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- The Weekly Wrap-Up - February 17th, 2024
The Weekly Wrap-Up - February 17th, 2024
January inflation comes in hot
CMG Venture & Mark Roussin
February 17, 2024
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Market Talk
Inflation data for January came in hotter than expected. The market initially sold off but was able to shake off the news with the S&P 500 recovering to end the week near all time highs.
Economic charts credit: Liz Ann Sonders
👉 EARNINGS EDGE: Earnings season may be winding down but were still busy here at the Investor’s Edge. Coinbase was our big winner of the week, rising over 34% after the company reported a positive net profit for the first time…upgrade to VIP to read the full Earnings Edge.
5 Stories Moving the Market
These are some of the biggest stories from the past week that had an influence on market action.
January consumer and wholesale prices rise more than expected, further signs of persistent inflation
Concerns over rising inflation intensified this week as two reports indicated higher-than-expected increases.
The producer price index (PPI), a key measure for domestic goods and services, saw a significant 0.3% rise — its largest move since August, surpassing economists' expectations of 0.1%. The core PPI, excluding food and energy, increased by 0.5%, defying projections of a 0.1% gain.
That follows the consumer price index (CPI) report earlier in the week, which also indicated persistent inflation. The CPI rose 3.1% from a year ago, down from the December level but still exceeding the Federal Reserve's 2% target. On a core basis, the CPI registered a 3.9% increase.
While markets had initially priced in a potential Fed rate cut in March, cautious policymakers have pushed back expectations to June, emphasizing the need to carefully navigate the inflation challenge amidst a stable economy.
Nvidia passes Alphabet in market cap and is now the third most valuable U.S. company
Nvidia has surpassed Google's parent company Alphabet in market capitalization, marking the chipmaker's continued success fueled by the artificial intelligence boom.
With its stock rising to $739.00 per share, Nvidia now boasts a market value of $1.83 trillion, surpassing Google's $1.82 trillion. This milestone follows Nvidia's recent overtaking of Amazon in market value, securing its position as the third-largest U.S. company, trailing only Apple and Microsoft.
The company's stock has surged by an impressive 221% in the past 12 months, primarily driven by the robust demand for its high-end AI server chips, a departure from its previous focus on consumer graphics processors for gaming computers.
Nvidia is set to report its quarterly earnings on Feb. 21, adding further anticipation to its remarkable growth trajectory. Analysts predict a remarkable 118% annual growth in sales, reaching $59.04 billion, as Nvidia's AI server chips experience high demand, particularly from tech giants like Google and Amazon for their cloud services.
Uber and Lyft experienced a surge in stock values this week, signaling improved financial performance amid increased ridership.
Uber's stock rose over 14% after announcing a $7 billion share buyback, building on the momentum from the previous week when the company reported its first-ever profitable year.
Lyft saw an impressive gain of over 35%, driven in part by a typographical error that caused a temporary spike of over 60% in after-hours trading T. Despite the correction in its EBITDA profit-margin forecast, with an increase of 0.5 percentage points instead of the initially reported five percentage points, investors remained optimistic as Lyft anticipates generating positive cash flow for the first time.
Retail sales tumbled 0.8% in January, much more than expected
Consumer spending experienced a significant decline in January, raising concerns about potential early signs of economic challenges.
Advance retail sales fell sharply by 0.8%, following a downwardly revised 0.4% gain in December. While a decrease was expected, the actual pullback was more substantial than anticipated, even when excluding auto sales, which dropped by 0.6%, well below the estimated 0.2% gain.
The report, which is adjusted for seasonal factors but not for inflation, indicates spending lagging behind the pace of price increases. On a year-over-year basis, sales were up just 0.6%.
Consumer strength has been a cornerstone of the U.S. growth narrative, but worries persist that persistent inflation could impact this, posing potential risks to future prospects.
Bitcoin surges above $50K for the first time since late 2021
Bitcoin's value surged by 17.5% this week, surpassing $50,000 for the first time since December 2021.
This upward trend is partially attributed to the success of spot Bitcoin exchange-traded funds (ETFs), which began trading on January 11th. Major mutual fund managers such as BlackRock, Fidelity, and ARK 21Shares have launched these ETFs, accumulating over $10 billion in assets in less than a month.
Anticipated growth in spot Bitcoin ETF inflows is expected over the next few months as trading firms conduct due diligence on these newly introduced investment vehicles.
All this comes ahead of the Bitcoin halving in April, which will see the rewards paid out to Bitcoin miners reduced from 6.25 BTC to 3.125 BTC.
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IE+ Posts of the Week
We continue to push out more and more content every week to give investors that edge. Here are the posts Plus subscribers received this week.
Edge Report
Mondays are for the investors. Every Monday morning we share exactly what we’re watching in the week ahead, how we’re positioning, and even get a sneak peek into our systems and models. This week we offered our view on upcoming earnings and shared an options strategy for a potential pullback in Amazon. See the full report here:
Portfolio Update - January
Every month we share a full access look into our portfolios, including holdings, performance, activity and our watchlists for the upcoming month. You can see both of our portfolios here:
Stock Deep Dive - Meta
Our Deep Dive focused on Meta this week. We not only broke down the financials of the Facebook parent company but we also shared our valuation models and price targets for 2024. You can see the full analysis here:
Earnings Recap
Every week during earnings season we share a recap of the quarterly reports from stocks that we cover. You can see this week’s earnings recaps here:
The Week Ahead
Nvidia’s earnings, the FOMC minutes and Fed speeches will all be huge catalysts for market action next week.
Earnings Reports
The biggest reports of the earnings season may be behind us, but there are still a few big names left to report. Next week Nvidia tops the tape, but we will also be covering Walmart, Home Depot, Palo Alto, Realty Income, Block and MercadoLibre.
Economic Reports
Next week is a holiday shortened week but PMI data, an existing home sales report and the FOMC minutes are scheduled to released. There will also be several speeches from Fed members throughout the week that could sway markets.
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The Investor’s Edge
Disclosure
This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.
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