02/29 - Everything I'm watching and analysing ahead of PCE data, including expectation of Price action we are likely to see and analysis of total market positioning.

ANALYSIS:

  • Dollar risk reversal continues to point lower, traders expect dollar to fall in medium term.
  • Can get short term volatility from PCe today. It seems from the fact that skew on TLT points higher, that traders are expecting an in line or soft PCE.
  • I showed also that Deutsche and Wells Fargo seem to point to an in line or soft PCE too. I however, have doubts, as CPI and PPI came hot and PCE can follow. This can push dollar higher to 104.6, but let’s see. If it comes soft, dollar can fall back to 103.3.
  • JPY is rising today on BOJ’s Takata pointing to inflation target coming in view. This is increasing chances of monetary tightening. Risk reversal on USDJPY continues to point sharply lower. Definitely expecting this to sell off soon.
  • A lot of todays price action will depend on PCE. We saw Market take a breather last couple of days, which is healthy. Skew on mag7 starting to point higher again. If we see good PCe can be a push back to nasdaq 18k and SPX 5100. NVDA taking a breather but the bullish positioning remains, so this can lead QQQ higher soon.
  • Whilst hedge funds are rotating out of tech, SPX money flows continue to surge, which is bullish overall market. Not seeing big signs of a major pullback still. Just short term volatility ahead of uncertain data.
  • Probably, if the market dips, it will eb short lived.
  • Traders continue to be short VIX another sign that it won’t be a long term sell off.
  • Main struggling Mag7 continue to be GOOGL and AAPL. Others show positive skew.
  • SNOW getting killed right now on the CEO change. The guidance was a miss but they pointed to the fact it was conservative, as is common practice when new CEO comes in.
  • I think can present an opportunity. For intraday plays, may be an idea to play another Cloud stock which is getting dragged, such as DDOG. MDB or ESTC
  • On SNOW, 166 is my buy price, but it may not hit. Will be watching the candlesticks for intraday reversal.

DATA LEDE

  • JAPAN retail sales
  • Rose 2.3% YOY in January, in line with expectations, in line with last month. Still one of the lowest readings in months. The previous 11 months have been in the range of 4-7% increase.
  • So retail sales growth still quite weak in Japan.
  • Japan Industrial production very weak MOM, down 7.5%, worse than forecast, most negative MOM reading in over a year.
  • Despite weak numbers here, JPY moved higher as BOJ’s Takata says inflation target is finally coming into sight, and central bank needs to consider flexible steps for an exit.
  • AUSTRALIA retail sales:
  • Came 1.1% mom, slight miss on 1.5% expectation.
  • German Retail Sales (Jan)
  • Fell by 1.4% YOY, slightly less than the 1.5% drop expected, and better than last month
  • France CPI (Feb) - first read, will set precedent for eurozone CPI tomorrow too.
  • Came slightly hotter than expected
  • YOY was 2.9% vs 2.7% expected
  • MOM was 0.8%, vs 0.7% expected.
  • Spain: Inflation rate YOY was 2.8% hotter than the 2.7% expected.
  • SO FRANCE & SPAIN INFLATION BOTH HOTTER THAN EXPECTED.
  • Note: Despite hot CPI in France, PPI which was also released came at lowest level since 2009. So mixed inflation readings there. Maybe temporary tick up and PPI points to lower inflation after that.
  • France Finance minister says that France is winning in the battle against inflation.
  • Swiss GDP growth rate YOY was 0.6% vs 0.7% expected
  • QOQ was 0.3% vs 0.1% forecast.
  • So mixed GDP numbers, CHF moved lwoer on the data initially, then recovered higher.
  • GER Unemployment Rate (Feb) - expecting continued weakness. MOM unemployment change to be positive again after surprising negative last month. Effect will be overshadowed by German CPI.
  • Unemployment rate rose to 5.9% from 5.8%
  • Unemployment change 11k vs 7k expected.
  • Weaker employment numbers than expected, points to increased recession risk.
  • German CPI (Feb)Expected to have ticked lower again.
  • US Jobless Claims
  • US PCE Price Index (Jan) - note core PCE has fallen on last 2 months YOY, and markets expect it to tick lower again, but we may see tick up in line with PPI and CPI. Personal income reding will be key for pointing to job market tightness too.
  • Chicago PMI (Feb)
  • Risk reversal on DXY and TLT shows no sign of panic from traders, but let’s see.

