February 9, 2022

The Appetizer

“I’d like to see 100 basis points in the bag by July 1.”

St. Louis Federal Reserve President James Bullard on the path of rate hikes.

Now, on to the numbers. Drum roll, please …

• 22.8%: the return of the Energy sector year to date. Value investors rejoice!
• 7.5%: the rise in inflation (as measured by CPI) over the last year.
• 1.42 billion: the amount of chicken wings Americans were estimated to have eaten this past Sunday.
• $175.41: how much consumers planned to spend on average for Valentine’s Day.
• 19: the number of medals Team USA has won at the 2022 Winter Olympics so far. They’re now in third place.

Dig In
Geopolitical Olympics

Hosting the Olympics can be a bit like hosting Thanksgiving. And now it’s China’s turn to host (again). Beijing is the first city to host both the summer and winter games, but who’s counting? The U.S. and China probably. The two countries are locked in competition for global leadership that we expect to last for decades.

This year’s Winter Olympics are a microcosm of the world’s rivalries and tensions. U.S. and UK diplomats, among others, are boycotting. Russia and China issued a joint statement. Pakistan’s Prime Minister tweeted “Visit China.” Can you guess the alliances?

Alliances are what’s caused the latest flare-up with Ukraine. Russia is unhappy that Ukraine has an invitation to join the wolf pack: the North Atlantic Treaty Organization (NATO). This has impacted markets, as investors are worried the situation could spiral into a military conflict. It’s reported Russia has amassed more than 130,000 troops at its border with Ukraine.

Tensions are rising, both on and off the ice. Learn more about the geopolitical risks we’re tracking in our 2022 Outlook or video.

Weekly Specials

We’ll keep telling ourselves that Stifel Bits played a key role in pressuring Tencent on restoring the original ending to Fight Club for Chinese movie watchers.

Senate, you’re up. The U.S. House actually worked together to pass a bill to overhaul the U.S. Postal Service’s finances and allow the agency to modernize. Maybe people in the Grand Canyon won’t have to get their mail by mule anymore!

There’s a new record: Americans swiped $52 billion on their credit cards in the fourth quarter. Overall, households added $1 trillion in new debt in 2021. Higher car and home prices are largely to blame. Consumer spending is expected to drive economic growth again this year.

Prepare for launch. Treasury yields hit 2% last week for the first time post-COVID. Inflation, the latest jobs report, and comments from Federal Reserve officials have markets prepping for a more aggressive Fed.

Corporate Lunch

72% of the companies in the S&P 500 have reported earnings. Of those that reported, 77% beat analyst estimates. Analysts now expect earnings to have grown 30.3% in the fourth quarter. Here are some highlights:

Chipotle had strong earnings as it announced price increases were the special of the day. The company raised menu prices by 4% in December to offset rising labor and input costs. One more fast-casual piece of news: they launched a new vegan chorizo.

Uber rose after it reported its second profitable quarter. The company completed 19 million trips per day on average. Coca-Cola beat on revenue and earnings partially due to consumers drinking more products away from home. Bottom line: happy hours and bottomless brunches are back.

The semiconductor shortage helped Mercedes-Benz exceed its profitability target last year despite selling fewer cars. Demand for its flagship S-Class model was up 40%.

Disney had a good quarter. Subscriptions to Disney+ surpassed 129 million, and the parks business doubled its revenues from the prior quarter.