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Barron’s Weekend Summary: The question of how the US economy has been able to defy gravity and stave off recession has dominated the conversation among professional prognosticators

Cover Story:

-The question of how the US economy has been able to defy gravity and stave off recession has dominated the conversation among professional prognosticators and given rise to a volatile economic environment, one in which a single data release can send markets soaring one day and plunging the next. The dynamic has left businesses struggling to figure out how to plan for the future and forced economists to examine why the combination of geopolitical tensions, inflationary pressures, and tightening monetary policy is having far less of an impact on the economy than historical precedent and conventional wisdom would suggest. And it has heightened the stakes for the Fed, which already had a difficult task of trying to slow the economy without driving it into recession, but now has to navigate an environment unlike anything it has ever seen.

Interview:

-Simon Powell, global head of thematic research for Jefferies, says that investors’ long-held view of Asia’s population as young and on the rise needs an update. While investors sometimes have dismissed megatrends as too long term to affect near-term investment decisions, now is the time, he argues, to pay attention to China’s demographic struggles and rising tensions with the US. Barron’s spoke with Powell, while he was on vacation in England, about the implications of China’s baby bust, why electric-vehicle batteries could be the next front in the battle between China and the West, and how to mitigate the risk of a possible conflict over Taiwan.

Tech Trader:

-Are algorithms speech? That’s the core question now before the U.S. Supreme Court. The answer could throw the internet into chaos. Algorithms cropped up this past week in oral arguments in two cases—Gonzalez v. Google and Twitter v. Taamneh—in which families of individuals killed in attacks by Islamic State sued social-media platforms for surfacing Islamic State–related content to some users. Heading into the hearings, internet companies feared that justices would lever the cases to rewrite Section 230, a provision in federal law that protects internet platforms from lawsuits over moderation of content created by users. Websites currently can moderate heavily, or not at all, and still not be liable. What’s unclear is whether Section 230 covers the use of algorithms to expose users to content.

The Trader:

-Hedge funds tilted toward growth sectors and away from cyclical and value-oriented areas of the market during last year’s fourth quarter, setting them up for a strong start to 2023. The Russell 3000 Growth index has added more than 7% year to date, versus a 2% rise for the value subset of the index. “Funds increased their net tilt to Consumer Discretionary by [3.3 percentage points], the largest change in any sector, and also lifted exposures to Communication Services and Info Tech” in the fourth quarter, Goldman Sachs strategist Ben Snider wrote this past week. “In contrast, hedge funds cut net tilts to Energy, Industrials, Materials, and Financials.”

-On Wednesday, Intel cut its dividend by 66% to an annual 50 cents a share, helping push the stock down about 16% in the past month. Intel has lost market share for chips to Advanced Micro Devices (AMD) and has struggled to meet Wall Street’s earnings targets. Weighing on earnings is weak PC demand, with year-over-year declines in sales. A dividend cut this large may partly reflect the economic environment, but also the company’s own problems.

Other companies are also facing macroeconomic challenges, and more dividend cuts may be on the way. Analysts’ aggregate 2023 earnings per share estimate for S&P 500 companies has already dropped by about 10.5% in the past year, according to FactSet.

Features:

-Since President Joe Biden earmarked $370B for clean energy in the Inflation Reduction Act in August, there have been 76 announcements of clean-energy projects, notes Credit Suisse. Of those, 40 specified dollar amounts, totaling $77B. “We’re basically accelerating the energy transition at ludicrous speed,” says Michael Cerasoli, portfolio manager at Eagle Global Advisors. Despite the dollars flooding in, it remains difficult to invest profitably in clean-energy companies. Some products, such as solar panels and batteries, trade like commodities, with little differentiation between companies. Others, like wind turbines, sell into highly regulated industries where returns are partially controlled by regulators.

-Take solar powered EV start up Sono. Shares are down 23% in late trading Friday after the company announced it “terminated” its Sion passenger car program. The Sion was designed to be a low cost $25,000 EV with a twist. The car was to be covered with solar panels that can provide some recharging free of charge thanks to the sun. Sono will continue to operate its solar-charging business, developing applications for commercial vehicles and, potentially, passenger vehicles down the road. “This pivot marks a significant step in Sono Motors’ business development,” said Laurin Hahn, co-founder and CEO of Sono Motors, in a news release. “It was a difficult decision and despite more than 45,000 reservations and preorders for the Sion, we were compelled to react to the ongoing financial market instability and streamline our business.”

