Weekly Roundup: January 17-20, 2023 (Week 3/52)

 Weekly Roundup: Week 3

   Market Review:

        The market has finally come back down to earth. We saw our first week with declines in the major indices of the market. Our week was shortened to honor the great Martin Luther King Jr on Monday. Stocks lagged during the middle part of the week, and fear started to grow. However, we saw a nice rally on Friday, with NASDAQ leading the charge. Stocks still managed to see a decline, but it was good to see those declines subside with a solid trading session on Friday. This week wasn't filled with too many economic prints coming out. One that stood out, was the retail sales. Retail sales fell about 1.1%, compared to a year earlier. This was the biggest decline in 2022, and it comes at a time in which holiday shopping was taken into consideration. I can see this rolling into a lot of our retail companies earnings reports. We can blame inflation for this, as a lot of consumers have had to cover their necessities, and have no leftover money to spend on retail shopping. 

        The main news came from individual companies. Toyota has decided to invest $35 billion into its EV unit, but it may be a little bit behind the ballgame. A lot of people are saying it could take a lot to compete with other companies who have already started producing units in their EV units. Peloton, who was a hit during the pandemic, has hired a former Twitter executive to be the head of marketing. Peloton definitely needs to change its marketing strategy with gyms opening back up and people resorting to that, then having to pay a high dollar for a bike and pay a subscription on top of that. GM launched its electric Corvette, but its hybrid. The car will start at $104,000, and it is not fully electric. Party City has officially filed for bankruptcy. The company was around for 30+ years, but has seen a decline in customers and couldn't make ends meet. They will take out a loan to pay all of its employees. Hertz is in line to bring in thousands of EVs into the Denver area, as well as chargers for the vehicles, in a partnership with the city of Denver. Vice Media has restarted its sale process, with the valuations of the company coming in at around $1 billion. This was definitely the week of bankruptcy, as Genesis, a crypto lending firm, filed for bankruptcy.

Company Earnings:

Tuesday:

• Morgan Stanley ($MS)- Morgan Stanley saw gains, after reporting earnings before the market opened. The profits were dented by the lack of deals made this year. This is something to look over, because in 2020 and 2021, we saw a record number of IPO deal. With the lags in the markets this year, we haven't seen near as many IPO. Morgan Stanley saw gains due to the record revenues in the wealth management and trading businesses. One thing to keep an eye out for, is the credit losses they are expecting. The company set aside $85 million to credit for it, but last year, they only set aside $5 million. 
• Goldman Sachs Group ($GS)- Goldman Sachs tumbled this week, as the company reported some pretty bad earnings. The company is set to lay off 3,200 workers, which is the most since the financial crisis in 2008. The company has lost billions of dollars on its push into consumer banking. Goldman also was dented bad on the deal making part of things. Marcus, the consumer banking unit, has been a failure so far, and Goldman looks to improve on this part to get back in the swing of things. 

Thursday:

• Procter & Gamble ($PG)- Procter and Gamble saw declines in its stock price, with correlation to its earnings report. The company was hit hard by the increase in prices of producing their products. This caused earnings to slip, which is something we are not used to with Procter and Gamble. The company was able to increase the price of their products, which allowed them to boost organic sales growth. The company should be fine, as they make some pretty essential products. This pullback may be an opportunity for investors who are interested in the company. 
• Netflix ($NFLX)- Netflix was one of the reasons the markets soared. The earnings were excellent and an increase in share price followed. The company added 7.66 million subscribers in the quarter, which was 3 million more than analysts had expected. We have seen the ad-tier results come back, and it is a little shaky. Management has looked into doing a free ad subscription and just generate revenue off the ads. The earnings came in lower, but I think the subscriber growth trumped this. It is interesting to see the gain in subscribers with the password crackdown. It will be a stock that is interesting to watch in the quarters to come. 

Market Outlook:

        Earnings season will be on fire this next week. We are going to be swarmed with results and it will have a lot of dictation on where the market will head. I am going to be keeping a close eye on some of the companies reporting. As for economic data, we don't have that much coming out. CPE numbers will come out, and it is always important to check out the weekly jobs data. The markets have some pretty positive sentiment around them. I think emerging markets are starting to become a lot more popular as well. Keep your eyes peeled this week for some important earnings reports and metrics coming out.

Thank you for reading, and have a wonderful week!