{"id":167756,"date":"2023-10-30T11:19:35","date_gmt":"2023-10-30T08:19:36","guid":{"rendered":"http:\/\/kupitiblog.store\/576r\/week-ahead-fed-meeting-apple-earnings-and-an-oversold-stock-market\/"},"modified":"2023-10-30T11:19:35","modified_gmt":"2023-10-30T08:19:36","slug":"week-ahead-fed-meeting-apple-earnings-and-an-oversold-stock-market","status":"publish","type":"post","link":"https:\/\/kupitiblog.store\/576r\/week-ahead-fed-meeting-apple-earnings-and-an-oversold-stock-market\/","title":{"rendered":"Week Ahead: Fed Meeting, Apple Earnings and An Oversold Stock Market"},"content":{"rendered":"

 <\/p>\n

The first bar chart is the fed funds probability for Wednesday\u2019s 11\/1\/23 FOMC meeting and what it\u2019s telling readers is that there is a 99% chance that the FOMC will maintain the current fed funds rate of 5.25% \u2013 5.50% for the next 6 weeks.Fed Watch Fed Funds 01-11-23 Meeting<\/span><\/p>\n

The second bar chart shows the probability for maintaining the fed funds at 5.25% \u2013 5.5% at about 80% (as of Friday, October 27th) with a higher probability of about 20% of a 25 bp\u2019s increase on December 13, 2023, or the next FOMC meeting after Wednesday\u2019s.Fed Watch Fed Funds 12-13-23 Meeting<\/span><\/p>\n

Looking at the fed funds probability picture, it\u2019s clear the Fed \/ FOMC is on hold for now. Let\u2019s see if the FOMC statement on 11\/1\/23, generates a rising probability of a 25 bp rise for the 12\/13\/23 meeting. (It\u2019s still pretty likely that the Fed\/FOMC or Powell would remain hawkish with this week\u2019s statement.<\/p>\n

The bully pulpit and scaring the short end of the Treasury yield curve is still the easiest and cheapest form of monetary policy.) However, I also think investors have to look at yields at the longer end of the curve, as there are some signs of the US economy weakening.<\/p>\n

Let\u2019s see if the probability changes for the 12\/13\/23 FOMC meeting for a potential rate hike, after Wednesday, 11\/1\/23\u2019s meeting.<\/p>\n

Oversold Stock Market<\/strong><\/h2>\n

Oversold Sectors<\/span><\/p>\n

What\u2019s a Fundamentals blog post without a Bespoke chart?<\/p>\n

Every sector above is trading in \u201cextreme oversold\u201d levels except consumer staples.<\/p>\n

Crude oil<\/span> is weakening, but the dollar<\/span> is still too strong.<\/p>\n

This isn\u2019t an easy market to navigate.<\/p>\n

Apple Earnings, Thursday Night, November 2nd, After the Closing Bell:\u00a0<\/strong><\/h2>\n

Apple Inc (NASDAQ:AAPL<\/span>) reports after the bell Thursday night and they\u2019ve experienced the typical year in terms of pre-new product launch or the new Apple iPhone 15.<\/p>\n

The September quarter is the 4th quarter of fiscal \u201923, and it doesn\u2019t look like the holiday quarter (fiscal Q1 \u201924) will be any less robust than is typical for the iPhone giant, unless we see the onset of a nasty recession in Q4. However in the calendar 4th quarter, 2018, when Jay Powell was raising the fed funds rate and the stock market was taking gas, Apple managed to just meet EPS and revenue consensus. The company did not manage their typical healthy \u201cupside surprise\u201d for the holiday quarter in Q4 \u201918.<\/p>\n

A look at Apple\u2019s EPS and revenue revisions over the last year:<\/p>\n

Apple EPS Revisions<\/span><\/p>\n

These revisions are sourced from IBES data by Refinitiv and show a gradual softening in EPS and revenue estimates over the last 12 months, not really that unusual for the 2nd year of an iPhone launch.<\/p>\n

Apple Revenue Revisions<\/span><\/p>\n

The key really is how well will the new iPhone and other Apple products sell in the holiday \/ Christmas quarter that has already started.<\/p>\n

Apple is expecting -1% revenue growth and 8% EPS growth for the fiscal Q4 \u201923 that will be reported Thursday night, but for the December quarter, revenue is expected to be up 5% and EPS is expected to grow 12% for the holiday quarter.<\/p>\n

Here\u2019s a history of Apple\u2019s revenue for the key December quarter for the last 5 years:<\/p>\n