The week that was on Wall St

When we switched off for the week, the fun began on Wall Street following the resolution of the debt ceiling dance.

By the end of the Friday session, the Dow Jones Industrial Average had lifted more than 700 points or 2.1%.

The S&P 500 gained 1.5% and everyone’s fave tech heavy Nasdaq Composite added another 1.01%, to end at 13,240.77.

After Friday’s festivities, the S&P 500 and both the Nasdaq and the Dow finished the four-day week circa 1.8% and then 2% higher, respectively.

Things might be tense, but the Nasdaq’s just not noticed.

One of the tech heavy’s lesser known and lesser named  database software players, MongoDB (MDB) jumped almost 30% on Friday, when both MDB’s Q1 earnings and Q2 outlook smashed expectations.

The company reported EPS of 56 US cents vs analyst expectations of 18 US cents per share, according to FactSet. Its Q2 earnings guidance also topped expectations, music to the ears of investors looking for somewhere to stick their good feelings.

Also led by an 11% gain for Elon’s Tesla (TSLA) and the now unhinged looking 172% year-to-date improvement for Nvidia (NVDA), the tech heavy index has made it six straight weeks of winning amid all kinds of macro, socio and economic calamity. Six in a row is a run of gains not seen for the composite since 2020.

The Nasdaq is up and cruising at an altitude of circa +27% in 2023, doing a number on both the S&P 500 and Dow Jones.

After peaking in late 2021, the Nasdaq lost a full third of its body weight last year, so the tech index is still circa 18% off its all-time fighting high.

In fact most global share markets rallied over the last week helped by the Thursday night US debt ceiling deal and the US Fed then signalling the idea of a pause in its passion for rate hiking this month.

For the week Wall Street rose a combined 1.9%, EU shares managed to find 0.05%, Japanese shares jumped another 2% and Chinese shares finally rose 0.3%, on the back of some overdue Hang Seng action.

The suspension of the US debt ceiling out to January 1 2025 heads was met with a jubilance only Wall Street knows of.

But it’s worth noting that there’s a pointy end at the back of avoiding the US Government default.

The relative smoothness of the process compared to 2011 and 2013 is a positive sign in terms of the present workings of the US political system with President Biden and Speaker McCarthy proving far more willing to compromise than had been feared. However, just bear in mind that the spending caps for the next two years will imply around a 0.2-0.3% of GDP fiscal drag at a time when the US economy is already slowing.

The resumption of bond issuance and rebuilding of Treasury’s deposit at the Fed will also reverse the liquidity boost that has been provided to markets by the Treasury running down its deposits since when it hit the ceiling in January.

Elon Watch

Dare I point out that Elon is once again the world’s No 1. richest human after doing in for tedious French billionaire Bernard Arnault.

It happened while our Musky Maverick made his first visit to China since before the pandemic.

The main takeaways are that Elon is most certainly not decoupling from China.

China’s ready as hell to court the foreign dollars as its economic recovery stumbles.

The future of all things Electric and Vehicular are very likely to stay in orbit around China. Innovation, sales, demand, production, funny names, mineral and metals demand and control as well as shady but lucrative backroom deals.

So, while it’s unsurprising Bloomberg says Our Elon’s back at top spot, it’s more the Frenchman’s fault than Elon’s electric reemergence in Beijing.

Arnault’s absurdly valuable LVMH luxury goods empire has taken a hit after analysts decided the even more absurd luxury-bag bubble could finally be bursting.

LVMH shares fell by more than 10% in the last few weeks, depressing no one sensible as well as Bloomberg’s estimated value of Arnault’s fortune, which it reckons crashed by another $5bn on Friday alone to around US$187bn.

Meantime, Elon’s back biting at the heels of US$200bn (he’s on about US$194bn apparently). TSLA jumping 11% on Friday didn’t hurt and helped add the US$56bn he’s recovered since Christmas.

Arnault did for Musk in December last year after the value of LVMH shares soared, while Musk’s wealth crashed as Tesla’s share price slid on investor fears that he might be preoccupied with Twitter.

Also happening to Musk last week – the AP reports – a top Twitter executive responsible for safety and content moderation jumped Twitter-ship, her departure coming soon after owner Elon Musk publicly complained about the platform’s handling of posts about transgender topics.

That probably won’t be bothering investors like Changpeng Zhao, after Fidelity Blue Chip Growth Fund slashed the market value of its own stake in Twitter for a third straight hit.

Fidelity reckons it has about US$6.55mn in Twitter equity. Down from circa US$20 million which the Fidelity fund valued its stake at in October.

