After a two month meltup which priced-in not one but several quarter of sheer earnings (and guidance) perfection, there was zero room for disappointment today when $5 trillion in market cap reported between GOOGL and MSFT, not to mention AMD and a bunch of other tech and consumer names. Alas, it was not meant to be, and the mega-cap tech earnings began not with a bang but a whimper.
Below is the EOD wrap from Goldman's Mike Washington which is titled, appropriately enough, "All about tech (prints go 0 for 3)
Another choppy session today as investors digested a hotter than anticipated JOLTS report (back above 9mm and an upward revision to previous month), megacaps slid ahead of the $5.7 trillion in market cap that reported tonight, and we got a slew of idiosyncratic movers as we enter the heart of earnings.
After hours, Tech went 0 for 3:
- MSFT flat on a solid print (azure +28% cc growth = in line w/ expectations),
- GOOGL -4% on mixed print (slight top line beat, but Op inc missed street),
- AMD -4% on a slight beat but guide FQ1 below (after trading down 3% today on a d/g away).
We have seen de-risking in megacap tech space since the beginning of last week which should damper the downside risk to this group a bit... but these prints certainly did not clear the high bar.
Other Standouts: Autos positioning was light headed into GM earnings this morning. Stock closed +8% after reporting sales & EPS upside and very strong guidance (F +2% in tandem). Banks and rate sensitives acted well on a competitor upgrade with the expectation for less onerous regulatory changes, and pockets of Semis/AI outperformed after a big raise from SMCI.
Our desk was a 5 on 1 – 10 scale in terms of overall activity levels. Overall executed flow on our desk ended with a -44bp sell skew vs 30d avg of -81bps. L/Os finished -8% net sellers, driven by supply concentrated megacap tech and discretionary vs demand in Financials and REITs. HFs finished +31bps buy skew, with sector skews benign and offsetting in nature. HFs sold mega cap tech, Hcare vs bought Staples, REITs, and discretionary.Derivatives: Active day in the tech space, as clients traded several names ahead of earnings. We saw buyers of short dated upside in AMZN, GOOG & SNOW, including a buyer of 13.5k next Friday AMZN call spreads. At the index level, flows trended the opposite way as clients focused on fix-strike protection in both SPX and NDX. The straddle for the rest of the week went out at 1.20%. (h/t Pat Grahling)
And here is something interesting: not even Goldman believes the bullshit spewed by Biden Department of Labor Propaganda.
We've been watching the workforce reduction dynamic closely into 2024. UPS and PYPL today joins the list of companies with layoffs announced over the last 3 months:
1. Twitch: 35% of workforce
2. iRobot: 31% of workforce
3. Hasbro: 20% of workforce
4. Spotify: 17% of workforce
5. Levi's: 15% of workforce
6. Zerox: 15% of workforce
7. Qualtrics: 14% of workforce
8. Wayfair: 13% of workforce
9. Duolingo: 10% of workforce
10. Washington Post: 10% of workforce
11. eBay: 9% of workforce
12. Business Insider: 8% of workforce
13. Paypal: 7% of workforce
14. Charles Schwab: 6% of workforce
15. Blackrock: 3% of workforce
16. UPS: 2% of workforce
17. Salesforce: 1% of workforce
18. Citigroup: 20,000 employees
19. Pixar: 1,300 employees
We, for one, can't wait for this Thursday's initial claims report to show another record low number just as US corporations lay off tens of thousands all around.
