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WHAT YOU NEED TO KNOW!

INFLATION PATTERN UNFOLDING AS WE PREDICTED

In our 2023 Thesis paper "The Great Stagflation" we warned that we should expect Inflation to unfold in a similar fashion to the three wave patterns of the 1930-1940s and the 1970s. That is exactly what we are currently seeing (chart right).

In the upcoming latest LONGWave video we revisit and delve into the unfolding Inflation pattern and what it means in the current market environment. FALSE BELIEFS & MARKET SHOCKS will be released to video subscribers on Wednesday.

RESEARCH

EVENTUALLY FUNDAMENTALS MATTER!

• Historical patterns indicate that gradual earnings decline, coupled with the Fed's interest rate cuts, can lead to rising market valuations, enabling the stock market to continue climbing despite a recession.
• However, unexpected dynamics, such as rising earnings accompanied by a stock market decline, can occur when the Fed raises interest rates.
• While current valuations are high, the direction of future interest rate changes remains uncertain. 

THE LATEST CONGRESSIONAL "PORK" SPENDING PACKAGE

• Have you actually ever read any Congressional Bills? You need to, in understanding how totally corrupt and wasteful Washington has become in spending our money. It is literally a feeding trough for legal robbery.
• We took the time to outline the latest spending package in Congress which will make the already outrageous $34.4 trillion federal debt (with $1.7T in interest) much. much worse via hidden waste!

DEVELOPMENTS TO WATCH

 CHINESE DEVELOPMENTS & CREDIT IMPUSLE 

• As expected, China revealed a new growth target of ‘around 5%’ in the Work Report at the National People's Congress.
• However, the report disappointed markets as there were no clear sign of stronger stimulus signals. In some respects the wording and planned measures were stronger, but it was buried in the details.
• Lifting consumer spending is becoming a high priority and the issuance of ultralong bonds for several years also suggests stimulus measures are set to continue.
• Other takeaways were stronger language on Taiwan, vowing support for the private sector, stronger efforts to attract FDI and a strong tech focus.

UNFUNDED SOCIAL SECURITY & MEDICARE $175.3 TRILLION



1. Medicare is forecasted to start cutting benefits in just seven years.
2. Social Security’s trust funds start running out of money in ten years.
3. The funds are projected for depletion by 2041.

Here are how the unfunded liabilities break out by program:

• Medicare Part A, which covers hospital visits, is projected to have $15.1 trillion more than it needs.
• Medicare Part B is the largest liability with an unfunded $99.5 trillion.
• Medicare Part D, for prescription drugs, will be missing $22.1 trillion.
• Social Security needs an additional $68.8 trillion.

GLOBAL ECONOMIC REPORTING: What This Week's Key Global Economic Reports Tell Us...

• NON-FARM PAYROLLS (NFP) - FEBRUARY LABOR REPORT
• PART-TIME JOB GROWTH: All the job growth has been in part-time jobs, which have increased by 921K since February 2023 (from 27.020 million to 27.941 million).
• FOREIGN BORN WORKER GROWTH: A near-record 2.4 million plunge in native-born workers in just the past 3 months (only the covid crash was worse)!
• A record 1.2 million foreign-born (read immigrants, both legal and illegal but mostly illegal) workers added in February!
• All job creation in the past 6 years has not only been been exclusively for foreign-born workers.
• There has been zero job-creation for native born workers since June 2018!
• ADP EMPLOYMENT REPORT - ADP has reported substantially less job growth than BLS's version of the truth for the last six months...and it's getting worse.
• We saw Wage-Growth Re-Accelerating In February.

In this week's expanded "Current Market Perspectives", we focus on the potential of a near term market top and the importance of Mag-7 Buybacks.

=========

EVENTUALLY FUNDAMENTALS MATTER!!

There is little doubt that Equity Fundamentals suggest that the market is currently overpriced (chart below). However, market can stay over priced for a long period of time!

