numbers, which look very healthy with a 17% increase in sales YoY. Operating income increased about 320%, which leads EPS to come in at $0.98 compared to $0.31 a year ago.
What does stand out on the balance sheet is a 478% increase in inventories at the end of Q1’24, compared to Q1’23.

PayPal Earnings

PayPal earnings came out and this was the first time they reported under the new EPS methodology. But what were the numbers, what was good, or bad, and why did they change this?

PayPal reported adjusted EPS of $1.08 vs expectations of $1.20. As this number was released, the stock slid about 5.5% before rapidly recovering as it was discovered that this number came under the new methodology. When this methodology was compared to Q1’23, EPS increased by 27% YoY. Under the old methodology, EPS came in at $1.40 vs $1.17 in the same quarter a year ago, an increase of 19.5%. What else happened? Revenue beat and guidance was lifted, PayPal beat this quarter on all fronts.

AMD Earnings

Let’s set the stage for AMD earnings before going into the numbers. This will make it clear how I think of them. AMD trades at a 300 PE, 48F/PE, and 0.44% FCF yield (-0.10% when adjusted for SBC). These numbers would suggest we are looking at a company with staggering growth, but unless 2% revenue growth YoY is that staggering you may be disappointed. So then maybe adjusted net income? Again a staggering increase of 4% YoY, while EPS increased 3%.
AMD has done very well over the past years as they improved the business massively, bidding it up to a 48F/PE may however be a bit overdone when we see these results. Let's just hope people will actually go from Nvidia to AMD as an alternative.

Starbucks Earnings

Starbucks is down about 11.5% in after-hours trading as the company reported worse-than-expected earnings, and they were bad. Fiscal Q2’24 presented sales that were down 3% at comparable stores. Change in transactions was down 7%, which was offset by a 4% increased sale in tickets and a 3% increase in store count.
Revenues were down about 600K ($6,380.0 ‘24 vs $ 6,380.6 ‘23), and operating income was down 6% as operating margins decreased to 18.0%, from 19.1%.

The Day Ahead

The day will bring another wash list of economic data points, but all eyes will be on Powell’s speech after the interest rate decision. The interest rate is expected to remain unchanged, as the CME FedWatch tool tells us investors give a rate cut a 1.6% chance. The tonation of Powell is what will be listened to to determine his dovish, or hawkishness.

Before we get there, we will first see the ADP Employment Change (175k exp), S&P Global Final Manufacturing PMI (49.9 exp), ISM Manufacturing PMI (50 exp), JOLTs Job Openings (8.69M exp).

We will also see a bunch of companies reporting earnings. The ones I will be looking at are:

Before Market Open:

Mastercard, $3.25 of EPS on $6.338 billion in revenues
Marriott, $2.16 of EPS on $5.946 billion in revenues

After Market Close:

Qualcomm, $2.33 of EPS on $9.353 billion in revenues
Doordash, $(0.03) of EPS on $2.452 billion in revenues
First Solar, $2.00 of EPS on $718.2 million in revenues

Growing Quality Morning Market Feed 30.04.24

Let’s start by looking at what happened yesterday as investors recovered some of the lost sentiment of recent weeks. The big 4 ETF”s ended the day:

SPY: +0.35%
Dow Jones: +0.81%
Nasdaq: +0.39%
Russell 2000: +0.41%

So what was the news we need to look a from yesterday? Let’s do a little sum-up before going more in-depth. We had Sofi earnings, Meta continued to drop, Google got sued again, and Tesla jumped 15%. We will also quickly look at the day ahead.

• SOFI Earnings (-10.5%)

Sofi reported earnings which beat estimates on both the top and bottom lines. GAAP-EPS came in at $0.02, where $0.01 was expected. Revenue came in at $580.65 Million, vs $555.50 million expected.
So what went wrong?
Q2 guidance came in a little soft, but the company increased full-year guidance slightly.
As for the Q2 guide, the company is expecting $555 - 565 million in revenues, with a net income of $5 - $10 million. This stacks up against Analysts’ expectations of $580.8 million in revenues and $13.9 million in net income.
The company increased the full-year guidance slightly from $2.37 to $2.41 billion, to $2.39 to $2.43 billion. They also stated to stay GAAP profitable in each quarter in ‘24. All in all good earnings with slightly disappointing guidance.

• Meta Continues to Drop (-2.4%)

After the 10.56% drop on earnings last week, shares in Meta continued to drop as they are expected to be investigated by the European Commission. This time it’s about questions over countering disinformation from Russia and other countries, as reported by the Financial Times.

• Google got another lawsuit

After jumping 10% last Friday on incredible earnings with amazing beats, the stock is down almost 3.5% today as it was announced that Google got sued by a group of artists over the company’s AI image generator. It’s another in a long string of copyright lawsuits due to the training of AI models.

• Telsa jumps 15%

Shares in Tesla jumps 15%, this came as the company announced that it got the green light to sell FSD in China. A huge milestone as it allows for masses of additional data and training of the system. Besides the training, it also offers an extra high margin opportunity in the world’s largest car market.

• So what should we look at today?

We will see some economic data coming out as markets will start looking at the FED Interest rate decision on Wednesday. Today we will first have wage data, as employment costs are expected to increase 1% QoQ.

We will also see some important earnings, as Amazon is expected to report earnings of $0.84 EPS and $142.65 billion of revenue, showing further increases in efficiency.
Coca-Cola is expected to report $0.70 of EPS, on $11 billion of revenue. Analysts are looking for $0.62 of EPS from AMD, on $5.48 billion of revenues. Starbucks is expected to report EPS of $0.80, with $9.12 billion in revenue.
PayPal gets to show how the turn-around is going as they are expected to report $1.20 in EPS and $7.51 billion in revenues.
Finally, recent market leader SMCI is expected to report $5.63 in EPS, and $3.96 billion of revenue.