The first full week of 2023 has arrived and market news is coming back into full-swing. For readers that are loyal to the Georgia Bulldogs and TCU Horned Frogs — best of luck tonight in the National Championship!
The viewership for college football this year has been at record highs, and the College Football Playoff Final will be hoping for continued success to close the season out. Remember — college football is a business and it’s a booming one:
Trend to watch in 2023:
Over the past couple of years, there’s been a clear breaking away from New York and California. We’re interested to see if this keeps up as the calendar has turned to 2023. We personally know dozens of people that have moved back to NY and CA for great opportunities. We’d expect these figures to calm down in 2023.
Will the recession cause more companies to force employees to be in the office? Will the cost of living in these states improve at all? Human geography is fun to keep an eye on, and we’ll certainly be watching the impacts on the real estate market.
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Key Earnings Announcements:
This week ends with heavy hitters stepping up to the plate.
Friday (1/13): Bank of America, BlackRock, BNY Mellon, Citi, First Republic Bank, Delta, JPMorgan Chase, UnitedHealth Group, Wells Fargo
What We’re Watching:
BlackRock (BLK)
The world’s largest asset manager is officially on our radar heading into its Q4 earnings. One qualm we have with the stock is BLK’s annual dividend yield being consistently low — around 2.6%. Currently with a P/E Ratio above 20 — we’re not sprinting to pile into BLK, but we’d like to keep a closer eye on it than we have in the past.
UnitedHealth Group (UNH)
In Q3, UnitedHealth raised its 2022 earnings and revenue guidance, driven similarly by an increase in members served through UnitedHealthcare and double-digit growth in Optum. UNH expects a profit of $21.7B-$22.3B in 2023 and expects revenue this year of ~$324.5B.
Projected growth in its Optum division is spurred by expected growth in Optum Rx, its pharmacy benefit management business, and its outpatient center arm.
Investor Events / Global Affairs:
Brazil’s capital is stormed, China opens up even more, and one of the year’s biggest conferences kicks off in Orlando.
Brazil Chaos
Thousands of protestors in São Paulo stormed the presidential palace, Congress, and Supreme Court on Sunday in retaliation to an election that claimed to have been rigged. Some 400-500 arrests have ben made. In October, Luiz Inácio Lula da Silva defeated former President Jair Bolsonaro with 51% of the vote for the top office in Brazil.
Frustration That Knows No Bound:
Mr. Bolsonaro has yet to publicly concede the race, and has been claiming that there was widespread voter fraud for months. He filed a request with the electoral court to annul ballots cast on most electronic voting machines, which would have overturned the Oct. 30 result. The request was turned down by the court.
Mr. Bolsonaro left Brazil for Orlando, Fla., shortly before Mr. da Silva was inaugurated on Jan. 1, the first president in the country’s recent democratic period to decline to take part in the symbolic act of handing over the presidential sash to his successor.
“Peaceful demonstrations, in the form of the law, are part of democracy. However, depredations and invasions of public buildings as occurred today, as well as those practiced by the left in 2013 and 2017, escape the rule.” — Bolsonaro on Twitter
The reopening allows the business community to more fully re-engage the fast-growing Chinese market.
According to Chinese immigration data — border crossings in the three months ended Sept. 30 totaled 22 million. The number for the full year before the pandemic, 2019, was 670 million people, more than half of them mainland Chinese travelers.
ICR Conference in Orlando, Florida
The ICR Conference is a unique platform where public and private company management teams, institutional investors, sell-side research analysts, investment bankers, private equity professionals and select media connect with one another with the goal of understanding consumer trends and public company prospects as the year begins. With 2500+ attendees and presentations by 150+ Public Company CEO’s and CFO’s — it’s widely considered one of the most important conferences of the year.
Noteworthy Expectations:
Both BMO Capital Markets and JPMorgan identified Lululemon (LULU) as a company that could see its guidance raised during the event.
Retail updates are expected from American Eagle Outfitters (AEO), Five Below (FIVE), Macy’s (M), On Holding (ONON), and more.
Inventory management appears to be a theme in which analysts seek clarity at the conference — specifically with companies like Best Buy (BBY) and Nordstrom (JWN).
Major Economic Events:
Focusing on Fed Chair Powell, fresh inflation data, and assessing if consumer credit will ever see a drop-off.
The gap between consumer sentiment and money invested is the largest we’ve seen in recent history.
Monday (1/9): Consumer Credit, NY Fed 1-Year & 5-Year Expectations, Speech by ATL Fed President Bostic, WSJ Interview of SF Fed President Daly
Tuesday (1/10): NFIB Small Business Index, Speech by Fed Chair Powell in Sweden
Wednesday (1/11): N/A
Thursday (1/12): Consumer Price Index (CPI), Federal Budget, Speeches by PHL Fed President Harker & STL Fed President Bullard
Friday (1/13): Import Price Index, University of Michigan Consumer Sentiment Index & Inflation Expectations
What We’re Watching:
Fed Chair Powell & Inflation
Source: Reuters
The last headline inflation reading came in at +7.1% YoY, with the consensus being +6.6% for this Thursday’s reading. We’ll be keeping watch on Fed Chair Jerome Powell’s speech in Sweden on Tuesday. In the past, Jerome Powell has revealed quite a bit of market-moving sentiment at his speeches at Jackson Hole and at the Brookings Institution. Will the trend continue?
Consumer Credit
Consumer Credit Monthly Change, 5-Year Chart
Besides the Covid crash in 2020, we’ve seen just one monthly reading in which consumer credit actually decreased. We aren’t necessarily expecting to see one soon, but the Fed would consider this to be a massive victory if one were to come in 2023.
Events-Driven Winners:
Which stocks moved the most last week.
Our friends at LevelFields scrub through thousands of data points each week to determine how events impact stock prices.
Stitch Fix Switches Things Up:
Founder Katrina Lake told employees on Thursday that the company will be cutting 20% of its salaried employees and she will be reassuming her post as company CEO. The brand’s current CEO, Elizabeth Spaulding, will be stepping down immediately.
Wonder what encouraged them to make a change…^^
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Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
