Earnings Expectations, Vacation Changes, & Biden Blames, Ep. #174

2023-04-20

Welcome Back! This week on The Capitalist Investor, hosts Three Take D and Tony the Tiger along with Cool Hand Luke discussed the market, current earnings, the Biden administration, and behavioral changes to summer vacations. They noted that 90% of the market’s gains this year have come from the top ten companies, the “FANG’s”, and that 20% of the S&P market cap will be reporting earnings next week, including many of the top ten companies. They also discussed Tesla’s activities and the controversy surrounding it, and talked ab...

Earnings Expectations

In this conversation, the speakers discuss the importance of understanding how resilient cloud spending is for the tech industry, and if the market has priced in a good earnings season. They give an example of Netflix, which reported earnings, with the concern that people are sharing passwords, which could impact Netflix's growth projections. They also note that Netflix is planning to crack down on password sharing at the end of Q2. The speakers agree that any negativity when expectations are positive could be a huge drag on the market and that the expectations are a lot higher, meaning a higher hurdle to jump.

The stock market has essentially rebounded 20% from the bottom. However, they pointed out that a rebound of 20% does not mean that it is in a new bull market, even though a lot of people have been saying that it’s a brand new bull market. They discussed how tech stocks are being priced in with the price-to-earnings ratio and their expectations for future growth. They also discussed how some tech companies are cutting jobs to add dollars to the bottom line, but they may be giving up some productivity in the process.

When it comes to consumer spending, people are not spending as much money as they used to due to a pending recession. Who is buying the newest iPhone, just to upgrade one generation? The resilience of consumers and companies has been extremely strong, but how will companies & stocks be affected if there is a hiccup from any of the big companies.

Vacation Changes

Vacations have changed over the years. Things like Ubers & AirBnB’s are just two examples that can impact the cost of a vacation. But other things such as societal changes, like drinking $20 cocktails can add to the cost of a vacation. Will consumers keep on spending money on big vacations, or will they stay to smaller, shorter, vacations this year or next year? The squad has some tips on what they do to save money on vacations.

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