Things you need to know
- Stocks stage a reversal of fortune – more of a dead cat bounce?
- FB, QCOM, PYPL, MCD, LLY and LUV all higher
- Yet – CAT fell despite a stronger report and TDOC and HOOD continue to fall further into the black hole – Cathie Woods loses another $400 million
- After the bell we heard from Apple and Amazon and…….it was a mixed bag
- Try the Penne Rigate w/ Broccoli Pesto & Chicken
So, it has been a rough week for stocks – that was until Thursday – when investors came charging back in sending the Dow up 700 pts or 2.1%, the S&P up 115 pts or 2.7%, the Nasdaq dup 430 pts or 3.4%, the Russell up 40 pts or 2% and the Transports up 430 pts or 2.9%.
The media suggesting that Marky Zuckerberg was solely responsible for the move – It is comical…really – anything they can do to make FB appear as if it is the driver of investor sentiment. Let us not overdo it – While FB did beat on the bottom line, they did not WOW anyone on any of the top lines – Revenue missed the estimate, Ad Revenues missed the estimate, Family of Apps Revenue missed the estimates, BUT they added daily users …. ….. ADU (Active Daily Users beat the estimates….1.96 bil vs. 1.94 billion, although Monthly Active Users (MAU) missed…. Ad impressions up but Avg price per ad was down – but less than the estimate, so that was a beat! In any event – trader types took the stock up 17%….and that caused Andy Sorkin to gush yesterday morning…. …. suggesting that FB is solely responsible for why futures were up in the pre-mkt yesterday – saving the stock market from further declines…. Comical!
Lest we forget that FB was down 52% ytd coming into this morning….it is down 56% from the August 2021 highs…. IT like many other ‘tech names’ have been slaughtered – so the mixed report – which was better than what so many people had prepared themselves for is a convenient excuse for the market to rally – both the stock and the market were in ‘short term’ oversold positions……a bounce is not uncommon in a broader weak tone…..so let’s not get crazy here. FB is not the ‘savior’.
Now what might have helped a bit more and given a reprieve to the selling were the earnings from some of the other names in the tech space – QCOM rose 9% after beating estimates AND giving strong forward guidance & PYPL also beat in the first qtr. but warned of a weaker second quarter which should have caused concern but had many analysts praising their honesty and saying that ‘the reset will allow for stronger future earnings’! It is so funny, what? Ok, then – couldn’t that be true for every company that reports weaker forward guidance? But remember – like FB – PYPL was down 54% coming into the report……Capisce?
Next up were the reports from both AMZN and AAPL who reported after the bell and…. well, let us just say it was mixed……AMZN reported rising operating costs as they build out while at the same time suggesting weaker forward guidance, but it is AMZN – their cloud business killed so what is anyone worried about? The stock is trading down 8% this morning at $2650 and might not find support until it hits $2500 – a level last seen in the April – June qtr. 2020, taking it down about 26% ytd……and AAPL? – Well – they beat the estimates, they boosted their divvy by 5% and they authorized and add ’l $90 billion to their current buyback program – this to try and hide the fact that they also warned of supply constraints and a possible $8 billion hit from the new China lockdown. The stock is quoted down $5….
Look – at the end of the day – markets and tech are in an oversold position – which does not mean they cannot go lower; it just means they got a reprieve yesterday as investors found some trading opportunity and value in the broader market yesterday….
But what about the significantly weaker GDP report? Did anyone bother to check it out? Expectations for 1Q GDP were +1.1% – but the actual number was -1.4% – a HUGE miss….and it was a NEGATIVE number – just to be clear…. which suggests that the economy is slowing down…and much sooner than expected. Understand that it is also a sharp reversal from the 6.9% rate in the 4th qr. Now to be sure the administration was quick to push this aside saying that ‘underlying strength in consumer and business spending will see growth resume soon’. Of course, they would say that…. Come on, Man!
Other news – Lonnie sold $4 billion of TSLA stock after sealing his deal to takeover TWTR, and the rumor is that some democratic senators – Cantwell and Markey are threatening to have him appear before the commerce committee in congress so that they can understand “the censorship or lack thereof, content moderation or not, that is going to be the policy of the new owner” – which would lead one to ask – where were these same senators when TWTR was TWTR? Were they not concerned about censorship or content moderation then?
Robinhood plumbs to new lows after a 43% decline in revenues and a decrease in MAU’s (monthly active users) …. the stock fell 11% in after-hours trading taking the stock down 90% from that August 4th spike…. HOOD is now an $8 stock and Cathie Woods’s ARKK Innovation ETF continues to bleed – now down 70% from its all-time high back on February 12, 2021.
