My top 10 things to watch Wednesday, March 1
1. China manufacturing rebounds most in more than a decade. Function of relaxing zero-Covid policy and reopening. But this will be interpreted as negative for the U.S., because China is now just viewed as a source of inflation.
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2. First day of March: the Dow, the S&P 500 and the Nasdaq set to open lower. February was down after a strong January. The Dow did the worst last month with a decline of 4.2%. The debate on Wall Street: whether the recent uptick in inflation will necessitate a more forceful Fed interest rate-hiking response. Fed meeting later this month.
3. Maybe Fed rate increases are working? Mortgage demand from homebuyers drops to a 28-year low. Remember, housing is an area of sticky inflation, along with wage and food inflation. We ran a screen on the Club portfolio, looking for stocks that outperformed the market on a monthly basis in both January and February, with positive returns each month. Seven stocks came back, including Nvidia (NVDA) and Meta Platforms (META). Check out our commentary for the rest.
4. Warren Buffett name: HP Inc. (HPQ) no real improvement anywhere. Penny beat on adjusted earnings-per-share (EPS) for fiscal 2023 first quarter. Miss on revenue. Cash flow has come down a lot. Not a lot to like here.
5. Further thoughts on my old shop Goldman Sachs (GS): What it must be like to work there and dismantle something so haphazardly put together. One year ago Goldman bought GreenSky for low-impact loans. Part of plan to meet customers where they transact. Failed strategy to make its Marcus consumer banking platform the future. Should we have seen this coming when Goldman veteran Omer Ismail left two years ago this week to go to Walmart (WMT) to help launch a fintech?
6. Club holding Eli Lilly (LLY) to cut insulin prices by 70%. Out-of-pocket costs are reduced to $35 per month for people with private insurance. The Inflation Reduction Act capped insulin prices for Medicare beneficiaries at that same level.
7. Novavax (NVAX) shares tank more than 25% early Wednesday after the company says "substantial doubt exists" about whether it can stay in business. The rollout of Novavax's Covid vaccine, first commercially available product, was plagued by manufacturing snags, regulatory delays and sluggish uptake.
8. Lowe's (LOW): Same-store sales were a little light in the fourth quarter. Overall revenue at the home improvement chain was also a little light. EPS fine. Clearing inventory, good cadence. The stock steady.
9. Kohl's (KSS) shares sink nearly 8% early Wednesday; already down nearly 50% over the past 12 months. The department store chain sees big loss instead of profit. Net sales short of estimates. Terrible guide.
10. Baird loves Ross Stores (ROST), raises price target to $130 per share from $125 and keeps outperform (buy) rating after better-than-expected quarter. This is another one that Wall Street can't stay away from even as it simply isn't that good a chain. In off-price retail, we own and like TJX Companies (TJX), the firm behind T.J. Maxx, Marshalls and Home Goods.
(See here for a full list of the stocks in Jim Cramer's Charitable Trust.)
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