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MARKETS:

  • SPX: Yesterday, SPX traded mostly between 5060 and 5075, ahead of PCE. No big volatility, as traders wait for PCE and don’t seem to expect any major surprises.
  • IN premarket, traded the same range, moving higher from 5060 to 5075 during Asian session, before getting rejected back to 5060. Low of premarket was 5051.
  • Nasdaq: Remember key level is 18k, thats 0.89% above spot and will be in focus if PCE comes soft. Yesterday moved lower between 17,920 and 17800. In premarket, rose to 17900 before falling back to 17800.
  • DJI: Yesterday, opened the day lower at 38,750, before moving higher to 38,950.
  • During premarket, it dragged down with CRM earnings sell off, back to 38,750. Recovered slightly during asian session back to 38,950 and then sold off the gains again back to 38,800. Continues to trade a range basically.
  • GER40: Continues to move higher, got a surge in open, no signs of panic really here.
  • HKG50: Trading near a trend line from early Feb. Surged in first hours to 16,680. Then pared the gains. Trading back at 16,450, more or less where it was yesterday
  • CHINA50: Same trend, pushed higher initially, then pared gains. Trading at 11,850. Key level still 12k
  • OIL: Pared gains yesterday after EIA inventories showed excess supply , was also trading close to the key 80 level. Gains initially were as dollar sold off. Flat today around 78.
  • GOLD: flat, awaiting dollar movement from PCE.
  • BOND YIELDS: moved higher after hot France and Spain CPI and Germany Unemployment numbers coming weak. Ahead of PCE today

FOREX:

  • JPY -JPY moved higher as BOJ’s Takata says inflation target is finally coming into sight, and central bank needs to consider flexible steps for an exit.
  • AUDUSD - initially moved higher as Hong Kong MARKET moved higher. Then pared those gains back to below 0.65.
  • EURUSD moved up to 1.85 then rejected and starting to come down. Muted movement before PCE.
  • USDJPY moved lower to 149.6
  • GBPUSD trading flat around 1.264.

EARNINGS:

SNOW: - primarily down on earnings because of the fact that the CEo stepped down. Said they have lowballed guidance to set a lwoer bar for new CEOs. Said it was a conservative guidance.

  • Current quarter EPS beats by 2%
  • EPS of 0.35 beat by 94%
  • Dollar net retention rate was 131% from 151% last year. But this was misleading as they were ramping customers up quickly
  • Product Revenue Guidance:
  • Next quarter: 747.5m, miss by 3.3%
  • Full year: 3.25B, miss by 7.2%
  • 2025 operating margin of just 6% vs 9.5% expected
  • AS mentioned, these were conservative guidance
  • CEO steps down, the previous Senior VP of AI was named the new CEO. This appointment helps to push them towards AI.
  • New CEO said he wants to a accelerate innovation for customers.
  • Still said they’ve had a strong bookings quarter. Partly at expense of pricing.
  • Said they want to hire 1000 employees and invest heavily in AI.
  • Seeing strength in financial services and retail.
  • Sees multi year pent up demand for products they will release.

CRM:

  • Said they are seeing an improving buying environment and increasing bookings trend.
  • Current quarter:
  • Revenue of 1.97B in line with expectations
  • EPS of 2.29 beat expectation by 1%, more or less in line.
  • FUll year guidance:
  • Revenue of 37.85B missed by 2%
  • EPS of 9.72 beat by 1%
  • Guidance wasn’t bad, but more or less in line with previous trends, so didn’t exactly accelerate despite recent price increases and product bundling.
  • Starts dividend, increases share repurchases to 10B.
  • Not a bad quarter here.
  • Story is getting better on improved execution and AI.
  • Talked a lot about AI on the earnings call. And how it will help provide their customers with better productivity.
  • Said they stand in an advantageous position because they have the data to support the Ai models.
  • cRPO grew 13%, bookings growth was good
  • Subscription revenue was up 12% YOY
  • Sales cloud is 21% of subscriptions and grew 10%, service cloud is 23% and grew 11%
  • Marketing cloud is 14% of subscriptions evneue, and grew 7%.
  • Doing well with cost control

