2/3/2022

STOCKS – AMZN,

MACRO – SPY, TIP

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• LIVE Q&A SESSION FRIDAY 2/4/22 AT NOON ET
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Stocks were hit hard today, with the NASDAQ Qs falling by more than 4% and the S&P 500 dropping by almost 2.5%. The markets are gaining some after-hours following Amazon’s result, but I think there is a lot of miscommunication there that is likely to get unwound as more investors dig past the headlines.

S&P 500 (SPY)

The S&P 500 fell to 4,480 today and back within the downtrend. Tomorrow is likely to be tricky with the Jobs numbers in the morning, which are likely to be confusing, and could provide a jolt to the stock market. Tomorrow and Monday are the best chances for that gap to fill; otherwise, it might be some time before that happens. The most significant risk here is a retest of the lows.

RATES (TIP)

Apart from the Facebook massacre, the ECB and rates drove part of the sell-off. It seems that 2022 is no longer a lock for no rate hikes from the ECB. So that sent yields soaring, and more importantly, real yields. The TIP ETF fell sharply today and looks like it is breaking free of that bear flag and heading lower to $124.30.

Amazon (AMZN)

Amazon fell around 8% today and then regained all those losses and is now up an additional 8% after hours, and back to approximately $3,200. The company missed on revenue and gave weaker than expected revenue guidance for the 1Q. Additionally, operating income guidance for the company missed estimates at the mid-point of the range. The company also noted that operating cash flow on a trailing twelve-month basis fell to $46.3 billion from $54.7 billion last quarter. Still, the company mentioned they would raise Prime membership’s costs, which was rumored the previous two days. How this stock is trading higher is beyond me. The only positive was the big EPS beat which was driven by an $11.8 billion gain in its Rivian investment, which is non-operating income. So outside of that, I would think this was pretty bad. Maybe expectations were for worse? But if these gains are all given back, don’t be surprised.

That’s all for tonight.

Mike