Michael Kramer and the clients of Mott Capital own Apple, Microsoft, Tesla
The Fed turned more dovish., shocker. It would seem to me the tightening cycle is over. Here was your essential line from the FOMC statement in my opinion:
In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.
The Fed would seem to now be focused on inflation, and as long as that stay low, then rates are finished rising. With oil and most major commodities down it seems unlikely that inflation will increase substantially anytime soon. With that, I think the Fed is likely finished raising rates for some time.
The bond and FX market would seem to agree with my assessment. 10-year rates fell sharply after the news, as did 2-year rates.
The dollar fell sharply too, as it should.
S&P 500 (SPX)
Stocks rose sharply as a result of the more dovish Fed with the S&P jumping 1.6%. For now, resistance on the S&P is at 2,690 and investors tried to break that resistance level, but failed on the first attempt. I expect that it will be broken, and that will likely result in a rally to 2,800.
Tesla reported results tonight, and they look pretty good, better than the disaster that some would have had you think after the company laid off workers. Nothing stands out to me except the company had cash flow of $750 million and has enough cash on hand to deal with the March debt payment. The chart is unchanged from yesterday, so I think $330 is still in play.
Facebook is surging after they beat estimates, but the most impressive number is that ARPU in the US & Canada at almost $35! That is a massive increase from last year! There was even a big jump in Europe.
Resistance for the stock is around $173.
Microsoft looks fine with earnings beating by $0.01 and revenue missing by a hair at $32.47 billion vs. estimates of $32.53 billion. The stock is down a bit, I’m not sure what I am missing here, but I don’t see a reason to be concerned. The company is guiding revenue to a range of 29.4 to 30.1 billion, or $29.75 billion, versus estimates of $29.83 billion.
Support for the stock is around $102. The stock is lifting after the market got the guidance.
Apple had a big day after the strong results, with shares rising above resistance at $164. The big move opens the door for the stock to increase to around $182.
AMD had a monster day with the stock rising 21% to $23.21. The stock continues to face resistance at $24.
Alibaba had a big day with shares rising above resistance $166 which could result in a rise to $179.
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