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| Greetings, Here are the top business stories for the next week: - The Core PCE Index will provide the next update on inflation.
- The Reserve Bank of New Zealand will announce its interest rate decision.
- Salesforce will post the quarterly results.
Thanks for reading! Stjepan
p/stjepan-kalinic | |
| 1 | | The Federal Reserve's preferred measure of inflation, the core Personal Consumption Expenditures (PCE) Price Index, is set to be released on Thursday, Feb. 29. Economists anticipate a 0.4% increase in the core PCE for January, reflecting a potential acceleration in underlying US inflation and highlighting the Fed's cautious approach to adjusting interest rates.  
More: - The core PCE price index measures the prices people in the United States pay for goods and services, excluding the volatile categories of food and energy. This exclusion provides a clearer view of the underlying inflation trend, reducing the impact of short-term fluctuations in these categories.
- Economists polled by The Wall Street Journal expect a 0.4% increase in the core PCE for January. If realized, this potential acceleration in inflation would mark the second consecutive monthly uptick, highlighting the ongoing challenges in managing price pressures.
- Federal Reserve officials have emphasized their patience in assessing inflation trends and have indicated that they will only consider adjustments to borrowing costs once they are confident in the sustained retreat of inflation. The PCE data will play a crucial role in shaping market expectations regarding the timing of any potential interest-rate cuts.
- Economists point to temporary factors, including residual seasonality and the rise in prices of portfolio-management services, as critical drivers behind the expected January increase in PCE inflation. Additionally, some of the anticipated gains in personal income are attributed to cost-of-living adjustments and a potentially unsustainably high nonfarm payroll print.
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| 2 | | The Reserve Bank of New Zealand (RBNZ) will announce its interest rate decision on February 29. Analysts anticipate a nuanced approach from the RBNZ, considering factors such as migration trends, inflationary pressures, and the potential impact on non-tradeable inflation. More: - The RBNZ will release a new set of economic projections, including the fresh inflation outlook, during the upcoming meeting. Investors and analysts will closely watch these projections, particularly the inflation outlook, to gauge the central bank's stance on monetary policy.
- The NZD, having demonstrated strength in February, is primarily driven by its carry advantage – a type of trade revolving around borrowing a low-yielding currency and buying a high-yielding currency.
- Despite a faster-than-forecasted disinflation in November, concerns persist about the resilience of the non-tradeable Consumer Price Index (CPI). The RBNZ remains watchful of inflationary pressures stemming from a tight labor market and rising immigration, with a focus on the impact on housing prices and rents.
- The surge in net immigration is a pivotal factor, with concerns raised about its potential inflationary impact on rents and housing prices. Recent trends indicate that the influx of migrants, particularly those aged 30-49 from countries like India, China, and the Philippines, may have varying inflationary effects through the housing channel.
- With the RBNZ's focus solely on price stability since December 2023, any shift in monetary policy will be communicated through Official Cash Rate (OCR) projections. Analysts anticipate the possibility of rate cuts starting in late 2024 or early 2025, with a potential tightening bias indicated in the front-end of the rate path.
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| 3 | | Domino's Pizza will announce its Q4 earnings results on Monday, Feb 26 before the market opens. Analysts anticipate a decline in year-over-year earnings, with a consensus EPS estimate of $4.39 and a revenue estimate of $1.42B. More: - The consensus EPS estimate for Q4 is $4.39, reflecting a 0.9% year-over-year decline, while the revenue estimate stands at $1.42B, signaling a 2.2% year-over-year increase. Over the last two years, DPZ has beaten EPS estimates 50% of the time and revenue estimates 38% of the time.
- Over the last three months, there have been 16 upward and four downward revisions in EPS estimates, indicating a generally positive sentiment. Revenue estimates have seen 12 upward revisions and seven downward revisions, further reflecting analysts' expectations for growth.
- Domino's Pizza has a track record of outperforming consensus EPS estimates, achieving this feat in all four quarters of the past year. Investors will keenly observe whether the company can maintain this positive trend in the upcoming earnings release.
- With revenues declining for two consecutive quarters, investors are interested in whether Q4 2023 can mark a turnaround. The company's ability to reverse the trend and achieve revenue growth will be a factor in influencing market sentiment.
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| 4 | | Salesforce will release its fourth-quarter 2024 results on Wednesday, Feb 28, with expectations of year-over-year growth in both revenues and earnings, fueled by the company's strategic investments in AI capabilities. Analysts forecast adjusted earnings of $2.09 per share and Q4 revenues of $8.52B, while the company's guidance suggests even more robust figures. More: - Analysts anticipate adjusted earnings of $2.09 per share for Q4 2024, reflecting a significant 24% year-over-year increase. Revenues are expected to reach $8.52B, indicating growth from the prior year's $8.38B.
