To The Moon

On Thu, 18 Jan 2024 at an event hosted by the Atlanta Business Chronicle, Atlanta Fed president, Raphael Bostic urged policymakers to proceed cautiously toward interest-rate cuts given the potential economic impact of unpredictable events ranging from elections at home to worldwide conflicts. In his prepared remarks, Bostic said that: (see above) “In such an unpredictable environment, it would be unwise to lock in an emphatic approach to monetary policy”. “I believe we should allow events to continue to unfold before beginning the process of normalizing policy.” Following the speech, the CME FedWatch tool on the probability of an early March 2024 rate cut fell further to 53.8% from 61.4%. (see above) And the probability of a status quo in current Fed funds rate rose to 44.8% from 37.0%. (see above) Factors Bostic cited that could change the calculus: Geopolitical conflicts (Russia/Ukraine, Hamas/Israel, Red sea Houthi attacks). Ongoing budget battle in Washington. Looming presidential election. Data points Bostic said he will be watching include: Overall economic growth (eg. GDP estimates). Inflation readings such as the Commerce Department’s PCE price index. Data on Jobs growth and losses (eg. US weekly jobless claims, Non Farm payroll, JOLTs etc..) US weekly jobless claims Fresh out of the oven, on Thu, 18 Jan 2024 - the US Labor Department reported that initial jobless claims hit their lowest level since September 2022, a sign that the labor market remains tight. (see above) Initial filings for unemployment insurance totaled 187,000 for the week ended 13 Jan 2024. The total marked a -16,000 decline from the previous week and came in below the Dow Jones estimate of 208,000. The total for continuing claims hit 1.806 Million, below the FactSet estimate for 1.83 Million. Fed’s Beige Book US weekly jobless claims’ report came a day after the Fed’s Beige Book report was released. According to the Beige Book report, the summary of economic conditions, reported mostly stagnant activity since late November 2023. On jobs employment, the report did note signs of a “cooling labor market,” with lower wage pressures. On housing, it said high interest rates were limiting activity, though the prospects of future easing from the Fed were raising hopes that the pace could accelerate. And just like that, the US market reacted more positively to the news in the media, snapping 3 days of pullback in this shortened trading week. By the time US market closed off Thursday: DJIA: +0.54% (+201.94 TO 37,468.61). S&P 500: +0.88% (-41.73 TO 4,780.94_. Nasdaq: +1.35% (+200.03 to 15,055.65). Looking ahead at pre-market indicators for Fri, 19 Jan 2024 trading (see above), for now it seems like Dow will take a marginal hit while both S&P 500 and Tech indexes will continue to improve further. The “X-factor” that I mentioned in my yesterday’s post about Apple - came true. Click here ! to read about it. Looks like $Bank of America(BAC)$ was the knight in shining armour that rescued $Apple(AAPL)$ and broke its downwards spiral momentum. (see above) BofA’s magic potion? Analysts at Bank of America upgraded Apple stock saying that the tech giant could see major long-term gains as artificial intelligence (AI) tech is integrated into the iconic iPhone. They further reported that investors' worries about near-term challenges like (a) the US Apple Watch ban, (b) weak sales in China, and (c) legal battles, do not consider the long-term upside of the iPhone business amid the AI boom. Analysts’ bullish stance are based on several factors: Stronger multi-year iPhone upgrade cycle. Higher growth in Services. Strong capital returns. Analysts’ belief that negative EPS estimate revisions are behind Apple now. What else? The upgrade move comes as investors’ focus shifts towards: (1) Vision Pro. The expected launch of Vision Pro next month (February 2024). BofA expects Vision Pro to “surpass iPad revs over time as Spatial Computing takes hold offering differentiated use cases driving services upside.” (2) AI driven iPhone. Stronger multi-year iPhone upgrade cycle driven by the need for the latest hardware to enable Generative AI features to be introduced in late 2024/2025. Apple is anticipated to introduce AI driven features in iOS18 with monetization through better iPhone hardware and AI enabled third party apps. (3) Streamline Apple’s AI team. While $Alphabet(GOOG)$ embarks on a proactive engagement to inform staff on a possible right-sizing in 2024, in a bid to (a) remove layers to simplify execution and (b) drive velocity in some areas, Apple likewise is embarking on a similar move (albeit in a smaller scale). Apple is looking to consolidate its AI-team supporting & improving Siri (a 121-person team). The San Diego based team has been asked to move to Austin and merge with the Texas group of the same Data Operations Annotations team. If the staff reject the migration, they will terminated on 26 Apr 2024. Is it me or that Wall Street always look to staff reduction as a positive move? (4) New Rating and Target Price. Bank of America upgraded Apple’s rating to “Buy” from “Neutral”. The also revised the forward target price to $225 from $208. On 18 Jan 2024, Apple bottomed at $186.82 per share around 1:25pm US time before staging a recovery. BofA’s upgrade of Apple, helped to pull the world’s most valuable company up by +3.26%, enabling Apple to end the day at $188.63. Apple continued to climb another +0.03% to $188.69 during after hour trading. Must Read: Click on below titles to access. Give a like & help to repost ok. Thanks. FAANG-Apple continue to fall as US market pulls back ? JPMorgan, BofA, Citi killed by Bad loans. HOLD the Buys? In falling market, META, AMZN, GOOG +++ which to Buy? Do you think Apple will continue to rise today or give up its yesterday’s gains? Do you think the delivery of Apple’s Vision Pro come February 2024 will help to further propel Apple’s stock price higher? Please give a “LIKe” and “Re-post” ok. Thanks. Rating is very important (to me). Do consider “Follow me” and get firsthand read of my daily new post/s ok. Thanks. @Daily_Discussion @TigerPM @TigerStars @Tiger_SG @TigerEvents