Traders Market Weekly: A Magical Green First Quarter for Stocks

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    March 31, 2024 FEAR NOT Brave Investors Where have we been and where are we going? Join our weekly market thread on Traders Community… AI Magic AI, Jo
    [See the full post at: Traders Market Weekly: A Magical Green First Quarter for Stocks]


    GE Spinoff watch:

    The process of General Electric (NYSE:GE) breaking up into three separate companies focused on aerospace, healthcare and energy will continue next week.

    GE Vernova (GEV) will begin trading on April 2 after the power and renewable energy business completes its spinoff from General Electric (GE). For FY24, GE Vernova expects to generate revenue of $34B to$35B in revenues, see mid single-digit percentage growth in adjusted EBITDA margin, and churn up free cash flow of $700M to $1.1B. For FY 2025, GE Vernova guided for mid single-digit percentage organic revenue growth, high-single digit (low end) percentage growth in adjusted EBITDA margin, and free cash flow of $1.2B to $1.8B. By 2028, the company said it expects mid single-digit organic revenue growth, 10% growth in adjusted EBITDA margin, and 90% to 110% conversion in free cash flow. Ahead of the spinoff, J.P. Morgan analyst Seth Seifman was positive on GE Vernova, pointing to its rebounding margins and cash flow, and diversified exposure to the energy transition.

    S&P Dow Jones Indices updates that GE Vernova will be added to the S&P 500 Index.


    Solventum will also start trading in the week ahead after being spun off from 3M (NYSE:MMM).

    The new company will separate 3M’s (MMM) relatively faster-growing business in health care as other segments such as industrial and consumer products lag. 3M (MMM) said the new company amassed $8.2B in revenues in FY 2023 and an estimated global addressable market of ~$93B.


    The 2024 Sohn Investment Conference will be held in New York City on April 3.

    The conference has led to share price jumps for some smaller-sized stocks in the past after hedge funds made pitches.

    Walt Disney (DIS)annual meeting taking place amid a proxy fight for board representation.

    Some of the notable companies presenting data at the American Association for Cancer Research Meeting include Black Diamond Therapeutics (BDTX), Illumina (ILMN), NeoGenomics (NEO), and Carisma Therapeutics (CARM).


    IPO watch:

    The quiet periods will expire on Ryde Group (RYDE) and Lucas GC (LGCL) to free up analysts to post ratings.
    Certain blocks of shares of SYLA Technologies (SYT) and Shengfeng Development (SFWL) will roll off their lockup period.

    Reddit (RDDT) will be on watch again as shares continue to gyrate after the IPO kicked off on March 21.


    Electric vehicle deliveries:

    Tesla (TSLA) & Chinese rivals NIO (NIO), Li Auto (LI), and XPeng (XPEV) shake out. Also, watch for EV pricing news from Chinese V players BYD Company (OTCPK:BYDDF) and Xiaomi (OTCPK:XIACF).will report Q1 deliveries sometime during the first few days of the month.

    TSLA Sell-side sentiment has been bearish as of late and the consensus deliveries expectation for the quarter has dropped all the way down to 425K from 494K just a few months ago. By comparison, Tesla delivered 485K vehicles in Q4 and delivered 422,875 a year ago in Q1.

    Ahead of the big report,
    Baird warned that the consensus mark may still be too high. The firm sees Q1 deliveries for Tesla of 421K and Q2 deliveries of $445K vs. 512K consensus.
    Citi is also expecting a miss with deliveries, with its estimate recently cut to 430K.
    Goldman Sachs said other data points also suggest slower sales for Tesla to start the year. “Specifically, downloads of the Tesla app in the US and in Europe have declined sequentially when comparing the first two months of 1Q24 vs. 4Q23, and app downloads YTD are down yoy vs 1Q23 in the US per Sensor Tower data, updated analyst Mark Delaney).


    Equity indices in the Asia-Pacific region began the week on a mostly higher note.

