Market 02/28: Q4 GDP revised slightly lower - public debt bears government spending

Q4 GDP revised slightly lower despite increased consumption - public debt bears government spending

US Q4 GDP revised slightly lower from +3.3% Q/Q to +3.2% Q/Q

Of which, consumer spending revised up from +2.8% to +3.0% Q/Q:

• Consumption remains the main driver of US economic growth (68.7% of GDP value).

However, leading the growth rate is government spending: +4.2% Q/Q — accompanied by public debt growth!

• Q4 GDP up +334.5 billion USD vs Q3, but public debt up a whopping 834.2 billion USD in just 1 quarter → For every 1 USD increase in GDP, traded by 2.5 USD increase in public debt

Q4/2023 core PCE growth also revised up to +2.1% Q/Q following consumer spending (from previous +2% Q/Q).

• However, the whole market is still awaiting January PCE tomorrow!

Trade deficit hits 90 billion USD threshold

January 2023 trade deficit hits 90.2 billion USD (> estimate: 88.5 billion USD and previous month: 87.9 billion USD)

• Wholesale inventories: -0.1% M/M (< estimate: +0.2% | Dec: +0.4%)

• Retail inventories: +0.5% M/M (estimate: +0.4% | Dec: +0.6%)

WTI oil price rises after OPEC+ extends production cuts

Crude oil inventories surge, shown in both API and DOE reports:

API Report

• Crude +8.428 million barrels (expected +1.5 million barrels)

• Gasoline -3.27 million barrels (expected -1.3 million barrels)

• Distillates -523,000 (-2.0 million barrels)

DOE Report

• Crude +4.199 million barrels (expected +1.5 million barrels)

• Gasoline -2.83 million barrels (expected -1.3 million barrels)

• Distillates -510,000 barrels (expected -2.0 million barrels)

Strategic Petroleum Reserve SPR continuously increases for 12/14 weeks (+743,000 barrels last week)

US crude production maintains record high due to halt in rig cuts.

Market news: Bitcoin surpasses 61,000 USD mark

• Bitcoin surpasses 60,000 USD threshold, approaching historical high of 65,000 USD in Nov 2021

• Bitcoin ETFs see strong inflows, flows into IBIT - BlackRock's Spot Bitcoin ETF increase most strongly this year

• However, the predicted probability of a Bitcoin price bubble has risen to ~100%.

  • However, it cannot be denied that Spot Bitcoin ETF has boosted demand from institutional investors (institutional investors).

    

Earnings reports: Baidu, Beyond Meat

1. Baidu: revenue grew well thanks to Internet services and AI platform

• Revenue: 34.95 billion RMB (4.92 billion USD), +6% Y/Y

  • Baidu Core: Revenue 27.49 billion RMB (3,87 billion USD), +7% Y/Y

  • iQIYI: Revenue 7.7 billion RMB (1.09 billion USD), +2% Y/Y

  • AI Cloud: PaddlePaddle community has 10.7 million developers

  • Autonomous driving: Apollo Go provided 839,000 rides in Q4, +49% Y/Y, driverless orders in Wuhan account for 45% of total orders.

• Non-GAAP EPS: 21.86 RMB (3.08 USD)

2. Beyond Meat: US revenue down due to decreased demand and high discounts

• Revenue 73.7 million USD

  • US retail revenue: down -22.6% Y/Y (down to 32.1 million USD) due to weak demand and high discounts

  • US foodservice revenue: down -25.9% Y/Y (10.7 million USD)

  • International retail: up +22.1% to 13.3 million USD thanks to new products

  • International foodservice: up 33.7% to 17.6 million USD thanks to QSR sales in EU

• EPS: -2.40 USD

• Gross profit: -83.9 million USD, with gross margin -113.8%

Other news

1. Japan's demographic structure is alarming: Death rate far exceeds birth rate.

   • FYI: Investors are still waiting for the results of the Shunto wage negotiations at the end of March to reassess Japanese market potential.

2. Apple is said to have canceled its electric car production plan, surprising nearly 2,000 employees working on the project.

3. Google CEO Sundar Pichai admits the company's mistake as AI Gemini produced ethnically biased images and answers.

4. US Department of Justice launches antitrust investigation against health insurer UnitedHealth

5. Logistics companies in California, Illinois, and Michigan announce mass layoffs and facility closures.