European Trader:

-British American Tobacco is a sleeping giant of the United Kingdom stock market that may be about to wake up. The UK’s FTSE Index is trading at record highs, closing above 8,000 points for the first time in its history earlier this month. British American Tobacco’s total return of 6,891% since the index launched in 1984 is the largest of any original constituent company, according to FTSE Russell data. The stock has blown hot and cold in recent years, though. Shares are down 30% over five years—but that might be about to change. The company is building an impressive portfolio of alternatives to cigarettes, while a pending regulatory decision over its Vuse Alto vaping product could provide a near-term catalyst.

Emerging Markets:

-Beneath their ringing rhetoric, sanctions architects were careful about curtailing Russia’s massive raw materials exports. The US has laid off imposing “secondary sanctions” on India and other places where the Russia trade is burgeoning. “The lesson is that sanctions have limited effect when the target is very important to the global economy,” says Christopher Granville, head of global political research at TS Lombard. Putin and his technocrats were preparing for this moment at least since 2014, when Russia first bit off a chunk of Ukraine. They ran budget surpluses, built up reserves, and designed a duplicate interbank network that cushioned the blow of being cut off from the global SWIFT payment messaging system. “If SWIFT had been cut off in 2014, their domestic messaging system would have collapsed,” says Elina Ribakova, deputy chief economist at the Institute of International Finance. “This time, their domestic system managed to function.”

Commodities:

Russia is a key supplier of many major commodities, but supply issues weren’t quite as catastrophic as some had expected following its invasion of Ukraine a year ago. “Given Russia’s vast amount of natural resources, the impact on the commodity sector from the war in Ukraine remains material,” says Jeremy Thurm, senior credit research analyst at Aegon Asset Management. After a year, however, a “variety of other factors such as redirected trade flows, lack of sanctions, China’s Covid lockdowns, and a warmer-than-expected winter have all muted the initial impact the war had on commodity prices.”

Following Russia’s Feb. 24, 2022, invasion of Ukraine, it wasn’t just oil prices that rallied. Russia is among the world’s biggest palladium producers, and US prices for the metal from just before the invasion to their 2022 price peak rose by more than 20%. Newcastle coal prices on ICE Futures Europe almost doubled, while European benchmark natural gas nearly tripled.

Streetwise:

-Jack Hough cites a top Wall Street strategist who claims that over the past week, US stocks have entered the “death zone”. I detected a bearish undertone. The phrase is used by mountaineers to describe heights where humans can’t live for long. Survival is said to depend on speed or supplemental oxygen. I recommend just picking hobbies that don’t have death zones. In fact, I’m cautious on most zones: flood, no-fly, hot, impact, euro. I’ll spend time in my comfort zone, but I prefer my happy place. Stock investors, says Hough, should favor defensive sectors like healthcare and consumer staples and efficient operators in industries like retail. Morgan Stanley even has a small Fresh Money Buy List. Names include Coca-Cola, Exxon Mobil, and Verizon Communications.

Weekend Papers Summary

NEW YORK TIMES

-No end in sight to war in Ukraine. Russia, Ukraine and the West face daunting challenges in moving forward, with no clear sense of what an attainable victory might look like.

-Protests and defiance mark a year of Russia’s war on Ukraine. On the anniversary of the invasion, President Volodymyr Zelensky vowed victory if Ukraine and its allies remained united “as one strong fist.”

-Biden reaffirms support for Ukraine amid concerns about Russia-Iran ties. The Biden administration announced new measures targeting Moscow and supporters of President Vladimir V. Putin’s war.

-Rare and dangerous: Southern California faces blizzard conditions. snow, high winds and intense rain hit parts of the state Friday. Blizzard warnings were in effect until Saturday afternoon in four counties.

-Nearly 600,000 still without power in Michigan after snowstorm. Customers in the Upper Midwest were in the dark on Friday evening after snow and ice hit the region this week, resulting in one death.

-Murdaugh hammered by prosecutor over where he was on night of killings. The intense cross-examination of Mr. Murdaugh, who is charged with killing his wife and son, came as he concluded his testimony in his own defense.

-12 States Sue FDA, Seeking Removal of Special Restrictions on Abortion Pill. The suit argues that rules applying to mifepristone unnecessarily limit patients’ access to medication abortion.

