US FINANCIAL MARKET
Wall Street Kicks Off Busy Week on Cautious Note: Markets Wrap – Bloomberg, 1/29/2024
- The rally that has pushed US stocks deeper into a record lost a bit of its luster, with traders bracing for a deluge of earnings and updates on the outlook for interest rates that will likely drive the direction of markets over the next few months.
- Equities struggled for direction in the run-up to results from five megacaps with a combined market value of more than $10 trillion, which have powered the resurgence in stocks.
- Just hours before the Federal Reserve decision on Wednesday, the Treasury is expected to announce an increase to its sales of long-term debt — which risks driving up yields and pressuring growth shares.
- Economic figures from consumer confidence to jobs will also be highly scrutinized.
- The S&P 500 fluctuated near its all-time high. The Nasdaq 100 was little changed.
- Amazon.com has abandoned its planned $1.4 billion acquisition of iRobot, sending shares of the Roomba maker tumbling.
- Treasury 10-year yields dropped three basis points to 4.1%.
- Oil gave up an earlier advance as traders digested the impact of separate attacks in the Middle East that killed US troops in Jordan and hit a fuel tanker in the Red Sea.
- This week marks the busiest this season, with more than 100 companies delivering earnings results — representing roughly 40% of companies by market value in the S&P 500, including Microsoft, Alphabet, Apple, Amazon.com and Meta Platforms.
- With most of the megacaps in record territory, there are concerns that investors are overexposed to just a handful of stocks, which could open the door for some pain if quarterly results underwhelm.
- SoFi Technologies reached profitability for the first time, taking fintech one step closer to Chief Executive Officer Anthony Noto’s goal of turning the former anti-bank into a top 10 financial institution.
- Reddit is weighing feedback from early meetings with potential investors in its initial public offering that it should consider a valuation of at least $5 billion, according to people familiar with the matter, even as it is estimated below that figure in the volatile market for shares of private companies.
- Ryanair Holdings said it would jump at the chance to grab any extra Boeing 737 Max jet deliveries from airlines that don’t want them, lending support to the embattled US plane maker under fire for quality lapses after a mid-air panel blowout this month.
- Royal Philips is suspending sales of sleep apnea devices and ventilators in the US after reaching an agreement with the US Food and Drug Administration over its faulty medical equipment.
- BYD’s preliminary 2023 net income was 29 billion yuan ($4 billion) to 31 billion yuan, according to a Monday filing to the Shenzhen Stock Exchange, missing the average estimate from analysts of 31.5 billion yuan.
- West Texas Intermediate crude fell 1.2% to $77.05 a barrel.
SoFi Stock Jumps After Company Swings to a Profit – Wall Street Journal, 1/29/2024
- SoFi Technologies swung to a quarterly profit, with revenue jumping by more than a third and the company signing up more than half a million new members.
- Revenue rose 35% to $615.4 million based on generally accepted accounting principles.
- Earnings came in at 2 cents a share, slightly beating consensus forecasts for SoFi to break even.
- SoFi expects a profit of $10 million to $20 million in the current quarter, and a full-year net income of $95 million to $105 million.
- The San Francisco-based company also laid out expectations for 20% to 25% compound revenue growth through 2026.
Amazon, iRobot Scrap $1.7 Billion Acquisition Deal – Wall Street Journal, 1/29/2024
- Amazon.com and iRobot have agreed to terminate their acquisition deal, citing challenges to gaining regulatory approval in the European Union.
- The companies said Monday that they have signed a termination agreement resolving all outstanding matters relating to the transaction.
- Amazon will pay iRobot a $94 million termination fee.
- The Wall Street Journal reported earlier this month that the European Union’s competition watchdog planned to block Amazon’s $1.7 billion bid to buy the Roomba maker.
- The European Commission previously raised concerns that the tie-up would restrict competition in the market for robot vacuum cleaners.
- In light of the termination, iRobot is launching a restructuring that will include 350 job cuts, representing about 31% of the company’s workforce, and see Colin Angle step down as chief executive and chairman.
Alaska Airlines Plane Appears to Have Left Boeing Factory Without Critical Bolts – Wall Street Journal, 1/29/2024
- Bolts needed to secure part of an Alaska Airlines jet that blew off in midair appear to have been missing when the plane left Boeing’s factory.
- Boeing and other industry officials increasingly believe the plane maker’s employees failed to put back the bolts when they reinstalled a 737 MAX 9 plug door after opening or removing it during production, according to people familiar with the matter.
- The increasingly likely scenario, according to some of these people, is based partly on an apparent absence of markings on the Alaska door plug itself that would suggest bolts were in place when it blew off the jet around 16,000 feet over Oregon on Jan. 5.
- They also pointed to paperwork and process lapses at Boeing’s Renton, Wash., factory related to the company’s work on the plug door.
Top Goldman Sachs Executive to Depart – Wall Street Journal, 1/29/2024
- Jim Esposito, co-head of Goldman Sachs’s GS sprawling global banking and markets division and one of the senior-most executives at the firm, plans to depart after nearly 30 years.
