There is no stopping the S&P500 as it soars past 5k; Arm (+60.1%) takes a strong-hold of the Nasdaq!

Another exciting week, but more-so on the earnings front as data releases were fairly mute. We are watching history in the making, with the S&P climbing above 5k for the first time and continuing to make all-time-highs! Equities cannot be stopped and seemingly irrespective of any banking-related fears (discussed below).

STOCK SPECIFICS:
Disney, Arm, Kering, Maersk
Disney (WTD +11.9%) - The “Suite” life of EPS & Dividend. (1) Beat on EPS though very marginally missed on Revenue. (2) Boosted its cash dividend by over 50%. (3) Targets a $3b share buyback in FY24. (4) Generally softer subscriber metrics, including revenues of other businesses (sports/entertainment). (5) Will develop a “Netflix-style” password restrictions for its Disney+ business. (6) Invests $1.5b into Epic Games (creator of Fortnite). My thoughts? Overall solid metrics, though ultimately investors focused on the dividend + share buyback. One thing notable that perhaps went under the radar is the “"Netflix-style” password restriction. As I made note in my prior newsletter, that same move enacted by Netflix led to an increase in Net subscribers - it was a positive move for the company, and a plan which will no doubt help Disney+.

Arm (WTD +60.1%) - Extremely strong results for the latest chip name on the market! (1) Beat on EPS and Revenue by fairly modest margins. (2) Significantly increased both EPS and Revenue view, above analyst consensus - for BOTH the next quarter and the full year. (3) China business grew 25%, up from prior +20%. (4) Received a downgrade to Underperform at Santander. My thoughts? Chip names are the talk of the Street at the moment, with NVDA surging to ATH, above the $700/shr. European peers such as ASML/BE Semiconductor have also benefited this week. But ARM was particularly strong, and perhaps caught investors off guard. Momentum will likely drive this stock higher for the near-term, that is until NVDA reports earnings on Feb 21.

Kering (WTD +9.5%) / Hermes (WTD +7.5%) / Luxury - Underperformance of last year a thing of the past. Kering: (1) Generally softer metrics, though did note of improvement of demand in Europe and the US in the latter part of last year. Hermes: (2) Beat on Revenue. (3) Proposed exceptional dividend. (4) Confirmed its prior guidance. (5) CEO says Hermes is confident on the Chinese market and sees no slowdown in US trends. My thoughts? I have consistently mentioned Luxury names in my letters - they underperformed last year, and analysts at GS, MS etc. have all been eyeing the opportunity to get back into the sector. The real boost here is Hermes noting that it is confident in the Chinese market - an issue that has been at the forefront of investors mind last year. The recent GDP/CPI metrics out of the country have not indicated this, but should they begin to improve, I see Luxury stocks as the first beneficiaries of it.

Maersk (WTD -10.9%) - Shares continue to sink as traders bet too early! (1) Beat on Revenue, missed on all other metrics. (2) Suspended share buyback. (3) Reported softer guidance than expected. (4) CEO noted that Red Sea disruption will not be a major boost for the company. My thoughts? In my prior newsletter I mentioned Hapag-Lloyd (a shipping name), where I mentioned traders perhaps bet too early on the net effects of the Red Sea disruption. It is more severe than that - traders bet wrong! Point (4) is testament that premiums are simply not increasing as much as traders hoped. Although, on an inflation perspective - this is good news! Investors may be looking for a rotation into some of the companies which have previously been hit by inflationary fears; retail/consumer disc etc.

KEY EVENTS:
NYCB
New York Community Bancorp (WTD -17.5%) / Retail Banking - The regional bank fell as much as 60% after it posted an unexpected Q4 loss 2 weeks ago. Since, the bank has been subject to several broker downgrades, with Moody’s cutting the bank to junk. This raised concerns to the wider regional banking sector - though comments from Citizens Financials helped to assure investors that the issues were localised and that NYCB is an outlier. On a Macro perspective, the banking fears sparked haven flows into the Dollar and Bonds. However, as the week progressed, investors quickly warmed up to positive remarks from the bank, where the bank pared most of the initial downside. Further, a slew of executive open market purchases into the bank further sparked upside in the stock. Why does it matter? Think back to last year, where SVB’s turmoil sparked concerns of a failing commercial real estate market - this is no different! Investors may be worried about a lack of future lending and this may be one block in the Jenga pile, ready to topple over. My thoughts? There is a lot to sort out at the bank. Reports suggested the bank are to offload mortgage risk - which only fuels wider investor fears. This will be a theme for the next couple of weeks, but executive purchases is a positive look for the bank.

KEY DATA:
US CPI Seasonal Revisions
US CPI Seasonal Revisions - Boring… and the market agreed - and so did pretty much every analyst. Fed-watched Timiraos tweeted “seasonal adjustments in the CPI were a nothing-burger”. There was some slight revisions, so lets actually digest them. (1) October + November CPI was revised slightly higher. (2) December was revised lower. (3) On an 6m annualised basis - unchanged. On the release, there was a hefty dovish reaction, though ultimately pared the entire move… I did say it was boring. So why did markets move? ING pointed out that markets needed a reason to move dovishly - and so even if revisions were unchanged, it meant inflation is moving in the right direction - and enough for the Fed to cut rates early.

Preview + What you said?
US CPI
US CPI - Headline M/M CPI is expected to print at 0.2%, unchanged from the prior - and something that would be welcomed at the Fed. As always, CPI will be viewed in the lenses of the next Fed policy decision. March seemed to be ruled out by Chair Powell at the latest policy announcement, so a significantly softer metric would be needed to shift the discussion forward to March.

What you said? Thank you to Esra for your reply this week! You said “I will be following the RBNZ inflation expectations survey this week. ANZ Bank recently predicted that the RBNZ will hike in the next two meetings - I want to know if the RBNZ also view inflation to be sticky”. Very insightful stuff from Esra, and the survey will be key for moves in the Kiwi this week - it moved significantly on ANZ Bank raising its forecast for the RBNZ hikes!

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