Good Morning Everyone!

Especially Mark Zuckerberg who stopped hanging out in the metaverse. Cut costs and returned to cash flow positive. Stock up 20% pre-market set to gain $200 billion.

Next catalyst, AI?

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Prices as of 4 pm EST, 2/1/23; % YTD

MARKET UPDATE

The U.S. Federal Reserve delivered an expected 25 basis point hike

• Signals a “couple” more hikes before a pause

ECB

• Delivers 50 basis point hike

• Signals more hikes ahead

Bank of England

• Raised by 50 basis points to 4%

• 10^th consecutive increase

• Like the Fed, close to a pause

Crude 76 -0.5%

Meta META +19%

• Q4 revenue 32.2 billion at high end of guide $30-32.5

• Ad revenues up 2% y/y

• Q1 revenue guide $26-$28.5 Billion vs $27B consensus

• 2023 operating expenses comes down to $89-95B from $94-100B

• After repurchasing $7 billion of stock in Q4, buyback increased by $40 billion

• How big is $40 billion. It’s 10% of the market cap.

• Don’t bet against Zuck

• Solid revenue, Solid guide, larger than expected capex cut, big share buyback

• Chart: Average Revenue per user (ARPU)

• People are using Meta products. Ad impressions up 23% y/y. Reels is having an impact.

Auto

• U.S. January SAAR 16.2 million units vs. street 15.3

• Incentives down 22.9% at $1,400 per car

• Days supply is 37 vs. 33 last month

Earnings

• MetLife MET flat EPS $1.55 vs street $1.65

• McKesson MCK -2% raised 2023 EPS guide

• Alfac AFL flat EPS $1.29 vs street $1.21

• Corteva CTVA -2% guide lower than street

• Allstate ALL flat Auto loss ratio worse than street

• Align ALGN +17% revenues down but better than street, $1 cash reserves

• Eli Lilly LLY -2% top line miss, bottom line beat

• Merck MRK -1% EPS $6.90 beat street $6.35, raised guide

• Shell SHEL +2% record profits of $42.3 billion, increased dividend and share buyback

• Bristol-Myers BMY +1% Q4 revenues +2%, earnings +5%, 2% increase to guide

• ConocoPhillips COP -1% 4% cash flow beat, capex modestly higher

• Honeywell HON -3% EPS in line, guide light

• Sony SONY +2% in-line, boosts guide       

• Estee Lauder EL -3% guide is light

• Ferrari RACE +5% revenue and EBITDA beat

Tonight

• Apple AAPL

• Google GOOGL

• Amazon AMZN

• Starbucks SBUX

CRYPTO UPDATE

99-year old Charlie Munger on crypto

• “Instead, it’s a gambling contract with a nearly 100% edge for the house, entered into in a country where gambling contracts are traditionally regulated only by states that compete in laxity”

• “The U.S. should now enact a new federal law that prevents this from happening”

Alameda Research

• Alameda wallet received over $10 million in crypto overnight

• $6 million in tether from Bitfinex

• $4.5 million in USDC from unknown entity

• Reasons unclear

Risk appetite

• More than half of altcoins outperforming Bitcoin BTC/USD over last 30 days

• Suggest higher risk appetite