-Vice CEO’s departure signals fallen hopes for digital media. Nancy Dubuc is leaving the media company, which is exploring a sale of some or all of the business, after nearly five years there.

-In town where train derailed, lawyers are signing up clients in droves. Attorneys have poured into East Palestine, Ohio, filing more than a dozen lawsuits so far on behalf of residents.

-Canada saw a deadly derailment. A decade later, little has changed. In 2013, a train loaded with oil jumped the tracks in Quebec, killing 47 people. But despite repeated calls for an inquiry, none was ever convened.

-Doctor describes and denounces CIA practice of ‘rectal feeding’ of prisoners. In a hearing at Guantánamo Bay, an expert gave a graphic public depiction of torture after the Sept. 11, 2001, terror attacks.

-Cambodia investigates after father and daughter infected with bird flu. Two family members were infected with H5N1; the daughter died. Eleven contacts, some with symptoms, have tested negative, according to the WHO.

THE FINANCIAL TIMES

-US President Joe Biden has said he did not think China would send weapons to Russia to help its military campaign in Ukraine, in comments that appeared to undercut claims from his top officials that Beijing was considering the idea.

-Stephen Schwarzman, the founder of Blackstone Group, received record income of nearly $1.3B in 2022, as assets under management and profits rose at the world’s largest private equity firm.

-Shell, ExxonMobil and the Dutch government earned €429B from exploiting the Groningen gasfield, but left thousands of residents with cracked homes and health issues, a parliamentary investigation has found.

The geological destabilization caused by drilling at Groningen, Europe’s largest natural gas reserve, resulted in 1,594 earthquakes and damaged more than 85,000 buildings, a Dutch parliamentary report concluded on Friday.

-Trafigura failed to require analysis certificates, ignored incorrect customs codes and missed other “red flags” that alarmed its bankers on nickel shipments it later discovered to be fraudulent, according to court documents obtained by the Financial Times on Friday.

-UK Prime Minister Rishi Sunak is already in a precarious position: the Conservatives trail the Labour opposition by about 20 points in the polls, his party is fractious, his two predecessors, Boris Johnson and Liz Truss, are agitating in the wings, and a general election must be called by the end of next year.

-When the US drugs company Abbott Laboratories acquired a small division of the German chemicals group BASF for $6.9B 23 years ago, its shares fell on fears that it had overpaid. But the deal was an amazing bargain. Humira, the promising medicine that came with it, is now the industry’s biggest blockbuster, with cumulative revenues of more than $200B. The anti-inflammatory drug used to treat rheumatoid arthritis and a range of other autoimmune conditions, is very expensive, costing more than $80,000 a year per patient in the US.

-Nigerians will on Saturday go to the polls to elect their next president, marking the end of a draining election campaign notable for the emergence of a credible alternative to the country’s two dominant political parties. The main candidates have spent five months crisscrossing Africa’s largest democracy as voters prepare to elect a replacement for President Muhammadu Buhari, who is standing down after eight years in power.

-Penguin Random House has announced that it will publish the original versions of Roald Dahl’s books alongside updated editions following an outcry over changes to the celebrated stories that were branded “absurd censorship”. Puffin, an imprint of Penguin Random House, was accused of censoring the classic children’s books after its “Roald Dahl books for young readers” edition was edited to rewrite or remove language deemed offensive, such as descriptions of obesity.

-Bosses at Europe’s largest companies received “surprisingly high” bonus levels for meeting goals to cut carbon emissions in 2022, easily achieving their targets despite inadequate progress on global warming, the latest executive pay expert report finds.

More than three-quarters of Europe’s 50 largest companies now include some form of carbon target in their executive pay packages, a new report from PwC and the London Business School said.

-The US will make “no apologies” for prioritizing American jobs in its push to lead the global clean energy contest, the White House official responsible for the $369B green funding drive has said. In an interview with the Financial Times, John Podesta, Joe Biden’s senior clean energy adviser, pushed back at criticism that the US Inflation Reduction Act would divert investment and undermine the EU economy. He argued allies who have hit out at the IRA should “welcome US leadership”.