- Salesforce's management previously forecasted Q4 earnings in the range of $2.25 to $2.26 per share, excluding special items. The revenue forecast falls between $9.18B and $9.23B. Both aspects of the guidance surpass analysts' projections, with the company consistently beating or matching quarterly earnings estimates for over a decade.
- The stock has been on an upward trajectory, rallying over 80% in the past year and nearing its all-time high from 2021. The company's focus on profitable growth and efficiency has contributed to this growth with a series of cost savings initiatives and the introduction of AI tools across its platform.
- Salesforce's emphasis on "profitable growth at scale," as highlighted by CEO Marc Benioff, is reflected in the company's improving margins. The adjusted operating margin in the last quarter reached 31.2%, up from 22.7% the previous year.
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| 5 | | Dell Technologies will release its quarterly results on Tuesday, Feb 27, with expectations of a decline in revenue for the period ending Jan 31, 2024. Analysts forecast an 11.5% decrease in revenue to $22.162B, while Evercore ISI includes a positive note, adding Dell to the Tactical Outperform list. More: - Analysts anticipate Dell to report a revenue decline of 11.5% to $22.162B, compared to $25.04B a year ago. The company's guidance, issued on Nov 30, 2023, projected revenue between $21.50B and $22.50B for the same period.
- The mean analyst estimate for Dell's earnings is $1.73 per share, reflecting market expectations for the company's financial performance. The current average analyst rating for Dell is "buy," with a breakdown of recommendations indicating 15 "strong buy" or "buy," two "hold," and one "sell" or "strong sell."
- The stock has experienced a breakout from a lengthy consolidation period ahead of its earnings report, showcasing a year-to-date increase of almost 15% and an impressive 109% growth over the previous year.
- Evercore ISI has added Dell to the Tactical Outperform list, citing expectations for sales above the long-term model for fiscal year 2025. They also raised the price target from $85 to $95 per share.
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| 6 | | The Bureau of Economic Analysis will release the preliminary Gross Domestic Product (GDP) for the 4th Quarter and Year 2023 (Second Estimate) on February 28, with a forecasted annualized growth rate of 3.3%. S&P Global Ratings provided an economic forecast update, anticipating U.S. real GDP growth of 2.4% in 2024, citing a sturdy job market and inflation cooling. More: - The GDP data is reported in an annualized format (quarterly change multiplied by 4), and three versions are released a month apart - Advance, second release, and Final. The advance and the second release are tagged as preliminary in the economic calendar.
- S&P Global Ratings expects U.S. real GDP growth of 1.6% between the fourth quarter of 2023 and the fourth quarter of 2024, an upward revision from their previous 0.8% forecast. For 2024, they project U.S. real GDP growth of 2.4%, up from the last 1.5% forecast.
- S&P Global Ratings attributes the upward revision to a sturdier job market and better-than-anticipated real GDP growth in the fourth quarter of 2023. Economic expansion exceeded expectations in the second half of 2023, with a solid fourth quarter providing a positive statistical carry-over effect to the 2024 forecast.
- Economic activity in the first quarter of 2024 is reported to be warmer than anticipated, with consumer spending benefiting from a robust labor market. S&P Global Ratings notes favorable year-end base effects contributing to the economic momentum.
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- Apple is holding an annual shareholder meeting on February 28. Dr. Wanda Austin is set to join the company's board, replacing the retired Al Gore and James Bell.
- The Mobile World Congress conference will kick off on Monday, Feb 26. This year's keynote speakers include Accenture CEO Julie Sweet, China Mobile Chairman Yang Jie, and Dell Technologies CEO Michael Dell.
- TJX Companies will release the latest earnings on Wednesday, Feb 28. Analysts expect an 11.5% increase in revenues. Wells Fargo Equity Research has the firm on the list of top companies exposed to China with potential tariff risks.
- Visa and Mastercard have come to a historic $5 billion settlement, marking a pivotal moment for small business owners. If your business accepts Visa/MC, Claim your share today*
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 | Freelance Writer | | Stjepan Kalinic is an analyst and writer with a background in institutional investment research. He's passionate about reading, playing music, lifting weights, and practicing martial sports. He values interesting books above everything else, and you can send recommendations through LinkedIn. | | This newsletter was edited by Megan LaBruna | |
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