In upcoming Wednesday's release of the March LONGWave video, with the assistance of over 55 slides, we discuss what could trigger a major sell off. The people at Game of Trade recently tried to isolate what really causes market crashes because over-valuations are a contributor but not the catalyst. Consider the following when you review our lastest video release entitled "False Beliefs & Market Shocks".

The Impact of Earnings on the Stock Market

In the past, significant drops in S&P 500 earnings have had a profound impact on the stock market's performance. Instances such as the 70% decline in earnings in 2008 and the 40% drop in 2001 led to significant corrections in the S&P 500. However, historical analysis reveals that not all declines in earnings result in a substantial decline in the stock market. Understanding the relationship between earnings decline, market performance, and the actions of the Fed is crucial for investors. 

In this article, we delve into history to shed light on whether a drop in earnings in 2024 would lead to a significant stock market decline or if the market could continue to climb higher despite a recession.

Earnings Decline and Stock Market Performance

A look back at the past 80 years reveals around 13 instances where S&P 500 earnings declined by 20% or more, mostly occurring during recessions.

While some of these instances led to substantial drops in the stock market, others did not result in any decline.

Analyzing the factors that influenced these outcomes provides insights into the potential impact of earnings decline in 2024. For instance, despite earnings downturns in 1985 and 1990, the stock market saw remarkable rallies.

Interest Rate Cuts and Stock Market Valuations

When exploring historical episodes, it becomes evident that the actions of the Fed play a crucial role in shaping market performance.

During periods when the Fed cut interest rates, stock market valuations often rose.

Lower interest rates reduce the attractiveness of holding cash, prompting investors to allocate more capital to assets like stocks, thus driving up market valuations.

This phenomenon was observed during the recession of 1990, where valuations increased by around 100% as the Fed cut interest rates, allowing the stock market to continue rising despite a 30% drop in earnings.

Gradual Earnings Decline and the Importance of Valuations

To see a similar scenario unfold in the next recession, a gradual decline in earnings (or no decline) would be key.

The stock market tends to react unfavorably to sharp drops in earnings, as they create uncertainty among investors. In addition, the Fed would need to cut interest rates in 2024, pushing market valuations higher.

Currently, stock market valuations stand at a PE of 22, historically leaving room for a rise to around 30, as seen during the dot-com bubble and briefly in 2021.

Earnings Rise and Stock Market Decline

While history suggests that rising valuations during an earnings decline can support a market rally, there are instances where the opposite occurred.

In 1974 and right after World War II, stock market earnings increased significantly, but the market experienced substantial declines.

The reason market valuations plummeted in 1974 was due to a surge in interest rates, which reached 13%.

When the Fed raises interest rates, it starts making cash a more attractive option.

In 1974, investors favored cash, yielding 13%, diminishing the attractiveness of stocks.

Possibility of Additional Rate Hikes

If the Fed mirrors the 1970s pattern by raising rates beyond 5%, a significant market decline may occur, irrespective of potential earnings growth.

The only way this could happen is if we see another wave of inflation. However, the historically reliable break even inflation rates currently don't signal an imminent inflation surge.

The Fed has even suggested potential 2024 rate cuts, resulting in an equity rally as investors front-run these potential cuts.

If valuations continue rising before a recession, then stocks would have no downside protection for earnings, given the big run up.

Such an occurrence would be similar to the 2000 run-up followed by the 2001 recession.

Conclusion

Historical patterns indicate that gradual earnings decline, coupled with the Fed's interest rate cuts, can lead to rising market valuations, enabling the stock market to continue climbing despite a recession.

However, unexpected dynamics, such as rising earnings accompanied by a stock market decline, can occur when the Fed raises interest rates. While current valuations are high, the direction of future interest rate changes remains uncertain. 

THE LATEST CONGRESSIONAL "PORK" SPENDING PACKAGE

“It also is sort of the grease that eases in billions and trillions of other dollars because you get people to buy into the total package by giving them a little bit of pork for their town, a little bit of pork for their donors."

