US FINANCIAL MARKET

Stocks Bounce Back Before Apple, Meta Earnings: Markets Wrap – Bloomberg, 2/1/2024

• Stocks advanced as traders awaited earnings from a trio of megacaps while weighing mixed economic data in the run-up to Friday’s jobs report.
• Wall Street sent equities higher, reeling from Jerome Powell’s message that a March Federal Reserve cut is unlikely. Big tech led the rebound ahead of results from Apple, Amazon.com, and Meta Platforms.
• After the heightened volatility of the Fed-decision day, Treasury yields looked reasonably stable.
• New York Community Bancorp extended losses after a selloff spurred by a surprise loss.
• Oil rose on a news report that the US approved plans for strikes in Iraq and Syria.
• West Texas Intermediate crude rose 1.4% to $76.88 a barrel.
• Just 24 hours ahead of the US government’s jobs figures, a report showed unemployment claims unexpectedly rose to a two-month high.
• Economists surveyed by Bloomberg forecast payrolls rose by about 185,000 in January following a December gain of 216,000.
• Separate data showed labor productivity advanced rapidly while measures of US factory activity climbed to the highest in 15 months.
• The S&P 500 rose 0.5%. The Nasdaq 100 rose 0.6%. The Dow Jones Industrial Average rose 0.2%.
• US 10-year yields declined three basis points to 3.88%.
• The British pound was little changed after a mixed message from the Bank of England opened the door to rate cuts while warning that price pressures could reemerge.
• Qualcomm, the world’s biggest smartphone processor seller, expects a modest recovery for the industry in 2024, with phone shipments getting more substantial, but the market for internet-connected appliances remains sluggish.
• Peloton Interactive expects to record another sales decline in the current quarter, defying Wall Street predictions for a return to growth after some of its comeback efforts failed to pan out.
• Royal Caribbean Cruises gave initial profit guidance well ahead of expectations amid record demand.
• Merck forecasts annual profit ahead of Wall Street views as sales of its cancer blockbuster Keytruda remain strong while the company hunts for new sources of growth.
• Shell kept up the pace of its share buybacks after a strong performance from its gas traders offset the impact of lower commodity prices in the fourth quarter.

Qualcomm Sees Shaky Recovery as Inventory Remains High – Bloomberg, 2/1/2024

• Qualcomm, the world’s biggest seller of smartphone processors, warned that some customers are still working through gluts of chip inventory even as the industry begins to recover.
• In the fiscal first quarter, which ended December 24, profit was $2.75 a share, excluding some items.
• Revenue was up 5% at $9.9 billion.
• Analysts had estimated a profit of $2.36 and sales of $9.54 billion.
• Chips for internet-connected devices remained a weak spot. Revenue from that business fell 32%.
• Qualcomm’s automotive sales rose 31%.
• Revenue from handsets gained 16% last quarter, compared with a 27% decline in the previous three months.
• In its quarterly report Wednesday, the company said that inventory remains elevated in the near term, and some customers continue to draw down their stockpiles.
• An excess of inventory has contributed to a yearlong slump in the market for phone chips, Qualcomm’s biggest market.
• Total sales will be $8.9 billion to $9.7 billion in the fiscal second quarter, Qualcomm said.
• That was in line with an average analyst estimate of $9.36 billion.
• Excluding certain items, profit will be $2.20 to $2.40 a share in the current quarter versus an average projection of $2.26.
• Phone shipments declined in 2023 and will be “flat to up slightly” in 2024, the company said Wednesday on a conference call following its fiscal first-quarter earnings report.
• Qualcomm also said Wednesday that Apple extended a patent licensing agreement by two years. It now runs until March 2027.

