The S&P surged 64 points (1.26%) on Friday to 5,128 – right up to its 50 DMA (5,130). The 50 DMA continues to serve as resistance and the S&P continues to trade in a range (4950 – 5250) defined by its recent high on Friday March 28 and low on Friday April 19. I continue to believe that it will be resolved to the downside for the reasons I articulated last Wednesday.
In that blog, the second reason was evidence that the economy is slowing. Weak US comps from McDonald’s (MCD) and Starbucks (SBUX) were the evidence I cited and Friday’s weak April Jobs Report (+175k) supports my contention as well (also see Aaron Back, “Economic Slowdown Isn’t Entirely Bad” [SUBSCRIPTION REQUIRED], WSJ Monday May 6).
Disney (DIS) earnings out Tuesday morning should shed some light on this too. DIS divides its business into three segments: Entertainment, Sports and Experiences. Experiences consists of its theme parks and associated businesses. DIS’s Experiences segment had almost $33 billion in revenue in its fiscal year ended September 30, 2023. Because going to a Disney theme park is a large discretionary expense, that number for the 1Q24 will give us important data about the current state consumer spending. My bet is that it will confirm what we heard last week from MCD and SBUX.
Berkshire’s annual meeting was held on Saturday and its 1Q24 13F released that morning in conjunction with the event. In it we found out that Buffett had reduced his massive Apple (AAPL) stake by about 13% during the quarter. While he downplayed any bearishness on AAPL at the annual meeting, I have my suspicions about what he’s really thinking (see my “An Open Letter To Warren Buffett Re: AAPL”, 8/3/23).
Lastly, UBER (UBER) reports 1Q24 earnings on Wednesday morning. While I’m more of a macro and value investor than a growth investor, UBER is one growth stock that I’m extremely bullish on for the long term. However, I am concerned about it in the short term because it will get hit hard in a bear market like any other growth stock. I recently reduced my position size to 4% of the value of the long/short portfolios. I’m very interested to see how they did in the first quarter of 2024.
