Bookends: Friday 03/01/24
Closing Out the Week of Feb. 26th
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:
This week, we saw more hits and near misses in some of the major report estimates. If this were horseshoes, we would feel good. Since it’s not, we will have to take some solace in being closer to expectations. That isn’t just trying to make “lemonade” out of this lemon grove economy reads of late. Better estimates mean being closer. Being closer means better expectations. Better expectations mean better predictability, which I believe the Fed is most worried about in their meeting later in March. This week was the first time I started to think cuts could be coming by (or even before) June, despite some more hawkish talk from Fed Presidents.
Elon Musk is suing OpenAI. No. I mean, Elon Musk is suing Sam Altman. Wait. What I really mean is Elon Musk is suing Microsoft MSFT 0.00%↑ , Google GOOG 0.00%↑ , and HAL 9000. That’s it. Angered by OpenAI’s pivot from saving humanity to profits, Elon Musk, who has been on an AI tirade of late (i.e., CoPilot and Gemini), is setting the stage for a full-on debate on AI and its possible misuse in society. The fact that there is talk of his “xAI” project to begin private investment rounds soon or how the promises of AI integration at Tesla TSLA 0.00%↑ is why he needs more controlling interest are coincidental, according to my X (formerly Twitter) chat bot Grok.
My favorite thing Phil wrote this week:
“Unless Thursday’s initial jobless claims report is catastrophic, we're still waiting until May for even the possibility of a Fed rate cut. That will continue to pressure small caps, specifically those with a negative EPS. The S&P's strong performance will continue to operate as a money vacuum. Fear of missing out (NVIDIA has projections of $1000) will mean less money going into small caps. Less money and less concentration equals a higher risk for news-driven volatility.”
from Bookends: Monday 02/26/24
Enjoy the weekend!
Phil’s Takeaways:
Happy Friday Everyone!
All three major indexes finished February in the green marking four consecutive months of growth. In many ways the market managed to pack a lot of gains into the calendar’s shortest month. The S&P 500 and Nasdaq closed at record highs, NVDA 0.00%↑ joined the $2 trillion club, and the tech sector as a whole enjoyed the record high AI fever. That highly contagious fever spread to Dell today as they posted an outrageous gain on not just a great earnings report but also the anticipated future demand for AI supporting hardware.
The highlight of the week for me will be the market’s discipline in responding to more data that supports the Fed’s reluctance to cut interest rates. Slow but steady movement by the PCE, the slightly disappointing housing numbers, and the continued caution by Fed presidents did little to shake the market like it would have in recent weeks. We may see another round of alarm as we get closer to the May Fed meeting but how the market has behaved this week is a welcome improvement over how the DOW behaved just a month ago when it lost confidence in early rate cuts.
Just a quick note, New York Community Bancorp NYCB 0.00%↑ lost 25% of its value after it found “material weaknesses” related to its loan review process. Regional banks weren’t in the best position to begin with and while I don’t yet know what that weakness was, banks with significant commercial real estate assets have been vulnerable for some time. Something for me to explore on Monday.
My favorite thing Clint wrote this week:
“I personally think that the Chinese EV maker's momentum and increasing global market share will force US automakers to recommit to EVs in the second half of 2024.”
from Aspen Aerogels Inc. (ASPN)
In case you missed it…
This week we posted our takes on Aspen Aerogel Inc. ASPN 0.00%↑ who may have two separate tracks to big gains in 2024.
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