NY POST

-As he prepared to board Marine One for a weekend getaway to Delaware on Friday, President Biden told reporters that he has no plans to visit East Palestine, Ohio — and that he hasn’t been invited amid rancor over the administration’s handling of the toxic train derailment. “At this moment, no,” Biden, 80, responded outside the White House when asked if he had any plans to visit the town near the Ohio-Pennsylvania border, where dangerous chemicals spilled onto the ground and toxic smoke billowed into the air after a Norfolk Southern train derailed on Feb. 3.

The toxic spill and ensuing fire forced the evacuation of roughly 5,000 panicked residents. Tens of thousands of animals in the area have also reportedly died in the weeks after the derailment, troubling residents.

-Meta Platforms said Friday it was releasing a new large language model based on artificial intelligence aimed at the research community, becoming the latest company to join the AI race.

The battle to dominate the AI technology space, which until recently existed in the background, kicked off late last year with the launch of Microsoft-backed OpenAI’s ChatGPT and prompted tech heavyweights from Alphabet to China’s Baidu to create their own offerings.

British American Tobacco BATS +1.02% is a sleeping giant of the United Kingdom stock market that may be about to wake up.

The U.K.’s FTSE 100UKX –0.37% Index is trading at record highs, closing above 8,000 points for the first time in its history earlier this month. British American Tobacco’s (ticker: BATS.UK) total return of 6,891% since the index launched in 1984 is the largest of any original constituent company, according to FTSE Russell data.

The stock has blown hot and cold in recent years, though. Shares are down 30% over five years—but that might be about to change. The company is building an impressive portfolio of alternatives to cigarettes, while a pending regulatory decision over its Vuse Alto vaping product could provide a near-term catalyst.

Another big reason to hold the stock amid these uncertain macroeconomic times: the company’s attractive 7.4% dividend yield. Quarterly dividends are also paid to holders of BAT’s American depositary shares (BTI).

BAT owns cigarette brands including Camel, Lucky Strike, Pall Mall, and Dunhill as well a range of vapor and heated tobacco products. The London-listed company, founded in 1902, has more than 52,000 employees worldwide and operates across more than 180 countries.

There were plenty of positives to take from the tobacco giant’s full-year earnings earlier in February, despite declining cigarette volumes in the U.S. The company said it expects its “new category” segment—which includes vapor, heated tobacco, and oral tobacco products—to be profitable in 2024, a year ahead of schedule. The unit is also on track to meet BAT’s target of five billion pounds sterling ($6 billion) in revenue by 2025.

But the share price reaction was negative, which Deutsche Bank analyst Gerry Gallagher attributed to the lack of a stock-buyback announcement. BAT said the board has decided to take a “pragmatic approach” to prioritize strengthening its balance sheet.

The market was expecting a buyback of £1 billion to £2 billion, Gallagher said. He noted the positive commentary around new-category revenue and said the bank’s analysts remain “committed buyers” of the shares. He has a £40 price target on the stock, 26% above Wednesday’s close.

Revenue and earnings look set for solid growth in the coming years. The tobacco giant reported revenue of £27.7 billion in 2022, and analysts expect that to rise to £28.8 billion this year and £30 billion in 2024. Profit is estimated to rise from 371.4 pence a share last year to 392.3 pence in 2023 and 417.5 pence next year. BAT’s Vuse vapor brand is one of its trump cards. The company said in 2022 that it had become the market leader in the U.S., the world’s largest vapor market.

But Vuse is also holding the stock back. Vuse Alto is pending market authorization from the U.S. Food and Drug Administration. New legislation passed in March 2022 requires companies to submit a premarket tobacco-product application, or PMTA, to keep vaping products on the market.

Two other Vuse products—Vibe and Ciro—were authorized last year, but their menthol variants were denied last month. If Vuse Alto gets the green light from regulators, it could be a significant catalyst for the stock. While there is uncertainty about U.S. cigarette demand and the Vuse Alto regulatory decision, the current valuation incorporates “much of those downside risks,” says J.P. Morgan analyst Jared Dinges.

The stock is cheap, trading at 7.5 times estimated 2024 earnings, compared with the industry average of 9.93, according to FactSet.

BAT has an appealing dividend yield amid tough economic conditions, and at best there’s plenty of upside ahead, if investors can see through the smoke.