Honeywell Posts Earnings Beat in a Tough Economy – Barron’s, 2/1/2024

• Honeywell’s fourth-quarter earnings showed that companies can still generate growth in a challenging economy.
• On Thursday, Honeywell reported fourth-quarter earnings per share of $2.60 from sales of $9.4 billion.
• Wall Street was looking for earnings of $2.59 a share on sales of $9.6 billion, according to FactSet.
• Full-year sales grew 4% on a comparable basis.
• Operating profit grew 10%.
• Margins expanded to 22.7% from 21.7%.
• Operating profit in Honeywell’s aerospace business was $3.7 billion, up 16%.
• Building technologies operating profit hit $1.5 billion, up 5%.
• Operating profit in Honeywell’s energy-related business was $2.5 billion, up 8%.
• Honeywell’s weakest business segment was automation—operating profit fell 17% yearly to $900 million.
• Looking ahead, Honeywell expects to generate 2024 earnings of between $9.80 and $10.10 a share.
• The midpoint of guidance, at $9.95, essentially aligns with the $9.96 a share that Wall Street is projecting.
• Sales are expected to grow between 4% and 6% faster than in 2023.
• Profit margins are expected to expand again, coming in at around 23%.

Merck results beat expectations as top drugs Keytruda, Gardasil post strong sales – CNBC, 2/1/2024

• On Thursday, Merck reported fourth-quarter revenue and adjusted earnings that topped estimates as it saw strong demand for its blockbuster cancer drug Keytruda and HPV vaccine Gardasil.
• Revenue: $14.63 billion vs. $14.50 billion expected.
• Merck’s immunotherapy Keytruda, which is used to treat several types of cancer, largely fueled the growth.
• The drug booked $6.61 billion in revenue, up 21% from the year-earlier quarter.
• Analysts had been expecting $6.41 billion in Keytruda sales, according to estimates from FactSet.
• Gardasil raked in $1.87 billion in sales, up 27% from the fourth quarter of 2022.
• That’s slightly below the $1.92 billion that analysts were expecting, according to FactSet estimates.
• Earnings per share: 3 cents adjusted vs. an expected loss of 11 cents per share.
• The company’s results include a charge of $1.69 per share related to the Daiichi Sankyo deal.
• The company expects revenue to come in between $62.7 billion and $64.2 billion and adjusted earnings to be $8.44 to $8.59 per share this year.
• Analysts surveyed by LSEG expected Merck to forecast full-year sales of $63.52 billion and adjusted earnings of $8.42 per share.
• That adjusted earnings outlook includes a one-time charge of roughly 26 cents per share related to Merck’s acquisition of Harpoon Therapeutics, which develops immune-based cancer drugs, earlier this month.
• Merck also announced a new restructuring program for 2024, which aims to improve the manufacturing network of both its pharmaceutical division and animal health business.
• Merck recorded charges of $190 million related to the program in the fourth quarter, excluding it from its adjusted results.

MetLife Net Income Plunges Despite Revenue Surge – Wall Street Journal, 2/1/2024

• MetLife logged a steep decline in net income despite a surge in revenue in the latest quarter.
• Revenue soared to $19.03 billion from $15.61 billion. Analysts polled by FactSet expected $18.24 billion.
• Premiums, fees, and other revenue surged 26% to $13.69 billion from $10.9 billion in the prior year.
• Net investment losses were $174 million, or $137 million after tax, during the quarter, primarily driven by regular trading activity in the portfolio, MetLife said.
• Adjusted earnings attributable to common shareholders were $1.83 a share, below analysts’ estimates of $1.88.
• “We have exited 2023 even stronger than we entered the year with excellent capital and liquidity,” said Chief Executive Michel Khalaf.

Aflac 4Q Revenue Falls on Weakness in Japan Business – Market Watch, 2/1/2024

• Aflac’s fourth-quarter profit rose despite slumping revenue as it faced a slowdown in its Japan business.
• Revenue fell 4.3% to $3.8 billion from a year earlier, missing the $4.3 billion expected by analysts polled by FactSet.
• Aflac said net earned premiums in the US rose 1.1% to $1.4 billion.
• Revenue in the segment was up 1.1% to $1.6 billion.
• In its Japan segment, net earned premiums were down 8.5% from a year earlier.
• Stripping out certain one-time items, adjusted per-share earnings came to $1.25, below the $1.45 forecast by analysts, according to FactSet.