Have you actually ever read any Congressional Bills? You need to in understanding how totally corrupt and wasteful Washington has become in spending our money. It is literally a feeding trough for legal robbery.

Here is the latest spending package in Congress which will make the already outrageous $34.4 trillion federal debt (with $1.7T in interest) much. much worse via hidden waste!

• Appropriations Committees Release First FY24 Package (Cover Right)
• The House and Senate have released a 1,050 page spending package. Yet because there are long lists of pork projects and niche special interest carve-outs, there's another 1,281 pages of "explanatory statements". 
• The name of the game for congressional spenders is "what can we get away with" rather than "how can we use the public's money most responsibly." For example: they use "emergency" designations as a budget gimmick to cram more $$$ inside spending caps. (LINK)
• Page 246. Is there an actual $100 million emergency at the Oceanic and Atmospheric Administration's procurement department? Not really, but now $100 million of the spending doesn't count towards limits. However, it will count when it's added to the debt.
• Page 301 of the spending package says that "paragraph(1)(Q)" is emergency spending. Backtrack to page 292 to find out that it's $125 million for security at the RNC/DNC conventions this summer. Set aside the candidates. Are the conventions a national emergency?
• P. 320-321 set up $450 million in spending on NASA exploration activity as an "emergency". If there was a genuine national emergency requiring space exploration, it would be major news. This is another gimmick.
• P. 324-325 marks $250 million of NASA's "construction and environmental compliance" account as an emergency. For emphasis, this is normal activity that they're classifying as an emergency so it doesn't count for budgetary purposes.
• P. 330 is more of the same: all $234 million of the National Science Foundation's "research equipment and facilities construction" account becomes an emergency.
• P. 344 has a gimmick that's almost entirely obscured. The Crime Victims Fund (first highlight) has a balance, and when Congress only uses part of the balance it claims the rest as "savings". The current balance isn't publicly available, so only a few people in Congress know the…
• P. 352 has the worst gimmick: a $12.44 billion "rescission" (cut) to the Department of Commerce "nonrecurring expense fund". The problem: this is a fake fund that was created as part of last year's debt limit deal. They use this fake cut to claim savings and spend more.
• P. 651 has a $350 million cut to the Indian Health Service. The funds were created in a 2022 Democrat-only spending package, which is rapidly becoming a huge slush fund for political convenience.
• P. 767 and 818 have a combined $8 billion in emergency funding gimmickry to hide the cost of housing welfare programs. Again, not new money, but hiding the money so it doesn't count against spending caps. 

EARMARKS

• Next up are earmarks, located in supporting documents. The Ojibwe are a Native American group living in northern MN/WI and southern Canada. Sen. Baldwin thinks we should spend $5 million on a "revitalization center" for the Ojibwe language institute.
• Sen. Baldwin also got an earmark to buy a solar energy system for Viola, WI. Unfortunately, it's located in a low-sunlight part of the country, so the value probably won't be worth the cost. 
• Sen. Murkowski continues a long tradition of getting big earmarks for tiny, remote locations in Alaska. This time it's a $4 million sewer system upgrade for the "city" of Pelican, population 98. So that's just over $40k per resident.
• Senators Capito and Machin got a $10 million wastewater project for West Union, WV, population 653. That's over $15k per resident.
• The Acer Access and Development program is a perfect example of federal excess, subsidizing maple syrup. This isn't needed in normal times and is unacceptably wasteful in today's budget environment. It's located in backup documents.
• There's a 306 page pdf file of earmarks for just the Transportation-HUD bill, most of which flow from the Community Development Fund. The CDF is a $6.7 billion slush fund for local pork and should be eliminated ASAP. .
• This isn't needed in normal times and is unacceptably wasteful in today's budget environment. It's located in backup documents.
• Senators Collins and King got a $1 million earmark for a "workforce transportation" study in Bath, Maine.
• Sen. Schatz got $9.5 million for a mass transit base yard in Kailua-Kona, Hawaii. The state of Hawaii has dysfunctional public transit even by the standard of other dysfunctional transit service in America. Sending good money after bad.
• Sen. Van Hollen thinks taxpayers should give $500k to the NAACP for its HQ in Baltimore. Wildly inappropriate handout to a highly partisan political organization. Imagine the media coverage if a Republican wanted half a million for the NRA or National Right to Life.

