Financial News vs. Noise
This week ought to be all about NVDA, which reports earnings on the 22nd after the close. At the moment the stock looks like more of a short than a long as it keeps trying to get up to 1000 and keeps failing. This week if was failing at 950.
A bunch of the other semi’s look similar. Of course this means nothing if they announce a blowout, but if they don’t then look out.
Meanwhile, two days of nothing on SPX after the inflation numbers. Makes sense as you figure there needs to be another catalyst for a large move either way.
Nothing really important macro this week, except Fed minutes.
Interesting take on earnings season from Mike O’Rourke at Jones:
According to Standard & Poor's, with 87.6% of S&P 500 members having reported earnings, the index is estimated to have earned $55.20. That is 1.12% better than the $54.59 estimate at the start of earnings season. These incrementally better Q1 earnings represent 5.06% year over year earnings growth. Despite the spin about how great earnings season has been (due to the percentage of companies beating forecasts), the Standard & Poor's forecast for full year earnings has barely up ticked as it has risen 0.22% since the start of earnings season. The remarkable aspect is that the full year 2024 earnings forecast hinges upon year over year earnings growth of 7% in Q2 and approximately 20% year over year growth in each of Q3 and Q4. This is at a time when economic growth is slowing. The fact that Fed Funds easing expectations have changed notably since the start of the year has not resulted in any material earnings revisions for the S&P 500.
According to the AAII there are very few bears left, but the ones still sticking it out will love this.
Ed Yardeni doesn’t agree. A massive earnings surge could lift the Dow to 60,000 and the S&P 500 to 8,000, says top Wall Street strategist-MarketWatch
Yardeni’s Roaring 20s scenario assumes S&P 500 companies collectively report earnings per share growth of at least 8.8% per year, the historical average rate since 1936. If growth rates of nominal and real GDP exceed their averages of 6.3% and 3.1%, respectively, since the last 1940s, that EPS expansion could speed up.
10yr rates hit their 200 day moving average and bounced. I flipped long on TLT at the close on Friday.
On the surface, rising rates and falling semi’s is a bearish signal to me. However, NVDA earnings could change that in a heartbeat.
Then you have the precious metals and miners, which continue to trade like meme stocks.
We have been trying to buy dips in these names and were lucky enough to get GFI the other day, but besides that, dips have been hard to come by.
Industrial metals have also been strong. We took profits on our FCX on Friday but will be looking to get in on dips.
In the law and order names GEO looks to be bottoming, but AXON and SWBI continue to move down. We are looking to add to our positions today.
Tweeted about HOOD being my favorite way to play the meme stocks. We took some profits Friday, will take some more today, and depending on how it goes we may exit entirely and look for a spot to get back in.
In Argentine names we sold our DESP and I continue to hold CEPU, EDN and YPF
Currently out of all my long China exposure and have some puts on FXI. Will be looking to get back into some of those names, particularly BIDU and PDD.
As a hedge I added to my VIX calls as it continues to move back towards the December lows.
I disagree with this. I think the media is assuming that the people now trading AMC and GME are the HODL diamond hand traders from the post Covid days. Maybe that’s some of them, but they don’t realize there is a whole group of smart, connected, retail traders who move from opportunity to opportunity. Unlike the HODL guys, they know how to get in and out of these names. They also know how to position size. They have found a way to beat the buy and hold and hedge fund Wall Street crowd, and that doesn’t make people happy. Market Froth Is Getting Extreme. Just Look at Meme Stocks.-WSJ
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