Which, if my math is correctish, means Twitter is probably worth about a third what Elon paid back in December, when I might point out, it also seemed a terrible idea.

Finaly, this happened a week before last week, but Musk’s brain implant company Neuralink says it’s somehow gotten permission from American regulators to begin testing its device in people. That’s ‘in’ people – not ‘on’ people.

I’ll find out where we can sign up.

 

The week that will be on Wall St

Apple will give us what has been billed as its biggest product launch since the iPad, 13 years ago.

The new “mixed reality” headset was seven years in the making — twice as long as it took to create the first iPhone.

Top Apple Tim Cook, who’ll sing the main song this week from Apple HQ in Cupertino, will be hoping for something that makes as much sense as the ipHone did for Mr Jobs, way back when.

The Financial Time’s tech man Richard Waters says this is more of an Apple hedge against “the eventual waning of enthusiasm” for smartphones.

What else? The most notable survivor of the January 6 highlight of former Republican President Donal Trump’s administration  – Vice-President Mike Pence – is widely thought to launch a typically timid presidential bid against his former boss this week. It should be a bit tiresome, pundits believe.

Pence remains, to all intents and purposes, just a bunny in the Trumpian headlights. Why would the Trumpists vote for the guy who ignored his boss and their dreamboat by rubber stamping Joe Biden’s election win?

There are a couple of worldwide whiny reports to watch out for this week.

The World Bank unveils its Global Economic Prospects (summer edition) report on Tuesday and the OECD releases its ‘we’re all screwed’ economic outlook the following day.

 

US Earnings spotlight – GameStop (GME)

GME reports after the close New York time on Wednesday, June 7

Wall Street analysts polled by Factset see GameStop posting an earnings per share (EPS) loss of 12 US cents on revenue of US$1.36 billion. This compares quite nicely to the same quarter last year when the loss was 52 US cents per share on revenue of US$1.38 billion.

GameStop remains one of the most widely followed stocks on the market, although the mania of meme-stocking just hasn’t been what it was even just 12 months ago. GME has been at the very centre of all that fun.

This year, however, GME has still jumped almost 28%, far and away besting the 8% rise in the S&P 500 index, and sitting pretty with what the Nasdaq has been able to pull off.

Much of those gains have come during a crazy May, with shares rising some 23%.

Currently trading at around $23 per share, the stock is off some 52% from its 52-week high of around $48.

Other notable US companies reporting this week

June 5 – June 9

 

Monday – GitLab (GTLB) and Science Applications (SAIC).

Tuesday – Ferguson (FERG), Casey’s General Stores (CASY)

Wednesday – Brown-Forman (BF.A), GameStop (GME), Campbell Soup (CPB), and HashiCorp (HCP).

Thursday – DocuSign (DOCU), Vail Resorts (MTN)

Friday – NIO (NIO).

 

The global economic week

Monday June 5 – Friday June 9

MONDAY
New Zealand, Thailand, Malaysia Market Holiday
Worldwide Services, Composite PMIs, inc. global PMI (May)
Indonesia Inflation (May)
Singapore Retail Sales (Apr)
Germany Trade (Apr)
Switzerland CPI (May)
Eurozone PPI (Apr)
United States Factory Orders (Apr)
United States ISM Non-manufacturing PMI (May)

TUESDAY
South Korea Market Holiday
Japan Household Spending (Apr)
Singapore S&P Global PMI* (May)
Thailand Inflation (May)
Eurozone HCOB Construction PMI* (May)
Eurozone Retail Sales (Apr)
United Kingdom S&P Global/CIPS UK Construction PMI*
S&P Global Sector PMI* (May)

WEDNESDAY
China (Mainland) Trade (May)
Japan Leading Economic Index (Apr, prelim)
Taiwan Trade (May)
United Kingdom Halifax House Price Index* (May)
United Kingdom KPMG / REC UK Report on Jobs* (May)
France Trade (Apr)
Canada Trade (Apr)
Canada BoC Interest Rate Decision
United States Trade (Apr)

THURSDAY
Japan GDP (Q1, final)
Japan Current Account (Apr)
India RBI Interest Rate Decision
Eurozone Employment Change (Q1)
Eurozone GDP (Q1)
United States Initial Jobless Claims
United States Wholesale Inventories (Apr)

FRIDAY
China (Mainland) CPI, PPI (May)
Malaysia Industrial Production (Apr)
India Industrial Production (Apr)
Canada Unemployment Rate (May)