    Markets in Hong Kong, Australia, and New Zealand remained closed for Easter Monday.

    Japan’s Nikkei: -1.4%,
    Hong Kong’s Hang Seng: HOLIDAY,
    China’s Shanghai Composite: +1.2%,
    India’s Sensex: +0.5%,
    South Korea’s Kospi: UNCH,
    Australia’s ASX All Ordinaries: HOLIDAY.

    China’s official Manufacturing PMI returned into expansionary territory for the first time since September while Caixin Manufacturing PMI pointed to the fastest pace of expansion since February 2023.
    Japanese automotive component manufacturer Denso will sell its entire 9.1% stake in Toyota Industries.
    Former Bank of Japan policymaker Watanabe said that the next rate hike is likely to take place in October.
    March Manufacturing PMI 50.8 (expected 50.1; last 49.1)
    Non-Manufacturing PMI 53.0 (expected 51.3; last 51.4).
    March Caixin Manufacturing PMI 51.1 (expected 51.0; last 50.9)

    Q1 Tankan All Big Industry Capex 4.0% (expected 9.2%; last 13.2%).
    Q1 Tankan Large Manufacturers Index 11 (expected 10; last 13)
    Q1 Large Non-Manufacturers Index 34 (expected 31; last 32).
    March Manufacturing PMI 48.2, as expected (last 47.2)
    Japanese automotive component manufacturer Denso will sell its entire 9.1% stake in Toyota Industries.
    Former Bank of Japan policymaker Watanabe said that the next rate hike is likely to take place in October.

    South Korea
    March trade surplus $4.28 bln (expected surplus of $5.75 bln; last surplus of $4.29 bln).
    March Imports -12.3% yr/yr (expected -8.1%; last -13.1%) and Exports 3.1% yr/yr (expected 5.2%; last 4.8%).
    March Manufacturing PMI 49.8 (last 50.7)

    Q1 URA Property Index 1.5% qtr/qtr (last 2.8%)

    • This reply was modified 2 weeks, 5 days ago by Truman.

    European markets are closed for Easter Monday, but they will reopen tomorrow.

    STOXX Europe 600: HOLIDAY, Germany’s DAX: HOLIDAY, U.K.’s FTSE 100: HOLIDAY, France’s CAC 40: HOLIDAY, Italy’s FTSE MIB: HOLIDAY, Spain’s IBEX 35: HOLIDAY.

    European Central Bank policymaker Holzmann said that the ECB could start cutting rates before the Fed while policymaker Stournaras sad that four cuts are possible this year, but not all policymakers expect this many cuts.


    UnitedHealth (UNH 494.85, +0.15, +0.03%): announces that CFO John Rex has also been appointed to serve as President in addition to continuing as CFO

    AT&T (T 17.16, -0.44, -2.5%): Addresses Recent Data Set Released on the Dark Web

    U.S. Steel (X 40.89, +0.11, +0.3%): Leading Independent Proxy Advisory Firms ISS and Glass Lewis Recommend U. S. Steel Shareholders Vote “FOR” the Pending Transaction with Nippon Steel Corporation (NSC); Nippon Steel (NPSCY) will still pursue its acquisition of US Steel (X) despite President Biden’s opposition, according to Reuters

    Microsoft (MSFT 422.55, +1.83, +0.4%): and OpenAI consider producing $100 bln Stargate artificial intelligence supercomputer, according to The Information

    Tesla (TSLA 176.42, +0.63, +0.3%): to increase US Model Y price by $1000, according to Reuters

    3M (MMM 90.50, +1.82, +2.1%): completed the planned spin-off of its health care business, which formally launches Solventum Corporation as an independent company. Solventum is listed on the New York Stock Exchange as SOLV; settles with Public Water Suppliers to address PFAS in drinking water receives final court approval

    UPS (UPS 151.80, +3.17, +2.1%): announces significant partnership expansion with USPS; FedEx discloses its agreement to provide domestic transportation services for the USPS will expire by its terms on September 29, 2024


