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Wednesday, February 14, 2024

Cisco Systems -- CSCO; Gasoline Demand; Market Wrap -- February 14, 2024

Locator: 46820MARKET.

Market Wrap

Headlines:

  • BRK: releases 14F for 4Q23; see below. Trivial. Six months old. Means nothing to "average 'mom-and-pop" investor"; money managers know that.
  • CSCO: to cut 5% of workforce; guides lower; that's not unusual for CSCO. Trivial.
  • SpaceX: has filed to move incorporation from Delaware to Texas. Neither trivial, not trivial; simply interesting.
  • Nvidia: market cap passes Alphabet and Amazon; now third most valuable US company. Not trivial. MOJO, FOMO, YOLO wouldn't go on this long if there wasn't fire where there's smoke;
    • someone or "someones" know something the rest of us don't
    • money managers flummoxed
  • industrial sector surged in today's market; not trivial, or was sector so beaten down, nowhere to go but up? Trivial? Hard to say what it means; could just as easily be a head fake;
  • CPI: report yesterday, trivial. 
    • Not trivial: the PCE to be reported Feb 29, 2024 (yes, it's leap year)
  • Japan: economy unexpectedly slips into recession, hurt by week domestic demand. Not trivial
    • both Japan and Singapore miss GDP expectations; not trivial.
  • Lyft: CEO takes responsibility for guidance error. Trivial. Story is over. Investors have moved on.
  • US mortgage rates surge again: JPow and Fed now their own worst enemy; not trivial
  • deflation, where prices fell in January, 2024; most important chart you can look at tonight;
  • oil prices give up advance as US crude stockpile surges; lots of interesting statistics; not seeing any analysis; superficial, energy seems to be suggesting slowdown, if not outright recession; not trivial.
    • gasoline demand: very, very concerning -- second only to housing sector as a leading indicator; not trivial:

Gasoline demand:

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Weekly EIA Petroleum Report

Weekly, link here.

  • US crude oil in storage: 2% below 5-year average
  • US crude oil inventories: increased by a whopping 12 million bbls
  • imports: averaging 7% less than last year
  • refiners: dropping even more -- now down to 80%
  • distillates: 7% below five-year average
  • diesel is going to be the big story this summer
    gasoline inventories a wash: total motor gasoline, down; finished gasoline up
  • jet fuel supplied: up 1.5% y/y

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Cisco

4Q23: A beat on both top line and bottom line, and everything after that, blah, blah, blah.  And then increases the quarterly dividend by a penny. Whoo-hoo!

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BRK's Quarterly 14F Released

BRK: top 4Q23 moves. Link here.

  • sold a bit of AAPL; 1% of his AAPL holdings;
  • slashed stakes in Paramount (PARA) -- one of his recent mistakes (buying PARA in the first place); headfake for those who follow Buffett
  • continued to slash stakes in HP (HPQ)
  • bought CVX; added 15.8 million shares; after cutting CVX positions in previous quarters;
  • making big commitment to Sirius XM (SIRI)
  • exited four stocks, including Brazilian fintech StoneCo (STNE)

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The Market Today

The market pretty much recovered much / all of what "it" lost yesterday.

Across the board, "everyone" said the market reaction was overdone.

Across the board, "everyone" agreed that the "inflation figure" was due almost solely to "rent" and that figure was incorrectly calculated, based on false data and/or wrong assumptions.

Across the board, "everyone" agreed that regardless of the "correct" inflation figure, inflation is heading down. 

General consensus, it no long matters "when" the Fed cuts. What matters is whether the Fed starts cutting this year.

So, bottom line: all three indices traded nicely into the green. Not only that, the industrial sector (e.g., CAT), hit all-time intra-day highs. Whoo-hoo!

The big pullback allowed for a nice buying opportunity yesterday for the nimble and quick, daring to jump over the proverbial candle stick. LOL.

On another note, the CPI is not even JPow's favorite inflation data point. Behind closed doors testifying before US Congress today JPow said he was not "concerned" (or something to that effect) about the CPI reported yesterday.  He and the Fed favor the PCE.


And there's more. The PCE is likely to come in at 2.0, maybe 1.9. Imagine what happens if the PCE comes in with a 1-handle.

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Earlier

Screenshots of earlier notes from the blog on market action the past 24 hours:


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