DHUnplugged #651: Resilient Rockem

Markets are moving back and forth just waiting for some big news.

Talk of a US default is making the rounds.

Tech has a big day - helping to push markets up from their recent despair.

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Warm Up

- All of a sudden - recession fears

- US Default whispers

- Republicans put forth budget with increase and expense slashing

- India - taking over the population race

- Resiliency everywhere ...

Market Update

- Banks - Still on shaky ground

- Central Banks blamed for market rally

- "This year’s rally in risk assets is more to do with a $1 trillion central bank liquidity injection than any improvement in the economic outlook, according to Citigroup Inc.. "

- "That massive tailwind — enough to lop 50 basis points off the investment-grade risk premium — may soon become a huge drag as policymakers get back to quashing inflation, having extinguished the banking-sector fire. "

- Do we believe that the Fed is done?

Earnings

Coca-Cola - Average price of 192 ounces of Coca-Cola's soda (12 pack of 16oz bottle) in the U.S. rose to $9.30 in 2022 from $8.03 in 2021, according to NielsenIQ's data. It stood at $10.55 so far in 2023. (31% increase in 2 years)

- Adjusted earnings came in at 68 cents per share, compared with estimates of 64 cents.

- The company's first-quarter revenue rose about 5% to $10.98 billion, beating estimates of $10.80 billion

IBM Earnings

- Bellweather anymore?

- IBM Corp missed Wall Street expectations for first-quarter revenue

- WHY? Hurt by shrinking corporate spending on IT services and a strong dollar.

- IBM cut its full-year consulting revenue growth forecast to 6%-8% from earlier expectations of high single-digit percentage growth.

- "We are seeing softness in certain components of our discretionary based offerings in consulting," Chief Financial Officer James Kavanaugh told Reuters about the U.S. market.

Whirlpool

- Didn't everyone think that margins would compress and higher rates will kill real estate?

- Whirlpool prelim Q1 $2.66 vs $2.17 S&P Capital IQ Consensus Estimate; revs $4.65 bln vs $4.50 bln S&P Capital IQ Consensus Estimate

- Whirlpool sees FY23 $16.00-18.00 vs $15.97 S&P Capital IQ Consensus Estimate; sees revs $19.4 bln vs $19.02 bln S&P Capital IQ Consensus Estimate

Tech

- Microsoft beats by $0.22, beats on revs; Azure +31% constant currency growth  (Shares up 6% A/H)

---- Revenue rose 7% to $52.9 billion in the quarter ended March

- Windows division  reporting revenue of $13.3 billion versus analyst estimates of $12.19 billion

- Alphabet beats by $0.10, beats on revs, Google Advertising revenue essentially flat yr/yr; On April 19, Board of Directors authorized repurchase up to additional $70 bln of Class A and Class C shares PLUS big 70b buyback announcement (Shares slight move A/H)

------- Ad sales saw a drop again - although not as much as last quarter

Banks

- The bank crisis is not totally over yet

-  Earnings and news from First Republic Bank - massive loss of deposits and company looking to some drastic ways to save itself (stock don 49% today)

- Pacific West bank - better than expected results, shares up 13% A/H

Debt Ceiling - Limits

- Republican led plan

- McCarthy floated a plan last week that would pair $4.5 trillion in spending cuts with a $1.5 trillion increase in the $31.4 trillion U.S. debt limit.

- All talking about this being political divided and will not pass

- The HOPE is that it will get sides talking

Change of US Default - debt ceiling etc

- Current pricing of credit default swaps soar

- BUT, only 2% implied odds of a default

- Seen this movie before.......

- This time different?