Corteva 4Q Loss Widens as Sales Fall – Market Watch, 2/1/2024

• Corteva forecast a return to sales growth next year after reporting a steeper fourth-quarter loss.
• Revenue fell 3% to $3.71 billion, beating the $3.61 billion expected by analysts polled by FactSet.
• Organic sales fell 8% in the period.
• Volumes fell 9%, primarily in Latin America, and prices rose 1% compared to the prior year.
• Stripping out certain one-time items, adjusted per-share earnings came to 15 cents, ahead of the 6-cent profit forecast by analysts, according to FactSet.
• Corteva expects sales of $17.4 billion to $17.7 billion in 2024, a growth of 2% at the midpoint from the prior year.
• Analysts polled by FactSet expect 2024 revenue of $17.59 billion.
• Adjusted earnings per share are expected to be $2.70 to $2.90, compared with the $3.03 expected by analysts.

C.H. Robinson Profit Plunges on Weak Freight Demand – Wall Street Journal, 2/1/2024

• C.H. Robinson Worldwide said profit fell sharply in the fourth quarter of last year as the country’s largest freight broker continues to deal with low levels of freight demand and a hostile pricing environment.
• Revenue dropped 17% to $4.22 billion, missing analysts’ expectations of $4.33 billion, according to FactSet. C.H.
• Robinson reported an 18% drop in transportation revenue.
• Stripping out one-time items, the company’s earnings per share came in at 50 cents.
• Analysts polled by FactSet had forecast adjusted earnings per share of 80 cents.

Peloton Cuts Sales Outlook; Stock Tumbles – Wall Street Journal, 2/1/2024

• Peloton cut its outlook for the year after reporting another drop in revenue despite gaining subscribers.
• Revenue came in at $743.6 million, ahead of analysts’ expectations for $733.2 million, according to FactSet.
• Peloton ended the period with 3 million paid connected fitness subscribers, slightly ahead of management’s expectations.
• Losses narrowed to $194.9 million, or 54 cents a share, from a loss of $335.4 million, or 98 cents a share.
• That was in line with analysts’ forecasts.
• The company cut its full-year revenue outlook from $2.68 billion to $2.75 billion, down from prior guidance of $2.80 billion.
• Peloton said it would miss a goal to generate positive cash flow for the year.

Elon Musk Wants to Move Tesla’s Incorporation From Delaware to Texas – Wall Street Journal, 2/1/2024

• Elon Musk said Tesla would hold a shareholder vote to decide whether to move its state of incorporation to the Lone Star State after a Delaware court ordered him to give up a compensation package valued at $55.8 billion.
• “The public vote is unequivocally in favor of Texas,” Musk said Thursday in a post on X.
• “Tesla will move immediately to hold a shareholder vote,” he said after conducting a poll on the platform.
• Tesla would need to conduct a shareholder vote if the company were to reincorporate in a different state, and even if the company succeeded, it wouldn’t affect the case, said Ann Lipton, a Tulane University law professor and corporate governance expert.

Amazon Could Face Government Order Making It Liable for Third-Party Products – Wall Street Journal, 2/1/2024

• Amazon.com faces a government order that could make it responsible for the safety of goods it sells for outside vendors on its website and ships for them through its logistics network.
• The US Consumer Product Safety Commission is preparing an order that could classify Amazon’s online retail business as a distributor of goods, according to people familiar with the matter.
• That designation could give Amazon the same safety responsibilities as traditional retailers and potentially open Amazon up to lawsuits and extensive recalls over items sold through its website.
• Amazon has fought the distributor designation because of the nature of its online marketplace.
• Amazon has said that it invests in product safety across its site.
• It also has argued that third-party sales are merely a platform for sellers and buyers to connect and, therefore, aren’t responsible for ensuring the quality and safety of products sold by outside vendors on its site.

Norfolk Southern CEO Faces Activists Calling for His Ouster – Wall Street Journal, 2/1/2024

• An investor group led by Ancora Holdings has taken a significant stake in Norfolk Southern. It plans to run a proxy fight to overhaul the railroad operator’s board and replace its chief executive.
• The group has built a roughly $1 billion stake and nominated a majority slate of directors to Norfolk Southern’s board in a bid to oust Chief Executive Alan Shaw, according to people familiar with the matter.
• The director slate includes former Ohio Gov. John Kasich and Sameh Fahmy, a railroad Kansas City Southern executive.
• The idea would be to take control of the board to effect changes aimed at boosting Norfolk Southern stock, down by about one-quarter from a high two years ago as revenue and profit fall.
• Norfolk Southern has met with the investor group in recent weeks.
• In those private conversations, the group’s director nominees have zeroed in on several issues, including how the company handled a significant train derailment last year and what they see as Shaw’s failure to hit operating targets.

