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Are we there yet?

NFL championships games are today and first month of new year is almost over...While first week of new year was bumpy for markets, it soon recovered its footing and reached new all time highs and itching towards breaking milestone of 5000. Almost 6 weeks back I wrote about "Goldilocks economy taking S&P to 5K"...depending on mega-cap tech earnings in next two weeks, it could happen by the time America gets glued to Super Bowl...The expectations are rematch of  2012 Super Bowl between Ravens vs Niners (Ravens won that year 34-31).  This game was also called "Harbaugh Bowl" since two Harbaugh brothers were head coaches of two playing teams. But one could never predict what could happen in today's games since all 4 teams are great teams and deserve to play Super Bowl. In the end it would come down to showing up and playing their best games...Only Lions is the team had not won Super Bowl yet (one of the 12 teams) even though it had won 2 pre-Super Bowl NFL championships in 1935 and 1957. 

Turning to economy - it seems to be doing perfectly fine with GDP growth above 3% and inflation readings below 3% and unemployment below 4%...That should give enough confidence to Fed just to stay the course of doing nothing for next 3-4 meetings and do rate cuts in second half of the year. 

When it comes to politics - the rematch between Biden vs Trump is almost certain barring health or legal issues. Given the momentum Trump is getting, Biden has to get his campaign in high gear before it's too late. 

Earnings - Most of the companies are beating earnings and giving cautionary projections (just to make sure that they beat the expectations again). The companies which are raising projections (e.g. SMCI) are getting handsomely rewarded (up almost 60% this year alone) while companies like TSLA and INTC are getting punished for giving conservative projections. While most Mag-7 companies would announce earnings in next two weeks, most important earning is further out on Feb 21 when AI darling NVDA would announce its earnings. Would it become $100 B annual run-rate company by end of 2024?  Markets are expecting that. Anything less would un-nerve the markets and remind them of 2000-2001...

That's all for now. Enjoy the games.. if you believe in connection between markets and Super Bowl, last rematch between Niners and Ravens in 2012 produced market returns of over 13%. Let's hope it repeats this year again!

/Shyam

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