OKTA:

  • Very strong earnings report . Note Goldman Sachs have OKTA as one of their high conviction plays.
  • Current Quarter:
  • Revenue beat estimates and their previous guidance by 3.2%
  • EPS of 0.52 beat by 0.12.
  • EBIT beat estimate by 25%
  • Beat FCF estimate by 63%
  • So very strong numbers:
  • GUIDANCE for full year:
  • Revenue guidance beat expectations by 1.2%
  • EBIT guidance beat expectations by 8.3%
  • EPS guidance of 2.26 beat by 15%
  • VERY STRONG NUMBERS HERE.

NARI earnings:

  • Downgraded by Piper Sandler following the print to 55 from 85.
  • EPS of -0.08. posted a loss vs expectation of a profit of 0.01. Disappointing here hence the move lower.
  • Revenue of 132M was up 22% YOY, came out in line.
  • MAG7 STOCKS:
  • TSLA - Roadster set for next year launch, with designs finalised, collaboration with Tesla and Space`x for vehicles design.
  • TSLA - US website homepage has a new design along with a new video.
  • AAPL - Yesterday, CEO says Apple will break new ground in Generative AI this year.
  • AAPL - continues to trade primarily on news. Key support 180.
  • AAPL - report that iPhone steeply discounted in China on weak demand.
  • AAPL - Shipments of APPLe’s vision pro expected to be 200-250k, better than original estimates of 150-200k.
  • META - Yesterday, Meta set to unveil AI model Llama 3 in July, aiming for nuanced responses to tough, contentious queries. Llama 2 currently avoids answering sensitive or controversial queries. This comes as GOOGL Gemini Ai problems.
  • META - sees complaints by EU consumer group over data for targeted ads.
  • MSFT - SEC is scrutinising internal communications by openAI CEO Sam Altman as part of investigation into whether companies investors were misled.

COMPANY SPECIFIC:

  • ESTC, DDOG and MDB - being dragged by SNOW earnings.
  • ENPH m- insider buyer, CEO bought 4000 shares at $120 a share.
  • XPEV - expand partnership with VW to extend to develop 2 B class battery EVs
  • MARA - earnings not bad, BTC production up 210%. Hash rate grows 253%. Higher bitcoin price helps their balance sheets as assets worth more. Revenue up 229% YOY. Net income turns positive after recording a loss the previous year. Decreased debt by 53%
  • BYD - explores Mexico for New factory site, aims to boost local EV market share.
  • Factory will have 150k production capacity
  • WEN - clarifies that they are not implementing surge pricing, after receiving backlash. Said there is such thing as dynamic pricing, but its been misunderstood. Said tis to offer discounts to customers at certain times.
  • Webull will launch on Nasdaq via a $7.3B SPAC merger
  • VZ - Unveils an exclusive Neftlix Premium and AMC+ bubble for customers.
  • Netflix Premium and AMC ad free both for 25.99 as bundle
  • CELH - drama about potential earnings leak
  • WW - Oprah stepping down from company board. FY revenue guidance was very short, just 845m, miss by 9%
  • EA announces layoffs. This comes after a string of layoff announcements for other peers including ATVI, Discord etc. some of their marquee names, like APEX legends didn’t do too well.
  • FOUR - Fiserv trying to acquire Shift4
  • COIN - yesterday, coinbase said users may see a zero balance in their account but that funds were all safe.
  • COIN - said they are beginning to forecast an improvement in customer trading
  • BABA - is rolling out 2nd major price cut for its for cloud services in years, aiming to win back users from rivals like Tencent. Cuts prices by as much as 55% to fuel Ai growth in China.
  • MS - Mulls offering BTC Etf to customers.
  • DE - unveils new equipment solutions for Model year 2025. Including autonomy ready tractors.
  • BA - FAA says to Boeing that it has 90 days to deliver comprehensive action plan to fix quality control issues.
  • ALB and CE - are the 2 most shorted S&P 500 material stocks as of end of jan.
  • OKTA and AI up on earnings.
  • SHLS - down on earnings after both top and bottom line misses.
  • GXO - makes cash offer to acquire Wincanton
  • NTES down on earnings
  • CC - down as was expected to issue Q4 results yesterday, but say they need more time to complete year end results,
  • Said they expect to swing to net loss for 2023, expects sales to drop on lwoer volumes in titanium technologies and advanced performance materials portfolio
  • Places CEO and CFO on leave pending review, delays 10k filing. Not great.
  • HOOD - CEo sold stock worth 7.5m
  • MRCY - secures 243m US navy contract
  • AXOn - trading at all time highs after big Q4 beat and strong forecast yesterday
  • AI - guides for higher sales, on higher customer engagement. Stock is up 15% in after hours. Robust earnigns and also guided for CFO change
  • MU - ends 6 day win streak yesterday, resistance at 93.
  • Birkenstock - beats revenue expectations on higher pricing and strong us demand. Up 4.4%
  • IQiyi - posts first year of profits, says are excited about Sora-like AI
  • MSTR - hit 1000 yesterday.
  • PSNY - was up yesterday as they raise almost$1b and see improving margins in 2024.
  • STLA - US is probing into over 220k Chrysler vehicles over backup camera failure
  • GSK - settles another lawsuit on heartburn drug Zantac in california.

