The Weekly Finance Wrap-Up

US Federal Bank Meeting

The Federal Open Market Committee (FOMC) data this week led markets to bet interest rate cuts are more likely in May 2024, not March 2024.

US earnings recession probability is low, although some bank balance sheets stress is presenting. US commercial real estate is very idiosyncratic, and the “3 days a week” effect is impacting office valuations.

Fundstrat notes the percentage of US companies reporting >10% earnings per share growth continues to gain. 

EPS is tracking +3.6% above the start of the quarter. This is above the 3.2% long-term average. And we are only at the midpoint, so this means the EPS estimates could ultimately be +6% above the start of the quarter (ex-Financials).

The market reaction to earnings has been improving.

Stocks with Quarterly EPS Growth Chart

There are possible signs China’s stock market and hence, China’s economy might be bottoming. While there has been much talk about the collapse of China lenders in the headlines, it seems like China equities might have made an interim low.

China Stocks Graph

In the streaming and technology sector, Ex FANG (Facebook, Amazon, Netflix, Google) market valuations in the US are not demanding, currently on 15.8 x 2025 earnings.  

Meanwhile in Australia:  

The Reserve Bank of Australia sits on the interest rate, cash rate holding at 4.35%. The rate hikes are done for now.  

Tune in to Siobhan Blewitt with Libbi Gorr on Enterprise Me, Disrupt Radio, on Monday 12th, February at 7am to hear more of what the next week ahead has in store for the economy and the markets.