How high will the US go?

How high will the US go?

Corporate Earnings News

A poor show? According to Refinitiv I/B/E/S data, approximately 81% of constituents have reported results (88% of aggregate earnings). Of the 405 constituents that have reported, 67.4% have reported earnings above analyst expectations, well-below the prior four-quarter average of 75.5% and slightly above the long-term average of 66.3%. In fact, the current quarter earnings beat rate is the lowest since 2015 Q4. Information Technology had the highest earnings beat rate this quarter (81.5%) followed by Health Care (81.1%), and Consumer Discretionary (69.4%). Meanwhile, Communication Services (42.1%), Utilities (47.4%), and Real Estate (54.5%) had the lowest earnings beat rate. From a year-over-year growth perspective, 2022 Q4 earnings is currently $443.2 billion (-2.8% y/y, -4.4% q/q). This marks the second consecutive quarter where quarter-over-quarter growth is negative and it is the second consecutive quarter where the y/y earnings growth rate finished lower compared to the start of earnings season – this has only occurred on two prior occasions since 2009.

The growing power of AI. On Wednesday, chip designer Nvidia forecast sales in the three months ending in April to about $6.5 billion, above estimates of $6.35 billion, according to Bloomberg. Its CEO and co-founder Jensen Huang said the company is teaming up with Oracle CorporationMicrosoft, and Alphabet (Google) to offer the ability to use Nvidia GTX machines to do AI processing via simple browser access. According to Refinitiv, Nvidia is the world's largest supplier of chips used in data centres for training AI and has become a key hardware supplier for Microsoft, which is actively building its AI capabilities despite the failure of its test AI Chatbot to answer questions correctly. Both Microsoft and Google’s parent Alphabet are investing heavily in AI chatbots and other forms of generative AI. Nvidia dominates roughly 80% of the market for graphics processing units, or GPUs, used to speed up AI work. Nvidia shares have been the best performer in the Philadelphia Stock Exchange Semiconductor Index this year, gaining 42%. The boost in AI spending is helping other semiconductor companies such as Advanced Micro DevicesMonolithic Power Systems, and ON Semiconductor grow this year despite worries over a higher interest rate environment hitting tech stocks. 

Corporate earning calendar 23 February - 2 March 2023

Thursday: Alibaba GroupKeurig Dr PepperModernaNewmont Mining CompanyBlockIntuitLemonadeLiberty GlobalAmerican Tower Corporation

Monday: ViatrisZoom Video CommunicationsWorkday

Tuesday: AMC EntertainmentHP CorporationOccidental PetroleumRivian AutomotiveTarget CorporationVirgin GalacticBayerMonster BeverageAutoZoneAgilent TechnologiesRoss Stores 

Wednesday: SalesforceJackson FinancialSnowflakeLowe's CompaniesDollar Tree

Thursday: Chargepoint HoldingsHewlett Packard EnterpriseZscalerCostcoBroadcomKroger

Key data to move markets this week


Friday: G20 Finance Ministers and Central Bank Governors meeting, German GfK Consumer Confidence survey, and German GDP.

Saturday: G20 Finance Ministers and Central Bank Governors meeting.

Monday: Eurozone Business Climate and Consumer Confidence surveys.

Tuesday: Spanish Harmonised Index of Consumer Prices. 

Wednesday: Italian S&P Global Manufacturing PMI, German S&P Global/BME Manufacturing PMI, German Unemployment change and Unemployment rate data, Eurozone S&P Global Manufacturing PMI, and German Harmonised Index of Consumer Prices.

Thursday: Italian unemployment, Eurozone Core Harmonised Index of Consumer Prices, Eurozone Harmonised Index of Consumer Prices, Eurozone unemployment, and ECB Monetary Policy meeting accounts. 


Friday: GfK Consumer Confidence survey and a speech by BoE MPC member Silvana Tenreyro.

Wednesday: S&P Global/CIPS Manufacturing PMI and a speech by BoE Governor Andrew Bailey.


Friday: Personal Consumption Expenditure - Price Index, Personal Consumption Expenditures Price - Index, Personal Income, Personal Spending, Michigan Consumer Sentiment Index, New Homes Sales, University of Michigan 5-year Consumer Inflation Expectations survey, and speeches by Fed Board of Governors member Philip N. Jefferson and Fed Bank of Cleveland President Loretta J. Mester.

Monday: Durable Goods Orders, Nondefense Capital Goods Orders, and Pending Home Sales

Tuesday: Housing Price Index, S&P/Case-Shiller Home Price Indices, Chicago Purchasing Managers’ Index, and Consumer Confidence survey.

Wednesday: S&P Global Manufacturing PMI, ISM Manufacturing Employment Index, ISM Manufacturing New Orders Index, ISM Manufacturing PMI, and ISM Manufacturing Prices Paid. Thursday: Initial jobless claims, Continuing jobless claims, Non-farm Productivity, and Unit Labour Costs. 

Global Market Indices 

US Stock Indices 

Nasdaq 100   0.31% MTD and  10.28% QTD 
Dow Jones Industrial Average   2.81 % MTD and  0.05% QTD 
NYSE  3.15% MTD and  2.28% QTD 
S&P 500   1.94% MTD and  4.11% QTD

Mega caps were hit this week by the threat of rising interest rates leading to waning consumer demand with AlphabetAmazonAppleMicrosoftTesla and Meta Platforms all .

Energy stocks continued to come under pressure this week as investors became concerned over future economic growth and fuel demand with ChevronShellEnergy FuelsOccidental PetroleumMarathon Oil CorporationHalliburtonMarathon PetroleumPhillips 66, and Apa Corp (US) all 

Materials and Mining stocks were also mixed this week with Yara International  , while Albemarle CorporationLargo Inc.Freeport-McMoranMosaicDow ChemicalNewmont Mining, and Sibanye Stillwater were all .

