Wall Street corrected severely on Tuesday evening before the Fed’s verdict on Wednesday evening after its monetary council, the stars of the day before like Tesla (-5.5%) or Apple (-1.8%) falling as quickly as they had rebounded… The S&P 500 thus returned 1.57% to 5,035 pts, the Dow Jones fell by 1.49% to 37,815 pts and the Nasdaq plunged by 2.04% to 15,657 pts, before Amazon’s accounts. and the Fed meeting. McDonald’s also, quite rarely, missed the market consensus for the closed quarter… On the Nymex, a barrel of WTI crude lost 2% to $81. The dollar index, on the other hand, gained 0.5% against a basket of currencies, while bitcoin fell to $57,000.
On the economic front, the employment cost index for the first quarter increased by 1.2% from one quarter to the next against 0.9% consensus – or 4.2% over one year against 4% consensus.
The S&P Case-Shiller ’20 City’ adjusted home price index for February increased 0.6% from the prior month (+0.9% excluding m/m adjustments and +7.3% over one year – against 6.7% consensus). The FHFA real estate price index for February increased by 1.2% against 0.1% consensus…
The Chicago PMI manufacturing index for April 2024 came in at 37.9, well below the market consensus which stood at 45. The indicator was 41.4 a month earlier. Today’s reading shows an acceleration in the contraction of manufacturing activity in the region considered.
The American consumer confidence index measured by the Conference Board for the month of April 2024 fell sharply to 97, compared to the market consensus of 104 and 103.1 for the revised reading of the previous month.
The ADP report on private employment, the ISM and PMI manufacturing indices, the JOLTS report on job openings and the DoE weekly report on domestic oil stocks will be announced on Wednesday, but it is mainly the Fed which will attract attention in the evening, with its monetary press release which will be followed by the traditional press conference by Jerome Powell.
It is extremely likely that the Fed will therefore once again leave its rates unchanged between 5.25 and 5.5%, given the still high level of inflation, as well as the resistance of employment and American economy. The whole question is therefore to know when the American central bank will finally be able to relax its policy…
According to the CME Group’s FedWatch tool, the probability of a new status quo on Wednesday is… approximately 99%. There is even more than 90% probability that the central bank will still leave its rates unchanged on June 12, after the next meeting, and even more than 75% probability that the status quo will persist on July 31 . It is therefore possible that the Fed will only start reducing rates in September or November…
On Thursday, operators will follow the Challenger, Gray & Christmas study on company layoff announcements, the balance of international trade in goods and services, weekly unemployment registrations, quarterly non-agricultural productivity figures, as well as American industrial orders.
Finally, on Friday, the monthly government report on the employment situation for the month of April will be announced. The final composite PMI index for April and the services ISM will also be revealed on the same day. John Williams and Austan Goolsbee from the Fed will also speak on Friday.
Apple will dominate Thursday evening with its latest financial results. Amgen and Booking Holdings will also release Thursday evening. ConocoPhillips, Cigna, Regeneron Pharmaceuticals, Zoetis, Moody’s, Motorola Solutions, Monster Beverage, Coinbase, Block Inc, Cummins, Intercontinental Exchange and Southern Company will also be there on Thursday…
Values
MicroStrategy (-17.6%), which presents itself as a software group but is best known for going into debt to massively buy Bitcoin, published its quarterly results on Wall Street last night. Revenues were $115 million, down 5% and below market consensus. The net loss represented $53 million or $3.09 per share, compared to a net profit of $461 million a year earlier. The gross margin fell to 74% compared to 77.1% a year earlier. Operational expenses more than doubled to $289 million. Recall that the group issued convertible bonds earlier this year to acquire even more Bitcoin. According to yesterday’s announcements, Michael Saylor’s group now owns 214,400 BTC for a value close to $13.6 billion.
MicroStrategy began buying Bitcoin in 2020 to hedge against inflation. As the maximum total number of Bitcoins is 21 million, the group, the main corporate holder of BTC, is at the head of more than 1% of these units… The group has purchased 25,250 Bitcoins since the end of the fourth quarter for 1.65 billion dollars, or $65,232 per BTC.
Paramount Global (-3.6%) published on Wall Street, for its first fiscal quarter, adjusted earnings per share of 62 cents, compared to a consensus of 35 cents. Revenue totaled $7.69 billion versus the FactSet consensus of $7.73 billion. Oibda, operating profit before depreciation and amortization, reached $987 million on an adjusted basis, compared to $754 million consensus. Paramount Global is also parting ways with its CEO Bob Bakish, replaced by a trio made up of Brian Robbins, CEO of Paramount Pictures, Chris McCarthy, CEO of Showtime and MTV Entertainment Studios, and George Cheeks, CEO of CBS.
Recall that the Redstone family, controlling shareholder of Paramount, and the general manager of Skydance Media, David Ellison, according to Bloomberg proposed concessions to other investors in Paramount’s capital, while certain shareholders wanted the group to study other alternatives . Shari Redstone is indeed considering selling her stake in David Ellison’s Skydance media firm.
