Strong face from Meta

Stocks had a mixed close yesterday as index’s could not hold on to the larger gains attained earlier in the session. Treasuries dipped as traders dumped bonds to buy the dip in stocks.

Wall Street weather. I know that you are most likely not on Wall Street in lower Manhattan as you are reading this note. In fact, there is a good chance that you are many thousands of miles away from the narrow cobblestone-clad boulevard, perhaps even on a different continent (that is just me being proud of having international readers). That said, no matter where you are, if you are an investor, you are in one way or another on Wall Street from 9:30 AM to 4:00 PM Eastern, Monday through Friday. On this Thursday on Wall Street, the weather is of some concern to the locals. I am looking out my window at my garden and it is just barely light as dawn has not quite broken. It is light enough for me to see the trees thrashing in the small woods behind my yard. I can hear the haunting whistle of the fresh, cool, northwesterly wind. It is, indeed, a cool morning with windchills in the 30s…that’s single digits in Celsius…for my international readers. Winter, having departed some time ago on the calendar has refused to cede its position to spring. Ok, that doesn’t sound too bad, does it? Well, for real New Yorkers it is a cause for anxiety. Yeah, yeah, I know that New Yorkers are generally an anxious bunch, but this on-again-off-again spring is a real challenge. Imagine a typical New York apartment. They are not known to be endowed with lots of room and they do not, for sure, afford their inhabitants with an abundance of closet space. That said, the locals must find creative ways to store their possessions, and the joke about storing odds and ends in microwave ovens is no joke…it’s true. Another interesting storage hack is finding a family member in the suburbs who is willing to store your seasonal clothes in their attic or cellar. At this time of year one can spot Manhattanites, Brooklynites, and Bronxites driving rental cars…SLOWLY IN THE LEFT LANE…of the New Jersey Turnpike or Northern State Parkway, back seats stuffed to the ceiling with heavy coats, woolen pants, sweaters, and plastic garbage bags overstuffed with mittens, caps, and even shoes. Yes, there is most likely an unopened box with an instant pot or air fryer that was sure to be a kitchen mainstay but could not find a storage space of its own, which will be permanently abandoned. Once all these winter necessities are deposited in the suburbs, the rental car is reloaded with spring regalia and even some summer necessities. If all goes well, closets, dressers, and microwaves will be restocked with the perfect seasonal blend of attire. If the dreaded suburb journey is made too early, one runs the risk of having to sport multiple layers of light sweaters under a light jacket and a pair of earmuffs that was accidentally left under the kitchen sink. If the trip is made too late…well, if you have ever stood in a crowded subway car wearing a winter wool suit on a warm day…you get the picture.

So, this is a time of high anxiety, for not just New York natives but also for investors focused on Wall Street. One day markets appear to have finally absorbed all the troubling news of the day and found a bottom. The next day, markets topple on news that a tech company is being bought by a wunderkind billionaire, only to fake a recovery on the following day with a mixed close. Earnings season can add an additional layer of uncertainty. Companies announce solid results, beating analyst estimates while upping forward guidance, only to close in the red, having gotten caught in a broader market decline. I am, of course, describing a highly volatile market. The VIX index is a good indicator of market volatility, and it is currently right around 30, which implies daily S&P500 swings of 1.9%. The S&P500 is made of many stocks, some more volatile than others. Beta is a measure of a stock’s volatility relative to the S&P500. If a stock has a Beta greater than 1, it is more volatile than the index. So, if you own stocks that have high Betas, you can expect even greater daily volatility than the already volatile S&P500. The good news about volatility is that it works in both directions. Therefore, if you own higher Beta stocks that have solid fundamentals and continuously deliver on their results, those stocks are likely to outperform the market when it eventually begins to trend higher.

The sky is a bit lighter now and I can see the bright green, young buds on the swaying trees and the birdsong is piercing through the sound of the howling wind. I just quickly checked the weather forecast for next week and temperatures are expected to top the 70s (20s Celsius). After dispatching this note, I will get myself ready for the day on Wall Street. I will be satisfied with just my suit jacket for warmth. I may be cold today, but I know that spring will come soon. It always does. Stay focused and stick to your long-term investment plan.

WHAT’S SHAKIN’

Meta Platforms (FB) shares are higher by +16.38% in the pre-markets after it announced that it missed EPS and Revenue targets last night. The stock is higher because the company revealed that its daily users increased in the quarter, a key metric for social media companies. Potential average analyst target upside: +72.5%.

Eli Lilly & Co (LLY) is higher by +4.51% in the pre-market after it announced that it beat EPS and Revenue estimates by +17.37% and +4.39% respectively. The company also raised its FY revenue guidance. Dividend yield: 1.37%. Potential average analyst target upside: +3.7%.

Align Technology Inc (ALGN) shares are off by -21.76% in the wake of its earnings announcement which had the company missing on EPS and Sales estimates by -3.87% and -2.63% respectively. The miss was made worse by the company pulling its full-year guidance due to, as the company put it, “lack of visibility.” Potential average analyst target upside: +39.0%.

ALSO, THIS MORNING: Thermo Fisher Scientific (TMO), Merck (MRK), The Southern Company (SO), Carrier Global (CARR), Caterpillar (CAT), PulteGroup (PHM), Hershey (HSY), Church & Dwight (CHD), American Electric Power (AEP), Comcast (CMCSA), Brunswick Corp (BC), International Paper (IP), and McDonalds (MCD) all beat on EPS and Revenues while Stanley Black & Decker (SWK), Northrop Grumman (NOC), and Lab Corp (LH) came up short on Revenues.

YESTERDAY’S MARKETS

Stocks attempted and failed at a comeback from Tuesday’s selloff with anxiety continuing to overhang market sentiment. The S&P500 rose by +0.21%, the Dow Jones Industrial Average climbed by +0.19%, the Nasdaq Composite Index slipped by -0.01%, the Russell 2000 Index declined by -0.34%. Bonds declined and 10-year Treasury Note yields added +11 basis points to 2.83%. Cryptos inched up by +0.77% and Bitcoin gained +2.58%.

NXT UP

• Initial Jobless Claims (April 23) is expected to come in at 180k after printing 184k last week.
• GDP Annualized (Q1) is expected to show a +1% growth compared to the prior read of +6.9%.
• Earnings after the close: Stryker, Altice, L3Harris, Avantor, Western Digital, Zendesk, Seagen, First Solar, Intel, Gilead, Roku, Robinhood, Mohawk Industries, Digital Realty Trust, Apple, LPL Financial, US Steel, and Amazon.com.