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RESEARCH MAILING -- CHANGES / SIGNUP

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A QUADRUPLE WITCH

ON THE "IDES OF MARCH"

WE SEE MARKET DIVERGENCES EVERYWHERE??

Click All Charts to Enlarge

1 - SITUATIONAL ANALYSIS

It was an ugly week on the macro side with hotter than expected inflation coming from the PPI, slower than expected growth, weaker than expected labor market data and noticeable volatility in Gold and Bitcoin/Cryptos.

This comes on prior week reporting of massive flow volumes into US equities (chart top right). However we were already seeing weakening in the Tech flows (chart right bottom), which carried forward into this week with weakening prices.

CHART BELOW - GOLD & BITCOIN

JPM futures positioning proxy in BTC and gold indicates momentum chasers are "all in". This could get "nasty" should we reverse lower in a more serious way. Private investors seem to be supporting both gold and bitcoin. Speculative institutional investors like hedge funds and CTAs have also been active in both markets.

CRYPTO & BITCOIN

2 - FUNDAMENTAL ANALYSIS

THIS IS NO VALUATION BUBBLE

PE Multiples are not outrageously out of line (chart right top).

Valuation of small-caps and mid-caps remain below historical averages (chart right bottom).

Valuation of largest TMT stocks today pales in comparison to the Tech Bubble (chart below).

3 - TECHNICAL ANALYSIS

MAGNIFICENT SEVEN -- Weakening!

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

BOND MARKET

CONTROL PACKAGE

There are FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a "control set".

1. The 10Y TREASURY NOTE YIELD - TNX - HOURLY (CHART LINK)
2. The 10Y TREASURY NOTE YIELD - TNX - DAILY (CHART LINK)
3. The 10Y TREASURY NOTE YIELD - TNX - WEEKLY (CHART LINK)
4. The 30Y TREASURY BOND YIELD - TNX - WEEKLY (CHART LINK)
5. REAL RATES (CHART LINK)

FISHER'S EQUATION = 10Y Yield = 10Y INFLATION BE% +REAL % = 2.326% + 1.991% = 4.317%

As rate-cut expectations fell from 6 this year to 3, Treasury yields rose... non-stop... all week with the belly of the curve underperforming (5Y yields up 28bps on the week). Yields all ended back up near their year-to-date highs...

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

US EQUITY MARKETS

CONTROL PACKAGE

There are FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a "control set".

1. The S&P 500 (CHART LINK)
2. The DJIA (CHART LINK)
3. The Russell 2000 through the IWM ETF (CHART LINK),
4. The MAGNIFICENT SEVEN (CHART ABOVE WITH MATASII CROSS - LINK)
5. Nvidia (NVDA) (CHART LINK)

S&P 500 - Daily - Our Though Experiment

Our Though Experiment, which we have discussed previously, suggests we have put in a near term top (or very close to it) and will now consolidate before possibly completing one final small impulse higher or put in a 1-2 Wave of a one higher degree.

NOTE: To reiterate what I previously wrote - "the black labeled activity shown below, between now and July, looks like a "Killing Field" where the algos take Day Traders, "Dip Buyers", "Gamma Guys" and FOMO's all out on stretchers!"

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

STOCK MONITOR: What We Spotted

MONDAY

• Boeing (BA) -3%: DoJ opens a probe investigating the mid-air door panel blowout on an Alaska Airlines (ALK) flight two months ago. In response, Boeing said "in an event like this, it’s normal for the DoJ to be conducting an investigation," adding that it was "fully co-operating and do not believe we are a target of the investigation.”
• Comcast (CMCSA) +2.5%: Comcast's Universal Pictures unit dominated at the Academy Awards, with "Oppenheimer" earning seven Oscars.
• EQT (EQT) -8% Equitrans Midstream (ETRN) +1.5%: To combine in a big natural-gas deal, where EQT will buy back its old unit for approx. USD 5.5bln or USD 12.50/share, via WSJ.
• Choice Hotels (CHH) +5.5% Wyndham Hotels & Resorts (WH) +2.5%: CHH terminated its hostile bid for WH and authorized an increase of 5mln shares to its repurchase program.
• Meta (META) -4.5%: Negative mention from GOP Presidential candidate Trump.
• Crypto-exposed names (COIN, MARA, MSTR) are seeing gains on account of the Bitcoin strength while the latter purchased 12k Bitcoins for USD 821.7mln in cash.
• Apple (AAPL) +1%: Reportedly testing AI-powered ad products for its App Store, according to Business Insider.
• Tesla (TSLA) +1.5%: Raised the price of its Model Y to USD 43,990 (prev. 42,990) in the US and Model Y Long Range to USD 48,990 (prev. 47,990). Meanwhile, its Berlin giga-factory could regain power from today.
• Procter & Gamble (PG) +1%: Upgraded at Truist.
• Advance Auto Parts (AAP) +3.5%: Third Point has a stake in AAP and is close to a settlement that will add three new directors to its board, according to WSJ citing sources.

