Back Like I Never Left
-Unknown To Me
It has been a minute. I got in an accident. My car was totaled but by the Grace of God, I walked away with no injuries. One day I might share the pictures but that day is not today and tomorrow does not look so good either.
Regardless, I had to take some time to handle all the insurance details and shop around for a new car. By the way, can someone tell me why CAR PRICES ARE SO DAMN EXPENSIVE?! Like seriously, I thought all the excess from the pandemic had been washed out but NOPE. These sellers still holding on to the pipe dream that their car is some kind of investment that they need to recoup their original price on. Oh well, hopefully, I find something soon.
Anyway, WELCOME BACK to the RAMBLING MIND Newsletter. This is your Market Update
Markets
I leave for two weeks and Apple becomes a Bank. And apparently, A.I. is going to take my job much faster than I ever thought😔. But the Market keeps climbing
Here are the results of the Stock Market Year-To-Date.
This newsletter is 1,219 words, a 6 min read
Tale of the Tape
Earnings
Big Tech Earnings Cliff Notes
I have not been keeping up with the Market News but here are quick cliff notes of Big Tech Companies that reported earnings last week:
Microsoft* - 😊👏🏾 - they are still growing revenues and profits by double digits
But growth for Azure Cloud (the fastest growing part of the business) has slowed from 40% to 20%.
The stock rose almost 10% after the earnings were released.
Google* - 😕🤷🏾♂️ - growth in revenue has stalled. They grew by 3% in the quarter compared to the prior year.
However, all comparisons to 2022 are going to be terrible because things slowed down massively in the last year.
YouTube saw a decline in revenue as competition continues to heat up from TikTok and overall advertising spending declines
But they authorized a $70 Billion Share Buyback
I believe this is why the stock went up by 4% when the earnings were released.
Facebook - 🎇🤗🤩🎇 - At least this was the reaction from investors after Facebook's earnings release. The stock rallied 12% after hours. Yes, I still refuse to call the company Meta
They announced a slight increase in users
Revenues increased very slightly at 3% but after 3 quarters of declines, this was cold water for thirsty investors.
Most important Zuck kept talking about efficiency over growth. Which investors really LOVE right now
Side note: if you had a Facebook account between 2007 and 2020, Facebook owes you some money. So go here and get your money.
Amazon* - 😁🙂🤨😐😑😕😲☹😭 - These were the emotions of investors after Amazon released earnings on Thursday.
Initially, investors were excited to see Amazon increase revenues by 9% and the stock rallied by 10%
But as investors digested the report, excitement quickly turned to horror. Stocks lost all the gains and ended the day down 3% and kept on sliding
AWS the money printing portion of Amazon had a massive slowdown in growth. Going from 37% in 2022 to 16% this year.
This is in line with Google and Microsoft's slowed Cloud growth
Investors completely ignored the 23% growth in Amazon advertising, which has continued to grow, unlike Facebook and Google.
Takeaway: The constant message across every single company that reported earnings this week.
Focus on reducing costs and increasing profits.
Artificial Intelligence. Every single earnings call had something about how AI would enable them to be more efficient or drive future growth
As Charlie Munger says, "Show me the incentive and I will show you the outcome." Right now, investors love the word A.I. It is the new hot thing. So companies are talking a lot about it. The more they can add A.I to their various press releases the higher their stock will go. Executives have a huge incentive to make that stock go up, so guess what they are talking about
My Takeaway: Expectations are everything. Google and Facebook reported the same results but one had a massive boost, while the other was largely ignored. Facebook has been seen as dead so even a bit of life is seen as a massive deal. This is also important in our life, our happiness is based on expectations. If we can control that, we tend to have much more happiness.
Stats of the Week
The war against smoking cigarettes has been one of the very few extremely successful health awareness campaigns.
By The Numbers: In the 1960s, 42% of US Adults smoked cigarettes.
Today that number is 11% and continues to fall rapidly
However, People are still smoking and getting their nicotine fix.
Vaping increased 6% last year and 15% of teenagers reported using e-cigs per the CDC.
The number of books banned in the US in the 2021-2022 school year.
Looking Ahead
Economy
Interest Rates
The Federal Reserve will have its bimonthly FOMC meeting and announce its latest interest rate increases on Wednesday. It is expected that rates will be increased by 0.25 bringing the Feds Funds Rates (which is the overnight bank lending rate and sets the interest rates for everything else) to 5%.
Jobs
The Economic Picture will get a bit clearer this week with details of the labor market released:
Tuesday: JOLTS (Job Openings and Labor Turnover Survey) will be released for the month of March.
Expected to be 9.3 million in March from 9.97 million in February
Wednesday: ADP Private Payrolls will be released
Expected to add 135,000 jobs in April vs 145,000 in March
Friday: Nonfarm payrolls released for the month of April
Expected to add 178,000 in April vs 268,000 in March.
This will be the lowest addition since December 2020.
Takeaway: We are returning to a very normal labor market.
Earnings
There are a bunch of companies reporting but only one matters.
Berkshire Hathaway will be holding their Annual Shareholders Meeting on Saturday. The Oracle of Omaha with his partner, the Direct and Mostly Silent Charlie Munger will be answering questions from shareholders and the general public about the economy and the markets.
This is an annual pilgrimage for a lot of investing nerds like myself. I hope to be able to go next year and hope Warren and Charlie are still alive to see them in person.
All Other Companies Reporting
Sports I Love
Welcome to Kelechi's Source of Pain
Come along on a journey of pain and terror from the mind of Kelechi. He tried to watch sports over the last week but apparently, all his teams decided, it was time to disappoint him.
First Up: Milwaukee BUCKS
I may be sad but I love what Giannis said after the game
Second Up: Manchester United
This team is just...….. I don't even know what to say about this team. In moments they are amazing but it is never for a full 90-minute game. Three times in the last couple of weeks, they took leads in games but gave the game back in the final minutes. It is so annoying to watch.
At least they won on Sunday and are in the FA Cup finals (hopefully, they don’t get embarrassed by Man City).
*I am a tiny shareholder in this company.