The Weekly Drop - December 4th, 2023
Does Santa have any magic left up his sleeve for December? š
Good morning investors!
Inflation, GDP, Fed speeches, earnings ā there was so much to keep track of last week.
But thatās why you subscribe to this newsletter ā I cut through all of the BS and give you what you need to know in easy to digest, bite sized pieces of content.
Grab your coffee and letās dive in.
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Market Recap
Markets continued to march higher as November came to a close. The S&P notched its fifth consecutive green week, rising nearly 12% over that time.
The main focus of the week was inflation data coming out of the PCE report, which actually turned out to be a nothing burger. Numbers were in line with estimates and showed inflation continues to cool, but there was some underlying stickiness in key areas.
Another report showed that Q3 GDP was actually stronger than initially expected, rising 5.2% in the quarter. Meanwhile the November PMI report showed the economy slowing significantly in the fourth quarter which led to the Atlanta Fed lowering its Q4 GDP estimate from 2% last week to 1.2% on Friday.
Lastly, several Fed members gave speeches this week that were a bit mixed regarding the future of interest rates, but Jerome Powell on Friday called talk of cutting rates āprematureā and said more hikes could happen. Investors ignored his comments and largely took his words as dovish.
Last, but not least, OPEC announced oil production cuts which initially pushed oil prices higher. But that was short lived as oil prices ultimately fell to end the week.
Letās take a look at some of the earnings reports from the week:
Salesforce
My prediction from last week:
With profit margins on the rise this year, I think Salesforce beats estimates in the quarter. The question will be guidance and with high valuations, thereās little room for mistakes. Unless guidance is astronomical, I tend to think the stock cools a bit after this report. ā ā
Salesforce topped earnings estimates as expected, but guidance was indeed astronomical and the stock was rewarded, rising 12% on the week. As a shareholder, this is one Iām ok being wrong on.
TD Bank
My prediction from last week:
The company has missed estimates the last 2 quarters when it came to earnings. The stock seemed to bottom in late October but Iām not getting too excited. While I think TD beat estimates last quarter, I donāt think the future is bright for the Canadian or U.S. economies and that could spell further trouble for TD. ā ā
TD beat on revenue but missed earnings expectations for the third quarter in a row. The bank didnāt give outright guidance but their commentary coincided with the notion that 2024 will be tough for both the Canadian and U.S. economies.
A bright note is that the bank raised its dividend 6.3%, a welcome announcement for shareholders.
Crowdstrike
Crowdstrike beat on the top and bottom lines and provided strong guidance. The stock was up nearly 12% on the week.
Snowflake
Snowflake crushed earnings estimates and provided strong guidance. The stock was up over 8% on the week.
Dollar Tree
Dollar Tree missed on the top and bottom lines and provided reduced guidance. Interestingly, the stock rose 5% last week as consumers are changing their spending habits and investors believe dollar stores will be the beneficiaries of those changes.
Discord
As always, if you want to see a breakdown of all the earnings and economic reports from last week, head to my Discord. Hereās a sneak peek:
The Week Ahead
While the earnings calendar is relatively quiet, several crucial jobs reports on the docket could make this week an eventful one. Especially as the market sits at a critical level and investors look to book profits into year end.
Earnings Reports
Broadcom, Lululemon, Dollar General and WSB favorite GameStop are set to report earnings this week.
As I have been saying 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 donāt miss anything by joining the Discord.
Economic Reports
Nonfarm payrolls, ADP employment and JOLTS data will be in focus for the Fed and investors alike this week. The labor market is showing signs of cracking and these reports will give us a clearer picture. This data will definitely influence the interest rate decision later this month.
We also get a key PMI report that has the capability to move markets.
Again, be sure you donāt miss anything by joining the Discord. I provide full breakdowns of every report as they are released.
What CMG is Watching
Itās time for the moment you have all been waiting for - exactly what I am watching in the week ahead and how Iām playing it. Unfortunately, this is only for the premium subscribers.
If you havenāt joined the CMG community yet, what are you waiting for?
By joining the club, you get all of the premium articles here on Substack, immediate entrance into the community chat, plus access to all of the locked content on Discord!
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