Dear valued client,
Markets notched another week of gains as attention on Wall Street was divided between corporate earnings and revealing economic data.
Several significant companies released their earnings report this week. I will focus on two in particular; Microsoft and Tesla.
Microsoft’s stock rose early Tuesday as it released better-than-expected sales figures. Given its market capitalization and influence, Microsoft is often viewed as an indicator of the health of the technology sector as a whole. Bill Gates added $9 billion to his Microsoft position this week – indicating, to him at least, the company is currently in a healthy financial position and its long-term prospects remain encouraging. Likewise, Tesla – a barometer of the electric car industry – posted a revenue advance of 37% last quarter and expects a delivery increase of 38% in 2023. All promising revelations.
In economic news, the United States GDP grew 2.9% last quarter, higher than the expected 2.8% rate. Though down from the previous quarter (3.2%), it is still solid given the less-than-robust holiday season shopping in December. On the consumer side of the economic equation, the PCE (Personal Consumption Expenditures Index) came in at 5% last month, compared to 5.5% in November. Given the PCE is the Federal Reserve’s favored metric of inflation, this is good news in that inflationary pressures are easing. My hope is that consumers don’t pull back on their spending to the point where the economy begins to constrict sharply, which would cause portent ripple effects on global markets.
The war in Ukraine will reach its one-year anniversary in less than a month. After much deliberation, the U.S. and Germany have agreed to send battle tanks to Ukraine. The tanks are said to aid in the effort of breaking the weeks-long stalemate and reconquering now Russian-occupied territory. Will these efforts help expedite the end of the conflict? Will these efforts alienate Putin and postpone possible peace talks? Only time will tell. Investors will monitor the situation as its developments will continue to affect supply chains, energy, and trade at a global level.
“Peace cannot be kept by force; it can only be achieved by understanding.” – Albert Einstein
Have a terrific weekend,
PW