Okta to Cut 400 Jobs in Latest Round of Layoffs – Wall Street Journal, 2/1/2024

• Okta is laying off 400 employees, or about 7% of its workforce, in its latest round of cuts as the identification software company seeks to cut costs.
• “We need to run the business with greater efficiency,” Chief Executive Todd McKinnon said in a memo to employees.
• “While we’ve taken steps in the right direction, the reality is that costs are still too high.”
• The company backed its guidance for its fiscal fourth quarter and fiscal 2024.
• McKinnon said the job cuts are a proactive measure.

Etsy Stock Soars After Online Marketplace Adds Elliott Executive to Board – Wall Street Journal, 2/1/2024

• Shares of Etsy popped more than 10% Thursday morning after the online marketplace said it will add a member of hedge fund Elliott Investment Management to its board of directors.
• Elliott has a 13% stake in Etsy, making it the largest investor in the company, according to people familiar with the matter.
• Marc Steinberg, a partner at Elliott, will join Etsy’s board effective this upcoming Monday, the company said in a securities filing.
• Steinberg’s appointment will expand the size of Etsy’s board to 10 members, it said.
• Elliott is also invested in Pinterest, where Steinberg holds a board seat.

US ECONOMY & POLITICS

Fed Signals Cuts Are Possible but Not Imminent as It Holds Rates Steady – Wall Street Journal, 2/1/2024

• The Federal Reserve signaled it was thinking about when to lower interest rates but hinted a cut wasn’t imminent when it held rates steady at its first policy meeting of the year on Wednesday.
• The central bank held its benchmark federal funds rate steady in a range between 5.25% and 5.5%, the highest level in more than two decades, as it awaits more convincing evidence that a sharp downturn in inflation at the end of last year will endure.
• “It’s a highly consequential decision to start the process” of lowering interest rates “and we want to get that right,” said Fed Chair Jerome Powell at a news conference.
• “We’ve made a lot of progress on inflation. We just want to ensure we get the job done sustainably.”
• “I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting” to justify a rate cut, “but that’s to be seen,” he said.
• Powell said Wednesday that the Fed might be slower in cutting rates or drag out the process if inflation proved more persistent.
• It could cut rates sooner and faster if the labor market weakened or there was “very, very persuasive lower inflation,” he said.
• “We want to see more good data. It’s not that we’re looking for better data,” Powell said.
• “Are the last six months flattered by one-off factors that won’t repeat themselves? We don’t think so. But that’s the question…we have to ask.”

US Jobless Claims Rise to Two-Month High as Labor Market Cools – Bloomberg, 2/1/2024

• Initial and recurring applications for US unemployment benefits rose to a two-month high, suggesting some slowdown in the labor market.
• Initial claims increased by 9,000 to 224,000 in the week ending January 27, according to Labor Department data released on Thursday.
• The median forecast in a Bloomberg survey of economists called for 212,000.
• Continuing claims, a proxy for the number of people receiving unemployment benefits, rose to 1.9 million in the week ending January 20.
• The four-week moving average, which helps smooth short-term fluctuations, increased to 207,750, marking the most significant increase since November.
• The unadjusted data on initial claims, which doesn’t consider seasonal influences, rose by 11,000 to about 261,000. California, New York, and Oregon saw the most significant gains.

