📊 The Katy Perry Economy

▪️ Earnings Today: Eli Lilly, Amgen, Gilead, Fiserv, KKR, Ford and SNAP (calendar below)

▪️ Economic Data Today: RealClearMarkets Economic Optimism (calendar below)

▪️ Fed Speak This Week: Bostic (Mon), Mester (Tues), Kashkari (Tues), Collins (Tues), Kugler (Wed), Barkin (Wed), Bowman (Wed), Barkin (Thurs)

▪️ 30yr mortgage is back above 7% (7.06%)

▪️ Average interest rate on new cars hit 8.51%, the highest since 2001

▪️ Under pressure from the Office of the Comptroller of the Currency (OCC), New York Community Bancorp ($NYCB) made unexpected financial decisions, including a substantial dividend cut and setting aside $552 million for potential loan losses. These moves led to a significant drop in its stock price (down ~50% in one month) and affected the broader banking sector.

▪️ The bond market experienced a downturn as strong US economic indicators and Federal Reserve comments suggested a continued fight against inflation, with no immediate interest rate cuts expected. This sentiment, reflected in rising yields and a strengthening dollar, underscores the resilience of the US economy but raises questions about future monetary policy directions.

▪️ Palantir Technologies ($PLTR) experienced a 19% surge in stock prices in after-hours trading yesterday following a Q4 revenue increase of 20% year-over-year, beating Wall Street expectations. The company's strong performance, driven by high demand for its artificial intelligence platform and significant growth in the U.S. commercial sector, aligns with its full-year revenue forecast.

▪️ Reddit reported over a 20% increase in revenue in 2023, reaching over $800 million, as it gears up for one of the most awaited IPOs in the US. Despite this growth, the company has not yet achieved full-year profitability, with an adjusted EBITDA loss of around $69 million.

▪️ In a significant shift in global markets, investors are moving billions of dollars from China to India, with Wall Street giants like Goldman Sachs ($GS) and Morgan Stanley ($MS) endorsing India as the key investment destination for the coming decade. Despite India's challenges, such as poverty and expensive stock markets, its rapid economic growth and infrastructure expansion under Prime Minister Narendra Modi are attracting global capital.

▪️ Mass layoffs, once a rare indicator of corporate distress, have become a routine management strategy, with companies like Citigroup ($C), Goldman Sachs ($GS), and major tech firms regularly announcing job cuts. This practice, which has grown significantly from under 5% in 1979 to 58% in 2023, is criticized for its detrimental effects on employees, companies, and the overall economy (Bloomberg Opinion).

Today’s earnings releases listed below. Full list for the week is here

Prices paid component within ISM Services PMI jumped to 64 vs. 56.7 in prior month … the largest jump since August 2012. Could this be a warning sign of boomerang inflation?

RCM economic optimism today, although results are unlikely to move markets.

We have three Fed speeches today: Mester, Kashkari and Collins

“Absorb what is useful, discard what is not, add what is uniquely your own”
Bruce Lee