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  • 👉 The Investing Week Ahead: 1/30/23

👉 The Investing Week Ahead: 1/30/23

Google, Apple, Amazon, & Meta Q4 earnings..

We’re going to need some coffee this week.

Because this is easily the craziest week since the calendar hit 2023.

The key question that could be answered soon: Is the following what is actually taking place?

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We’ve got the Fed’s first meeting of the year, earnings reports from 4 of the Top 5 largest companies in the world (AAPL, AMZN, GOOG, META), jobs reports from the BLS and ADP, escalating wartime tensions, and much more.

The results of this week are likely to give us some more clarity if the market-wide worries are validated, or if bulls are truly in control.

Reminder: 

We’re publishing an incredible deep dive update on the economy, the stock market, as well as sharing a few stock ideas tomorrow. Stay tuned!

Guidance Matters:

Remember — even if a company’s results are lackluster, stocks can still soar based on forward-looking guidance.

The difference between operational issues that are going to be here for another 6 months versus 9 or 12 months can often be the difference between massive swings to the upside or downside.

When expectations have been lowered and earnings revisions pile in toward the downside — GUIDANCE during recessionary times is often the most important part.

Let’s see who’s in the queue.

Key Earnings Announcements:

The tech-heavy Nasdaq-100 is about to be put to the test.

The most anticipated earnings releases scheduled for the week are Amazon #AMZN, Apple #AAPL, SoFi #SOFI, AMD #AMD, Meta Platforms #META, Alphabet #GOOGL, Exxon Mobil #XOM, UPS #UPS, GM #GM, and Pfizer #PFE.

Monday (1/30): Canon, NXP Semiconductors, Philips, SoFi, Whirlpool,

Tuesday (1/31): AMD, Amgen, Caterpillar, Electronic Arts, ExxonMobil, General Motors, Marathon, McDonald’s, Phillips 66, Snapchat, Spotify, Stryker, UPS

Wednesday (2/1): Aflac, Allstate, Altria, AmerisourceBergen, GSK, Humana, Meta, MetLife, McKesson, Peloton, T-Mobile, Waste Management,

Thursday (2/2): Alphabet, Amazon, Apple, Atlassian, ConocoPhillips, Eli Lilly, Estēe Lauder, Ford, Gilead, Hershey, Honeywell, Merck, Qualcomm, Sony, Starbucks,

Friday (2/3): Aon, Cboe, Cigna, Regeneron, Sanofi

The Big Boys are Up to Bat:

The Nasdaq-100 is considered the preeminent tech-heavy stock index. 

Last week, Microsoft (MSFT) warned that sales growth from its important Azure cloud-computing business will slow by -4 or -5 points.

Intel (INTC) gave one of its most dreary forecasts ever — predicting that its gross margin would be down 14.1 points from the same period a year ago.

International Business Machines (IBM) projected weaker-than-expected profitability.

However… the Nasdaq-100 was still up +4.7% last week — nearly double the return of the broader S&P 500.

It’s now up to the next set of heavyweights to show us under the hood. Below are so thoughts in anticipation of the reports:

We’ll also be looking to see the current state of the cloud infrastructure development for both Amazon and Google — especially after Microsoft Cloud drove the tech giant’s revenue in its report last week.

However, MSFT clearly signaled that the cloud business is expected to slow (as mentioned above).

Signals are mixed and we want more data.

Investor Events / Global Affairs:

Spain’s inflation catches central banks by surprise, U.S. Auto Sales have mixed expectations, and the Russia / Ukraine war is causing more alliance-building to take place.

  • Spain’s Inflation Jump Causes Concern

Spanish Inflation Unexpectedly Accelerates

Early Monday morning, we learned that Spain’s inflation took a turn toward the upside after 5 consecutive months of slowing price growth.

Spanish consumer prices rose by +5.8% year-over-year — blowing through median estimates of +4.8%. 

This move came ahead of week that will see the United States Federal Reserve (FOMC), the European Central Bank (ECB), and the Bank of England (BoE) make policy decisions.

Chaotic Week for Policymakers:

Does Spain’s inflation directly impact ours?

Not necessarily, but this was an unwelcome start to a week in which major decision-makers are waving their wand. The ECB and BoE are expected to lift rates by half a percentage point, to their highest levels since fall of 2008.

  • U.S. Auto Sales Incoming

Over the weekend, we found out that Toyota (TM) will be keeping its crown as the top-selling carmaker in the world. 

This week, we find out specifics surrounding new car sales to start the year in the United States.

