![NVDA 4Q23 EPS increase was $10.7b of S&P 500 EPS gain $34.9B (31%). AMZN another 30%. Ex-bottom 15 cos, S&P 500 EPS growth >14%](https://cdn.fsinsight.com/wp-content/uploads/2024/02/image-40.png)
![NVDA 4Q23 EPS increase was $10.7b of S&P 500 EPS gain $34.9B (31%). AMZN another 30%. Ex-bottom 15 cos, S&P 500 EPS growth >14%](https://cdn2.fsinsight.com/wp-content/uploads/2024/02/image-327-1024x684.png)
![NVDA 4Q23 EPS increase was $10.7b of S&P 500 EPS gain $34.9B (31%). AMZN another 30%. Ex-bottom 15 cos, S&P 500 EPS growth >14%](https://cdn2.fsinsight.com/wp-content/uploads/2024/02/image-328-1024x442.png)
![NVDA 4Q23 EPS increase was $10.7b of S&P 500 EPS gain $34.9B (31%). AMZN another 30%. Ex-bottom 15 cos, S&P 500 EPS growth >14%](https://cdn2.fsinsight.com/wp-content/uploads/2024/02/image-329-1024x291.png)
VIDEO: NVDA accounted for 31% of all profit growth in 4Q23, so a strong argument against a bubble. Inflation remains the unknown near-term.
Please click below to view our Macro Minute (Duration: 5:02).
With just a few trading days left in February, the S&P 500 is set to gain ~5%, bringing YTD gains to ~7%. As we noted early in February, given the strength of the Jan gains (>2%), the probability of a positive year jumps to 92%. Moreover, our YE target of 5,200 is likely low.
- The median gain, using the precedent 15 years of similar Jan, implies 5,400 to 5,500 by YE. But we do not feel any urgency at this moment to adjust a YE target that is more than 10 months away.
- 4Q23 EPS season largely ended last week. NVDA 1.39% is one of the last major companies to report, and there are not even 20 EPS reports left. Overall, it has been a good earnings season with 78% beating by a median of 7%. And the bottoms up EPS figure has risen 3% to $55.20.
- Are earnings tracking towards our 2025 EPS of $260? Here is some simple math:
– 4Q23 EPS annualized is $221 ($55.20 x 4)
– The “surprise” level is 7% and EPS is 3% higher than vs start of EPS
– 4Q23 EPS growth is 7%, and >14% ex-bottom 15 stocks
– Our 2025 EPS is $260, or 17% higher
– 2025 EPS is 2 years away
– This implies 8% EPS CAGR - So yes, EPS is definitely tracking towards our $260 2025 EPS figure. That is a good thing.
- The S&P 500 added $35 billion in net income in 4Q23 vs 4Q22, which is the 7% EPS growth. The contributions from NVDA 1.39% and AMZN 3.74% is staggering:
– NVDA 1.39% added $10.7B net income 4Q23 vs 4Q22
– AMZN 3.74% added $10.3B
– NVDA is 31% of EPS growth, AMZN is 30%
– these 2 accounted for 61% of all added net income - AI and the associated ecosystem is adding up to real spending and growth. This is a strong argument against those deeming AI is a bubble. In fact, NVDA 1.39% forward FCF yield of 3% is about the same as SPY 0.91% 3.5% yield. Since when is a bubble seeing a FCF yield just a touch lower than the overall market?
- There is some meaningful macro data this week. The two key ones, in my view, are:
– 2/29 Thu: Jan core PCE deflator +0.40%
– 3/1 Fri: Feb ISM Manufacturing 49.5 vs 49.1 last month - The core PCE deflator is largely interpolated because with Jan CPI and Jan PPI, tireless Ken is able to calculate >90% of the components. We will have a preview closer to Thursday, but the only “surprise” would be if the reading is on the soft side.
- As for ISM, a reading above 50, in my view, would be positive. This has been stuck below 50 since early 2022 and a move above 50 signals expansion. While those inflationistas might argue this is inflationary, that is really not the importance.
– a move >50 would indicate the US manufacturing recession is over
– this has a large influence on EPS growth and thus, strengthens our $260 conviction - Would the Fed worry about a 50 ISM? To us, this is not inflationary. The drivers of inflation at the moment are housing and auto insurance. And ex those items, inflation is largely falling like a rock.
Bottom line: We still see dry powder on sidelines
Stocks are going up on good news, which is a good thing. A worrying sign is stocks falling on good news. That has not happened yet.