Tesla (-5.5%) announced plans earlier this month to reduce workforce by around 10% of staff. ‘The Information’ understands that Elon Musk has decided to part ways with several executives as part of the cuts. Thus, Rebecca Tinucci, at the head of the Superchargers activity, as well as those working for her, would leave the manufacturer. Daniel Ho, head of new vehicle programs, would also relinquish his post on Tuesday. His teams would also be affected. The Information indicates that 500 jobs would be affected in the activity dedicated to superchargers. The number of employees working for Ho is not known. Rohan Patel, head of public policy and business development, announced his departure earlier this month, while his team is to be disbanded. Drew Baglino, in charge of battery development, also announced his departure this month…
Microsoft (-3.2%) will invest $1.7 billion in the cloud and artificial intelligence in Indonesia over a period of four years. This was stated by the boss of the Redmond giant, Satya Nadella, during a local visit to Jakarta. It is therefore a bet by the group on the largest economy in Southeast Asia, notes Bloomberg. The announcement came following a meeting between Nadella and the President of the Republic of Indonesia, Joko Widodo. “The AI revolution is going to be the next major shift in the GDP growth curve,” Nadella told developers, ministers and leaders in Jakarta.
McDonald’s (-0.2%%). The fast food giant missed consensus for the closed quarter. Global like-for-like growth in the first quarter was only 1.9%, a performance below expectations, since analysts anticipated a 2.3% increase. International activity weighed on growth, while in the United States, expansion on a comparable restaurant basis was relatively weak at 2.5%, in line with the consensus, but well below the 12.6% displayed on the corresponding period last year. Quarterly adjusted earnings per share were $2.70 versus $2.72 consensus. Operating expenses increased by 2% to 3.43 billion. Revenues were $6.17 billion, up 4%, compared to the consensus of $6.15 billion.
Restaurant Brands (-4.1%) exceeded expectations in the first quarter, posting revenues of $1.74 billion and net income of $328 million, for earnings per share of 72 cents. Like-for-like growth was 4.6%, with notable performances in North America. The group also announced plans to invest $300 million in its Burger King chain in order to renovate 1,100 restaurants in the United States.
Coca-Cola (-0.4%) raised its growth estimates for the financial year… For the first fiscal quarter, the group achieved revenues of $11.3 billion (+3%) compared to a consensus of barely 11 billion, while its adjusted earnings per share came to 72 cents against 70 cents consensus. Organically, revenues increased by 11% year-on-year, while volumes only increased by 1%. The soft drinks giant is therefore still benefiting from the price effect and demand remains robust in the United States and internationally. Organic growth in the Europe, Middle East and Africa region was 15%, compared to 7% in North America. Average prices increased by 13% worldwide. The group still envisages, for 2024, adjusted earnings per share growing by 4 to 5%, in line with market expectations, but it is therefore raising its revenue growth guidance to between 8 and 9% organically.
PayPal (+1.3%) published a total payment volume of $404 billion (+14%) for the first quarter, higher than analysts’ expectations, for revenues up 9% to $7.7 billion. dollars, also better than expected. Total operational expenses were 6.53 billion. Operating margin improved by 84 basis points to 18.2% on an adjusted basis. Adjusted earnings per share were $1.08 under a new accounting methodology, compared to 85 cents a year earlier. For the full year, adjusted earnings per share are expected at $3.83 and diluted earnings per share are estimated at $3.65.
Eli Lilly (+5.9%), the Indianapolis pharmaceutical group announced profits for its first quarter that exceeded expectations. Revenues reached $8.8 billion, up 26% year-on-year, compared to $8.9 billion consensus. Net profit soared 67% to $2.24 billion. Earnings per share rose 66% to $2.48. The annual revenue guidance is raised to between $42.4 and $43.6 billion. Adjusted earnings per share are now expected to be between $13.50 and $14.
3M (+4.7%), the industrial colossus of Minnesota, jumped on Wall Street this Tuesday. The group exceeded profit and revenue expectations for the first quarter. Revenues were $8 billion, practically stable, while adjusted earnings per share were $2.39, compared to $1.97 a year before and $2.10 consensus. William Bill Brown will take over as CEO on May 1, while Mike Roman becomes executive chairman. The group is initiating annual guidance based on continuing operations, with adjusted EPS expected between $6.80 and $7.30.
Air Products & Chemicals (-0.7%) posted adjusted earnings per share of $2.85 in the second fiscal quarter, compared to a consensus of $2.69. The industrial gases player had sales of $2.98 billion, compared to a consensus of $3.05 billion. However, the group maintains annual guidance for adjusted earnings per share ranging from $12.20 to $12.50. Third-quarter adjusted earnings per share are expected between $3 and $3.05.
NXP Semiconductors (+3.6%), the Dutch semiconductor designer, listed on Wall Street, published its accounts last night, beating the profit consensus for the first fiscal quarter. Adjusted earnings per share were $3.24, compared to a market consensus of $3.16 and a level of $3.19 a year earlier. Revenues were $3.13 billion, almost stable year-on-year and in line with market expectations. Adjusted EPS for the current period is anticipated between $3 and $3.41, i.e. a mid-range of $3.20 versus a consensus of $3.11…
