Magnificent Monday – Waiting For The Seven To Report

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The Magnificent 7!  

We live by the 7 and we’ll die by the 7 if they can’t pull off their numbers this week and next. Expectations are high and multiples are high with META still at 32x last year’s earnings, TSLA 34x, MSFT 36x, GOOG/L 27x, AMZN 60x, NVDA 63x and even AAPL is at 25x earnings.  

Money in the bank is paying 5% and 5% is 20x earnings with (technically) NO RISK.  Unless the growth is SPECTACULAR. How spectacular? Well, we’d need to see a path to 20x and let’s say we’re generous and giving it 3 years… 

32x would be a $1.2Tn company making $38Bn so getting to $60Bn (20x) means they have to be growing at 17% annually.  If you’re not seeing that kind of growth, you’re simply not going to get to 20x, are you?  META made $38Bn last year and, historically, has grown 12% but this year they expect to LEAP to $52Bn and on to $60Bn in 2025 – 50% is A LOT of growth to expect in one year and last year, their Q1 earnings were $5.7Bn so they’ll need to be closer to $10Bn to be on track for $52Bn – that’s the kind of pressure the Magnificent 7 are under.  

  1. Meta Platforms (META):

  2. Tesla (TSLA):

  3. Microsoft (MSFT):

  4. Alphabet (GOOGL):

  5. Amazon (AMZN):

  6. Nvidia (NVDA):

  7. Apple (AAPL):

Will they deliver? No one seems to think they won’t so we’ll have to wait and see what actually happens and, aside from those usual suspects – we have over 100 S&P 500 companies reporting their earnings this week.

The most anticipated earnings releases for the week of April 22, 2024 are Tesla #TSLA, Meta Platforms #META, Microsoft #MSFT, Alphabet #GOOGL, Intel #INTC, Exxon Mobil #XOM, IBM #IBM, Visa #V, Ford Motor #F, and Boeing #BA.

On the Data front, it’s a busy week and we kicked it off well with the Chicago Fed National Activity Index up 0.15 vs 0.09 expected.  The 3-month average is still -0.19 so nothing to celebrate – especially as Personal Consumption is still down.  We are STILL holding note auctions. This week it’s the 4-week, 8-week, 4-month, 6-month, 2-year (2 types), 5-year and 7-year for another $300Bn as the insanity continues.  

Tomorrow we get Home Sales, PMI and the Richmond Fed, Wednesday is Durable Goods and Business Uncertainty. Thursday is GDP for Q1 (first look – 2.7% expected) along with Inventories and Home Sales again.  Friday is Personal Income and Outlays along with Consumer Sentiment – both very important indicators as to how stressed out Consumers are.  

And that’s it, April is pretty much in the bag and then we have a holiday in May and then the year is half over – wow! So we’ll take this meaningless Monday to relax and we’ll see how things look tomorrow but, unless we get some truly magnificent earnings – today is just the pause before the pullback continues. 

Be careful out there, 

    • Phil

 

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