Massive Up Moves for META and Jobs

Good Afternoon Traders and Investors and thank you for joining me for another edition of the Magnelibra Markets Podcast, I’m your host Mike Agne and today’s episode #29 is entitled “Massive Up Moves for META and Jobs”

Quick Disclaimer: The following podcast is for educational purposes only. This is not a solicitation to buy or sell commodity futures or options. The risk of trading securities, futures and options can be substantial and may not be appropriate for all listeners.

Non Farm Payroll Shocker!! So the BLS reported this morning that the US Economy saw an increase of 353k jobs! To keep things in perspective the average January Effect gain over the last 4 years has been for an increase in jobs of about 332k, so this is in line with that statistic. Here is a link to the full Dept of Labor release, Dept of Labor January 2024 NFP Release

The unemployment rate was steady at 3.7% Avg Hourly Earnings on an annual basis was up to 4.5% an increase from last month by 0.2%. Not exactly the type of inflation Powell wants to see. However Zerohedge posted this Seasonally adjusted chart and its pretty amazing as it shows the January number without the seasonal adjustment is actually down 2.63m jobs:

So all in all we know the headline numbers is all that matters and the background, underlying dynamics of all the recent layoff announcements don’t really matter until they do. Last year the tech sector alone lost 240k jobs and this trend is continuing into 2024. However it doesn’t seem that the BLS has seen that data yet!

Another data point to consider is the key difference of the Bureau of Labor Statistics NFP report and the Establishment Survey:

1. Non-farm payrolls: Counts individual jobs, regardless of who holds them. Someone with two jobs is counted twice.

2. Establishment survey: Counts individual employers and their jobs. An employee with two jobs will be counted separately on each employer's payroll, but only once in the survey itself.

Alright so let’s get to the big news which occurred after the close and last night and that was the earnings reports of Meta, Amazon and Apple, this is where the real tone for today was set. The Big Big Winner of the night was META as they announced a 50c dividend for the first time ever, which will also see Mark Z get about $700m a year from this. Anyway let’s look at their numbers:

• Meta reported fourth-fiscal-quarter net income of $14.02 billion, or $5.33 a share, beating exp. of $4.82 a share compared with net income of $4.65 billion, or $1.76 a share, in the same quarter a year earlier.

• Revenue expanded 25% to $40.11 billion beating the $39.1B exp. and up from $32.2 billion in the year-ago quarter.

• Meta executives forecast first-quarter revenue of between $34.5 billion and $37 billion, while analysts on average were expecting $33.9 billion, according to FactSet.

• Adding to the profitability was the fact that headcount was slashed 22% to 67,317 in 2023.

META was up huge out of the gate overnight jumping $60 +15% and this run has continued throughout today as META is now trading $477 +$83 or 21% adding over $200Bn in market cap alone today! We did notice yesterday that some lucky options trader bought about 2000 $460 calls for expiration today paying around 18c, well those same calls now are $16.00 mind you these calls were some $65 out of the money, but hey when you know you know right! Spending $36k to make $3.6m not to shabby

Next up we have Amazon where their stock jumped 7% overnight and continues to perform today holding at the $171 mark up nearly $12 on the day or 7.5%:

As far as the data on their earnings (ZeroHedge data):

• EPS $1.00 vs est. 78c

• Net sales $169.96 billion, +14% y/y, beating estimates of $166.21 billion

  • Online stores net sales $70.54 billion, +9.3% y/y, beating estimate $68.91 billion

  • Third-Party Seller Services net sales $43.56 billion, +20% y/y

  • AWS net sales $24.20 billion, +13% y/y

  • North America net sales $105.51 billion, +13% y/y

  • International net sales $40.24 billion, +17% y/y

  • Amazon Web Services net sales excluding F/X +13%

• Operating income $13.21 billion vs. $2.74 billion y/y, beating estimates of $10.49 billion

• Operating margin 7.8% vs. 1.8% y/y, beating estimates of 6.17%

• Also of note: during the last year, Amazon laid off about 27,000 corporate employees. Just for fun if we take that 27k number and multiply it by $250k avg compensation, this saved Amazon $6.75Bn!

Next up Apple, where we know the decreased China sales would be the dent in the armor but Apples numbers weren’t that bad and they avoided a 5th straight quarterly loss, however forward guidance was not great and were not sure Vision Pro at $3500 a pop will be the game changing tech Apple needs, anyway here is the data:

• EPS $2.18 vs. $1.88 y/y, est. of $2.11

• Revenue $119.58 Bn, +2.1% y/y, est. of $117.97 Bn

Apple was hit over night dropping down to that important $180 area but has since bounced now Apple is near $187 again down over $5 or 3% on the day:

Ok that is it for the free look version for those not already subscribed please do so, you owe it to yourself to join the ranks of the most well educated and informed investors and traders out there, you won’t be disappointed, so hit the subscribe button and enjoy the rest of the podcast!