...... IT JUST GOES ON AND ON!!!

DEVELOPMENTS TO WATCH

CHINESE DEVELOPMENTS & CREDIT IMPUSLE 

5% growth target as expected, but the stimulus signals disappointed.

• As expected, China revealed a new growth target of ‘around 5%’ in the Work Report at the National People's Congress.

• However, the report disappointed markets as there were no clear sign of stronger stimulus signals. In some respects the wording and planned measures were stronger, but it was buried in the details.

• Lifting consumer spending is getting a high priority and the issuance of ultralong bonds for several years also suggests stimulus measures are set to continue.

• Other takeaways were stronger language on Taiwan, vowing support for the private sector, stronger efforts to attract FDI and a strong tech focus.

KEY MESSAGE FROM THE WORK REPORT

China’s premier Li Qiang delivered his first work report after taking over from Li Keqiang. As usual the report did not provide any big surprises, as much of the signals have already been revealed through politburo meetings and China’s annual Economic Work Conference held in December. Nevertheless, it seems markets had hoped for China using the occasion to take even stronger measures to lift confidence and announce new strong stimulus measures. These hopes were not met and Chinese offshore H-share stocks lost 2.6% by the end of the trading session. 

Offshore stock markets were clearly disappointed and it reflects the low conviction about China’s ability to get out of the doldrums in the short term. The A-share market did not see the same negative reaction, possibly due to support from Chinese state funds.

The work report does not change expectations for a continued muddling through scenario for China’s economy this year. The growth forecast is 4.5% and hence below the government target of ‘around 5%’, as we see continued headwinds from the housing crisis to weigh on private consumption. However, there is a possibility that China will step up stimulus as the year progresses to hit the 5% target – as was the case in 2023.

MATASII ASSESSMENT

China saved the global economy on four separate occasions over the last decade and half (chart right).

However, another mini-bazooka of stimulus from Beijing does not seem likely.

China’s focus tends to be on the medium to long term and they partly see the current pain as a consequence of a needed restructuring of the economy that cannot be fixed with short term big stimulus. The bad experience with massive stimulus in 2008/09 during the Global Financial Crisis that caused problems for China in subsequent years is still fresh in mind. ‘High-quality development’ implies not splashing money out with no clear direction but rather carefully directing money to areas that China sees as beneficial in the future, such as tech investments and green projects. 

UNFUNDED SOCIAL SECURITY & MEDICARE $175.3 TRILLION

The new Financial Report of the United States Government (February 2024) estimates that the financial position of Social Security and Medicare are under funded by $175.3 Trillion. Treasury Secretary Janet Yellin signed the report.

• The gross domestic product of every country on planet earth was only $104.5 trillion last year.
• $175.3 trillion is nearly as much as our federal government has spent on everything since the Constitution was written in 1787, even adjusted for inflation.

1. Medicare is forecasted to start cutting benefits in just seven years.
2. Social Security’s trust funds start running out of money in ten years.
3. The funds are projected for depletion by 2041.

Here are how the unfunded liabilities break out by program:

Medicare Part A, which covers hospital visits, is projected to have $15.1 trillion more than it needs.

Medicare Part B is the largest liability with an unfunded $99.5 trillion.

Medicare Part D, for prescription drugs, will be missing $22.1 trillion.

Social Security needs an additional $68.8 trillion.

