Bookends: Friday 02/16/24
Closing Out the Week of Feb. 12th
Close out your trading week here with Ledger Island Bookend Friday where we recap our favorite stories and give you our takeaways.
Clint’s Takeaways:
Tuesday was an eventful day for the markets. A hotter-than-expected CPI report sent the 10-year Treasury yield up and the major indices down. "March-Cutters" turning their focus to May (possibly) held out hope there was a Lyft LYFT 0.00%↑ like typ0 in the print s0mewhere, but n0 intenti0nal decepti0n was f0und.
Love was in the air on Valentine's Day (Wednesday), and investors seemed ready to mend a broken heart as stocks regained some ground from the day before, but would they be hurt again? Typically, a .3% rise in PPI, as reported today, would have ignited another sell-off, but the markets took it in stride, only moderately down on the week. The Russell 2000 Index seemed to bear the brunt on Friday.
Last Sunday's Super Bowl rippled throughout the week as well. Paramount PARAA 0.00%↑ reported a record-breaking 123.7M viewers and followed that news up with 800 layoffs. PENN Entertainment PENN 0.00%↑ (ESPN Bet partner) and DraftKings DKNG 0.00%↑ reported disappointing earnings and indicated that the Chiefs' victory over the 49ers favored the betters, not the house. I'm sure that brings a little comfort to San Fransico fans.
My favorite thing Phil wrote this week:
“I’m being a cautious investor this week letting the market get its sea legs in this new post-5000 S&P world. Plus, with the CPI and PPI reports out this week, the market will again be responding to any suggestion that rate cuts could be delayed even beyond May.”
from Bookend Monday: 02/12/24
He nailed that call. Enjoy the long weekend!
Phil’s Takeaways:
Happy Friday, Everyone!
Three weeks of respectable gains ended with a pretty emphatic drop after this week’s news, making it even more likely that Fed rate cuts are coming any time soon. The PPI report showed an increase in prices for January, prompting concerns that inflation may push up slightly after months of improvement. Both the Atlanta and San Francisco Fed presidents made statements that have the markets believing that any rate cuts are coming no earlier than summer.
All this action meant that the market appeared to be settling into a predictable but annoying trend. The market will respond negatively to any indication that rate cuts will be delayed but recover as companies continue to announce positive news about earnings. The fact that the market couldn’t recover enough to finish the week in the green is a trend I will observe next week. This trend on Ledger Island has been particularly annoying since small-cap stocks have been especially vulnerable to high-interest rates.
For me, the biggest stories this week have been outside the US, where Asia and Europe are trying to navigate this odd global economy. Japan and England formally entered a recession while Germany and France narrowly avoided the dreaded R word. Meanwhile, China continues to struggle with deflation concerns as their government considers policies to address the consequences of their high housing costs. We don’t talk about international stocks much here on Ledger Island, but I’ll spend Monday talking more about the lessons we can learn from these markets.
My favorite thing Clint wrote this week:
“WBD seems incapable of turning victories into actual growth. Barbie garnered critical and box office success (1.45B worldwide), yet Q3 Network Segment revenue? Distribution declined by 2%. Ad revenue is down 13%. Content revenue declined 22%!”
from Warner Bros Discovery Inc. (WBD)
In case you missed it…
Today we posted our take on Warner Bros. Discovery Inc. (WBD) which closed the week out at $9.83.
We also added an update to our Geron Corporation (GERN) from December 2023 who closed out the week at $2.00.
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