Morning Reads

Morning Reads

Open Interest Changes

PREMIUM

Prepper

Earnings season made splashy headlines this week, with notable tech giants front and center in the latest round of quarterly results. See more on those below as investors continue to size up the state of the market and the companies helping power the AI revolution. Eyes were also on the latest statements from Fed Chair Jerome Powell (who will appear again on 60 Minutes this Sunday), but central bank watchers will have one more big data point to digest before then with the release of non-farm payrolls at 8:30 AM ET.

Jobs Day: Policymakers need more evidence that the labor market is softening and wage gains are moderating before choosing the next step for monetary policy. Right now, things are in wait-and-see mode as Fed officials take a more measured approach. It's a delicate balancing act as the central bank strives to achieve a so-called soft landing, where inflation returns to the 2% level without causing a recession.

If it fulfills the central bank's wishes, the number of jobs seen this morning will continue to subside through January. Economists are expecting just that, with the consensus at 170K, down from 216K reported in December and the outsized 504K reported in January 2023. The unemployment rate is expected to tick up to 3.8% from 3.7% in December, which would be another welcome sign. While there have been some surprises in the past, and the numbers can be choppy from month to month, the overall 3-month rolling average for nonfarm payrolls growth has been declining fairly steadily as seen in the chart below.

Source: U.S. Department of Labor

SA commentary: "The labor market is still in imbalance - the labor demand exceeds the labor supply," according to analyst Damir Tokic. "There is a labor shortage, and it has to do with demographics and politics, but further analysis shows there are structural issues." See January Payrolls Preview: The Labor Market Is Still Tight, And That's A Problem (5 comments)

First dividend

Meta Platforms (META) soared 15.2% AH on Thursday to a record $454.81/share as Q4 earnings smashed expectations. An announcement of the company's first-ever dividend also stunned investors, while the social media giant increased its stock buyback authorization by $50B and guided to the upside for Q1 revenues. "We had a good quarter as our community and business continue to grow," CEO Mark Zuckerberg declared. "We've made a lot of progress on our vision for advancing AI and the metaverse." SA analyst Steven Fiorillo followed up on the results by saying that "Meta is setting up for a record-breaking year" and he "wouldn't be surprised if it follows Amazon (AMZN) and Alphabet (GOOGL) in splitting its shares sometime in 2024." (143 comments)

iEarnings

Apple (AAPL) was also in the spotlight as concerns about the tech behemoth's presence in China outweighed the end of four straight quarterly sales declines. The stock fell 2.9% to $181.45/share in extended trading, though Apple's Services revenue hit an all-time high. "I remain very optimistic about China over the long term," CEO Tim Cook countered on an earnings call when asked about the market. The report comes just a day before Apple launched its first new major product in a decade - Vision Pro. "Apple announced a decent set of Q1 results, but the company overall just isn't growing that fast right now," noted SA analyst Bill Maurer. (85 comments)

Robust revenue

AI was also a theme at Amazon (AMZN), with a new shopping assistant called Rufus that uses generative artificial intelligence to help search for products. Meanwhile, Q4 operating income came in above expectations, while the firm set strong Q1 guidance, sending AMZN shares up 7.1% to $170.60. "AWS’ continued long-term focus on customers and feature delivery, coupled with new Gen AI capabilities like Bedrock, Q, and Trainium, are starting to be reflected in our overall results," said CEO Andy Jassy. CFO Brian Olsavsky noted that revenues are accelerating rapidly across all three layers in the Gen AI stack, despite being in relatively early days. (49 comments)

Today's Markets

In Asia, Japan +0.4%. Hong Kong -0.2%. China -1.5%. India +0.6%.
In Europe, at midday, London +0.2%. Paris +0.7%. Frankfurt +0.8%.
Futures at 7:00, Dow +0.1%. S&P +0.6%. Nasdaq +1%. Crude +0.4% to $74.13. Gold +0.1% to $2,073. Bitcoin +2.6% to $43,126.
Ten-year Treasury Yield +2 bps to 3.88%.

Today's Economic Calendar

Auto Sales
8:30 Non-farm payrolls
10:00 Consumer Sentiment
10:00 Factory Orders
1:00 PM Baker Hughes Rig Count

Companies reporting earnings today »

What else is happening...

EU overcomes threat of Hungary veto to seal $54B aid for Ukraine.

NY Community Bancorp (NYCB) slides further after two downgrades.

Plug Power (PLUG) ramps up hydrogen production; peers surge.

DocuSign (DOCU) sinks as banks eye funding potential $13B buyout.

Palantir (PLTR) partners with Australian retailer Coles Supermarkets.

Intel (INTC) delays construction timetable for $20B Ohio chip facility.

Qualcomm's (QCOM) share loss at Samsung puts damper on results.

Twilio pares gain as messaging startup Bird considers takeover offer.

Mattel (MAT) moves: Activist calls for sale of Fisher Price, American Girl.

Peloton (PTON) hits all-time low after CEO outlines ongoing challenges.

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.

More Posts by UPB: View All | Private Twitter Feed: Access Now! (For Diamond Members)