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Boeing’s earnings call and megacap results highlight earnings this week. (0:19) Bye-bye inverse Cramer ETF. (4:36) The Osborne Effect may be in play for Tesla. (5:14)
The following is an abridged transcript:
The top story to look out for this week
It’s not often that a Fed decision has to take a back seat. But with the decision a foregone conclusion that the FOMC will keep rates steady (at least as far as the market is concerned) attention will be on the busiest week for earnings season.
Wednesday includes Mastercard (MA), MetLife (MET) and Qualcomm (QCOM). But all eyes will be on Boeing (BA) – and it’s the earnings call that will be key.
Executives will be on the hot seat amid the Boeing 737 Max 9 grounding and new guidance is likely to come. Boeing shares are down more than 20% year to date.
Thursday brings megacaps Apple (AAPL), Meta (META) and Amazon (AMZN). Also scheduled are Merck (MRK), Honeywell (HON), Altria (MO), Royal Caribbean (RCL), and Post Holdings (POST). Options trading implies large share price moves for Peloton Interactive (PTON) and Canada Goose (GOOS) after they report.
And on Friday, Exxon Mobil (XOM), Chevron (CVX), AbbVie (ABBV), and Charter Communications (CHTR) will weigh in.
The Fed decision hits on Wednesday, and while it isn’t front and center, it still will command attention for Chairman Jay Powell’s press conference. Any hints on direction for the March meeting will see some major market moves. Right now the fed funds futures are pricing in pretty much a coin toss on whether Powell and company will stand fast on rates or cut by a quarter point.
Michael Darda, economist and strategist at Rothy MKM, says “If we want to understand the stance of monetary policy, we need to zero in on nominal magnitudes, which have slowed to trend.”
“Back in 2003, then Fed Governor Ben Bernanke said that because the neutral interest rate (and velocity of money) fluctuate and are not observable in ‘real time’ the only way to check to see if there had been a stable monetary backdrop was to look at nominal growth and inflation. We can isolate nominal domestic demand by looking at final sales to the private sector, which excludes temporary perturbations from government spending, inventories, and trade.”
“Nominal final sales to domestic purchasers advanced 4.6% at an annual rate during Q4, about in line with the 2009-2019 trend of 4.3% per annum growth. The average growth rate over the last three quarters for this nominal magnitude is also 4.6% compared with the previous 10 quarters in which nominal final sales to private domestic purchasers averaged 9.7% per annum growth.”
He says: “With the Fed likely to push back on the timing and magnitude of rate cut expectations due to a tight labor market and ‘easy’ financial conditions, nominal demand should continue to slow during 2024.”
On Friday the January employment report is due. Economists expect that nonfarm payrolls rose by 177,000 last month and the jobless rate stayed steady at 3.7%.
The weekly jobless claims figures last week eased some hawkish concerns as they rose back above 200,000 after clocking in at close to a 50-year low. It looks like that was more weather driven.
Looking to news this weekend
The Biden administration is expected to award billions of dollars in subsidies to Intel (INTC), Taiwan Semiconductor (TSM), and other semiconductor firms in the coming weeks for new factories.
The subsidies, part of the $53 billion Chips Act, are expected to be announced before Biden’s State of the Union speech on March 7, according to a WSJ report. The announcements will be preliminary and the funds will be released in stages.
The premium California drivers pay for gasoline compared to the overall U.S. average likely will rise significantly if state legislators continue enacting policies to discourage petroleum production. That’s what the head of Chevron’s (NCVX) refining division told Bloomberg in an interview Saturday.
California drivers paid an average of $4.94/gal of gasoline in last year’s Q4 vs. $3.22 for the national average, partly because the state’s tough low-carbon fuel standards have encouraged refineries to convert from petroleum to renewable diesel, which reduces gasoline supply and raise prices, Chevron’s Andy Walz said.
Vince McMahon resigned as executive chairman of WWE parent company TKO Group (TKO) amid an alleged sex abuse scandal. McMahon will defend himself against the claims but says he will step down “out of respect” for TKO and the WWE business.
And the Inverse Cramer Tracker ETF (BSJIM) will shut down after almost a year of trading, according to a press release. The ETF that was created to short stock recommendations by CNBC TV personality Jim Cramer is set to close trading on Feb. 13 after attracting about $2.37 milli0on in assets under management since its launch last March.
The news comes after the Long Cramer Tracker ETF closed last year, stopping trade Sept. 11. Both ETFs were created by Tuttle Capital Management’s chief executive Matt Tuttle, who has also created the AXS Short Innovation Daily ETF (SARK) that bets against Cathie Wood’s flagship fund.
Among our spotlight Seeking Alpha stories
As the post-earnings breakdowns on Tesla (TSLA) continue to pour in, Deepwater Asset Management’s Gene Munster and Brian Barker outlined a key reason that the company may have pointed to a “notable” slowdown in unit volume growth this year. The analysts said the Osborne Effect may be in play.
The Osborne Effect is roughly defined as a social phenomenon of customers canceling or deferring orders for the current products due to an announcement or unofficial buzz over a future product that may compare favorably. The Osborne effect is considered a form of sales cannibalization by a company as it sets its product strategy.
And forty years ago this week, Apple (AAPL) turned the world on its head with the introduction of the Macintosh. Investors once placed outsized importance on Mac sales figures and growth rates, but as it increasingly becomes a smaller percentage of the company’s overall revenue base, Apple is attempting to somewhat shift the narrative.
Apple’s CFO Luca Maestri said on its most recent earnings call that Mac sales should accelerate from the September quarter, due in part to new products and a broader rebound in the PC industry, as evidenced by recent results from Dell (DELL) and HP (HPQ). Chief Executive Tim Cook also touted the Mac’s importance both in the present and to the company’s future.
Wrapping up in the Wall Street Research Corner
Barclays ranks ETFs that have the most bullish and bearish sentiment.
The “sentiment indicator” is a weighted average of two-year percentile across several metrics, including the one-week moving average of the put-to-call open interest ratio, the two-week change in the one-week moving average of the put-to-call open interest ratio, the one-week moving average of two-month, 25-delta skew, two-week change in skew, two-week ETF flow, short interest, and two-week change in short interest, expressed as a percentage of assets under management.
Among the bulls are the SPDR S&P Biotech ETF – ticker (XBI), and the U.S Global Jets ETF – ticker (JETS). The bears see the Nasdaq 100 (QQQ) and the iShares Semiconductor ETF – ticker (SOXX).
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