DHUnplugged #689: AI Market Euphoria

DHUnplugged Podcast

Big Week - AND HOW! Big Caps BIG - Small Caps Small AAPL declined 3.4% on the week while AMZN jumped 8.0% and META gained 20.5%. Shakeup at Morgan Stanley Banking Sector Fears (NYCB) The latest Closest to The Pin. PLUS we are now on Spotify and Amazon Music/Podcasts! Click HERE for Show Notes and Links DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar. Love the Show? Then how about a Donation? Follow John C. Dvorak on Twitter Follow Andrew Horowitz on Twitter Warm Up - Big Week - AND HOW! - Big Caps BIG - Small Caps Small (Regional Bank woes) --- AAPL declined 3.4% on the week while AMZN jumped 8.0% and META gained 20.5%. - Shakeup at Morgan Stanley - Banking Sector Fears (NYCB) - AI induced euphoria - is that a thing? Market intoxicated on it. Market Update - Powell was Hawkish - Markets Didn't Care (past Wednesday) - HUGE Employment Surprise - Market Didn't Care (after 10 minutes) - META/Facebook Earning - Yes Markets cared - all day Friday - Undercurrent of something happening (Region Bank breakdown - NYCB) - China comes out strong with market supportive measures - market rallies 5% Employment Report - Much hotter than anticipated - Treasury Yields and the USD spiked - Unemployment rate at 3.7% (expected to tick up to 3.8% - Briefing.com: This report is not likely to persuade the FOMC to cut rates as soon, or as much, as the market had hoped. As a result, the fed funds futures market repriced the probability of a 25-basis points rate cut at the March FOMC meeting to 20.5% (from 38.0% yesterday and 47.6% one week ago) while the probability of a 25-basis points rate cut at the May FOMC meeting has been reduced to 74% (from 93.8% yesterday), according to the CME FedWatch Tool. - markets were a bit flushed on the initial report but tossed it aside and preferred to focus on META earnings Rate Cut Odd for MARCH - As a result of the Fed meeting and employment report, the fed funds futures market repriced the probability of a 25-basis points rate cut at the March FOMC meeting to 20.5% (from 38.0% yesterday and 47.6% one week ago) while the probability of a 25-basis points rate cut at the May FOMC meeting has been reduced to 74% (from 93.8% yesterday), SO REACHING - Chicago Fed President Austan Goolsbee said Friday that while the January job report was impressive on the surface, underlying details were not as strong. - “The headline number was almost breathtaking,” Goolsbee said in an interview on the “PBS NewsHour” program. - “If you peel back the onion a little bit, it’s not as strong as that headline number advertises … but it’s still very strong,” he said. - In particular, he noted that hours worked fell 0.2% last month despite the jump in net new jobs. Amazon - Blowout - Earnings per share: $1.00 vs. 80 cents expected by LSEG - Revenue: $170 billion vs. $166.2 billion expected - Amazon Web Services: $24.2 billion vs. $24.2 billion, according to StreetAccount - Advertising: $14.7 billion vs. $14.2 billion, according to StreetAccount - Amazon said first-quarter sales will be between $138 billion and $143.5 billion, representing growth of 8% to 13%. Analysts were expecting revenue of $142.1 billion, according to analysts. META - BLOW-OOOUUUUTTTT - Meta Platforms beats by $0.51, beats on revs; guides Q1 revs above consensus; - FY24 total expense guidance unchanged at $94-$99 bln, - CapEx guidance of $30-$37 bln, up $2.0 bln at high end; - They stopped spending on META. - Initiates quarterly dividend of $0.50/share, also announces $50 bln increase to share repurchase program. - Stock up 21% Apple Earnings - headline: Apple beats by $0.08, beats on revs; iPhones and services beat; China revenue declines 13.1% - Magic words: CEO Tim Cook thinks there is a huge opportunity to for Apple on AI, but he does not want to get ahead of things. - Apple reports Q1 iPhone revenue of $69.