- for macro risks, the next key hurdle will be February CPI which is released 3/12
- that is several weeks away
![NVDA 4Q23 EPS increase was $10.7b of S&P 500 EPS gain $34.9B (31%). AMZN another 30%. Ex-bottom 15 cos, S&P 500 EPS growth >14%](https://cdn2.fsinsight.com/wp-content/uploads/2024/02/image-330.png)
![NVDA 4Q23 EPS increase was $10.7b of S&P 500 EPS gain $34.9B (31%). AMZN another 30%. Ex-bottom 15 cos, S&P 500 EPS growth >14%](https://cdn2.fsinsight.com/wp-content/uploads/2024/02/image-331.png)
![NVDA 4Q23 EPS increase was $10.7b of S&P 500 EPS gain $34.9B (31%). AMZN another 30%. Ex-bottom 15 cos, S&P 500 EPS growth >14%](https://cdn2.fsinsight.com/wp-content/uploads/2024/02/image-337.png)
![NVDA 4Q23 EPS increase was $10.7b of S&P 500 EPS gain $34.9B (31%). AMZN another 30%. Ex-bottom 15 cos, S&P 500 EPS growth >14%](https://cdn2.fsinsight.com/wp-content/uploads/2024/02/image-332.png)
![NVDA 4Q23 EPS increase was $10.7b of S&P 500 EPS gain $34.9B (31%). AMZN another 30%. Ex-bottom 15 cos, S&P 500 EPS growth >14%](https://cdn2.fsinsight.com/wp-content/uploads/2024/02/image-333.png)
![NVDA 4Q23 EPS increase was $10.7b of S&P 500 EPS gain $34.9B (31%). AMZN another 30%. Ex-bottom 15 cos, S&P 500 EPS growth >14%](https://cdn2.fsinsight.com/wp-content/uploads/2024/02/image-334.png)
![NVDA 4Q23 EPS increase was $10.7b of S&P 500 EPS gain $34.9B (31%). AMZN another 30%. Ex-bottom 15 cos, S&P 500 EPS growth >14%](https://cdn2.fsinsight.com/wp-content/uploads/2024/02/image-335.png)
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Key incoming data March:
- 3/01 9:45 am ET: Feb F S&P Global Manufacturing PMI
- 3/01 10:00 am ET: Feb ISM Manufacturing
- 3/01 10:00 am ET: Feb F U. Mich. Sentiment and Inflation Expectation
- 3/05 9:45 am ET: Feb F S&P Global Services & Composite PMI
- 3/05 10:00 am ET: Feb ISM Services
- 3/06 10:00 am ET: Jan JOLTS Job Openings
- 3/06 2:00 pm ET: Fed Releases Beige Book
- 3/07 8:30 am ET: 4QF 2023 Nonfarm Productivity
- 3/07 9:00 am ET: Feb F Manheim Used Vehicle Index
- 3/08 8:30 am ET: Feb Jobs Report
- 3/12 8:30 am ET: Feb CPI
- 3/14 8:30 am ET: Feb PPI
- 3/14 8:30 am ET: Feb Retail Sales Data
- 3/15 8:30 am ET: Mar Empire Manufacturing Survey
- 3/15 10:00 am ET: Mar P U. Mich. Sentiment and Inflation Expectation
- 3/18 8:30 am ET: Mar New York Fed Business Activity Survey
- 3/18 10:00 am ET: Mar NAHB Housing Market Index
- 3/19 9:00 am ET: Mar Mid-Month Manheim Used Vehicle Index
- 3/20 2:00 pm ET: Mar FOMC Rate Decision
- 3/21 8:30 am ET: Mar Philly Fed Business Outlook Survey
- 3/21 9:45 am ET: Mar P S&P Global PMI
- 3/25 10:30 am ET: Mar Dallas Fed Manufacturing Activity Survey
- 3/26 9:00 am ET: Mar S&P CoreLogic CS home price
- 3/26 10:00 am ET: Mar Conference Board Consumer Confidence
- 3/28 8:30 am ET: 4QT 2023 GDP
- 3/28 10:00 am ET: Mar F U. Mich. Sentiment and Inflation Expectation
- 3/29 8:30 am ET: Feb PCE
Key incoming data February:
2/01 8:30am ET 4QP 2023 Nonfarm ProductivityMixed2/01 9:45am ET S&P Global Manufacturing PMI January FinalTame2/01 10am ET January ISM ManufacturingMixed2/02 8:30am ET January Jobs ReportHot2/02 10am ET: U. Mich. Sentiment and Inflation Expectation January FinalTame2/05 9:45am ET S&P Global Services & Composite PMI January FinalTame2/05 10am ET January ISM ServicesTame2/07 9am ET Manheim Used Vehicle Index January FinalMixed2/09 CPI RevisionsTame2/13 8:30am ET January CPIMixed2/14 PPI RevisionsTame2/15 8:30am ET February Empire Manufacturing SurveyTame2/15 