GLOBAL ECONOMIC INDICATORS: What This Week's Key Global Economic Releases Tell Us

FEBRUARY LABOR REPORT (NFP)

What you can distill from the Job Reports:

• PART-TIME JOB GROWTH: All the job growth has been in part-time jobs, which have increased by 921K since February 2023 (from 27.020 million to 27.941 million).
• FOREIGN BORN WORKER GROWTH: A near-record 2.4 million plunge in native-born workers in just the past 3 months (only the covid crash was worse)!
• A record 1.2 million foreign-born (read immigrants, both legal and illegal but mostly illegal) workers added in February!
• All job creation in the past 6 years has not only been been exclusively for foreign-born workers.
• There has been zero job-creation for native born workers since June 2018!

HEADLINE NUMBERS

Stocks saw two-way price action on Friday with an initial rally post-NFP which ultimately was a "dovish" report, where although the headline beat, it was offset by downward revisions, soft wages and rising unemployment. 

• Overall, the February jobs report was a dovish one.
• Although the headline beat at 275k (exp. 200k), the prior saw a chunky revision lower to 229k from 353k.
• The unemployment rate saw a notable move higher to 3.9% from 3.7%, despite expectations for this to be left unchanged, while the participation rate was left unchanged at 62.5%.
• The move higher in the unemployment rate sees the data move closer in line with the Fed year-end median forecast of 4.1%, but this is set to be updated in March.
• After hot wages in January (supported by one time impacts, weather & minimum pay boosts), wages eased in February to just a gain of 0.1% M/M with the Y/Y wage gains easing to 4.3% from 4.4% (revised down from 4.5%), with both beneath expectations of 0.3% and 4.4%, respectively.
• The data gives credence to some of the seasonality concerns observed with the January prints, which largely were all hotter than expected. This suggests it may be a one off impact, but the February CPI report due next week will help either support or push back on this assumption.
• Regarding Fed implications, money markets have moved more dovish and are now pricing in 100bps of easing throughout 2024 vs 93bps priced in pre-data, while money markets now fully price a 25bp cut in June.
• Market pricing for May is little changed, suggesting markets are still more confident on the first cut taking place in June, in fitting with the majority of analyst forecasts pre-data.

ADP EMPLOYMENT REPORT

ADP has reported substantially less job growth than BLS's version of the truth for the last six months...and it's getting worse (chart right). [Who Do You Believe: Independent Payroll Processing Records or the Government?]

• The US ADP national employment printed 140k in February from 111k in January, and shy of the expected 150k.
• Within the report, the largest gains were in Leisure & Hospitality (+41k), Construction (+28k), and Trade, Transportation & Utilities (+24k).
• The only industries seeing declines were Natural Resources & Mining (-4k) and Information (-2k).
• Meanwhile, the median change in annual pay showed job-stayers' wages eased to 5.1% (prev. 5.2%), and job-changers lifted to 7.6% (prev. 7.2%).
• In commentary, ADP's Chief Economist said "Job gains remain solid. Pay gains are trending lower but are still above inflation. In short, the labor market is dynamic, but doesn't tip the scales in terms of a Fed rate decision this year."
• Overall, while the headline jobs added missed the analyst consensus, it was still an increase in the pace of jobs added over the January figures. Furthermore, the uptick in job-changer wage growth to 7.6% from 7.2% marks the first increase in over a year. But, of course, the link between ADP and NFP is spurious, so extrapolating between the two is hard and in some people's eyes, a fool's errand.

GLOBAL MACRO

WHAT DOES YOUR SCAN OF THE DATA BELOW TELL YOU? - THE MEDIA AVOIDS BAD NEWS!

We present the data in a way you can quickly see what is happening.

THIS WEEK WE SAW

Exp=Expectations, Rev=Revision, Prev=Previous

$1 TRILLION YTD MARKET CAP GAINS

MARKET CLOSES DOWN FOR ONLY THE THIRD WEEK IN 17 WEEKS

Click All Charts to Enlarge - Gord's Subscriber Chart Deck (CLICK HERE)

YOUR DESK TOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

Asset Managers and Leveraged Funds have begun "Getting Out of Dodge!". These are typically smart, well informed, and knowledgeable investors. When they start taking risk off the table you need to pay attention.

