Welcome to your new week.
Before we dive in โ two quick callouts for you:
Below shows the last time the S&P 500 had a weekly candle cross of the Moving Average Convergence / Divergence (MACD). If things were to repeat themselves โ weโll be seeing some more red. My friend and expert analyst Caleb Franzen suspects the index might be headed toward the ~4,700 range before volatility begins to subside. Use this as an opportunity.
Election years tend to chop until Memorial Day and then have stronger summers. This would align with my late-Q2 / Q3 bullish hunch shared in this post just last week.
These are merely interesting charts to share.
If you want to see a detailed breakdown of my personal stock and cryptocurrency portfolios, consider subscribing below.
Key Earnings Announcements:
Around 20% of the S&P 500 report earnings this week โ including four of the โMagnificent Seven.โ
Monday (4/22): Cadence Design Systems, Globe Life Medpace Holdings, Nucor, SAP, Truist, Verizon
Tuesday (4/23): General Motors, Jetblue, RTX Corp, Spotify, Tesla, Texas Instruments, United Parcel Service, Visa
Wednesday (4/24): AT&T, Boeing, Chipotle, Ford Motors, General Dynamics, International Business Machines, Meta
Thursday (4/25): Alphabet, Altria, American Airlines, Caterpillar, Dexcom, Intel, Microsoft, Royal Caribbean Group, Snap, Southwest, T-Mobile
Friday (4/26): AbbVie, Centene Corporation, Charter Communications, Chevron, Exxon Mobil, HCA Healthcare
What Weโre Watching:
Tesla (TSLA)
Tesla (-40% YTD) is experiencing some turbulence while the EV market continues to develop โ as seen by the -20% revenue decline in Q1 and a U.S. market share reduction from 62% to 51%.
Amidst the market slowdown and fierce competition โ notably from Chinese manufacturers โ Tesla's profitability continues to be pressured. Decreasing margins due to aggressive price cuts and the lack of new model introductions are causing analysts to turn against Elon.
Just this past week โ TSLA was forced to recall 3,878 delivered Cybertrucks due to an accelerator pedal issue AND the company is laying off about 10% of its staff.
As Tesla approaches its earnings call, key points of interest will include the outlook for annual deliveries, pricing strategies, and updates on the robotaxi event scheduled for August.
Tesla, Inc. (TSLA) Stock Performance, 5-Year Chart, Seeking Alpha
Analysts expect $0.42 GAAP EPS on Revenue of $22.3 billion.
You can explore the most recent TSLAย investor release here and here.
Boeing (BA)
Boeing (-35% YTD) is facing significant challenges this year following a 737 MAX 9 incident โ which has led to A LOT of social media scrutiny.
Between production halts, lawsuits, whistleblowers suspiciously dying, and the CEO departing โ Boeing feels like a dumpster fire.
Boeing has about 40% market share and Airbus has about 60% โ but Boeing has nearly four times more โincidentsโ in their planes. Just this morning โ there was another Boeing plane that had a wheel fall off.
Despite these issues, Boeing managed to secure 113 new airplane orders in March โ showing continued customer confidence. However, the company's airplane deliveries have decreased with only 29 jets delivered in March compared to 64 in the same month last year.ย ย
The company's financial outlook is also under strain, with a projected free cash flow burn of up to $4.5 billion for Q1 โ materially higher than the previous year.
Boeing Co, (BA) Stock Performance, 5-Year Chart, Seeking Alpha
Analysts expect -$0.86 GAAP EPS on Revenue of $17.22 billion.
You can explore the most recent BA investor release here and here.
General Motors (GM)
General Motors (+18% YTD)ย reported promising Q4 earnings, with a market share increase to 16.2% in the U.S. and 12.2% in South America โ though it faced a decline from 11.2% to 8.4% in China.
GM's strong sales in its main markets โ coupled with $1 billion in cost reductions and $10 billion worth of strategic buybacks โ have positioned it to potentially outperform its conservative financial forecasts for 2024.