8:30am ET February Philly Fed Business Outlook SurveyTame2/15 8:30am ET January Retail Sales DataTame2/15 10am EST February NAHB Housing Market IndexTame2/16 8:30am ET January PPIMixed2/16 8:30am ET February New York Fed Business Activity SurveyTame2/16 10am ET U. Mich. Sentiment and Inflation Expectation February PrelimTame2/19 9am ET Manheim Used Vehicle Index February Mid-MonthTame2/21 2pm ET January FOMC Meeting MinutesTame2/22 9:45am ET S&P Global PMI February PrelimTame- 2/26 10:30am ET February Dallas Fed Manufacturing Activity Survey
- 2/27 9am ET February S&P CoreLogic CS home price
- 2/27 10am ET February Conference Board Consumer Confidence
- 2/28 8:30am ET 4QS 2023 GDP
- 2/29 8:30am ET January PCE
Key incoming data January:
1/02 9:45am ET S&P Global Manufacturing PMI December FinalMixed1/03 10am ET December ISM ManufacturingTame1/03 10am ET JOLTS Job Openings NovemberTame1/03 2pm ET December FOMC Meeting MinutesTame1/04 9:45am ET S&P Global Services & Composite PMI December FinalTame1/05 8:30am ET December Jobs ReportMixed1/05 10am ET December ISM ServicesTame1/08 9am ET Manheim Used Vehicle Index December FinalTame- 1/
11 8:30am ET December CPIDetails Suggest Tame 1/12 8:30am ET December PPITame1/16 8:30am ET January Empire Manufacturing SurveyTame1/17 8:30am ET January New York Fed Business Activity SurveyTame1/17 8:30am ET December Retail Sales DataStrong1/17 9am ET Manheim Used Vehicle Index January Mid-MonthTame1/17 10am EST January NAHB Housing Market IndexMixed1/18 8:30am ET January Philly Fed Business Outlook SurveyTame1/19 10am ET U. Mich. Sentiment and Inflation Expectation January PrelimTame1/24 9:45am ET S&P Global PMI January PrelimMixed1/25 8:30am ET 4QA 2023 GDPMixed1/26 8:30am ET December PCETame1/29 9:30am ET Dallas Fed January Manufacturing Activity SurveyTame1/30 9am ET January S&P CoreLogic CS home priceTame1/30 10am ET January Conference Board Consumer ConfidenceTame1/30 10am ET JOLTS Job Openings DecemberMixed1/31 2pm ET FOMC Rate DecisionTame
Key incoming data December
12/01 9:45am ET S&P Global Manufacturing PMI November FinalTame12/01 10am ET November ISM ManufacturingStrong12/05 9:45am ET S&P Global Services & Composite PMI November FinalStrong12/05 10am ET JOLTS Job Openings OctoberTame12/05 10am ET November ISM ServicesStrong12/06 8:30am ET 3QF 2023 Nonfarm ProductivityStrong12/07 9am ET Manheim Used Vehicle Index November FinalTame12/08 8:30am ET November Jobs ReportTame12/08 10am ET U. Mich. Sentiment and Inflation Expectation December PrelimTame12/12 8:30am ET November CPITame12/13 8:30am ET November PPITame12/13 2pm ET FOMC Rate DecisionDovish12/14 8:30am ET November Retail Sales DataTame12/15 8:30am ET December Empire Manufacturing SurveyTame12/15 9:45am ET S&P Global PMI December PrelimTame12/18 8:30am ET December New York Fed Business Activity SurveyTame12/18 10am ET December NAHB Housing Market IndexTame12/19 9am ET Manheim Used Vehicle Index December Mid-MonthTame12/20 10am ET December Conference Board Consumer ConfidenceTame12/21 8:30am ET 3QT 2023 GDPMixed12/21 8:30am ET December Philly Fed Business Outlook SurveyMixed12/22 8:30am ET November PCETame12/22 10am ET: U. Mich. Sentiment and Inflation Expectation December FinalTame12/26 9am ET December S&P CoreLogic CS home priceTame12/26 10:30am ET Dallas Fed December Manufacturing Activity SurveyTame- 12/29 9:45am ET December Chicago PMI
Key incoming data November
