Good morning investors!
The labor market is cooling which obviously means stocks should go lower, right? Wrong! Stocks moved higher again last week after a number of weak jobs reports.
Confused? Don’t worry, I’ll break it all down for you.
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Grab your coffee and let’s dive in.
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Market Recap
December started the same way November ended, with another green week for the markets.
The main focus of the week was the number of jobs reports as investors looked for clues into the next rate hike decision. The bad news was that all of the reports indicated the labor market is cooling. The good news, for investors anyway, is that a weak labor market means rate hikes are in the rear view mirror.
Let’s take a look at some of the earnings reports from the week:
Broadcom
My prediction from last week:
With earnings from Nvidia and AMD to look back on, I fully expect the company to beat once again. The question will be guidance which might show some weakness. Valuations are not too bad but they are still high so I wouldn’t mind a pullback here to give the stock some time to catch up to financials and allow for the next leg higher. ✅
Broadcom topped earnings estimates as expected but the stock fell slightly on the week after guidance was in line and not extraordinary.
Lululemon
My prediction from last week:
With the strong consumer spending in Q3, I tend to think Lululemon has no problem beating estimates this quarter. With the high valuations and signs pointing a reduced consumer spending, guidance will have to be spectacular for this stock to make all time highs. ✅ ❌
Lululemon beat on revenue and earnings expectations for the seventh quarter in a row. Guidance was lower than expected and the stock was initially punished, only to recover on Friday to end the week up 5% and make all time highs.
Dollar General
My prediction from last week:
The company has missed estimates in three of the last four quarters, but the bar is extremely low this quarter after the company reduced guidance significantly last quarter. With the strong consumer and lowered guidance, I find it very difficult for Dollar General to miss estimates this quarter. And with valuations where they are, a beat and decent guidance could lift the stock higher. ✅ ❌
Dollar General beat on the top and bottom lines, but guidance was weak resulting in the stock falling 6% last week.
Discord
As always, if you want to see a breakdown of all the earnings and economic reports from last week, head to my Discord. Here’s a sneak peek:
The Week Ahead
While the earnings calendar is relatively quiet, two key inflation reports are set to be released this week. With the market sitting at a critical level and investors looking to book profits into year end, things could get interesting.
Earnings Reports
Oracle, Adobe, and Costco top the earnings calendar this week.
As has been the case all earnings season, there should be no surprises for the last quarter. The consumer was strong, the economy was chugging along and the reports should continue to indicate that. But pay attention to the forward guidance, that continues to be the key.
*Note - I will be creating one page summaries for key reports. Be sure to follow me on Twitter.
Let me know in the comments what stocks you are watching.
And be sure you don’t miss anything by joining the Discord.
Economic Reports
The CPI and PPI will be in focus for the Fed and investors alike this week. Inflation continues to trend towards the Fed’s target and this data will definitely influence the interest rate decision later this month.
We also get a key retail sales report and PMI data that both have the capability to move markets.
Again, be sure you don’t miss anything by joining the Discord. I provide full breakdowns of every report as they are released.
What CMG is Watching
It’s time for the moment you have all been waiting for - exactly what I am watching in the week ahead and how I’m playing it. Unfortunately, this is only for the premium subscribers.
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