| Greetings, Here's your daily business briefing. - Super Bowl to generate $1.1B in economic activity.
- Tuesday's CPI will provide clarification on inflation.
- Cisco will report earnings and provide clarification on restructuring.
Thanks for reading! Stjepan
p/stjepan-kalinic | |
| 1 | Super Bowl LVIII match between the Kansas City Chiefs and San Francisco 49ers is kicking off tonight at Allegiant Stadium in Las Vegas, NV. The event, hosted by "Sin City" for the first time, is set to break multiple records and generate a notable economic impact. - The American Gaming Association expects a record-breaking $23.1B in wagers, with a 35% increase in bettors from the previous year. Some 67.8 million Americans will place a bet – or around a quarter of the country's adult population.
- Super Bowl ads cost $7M for a 30-second slot, with networks projected to earn over $650M in ad revenue. This year's advertisement celebrities include Lionel Messi, Dan Marino, Christoper Walken, and Arnold Schwarzenegger. Usher will headline the half-time show.
- Taylor Swift will attend to support her boyfriend, Chief's tight end Travis Kelce. The NY Times has investigated whether her attendance actually increases NFL ratings.
- Resales are skyrocketing past the previous highs, with the average ticket price exceeding $10,000.
Why it Matters: The Super Bowl is anticipated to generate a gross economic impact of $1.1B for Las Vegas, drawing 150,000 visitors expected to spend $215M on various activities and reinforcing the city's position as a hub for sports and entertainment. The event contributes to Las Vegas' growing sports identity, with recent additions like the NHL's Golden Knights, the arrival of the Raiders, and hosting major sporting events, enhancing the city's status as a premier destination for sports enthusiasts. |     | |
| 2 | The release of the Consumer Price Index (CPI) on Tuesday, Feb. 13 is anticipated to show a continued slowdown in inflation. The CPI for January is forecasted to rise by 0.1%, with an annual increase of 2.9%, down from 3.4% in December, reflecting ongoing efforts by the Federal Reserve to address inflation concerns. More: - Factors like rising manufacturing costs and supply chain disruptions may pose risks to the inflation outlook, potentially impacting the timing of any rate cuts by the Federal Reserve.
- The New York Fed's measure of 1 and 3-year CPI expectations, along with the Michigan 1-year inflation expectations, indicates a downward trend. If these CPI expectations remain below the Fed's 2% target, they could influence future monetary policy decisions.
- The strength of the labor market, reflected in real wage gains and robust employment numbers, may contribute to persistent inflation. Ongoing consumer spending, driven by strong employment, is a key concern for the Fed.
- While prices for goods have fallen, inflation in services, particularly housing and rents, has been slower to decline. The divergence in inflation dynamics between goods and services remains a key factor in the overall inflation trend.
Zoom Out: - Ongoing challenges in the global supply chain, such as unrest in the Red Sea and the Panama Canal draught driving up shipping prices, may impact inflation. These disruptions could pose a headache for policymakers and affect the trajectory of inflation.
- Despite these challenges, the Baltic Dry Index (BDI), a leading economic indicator that tracks the cost of shipping dry bulk remained in a tight range year-to-date. This state indicates a potential weakness in global economic demand.
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| 3 | Cisco Systems ($CSCO) is set to release its second-quarter fiscal 2024 results on Feb. 14, with anticipated revenues between $12.6B and $12.8B. Analysts project a year-over-year decline of 4.6% in earnings to $0.84 per share and a 6.4% drop in revenues to $12.72B. More: - Non-GAAP earnings are expected to be between $0.82 and $0.84 per share.
- Cisco's Q2 results are expected to benefit from its diverse product portfolio, innovation in key areas like generative AI and cloud, and a focus on fortifying its unified security platform.
- Macroeconomic headwinds and declining new orders due to elevated inventory levels may impact the company's top-line growth.
- The company is reportedly looking to restructure and focus on high-growth areas. The process might involve reducing its current headcount of 84,900 by thousands. The last time the company announced such a measure was in November 2022, when it laid off approximately 5% of its workforce.
