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Friday December 2, 2022



Alphabet Reports Earnings

Alphabet Inc. (GOOGL) released its latest quarterly earnings on Tuesday, February 1. The tech titan reported revenue that exceeded expectations. The parent company of Google saw shares jump 8% following the earnings release

The company reported revenue of $75.3 billion, up 32% from $56.9 billion during the same quarter last year. This beat analysts' expected revenue of $72.2 billion.

"Q4 saw ongoing strong growth in our advertising business, which helped millions of businesses thrive and find new customers, a quarterly sales record for our Pixel phones despite supply constraints, and our Cloud business continuing to grow strongly," said Alphabet CEO, Sundar Pichai. "Our deep investment in AI technologies continues to drive extraordinary and helpful experiences for people and businesses, across our most important products."

Alphabet posted net income of $20.64 billion, or $30.69 per adjusted share for the second quarter. This was up from $15.22 billion, or $22.30 per adjusted share during the same time last year.

Advertising revenue from Google came in at $61.24 billion for the quarter. This was up 33% from the prior year's quarter. The company attributed the revenue growth to its Retail segment. Google Cloud's revenue increased to $5.54 billion, up from $3.83 billion.

Alphabet Inc. (GOOGL) shares ended the week at $X, up/down X% for the week.

Amazon Posts Earnings

Amazon.com, Inc. (AMZN) reported its latest quarterly earnings on Thursday, February 3. The online retail giant reported big earnings. The company's stock rose 14% following the release of the report.

The company's net sales reached $137.4 billion for the fourth quarter. This was up 9% from $125.6 billion in sales last year at this time.

"As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to Omicron," said Amazon CEO Andy Jassy. "Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic."

The company's net income for the quarter was $14.3 billion or $27.75 per adjusted share. This was up from $7.2 billion or $14.09 per adjusted share at the same time last year.

The company reported net product sales of $71.1 billion, surpassing its net service sales of $54.5 billion. The company forecast sales growth may increase 3-8% in the first quarter of 2022. Amazon attributed its sales increase this quarter to the growth of its AWS cloud service division, the addition of marquee new entertainment, and its heavy investment in Prime.

Amazon.com, Inc. (AMZN) shares ended the week at $X, up/down X% for the week

Disney Releases Earnings Report

The Walt Disney Company (DIS) reported its quarterly earnings on Wednesday, February 9. The company's revenue and net income has increased year over year.

Revenue for the quarter came in at $21.8 billion. This was up 34% from $16.2 billion in revenue last year at this time.

"We've had a very strong start to the fiscal year, with a significant rise in earnings per share, record revenue and operating income at our domestic parks and resorts, the launch of a new franchise with Encanto, and a significant increase in total subscriptions across our streaming portfolio to 196.4 million, including 11.8 million Disney+ subscribers added in the first quarter," said Disney CEO Bob Chapek. "This marks the final year of The Walt Disney Company's first century, and performance like this coupled with our unmatched collection of assets and platforms, creative capabilities, and unique place in the culture give me great confidence we will continue to define entertainment for the next 100 years."

Disney posted net income of $1.1 billion for the quarter or $0.63 per adjusted share. Last year at this time, the company reported a net income of $29 million or $0.02 per adjusted share.

The company's Parks, Experiences and Products segment posted a jump in revenue as its theme parks around the world have reopened and are operating with fewer COVID-19 capacity restrictions. Domestic revenue hit $7.2 billion during the quarter, up from a mere $3.6 billion during the same quarter last year. The company's significant turnaround in revenue came as more guests attended its theme parks, stayed in its branded hotels and booked cruises. International revenue experienced a gradual increase from $378 million to $861 million. International locations continue to be impacted by mandatory capacity and travel restrictions.

The Walt Disney Company (DIS) shares ended the week at $, up/down % for the week.

The Dow started the week at 35,108 and closed at X on 2/11. The S&P 500 started the week at 4,505 and closed at X. The NASDAQ started the week at 14,119 and closed at X.

Treasury Yields Climb

U.S. Treasury yields rose throughout the week as the market experienced the highest annual increase in inflation in 40 years. Yields continued to grow on Friday as unemployment claims begin to decline in the wake of the Omicron variant.

On Thursday, the U.S. Department of Labor announced that the consumer price index, which measures the costs of dozens of everyday consumer goods, rose 7.5% for January as compared to the prior year. This marks the highest annual price increase since February 1982.

"With another surprise jump in inflation in January, markets continue to be concerned about an aggressive Fed," said asset allocation strategist at LPL Financial, Barry Gilbert. "While things may start getting better from here, market anxiety about potential Fed overtightening won't go away until there are clear signs inflation is coming under control."

The benchmark 10-year Treasury note yield opened the week of 2/07 at 1.913 and traded as high as 2.057 % on Thursday. The 30-year Treasury bond yield opened the week at 2.213% and traded as high as 2.341% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment insurance totaled 223,000. This was better than market estimates of 230,000 and was an improvement from the prior week's 238,000.

"The omicron bump in unemployment claims is dropping, and we should see levels revert to the pre-pandemic average this month," said corporate economist at Navy Federal Credit Union, Robert Frick. "But the country was at peak omicron when surveys were taken for January jobs numbers, so we can expect weak employment figures in tomorrow's release, and possibly a net loss in jobs. Hiring should rebound quickly though, if previous pandemic waves are any guide."

The 10-year Treasury note yield closed at x% on 2/11, while the 30-year Treasury bond yield was x%.

Mortgage Rates Increase

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, February 10. The Mortgage rates increase is due largely to the high inflation coupled with the uncertainty of the Omicron COVID-19 variants impact on the markets.

This week, the 30-year fixed rate mortgage averaged 3.69%, up from last week's average of 3.55%. Last year at this time, the 30-year fixed rate mortgage averaged 2.73%.

The 15-year fixed rate mortgage averaged 2.93% this week, up from 2.77% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.19%.

"The normalization of the economy continues as mortgage rates jumped to the highest level since the emergence of the pandemic," said Freddie Mac's Chief Economist Sam Khater, "Rate increases are expected to continue due to a strong labor market and high inflation, which likely will have an adverse impact on homebuyer demand.

Based on published national averages, the savings rate was 0.06% as of 12/20. The one-year CD averaged 0.13%.

Published February 11, 2022

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