Bank earnings were mixed. Consumer demand for air travel remains robust. TSMC is bullish on AI demand. CEOs at Davos are optimistic even though geopolitical, trade & election uncertainties remain.
For Delta, it doesn't have any of the Max9's in its fleet, regardless it is truly sad how an engineering juggernaut like Boeing can put itself in a position like this (again).
I think that TSMC datapoint is a very important one. Discussed it in my weekend report as well. Worth noting the global chip industry saw its first y/y gain in sales in 14 months.
Very insightful take you have on TSMC. TSMC's 20% growth projections for 2024 are indeed not an easy task, just indicates how the rapid innovation and adoption of AI will drive the next boom cycle.
When nothing makes sense, the markets are awash in cash on real estate side so much they’re pricing themselves out, and on the consumer retail side flanks they’re barely scraping along… Idk what to make of it. Uncharted is an understatement but when this thing blows (not casting shade understand) as they always eventually do. This will suck the atmosphere clean and will not be anything left to climate change… Will steal the breath to blow a whistle.
Thanks for this breakdown. I wonder what you are thinking about the health care sector. Seems like those stocks are going down while everything else is looking up...
Great question Jessica. I am bullish on the overall health acre sector, but particularly pharma and health insurance. I believe as the sentiment shifts towards the possibility of a Fed cut, money is moving away from defensive names to risk assets, such as tech. But, if I look the broader picture, the overall uncertainty around a recession possibility remains and most importantly, I think inflation is going to remain sticky moving forward. So, I am a buyer of pharma and insurance, because of their defensive nature and strong company fundamentals. Over a 3 -5 year horizon, I am especially bullish. Let me know if you had any other question.
Good point on the deterioration in the private (debt) market - the decline in EBITDA margin for small and medium private enterprises is serious under the weight of tougher financial conditions. The private credit market has been a favorite for institutional investors as alternatives to fixed income to gain more yield but how are the private lenders themselves going to finance their deals??To investors cash and cash bonds are serious contenders especially they are relatively more liquid!
Fully agree with you, while there is not always a lot of available data on this front, this is a space to watch out for in how it develops and the extent of damage of financial tightening. While the Fed faces a dilemma as to the timing of their interest rate cut, with strong retail sales and labor market, the private credit market could morph into something troublesome.
They're going to be forced too but at the risk of blowing the entire kitnkbootal… But then the silver lining when it blows us all to kingdom come, the kids will finally be able to afford a house ;)
Very insightful! Though, I‘m curious what the leaders in Davos smoke or they just follow mainstream media (which I can‘t believe). I personally, think that the geopolitical tension will intensify and dominate the financial markets more than in the past. It‘s a shift in power and global dominance.
I am with you, WEF has always been disconnected and with elitism taking the center stage, world leaders can often be delusional. So, while I look for insights in certain CEO commentary, I wouldn't base my hypothesis off on WEF. As for your take on geopolitics, couldn't agree more.
You heard it right, as long as there is demand for US debt, the US government can keep issuing more to finance itself. A lot of it is predicated on US dollar being the reserve currency, however, the higher the debt balloons, the upper limit of fiscal irresponsibility will be tested (one day). Not likely in 2024.
Great round-up as usual Amrita. Re the bank earnings section and "are we missing a piece of the puzzle". Are you making the inference that Bank earnings are a proxy for the general economic state of affairs, or at least for large cap companies?
Technically, big banks lend to big firms/companies, which are technically in good state during this whole cycle. Meanwhile, smaller banks lend to smaller firms and the big unknown at this point is the list of non-public mid-market companies who are seemingly squeezed on their margins and the impact it would have on the overall banking system and the economy should defaults/bankruptcies rise from current levels.
I am not following all the Boeing drama too deeply in all honesty, but this is not the first time that Boeing has faltered and unfortunately for a company like Boeing, a compromise in quality for their products translate to lost lives. I don't think this is going to be a long term issue curbing down on air travel demand, but, this is a sad reckoning for the engineering giant.
“Demand for air travel remains robust”
Especially for jets without screen doors
For Delta, it doesn't have any of the Max9's in its fleet, regardless it is truly sad how an engineering juggernaut like Boeing can put itself in a position like this (again).
I think that TSMC datapoint is a very important one. Discussed it in my weekend report as well. Worth noting the global chip industry saw its first y/y gain in sales in 14 months.
