Fed Tightening and Easing All at Once? | How Wrong Were Analysts on Earnings?

Broken Pie Chart

ZEGA CEO Jay Pestrichelli rejoins Derek Moore to talk Jay Powell and the Fed seemingly tightening and loosening all at once. They raised rates, but then increased the size of their balance sheet through the SVB (and other) bank bailouts. Then, observing the deep discounts, some REIT etfs are currently trading to NAV and what that infers. Also, Hindenburg research (a short seller) put out negative research on Block (Square). The role of short-selling firms and noting the high stock-based compensation impact on non-GAAP earnings in Block. Finally, Jay and Derek discuss the changes to sector classifications and the impact on financials, how bad a year 2022 was for both stocks and bonds together, and how earnings estimates look going forward and how far off analysts were last year. Of course, they’ll have some recommendations.

2023 Q1 earnings estimates on the S&P 500 Index companies

How the analysts brought down earnings estimates

How off analysts were from their early estimates to actual earnings

Hindenburg negative Block (Square) piece before they sold short

SBC or Stock Based Compensation impact on GAAP earnings vs adjusted earnings

Real Estate REITs seem to be trading below their NAV, are they ahead of the game?

Goldman Sachs points out tightening financial conditions are a quasi-25-50 bps raise

How the bank crisis may make lending standards tighter

Will financials have a headwind on earnings due to tightening credit conditions?

Fed balance sheet balloons up after bailouts of banks

GICS sector re-classification by moving companies like Visa and Mastercard to financials

They discuss whether sector re-classifications in many companies were the right fit

Berkshire Hathaway holds Apple and other non-financials but are the highest weighted in XLF

What the earnings outlook shows for first quarter through the end of 2023

How far off analysts were when looking at their projections for Q4 22 a year out

How much analysts estimates for sectors and the S&P 500 earnings change over time

QT Quantitative Tightening and QE Quantitative Easing all at the same time?

Treasury Secretary Janet Yellen confusing answers to congress on bank bailouts

Did the Fed need to raise 25 bps to keep its credibility?

Mentioned in this Episode:

Sequence of recessions and what comes first https://podcasts.apple.com/us/podcast/sequence-of-recessions-slowdowns-dividends-make/id1432836154?i=1000603802075

US Debt Bomb and Growing Interest Rates effects on US Federal Deficit and Budget https://podcasts.apple.com/us/podcast/us-debt-bomb-interest-rates-brewing-auto-loan-problem/id1432836154?i=1000602839094

Bloomberg Odd Lots Podcast deep dive into state of commercial real estate and loans https://podcasts.apple.com/us/podcast/where-stress-is-showing-in-the-%2420-trillion/id1056200096?i=1000604934309

Podcast Explaining Overnight Reverse Repos ON RRP by the FED https://open.spotify.com/episode/09VOIffldtn3WxNm7rzyNx

Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt

Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr

Contact Derek [e-mail]