Weekend Update #123
Welcome to Blue Room's Weekend Update. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.
The trading week ended April 21, 2023 was punctuated by earnings season going into full swing, with the likes of Goldman, Tesla and Netflix reporting Q1 financials. Earnings kicked off last Friday with JPMorgan, Citi, Wells Fargo and BlackRock all reporting better-than-expected results as they benefited from deposit inflows resulting from customers fleeing regional banks in the aftermath of the SVB debacle. Additionally, it appears consumers are starting to fall behind on credit card and loan payments as the economy softens, though delinquency levels remain modest.
Netflix beat earnings estimates but missed on revenue due to disappointing subscriber growth resulting from its initiatives to stem password-sharing. The company also said it would be shutting down its DVD business later this year.
Tesla missed revenue and earnings estimates as the company implemented price cuts on many of its models, the Austin and Berlin factories provided margin headwinds, and inputs costs have not fallen as quickly as vehicle prices.
Elsewhere in financial news, Speaker of the House of Representatives Kevin McCarthy proposed a $1.5 trillion increase to the debt ceiling, which would carry with it a variety of spending cuts, including ending President Biden’s student loan forgiveness and setting discretionary spending at Fiscal Year 2022 levels. It remains to be seen how legislators will respond to the package, though prices on credit default swaps for US Treasuries hit their highest since 2011, the last time the United States saw a credit downgrade from AAA to AA+ with a negative outlook by Standard & Poor’s.
Friday’s Close
S&P 500 4,133.52 +0.09%
Dow Jones 33,808.96 +0.07%
Nasdaq 12,072.46 +0.11%
Key Economic Readings Next Week
Monday, April 24 — Chicago Fed Nat. Activity Index; Dallas Fed Manf. Activity
Tuesday, April 25 — S&P CoreLogic CS 20-City; Conf. Board Consumer Confidence
Wednesday, April 26 — Durable Goods Orders, Retail Inventories
Thursday, April 27 — GDP Annualized QoQ; Pending Home Sales
Friday, April 28 — Personal Income/Spending; PCE; U. of Mich. Sentiment
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