Breakfast Bites - Wed Apr 19, 2023
Netflix guides lower; UK inflation comes in hot; Eurozone inflation comes in cool; Tesla reports this evening
Rise and shine everyone
Markets are looking a little shaky this morning. We had earnings from Netflix last evening and JNJ, Goldman Sachs, and Lockheed Martin before market open yesterday. It’s a mixed bag of results but so far, more beats than misses.
Netflix added 1.75m subscribers (slightly below expected) but beat on EPS $2.88 vs $2.86 est. Revenues came in slightly lower at $8.16B vs. $8.18B est. The Q2 guidance is what the market did not like as they guided to lower EPS of $2.84 vs. $3.07 est. and revenues of $8.24B vs $8.47B est.
The major earnings on the cards today is Morgan Stanley & Abbott before market open; Tesla and Lam Research after market close.
US Equities are down this morning, along with Gold, Oil, and Bitcoin. Dollar and rates have a slight bid.
Asia and Australia
Asian markets ended with a negative bias Wednesday. Losses greatest in Hong Kong, which shrugged off last night's Ant Group news to end sharply lower.
Yellen will deliver a speech in Washington on Thursday to lay out the Biden administration's principal objectives for the US-China economic relationship
14 out of 22 of BOJ watchers expect no change to policy at the April 27-28 MPM. Remaining eight expect amendments to forward guidance. - I don’t expect a change either but, it would be good to get more clarity on the forward guidance.
Iron ore futures on China's Dalian exchange down 7% from early April highs, recently falling to their lowest since late December.
Europe, Middle East, Africa
European markets lower on Wednesday.
UK Inflation comes in with a surprise re-acceleration. CPI at +10.1% y/y vs consensus of +9.8% but slightly off from February's print of +10.4%.
March Eurozone CPI eased to 6.9% from 8.5% in the prior month according to Eurostat data, largely on rapidly falling energy costs as natural gas prices keep declining after surging a year ago on the Ukraine war.
The Americas
US paychecks starting to outpace inflation, amplifying purchasing power and giving Fed more ammo to hike in May
St. Louis Fed President Bullard backs more rate hikes, pushes back against recession talk
Tesla cuts some Model Y and Model 3 US prices for sixth time this year ahead of Q1 results
Meta to begin another round of layoffs, potentially affecting around 4K jobs
ASML beats but notes some customers delaying timing of their demand for certain tools
Calendars
(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)
If consumer purchasing power remains high, which sectors are likely to stay resilient to rate hikes? I am thinking consumer staples