My top 10 things to watch Wednesday 18 January
1. “Mild recession” are the new keywords. We’ll talk about this concept and how to play it at our “Monthly Meeting” on Thursday at noon ET. Meanwhile, ahead of Wednesday’s opening bell, new data shows still elevated inflation is easing. Producer prices fell by more than expected 0.5% in December. Retail sales also fell slightly more than expected by 1.1% last month.
2. Ahead of Wednesday’s session, the Nasdaq kept his rally going, now on seven consecutive sessions. The Dow Jones Industrial Average, took it on the chin on Tuesday, however, closing 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. The outlook for early 2023 was also better, continuing the “Life’s Too Short” LTS pattern we explore in our “Mad Money” series. Travel is a post-Covid winner.
4. Citi downgrades Morgan Stanley (MS) to neutral (hold) from buying, saying all of Tuesday’s good earnings news is already priced into the stock. Analysts fear compression of the net interest margin. Citi’s price target of $100 per share assumes a 13x multiple. Too high. But I think this Club share has broken away from the pack. BMO Capital and Wells Fargo raise their PTs to $109 and $89, respectively.
5. Wells Fargo lowers price target Goldman Sachs (GS) to $390 per share from $400 after Tuesday’s disappointing earnings. But the analyst maintains an overweight (buy) rating for Dow shares. David Solomon, CEO of Goldman Sachs, told CNBC from Davos on Wednesday that the bank was taking on too much and too quickly in its consumer business.
6. UBS lowers price target UnitedHealth (UNH) to $550 per share from $590 after a mostly solid quarter; retains neutral (hold) rating. Odd. Analysts say Dow stock will be rangebound. In the defensive health insurance industry, we love and own human (HUM) for the club.
7. Credit Suisse maintains its outperform (buy) rating. Apple (AAPL) after announcing 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 for the Club stock, representing an increase of more than 38% from Tuesday’s closing price.
8. keep club Microsoft (MSFT) announces 10,000 layoffs, or approximately 5% of workforce; Costs of $1.2 billion associated with rent consolidation and other activities. Microsoft will report its quarter next week, next Tuesday.
9. Finance Minister Janet Yellen sat down with Chinese Vice Premier Liu He in Zurich, Switzerland, just over 90 miles northwest of Davos, where the world’s elite gather. Prior to her flight to Africa, Yellen’s first face-to-face meeting with Liu was described by the Treasury Department as “candid, substantive and constructive.” Both parties agreed on better communication.
10. Moderna (MRNA) shares are up nearly 7% after the biotech 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 stocks.)
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