European Stock Indices

Stoxx 600  1.99% MTD and  8.79% QTD 
DAX   1.80% MTD and  10.60% QTD 
CAC 40   3.06% MTD and  12.75% QTD 
IBEX 35  1.54% MTD and  11.47% QTD 
FTSE MIB  1.89% MTD and  14.32% QTD
FTSE 100   2.05% MTD and  6.43% QTD 

Other Global Stock Indices 

MSCI World Index  1.82% MTD and  5.15% QTD 
Hang Seng  6.49% MTD and  3.25% QTD

Fixed Income

US 10-year Treasuries at 3.92%.
German 10-year bunds at 2.52%.
UK 10-year gilts at 3.60%.

US yields were up again this week following the release of the FOMC minutes on Wednesday which indicated that the majority of members supported the 25 basis-point rise in February. With business activity growing as represented by a flash Composite PMI of 50.2, rising core CPI, up 0.4% in January on a m/o/m basis and up 5.6% from a year earlier, a still tight labour market with unemployment remaining at 3.4%, the market has finally taken to heart the seriousness of the Fed to do whatever it takes to rein in inflation. The US Treasury yield curve that measures the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, remained deeply inverted at -77.90 basis points on Wednesday.


Gold futures to $1,832.00 per ounce.
Silver futures to $21.88 per ounce.
West Texas Intermediate crude futures to $74.05 a barrel.
Brent crude futures to $80.60 a barrel.

Oil fell this week as the likelihood of Fed tightening further for longer finally really hit investors, leading to dollar strengthening and making USD denominated oil more expensive for holders of other currencies. Gold, normally seen as a hedge against inflation, is becoming less appealing to investors as interest rates rise since it is a non-yielding asset.


The USD strengthened again this week as FOMC minutes confirmed the Fed will keep monetary policy tighter for longer. The GBP is  0.47% YTD against the USD despite the UK avoiding recession in Q4 and the unexpected rise in February’s preliminary "flash" S&P Global/CIPS UK Composite Purchasing Managers' Index which raised expectations that the BoE might now keep rates higher for longer. It appears that concerns over the Northern Ireland post-Brexit deal may continue to weigh on Sterling. The EUR   0.92% YTD.

Bitcoin   4.41% MTD and  44.57% YTD.
Ethereum   3.03% MTD and  35.68% YTD.

Note: As of 5:30 pm EST 22 February 2023 

Global Macro Updates

Rate hiking despite recession risks. Minutes from the Federal Reserve's 31 January- 1 February meeting released on Wednesday said that "almost all" Fed officials agreed to slow the pace of increases in interest rates to 25 basis-points with a few wanting a 50 bps rise. The minutes highlighted that policymakers see the risks of high inflation remaining a "key factor" that would shape monetary policy and further rate hikes would be necessary until it was controlled. Fed bank of St Louis President James Bullard on Wednesday reiterated his view that a Fed policy rate of 5.25% to 5.5% would be adequate to curb inflation. According to Refinitiv, his assessment is in line with the rate futures market, which expects a peak Fed funds rate of 5.38% hitting in July.

Are Europe’s investors overreacting? 
The Central Bank of France Governor François Villeroy de Galhau told French daily Les Echos that investors betting on more interest rate hikes by the ECB have 'overreacted' to strong US data and ECB communication since last week. He said, "There is an excess of volatility in the terminal rate expectations… put differently, markets have overreacted a little since Thursday." Villeroy said that peak interest rates could be reached by the end of the summer but the ECB was under no obligation to raise rates at each of its meetings until September. Villeroy and ECB board member Isabel Schnabel have previously said the central bank may need to "act more forcefully" if it found that the economy's reaction to its tightening was weaker than in the past.

Can the UK get past Brexit? UK Prime Minister Rishi Sunak has said that a possible new deal with the EU over post-Brexit arrangements in Northern Ireland would involve legal changes to the existing treaty. As noted by Bloomberg, government officials on both sides have previously signalled that any agreement would not rewrite the existing treaty between the UK and the EU on Northern Ireland. More likely is an arrangement under which they would change their own domestic laws to implement the terms of a new agreement.

Is the SEC wrongly labelling crypto? According to Reuters, Paxos Trust Company, the firm behind Binance's stablecoin, is in discussions with the SEC after the regulator told the company it should have registered the token as a security. This is not the first time the SEC is trying to label a cryptocurrency as a security and secure rights to regulate. The $30 million in fines that crypto exchange Kraken agreed to pay and to discontinue offering its staking service to US customers following charges alleging that it violated securities laws by failing to register the offer and sale of its “crypto asset staking-as-a-service program” is, as noted by legal firm Foley and Lardner LLP, an example of the SEC pursuing enforcement actions against “centralised crypto companies” and claiming that existing securities laws apply to crypto-related financial products. Now the cryptocurrency trade association Chamber of Digital Commerce is urging a federal court to dismiss a case brought by SEC against former crypto-exchange Coinbase employees accused of insider trading, arguing that the case unfairly labelled several crypto assets as securities. In an amicus brief, a brief filed in court by an organisation or individual who is not named in the case, but has a strong interest in the matter, it says the regulator should have instead either promulgated a rule clarifying its expectations or waited for certainty from Congress. If the court were to rule in the SEC’s favour, crypto exchanges that offer the nine tokens the SEC has labelled as securities could face state and federal regulatory actions as well as private litigation, the Chamber of Digital Commerce argued in its amicus brief.

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