11/01 9:45am ET S&P Global PMI October FinalTame11/01 10am ET JOLTS Job Openings SeptemberMixed11/01 10am ET October ISM ManufacturingTame11/01 10am ET Treasury 4Q23 Quarterly Refunding Press ConferenceTame11/01 2pm ET FOMC Rate DecisionDovish11/02 8:30am ET: 3Q23 Nonfarm ProductivityTame11/03 8:30am ET October Jobs ReportTame11/03 10am ET October ISM ServicesMixed11/07 9am ET Manheim Used Vehicle Index October FinalTame11/10 10am ET U. Mich. November prelim Sentiment and Inflation ExpectationHot11/14 8:30am ET October CPITame11/15 8:30am ET October PPITame11/15 8:30am ET November Empire Manufacturing SurveyResilient11/15 8:30am ET October Retail Sales DataResilient11/16 8:30am ET November New York Fed Business Activity SurveyTame11/16 8:30am ET November Philly Fed Business Outlook SurveyTame11/16 10am ET November NAHB Housing Market IndexTame11/17 9am ET Manheim Used Vehicle Index November Mid-MonthTame11/21 2pm ET Nov FOMC Meeting MinutesTame11/22 10am ET: U. Mich. November final Sentiment and Inflation ExpectationTame11/24 9:45am ET S&P Global PMI November PrelimMixed11/27 10:30am ET Dallas Fed November Manufacturing Activity SurveyTame11/28 9am ET November S&P CoreLogic CS home priceTame11/28 10am ET November Conference Board Consumer ConfidenceTame11/29 8:30am ET 3QS 2023 GDPStrong11/29 2pm ET Fed Releases Beige BookTame11/30 8:30am ET October PCETame
Key incoming data October
10/2 10am ET September ISM ManufacturingTame-
10/3 10am ET JOLTS Job Openings AugustHot -
10/4 10am ET September ISM ServicesTame 10/6 8:30am ET September Jobs ReportMixed-
10/6 9am ET Manheim Used Vehicle Index September FinalTame 10/10 11am NY Fed Inflation ExpectationsMixed-
10/11 8:30am ET September PPIMixed 10/11 2pm ET Sep FOMC Meeting MinutesTame-
10/12 8:30am ET September CPIMixed -
10/13 10am ET U. Mich. September prelim 1-yr inflationMixed 10/16 8:30am ET October Empire Manufacturing SurveyTame10/17 8:30am ET October New York Fed Business Activity SurveyTame10/17 8:30am ET September Retail Sales DataHot10/17 9am ET Manheim October Mid-Month Used Vehicle Value IndexTame10/17 10am ET October NAHB Housing Market IndexTame10/18 8:30am ET September Housing StartsTame10/18 2pm ET Fed releases Beige BookTame10/19 8:30am ET October Philly Fed Business Outlook SurveyTame10/19 10am ET Existing Home SalesTame10/19 12pm ET Fed (including Powell) at Economic Club of New York10/24 9:45am ET S&P Global PMI October PrelimTame-
10/26 8:30am ET 3Q 2023 GDP AdvanceStrong 10/27 8:30am ET September PCETame10/27 10am ET Oct F UMich Sentiment and Inflation expectationTame10/30 10:30am ET Dallas Fed September Manufacturing Activity SurveyTame10/31 8:30am ET 3Q23 Employment Cost IndexMixed10/31 9am ET August S&P CoreLogic CS home priceMixed10/31 10am ET October Conference Board Consumer ConfidenceTame
Key incoming data September
9/1 8:30am ET August Jobs ReportTame9/1 10am ET August ISM ManufacturingTame9/6 10am ET August ISM ServicesMixed9/6 2pm ET Fed releases Beige BookTame9/8 9am ET Manheim Used Vehicle Index August FinalTame9/8 2Q23 Fed Flow of Funds ReportTame-
9/13 8:30am ET August CPIMixed -
9/14 8:30am ET August PPITame -
9/15 8:30am ET September Empire Manufacturing SurveyTame 9/15 10am ET U. Mich. September prelim 1-yr inflationTame-
9/18 8:30am ET September New York Fed Business Activity SurveyTame -
9/18 10am ET September NAHB Housing Market IndexTame 9/19 9am ET Manheim September Mid-Month Used Vehicle Value IndexMixedMarket saw Hawkish9/20 2pm ET September FOMC rates decision-