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| 4 | Coca-Cola ($KO) is expected to report Q4 fiscal 2023 earnings on Feb. 13, with a consensus estimate of $0.48 per share, representing a 6.7% year-over-year increase, and revenues expected to reach $10.63B, up 5% from the previous year. Analysts anticipate continued momentum in Coca-Cola's performance, with a 10% increase in net income, a 7% rise in revenue to $10.8B, and a $0.04 per share increase in earnings to $0.49. More: - Analysts anticipate a 10% growth in Coca-Cola's net income for Q4, reaching $2.15B. Revenue growth is anticipated across all geographic regions, with North American growth forecast at 4.7% YoY and Latin America jumping nearly 13%.
- The company is expected to reverse prior-year losses in Europe, achieving a quarterly revenue growth of about 4.5%.
- Concerns about the impact of weight-loss drugs, like Ozempic, on consumer snacking appetite will be closely watched, with last quarter's sales showing minimal impact on beverage sales.
- KO stock has not participated in the ongoing stock rally, losing 0.43% year-to-date. In 2023, it significantly underperformed in the market, declining 7% compared to a 24% rally in the S&P 500.
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| 5 | Form 13F, mandated by the SEC, is due Feb. 14 for the calendar quarter ending Dec. 31, 2023. It is a quarterly report filed by institutional investment managers with at least $100M in assets, disclosing their equity holdings and offering insights into market trends. More: - Institutional investment managers with over $100M in assets must file Form 13F within 45 days after the end of each calendar quarter. The reports reveal long positions, put and call options, ADRs, and convertible notes, providing transparency into the strategies of major institutional investors.
- While considered a valuable tool for tracking institutional investment strategies, 13F filings have limitations, as they only cover long positions and certain investment categories, leaving out crucial details such as short positions.
- Congress introduced the 13F requirement in 1975 to enhance public confidence in the integrity of the U.S. financial markets. Advocacy groups like Americans for Financial Reform and the National Investor Relations Institute have urged the SEC to implement changes to address these limitations, including more frequent reporting and disclosure of a wider range of financial products.
- The Magnificent Seven group of stocks consisting of Nvidia, Microsoft, Amazon, Apple, Meta, Alphabet, and Tesla will be in the spotlight for institutional ownership changes.
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| 6 | Microsoft is set to unveil its "vision for the future of Xbox" in an upcoming business update, responding to speculation about Xbox games potentially coming to other platforms. While details remain scarce, recent reports suggest internal reassurances within Microsoft that it will continue producing Xbox consoles, potentially dispelling rumors of a shift toward multi-platform publishing. More: - Speculation arose that Microsoft might sacrifice some Xbox exclusives for multi-platform publishing, prompting concerns among Xbox players
- Phil Spencer, head of Microsoft Gaming, acknowledged the questions and speculation surrounding Xbox's future. He emphasized the company's commitment to addressing concerns and providing more information about its future plans in the upcoming event.
- Reports suggest an internal town hall meeting where Phil Spencer reassured employees about Microsoft's commitment to producing Xbox consoles. The company purportedly pledged to continue making Xbox hardware, signaling a dedication to its multi-device gaming strategy.
- Xbox brand has had four generations of hardware over 23 years, selling over 180 million units. Yet, the latest reports indicate that PlayStation 5 has outsold Xbox by an almost two-to-one margin.
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| 7 | | Quick Hits: - Visa and Mastercard have come to a historic $5B settlement, marking a pivotal moment for small business owners.*
- SeaWorld Entertainment ($SEAS) will formally change its corporate name to United Parks & Resorts Inc. The stock symbol will change to PRKS.
- Producer Price Index (PPI) will be released on Feb. 16, with economists forecasting a 0.1% month-over-month increase. PPIs provide measures of average movements of prices received by the producers of various commodities.
- FED speakers have a busy schedule next week. Thomas Barkin, Neel Kashkari, Austan Goolsbee, Mary Daly, Michael Barr, and Raphael Bostic are all participating in various events across the country.
- Dive into advanced tips and tricks with the Kubernetes Cookbook Get your copy, compliments of the cloud experts at DoiT.*
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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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