The economy is channeling its inner Paris Hilton. Employment jumped 353k in Jan, above all estimates, with health care and services industries leading the charge. Ave hourly earnings also were up 0.6%, but interestingly hours worked fell. So, start sharpening those Fed cut pencils again…you could be waiting longer than you hoped.
UST yields are up today. Traders are no longer fully pricing in a May cut. The USD is up because people put their money here for good rates. Powell is on 60 Min this weekend, so watch out on Monday. He can’t help himself on the Q&A.
JPM is getting ready to jump into the hen house, so to speak. They’re starting to trade private credit loans. Lenders typically like to sell borrowers on the fact that it’s a quieter segment, and they also don’t want to value the assets on a marked-to-market basis more frequently. Investors in the loans would love more transparency and liquidity. If rates stay high, borrowers will be challenged, and there will be more forced sales, generating distressed debt bargains and trading opportunities galore. Fund managers also may not like the change, because they thought it was a less volatile area for portfolios. Live price discovery will change that, especially during big market moves.
Meta announced its first dividend plus additional buybacks on the back of strong earnings, per Bloomberg. Reuters is out with a story about how stock buybacks should increase this year after pausing in 2023, because earnings should be better.
The new trend is for nations to build and run their own AI infrastructures for “sovereign AI capabilities.” Nvidia loves that. India, Japan, France and Canada are talking about its importance.
Mgmt guided operating income above expectations, with the cloud division doing well, per Bloomberg.
Apple even surprised with rev above forecasts, but China sales disappointed folks amid weak consumer spending, per Reuters. Investors are now worried that China could be more than a near-term challenge, and the co set a rev target $6bn lower than forecasts. Also, do you know anyone with a Vision Pro? I don’t and live in Silicon Valley. Also kind of lame. Tim Cook said they’ll make an announcement this year on an AI feature. It’s like saying in Jan that I’ll be losing weight this year by working out more, when everyone else is on Ozempic and bone broth, down 35 pounds already.
The activist investor Barrington wants Mattel to divest some biz and do a $2bn buyback, per Reuters.
Intel wants to delay a $20bn chip facility in Ohio. The stock is down, per Bloomberg, because you don’t do that when in a position of strength.
NASDAQ 100’s EPS is rocketing to the moon while small caps’ EPS is on the downswing. But even within the Big category, there are relative winners. Growth stocks have the strongest EPS growth, whereas Value is more like the Russell with a decline.
The groundhog didn’t see his shadow, so folks are hoping for an early spring.