- Among a handful of colleagues who along with Chief Executive David Solomon have set Goldman’s strategy, Esposito played a big role in merging the firm’s investment-banking and trading teams as part of its reorganization in the fall of 2022.
- He aspired to be president or CEO of Goldman, according to people familiar with the matter, and his departure signals that he determined his odds of attaining one of those positions in the near term were long.
- Solomon has indicated to top Goldman executives that he isn’t planning on stepping down soon, the people said.
- President John Waldron has been interested in taking over as CEO while Marc Nachmann, the head of Goldman’s asset- and wealth-management division, is increasingly becoming a competitor for that position, too.
Tesla Expects Capital Expenditures to Decline After Fiscal 2024 – Wall Street Journal, 1/29/2024
- Tesla expects to spend more than $10 billion in capital expenditures in the current fiscal year, but expects that figure to decline in the following two years.
- The Elon Musk-led electric vehicle maker disclosed the guidance in a regulatory filing containing its annual report.
- For fiscal 2025 and fiscal 2026, Tesla said it is targeting capital expenditures of $8 billion to $10 billion.
- The company cautioned that various factors, including potentially shifting company priorities and the addition of new projects, could affect the guidance.
- The company also said it expects to be able to fund itself and its expansion “as long as macroeconomic factors support current trends in our sales.”
- Tesla said it is likely to see heightened levels of capital expenditures over certain periods due to various factors such as labor availability, supply-chain issues, material prices and trade conditions.
EUROPE & WORLD
China Industrial Profits Fall in 2023 as Demand Remains Weak – Bloomberg, 1/29/2024
- Profits at large Chinese industrial companies declined in 2023, reflecting widespread corporate pain stemming from falling prices and weak demand both at home and overseas.
- Industrial profits at large-scale Chinese companies decreased 2.3% last year from 2022, according to data published by the National Bureau of Statistics on Saturday.
- That annual number contrasted with an end-of-year surge, after December profits soared 16.8% from the same month in 2022.
- That was a slower pace than November’s 29.5% increase.
- Both months reflected a rebound in output from a year earlier, when nationwide Covid outbreaks shuttered factories in many major cities.
- “Overall, industrial profits maintained the recovery momentum in 2023,” the NBS said in a statement, noting the annual decline narrowed from 2022 as monthly profits resumed growth since August.
- Going forward, the nation will seek to “expand domestic demand, lift market confidence, invigorate various industry participants,” and try to sustain and strengthen the recovery.
Ryanair Lowers Profit Outlook on Battle With ‘Pirate’ Sites – Bloomberg, 1/29/2024
- Ryanair Holdings said its battle with so-called “pirate” websites is hurting profit, as the discount carrier lowers fares to keep its planes full.
- Profit after tax came in at €15 million in the third quarter, down from €211 million in the same period last year.
- While rising fuel costs have also been “a big headwind,” the company is well hedged going forward, Sorahan said.
- It now expects profit of up to €1.95 billion ($2.11 billion) for the fiscal year ending in March — almost 5% below the €2.05 billion previous top-end of its range.
- Bloomberg News reported last week that United was looking for ways to get out at least part of its Max 10 order, and Boeing rival Airbus is working to free up delivery slots to accommodate the marquee customer.
- “If they don’t want their Max 10s or otherwise, we’ll take them,” Sorahan said.
- “The price is right, we’re very happy with this aircraft, we’d love to get more.”
BYD Misses Earnings Estimates as Price War Takes Toll – Bloomberg, 1/29/2024
- BYD’s earnings rose on back of soaring electric vehicle sales but fell short of analyst expectations as a price war in China hit the bottom line.
- BYD sold 526,409 fully electric cars in the final quarter of 2023, surpassing Tesla for the first time as the largest seller globally.
- The growth has been driven mainly by its much broader lineup of cheaper models in China.
- In November, the Shenzhen-headquartered EV maker discounted its popular Qin, Han and Tang models by as much as 10,000 yuan in a bid to reach its annual deliveries target.
- Sales in China helped offset a decline in global demand, lifting BYD’s preliminary 2023 net income at least 75% from the previous year to between 29 billion yuan ($4 billion) and 31 billion yuan, the company said Monday in a filing with the Shenzhen Stock Exchange.
- But the total fell short of an average analyst estimate of 31.5 billion yuan.
Philips Halts Sale of Sleep Apnea Gear in US After FDA Deal – Bloomberg, 1/29/2024
- Royal Philips is suspending sales of sleep apnea devices and ventilators in the US after reaching an agreement with the US Food and Drug Administration over its faulty medical equipment. The shares fell as much as 6.8%.
- Orders slumped 3% in the period.
- Adjusted earnings before interest, taxes and amortization came in at €653 million in the fourth quarter, missing analyst estimates.
- Despite the sales halt in the US, Philips expects comparable revenue growth of between 3% and 5% this year, it said Monday detailing earnings.
- The Dutch manufacturer set aside €363 million ($393 million) in the fourth quarter due to the consent decree settlement and warned there will be additional costs this year.
