Earnings, GDP and we go limit up

March 22: Atlanta Fed GDPnow forecasts 3.2% growth

April 18: Atlanta Fed GDPnow forecasts 2.5% growth on April 18.

April 26: Atlanta Fed GDPnow revises the model to 1.1% growth less than twenty-four hours before the data is released.

April 27: The Commerce Department reports gross domestic product rose at an unbelievable… 1.1% annualized pace for the first quarter.

Not rigged but maybe just a little bit.

Now the market is ripping limit up (because of course it is) on weaker than expected GDP data, boomercore Facebook’s guidance for 2023, and Core PCE (stuff people buy to live their lives minus food and energy which are also very important) is up 4.9% QoQ versus 4.7% forecast.

So the economy is slowing, a lot more people are using Facebook and people have less money for stuff because they are paying more money for ex food and energy which don’t look is up going into the summer driving season.

Yeehaw!

A tale of two earnings reports

$META looks unstoppable today up 14.80% on earnings at its highest levels since last January, over 100% since the bottom in October. The street loves Zuck’s year of efficiency even though the company continues to incinerate money on its metaverse product (reality labs) with losses at $3.99 billion versus estimates of $3.8 billion. Meta continues to cut jobs and buy back stock. The market loves it.

[ ft ]

Two things stood out to us:

User growth: Monthly active people on their family of apps grew 5% from the prior year to more than 3.8 billion. Facebook daily active users increased by 4% to more than 2 billion.

Average revenue per user (ARPU): in the US and Canada each user generates $48.85 in revenue for the company. In a year that’s over $200 a year from a free to use product.

Comparatively Spotify gives you three months free and then $9.99 a month and has to pay licensing fees out the wazoo to music labels. Facebook prints money off of people using the product. It’s an easy choice in which business you’d rather be in.

Beating low targets is one thing, but as we’ve seen with earnings the only thing that matters (aside from options flow) is forward guidance. $META guides higher and the stock rips. Meanwhile the opposite it happening in the industrial construction and manufacturing sector.

Caterpillar ($CAT) is down -16.85% in the last three months and even a triple beat can’t send the stock up. Earnings surprised to the upside by 29.55%, profit was 21.1% compared to 13.7% YoY but it didn’t help investor concerns about the lack of demand for their equipment which typically leads to a slowdown in construction.

[ bloomberg ]

With lending drying up and commercial real estate in dante’s inferno it looks like 2023’s only place to hide remains the metaverse and the diarrhea factory ($CMG).

Other News:

American Airlines +3.34% : There’s a saying if you want to be a millionaire spend a billion dollars on an airline. First quarter revenue $12.19 billion with a b, while first quarter profit… $10 million with an m. There are kids in Thailand selling dark web dick pills making more than $10 million. You can remove cramping people like cattle and sending them through the sky in giant metal tubes from businesses we’d ever want to be involved or invested in.

JPowell gets bamboozled: Somehow the most powerful man in the financial world was Borat’ed into speaking with a Zelensky impersonator. This will not make the major news cycle because why do we want people to know how stupid and how poor our security truly is? In the call he admits there’s a recession on the way, the inflation is the worst in 40 years and he needs to cool the labor market. Two more hikes incoming.

Crypto did the crypto thing: Crypto briefly “flash crashed” by 7% yesterday after Arkham Intel misfired an alert that the U.S. Government was liquidating Mt. Gox bitcoins which lead to market makers Jump trading selling a little over $30 million in BTC. However if you believe that a $30 million market sell can move bitcoin by 7% then we have a guaranteed investment scheme that will pay you 200% per year to sell you on. [ decrypt ]

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