Well folks, after a grand slam jobs report last Friday, the market is back at it again with a week of FOMC member speeches - check out the schedule here and read on for your daily dose of market inspiration with stories on the state of earnings, China’s weather balloon and the persisting earthquakes in the middle east.
Markets in Review
In the premarket today, equities are following suit with their risk-off trajectory from Friday as the Dow, S&P and Nasdaq trade down 49, 63 and 79 bps each at time of writing. With the large shock experienced as the jobs report came in greatly above expectations it is likely that the market will trade in limbo as FOMC members give speeches throughout the week. Moreover, all eyes will now be on the February 21 release of January’s CPI figures. The following will serve as a preview of the most anticipated issuers reporting through the week and a review of the current earnings season’s data.
Earnings Scorecard: For Q4 2022 (with 50% of S&P 500 companies reporting actual results), 70% of S&P 500 companies have reported a positive EPS surprise and 61% of S&P 500 companies have reported a positive revenue surprise. Earnings Growth: For Q4 2022, the blended earnings decline for the S&P 500 is -5.3%. If -5.3% is the actual decline for the quarter, it will mark the first time the index has reported a year-over-year decline in earnings since Q3 2020 (-5.7%). Earnings Revisions: On December 31, the estimated earnings decline for Q4 2022 was -3.3%. Seven sectors are reporting lower earnings today (compared to December 31) due to downward revisions to EPS estimates and negative EPS surprises. Earnings Guidance: For Q1 2023, 37 S&P 500 companies have issued negative EPS guidance and 6 S&P 500 companies have issued positive EPS guidance. Valuation: The forward 12-month P/E ratio for the S&P 500 is 18.4. This P/E ratio is below the 5-year average (18.5) but above the 10-year average (17.2).
Short: Alico, Inc. (ALCO-NASDAQ) | Timeline: 1 day
Alico, Inc. (ALCO), which operates as an agribusiness and land management company in the United States, reported earnings this morning before market open. Though topping revenue estimates, ALCO missed earnings estimates by a whopping 170.97%, as the company accelerated the harvest due to an increased rate of fruit drop as a result of Hurricane Ian. (Full Story)
Turning to the chart, ALCO has struggled over the last 6 months, falling from highs of about $43. That said, the stock has been oscillating through quite a steep downward price channel during this period, and as the price reaches resistance and Stochastic RSI becomes heavily overbought, a rejection at this level is likely.
Zooming Out...
Balloon Busted
After much deliberation, the so-called “Chinese Spy Balloon” was shot down off the Carolina coast Saturday afternoon. While the balloon’s destruction marks a serious degradation within US-China relations, it was also the first air-to-air kill for the F-22 Raptor.
In the days since the first sighting of the balloon over Montana, more balloons have been spotted over India, the Philippines, Japan and Latin America. Chinese officials have claimed the balloon over Latin America, however, have remained tight-lipped on taking responsibility for the others. US Defense officials have stated that the balloons are part of a more extensive surveillance operation that spans over five continents.
Earthquakes Everywhere
Late Sunday night and into Monday morning a devastating earthquake wrought havoc across cities in and around Southern Turkey and Syria. The entire area has been severely affected after it was rocked by a magnitude 7.8 earthquake, and over 75 aftershocks. Roughly 1500 people have perished, with hundreds more missing as the quake caused an estimated 900 buildings to collapse.
Early reports indicate that the quake was caused by a fault line break within the south of Turkey, while a warning has been issued in the eastern Mediterranean as there is the chance of a Tsunami occurring. Allies of Turkey inside, and opposed to NATO have offered their support.
Making Headlines...
'Loophole' excuses WHO officials accused of misconduct
A confidential U.N. report into alleged missteps by senior World Health Organization staffers in the way they handled a sexual misconduct case during an Ebola outbreak in Congo found their response didn't violate the agency’s policies because of what some officials described as a “loophole” in how the WHO defines victims of such behavior. (Full Story)
Putin approves sale of Mercedes-Benz Russian finance arm
Russian President Vladimir Putin on Monday approved the sale of Mercedes-Benz's local financial services division to Russian car dealer Avtodom, nudging the German automaker closer towards fully offloading its Russian assets. (Full Story)
Rothschild Family to Take Bank Private in $4 Billion Deal
The Rothschild family is planning to take its eponymous French bank private in a deal that values it about €3.7 billion ($4 billion), ending decades of public ownership for one of the most storied names in global finance. (Full Story)
PG&E Will Pay Sunrun Battery Owners for Power to Avoid Blackouts
PG&E Corp. and Sunrun Inc. have formed a partnership to pay homeowners with solar and battery systems to provide power to the California grid and help prevent blackouts when demand spikes in hot weather. (Full Story)
Chart of the Day: Corporate bonds yield less than the Fed funds rate for the first time in 30 years.
“The question isn’t who is going to let me; it’s who is going to stop me.”
— Ayn Rand
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