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How many people have died from Covid in China? All we know is that the government is lying and that the stock market is about to get a big boost
In the week leading up to the Lunar New Year festival, the official count for the number of Covid deaths in China after the chaotic end of the country’s 0-Covid policy was 12,658. That brought the total reported by China’s Center for Disease Control and Prevention to an official 59,938. Outside experts calculate that the true total is much, much higher. Airfinity, a healthcare data crunch puts the number at 640,000.
Saturday Night Quarterback says, For the week ahead expect…
I expect technology earnings to hold center stage as investors and traders wait for the Federal Reserve to speak on interest rates next week on Wednesday, February 1. I think what companies say about expectations for revenue and earnings for the first quarter of 2023 will be more likely to move stocks significantly than what they report for the fourth quarter.
Economy down but stocks up? Remember that the economy doesn’t equal the stock market
This may seem perplexing: Alphabet (AKA Google) announced that it would cut 12,000 jobs just days after Microsoft (MSFT) said it would cut 10,000 jobs. And stocks, especially technology stocks, rallied. The Standard & Poor’s 500 closed up 1.89% today and the Dow Jones Industrial Average ended the day up an even 1.00%. The technology-heavy NASDAQ Composite finished up 2.66% and the NASDAQ 100 wound up climbing 2.86%. But remember that the economy doesn’t equal the stock market
Another day, more tech job cuts: Google to cut 12,000 jobs
Google’s parent Alphabet (GOOG) will cut 12,000 jobs, or 6% of its workforce, the company said today, Friday, January 20. This comes after Microsoft (MSFT), announced earlier this week that it would cut 10,000 jobs or 5% of its workforce. The two companies are gearing up to go head to head in a battle to see if artificial intelligence chatbots can disrupt Google’s stranglehold on Internet search.
So it begins: Treasury announces first deferrals to stave off debt ceiling crisis
The first steps of an effort that Treasury Secretary Janet Yellen has told Congress could postpone a debt ceiling crisis and a potential government default until June or so fell into place today. The Treasury is deferring payments into two government-run retirement funds to cut outlays and to do an end run about the debt limit accounting rules.
Please Watch My New YouTube Video: Quick Pick Sell UUP
Today I posted my two-hundred-and-twenty-sixth YouTube video: Quick Pick Sell UUP. This week’s Quick Pick: Sell UUP–the dollar ETF. I had the Invesco DB US Dollar Index Bullish Fund (NYSEARCA: UUP) in my portfolio through 2022 while the dollar was doing well but the dollar has recently taken a turn South and I’m now saying: Sell. UUP was going up while expectations were that the Fed was going to continue to raise interest rates, but now that the market believes (rightly or wrongly) that the Fed will be slowing their rate hikes, we’ve seen it move down by about 1.22% for 2023. This will likely continue to be the case as other countries maintain steady interest rates or even raise them to fight inflation (Watch the European Union) and as we edge closer to the debt ceiling cliff. U.S. Secretary of the Treasury, Janet Yellen thinks the government can shift things to cover us through June, but after that, if the debt ceiling isn’t raised by Congress, the United States will not be able to borrow enough money to meet all of its obligations. I think we’ll walk right up to that cliff, but I sincerely hope we don’t go over it. For now, I’m selling UUP and I’ll be looking for a gold ETF to replace it. More on that to come!
China’s population fell in 2022 for the first time in six decades
I don’t think this has implications for your portfolio tomorrow, but it’s hard (short of global warming) to think of a trend that will be more important for your portfolio in the long run. On Tuesday, January 17, China’s government announced that the country’s population shrank in 2022 for the first time in sixty years. Demographers have known the decline in China’s population was coming for a long time, but the actual event is sooner and steeper than most forecasts had indicated. China’s population in 2022 fell by 850,000, with more deaths than births for the first time since the famines in the 1950s and early 1960s caused by Mao Zedong’s Great Leap Forward.
Please Watch My New YouTube video: Get Ready for the Tech Earnings Flood
Today I posted my two-hundred-and-twenty-fifth YouTube video: Get Ready for the Tech Earnings Flood. This week is a bit of a breather. Last week ended with bank earnings and next week begins the flood of tech stock earnings. This week we’ve got Alcoa, which used to be a market indicator but that is no longer the case (thankfully, since Wall Street estimates have them at a loss of $.75 for this quarter.) Netflix is up next on Thursday, January 19. Netflix (NASDAQ: NFLX) will show +$.44 this quarter versus +$1.33 last year at this time. I think this will likely be the trend with tech stocks. Lower earnings and slower revenue growth year-over-year. 2022 has been tough for technology companies and earnings will likely be lower for the fourth quarter than in 2021. Look closely at future estimates and guidance. Where are they going from here? (the bad news for the fourth quarter is widely expected.) Microsoft will report earnings on January 24, shortly after announcing it will be laying off 10,000 employees. After that, we’ll get Apple (NASDAQ: AAPL), on January 26, and then the floodgates open with more and more technology companies announcing earnings and setting the tone for the stock market at the start of 2023.