OK – so what about this morning… the last trading day of the month and since this is not a quarter end – I would not be surprised to see the month end on weakness…….US futures are down – Dow off 115 pts, the S&P down 30, the Nasdaq down 145 pts and the Russell off by 4 pts. 10 yr. treasuries are yielding 2.87%, oil is trading back above $106/barrel and going higher and the war in Ukraine continues. China is about to lock down Beijing as citizens are warned not to come outside.
Earnings today include HON, BMY, CVX, XOM and PSX.
Eco data today includes Personal Income exp of +0.4% and Personal spending exp of 0.6%, and the FED’s favorite Inflationary index – the PCE Deflator – the (Personal Consumption Expenditures)…..and the estimate is 5.3% y/y…..Which I just don’t see…how can that report be below last months report after the PPI surged well beyond what it’s expectation was? Unless somebody ‘plays with the numbers’ it just would not make sense…Higher input costs at the PPI level have to show themselves in the system….and the PCE is part of the system. Just sayin’
This weekend – is the annual Berkshire Hathaway meeting – being held at the Omaha convention center….in Omaha Nebraska….so expect to hear all kinds of commentary (and wisdom) from both Warren (91) and Charlie (98) ….
European markets are up about 0.5% across the board. Strong earnings reports driving that action…. Eurozone inflation hitting its 6th record high – coming in at 7.5% up from last month’s 7.4%.
The S&P closed the day at 4287 after testing both 4188 and 4308. 200 earlier in the day…. Wednesday’s low of 4162 is still above the February low of 4130 – but 4130 is still in the line of sight and depending on what the FED says next week – will determine the next move. Recall that the FED is in a quiet period now, so do not expect to hear anything from the FOMC members until after next Wednesday. Many analysts are now speculating on the narrative – trying to change the story…going from multiple 75 bps moves in June and July to 50 next week, then 50 in June and then 25 at each of the remaining meetings in July, Sept, Nov and Dec bringing us to 2.5% by year end – down from last week’s hysterical 3.5% that was bandied about….now remember – these are not FED officials saying this, but it could be the FED that is leaking the story to analysts to prep the markets – Capisce? They always do…they leak the info – allow the big boys to say it, put it in the public square and then when they say it – everyone looks like a hero! It will also serve to stop the selling – if markets think that the FED moves will NOT be as aggressive as believed. It is all a tangled web we weave…in the end – Stick to the plan. Invest in good solid names, do your homework, and remember that chaos creates opportunities for the long-term investor.
Take Good Care
Chief Market Strategist
kpolcari@slatestone.com
Penne Rigate w/Broccoli Pesto & Chicken
This is a great and easy dish to make and one that I made once a week for my kids when they were growing up. It gave them a bit of everything – right? Chicken, broccoli and pasta…. This is also a great party dish – because it goes a long way.
Cost: $30 for a family of 4
For this you need – 1 lb. of Penne Rigate, 4 skinless chicken breast – cut up into bite size pieces, onion, butter, olive oil, garlic, s&p, broccoli – trimmed and cut into small pieces – you want both the floret and part of the stalk, ½& ½, fresh grated parmegiana cheese….
Bring a pot of salted water to a rolling boil.
Begin by seasoning the chicken pieces with s&p. Set aside. In a large pot – heat up some olive oil – add in the sliced garlic and sauté for 4 or 5 mins…. until golden…now add in the chopped onion and sauté until soft. Next add the broccoli – mix well and turn heat to med and cover – stirring occasionally. You want the broccoli to become soft. This might be about 15 mins or so.
While this is cooking – in another frying pan – add a dollop of butter and a splash of olive oil – heat until the butter begins to froth…. now add in the chicken pieces and turn heat to high. Cook the chicken thru and thru – until it takes on a bit of a goldeny color…Turn off the heat and set aside.
Now – the back to the broccoli – turn heat off and allow to cool for 5 mins. Take out your Cuisinart. Add the broccoli and onions and puree. Add in a handful of cheese and mix again. Done. Taste for seasoning and adjust.
Now add the pasta to the water and cook for 8 mins or so or until al dente. Strain and reserve a mugful of the pasta water. Now add the pasta back to the pot – toss in ¼ of the water and mix. Now add the chicken and the broccoli pesto – mix well and serve immediately. Always have extra cheese on the table for your guests.
Buon Appetito.