Weekly Market Update: More stubborn inflation data and Russia bear swat markets

US investors returned to a holiday shortened trading week with geopolitics back in focus. President’s Biden’s surprise trip to Kyiv ushered in a string of headlines from both sides in the lead up to the one-year anniversary of Russia’s invasion of Ukraine. Ultimately, new rounds of sanctions, tariffs, and aid were introduced by the West, even as high-level Chinese officials visited Moscow, sparking speculation about Beijing’s designs on acting as either a peace broker or arms broker in the conflict.

Stock markets continued to encounter resistance in the form of rising interest rates. The economic data and central bankers’ signaling remained supportive of the higher-for-longer narrative that has gained traction as investors have had to adjust to the stronger than expected January data. That theme culminated on Friday when the S&P fell to roughly a 1-month low after hotter than expected January PCE data spooked the market. The month over month core PCE reading of 0.6% was the largest monthly rise since August. Moreover, it got a boost from the category that Chair Powell has highlighted recently: core non-housing service prices. That sub-index also rose by nearly 0.6%, which was its largest gain since November 2021, illustrating this very large component of core inflation is not yet showing any real signs of deceleration. After that data, the US 2-year yield climbed above 4.8% and futures markets began to price in the terminal fed funds rate to exceed 5.4% later this year. The Dollar firmed up to the best levels in roughly two months while commodities and risk assets in general weakened into the end of the week. For the week, the S&P lost 2.7%, the DJIA was off 3%, and the Nasdaq fell 3.3%.

Growth and inflation tensions played out in corporate news this week. Discount retailer Dollar General, which usually flourishes during recession, announced it is cutting quarterly guidance, citing bad winter weather. Walmart beat analyst expectations handily, noting that the big box retailer is managing to contain capex costs and attracting more higher-end customers looking for bargains. Home Depot’s numbers were shakier, reporting a 6% decline in customer transactions and guiding a decline in earnings for the year, perhaps signaling more weakness in the housing market. Contrary to that, homebuilder Toll Brothers reported strong quarterly results and affirmed guidance, noting that it is seeing an uptick in demand continuing as recently as last weekend. In the tech world, Cybersecurity firm Palo Alto reported strong quarterly results and gave solid guidance, sending share higher. Intel continued to flounder, cutting its dividend by two thirds, though affirming its guidance. Adobe shares fell to their lowest levels of 2023 after reports emerged that the DOJ is preparing a suit to block its $20B acquisition of Figma.

MON 2/20

(TW) Taiwan Jan Export Orders Y/Y: -19.3% v -24.0%e; Sees Feb orders down between -10.8% and -6.9% y/y

(HK) Macau Jan tourist arrivals at 1.4M, +101.3% y/y

(US) US Pres Biden: Ukraine will get new military aid package worth $500M to be announced on Feb 21st; Will include HIMARS ammunition - statement from Kyiv

(NL) Dutch intelligence agency official: Russia tried to gain intelligence to sabotage critical infrastructure in the Dutch part of the North Sea; Russia may target Netherlands' offshore infrastructure - press

(TR) Magnitude 6.4 earthquake strikes Turkey-Syria border region

TUES 2/21

(FR) FRANCE FEB PRELIMINARY MANUFACTURING PMI: 47.9 V 51.0E (moves back into contraction); Composite PMI highest since July 2022

TSM Reportedly considers to delay its Europe fab by two years to 2025 amid automotive chip shortage is no longer as severe as it was – press

(JP) Japan Cabinet Office (Govt) Feb Monthly Report: Maintains overall economic assessment

(RU) Russia Pres Putin: We are in difficult times, prior to historical events; We will decide tasks of special military operation step by step; Vows to continue military operation in Ukraine - Federal Council address

(UK) FEB PRELIMINARY MANUFACTURING PMI: 49.2 V 47.5E (7th straight contraction); Composite PMI highest since June 2022

(DE) GERMANY FEB ZEW CURRENT SITUATION SURVEY: -45.1 V -50.5E; EXPECTATIONS SURVEY: 28.1 V 23.0E

(RU) Russia Pres Putin: Russia suspends participation in START nuclear arms treaty [**Note: inspections had been halted since 2020]; We suspend participation, not withdrawing from this; Will not allow NATO to inspect our nuclear objects - Federal Council address

HUN Reports Q4 $0.04 v $0.11e, Rev $1.65B v $1.56Be; Optimistic that destocking will end in H1 2023; Notes seeing some green shoots in areas like China, automotive, and aerospace, but construction demand globally is still under pressure