TUESDAY

• Oracle (ORCL) +11.5%: EPS and cloud revenue beat and said demand for Gen2 AI infrastructure substantially exceeds supply. Oracle said it is set to make a joint announcement with Nvidia (NVDA) in the coming week.
• Disney (DIS) flat: Outlines investment plan and pushes back against activists.
• New York Community Bancorp (NYCB) +6%: Completed a USD 1bln capital infusion deal with an investor group, and also announced a one-for-three reverse stock split.
• 3M (MMM) +5%: Named William Brown, former CEO at L3Harris Tech (LHX), as CEO while Michal Roman will move from CEO to Exec Chair of the board.
• Southwest Airlines (LUV) -15%: Plans to cut 2024 capacity amid Boeing (BA) challenges and expects a net loss in Q1, but still expects to return to profitability in March.
• American Airlines (AAL) -4.5%: Reaffirmed FY24 guidance but sees Q1 adj. EPS coming in at the low-end of the prior range.
• Kohl's (KSS) -6.5%: Comp. sales declined more than expected and the FY SSS view disappointed.
• ACADIA Pharmaceuticals (ACAD) -17%: Phase 3 Pimavanserin study did not meet its endpoints.
• Boeing (BA) -4.5%: FAA Audit of Boeing’s 737 Max production found dozens of issues.
• Apple (AAPL) +0.5%: To let developers distribute apps directly from their sites from this Spring as part of changes required by new EU rules.
• Asana (ASAN) -12.5%: Forecasted a surprise loss per share for the next quarter, while FY revenue guide was also light.
• IBM (IBM) +3%: Tells employees it’s cutting jobs in marketing and communications, according to CNBC.

WEDNESDAY

• Intel (INTC) –4.5%: Pentagon withdrew from allocating up to USD 2.5bln in chip grants to Intel.
• Dollar Tree (DLTR) -14%: EPS and revenue missed alongside taking a USD 1bln+ goodwill impairment charge, as it plans to shut nearly 1,000 stores. Q1 diluted EPS guidance was light of expectations.
• Archer Daniels Midland (ADM) +1.8%: Announced a USD 1bln accelerated share buyback program. In US trade, Reuters reported the US DoJ is reportedly probing accounting practices on ADM's (ADM) ethanol trading desk and is examining whether co. improperly accounted for hedges in its ethanol trading unit, according to sources.
• Nucor (NUE) +0.5%: Upgraded at Citi who sees it shares as undervalued.
• Tesla (TSLA) -4.6%: Downgraded at Wells Fargo on price, demand and valuation concerns.
• GE HealthCare Technologies (GEHC) -3.5%: Launched a secondary public offering of 13mln shares of common stock.
• Williams-Sonoma (WSM) +17%: EPS and revenue topped forecasts and it raised its quarterly dividend 26% alongside announcing a stock buyback authorization of USD 1bln.
• Johnson & Johnson (JNJ) -1.2%: US FDA staff flagged safety concerns for car-t therapy.
• McDonald's (MCD) -4%: Sees Q1 sales in its international business slightly lower that Q4; continues to deal with impacts of war in the Middle East but are also seeing "a sluggish start" in China this year. In China, business is doing "okay", but the environment continues to be challenging.
• US Steel (X) -12%: US President Biden set to voice concerns over Nippon Steel takeover of US Steel (X), according to FT. Biden set to issue a statement about the takeover before Japanese PM Kishida arrives for a state visit on April 18th.
• Adobe (ADBE) -0.5%: Adobe Firefly reportedly repeats the same AI blunders as Google (GOOGL) Gemini, according to Semafor.

THURSDAY

• Microsoft (MSFT) and Oracle (ORCL) expand partnership to satisfy global demand for oracle database Azure.
• MicroStrategy Incorporated (MSTR) - The crypto investor announced its intention to offer USD 500mln of convertible senior notes due 2031, with an additional option for purchasers to buy up to USD 75mln more. MSTR intended to use the proceeds to purchase additional bitcoin and for general corporate purposes. Shares +4.5 pre-market trade.
• Under Armour (UAA) - Kevin Plank will assume the roles of President and CEO from April 1st, succeeding Stephanie Linnartz. Mohamed El-Erian will become the non-executive Chair of the Board. Plank, founder of Under Armour, transitions from the Executive Chair role, while Linnartz will remain to advise until April 30th. Shares -4.5% in pre-market trade.
• Fisker Inc (FSR) Is considering a bankruptcy filing, according to WSJ sources. Shares -36% in pre-market trade.
• Foxconn (2317 TT) sees 2024 revenue to increase significantly Y/Y; sees Q1 revenue to slightly decline Y/Y, sees Q1 revenue for smart consumer electronics to slightly decline Y/Y. Q4 net profit TWD 53.14bln (exp. 43.5bln; prev. 43.1bln Q/Q). Sees Q1 revenue for cloud and networking products to be flat Y/Y. Sees Q1 revenue for computing products to be flat Y/Y. Says major growth momentum this year will be AI servers, expects the servers business to grow strongly this year; sees very strong demand in AI from clients. AI server growth in 2023-25 could be stronger than the market average, potentially above 30% or higher annually. Semiconductor revenue will surpass TWD 100bln this year.