US Firms’ Hiring Announcements Ease in Latest Two Months – Bloomberg, 2/1/2024

• US companies announced plans to hire just 5,376 workers in January, the lowest total for that month.
• That follows the lowest monthly hiring total of any month in December.
• While hirings are weak, job cuts are picking up too, according to a monthly report published Thursday by the executive coaching firm Challenger, Gray & Christmas.
• Companies announced plans to cut 82,307 positions last month, up 136% from December.
• The job cuts last month were the second-most of any in January since 2009 when the US was amid the Great Recession.
• The reductions in January were led by finance companies, which announced 23,238 job cuts.
• The technology sector followed with 15,806 layoffs, and retailers cut 5,364 after the holiday.
• Last month, “restructuring” was the most-cited reason for job cuts, with 28,329.
• This was followed by plant, store, and unit “closing,” which accounted for 14,555 cuts.
• Artificial intelligence was cited for 381 job cuts in January.

US Factory Gauge Climbs to Highest Since 2022 on Orders Growth – Bloomberg, 2/1/2024

• A measure of US factory activity climbed to a 15-month high at the start of the year, fueled by the most substantial orders growth since May 2022 and suggesting manufacturing is starting to stabilize.
• The Institute for Supply Management’s manufacturing gauge rose 2 points to 49.1 last month, according to data released Thursday.
• The 5.5-point increase in the orders index marked the most significant monthly advance over three years, helped by robust demand in the last half of 2023.
• Production expanded for the first time in four months, while a gauge of customer inventories showed the leanest stockpiles since October 2022.
• While domestic demand has been steady, the group’s export orders gauge showed overseas customers are pulling back.
• The index fell 4.7 points to 45.2 in January, marking the fastest rate of contraction since May 2020.

US Productivity Increases at Rapid Pace, Cementing 2023 Rebound – Bloomberg, 2/1/2024

• US labor productivity advanced rapidly in the fourth quarter, wrapping up a year of improving efficiency gains that helped fuel economic growth as inflation receded.
• Productivity, or nonfarm employee output per hour, rose at a 3.2% annualized rate after surging a revised 4.9% in the prior period, data from the Bureau of Labor Statistics showed Thursday.
• Unit labor costs — what businesses pay employees to produce one unit of output — increased by 0.5% after a revised 1.1% decrease in the third quarter.
• Productivity increased 2.7% in the fourth quarter compared with a year earlier, exceeding the average gain of the last 25 years.
• That’s a welcome sign for Federal Reserve officials as they seek further progress on inflation.
• Unit labor costs in the fourth quarter rose 2.3% from the same three months of the previous year.

House passes child tax credit expansion — which could benefit millions of families, experts say – CNBC, 2/1/2024

• House lawmakers passed a $78 billion bipartisan tax package on Wednesday night, including a child tax credit expansion that could benefit millions of children in low-income families, according to policy experts.
• If enacted, the bill would expand access to the child tax credit, or CTC, and retroactively boost the refundable portion for 2023, which could affect taxpayers this filing season.
• The House overwhelmingly approved the bill but still needs 60 votes to pass in the Senate amid competing priorities.
• The bill would expand the child tax credit through 2025 and lift 400,000 children above the poverty line in the first year. Another 3 million children would be less poor, according to a recent report from the Center on Budget and Policy Priorities.
• If enacted, eligible families could see an average tax cut of $680 for 2023 taxes, according to estimates from the Urban-Brookings Tax Policy Center.

US construction spending rises more than expected in December – Reuters, 2/1/2024

• US construction spending increased more than expected in December amid a surge in single-family homebuilding, and further gains are likely as mortgage rates decline.
• The Commerce Department said on Thursday that construction spending rose 0.9%.
• Data for November was revised higher to show construction spending advancing 0.9% instead of 0.4% as previously reported.
• Economists polled by Reuters had forecasted that construction spending would gain 0.5%.
• Construction spending shot up 13.9% on a year-on-year basis in December.
• It increased 7.0% for all of 2023.
• Spending on private construction projects increased 0.7% in December after rising 1.1% in November.
• Investment in residential construction soared 1.4% after advancing 1.0% in the prior month.
• Outlays on new single-family construction projects jumped 1.6%.
• Outlays on multi-family housing projects gained 0.3% in December.
• Outlays on private non-residential structures like factories fell 0.2%.
• Spending on manufacturing construction projects dipped 0.1% as the boost from a policy by the Biden administration to bring semiconductor manufacturing back to the United States faded.
• Spending on public construction projects increased 1.3% after gaining 0.5% in November.
• State and local government spending rose 0.9%, while outlays on federal government projects surged 6.4%.