- The development adds to the woes stemming from quality issues at the company, following a recall of an MRI device last month.
- Philips more than two years ago began recalling some 5.5 million sleep apnea devices over health concerns related to disintegrating noise-dampening foam in them.
- While the manufacturer has set aside about €1 billion for the issue and in September agreed to pay at least $479 million to resolve some of the litigation, it’s still facing potentially costly class-action and potentially thousands of individual lawsuits in the matter.
Intelligence Reveals Details of U.N. Agency Staff’s Links to Oct. 7 Attack – Wall Street Journal, 1/29/2024
- At least 12 employees of the U.N.’s Palestinian refugee agency had connections to Hamas’s Oct. 7 attack on Israel and around 10% of all of its Gaza staff have ties to Islamist militant groups, according to intelligence reports reviewed by The Wall Street Journal.
- Six United Nations Relief and Works Agency workers were part of the wave of Palestinian militants who killed 1,200 people in the deadliest assault on Jews since the Holocaust, according to the intelligence dossier.
- Two helped kidnap Israelis.
- Two others were tracked to sites where scores of Israeli civilians were shot and killed.
- Others coordinated logistics for the assault, including procuring weapons.
- Of the 12 Unrwa employees with links to the attacks, seven were primary or secondary school teachers, including two math teachers, two Arabic language teachers and one primary school teacher.
- The information in the intelligence reports—based on what an official described as very sensitive signals intelligence as well as cellphone tracking data, interrogations of captured Hamas fighters and documents recovered from dead militants, among other things—were part of a briefing given by Israel to U.S. officials that led Washington and others to suspend aid to Unrwa.
US Weighs Response to Deadly Drone Attack as Iran Denies Role – Bloomberg, 1/29/2024
- The White House said it’s weighing potential responses to a deadly attack on a US base in Jordan by Tehran-backed militants over the weekend, as both Washington and Tehran seek to avoid a direct confrontation over the widening Middle East conflict.
- President Joe Biden is facing mounting pressure to respond to the drone assault, which killed three US soldiers and wounded dozens of others.
- They were the first Americans to die from such an attack since regional tensions were inflamed by the start of the Israel-Hamas war in Gaza in October.
- Biden is “working through” options, National Security Council spokesperson John Kirby told NBC on Monday, reiterating that the US doesn’t want a “wider war” with Iran.
- On Sunday, the president didn’t directly blame Tehran, but said the attack “was carried out by radical Iran-backed militant groups operating in Syria and Iraq.”
Netanyahu Says Big Gaps Remain in New Hostage Negotiations – Bloomberg, 1/29/2024
- Israeli Prime Minister Benjamin Netanyahu said a summit in Paris on Sunday to negotiate a return of hostages held by Hamas in exchange for a cease-fire in Gaza was “constructive,” but “significant gaps” remain.
- Those differences will be discussed at additional meetings this week, according to a statement from Netanyahu’s office.
- Spy chiefs and top officials from Qatar, Egypt, the US and Israel met to try to secure the release of more than 100 hostages taken from Israel on Oct. 7 that are still held in Gaza, and end the war there that has killed more than 26,000 people, according to Hamas officials.
- The deal under discussion would include a two-month pause in fighting to allow the return of captives, according to reports in international media.
- Hamas wants the end of combat to be permanent.
- Israel doesn’t, arguing the country won’t be secure until Hamas’ military and governing structures are dismantled.
- The reports said women, children, the elderly and wounded would be returned in the first month in exchange for a halt in the fighting.
- Soldiers and those of military age would follow in the second month.
- As part of the deal, a large number of Palestinian prisoners in Israel would be released and more humanitarian aid would be allowed into Gaza, where hunger and disease are spreading as nearly 2 million remain displaced.
King Charles Leaves Hospital After Prostate Treatment – Bloomberg, 1/29/2024
- The King has left hospital after spending three nights receiving medical care following treatment for an enlarged prostate.
- Charles, 75, was seen leaving the private London Clinic on Monday afternoon after being admitted on Friday with the Queen by his side.
- Camilla had arrived at the hospital ahead of the King being discharged and had visited her husband every day of his four-day stay at the clinic.
- The King underwent a corrective procedure for the benign condition and it has been reported he could take up to a month off from public duties as he recuperates.
Factmonster – TODAY in HISTORY
- John Beckley became the first Librarian of Congress. He was paid $2 a day. – 1802
- Henry Clay introduced the Compromise of 1850 to the Senate. – 1850
- Kansas became the 34th state in the United States. – 1861
- Karl Benz received a patent for the first successful gasoline-driven car. – 1886
- In his State of the Union address, President Bush labels Iraq, Iran, and North Korea an “axis of evil.” – 2002
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Historical performance is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. Any economic forecasts set forth may not develop as predicted.
All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.
Material presented is excerpts derived from third party content and you may need a subscription to access the full the content. The views and opinions expressed are those of the authors and do not necessarily reflect the views of Pence Financial Group or LPL Financial.
Prior to making any investment decision, please consult your financial advisor regarding your specific situation.