🔔Week Overview: FOMC + Earnings Full Steam Ahead
& Bitcoin Reserve coming to the US?
Good afternoon everyone!
We have a suuuper stacked week, so let’s get straight to it.
TLDR: We have the bulk of tech earnings this week, with MSFT 0.00%↑ Tuesday AH, META 0.00%↑ Wednesday AH and AMZN 0.00%↑ & AAPL 0.00%↑ Thursday AH. These tech earnings will likely play a huge part in determining the direction of the stock market. On top of all these earnings, we also have FOMC on Wednesday, where we will get a clearer picture on the direction the Fed wants to go. We shouldn’t be getting a rate cut until at least September, so let’s see what clarity the Fed provides us.
👈Here’s what happened last week
GOOGL 0.00%↑ Earnings:
GOOGL 0.00%↑ reported earnings on Tuesday, here’s their results:
EPS: 1.85 projected vs 1.89 reported
Revenue: $84.29B projected vs $84.74B reported
My perspective:
The Wiz, cybersecurity firm, acquisition ended up falling through (which isn’t that big of a deal in my opinion). The positive revenue and profitability is attributed to their main revenue drivers: search advertising & cloud-computing businesses. The reason why the market reacted negatively to Alphabet’s quarter is due to lower than expected revenue from YouTube Ad Sales (8.7B actual vs 8.9B projected). DESPITE this slight miss, Alphabet’s profitability increased by 29%, which beat expectations. I think the company’s stock had a great run up to earnings as a classic buy the rumor sell the news scenario. The stock is definitely still a great add, the company will continue to reap the benefits of their AI investments.
TSLA 0.00%↑ Earnings:
Tesla’s results:
EPS: 0.52 actual vs 0.61 projected
Revenue: $25.5B actual vs $24.5B projected
Operating Profit Margin: 6.3% actual vs 9.6% projected
My perspective:
I am honestly quite disappointed in this quarter’s results, and I am left wondering what people were expecting from this quarter. I know that many Tesla bulls will argue that Robo-Taxis is the next big step in growth of the company but for me, it just seems like there is no solid foundation for the company to fall back on. A good comparison is Google, they have their core products like their cloud-computing that can offset YouTube Ad Sales. Tesla, on the other hand, saw an increase in revenue from selling credits to other automakers to meet emission criteria, and was still less profitable. I think it is too risky to short Tesla, which has a cult like following, but I am definitely not buying more shares. Holding my shares might be in question soon as well, just my two cents!
CMG 0.00%↑ Earnings:
EPS: 0.32 projected vs 0.34 actual
Revenue: $2.92B projected vs $2.97B actual
My perspective:
In Chipotle’s quarterly call, they reported margin squeezes for the rest of the year due to increasing operating costs. Despite this, they performed very well this quarter. I don’t think we will see a rampant growth in the stock price like a tech company, especially after a stock split. Investors will want to see continued strong growth despite profitability challenges in the near future. The majority of new stores will be in the new Chipotlane design, which should help with volume of sales and profitability. I think Chipotle reporting to their investors of what’s to come is very reasonable versus telling investors about the margin struggles in the next quarter after an underperformance. It’s always better to lower expectations to make it easier to beat them later on. There is also potential for more international expansion.
👉Catalysts This Week
Events (All times in EST):
Wednesday, 7/31
8:15 AM- ADP Non-Farm Employment
2:00 PM- FOMC
Thursday, 8/1
8:30 AM Unemployment Claims
10:00 AM ISM Manufacturing PMI
Friday, 8/2
8:30 AM Unemployment Rate
Most notable earnings (PM= Premarket, AH= After Hours):
Monday, 7/29
PM : MCD 0.00%↑
Tuesday, 7/30
PM: SOFI 0.00%↑, PYPL 0.00%↑, PFE 0.00%↑, BP 0.00%↑, PG 0.00%↑
AH: AMD 0.00%↑, MSFT 0.00%↑, SBUX 0.00%↑, PIN 0.00%↑
Wednesday, 7/31
PM: BA 0.00%↑, WING 0.00%↑
AH: META 0.00%↑, ARM 0.00%↑, QCOM 0.00%↑, CVNA 0.00%↑
Thursday, 8/1
PM: MRNA 0.00%↑, CROX 0.00%↑
AH: AMZN 0.00%↑, AAPL 0.00%↑, INTC 0.00%↑, COIN 0.00%↑, ROKU 0.00%↑
Friday, 8/2
PM: CVX 0.00%↑, XOM 0.00%↑
Here is the full list, courtesy of Earnings Whispers:
🏧FOMC, 7/31
The Fed is steadily approaching the time for our first rate cut, and it’s timing has to be perfect. At risk of tanking the job market, the cut needs to come before it’s too late. We are definitely (99.9%) not getting a rate cut at this July meeting, but we should expect to see a more definitive clue on when the first cut will be.
Recent data has shown that the Fed has achieved balance with pricing and unemployment. And. Friday’s unemployment rate report should reaffirm things.
Across the globe, we are also getting rate decisions in a multitude of other nations this week.
I don’t think Powell will outright state when the first rate cut will be, but, there will be ample communication prior to the FOMC meeting where they rule to have the cut. Stating an exact date would be catastrophic upon conflicting data, so it makes sense that the Fed will continue to play it safe. We want Powell and the Fed to agree with the masses that a rate cut “soon” is appropriate, which is good enough for me!
🏛️Bitcoin Reserve
This year’s Bitcoin conference, hosted in Nashville, included speeches by RFK Jr. and former POTUS Donald Trump (amongst many others). Trump emphasized his support of Cryptocurrencies by claiming that he would make “the United States the crypto capital of the planet and the Bitcoin super power of the world.” The former POTUS also declared there would be a “bitcoin and crypto presidential advisory council.”
Meanwhile, RFK Jr. and Sen. Cynthia Lummis proclaimed they would make sure the U.S. purchases up to 1-4 million bitcoin as a reserve to help ease our debt. The US government already has about 210,000 Bitcoin, which is worth more $14B. This was collected from illegal operations. The reserve would take a lot of capital, and would be interesting to see how it could balance debt and purchasing. Regardless of what happens, Crypto bulls would love to see the US become a more friendly regulation place for cryptocurrencies.
I think the future of Crypto is still quite nebulous but we are making good progress in the right direction. There is more adoption, and people are more aware of what cryptocurrencies are. For my crypto investors out there, we are seeing Bitcoin in bullish flag on the weekly chart.
Breaking this flag will lead to new all time highs, and the rest of crypto will follow suit. This still aligns pretty well to my thesis that we will see a supply squeeze leading to price inflation from the Bitcoin halving. We should see the peak at the tail-end of Q4 2024 into Q1 of 2025.