EUROPE & WORLD

BOE Rate Caution Set to Extend Pound’s Peer-Beating Run – Bloomberg, 2/1/2024

• The pound looks poised to extend its peer-beating performance this year after the Bank of England struck a less dovish tone than the market expected on Thursday.
• While the BOE held interest rates unchanged, the central bank revised its expectations for inflation in the coming two years, and two policymakers voted for a rate hike.
• While one policy committee member voted for a reduction, the two voting to hike rates highlighted the bank’s more cautious stance.
• The pound traded almost flat at around $1.26 on Thursday, holding on to a 0.5% decline versus the dollar this year.
• Bets on the scope of monetary easing expected from the BOE this year were little changed after the decision, with markets fully pricing four quarter-point rate cuts and around a 50% chance of a fifth.
• The first reduction is seen in June.
• Officials believe consumer-price inflation will reach the 2% target in the second quarter, thanks to tumbling energy prices.
• They then see it rebounding to almost 3% as the impact of cheaper energy fades and underlying price pressures in services and wages persist.

ABB Results Hit Targets, Expects Positive Performance in 2024 – Market Watch, 2/1/2024

• ABB said Thursday that its fourth-quarter and 2023 results aligned with its guidance and expects another year of good performance in 2024 despite the geopolitical situation adding uncertainty.
• Revenue increased 5% annually to $8.245 billion on higher volumes and contributions from earlier implemented price increases, it said.
• The Swiss technology group said Thursday that it made $921 million in net profit for the fourth quarter compared with $1.13 billion in the prior-year period.
• Analysts had expected $872 million in net profit and $8.10 billion in revenue, according to a company-compiled consensus.
• ABB booked operational earnings before interest, taxes, and amortization of $1.33 billion, up from $1.15 billion and slightly below analysts’ estimates of $1.35 billion, according to company-compiled consensus.
• Orders were flat on year at $7.65 billion.
• They increased in three business areas. The company said the robotics and discrete automation division dropped due to normalizing order patterns and inventory adjustments in a declining robotics market.
• As for regions, Americas was up by 3%, while Europe decreased by 2% due mainly to a double-digit decline in Germany, ABB said.
• In Asia, the Middle East, and Africa, orders remained overall stable, and a strong performance in countries like India and South Korea helped offset the 8% fall in China.
• ABB is proposing an ordinary dividend of CHF0.87 a share, up from CHF0.84.
• For the first quarter of 2024, the company anticipates low to mid-single digit comparable revenue growth and the Operational EBITA margin to remain stable or slightly improve on year.
• For the year, it forecasts a positive book-to-bill, comparable revenue growth of around 5%, and the operational EBITA margin will slightly improve from 17% in 2023.

Royal Caribbean stock jumps as strong start to ‘wave season’ sparks upbeat outlook – Market Watch, 2/1/2024

• Shares of Royal Caribbean Group surged toward pre-pandemic levels Thursday after the cruise operator reported fourth-quarter profit and a full-year outlook better than Wall Street expected, citing record bookings to start the Wave season.
• Wave season is when cruise promotions peak during the first quarter of the calendar year.
• Revenue jumped 27.9% to $3.33 billion, just below the FactSet consensus of $3.36 billion, to mark the first revenue miss in four quarters.
• Passenger ticket revenue climbed 34.3% to $2.29 billion, in line with the FactSet consensus, and onboard and other revenue grew 15.9% to $1.05 billion to miss expectations of $1.07 billion.
• Excluding nonrecurring items, adjusted earnings per share of $1.25 beat the FactSet consensus of $1.14.
• Looking ahead, the company expects adjusted first-quarter EPS of $1.10 to $1.20, above the FactSet consensus of 93 cents, and 2024 adjusted EPS of $9.50 to $9.70 compared with expectations of $9.21.

