- Stocks pushed higher this past week as all major averages notched gains of at least one percent, this as bond yields continued to moderate amidst falling inflation. That said, investors will be closely watching the upcoming two-day meeting of the Federal Reserve’s Open Market Committee (FOMC) this Tuesday and Wednesday, the body that, amongst other charges, determines the direction of interest rates. At the present time, the consensus is for at least a hike of at least 0.25% for each of the next two meetings, the latter which is being held March 21-22.
- Microsoft reported earnings on Tuesday after the market closed, posting earnings per shares of $2.32 as compared to estimates of $2.29 along with a slight revenue miss of $52.75 billion compared to the consensus of $52.94 billion. During the conference call, Microsoft warned of near-term softness to their enterprise software business, sparking fears of weakness in the overall economy. After initially selling off to around $232/share, the stock rebounded to finish the week at $248.16. We often say that it is often as important to watch investor response to data as is the data itself.
- Google “Open AI” as you will be hearing a lot about it in the future. Microsoft announced their third investment into Open AI creator, ChatGPT, a chatbot that is used to mimic human conversation. According to the company, Microsoft has invested in Open AI, but the specifics of the investment are not publicly disclosed. Microsoft and Open AI have also announced a partnership to integrate Open AI’s GPT-3 language model into Microsoft’s Azure cloud computing platform and to collaborate on the development of new AI technologies.”
- India, the new China. According to Piyush Goyal, India’s Minister of Commerce and Industry, Apple has plans to manufacture 25% of iPhones in India, up from 7% today. This is a move by Apple to diversify away from China, where Apple makes the bulk of its iPhones.
- Chevron draws the ire from the Biden Administration. After raising their quarterly dividend by $0.09 to $1.51 and announcing a share buyback program of up to $75 billion (20% of their current market capitalization), the Biden Administration chastised Chevron. Per White House spokesperson Abdullah Hasan, “for a company that claimed not too long ago that it was ‘working hard’ to increase oil production, handing out $75 billion to executives and wealthy shareholders sure is an odd way to show it.” Get real. Wasn’t it the anti-big oil rhetoric along with the detrimental regulatory acts and green policies that currently discourages long-term investment into traditional energy sources?
- M2 Money Supply Declines for first time ever. M2, broadly defined as currency in circulation, checking, savings and money market accounts, declined for the first time since 1959, the year the Fed first started publishing such data. Many, including us, believe that the post-COVID surge in M2 is greatly responsible for the inflationary period we are currently experiencing so that this is actually welcome news – should the Fed heed the warning and cease hiking interest rates.
- Raising the cap. This past week Senator Joe Manchin, a Democrat from West Virginia stated that in order to fix Social Security, rather than to either cut benefits, the “easiest and quickest thing that we can do is raise the cap.” Presently, wages up to $160,200 are subject to a 6.2% Social Security Tax. Our guess is that we will be hearing much more of this in the future.
- Upcoming Economic Reports scheduled to be released this week include – on Tuesday, the Conference Board Reports on January Consumer Confidence; on Wednesday, the Job Opening and Labor Turnover Survey (JOLTS) along with December Construction Spending; on Thursday, the Weekly Report of Initial Claims for Unemployment Insurance, the Initial look at Q4 Productivity and December Factory Orders. Finally, on Friday, the main event – the January Non-Farm Payroll Report, including the January Unemployment Rate.
- The earnings beat goes on and as of today, they have been satisfactory relative to expectations. However, over the next couple of weeks, the market leaders will report and also provide their outlook for the upcoming quarter(s). Companies reporting this coming week include ExxonMobil (XOM), Pfizer (PFE), McDonalds (MCD), United Parcel Service (UPS), T-Mobile (TMUS), Meta Platforms (META), Thermo-Fisher Scientific (TMO), Merck (MRK), Eli Lilly (LLY), Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), Shell, plc (SHEL), Bristol Myers Squibb (BMY), Conocophillips (COP) and Qualcomm (QCOM).