Morning Reads

Morning Reads

Todays Open Interest Change




Get ready for the big show! The busiest week of the Q4 earnings season is about to kick off, with more than 100 companies representing nearly a third of the S&P 500's market value set to report results. Heavyweights like Caterpillar (CAT), Exxon (XOM), GM (GM), McDonald's (MCD) and Pfizer (PFE) are on tap this morning, but things will quickly turn to tech after the bell. Snap (SNAP) is set to provide an early look into what is cooking in the world of online advertising, user growth and consumer spending, after Microsoft (MSFTissued conservative guidance last week and revealed that new business growth slowed in December.

Next up: Meta Platforms (META) will disclose its quarterly results tomorrow, while Alphabet (GOOGGOOGL), Amazon (AMZN) and Apple (AAPL) are gearing up for Thursday. According to FactSet, overall earnings are projected to decline for the season, with technology and media companies among the top losers. Massive layoffs have already hit the industry as a consumer spending slowdown and an aggressive Fed weakens growth-oriented sectors of the economy.

"In the last 90 days, Wall Street analysts have overwhelmingly lowered their earnings estimates ahead of results this week; 42, 46, and 33 downward revisions for Meta, Alphabet, and Apple, respectively," writes Steve Cress, Head of Quantitative Strategies at Seeking Alpha. He gives a full Quant overview ahead of the earnings, but only one name stands out as a consensus Strong Buy before the big show. The three mega-cap tech stocks' results could influence the market for months to come, but also check out other Strong Buy technology recommendations that can be found on the SA Top Technology Stocks screener.

Other catalysts: Earnings season is not the only thing on investors' minds. The FOMC today will kick off its first meeting of 2023, which should provide more clarity on Fed policy direction for the rest of the year. This week's Wall Street Breakfast poll will remain open until the FOMC press conference tomorrow, so make sure to vote and see what the Seeking Alpha community thinks about where rates might be headed in 2023.

Ruled out?

Will the U.S. send F-16 jets to Ukraine to help in its war against Russia? "No," President Biden told reporters, ruling out the fourth-generation fighters. Some believe that the decision might eventually be reversed, which could be a boon to defense players like Lockheed Martin (LMT), especially given pressure from Poland and other NATO allies. In fact, there have already been several times that the U.S. administration was resistant to a particular weapons system, only to approve it after rounds of negotiations (M1 Abrams tanks and the Patriot missile defense system). Emmanuel Macron is also set to meet Ukraine Defense Minister Oleksiy Reznikov today in Paris, where such requests may be on the table, after the French president said "by definition, nothing is excluded" in terms of military assistance (Russia might also be mobilizing another 200K troops). (10 comments)

World economic outlook

While concerns about a recession continue to worry markets, fresh optimism was seen in the latest forecasts from the IMF. Resilient demand and spending in the U.S. and Europe, strong labor markets, China's reopening and the easing of an energy crisis saw the fund upgrade its global economic growth outlook after three cuts in the previous year. Global gross domestic product will likely expand by 2.9% in 2023, 0.2 percentage points higher than estimated in October, and there is a "narrow path" where the U.S. can avoid a recession. "The outlook is not worsened this time around, which in itself is good news, but it's not enough," IMF Chief Economist Pierre-Olivier Gourinchas declared, flagging the current price environment (see Mohamed El-Erian wants steeper rate hikes to tame inflation). (115 comments)

New export controls

The battle over silicon continues as the U.S. considers cutting off Chinese telecoms equipment giant Huawei from all of its American suppliers. While the firm has been blacklisted for several years - over national security concerns and to limit China's technological advances - certain goods were allowed to be sold to the company. For example, Intel (INTC) and Qualcomm (QCOM) received permission to sell 4G smartphone chips to Huawei in 2020 (after heavy lobbying efforts), though for others like Broadcom (AVGO), the bans have wiped out large amounts of revenue. Additional items that may now be in the crosshairs include artificial intelligence, Wi-Fi 6 and 7, and high-performance cloud and computing products. (4 comments)

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Today's Markets

In Asia, Japan -0.4%. Hong Kong -1%. China -0.4%. India +0.1%.
In Europe, at midday, London -1%. Paris -0.8%. Frankfurt -0.8%.
Futures at 6:30, Dow -0.4%. S&P -0.5%. Nasdaq -0.7%. Crude -1.3% to $76.89. Gold -1% to $1919.90. Bitcoin -1.8% to $22,830.
Ten-year Treasury Yield -1 bps to 3.54%

Today's Economic Calendar

FOMC meeting begins
8:30 Employment Cost Index
9:00 S&P CoreLogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
9:45 Chicago PMI
10:00 Consumer Confidence
3:00 PM Farm Prices

Companies reporting earnings today »

What else is happening...

Another key automaker follows Tesla (TSLA) in cutting EV prices.

Ukraine war helped speed shift away from oil and gas - BP.

J&J (JNJ) blocked from using bankruptcy to resolve talc lawsuits.

DOJ collects depositions for Spirit (SAVE)-JetBlue (JBLUlawsuit.

'Avatar 2' (DIS) leads for seventh week, becomes global No. 4 all-time.

COVID public health emergency coming to an end on May 11.

Lucid (LCID) may have Saudi backing even if buyout doesn't happen.

Elon Musk's Twitter payments system could include a crypto option.

Here are the top small-cap stock ideas from MKM's chart team.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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