What You Missed Yesterday

Friday, February 2

I guess rates don’t matter when the winners keep winning. The market surged yesterday despite Jerome Powell dropping the hammer on the promise of interest rates getting lowered by March. It looks like enough businesses are finding ways to perform despite higher costs and higher rates.

More importantly, 3 of the top 10 biggest stocks in the world posted incredibly strong earnings yesterday and painted a very rosy picture for 2024 (at least for the most part). Meta can’t help but drive more efficiency, Amazon can only drive higher margins and Apple can only post revenue gains even when their revenue in China is falling off a cliff.

Basically, if you’re invested in the Magnificent 7 (besides Tesla)—you’re going to do just fine while the Russell 2000 struggles to find any signs of life. Slowly but surely, the mid-tier players will find a way forward in this tough environment—but the big dogs are thriving no matter what.

However, the rest of the market is getting hammered as a hotter-than-expected jobs report caused U.S. Treasury yields to pop on added inflation fears. With that sell-off not even denting the Mag 7 winners from yesterday—we’re really starting to see the economy bifurcate as the winners at scale continue winning despite how oppressive the macro environment is.

So, let’s explore how the top tier of this economy is staying dominant and how the battle lines will evolve in 2024.

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