The Fed, Earnings, & GDP

A packed week for investors

Author

Mark Roussin
July 24, 2023

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Market Talk ⏪

We always begin with 5 important topics from the week prior and/or related to the week ahead for investors to be mindful of.

  1. Tesla’s second-quarter 2023 report disappoints investors: Tesla reported its revenue and earnings beat for the second quarter of 2023. The company’s Q2 gross margins were reported to be 18.2%, lower than the expected 18.8%, and the operating margins stood at 9.6%, below the expected 10%. As a result, Tesla stock plummeted 9.7% as the company also indicated that the Q3 2023 production would also go down. Tesla, along with Netflix brought the technology sector as a whole down late in the week. Could this be the start of a breather for that sector?

  2. Could this be the FINAL rate hike for the Fed: The Federal Reserve members meet this week to decide on their latest move regarding interest rates. The overwhelming majority believes the Fed will hike rates an additional 25 basis points this week before taking a prolonged pause to watch more data. I have been in this camp for awhile now and believe we will get a pause for the remainder of the year before the Fed decides on if they want to cut rates in 2024 due to slowing economic data, which is starting to show, albeit in the early stages.

  3. Lower US Dollar continues to support stock rally: The US Dollar topped out in September of 2022, but since then, the US Dollar has fallen 13%. International companies have dealt with a high US Dollar, but a drop off helps support those companies with international sales as a lower dollar helps them add higher profits.

  4. Oil prices rise due to supply tightening: As the oil demand from India and China increased heavily, oil prices rose due to tight supplies. Brent futures rose by 94 cents and WTI crude also rose by 94 cents. Since Russia has joined hands with Saudi Arabia in reducing the oil output for August 2023, the tight supply in the US is evident in its inventories and causing the price hike. Additionally, China also suggested an upcoming boost in automobile sales, leading to a bullish trend in the oil industry.

  5. Existing home sales drop to the slowest pace in 14 years: This past week we got some fresh new data regarding the housing sector, which has been dealing with low inventory and high mortgage rates above 7%. In June, home sales were 18.9% lower compared with last year, falling to a seasonally adjusted annualized rate of 4.16 million units, the slowest pace in 14 years, which is concerning.

Deep Dive 📰

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  • Monthly Portfolio Updates

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  • Valuation Dashboard

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Premium subscribers will be receiving their DEEP DIVE reports this week for the month of July.

Go PREMIUM today!

US Markets 🇺🇸

Here is a performance summary for US Equities:

Here is a look at US Treasuries:

The Fear & Greed Index measures market sentiment based on the following seven factors: put/call ratios, junk bond demand, stock price breadth, market volatility, stock price strength, safe-haven demand, and market momentum.

On the week, the index remained relatively the same, still stuck in the Extreme Greed reading. Currently, the index has a reading of 82, which is in line with the prior week reading of 80.

Earnings on Deck 💰

Q2 earnings season is officially in full swing with yet another busy week of earnings due out. Here are the companies reporting this week:

Dividend News 📝

Here are some notable analyst upgrade/downgrades from the previous week:

  • Citi downgrades AT&T to neutral from buy

  • Morgan Stanley downgrades Pepsi to equal weight from overweight

  • JPMorgan upgrades Progressive to overweight from neutral

  • Bernstein upgrades UnitedHealth to outperform from market perform

  • Morgan Stanley names American Express a top pick

  • JPMorgan adds Qualcomm and HP Inc. to the focus list

  • JPMorgan upgrades Cisco to overweight from neutral

  • Argus downgrades AT&T to hold from buy

  • Piper Sandler upgrades SL Green to overweight from neutral

  • Bank of America upgrades Consolidated Edison to buy from neutral

Economic Data This Week 📆

Monday

  • S&P US manufacturing PMI (July)

  • S&P US services PMI (July)

Tuesday

  • Consumer Confidence (July)

Wednesday

  • FOMC decision on interest-rate policy

  • FED Chairman Powell’s press conference

Thursday

  • GDP (advanced report) (Q2)

  • Pending home sales (June)

  • Initial Jobless Claims

Friday

  • PCE Index

  • Consumer Sentiment (final)

  • Personal Income/Spending

Other Resources 📺

If you have not done so yet, check out my growing YouTube community of more than 30,000 like-minded investors where I publish weekly videos focused on building wealth through investing.

Here is the latest video I released: The Power of Compounding Dividends:

Here is another video I put out last week: 3 Dividend Stocks That Pay Monthly Dividends:

Here are a few others of my latest videos:

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Have questions? You can email me directly at [email protected].

Happy Investing!

Mark

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