My top 10 things to watch Wednesday, Jan. 18
1. “Mild recession” are the new watchwords. We’ll talk about this concept and how to play it during our “Monthly Meeting” at noon ET on Thursday. Meanwhile, before the opening bell Wednesday, new data shows that still-elevated inflation is easing. Producer prices in December declined a greater-than-expected 0.5%. Retail sales last month also dropped a tad-more-than-expected 1.1%.
2. Ahead of Wednesday’s session, the Nasdaq kept its rally going, now at seven straight sessions. The Dow Jones Industrial Average, however, took it on the chin Tuesday, closing down more than 1% and ending its four-session winning streak. The S&P 500‘s modest loss was also the first in five days.
3. United Airlines (UAL) reports a strong fourth quarter with earnings and revenue better than expected. Early 2023 outlook also beat, continuing the LTS pattern, “Life’s Too Short,” that we’re exploring in our “Mad Money” series. Travel is a post-Covid winner.
4. Citi downgrades Morgan Stanley (MS) to neutral (hold) from buy, saying all Tuesday’s good earnings news is already priced into the stock. Analysts fear net interest margin compression. Citi’s price target of $100 per share assumes a 13x multiple. Too high. But I think this Club stock has broken away from the pack. BMO Capital and Wells Fargo raise their PTs to $109 and $89, respectively.
5. Wells Fargo cuts price target on Goldman Sachs (GS) to $390 per share from $400 after Tuesday’s earnings disappointment. But analyst keeps overweight (buy) rating on the Dow stock. Goldman Sachs CEO David Solomon told CNBC from Davos on Wednesday the bank took on too much, too quickly in its consumer business.
6. UBS cuts price target on UnitedHealth (UNH) to $550 per share from $590 after a largely solid quarter; keeps neutral (hold) rating. Odd. Analysts say the Dow stock will be rangebound. In the defensive health insurance sector, we like and own Humana (HUM) for the Club.
7. Credit Suisse keeps its outperform (buy) rating on Apple (AAPL) after the announcement of the tech giant’s next-generation semiconductors, the M2 Pro and M2 Max, and new Mac Minis and MacBook Pros. Analysts also reiterated their $185-per-share price target on the Club stock, which represents over 38% upside from Tuesday’s close.
8. Club holding Microsoft (MSFT) is expected to announce thousands of layoffs, according to reports. U.K broadcaster Sky News, owned by CNBC’s parent company Comcast (CMCSA), says the reductions could total about 5% or roughly 11,000 positions. Other media accounts put the job cuts at much higher levels.
9. Treasury Secretary Janet Yellen sat down with Chinese Vice Premier Liu He in Zurich, Switzerland, a little more than 90 miles northwest of Davos, where the world’s elite are gathering. Ahead of flying out for her trip to Africa, Yellen’s first in-person meeting with Liu was described by Treasury as “candid, substantive, and constructive.” Both sides agreed to better communication.
10. Moderna (MRNA) shares jump nearly 7% after the biotech firm said late Tuesday that its RSV vaccine is 84% effective in preventing the disease in older adults.
(Jim Cramer’s Charitable Trust is long MS, HUM, AAPL, MSFT. See here for a full list of the stocks.)
As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade.
THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