TSMC looking for chip inventory correction to end in second half of 2023
Well, Taiwan Semiconductor Manufacturing (RSMC) ought to know. The world’s largest chip foundry makes semiconductors for just about everyone. And last week the company said that it expects revenue to fall in the first half of 2023 as semiconductor companies cut orders and reduce inventory. But, the company says, it expects demand to return to “normal” in the second half o 2023.
Retail sales dip in December–is the consumer showing signs of weakness?
U.S. retail sales fell 1.1% in December from November, the Department of Commerce reported this morning. Commerce also revised November sales figures to show a drop of 1% from October instead of the originally reported 0.6% decline. The figures are seasonally adjusted (which always introduces an element of uncertainty) but they don’t reflect price changes and some of the month-to-month drop could be a result of declining inflation. The decline might be a reflection of a falling inflation rate in November and December. Could be. Or maybe consumers are cutting back on spending as they anticipate a slowing economy or as they read about another big tech industry layoff.
Microsoft reportedly plans to cut 11,000 jobs; this is a serious indicator for the economy
Granted these are all reports from outside news sources but there are a number of them. Where there’s smoke there might well be fire. U.K. broadcaster Sky News has reported that Microsoft plans to cut about 5% of its workforce or about 11,000 roles.
Will Netflix earnings on Thursday shock the market?
Right now Wall Street analysts project that on Thursday, January 19, Netflix (NFLX) will report earnings of just 44 cents a share for the fourth quarter of 2022. That would be a huge drop from the $1.33 the company reported in the fourth quarter of 2021. If Netflix reports as expected, will the stock market shudder lower? After all, the Netflix results would be very similar to the negative reports from the big banks so far this earnings season. And it might foreshadow disappointing earnings from the technology companies that began reporting on January 24 with Microsoft (MSFT). Probably not. Although I think it should.
Please Watch My New YouTube Video: Beyond 5%
This week’s Trend of the Week: Beyond 5%. On Monday, January 9, it looked like the market was going up until Raphael Bostic (head of the Atlanta Fed) and Mary Daly, (head of the San Francisco Fed) came out saying that Fed rates may have to be raised to above 5%. Unsurprisingly, this stopped the rally in its tracks. On Tuesday, January 10, the theme of “beyond 5%” continued with Jamie Dimon, CEO of JP Morgan Chase, reiterating the idea of a 50% chance of rate increases that took the peak up to 6%. The market consensus has comfortably settled on a 5% peak, but the idea of a possible rise to 6% is starting to percolate through the market. I’m still looking for a bottom in this market in mid to late 2023. Turmoil in Congress over the debt ceiling could push that out a bit further.
Start your debt ceiling crisis clock running NOW!
The Biden administration will act starting on January 19 to reprioritize federal funds in order to put off a debt ceiling crisis until June, Treasury Secretary Janet Yellin told Congress in a letter today. The “extraordinary measures” which should be old hat at Treasury by now from past crises, are intended to prevent the U.S. government from breaching the debt ceiling until, at least, early June. That would, theoretically, give Congress time to pass legislation raising or suspending the country’s borrowing cap past its current level of $31.4 trillion. Otherwise, the U.S. government would experience a historic default, which Yellen said could cause “irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.” Theoretically
Please Watch My New You Tube Video: Quick Pick Alibaba
Today I posted my two-hundred-and-twenty-third YouTube video: Quick Pick Alibaba. This week’s Quick Pick is Alibaba (NYSE: BABA). The past year has not been so great for Alibaba and its shares. China cracked down on domestic internet technology companies and Jack Ma (head of Alibaba, Ant Group, and Ant Financial) specifically. The Ant Financial IPO was squashed by regulators leaving it unable to go public and Jack Ma disappeared for a while. He’s recently resurfaced in Thailand (among other places) and has stepped away from control of Ant Group. This opens up a much stronger possibility that Ant Financial will now get an IPO. This news, along with a loosening of the technology crackdown from the government, has caused Alibaba stock to spike from $88.09 to $114.45 in two weeks. Other Chinese technology companies like Tencent and JD.com are seeing similar trends. Additionally, there’s speculation that because of the slowdown in the Chinese economy, largely due to the Covid-19 outbreak there, the People’s Bank may step in to deliver a big stimulus package. As a relatively short-term, speculative play, Alibaba is attractive. But I don’t know that I’d put it back in my 5-Year portfolio, due to uncertainty from raging Covid in China and the toll that it is taking on the economy there.
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