Adidas Earnings Beat Guidance After Decision Not to Write Off Most Yeezy Inventory – Wall Street Journal, 2/1/2024

• Adidas said its revenue and operating profit exceeded company guidance last year after a better-than-expected performance in the fourth quarter, and the group decided not to write off most of its Yeezy inventory.
• The German sporting goods company said Wednesday that sales on a currency-neutral basis were flat last year compared with 2022, better than Adidas’s most recent forecast of a low-single-digit rate contraction despite the drag from the devaluation of the Argentine peso in the fourth quarter.
• In reported terms, annual sales slipped 5% to 21.43 billion euros ($23.24 billion).
• Adidas made an operating profit of €268 million in 2023, down from €669 million in 2022.
• However, the result is better than the company guidance of a €100 million operating loss.
• On an underlying basis, operating profit was roughly €200 million in 2023, also above guidance of around €100 million.
• Gulden expects a “flattish” start to sales this year, but revenue should improve every quarter.
• The group targets currency-neutral sales growth at a mid-single-digit rate and an operating profit of around €500 million in 2024.

Ferrari finishes a record year by topping Wall Street’s estimates – CNBC, 2/1/2024

• Ferrari topped Wall Street’s top- and bottom-line earnings expectations for the fourth quarter to finish a record year of profits for the luxury sports car manufacturer.
• Ferrari’s revenue last year increased 17% to 5.97 billion euros ($6.46 billion), including an 11% increase during the fourth quarter from 1.37 billion a year earlier in 2022.
• Ferrari shipments were up 3% last year to 13,663 vehicles in 2023, including 3,245 units in the fourth quarter.
• Its adjusted earnings before interest and taxes (EBIT) was 1.62 billion euros ($1.75 billion) for the year, including 372 million euros ($402.3 million) during the last quarter.
• The automaker reported a net profit of 1.26 billion euros ($1.36 billion) for 2023, including 294 million euros ($317.9 million) during the fourth quarter.
• The company’s forecast for this year calls for revenue of more than 6.4 billion euros ($6.9 billion) and adjusted per-share profit of at least 7.50 euros, with an adjusted EBIT margin of at least 38%.
• Its adjusted profit margins are expected to be in line or slightly lower than 2023.

Oil giant Shell posts full-year profit beat and announces $3.5 billion share buyback – CNBC, 2/1/2024

• British oil giant Shell beat expectations for full-year profit on Thursday, announcing a 4% increase in its dividend and a $3.5 billion share buyback program.
• Shell reported adjusted earnings of $28.25 billion for 2023, a 29% drop compared to its highest-ever annual profit of $39.9 billion the year prior.
• Analysts had expected Shell’s full-year 2023 net profit to come in at $27.5 billion, according to an LSEG-compiled consensus.
• Shell posted stronger-than-anticipated adjusted earnings of $7.31 billion for the final quarter of 2023.
• Shell announced a 4% increase in dividend per share for the fourth quarter and said a share buyback program of $3.5 billion will be carried out over the next three months.

Deutsche Bank Unveils Job Cuts, Plans Big Payout Boost – Wall Street Journal, 2/1/2024

• Deutsche Bank is planning sizable job cuts again, even as Germany’s largest lender touts a strong outlook for the years ahead.
• Under Chief Executive Officer Christian Sewing, the lender’s management is already years into a long turnaround effort. Sewing and his colleagues want to get a grip on costs and boost its sluggish share price, ensuring the bank can keep rewarding shareholders while interest rates are set to fall.
• Deutsche Bank slashed its workforce from over 100,000 staff in 2015 to about 83,000 in 2021, but the headcount has since risen above 90,000.
• On Thursday, the bank said it planned to shed 3,500 non-client-facing employees through 2025, a figure that includes 800 positions that it already cut last year.
• Revenue rose 5%, with an equivalent rise in costs.
• Deutsche Bank expects annual revenue to grow by more than €3 billion by 2025 to reach €32 billion.
• In investment banking, quarterly revenue increased 10%. In bond and currency trading, revenue rose 1%, beating a 9% fall on average for Wall Street peers.
• For the fourth quarter of last year, the bank reported a profit of €1.43 billion, down 28% from a year earlier, when it got notched gains from selling a business in Italy and a chunky US tax benefit.

