My top 10 things to watch Thursday, Feb. 2, 2023
1. The Federal Reserve is saying exactly what it should say, allowing all people to dream what they want to dream. It vowed on Wednesday to keep fighting inflation and raised interest rates by 25 basis points. But the market seemed to rebound on Chair Jerome Powell's statement that inflation has "eased somewhat." It's still all about wages. We need wages lower, but there are only so many points you can really tack on without really gulling the economy.
2. Bears at pivot as we are back to where we were at Jackson Hole moment in August when Powell pledged to continue to use its tools to attack inflation. Those who have sat out this rally are now talking about how we need a breather.
3. Thursday is the biggest single day of earnings this season for the Club, with nine of our holdings reporting — three before the bell and six after the close. That list includes mega-caps Apple (AAPL), Alphabet (GOOGL) and Amazon (AMZN), as well as household names Starbucks (SBUX) and Ford Motor (F). Check your inboxes and the site all day for updates and analyses.
4. Momentary tech ascendance in the market as quarterly results have not been as bad as feared. Consider Advanced Micro Devices (AMD): Shares bounced Wednesday after AMD delivered a Q4 beat after the bell on Tuesday. We were also reassured by CEO Lisa Su's confidence in the chipmaker's data-center outlook.
5. Meta Platforms (META) sounded like the mature company that we have been waiting for when it reported earnings on Wednesday after the bell. Beats on top and bottom lines. Just got too cheap and then got some growth and some cost cuts. They are being so judicious and they didn't emphasize the metaverse on the conference call with investors, even as they are still spending. The social media company also announced a $40 billion buyback. It's all in the tone, the recognition that there are shareholders. Huge multiple expansion. Many PT raises, including Bank of America's lift to $220 from $160.
6. Honeywell (HON) shares fell in the premarket on Thursday after reporting slight miss on revenue and a beat on adjusted earnings per share. Market judged weak immediately, but we have seen this movie before. No room for mixed cyclicals and even the good ones aren't going up for now.
7. Brinker (EAT), which owns and operates Chili's, reported a strong quarter with margins returning to double digits. The company represents a great paradigm: the less wealthy customers have dropped off as price was taken, but the wealthier are spending like crazy making it so the quarter was much better. Barclays and Citi raised their price targets.
8. Multiple price target boosts for Peloton (PTON). That's because this subscription model is run by a pro in CEO Barry McCarthy and the customers are re-upping nicely. Taking share and has a place in the workout panoply because many people feel comfortable working out from home. Now just another successful sub company like McCarthy ran at Netflix (NFLX) and Spotify (SPOT).
9. Elevator company Otis Worldwide (OTIS) says business in the eurozone is the strongest of any right now. The most building is occurring there and the Middle East (Qatar, Dubai) and not in the United States or China. Very big change that must be noticed. CEO Judy Marks delivers another excellent quarter.
10. Merck (MRK) not good enough? Shares dipped more than 1% this morning despite beating estimates on the top and bottom lines.
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