Stifel Bits

February 15, 2023

The Appetizer

“It will continue to be in decline. It will be crappier. Budgets will get cut.”

  • Former Fox executive Peter Chernin on legacy TV

Now, on to the numbers. Drum roll, please …

  • 139 million: How many metric tons of single-use plastic waste were generated in 2021.
  • 35%: The percentage of millionaires that said their ability to be financially secure in retirement is “going to take a miracle.”
  • 60%: China’s control of the world’s production of rare earth minerals and materials, according to Rice University’s Baker Institute.
  • $1,000: The Grubhub bill amount that a six-year-old in Michigan racked up after getting hold of his dad’s phone to play games.
  • $16 billion: The amount that Americans are estimated to have gambled on this year’s Super Bowl, a new record.
  • 12: The number of new moons discovered orbiting Jupiter, for a total of 92 known moons. Scientists expect to discover even more.
  • 700 pounds: The weight of acorns found stuffed by woodpeckers inside the walls of a California home.

Dig In
A Look at Earnings

It’s hard to believe we’re already half way through February – that means the majority of the S&P 500 have reported fourth-quarter earnings. Let’s see how they did.

Heading into earnings season, expectations were down due to persistent high inflation, tightening monetary policy, and the slowing economy. No surprise there, and that’s largely how results have played out with earnings growth down 4.9% compared to last year.

The financial sector was the largest detractor to earnings growth as banks increased provisions for loan losses, while the energy sector showed strong growth due to rising oil prices, with companies such as Exxon Mobil posting record profits.

Overall, 69% of the companies that have reported their earnings beat analysts’ expectations. That’s great! But in the past five years, 77% of companies have beat expectations on average … perhaps not so great. Or is it?

The Federal Reserve (Fed) is watching economic and jobs data closely for signs that inflation may be easing. A pivot in Fed policy – a pause in rate hikes – would likely help keep a soft landing for the economy possible.

Weekly Specials

With all the commotion, you’d have thought 99 red balloons had passed by. Instead, a single Chinese balloon floated across the U.S., including over several sensitive military areas, before fighter aircraft shot it down off the South Carolina coast. The incident has raised tensions at a time when the two nations have been trying to cool things off a little.

Shout out to California rolls and fake crab for paving the way for this one: Plant-based seafood may be coming your way soon. The so-called fish includes both plant and aquatic ingredients, including ocean algae and seaweed. Some industry experts believe this could become a $1.6 billion market in the next 10 years.

Well, we made it through midterms and now we’re on to Wall Street’s favorite part of the presidential cycle: the third year. Since 1945, the S&P 500 has risen an average of 15.9% during the last full year before an election, compared to an overall average of 9.2% in the other years.

President Biden gave his State of the Union address last week, which many believe was a soft opening for his reelection campaign. State of the Union addresses rarely move the debate in Washington, and this speech may be no different. Check out Stifel’s Potomac Perspective for a recap of what we’ll be watching going forward.

Remember when SpaceX put a Tesla Roadster in space? Pretty cool! Well, that was five years ago. The car takes 557 days to orbit the sun and is just about to cross Mars’ orbit for the fourth time. The car originally had a 36,000-mile warranty, but it’s blown way past that – by more than 70,000 times!

Corporate Lunch

Google on Monday unveiled a new chatbot named “Bard” amid the success of ChatGPT, which Microsoft has integrated into its search engine, Bing.

Elon Musk is set to present Tesla’s “Master Plan 3” on March 1. The master plan details Musk’s goals for the company and initiatives that will move the firm forward. Maybe he’ll announce the development of another chatbot.

The tale of two rideshares: Uber, who not only brings you from point A to point B, but also brings your food and ships your cargo freight, just beat earnings estimates over its multiple business segments, while Lyft … well they can just get you from to point A to point B, and missed earnings estimates.

AMC Theatres, the world’s largest cinema chain, announced plans to vary ticket prices based on seat location. The seats in front, where your ears get blasted by speakers, will be cheaper than the middle seats.

Chick-fil-A is testing a new plant-based sandwich for all of our vegan, vegetarian, pescatarian, and flexitarian friends. After four years of intensive development, they are ready to test their meat substitute. Instead of using fake meat, they are making sandwiches with pressure-cooked cauliflower.

Bed Bath & Beyond secured financing to keep the lights on and avoid bankruptcy – for at least the time being. The company is poised to receive over a billion dollars from investors over time in a large stock offering.

And Tom Brady is still retired …

drawing of a table setting

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