US Hits Houthi Drone Station in Yemen, Citing Threat to Ships – Wall Street Journal, 2/1/2024

• US forces struck targets belonging to Yemen’s Houthi rebels on Thursday, continuing its effort to degrade the Iran-backed group’s military capabilities without triggering a broader war in the region.
• US Central Command, which is responsible for US military operations in the Middle East, said it struck a Houthi drone ground control station as well as several of the group’s drones after determining they presented an “imminent threat” to merchant vessels and US Navy ships in the region.
• It said the attack was in self-defense.

Disney’s India Unit Takes Valuation Hit in Planned Sale – Wall Street Journal, 2/1/2024

• Disney has reached a preliminary agreement to sell 60% of its Indian media business in a deal that values the overseas operation at $3.9 billion, dramatically less than it was worth when Disney acquired it in 2019.
• The entertainment giant signed a memorandum of understanding in late December to merge its India business with Viacom18, a partnership between billionaire Mukesh Ambani’s Reliance Industries, Paramount Global, and Bodhi Tree Systems, according to people familiar with the details of the deal.
• Bodhi Tree is an investment fund founded by media scion James Murdoch and former Disney India chief Uday Shankar.
• Under the agreement’s terms, Disney will retain ownership of 40% of its India operations, while Reliance will own 51% and Bodhi Tree will own 9%.
• Some people said Viacom18 will pay about $1.5 billion in cash and stock in return for its stake in the merged company.
• The deal, which hasn’t been completed and could change, is expected to close in February, the people familiar with the matter said.

EU Leaders Agree to $54 Billion Ukraine Aid Package as Hungary’s Orban Backs Down – Wall Street Journal, 2/1/2024

• European Union leaders agreed to a $54 billion budget aid package for Ukraine on Thursday, locking in their financing for Kyiv for the next four years and overcoming weeks of opposition from Hungarian Prime Minister Viktor Orban.
• The decision is a significant boost for Ukraine, which could have started to run short of funds in the coming weeks to pay for salaries, pensions, and other essential services.
• However, Ukraine is relying on still-blocked US assistance to cover its entire budget gap for 2024 and maintain military supplies.
• Under the terms of the deal, the Ukraine aid package could be reviewed in two years to examine whether the assistance is still necessary.
• However, Hungary didn’t win the veto, which would have given it the power to stop the assistance at that point.

Tesla upgrades Model Y in China as BYD competition heats– CNBC, 2/1/2024

• Tesla upgraded the self-driving hardware on the Model Y car it sells in China, Elon Musk’s automaker said on WeChat on Thursday, as it looks to boost sales and fend off rising competition from domestic players.
• The Tesla Model Y will come with Hardware 4.0 (HW 4.0) free of charge when a customer purchases the car.
• HW 4.0 is a set of cameras, sensors, and onboard computers designed to facilitate Tesla’s experimental driver-assistance software, marketed as Full Self-Driving Beta or FSD Beta.
• Tesla has not officially launched FSD Beta in China, though state media reported in November that the electric carmaker is trying to release it, citing company insiders.
• Tesla has brought HW 4.0 to the Model S and Model X cars in some markets.

Factmonster – TODAY in HISTORY

• The United States Supreme Court convened for the first time in New York City. – 1790
• Julia Ward Howe’s poem “Battle Hymn of the Republic” was published in the Atlantic Monthly. – 1862
• The Oxford English Dictionary A–Ant’s first volume was published. – 1884
• A press conference announcing the first electronic digital computer, ENIAC, was held at the University of Pennsylvania. – 1946
• Four black college students began a series of sit-ins at a white-only lunch counter in Woolworth’s, Greensboro, NC – 1960
• During the Vietnam War, a Viet Cong officer was executed with a pistol shot to the head by Saigon’s police chief, and the image was captured in a famous news photograph. – 1968
• Ayatollah Ruhollah Khomeini returned to Tehran after 15 years of exile. – 1979
• The space shuttle Columbia disintegrated as it tried to reenter the Earth’s atmosphere after a sixteen-day mission in space. All seven members of the crew were lost. – 2003
• Johanna Sigurdardottir takes office as Iceland’s first female prime minister. – 2009

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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.