Technocracy!? | Long $MTH


Well folks, big news in the tech sector served as the main catalyst yesterday to higher moves for the Nasdaq, which is up 18% already since the start of the year! Today, all eyes will be on Q1’s GDP figure, which is slated to come in at 2% based on consensus estimates – check those numbers out in real time here and read on for your daily dose of market inspiration within this 267th Coachman’s Report

Markets in Review…

While a majority of sectors have traded down over the last few days, big surprises on earnings and announcements within the tech sectors have pushed the Nasdaq higher, with the index gaining 58 bps by yesterday’s close.

Interestingly enough, after Microsoft reported beats on both earnings and revenue estimates, increased guidance on the prospects of their AI business not only served as a main driver for sentiment surrounding their stock, but also Nvidia’s – driving both equities +7% and +3% by close given the heightened demand circling Nvidia’s product line given its vast implications as an input to the AI supply chain; we’ll be watching this intently over the next couple weeks as the earning season continues to unfold and possibly lend further credence to the position of semiconductors as a strong corollary industry to AI within the market.

Long: Meritage Homes Corporation (MTH-NYSE) | Timeline: 1 day

Meritage Homes Corporation (MTH), together with its subsidiaries, designs and builds single-family attached and detached homes in the United States, reported some record results in their Q1 2023 results yesterday after market close. The company beat earnings and revenue estimates by 37.28% and 23.21%, respectively, mainly attributable to the record year-over-year closing units and home closing revenue this quarter. (Full Story)

Turning to the chart, MTH has continued to perform well after a reversal nearing the end of 2022. That said, as investor sentiment is now at a high and the stock continues in this uptrend, traders should expect a bounce off the 50-period moving average and the Stochastic RSI begin to reverse from extremely oversold levels.

Zooming Out…

Debt Crisis Diverted?

Last night the House narrowly passed a bill to raise the debt ceiling by $1.5T USD or suspend the ceiling until March 31st 2024- whichever occurs first- in a 217-215 vote. While one would figure a bipartisan effort would go into ensuring America didn’t default in early June, the vote was split roughly across party lines due to the bill’s austerity measures which include: spending increases by only 1% per year, blocking student loan forgiveness, reallocating unspent COVID funds, rescinding new IRS funding, and raising the working age requirement for SNAP benefits- cuts that would amount to roughly $4.5T in deficit reduction over the decade.

While this does bring hope to the market, reflected in the 13-75bp gains across the major US indices in pre market trading, the US isn’t fully out of the woods yet as the bill must pass the Democrat controlled Senate.

Canada’s Convoy Returns… 

In response to what’s been dubbed as unfairly low salary increases and non access to remote work opportunities, over 150 thousand members of Canada’s PSAC (Public Service Alliance of Canada) have been striking for the past two weeks, and don’t plan on stopping until mid May. This strike has grown to such a degree that members have boasted about blocking ports in Saint John’s, Montreal, and Vancouver, alongside the Treasury building in Ottawa- that said, the government is steadfast in ensuring the “best deal for the taxpayers”.

While the plight of the individuals involved is clear, especially as inflation for basic goods has soared since the start of the pandemic- the current response to such blockades, or lack thereof, is in stark contrast to the activation of the Emergencies Act during the “Freedom Convoy Protests” of early 2022, even though the two groups have blockaded essential infrastructure. This shift in responses also comes as PM Trudeau begins to heavily backpedal on his COVID policies, and claim that he nor the government ever forced anybody to get vaccinated.

Making Headlines…

Canada’s new investment rules are being inspired by dishwashers, refrigerators

  • Canada’s new labels for green investments are being inspired in part by energy ratings on refrigerators and dishwashers. That’s according to Barbara Zvan, the Canadian pension fund boss looking to ease uncertainty for investors and shrink the estimated $115 billion per year shortfall in spending needed to hit Ottawa’s net zero by 2050 goal. (Full Story)

Ukraine war: Bakhmut defenders worry about losing support

  • A year ago Volodymyr and his men were firing all 40 barrels of their BM-21 Grad rocket launcher in one go. Now they can only afford to fire a few at a time at Russian targets.(Full Story)

Microsoft mentioned artificial intelligence 50 times on its earnings call and Wall Street is thrilled

  • The company highlighted its ongoing investment in artificial intelligence through its $10 billion stake in ChatGPT parent OpenAI, and Microsoft CEO Satya Nadella is bullish about the growth opportunity ahead. (Full Story)

China’s stock markets have lost $550 billion in the last week as investors doubt the economy’s rebound

  • In the past week alone, the Shanghai and Shenzhen stock exchanges have lost about $519 billion in market capitalization, while companies listed on the Nasdaq Golden Dragon index shed $31 billion, The Financial Times reported. (Full Story)

Chart of the Day: Chinese Yuan overtakes US dollar as most-used currency in China’s cross-border transactions for the first time in history.

“Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth.”

– Marcus Aurelius