Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
You can access both of our platforms from a single Saxo account.
Earnings round trip: Meta, Caterpillar, and Amazon
Peter Garnry
Chief Investment Strategist
Summary: Meta blasts Q1 revenue and earnings estimates on top of guiding strong Q2 revenue figures significantly exceeding estimates suggesting the online advertising industry has turned a corner reflecting a more upbeat outlook from companies in Q2. From a macro perspective this is very positive and suggests that a recession is not imminent just yet. Caterpillar revenue and earnings in Q1 are strong and above consensus estimates driven by a much stronger pricing effect than expected while confirming the 2023 outlook. Amazon is the next major earnings release in focus and will be reporting after the US market close in which investors will be hoping for its operating income extending the positive gains showed in Q4.
Caterpillar beats estimates on surprise demand
If there is a company that should begin feeling the headwinds of higher interest rates it should be Caterpillar, the world’s largest manufacturer of machinery and construction equipment, but the company just reported better than expected Q1 results. Revenue came in at $15.9bn vs est. $15.3bn an increase of 17% y/y driven by strong price realization but also higher sales volume. Higher prices also lifts the operating income to $3.3bn vs est. $2.4bn underpinning that Caterpillar has the market power to pass on inflation with customers accepting it without destroying demand. The forward-looking statements from Caterpillar suggests that the economy is humming along.
Meta Q1 results confirm advertising has turned a corner
Meta has been the big winner among the mega caps so far in the Q1 earnings season with last night’s results smashing estimates. Q1 advertising revenue was $28.1bn vs est. $26.8bn and the Q2 total revenue guidance of $29.5-32bn is higher than consensus at $29.5bn suggesting advertising is beginning to surprise to the upside like we saw the other day from Alphabet’s Q1 results. From a macro perspective this suggests that the economy could begin accelerating over the next 3-6 months. The only disappointing thing in the result was that the headcount is only down 1% y/y and that it expects the Reality Labs segment’s operating loss to increase indicating that the CEO and founder Mark Zuckerberg is not willing to sacrifice his bet on the metaverse just yet. Meta shares are up 12% in pre-market trading.
Can Amazon get its mojo back?
The big earnings focus tonight after the US market close is Amazon which is expected to see just 7% y/y revenue growth which implies slightly or no volume growth at the largest e-commerce retailer in the developed world. Amazon misread the signals during the pandemic which led to massive overinvestment which has haunted the company for many quarters and recent cost-cutting exercises should extend the rise in operating income which happened in the last quarter (see chart).
Given the low expectations for Amazon it should be manageable for the company to beat expectations, but despite many years of abrupt success it is no so given any longer. Competition has increased dramatically in e-commerce and cloud infrastructure, and Amazon’s international e-commerce operations remain a negative for the outlook.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...