• Apple (AAPL) +1: Buys AI startup DarwinAI as part of race to add features; has added dozens of DarwinAI staff to its AI division, according to Bloomberg. In other news, supplier Foxconn saw profits jump +33% Y/Y in Q4, topping expectations. The beat was driven by demand for AI servers, and strong holiday sales. While it forecast a slow start to 2024, it sees ending the year with a significant revenue increase.
• Under Armour (UAA) -11%: Founder of the Co. Kevin Plank will assume the roles of President and CEO from April 1st, succeeding Stephanie Linnartz.
• Fisker (FSR) -53.5%: EV startup faces potential bankruptcy due to sluggish sales in the US.
• Dick's Sporting Goods (DKS) +15%: EPS, revenue, and gross margin beat alongside raising annual dividend 10%.
• Alibaba (BABA) -4%: EU Commission opens investigation into AliExpress.
• Lithium Americas (LAC) +5.5%: Receives USD 2.26bln Thacker Pass project commitment from DOE.
• Paramount Global (PARA) -3.5%: India's Reliance Industries will acquire Cos. entire 13.01% stake in Viacom 18 Media for USD 517mln.
• Robinhood (HOOD) +4.5%: Said its equity trading volumes in February rose 41% Y/Y.
• Sentinel One (S) -16.5%: Greater loss per share than forecasted.
• Intel (INTC), Qualcomm (QCOM) and Google (GOOG) say they plan to battle Nvidia (NVDA) AI software dominance through UXL Foundation, via Reuters citing sources. To prepare tech specs for software in H1'24.
• UiPath (PATH) -7%: Next quarter revenue guidance disappointed.
• Lennar (LEN) -7.5%: Top line light.

FRIDAY

• Adobe Inc (ADBE) - Q1 2024 (USD): Adj. EPS 4.48 (exp. 4.38), Revenue 5.18bln (exp. 5.14bln), announces new USD 25bln share repurchase program. Co. drove record Q1 revenue demonstrating strong momentum across Creative Cloud, Document Cloud and Experience Cloud. The chair and CEO said they have done an incredible job harnessing the power of generative AI to deliver ground-breaking innovation across our product portfolio. Co noted Q1 results and record RPO reflect strong customer adoption of their innovative products and services. Sees Q2 Adj. EPS USD 4.35-4.40 (exp. 4.39). Sees Q2 rev. 5.25bln-5.30bln (exp. 5.30bln). (Newswires) Shares -10.9% after-hours.
• Apple (AAPL) - Buys AI startup DarwinAI as part of race to add features; has added dozens of DarwinAI staff to its AI division, according to Bloomberg. (Bloomberg)
• Adobe (ADBE) -13.5%: Next quarter EPS and revenue guidance were light, putting a dampener on any upside to its FY guidance. Note, top and bottom line beat alongside a new USD 25bln share repurchase program.
• PagerDuty (PD) -7.5%: Next quarter and FY outlook disappointed.
• Jabil (JBL) -16.5%: Top line missed with weak next quarter and FY guidance.
• Ulta Beauty (ULTA) -5%: FY adj. EPS and comp. sales growth view fell short of Wall St. expectations. Note, EPS, revenue, and comp. sales beat alongside a USD 2bln stock buyback program.
• Intuitive Surgical (ISRG) +3%: Fifth-generation robotic system, da Vinci 5, received FDA clearance.
• Madrigal (MDGL) +11%: Announces FDA accelerated approval of Rezdiffra. In wake of the positive update, it had its PT lifted at numerous brokerages, with a highlight from Piper Sandler noting Madrigal label for Rezdiffra is 'best case scenario'.
• Steel Dynamics (STLD) +4.5%: Next quarter EPS guidance surpassed consensus and says Q1 profitability from steel operations are expected to be meaningfully stronger than sequential Q4 results.
• Rivian (RIVN) +3.5%: Upgraded at Piper Sandler after R2 unveiling.
• Micron Technology (MU) +2%: Named a top pick at Citi and raised its PT to USD 150 (prev. 95); believes MU’s stock should get a premium given its increasing exposure to AI.
• AI names such as NXP Semiconductor (NXPI), and ON Semiconductor (ON) saw weakness after China urges EV makers to buy local chips as US clash deepens.
• Spotify (SPOT) -1%: Said its iPhone app updates in the EU were getting held up by Apple.
• Housing names (RDFN, Z, LMND, OPEN, RMAX, COMP) : US National Association of Realtors has agreed to cut commissions in order to settle lawsuits, via NY Times; group to pay USD 418mln in damages/amend housing rules, which could drive-down housing costs.

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