GM has responded to operational challenges by focusing on cost efficiency, reducing selectable options across products to save $200 million on manufacturing complexity and costs. Despite slowing growth in the EV sector, GM has moderated its spending and believes the EV side of the business will be EBIT profitable in 2025.
General Motors Co, (GM) Stock Performance, 5-Year Chart, Seeking Alpha
Investor Events / Global Affairs:
Earnings season considerations, the โNo Landingโ scenario becomes more possible, and Stripeโs biggest conference of the year.
Big Tech โ Propping Up Earnings Growth
Despite strong earnings surpassing expectations โ stock price impacts have been muted this earnings season.
Julian Emanuel from Evercore noted, "The broader market is having digestion problems in and around this earnings season." If you beat top and bottom line estimates โ youโre getting rewarded slightly less than before (+0.8% average of 1-day price reactions).
However, if you miss on top and bottom line estimates โ youโre getting punished nearly twice as hard as normal (-5.8% average of 1-day price reactions).
โDespite a sell-off across tech last week after disappointing results from chipmakers and Netflix, earnings growth expectations are still sky-high for Meta, Microsoft, and Alphabet, which are all expected to report in the week ahead.โ
โNo Landingโ Scenario Becoming More Possible?
The Federal Reserve is signaling a cautious path forward in adjusting interest rates amid persistent inflation pressures.
Fed Chair Jerome Powell highlighted the uncertainty โ "Itโs likely going to take longer than expected to gain the confidence needed to lower rates.โ
Adding to this point โ Boston Fed President Susan Collins noted, "This implies that demand will need to moderate for the Fed to achieve its price-stability goal.โ
It seems confidence in the Fedโs ability to bring inflation down is decreasing, with more people factoring in a โno landingโ scenario. As a reminder โ this is a situation in which inflation DOES NOT reach the Fedโs 2% goal + the U.S. economy keeps growing.
The โno landingโ scenario is essentially saying โ โWe failed on the whole inflation thing, but we hope you are enjoying the strong economic times.โ
Stripe Sessions Conference
One of the most important privately-held tech companies is hosting their biggest event of the year.
Expect to hear updates from Nvidia (NVDA) CEO Jensen Huang, Instacart (CART) CEO Fidji Simo, Urban Outfitters (URBN) CTO David Hayne, and many more.
Major Economic Events:
Key inflation indicators like PCE and consumer sentiment take stage white Q1 growth for the US economy (GDP) is released.ย ย
Monday (4/22): N/A
Tuesday (4/23): New home sales, S&P flash US manufacturing PMI, S&P flash US services PMI
Wednesday (4/24): Durable-goods orders, Durable-goods order minus transportation
Thursday (4/25): Advanced retail inventories, Advanced US trade balance in goods, Advanced wholesale inventories, GDP, Initial jobless claims, Pending home sales
Friday (4/26): Core PCE index, Consumer sentiment (final), PCE index, Personal income (nominal), Personal spending (nominal)
What Weโre Watching:
Q1 GDP
US Gross Domestic Product (GDP) QoQ Performance, 2-Year Chart
On Thursday โ weโll see GDP estimates for Q1 2024.
The US Census Bureau estimates the economy expanded by +2.8% in the first quarter โ which would mark the 7th straight quarter of +2% expansion.
This GDP report is particularly relevant to the โno landingโ scenario that we discussed in the previous section. The Fed may be paying attention to this GDP report more than any other one since the pandemic.
Core PCE Index
US Core PCE Price Index, 5-Year Chart
On Friday, the Core PCE index (the Fed's favorite inflation gauge) returns to the spotlight.
Itโs forecasted at 2.4% for the month of March โ a +0.4% increase from last month.ย
The recent high figures in retail sales, CPI, and PPI suggest that this report could potentially exceed expectations.
"Should core PCE inflation come in around 0.25% [month-over-month] for March and April, the year-on-year reading will slow, giving the Fed cover to begin 'gradually' adjusting policy rates lower starting in June or July,"
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