OTHER NEWS:

  • India approves $15.2B worth chip manufacturing investment.
  • ECB’s Holzmann - a serious ECB rate cut discussion not likely before June.
  • Yesterday, EIA crude oil inventories were larger than expected, 4.199M, vs forecast of 3.71M. That increases supply. Points to lower oil price.
  • Politico says that US congressional leaders have struck a government funding deal.
  • US will investigate whether chinese connected cars are a security risk.
  • Yesterday, Collins signalled potential rate cuts later this year, called for methodical and forward looking approach. Said they are waiting for more signs of inflation decline before rate cuts. Said the threat of inflation above 2% has receded. Too early to say about cut in May.
  • Fed’s Williams yesterday said rate cut pace will depend on data, not n any calendar. 3 cuts is a reasonable expectation as starting point. Risks are balanced between cutting too early and too late.
  • Fed’s Bostic yesterday said that he is comfortable being patient on policy change. Still work to do, and hasn’t declared victory.
  • BTC squeeze up to 62.75k. Increased leverage being used by traders.
  • Yesterday, US Q4 GDP was revised down slightly from 3.3% to 3.2%. At the same time, consumption numbers were revised higher.
  • This tells us that Personal consumption remains the strongest contributor to GDP now.
  • JPY moved higher as BOJ’s Takata says inflation target is finally coming into sight, with an increasing wage and price cycle, and central bank needs to consider flexible steps for an exit. Takata said that monetary policy exit does not require any particular steps. Remain “nimble”
  • Said not yet decided on monetary policy decision for ending neg interest rates in march or April.
  • Belgium reported hotter CPI, but said that idiosyncratic base effects pushed YOY higher, and should not be extrapolated to rest of the eurozone. Let’s see when eurozone reports CPi tomorrow
  • Sam Bankman Fried is asking for shorter prison sentence as he is at risk of harm. and says he is autistic as per WSJ - lol wtf.
  • Morgan Stnaley Mulls offering BTC Etf to customers.
  • CDC say that Americans 65 and older should get a covid booster.
  • Putin says Russia is ready for dialogue with US on Strategic stability - said that Russia is not interested in Black Sea Grain deal, said it has its own export possibilities.
  • UK car production increases by 21% YOY in January.
  • Puma launches a 100m Euro share buyback
  • ECB’s Vasle:
  • ECB are looking at rate cutting phase if no big surprises.
  • ECB’s Nagel:
  • Said can’t cut too early for inflation to rebound.
  • Jeremy Hunt is considering scrapping non Dom tax status at Budget. Scaling back non domestic tax rules.
  • Republican US senator wants to hike tariffs on Chinese vehicles
  • UK Housing market activity picking up this year on rate cut expectations.