THE DOTCOM BUBBLE'S "CISCO" v THE CURRENT 'IRRATIONAL EXUBERANCE' & "NVIDIA".

2 - FUNDAMENTAL ANALYSIS

CORPORATE STOCK BUYBACKS

I have written that the problem is when markets are this elevated the question is where will new buyers come from? When everyone is in, who is left to buy and keep stocks rising?

The unique answer to this dilemma is something the markets have historically never seen. That is corporate buyback rates within extremely narrow breadth.

What we have witnessed is the MAG-7 stocks being heavily bought back by the MAG-7 themselves!

Though the MAG-7 slowed their purchases in 2023 (see chart above), their 4Q filings show the group is currently authorized to repurchase $215 billion in stock, 30% higher than the level authorized at the same time last year ($166 billion). This is led by META (+$30 bn yr/yr), NVDA (+$15 bn), and AAPL (+$12 bn).

TO KEEP THIS MARKET RISING FURTHER THE MAG-7 MUST CONTINUE TO FILL THE AUTHORIZED REPURCHASE BUDGETS

.... ALONG WITH FOREIGN MARKETS (CHART RIGHT)

As Peter Tchir of Academy Securities recently observed (and it indirectly relates to MAG-7 Buyback volumes above):

One thing that I think we have been seeing of late is that anecdotally it looks like relatively small net flows are having a larger than normal price impact on the markets. I’m not sure what caused the Nasdaq 100 to spike from 2:30pm until 2:45pm yesterday, only to see two heavy selling “pencils” (a line that goes straight down on the chart) into the close. Across the board I wonder if the “faux liquidity” we have created with so much electronic and algorithmic trading is obscuring an unnervingly low level of true liquidity – in both directions.

While I suspect that “this time is different,” I can’t help but drag out When Price Becomes “Just” a Number.  My experience is that there are times when price “becomes just a number.” And whatever that number is supposed to mean gets lost in the shuffle of short squeezes, chart watchers, gamma squeezes, and the like. I’m not sure we are seeing that in this market, but it is in the back of my mind and certainly seems relevant to the next “trillion dollar” mistake!

3 - TECHNICAL ANALYSIS

THE DOLLAR & GOLD

In our Mid-Week "Gord's Desk Top" we highlighted a potential move lower in the dollar which we expected would take gold higher. This is in fact what we subsequently witnessed. There is more to go if our sub-degree Head & Shoulders chart highlighted below is correct.

YOUR DESK TOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

Gold continued higher from its breakout. The Elliott Wave count suggests that the first 5 Wave Impulse wave may be in.

A consolidation in the form of a Wave 2 corrective pattern is likely to soon occur.

YOUR DESK TOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

THE MAGNIFICENT 7

The pull back in the Mag-7 stocks this week was quite pronounced. The market appears exhausted!

CHART BELOW

• We have reached the vertical lift part of the parabolic (geometric) lift shown by the dashed red line.
• We have Divergence with momentum (bottom pane).
• Momentum appears to be rolling over (bottom pane).

MATASII CROSS: WEEKLY - CONTINUES TO SIGNAL A MAG-7 BUY

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 Thought Experiment

Our Though Experiment suggests we have likely put in a near term top. Our relative confidence comes from the fact we hit our 5186 (see Parabolic lift chart at top of the Market Perspective page) and immediately pull backed to close at 5124. Additionally the pull back occurred as we touched the mid-channel mark of our rising trend channel.

We are likely to now consolidate before possibly completing one final small impulse higher (black impulse wave).