9/21 8:30am ET September Philly Fed Business Outlook SurveyMixed 9/22 9:45am ET S&P Global PMI September Prelim9/25 10:30am ET Dallas Fed September Manufacturing Activity Survey9/26 9am ET July S&P CoreLogic CS home price9/26 10am ET September Conference Board Consumer Confidence
Key incoming data August
8/1 10am ET July ISM ManufacturingTame8/1 10am ET JOLTS Job Openings JunTame8/2 8:15am ADP National Employment ReportHot8/3 10am ET July ISM ServicesTame8/4 8:30am ET July Jobs reportTame8/7 11am ET Manheim Used Vehicle Index July FinalTame8/10 8:30am ET July CPITame8/11 8:30am ET July PPITame8/11 10am ET U. Mich. July prelim 1-yr inflationTame8/11 Atlanta Fed Wage Tracker JulyTame8/15 8:30am ET Aug Empire Manufacturing SurveyMixed8/15 10am ET Aug NAHB Housing Market IndexTame8/16 8:30am ET Aug New York Fed Business Activity SurveyNeutral8/16 2pm ET FOMC MinutesMixed8/17 8:30am ET Aug Philly Fed Business Outlook SurveyPositive8/17 Manheim Aug Mid-Month Used Vehicle Value IndexTame8/23 9:45am ET S&P Global PMI Aug PrelimWeak8/25 10am ET Aug Final U Mich 1-yr inflationMixed8/28 10:30am ET Dallas Fed Aug Manufacturing Activity SurveyTame8/29 9am ET June S&P CoreLogic CS home priceTame8/29 10am ET Aug Conference Board Consumer ConfidenceTame8/29 10 am ET Jul JOLTSTame8/31 8:30am ET July PCETame
Key incoming data July
7/3 10am ET June ISM ManufacturingTame7/6 8:15am ADP National Employment ReportHot7/6 10am ET June ISM ServicesTame7/6 10 am ET May JOLTSTame7/7 8:30am ET June Jobs reportMixed7/10 11am ET Manheim Used Vehicle Index June FinalTame7/12 8:30am ET June CPITame7/13 8:30am ET June PPITame7/13 Atlanta Fed Wage Tracker JuneTame7/14 10am ET U. Mich. June prelim 1-yr inflationMixed7/17 8:30am July Empire Manufacturing Survey7/18 8:30am July New York Fed Business Activity Survey7/18 10am July NAHB Housing Market Indexin-line7/18 Manheim July Mid-Month Used Vehicle Value IndexTame7/25 9am ET May S&P CoreLogic CS home priceTame7/25 10am ET July Conference Board Consumer ConfidenceTame7/26 2pm ET July FOMC rates decisionTame7/28 8:30am ET June PCETame7/28 8:30am ET 2Q ECI Employment Cost IndexTame7/28 10am ET July Final U Mich 1-yr inflationTame
Key data from June
6/1 10am ET May ISM ManufacturingTame6/2 8:30am ET May Jobs reportTame6/5 10am ET May ISM ServicesTame6/7 Manheim Used Vehicle Value Index MayTame6/9 Atlanta Fed Wage Tracker AprilTame6/13 8:30am ET May CPITame6/14 8:30am ET May PPITame6/14 2pm ET April FOMC rates decisionTame6/16 10am ET U. Mich. May prelim 1-yr inflationTame6/27 9am ET April S&P CoreLogic CS home priceTame6/27 10am ET June Conference Board Consumer ConfidenceTame6/30 8:30am ET May PCETame6/30 10am ET June Final U Mich 1-yr inflationTame
Key data from May
5/1 10am ET April ISM Manufacturing (PMIs turn up)Positive inflection5/2 10am ET Mar JOLTSSofter than consensus5/3 10am ET April ISM ServicesTame5/3 2pm Fed May FOMC rates decisionDovish5/5 8:30am ET April Jobs reportTame5/5 Manheim Used Vehicle Value Index AprilTame5/8 2pm ET April 2023 Senior Loan Officer Opinion SurveyBetter than feared5/10 8:30am ET April CPITame5/11 8:30am ET April PPITame5/12 10am ET U. Mich. April prelim 1-yr inflationTame5/12 Atlanta Fed Wage Tracker AprilTame5/24 2pm ET May FOMC minutesDovish5/26 8:30am ET PCE AprilTame5/26 10am ET U. Mich. April final 1-yr inflationTame5/31 10am ET JOLTS April job openings
![NVDA 4Q23 EPS increase was $10.7b of S&P 500 EPS gain $34.9B (31%). AMZN another 30%. Ex-bottom 15 cos, S&P 500 EPS growth >14%](https://cdn2.fsinsight.com/wp-content/uploads/2023/09/image-255.png)