A Mediocre Earnings Season

In his Daily Market Notes report to investors, Louis Navellier wrote:

Risky FOMO

The S&P bounces back over 4,100 despite higher interest rates.

Stocks are motoring back towards last week’s highs in the early hours of trading, even as interest rates, notably the US 2-year, remain elevated. The higher short rates are hurting gold, now up less than 1% YTD (silver is down 8.2% YTD) and supporting the US dollar index, now back above 103.

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Q4 2022 hedge fund letters, conferences and more

Crude oil has pulled back modestly below $80/bbl, natural gas is back below $2.45 and gasoline is holding at $2.50.

Retail investors have been adding risk exposure, in an expected Fear Of Missing Out sentiment on the very strong January market performance. Especially in Tesla, where a remarkable 24% of last week’s retail individual stock purchases were Tesla Inc (NASDAQ:TSLA) shares.

Mediocre Earnings

Earnings season is winding down and it hasn’t been as bad as the bears hoped, nor as good as the bulls wanted, but has supported the January rally 70% of companies reporting beat estimates but beat by less than usual. Five percent hit their estimates and 25% missed.

The sectors with the biggest misses were communication with 39% missing, and energy, which had very bullish estimates, with 36% missing. The best sectors were the more stable utilities with only 14% missing, and healthcare with 16% missing.

Surprisingly technology, with bearish estimates, only missed 19%. We get Coca-Cola Co (NYSE:KO) and Cisco Systems Inc (NASDAQ:CSCO) earnings this week, along with a dozen other notable names.

Soft Landing On The Horizon

The tension in the market remains whether inflation will truly cool enough for the Fed to pause and even pivot this year, and if not can earnings grow attractively enough to pull money out of +4% money market funds.

We’ll get CPI and PPI this week. Today, stocks are moving back into their recent trading ranges having fallen below them last Friday and giving the bears hope.

The week appears off to a good start in stocks as fears of mid-single-digit interest rates appear to be fading, even in the housing market. The soft landing is becoming more believable.

Coffee Beans

A factory that makes M&Ms and Mars bars has been fined more than $14,500 after an accident in which two workers fell into a vat of chocolate. They were freed by cutting a hole in the bottom of the tank. The workers were not authorized to work in the tanks and were not trained on the proper safety procedures for the equipment. Source: Sky News. See the full story here.

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