Happy Friday folks! While 2023’s first week was quite lackluster for markets, it is surely going out with a bang today as the jobs data released earlier this morning came in well above expectations; the US economy added 233k jobs for the month of December vs. 200k forecasted. This has brought the unemployment rate to 3.5% – read on for more on how this will affect the macro picture as well as for stories on the clear divide emerging within the Republican party, Mexico’s state of chaos and a special equity research report on Autodesk within this 189th Coachman’s Report!
Markets in Review
Prior to the jobs release, equity indices were relatively unchanged in the premarket today. With the Dow, S&P and Nasdaq +1, -8 and -31 bps respectively, following its release, all futures pushed into the green, ranging between 30 to 60 bps positive. Additionally, this has had a large effect on target rate probabilities for the February 1st FOMC meeting, with the likelihood of a 25 bp interest rate hike increasing from just 58% yesterday to 63% this morning. Lastly, US treasuries have started to trade lower in the anticipation of this next hike, with the yields on some shorter tenors pushing above 4.8% – not only is it likely they’ll reach 5% a month from now but also that this further inverts the curve (pictured below) as many grow even more skeptical of the Fed’s ability to actually achieve a ‘soft landing’.
Long: Aehr Test Systems (AEHR-NASDAQ) | Timeline: 2 days
Aehr Test Systems (AEHR), which provides test systems for burning-in semiconductor devices in wafer level, singulated die, and package part form worldwide, reported unbelievable growth in their earnings report, yesterday after the market closed. The company beat earnings and revenue estimates by 88.24% and 15.90%, respectively, with net sales coming in at $14.8 million, up 54% YoY as the company’s momentum in silicon carbide wafer level burn-in continues to grow. (Full Story) Referring to the chart, macroeconomic headwinds affecting the semiconductor industry haven’t stopped AEHR from attracting more and more buying, increasing from lows of $7 back in May. As the stock continued to increase, the price fluctuated within an ascending broadening wedge – and as it reached the channel’s lower end, a bounce is likely, especially with the Stochastic RSI carrying substantial bullish momentum.
A House Divided As of Friday morning, Republican Speaker of the House candidate Kevin McCarthy failed to secure majority votes for the 11th time. McCarthy and some of his supporters have claimed that he’s “earned” the position due to his years of service to the Republican Party. On the other hand, his detractors claim his election will be the continuation of “classic politics”. Although McCarthy has offered concessions and made promises to his Republican colleagues, many don’t trust the speaker candidate to honour his word, and as such have not been swayed. In terms of what this means for ordinary government proceedings, newly elected House members have still not been able to take their oath, or be sworn into office. Additionally many have made the claim that the DOD, intelligence agencies, and State Department have little to no oversight without the newly elected congressional members. The next time McCarthy will be eligible to call another vote is when the House resumes session at noon EST today. While extremely unlikely, maybe the 12th time’s the charm for Kevin. Mexico Under Siege Following the capture of El Chapo’s son, parts of Mexico have been thrown into a state of chaos. For context, El Chapo was one of the cartel’s most notorious crime lords prior to his extradition to the United States in 2017. While still behind bars, many followers remain loyal to him and his dynasty, which has led to this latest fiasco. The acts of violence included the shooting of two planes on the tarmac at a local airport, along with multiple broad-day riots primarily concentrated within the northern part of Sinaloa state. The violence escalated to a fever pitch in the city of Culiacán as militants battled against government troops and helicopters.
Equity Research byThe Globetrotting Investor – Autodesk ($ADSK-NASDAQ)
Autodesk, Inc. is an American multinational software corporation that makes software products and services for a plethora of industries including architecture, engineering, construction, manufacturing and media – with clients spanning all areas of the economy as well as a stock price that’s 50% off from highs. Read a full report here by the The Globetrotting Investor to find out if now is the time to get into this multi-billion dollar powerhouse.
World Food Index Ends Year Where It Began After Dramatic Run
After a year marred by disruptions from the war in Ukraine and extreme weather, global food prices ended 2022 roughly where they started. (Full Story)
Oil Set for Large Weekly Decline…
Oil headed for a large weekly loss as demand concerns continue to hang over the market. (Full Story)
McDonald’s Japan hikes prices for 3rd time in 10 months on surging costs
The Japanese operator of McDonald’s restaurants announced its third price hike in less than a year on Friday in the latest sign of compounding inflationary pressures on the nation’s consumers. (Full Story)
Toronto region home sales down 48.2% in December from previous year
Home sales in the Greater Toronto Area (GTA) fell sharply in December 2022 when compared to the previous year, as heightened interest rates weighed on the housing market, according to a new report. (Full Story)
Chart of the Day: Canada with more private debt than Japan through the 90’s
“Doubt kills more dreams than failure ever will.”
– Suzy Kassem