Cox Automotive — the world’s largest automotive services & technology provider — releases this data, and is expecting to see improved inventory levels and higher fleet sales.

January sales are expected to fall almost 20% month over month, largely due to three fewer selling days than December and the usual post-holiday drop in activity.

Tickers to keep an eye on: GM, HMC, STLA, TM, TSLA

“After a slow December, a return to ‘normal’ would be welcome. With inventories improving, and more fleet activity likely, we are expecting an increase in January new-vehicle sales activity. 

Though some dealer lots across the country have ample inventory, some Asian brands continue to have extremely limited availability.

One of the key questions for the market this year is whether some brands – particularly American ones – will be forced to increase incentives to keep supply from getting too high.” — Charlie Chesbrough, Senior Economist @ Cox Automotive

  • NATO Asks South Korea to Join the Party

This came just days after the U.S. conducted its largest military exercise ever with Israel and widespread calls for Iran to stop supplying Russia with weaponry.

To date, South Korea has sent materials like bulletproof vests, gas masks, and medical supplies to Ukraine. However, they’ve refused to send lethal weapons — as it breaks their own law of not arming countries engaged in conflicts.

NATO’s Stoltenberg was on a two-day visit to Seoul, South Korea and recently left for Tokyo, Japan. Leadership figures in Pyongyang, North Korea are calling Stoltenberg’s visits “a prelude to confrontation and war.”

Alliances Forming:

The numbers are staggering that have been sent to Ukraine (2022 data of shipments from the U.S. shown above).

It’s a complex topic and the loss of life is devastating, but the clearly emerging visuals of alliances forming is pretty dang frightening.

Just check out this WSJ excerpt from Saturday:

“The U.S. is trying to persuade Mozambique, an African country long friendly to Moscow, to use its new seat on the United Nations Security Council to condemn Russia’s invasion of Ukraine.

The American ambassador to the U.N., Linda Thomas-Greenfield, visited the southern African country this week, telling the government that neutrality wasn’t an option when a big power invades a smaller neighbor in violation of a U.N. Charter that Security Council members are bound to uphold.”

Things feel like they’ve shifted toward a ‘you’re with us or you’re against us’ mentality. 

We’re very interested to see how this unfolds, and we’re hoping it’s more peaceful than expected.

Major Economic Events:

Jerome Powell is ready to hop back in front of the camera, and the immovable Unemployment Rate keeps gaining more attention.

Monday (1/30): N/A

Tuesday (1/31): Chicago Business Barometer, Consumer Confidence Index, FHFA Home Price Index, Employment Cost Index, Rental Vacancy Rate

Wednesday (2/1): ADP Employment Report, Construction Spending, FOMC Rate Announcement (Jerome Powell Press Conference), ISM Manufacturing Index, Motor Vehicle Sales

Thursday (2/2): Factory Orders, Productivity, Unit Labor Costs

Friday (2/3): Average Hourly Earnings, ISM Services Index, Labor Force Participation Rate, Nonfarm Payrolls, Unemployment Rate

What We’re Watching:

The three Fed Funds forecasts shown above are based on the following:

In other words — the above chart shows how different projections are when compared to the Fed’s words throughout Q4’22.

Jerome Powell’s speech on Wednesday should provide us with clarity if the market ‘calling their bluff’ has been correct.

Key thing to look out for — will things be “higher for longer?” The new base case from the market is two more 25 bps raises and rates starting to be cut around summertime.

Will anything more severe than that cause investors to worry?

The above graph from Morgan Stanley (MS) shows the pretty well-correlated relationship between S&P forward EPS and the unemployment rate.

This week, we get a full look at the employment situation from both the Bureau of Labor Statistics (BLS) and ADP’s jobs report.

Currently, the unemployment rate is expected to rise marginally from 3.5% to 3.6%. Everyone is watching to see if this seemingly immovable number will ever rise.

Events-Driven Winners:

Which stocks moved the most last week.

LevelFields_event_driven_winners_10Jun2022

Our friends at LevelFields scrub through thousands of data points each week to determine how events impact stock prices.

If you weren’t aware, Warren Buffett’s Berkshire Hathaway (BRK.A) is the largest shareholder of American Express stock. 

This Top 10 list of heavy hitting shareholders was pleased to see a +15% dividend increase last week — and I’m absolutely looking further into American Express as a position in the dividend growth portfolio:

If you’re starting your investing journey or want to change to a cleaner, social-focused investing platform, consider visiting Public.com.

Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

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