Very insightful take you have on TSMC. TSMC's 20% growth projections for 2024 are indeed not an easy task, just indicates how the rapid innovation and adoption of AI will drive the next boom cycle.
When nothing makes sense, the markets are awash in cash on real estate side so much they’re pricing themselves out, and on the consumer retail side flanks they’re barely scraping along… Idk what to make of it. Uncharted is an understatement but when this thing blows (not casting shade understand) as they always eventually do. This will suck the atmosphere clean and will not be anything left to climate change… Will steal the breath to blow a whistle.
Thanks for the breakdown. Excited to see Netflix's earnings news. I wrote about them a few days so some confirmation bias would be nice 😂
Just saw your post on Netflix, really great writeup. Just subscribed to your newsletter as well.
Thanks for the kind words Amrita.
Thanks for this breakdown. I wonder what you are thinking about the health care sector. Seems like those stocks are going down while everything else is looking up...
Great question Jessica. I am bullish on the overall health acre sector, but particularly pharma and health insurance. I believe as the sentiment shifts towards the possibility of a Fed cut, money is moving away from defensive names to risk assets, such as tech. But, if I look the broader picture, the overall uncertainty around a recession possibility remains and most importantly, I think inflation is going to remain sticky moving forward. So, I am a buyer of pharma and insurance, because of their defensive nature and strong company fundamentals. Over a 3 -5 year horizon, I am especially bullish. Let me know if you had any other question.
Good point on the deterioration in the private (debt) market - the decline in EBITDA margin for small and medium private enterprises is serious under the weight of tougher financial conditions. The private credit market has been a favorite for institutional investors as alternatives to fixed income to gain more yield but how are the private lenders themselves going to finance their deals??To investors cash and cash bonds are serious contenders especially they are relatively more liquid!
Fully agree with you, while there is not always a lot of available data on this front, this is a space to watch out for in how it develops and the extent of damage of financial tightening. While the Fed faces a dilemma as to the timing of their interest rate cut, with strong retail sales and labor market, the private credit market could morph into something troublesome.
The best time to purchase real estate at a good price is when the bank charges it off.
100% agree, got to be wise with your own money and investments in order to take advantage of that
They're going to be forced too but at the risk of blowing the entire kitnkbootal… But then the silver lining when it blows us all to kingdom come, the kids will finally be able to afford a house ;)
Very insightful! Though, I‘m curious what the leaders in Davos smoke or they just follow mainstream media (which I can‘t believe). I personally, think that the geopolitical tension will intensify and dominate the financial markets more than in the past. It‘s a shift in power and global dominance.
I am with you, WEF has always been disconnected and with elitism taking the center stage, world leaders can often be delusional. So, while I look for insights in certain CEO commentary, I wouldn't base my hypothesis off on WEF. As for your take on geopolitics, couldn't agree more.
Heard that us debt is almost close to 33 trillion. How Us is going to manage this huge debt.
You heard it right, as long as there is demand for US debt, the US government can keep issuing more to finance itself. A lot of it is predicated on US dollar being the reserve currency, however, the higher the debt balloons, the upper limit of fiscal irresponsibility will be tested (one day). Not likely in 2024.
Great round-up as usual Amrita. Re the bank earnings section and "are we missing a piece of the puzzle". Are you making the inference that Bank earnings are a proxy for the general economic state of affairs, or at least for large cap companies?
Technically, big banks lend to big firms/companies, which are technically in good state during this whole cycle. Meanwhile, smaller banks lend to smaller firms and the big unknown at this point is the list of non-public mid-market companies who are seemingly squeezed on their margins and the impact it would have on the overall banking system and the economy should defaults/bankruptcies rise from current levels.
Does that answer your question?
Yes, thanks! You confirmed what I was assuming 👍
Amrita - your thoughts on max driven aviation problems ?
I am not following all the Boeing drama too deeply in all honesty, but this is not the first time that Boeing has faltered and unfortunately for a company like Boeing, a compromise in quality for their products translate to lost lives. I don't think this is going to be a long term issue curbing down on air travel demand, but, this is a sad reckoning for the engineering giant.
deeply appreciate your time and response
am getting used to reading these every week !! its very useful
Glad you enjoyed the post.
Really good blog congrats !
fyi
https://jabberwocking.com/the-stock-market-continued-to-not-set-new-records-today/
Fair point on the inflation adjusted side of things, agreed.