    Semtech (SMTC 27.59, +0.10, +0.4%): misses by $0.02, beats on revs; guides Q1 EPS in-line, revs in-line

    Oxford Industries (OXM 101.30, -11.10, -9.9%): misses by $0.05, reports revs in-line; guides Q1 EPS below consensus, revs below consensus; guides FY25 EPS below consensus, revs above consensus; increases dividend


    3M completed spin-off of health care business, launches #Solventum as independent company listed on the NYSE as $SOLV;
    – Settles with Public Water Suppliers to address #PFAS in drinking water receives final court approval

    $MMM 92.96+4.28 +4.82%
    $SOLV $66.92 -3.8% (Issued at $80)


    Early Market
    Dow 39552.02 -255.35 (-0.64%)
    Nasdaq 16378.17 -1.29 (-0.01%)
    SP 500 5240.30 -14.05 (-0.27%)
    10-yr Note -32/32 4.333
    NYSE Adv 908 Dec 1883 Vol 238 mln
    Nasdaq Adv 1483 Dec 2759 Vol 2.7 bln

    Industry Watch
    Strong: Communication Services, Information Technology, Energy
    Weak: Health Care, Real Estate, Utilities, Industrials, Consumer Staples

    Moving the Market

    — Digesting a slate of economic data, which showed some sticky inflation data
    — Rising Treasury yields keeping the stock market in check
    — New inflows at the start of Q2
    — Gains in mega caps and semiconductor stocks

    The top two performing S&P 500 components are in the heavily-weighted information technology sector, which sports a 0.1% gain. Micron (MU 126.32, +8.43, +7.2%) and Western Digital (WDC 72.17, +3.93, +5.8%) are the winning standouts in that respect. On a related note, Digitimes reported that DRAM prices and demand are falling.

    Walgreens Boots Alliance (WBA 20.26, -1.44, -6.6%) is the worst performing S&P 500 component with no specific news to account for the selling.


    The March ISM Manufacturing Index checked in at 50.3% (consensus 48.5%), up from 47.8% in February. That is the first reading above 50.0% since September 2022, which equates to a manufacturing sector operating in an expansion mode.

    The key takeaway from the report is that it contained all the reasons why the Fed believes it can be patient before cutting rates: business activity is expanding, prices are sticking at higher levels, and employment conditions remain reasonably good.

    Total construction spending decreased 0.3% month-over-month in February (consensus 0.6%) following an unrevised 0.2% decline in January. Total private construction was flat month-over-month while total public construction was down 1.2% month-over-month. On a year-over-year basis, total construction spending was up 10.7%.

    The key takeaway from the report is that new single-family construction remains an important prop for overall construction spending, but the pickup there in February wasn’t enough to offset a decent-sized decline in nonresidential spending in both the private and public sectors.


    U.S. Treasuries trade on their lows after a steady slide from their opening levels.

    The Treasury complex has faced steady pressure through the first couple hours of action, lifting yields on 5s, 10s, and 30s back above their respective 200-day moving averages to levels not seen in nearly two weeks.

    The selling produced lows shortly after the release of a better-than-expected ISM Manufacturing report for March (actual 50.3%; consensus 48.5%), which showed a return into expansion.

    Equities started the day on a mixed note with the Nasdaq (+0.5%) showing early strength while the Dow (-0.5%) hovers in the red and the S&P 500 (unch) is little changed.

    2-yr: +7 bps to 4.69%
    3-yr: +8 bps to 4.49%
    5-yr: +9 bps to 4.31%
    10-yr: +10 bps to 4.31%
    30-yr: +10 bps to 4.45%


    Dow 39,566.85 -240.52 -0.60%
    S&P 500 5,243.77 -10.58 -0.20%
    Nasdaq 16,396.83 17.37 0.11%
    VIX 13.66 0.65 5.00%
    Gold 2,265.10 26.70 1.19%
    Oil 83.93 0.76 0.91%


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