GIS Raises FY23 outlook; Continues to expect to deliver top-tier shareholder returns

HD Reports Q4 $3.30 v $3.27e, Rev $35.8B v $35.9Be; Raises Quarterly dividend 10% to $2.09 from $1.90 (indicated yield 2.63%); Announces $1B investment in associates

WMT Reports Q4 $1.71 v $1.52e, Rev $164.1B v $159.7Be; Guides FY24 EPS short of consensus; Raises Quarterly dividend 1.8% to $0.57 from $0.56 (indicated yield 1.56%)

(US) Feb Philadelphia Fed Non-Manufacturing Regional Index: +3.2 v -6.5 prior

(US) FEB PRELIMINARY S&P/MARKIT MANUFACTURING PMI: 47.8 V 47.4E (5th month of contraction); Services moves into expansion territory

(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -1.5% v +3.2% prior

(RU) Reportedly China's Xi to travel to Moscow in the spring; Xi expected to push Putin for peace talks with Ukraine – press

(EU) ECB chief Lagarde: Seeing no EU country in recession in 2023

(US) FERC grants Freeport LNG request to commission including cooldown of liquefaction Train 2 – filing

PANW Reports Q2 $1.05 v $0.78e, Rev $1.66B v $1.65Be

WED 2/22

RIO.AU Reports FY22 underlying Net $13.3B v14.0Be, underlying EBITDA $26.3B v $37.7B y/y, Rev $55.6B v $63.5B y/y

BN.FR Reports FY22 Net €959M v €1.92B y/y, Recurring Op €3.38B v €3.35Be, Rev €27.7B v €27.4Be

(JP) Semiconductor Equipment Association of Japan (SEAJ) Jan Chip-making Equipment Y/Y: -2.1% v +1.1% prior

STLA Reports FY22 adj Op €23.3B v €21.5Be, Rev €179.6B v €176.1Be; Plans up to €1.5B share buyback through 2023; Notes slow but steady improvement in chip supplies

(CN) China said to urge the State-run companies to drop the big four international auditors and use local ones citing data risk – press

7267.JP Said to raise wages by 5% (biggest increase in 30 years) - press

BIDU Reports Q4 (CNY) 16.87 v 13.90e, Rev 33.1B v 32.1Be; Announces $5B share buyback (10% of market cap) through Dec 2025; Plans to integrate Ernie bot into a number of Baidu's businesses

(US) Fed’s Bullard (Non-Voter): I think markets have overpriced a recession in 2023; US economy is stronger than what we previously thought which adds up to markets needing to price in tougher road for inflation and rates – CNBC

INTC Cuts Quarterly dividend 65.8% to $0.125 from $0.365 (indicated yield 1.92%); Affirms Q1 -$0.15 v -$0.15e, Adj Rev $10.5-11.5B v $11.1Be

(RU) Russia Foreign Ministry: We appreciate China's balanced position on Ukraine issue; "Vision" very much the same between us

TOL Exec: Uptick in demand continued through last weekend - post earnings comments

(RU) Russia said to cut crude exports from western ports by 25% in March versus Feb – pres

(US) FEB FOMC FEB MINUTES: ALL PARTICIPANTS AGREED MORE RATE HIKES NEEDED TO ACHIEVE JOB AND INFLATION OBJECTIVES; A FEW CALLED FOR A 50 BPS HIKE

(US) US said to consider releasing intelligence related to China potentially transferring arms to Russia - US financial press

(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 3.50%; AS EXPECTED

THRS 2/23

ENI.IT Reports Q4 adj Net €2.5B v €2.1B y/y, adj Op €3.59B v €3.81B y/y, Rev €31.3B v €26.8B y/y

(RU) Reportedly Russia Pres Putin has already gamed out the possibility of using a nuclear weapon in Ukraine; Putin’s calculation implies that Russia is more committed to the Ukraine war than the West - FT

(EU) NATO Sec Gen Stoltenberg: See signs China is considering giving arms to Russia; Closely monitoring Russia on their nuclear weapons

TSM Reportedly TSMC's 5nm demand has suddenly increased recently as urgent orders came from NVIDIA, AMD and Apple, mainly for AI and server chips - DigiTimes

(EU) EURO ZONE JAN FINAL CPI Y/Y: 8.6% V 8.6%E; CPI CORE Y/Y: 5.3% V 5.2%E (record high)

