On Thursday the financial markets get a new monthly PCE inflation report. The PCE, Personal Consumption Expenditures index, is the Federal Reserve’s favorite inflation measure. And Thursday’s report on January inflation could be bad news for the financial markets,
I think.the market to continue to come to terms with the likelihood that the Federal Reserve will begin to cut interest rates later than expected in 2024 and will make fewer cuts than expected.
This probably isn’t a part of the credit market you watch–even if you watch the credit market. But 8.6% of commercial real estate loans bundled into collateralized loan obligations (CLOs) were classed as distressed in January, according to a report by analytics firm CRED iQ, Bloomberg reported Friday. That’s a 480% increase in distressed loans in CLOs since February 2023. The culprit, again, is real estate loans that have gone bad.
Going into Wednesday earnings, Nvidia was the third largest short on the U.S market with about $18.3 billion in shares borrowed and then sold short, according to S3 Partners. Those short sellers wound up with $3 billion in paper loses after the stock soared Thursday on a big earnings and revenue beat.
Yesterday, Thursday, February 22, Nvidia (NVDA) gained 16.40% at the close after beating Wall Street expectations on earnings and revenue after the market close on Wednesday. And then raising guidance for the rest of 2024. But what most interested me on Thursday were what tech stocks Nvidia carried higher with it–and which stocks it didn’t.
Economics is supposed to be the gloomy science. So where’s the gloom? Stock markets are supposed to climb a Wall of Worry. So where’s the worry? In its latest survey (February 16-21) of economists (72 of them), Bloomberg found them positively giddy–for economists.
Today’s video is Doldrums from now through April.. Doldrums are, “a state or period of inactivity, stagnation, or depression” or, in nautical terms, the places where tradewinds converged and ships were left stagnant on the ocean until a storm or the wind picked up to get the vessel back in motion. The recent stock plunge of 26% from Palo Alto Networks (PANW) certainly doesn’t feel like a market that is stagnant or waiting for a change in the winds, but I think that’s what we’ll see going forward. After Nvidia’s report, there aren’t any big earnings reports expected until April and we’ll likely be moving sideways until the Fed sets the market sailing with a rate cut. The odds of the Fed not doing anything at the March meeting according to the CME Fedwatch are up to 90%. That rate cut expectation has now moved solidly to June or July with the CME Fedwatch polling at 75% for June and 90% for June or July. Until those rate cuts happen, and with little to no market-moving earnings reports expected in the months between, the stock market will be drifting in the doldrums while we wait for the wind to pick up.
Well, optimistic analysts just weren’t optimistic enough about Nvidia’s (NVDA) fourth quarter 2023 earnings. The company reported adjusted earnings of $5.16 per share on revenue of $22.1 billion. Analysts were expecting earnings of $4.60 a share and revenue of $20.4 billion.
After yesterday’s earnings report–the company beat Wall Street estimates for the quarter–and radically lower guidance for next quarter and the rest of 2024–total billings for next quarter will grow by just 2% to 4% and revenue for all of 2024 will grow by just 15% to 16% from 2023–shares of Palo Alto Networks (PANW) took a big hit right between the eyes. The stock fell 28.44% at the close and lost $104.12 a share to $261.97. What do I recommend? I’d say “buy” with a couple of caveats. Why buy?
Today's Hot Button Moves NOW video is Buy GLP-1. GLP-1 isn't a stock, it's a booming class of diabetes and weight loss drug that is boo. Novo Nordisk's Wegovy and Eli Lilly's Monjouro and Zepbound have found massive demand as the diabetes drugs have also been found to...
t should be a familiar story in this priced-to-perfection market: Company beats big in current quarter but lowers guidance and stock takes a dive. Latest victim? Palo Alto Networks (PANW). The stock is down 14.09% at 4:30 New York time today. And with Nvidia scheduled to report tomorrow after the close, you can bet the market will be on edge tomorrow.
Lynas, one of the largest producers of rare earth minerals outside of China (and one of only two non-Chinese processors of rare earth minerals) is my sixth Penny stock pick for my Special Report.
I expect the market reaction to Nvidia’s (NVDA) earnings report, to be released after the close on Wednesday, February 21, to tell investors a lot about the short-term direction of this stock market. We’re likely to learn more, however, from the reaction to an Nvidia beat rather than from an earnings miss.
Can you hear the barkers yelling to the crowd? It’s Wall Street analysts rushing to raise their target prices for Nvidia (NVDA) ahead of next week’s quarterly earnings report. On February 21, after the close, Nvidia is expected to report earnings of $4.18 share, up from $0.65 a share in the quarter a year ago, on revenue of $20.5 billion. And even though the stock is up 47% for 2024 as of the February 15 close and up 219% for the last year, Wall Street analysts are rushing to increase their target price on the shares.
Today’s Quick Pick is Cheniere Energy (LNG). Cheniere is a liquified gas supplier and the stock was down about 7.5-8% this year. Much of that drop was a reaction to the Biden administration’s decision to delay permits for new LNG export facilities in order to put pressure on the industry to decrease their methane emissions. However, this is essentially a non-issue for Cheniere since the company’s most recent expansion had already been permitted. The company is on track to go from a capital-intensive/debt heavy stage to putting billions into new sites and export facilities to a generator of free cash flow from those completed facilities. The current dividend is only 1.05% but the total yield, (dividends plus stock buybacks) is about 6.05%. Management has said they believe there will be enough free cash flow to raise the dividend rate by 10% a year from now until the mid to late 20s. In my opinion, demand for LNG is shifting as markets like Japan and China are transitioning to nuclear or solar and wind, but there is still growing demand from places like India, which is looking to transition away from coal. Cheniere is predicting 3% annual revenue growth and I think that’s reasonable and enough to keep the cash flow and dividends moving. I will be Cheniere to my Dividend Portfolio on those future yield prospects.