Healthy discourse

Stocks surged for a second straight session hurdling the S&P to another new high. The Fed is cautiously optimistic, which doesn’t hurt stocks.

I don’t blame you. This is a confusing stock market. I report to you that a company has a great earnings report, and the stock goes down. Just when you think it is time to buy bonds… they tank. Regional banks are far from out of the woods, as we are learning. They get downgraded and… they rally. Then there is the zaniness (a real word, check me if you must) of the news cycle. For some strange reason FOMC members are still getting lots of airtime with investors, playing with their emotions.

Re: the Fed, I want to be clear. Your financial future IS, indeed in their hands. HOWEVER, at this stage, investors appear to be a bit overly sensitive to the policymakers. I have an interesting theory on that for another time, but today I have to share one of those “furrow the brow and hmm” stories. Yesterday, Adriana Kugler, recently minted Fed Governor, told a crowd at that Brookings Institute that she was pleased with the direction of inflation and expected it to continue to pull back. That’s it! Should we even keep reading? Well, she kept speaking, warning that the Fed’s job was not done yet and that tensions in the middle east along with the Ukraine war could cause commodity prices to climb. Ok, two quick comments on that. I am sure that you don’t need a doctorate in finance to know that, nor do you need to be a decorated scholar to know that those types of risks are regularly absorbed by the market, and while they certainly played into the last inflationary surge, they were only a minor part of the problem. My second comment is: “come on already,” I know that the Fed remains diligent, and that Paul Volcker acted too early and was bitten in the… um, behind, by a second jump in inflation. I also know that while the economic numbers look solid on the surface, there are still far too many layoff announcements on the tape to ignore. If the Fed is intent on playing another game of chicken… um, good luck with that, and just thinking “how did that turn out in 2021?”

Look folks, I am going to repeat my recent mantra. Are rates going to be lower at the end of the year or higher? There you go, you have your answer. Fed members are getting far too comfortable with their airtime and seem intent on filling it with… whatever. Someone who is not used to airtime is the CEO of Novo Nordisk. I spotted a picture of him in pressed coat and tie in this morning’s news. That is a man with confidence, and do you know why? Because Novo Nordisk… well… I am just going to show you. Check out this chart and follow me to the finish line. You can turn on the tea kettle, we are almost there.

That’s right Ozempic, the company’s top producing drug. The company also sells Wegovy, which is the same thing but a higher dose. That is good news for you if you are an investor, but here is the zany thing. He tells the press… smugly, that he is getting calls from “scared” CEOs from food companies wanting to better understand the company’s roll out schedule. When I read that, I will admit that I immediately brought up the chart of JM Smucker, the now owner of Twinkies, and wouldn’t you know it, it is down over the past 52 weeks. I doubled down and pulled up McDonalds… it is up by +11.79% over the past 12 months. Maybe McDonald’s is just a good company… with healthy menu options… though, you know, NOBODY goes to McDonald’s for those 😉. Anyway, none of this is important enough for you to take notes on… it won’t be on the test. It does show, however, that where truly impactful news is lacking, the financial markets are happy to fill the tape with something. Please, stay focused on what is important.


The Walt Disney Co (DIS) shares are higher by +7.95% after it announced an earnings beat on a Revenue miss. The company gave upbeat future guidance and boosted its dividend which is always appreciated by investors and signals the companies confidence. Investors should read the label closely on this one as many key indicators are still shy of their marks. Dividend yield: 0.90%. Potential average analyst target upside: +11.5%.

PayPal Holdings Inc (PYPL) shares are lower by -9.68% in the premarket after it announced a Q4 beat but offered full-year guidance that was below analyst expectations. In the past month, 9 analysts have raised their price targets while 13 have lowered them. Potential average analyst target upside: +12.6%.

Also this morning: Spirit Airlines, Ares Management, S&P Global, Zimmer Biomet, Tenet Healthcare, and Lumentum all beat on EPS and Revenues while Appollo Global, Tempur Sealy, Hershey, Under Armour, Philip Morris, Duke Energy, and Harley-Davidson came up short.



  • Initial Jobless Claims (Feb 3) is expected to come in at 220k, down slightly from last week’s 224k claims.
  • Fed speak: Barkin and Logan. Treasury speak: Janet Yellen. Senate Speak: Pharma bosses will discuss prescription prices with lawmakers.
  • After the market earnings: Illumina, Onto Innovation, Cloudflare, Dexcom, Take-Two Interactive, Affirm Holdings, Expedia, and Pinterest.


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