(CN) Reportedly Citic Group Chairman Zhu Hexin is is the leading candidate for PBOC Gov post; China said to be preparing to shake up leadership of its financial system - US financial press

BABA Reports Q3 $2.79 v $2.29e, Rev $35.9B v $35.5Be; Expects continued recovery in consumer sentiment, economic activity

BRE Reports Q4 $1.33 v $1.19e, Rev $8.19B v $8.13Be

DG Cuts Q4 $2.91-2.96 (prior $3.15-3.30) citing lower-than-anticipated sales and higher-than-anticipated inventory damages; Notes Nov and Jan SSS were as expected, Dec SSS lower than expected as a result of the storm Elliott

HUM Raises FY23 individual Medicare Advantage products at least 775K (prior at least 625K) citing continued higher than anticipated sales volumes and favorable member retention early in 2023; Affirms FY23 >$28.00 v $28.02e

(US) INITIAL JOBLESS CLAIMS: 192K V 200KE; CONTINUING CLAIMS: 1.65M V 1.70ME

(US) Q4 PRELIMINARY GDP ANNUALIZED Q/Q: 2.7% V 2.9%E; PERSONAL CONSUMPTION: 1.4% V 2.0%E

(US) Q4 PRELIMINARY GDP PRICE INDEX: 3.9% V 3.5%E; CORE PCE Q/Q: 4.3% V 3.9%E

(US) DOE CRUDE: +7.7M V +2ME; GASOLINE: -1.9M V +0.5ME; DISTILLATE: +2.7M V -0.5ME

(CN) Reportedly China and Russia negotiating the purchase of 100 strike drones, which could be delivered as soon as Apr 2023 - German press

INTU Reports Q2 $2.20 v $1.43e, Rev $3.0B v $2.90Be

SQ Reports Q4 $0.22 v $0.27e, Rev $4.65B v $4.53Be

SQ Jan-Feb 2023 Combined Gross Profit +25% y/y - shareholder letter

(JP) JAPAN JAN NATIONAL CPI Y/Y: 4.3% V 4.3%E; CPI EX-FRESH FOOD (CORE) Y/Y: 4.2% V 4.3%E (highest annual pace in 41 years)

(JP) BOJ GOV NOMINEE UEDA: Reiterates current monetary easing is appropriate; it takes time to achieve sustainable inflation (2% target) - Parliament testimony

(CN) China Ministry of Foreign Affairs (MOFA) releases proposal related to Ukraine; Calls for ceasefire and resuming peace talks; Calls for respecting the sovereignty of all countries; Dialogue and negotiation are the only viable solution to the Ukraine crisis

FRI 2/24

BAS.DE Reports final Q4 €0.09 v €0.30e, adj EBIT €373M v €420.2Me, Rev €19.3B v €20.1Be; Plans to eliminate 2.6K jobs in cost cutting initiative (2% of global workforce); To close one of two ammonia plants in Ludwigshafen

(US) US HIKING TARIFFS ON OVER 100 RUSSIA METALS, MINERALS AND CHEMICALS WORTH $2.8B; CONFIRMS NEW SANCTIONS AGAINST RUSSIA; ALSO TO SANCTION SOME THIRD-COUNTRY FIRMS, INCLUDING IN CHINA AND EUROPE – PRESS

WAF.DE Reports prelim Q1 Rev -15% q/q citing expected inventory adjustments for the next quarters and short-term postponement of delivery volumes of some customers in H1 2023

ERICB.SE Reportedly to cut 8.5K workers globally (~8% of total) – press

GM Spokesperson: Confirms GM to halt production at its Fort Wayne Truck Assembly plant in Indiana from Mar 27th for two weeks, citing DSO inventory bloat (**Note: 2nd time in 1 year) - press

(US) JAN PERSONAL INCOME: 0.6% V 1.0%E; PERSONAL SPENDING: 1.8% V 1.4%E

(US) JAN PCE DEFLATOR M/M: 0.6% V 0.5%E; Y/Y: 5.4% V 5.0%E (1st acceleration in annual pace in 7 months)

(US) FEB FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 67.0 V 66.4E

(US) Fed’s Bullard (Non-Voter): Soft landing is feasible; Expect inflation to come under control in quarters and years ahead

(US) Atlanta Fed GDPNow: Raises Q1 GDP from 2.5% to 2.7%