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

FRIDAY

• Broadcom (AVGO) -6.5%: Semiconductor solutions revenue was light. Looking ahead, maintained FY24 revenue outlook and sees around USD 7bln of AI chip revenue in 2024. Note, EPS and revenue beat expectations.
• Marvell Technology (MRVL) -11%: Q1 guidance was light. In Q4 numbers, EPS was in line and revenue marginally topped alongside a USD 3bln stock repurchase authorization.
• Eli Lilly (LLY) -2.5%: US FDA has delayed the decision on the approval of its Alzheimer drug. Biogen (BIIB) +2%.
• Costco (COST) -7.5%: Weak Revenue & comp sales for February.
• MongoDB (MDB) -6.5%: Disappointing Q1 and FY outlook.
• Amazon (AMZN) -1%: FTC is reportedly probing Amazon’s new controversial fees in its USD 140bln seller business, via Fortune.

THURSDAY

• Victoria's Secret (VSCO) -29.5%: Sees next quarter sales falling more than forecasted with FY outlook also light.
• Infinera (INFN) -12%: Disappointing next quarter guidance; forecasts a surprise loss per share with revenue also light.
• Ciena (CIEN) -14.5%: Cut FY24 revenue view with next quarter light.
• Verizon Communications (VZ) -1%: Transfers pension liabilities.
• Apple (AAPL) flat: EU antitrust regulators requested further explanation from Apple after it blocked Epic Games in the EU. Following this, Apple snapped back saying it exercised its right.

WEDNESDAY

• Ross Stores (ROST) -0.5%: FY24 profit view disappointed Wall St. consensus. Although, in Q4, top and bottom line and comp. sales beat alongside raising quarterly dividend 10%.
• Thor Industries (THO) -15%: EPS, revenue, and gross margin light of expected; also cut FY guidance.
• Foot Locker (FL) -30%: Reported a holiday-quarter loss, issued weak guidance and said it’s behind on meeting its profitability goals. Note, EPS, revenue, and SSS were much better-than-feared

TUESDAY

• Apple (AAPL) -3%: iPhone sales in China plunged 24% Y/Y in the first six weeks of 2024, according to Counterpoint Research cited by Bloomberg. Huawei Sales were +64%, while total China smartphone sales were -7%. Separately, according to Ming Chi Kuo, the market consensus for iPhone shipments in 2024 has started to ease to closer to 200mln units from 220-225mln units initially.
• Tesla (TSLA) -4%: Had a fire at a Berlin plant, and the boss expects power to be down for several days and do not expect production to resume this week.
• MicroStrategy (MSTR) -21%: Plans a USD 600mln convertible senior notes offering.
• Albemarle (ALB) -19.5%: Has begun a USD 1.75bln depositary shares offering.
• GitLab (GTLB) -21%: Forecasts a surprise next quarter loss per share, with FY25 outlook also weak.
• Disney (DIS) -0.5%: CEO Iger is "extremely confident" DTC (streaming) will be profitable by Q4 2024 (as previously guided); sees exceeding prior FCF guidance for FY24 of USD 8bln (exp. 8.27bln).

MONDAY

• Apple (AAPL) -2.5%: Is to face an EU fine in excess of EUR 1.8bln regarding the Spotify (SPOT) complaint. In other news, Evercore removed Apple from its 'Tactical Outperform' list. Lastly, Apple (AAPL) unveiled the new 13- and 15-inch MacBook Air with the powerful M3 chip.
• Applied Materials (AMAT) -0.4%: Exec stated it benefitted from being allowed to ship some technologies to China from DRAM customers in current quarters that weren't allowed in 2023.
• American Airlines (AAL) -5.5%: Ordered 85 Airbus (AIR FP) A321NEO jets, 85 Boeing (BA) 737 MAX 10 and 90 Embraer (ERJ) E175 aircrafts. Expects to remain within previous guidance for capacity and CapEx inclusive of aircraft orders. Orders also include options and purchase rights for further 193 aircrafts. Forecasts 2024 FCF of roughly USD 2bln; 2024 adj. EBITDAR margin of about 14%; 2025 adj. EBITDAR margin about 14-16%.

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A GREAT STAGFLATION

RELEASED - 01-15-23 --- 88 Page Paper

FULL 212 PAGE PDF DOWNLOAD