Welcome Back,

Market Headlines 👀 

• US Federal Reserve Chair Jerome Powell interview aired yesterday on 60min, states the market should only expect 3 rate cuts this year.

• US Senate unveils a new bipartisan $118b bill which would send aid to Israel, Taiwan and Ukraine; along with tighter border controls.

• US Mortgage rates jump back over 7%.

• Boeing (BA) says their supplier found mis-drilled holes in about 50

  737- jets which are yet to be delivered.

• Snapchat (SNAP) announces a 10% company wide layoff.

• Estee Lauder (EL) announces they are laying off 3,000 employees.

• Nvidia (NVDA) stock hits another new all time high after Goldman Sachs increases price target from $625 to $800.

Earnings 💸

• McDonalds (MCD)

  • EPS: $2.95 beats (exp. $2.83)

  • Revenue: $6.4b misses (exp. $6.5b)

• Caterpillar (CAT)

  • EPS: $5.23 beats (exp. $4.80)

  • Revenue: $17.1b misses (exp. $17.2b)

• Palantir Technologies (PLTR)

  • EPS: $0.08 meets (exp. $0.08)

  • Revenue: $608m beats (exp. $602.8m)

SPX Heatmap 🔥 

Recap Around the Street 🧠

For equities, resilient data helps to confirm equity earnings forecasts that never believed in the hard landing that the bond market feared (EPS estimates are for +10% in 2024 and +11% in 2025 for the S&P 500). The U.S. economy needs to remain resilient for this kind of earnings growth to materialize, so strong data serves to increase the probability that these forecasts are correct (however, as we noted last week, EPS forecasts have been getting trimmed all the while economic data has come in better than expected!).

The tighter Fed could have important implications on valuations for equities, but this isn’t a direct line. Valuations have expanded materially since the October low (+17% for the S&P 500 to 20.4x forward), boosted by bets that the Fed would be easing policy in the near future, but also likely boosted by overall improved sentiment towards equities (and a positioning chase), as well as technology optimism. If yields were to continue to rise as the Fed pushes back on easing, this could pose a challenge for extended equity valuations.(Contributed by Cameron Dawson, CIO at NewEdge Wealth.).

Market Preview 🎞️

• Tuesday earnings: Spotify (SPOT), Snapchat (SNAP), Enphase (ENPH), Ford (F)and Chipotle (CMG)

• Wednesday, February 7th: MBA mortgage applications; Consumer Credit

• Wednesday earnings: Alibaba (BABA), Uber (UBER), CVS Pharmacy (CVS), Wynn Resorts (WYNN) and Roblox (RBLX)

• Thursday, February 8th: Weekly jobless claims

• Thursday earnings: Cloudfare (NET), Affirm (AFRM), Expedia (EXPE), Pinterest (PINS), and Dynatrace (DT)

• Friday earnings: PepsiCo (PEP)

Enjoy reading?👇

That’s all for today, folks! We’ll be back around the same time Thursday with a curated list of important news, economic data and market highlights. 

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