Upbeat 2024 Guidance from TSM, Housing Starts, and Fed Speakers
January 18, 2024
US equity futures are pointing to a higher open following an upbeat 2024 outlook issued by Taiwan Semiconductor (TSM). The company reported better-than-expected results for its December quarter - EPS of $1.44 per share bested the $1.38 consensus forecast with revenue that largely matched market expectations. On a quarter-over-quarter basis, TSM’s smartphone business rose 25% while its High-Performance Computing segment (data center, AI) climbed 16%. For the current quarter, the company sees its top line in the range of $18.0-$18.8 billion compared to the $18.27 billion consensus with typical smartphone seasonality offset by continued HPC-related demand. On the earnings call, management shared it expects full-year 2024 revenue to grow in the low-to-mid 20% range.
Coming up - December Housing Starts. Following yesterday’s December Retail Sales and Industrial Production reports, we’ve seen upward revisions to December quarter GDP expectations. The Atlanta Fed’s GDPNow model puts 4Q 2023 GDP at +2.4% and that upward adjustment means investors will be tuning into this morning’s December Housing Starts report. Out at 8:30 AM ET, headline housing starts are expected to fall to 1.426 million from 1.56 million in November. A stronger-than-forecasted print would be another data point indicating the economy continues to hum, supporting the patient path to rate cuts for the Fed.
Bostic, Bostic, Bostic. As the market chews through this morning’s housing data, it will be factoring comments from Atlanta Fed President Raphael Bostic, who is scheduled to speak on three different occasions today. We doubt the recent string of data will change Bostic’s view about only two or three rate cuts this year, and the odds are high he reiterates his view rates need to remain as is until at least the summer.
For more, be sure to read our Daily Markets column published each day by Nasdaq.
Model Musings
Artificial Intelligence - “Taiwanese chipmaker TSMC projected on Thursday more than 20% growth in 2024 revenue on booming demand for high-end chips used in artificial intelligence (AI) applications even as the broader industry deals with weak smartphone and electric vehicle sales.” Read more here
Cloud computing - “Cloud continues to be the foundational transformation platform for organizations that want to be industry leaders and adopt the most impactful emerging technologies. From GenAI and automated shop floors to software-defined vehicles and smart meters, the technology innovations promising to revolutionize industries require strong cloud capabilities and an understanding of how the cloud is evolving.” Read more here
Data Privacy & Digital Identity - “In the payments and financial landscape, staying still often means falling behind. And falling behind in today’s rapidly digitizing environment can be dangerous. That’s because traditional security systems are proving to be increasingly vulnerable to attacks from 21st-century cyber fraudsters using sophisticated tactics and tools that have been democratized by the rise of novel technologies like generative artificial intelligence (AI). As fraudsters grow more emboldened and scale their attacks using new tools, eCommerce sites, and financial institutions trying to meet a digitally native cohort of end users must assess the ways in which they can stay ahead with their own fraud defenses. The proliferation of online banking in particular has provided scammers with fresh opportunities…” Read more here
The strategies behind our Thematic Models:
Aging of the Population - Capturing the demographic wave of the aging population and the changing demands it brings with it.
Artificial Intelligence – Software, chips, and related companies that facilitate the collection and analysis of large data sets and autonomous generation of solutions given non-machine language prompts.
CHIPs Act – Capturing the reshoring of the US semiconductor industry and the $52.7 billion poised to be spent on semiconductor manufacturing.
Cloud Computing – Companies that provide hardware and services that enhance the cloud computing experience for users, such as co-location, security, and edge computing.
Consumer Inflation Fighters - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
Core Holdings – Companies that reflect economic activity and are large enough to not get pushed around by day-to-day market trends. Low-beta, large-cap names able to better withstand economic turmoil.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
EV Transition - Capturing the transition to EVs and related infrastructure from combustion engine vehicles.
Guilty Pleasure – Companies that produce/provide food and drink products that consumers tend to enjoy regardless of the economic environment and potential long-term health hazards associated with excessive consumption.
Homebuilding & Materials – Ranging from homebuilders to key building product companies that serve the housing market, this model looks to capture the rising demand for housing, one that should benefit as the Fed returns monetary policy to more normalized levels.
Luxury Buying Boom - Tapping into aspirational buying and affluent buyers amid rising global wealth.Market Hedge Model – This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
Nuclear Energy & Uranium – Companies that either build and maintain nuclear power plants or are involved in the production of uranium.
Precision Ag & Agri Science – Companies that look to address shrinking arable land by helping maximize crop yields utilizing technology, science, or both.
Rebuilding America - Turning the focused spending on rebuilding US infrastructure into revenue and profits.
Safety & Security – Targeted exposure to companies that provide goods and services primarily to the Defense and security sectors of the economy.
Space Economy – Companies that focus on the launch and operation of satellite networks.
The strategies behind our Dividend Income Models:
Monthly Dividend Model – Pretty much what the name says – this model invests in companies that pay monthly dividends to shareholders.
ETF Dividend Model – High-yielding ETFs that provide a range of exposures from domestic equities, international equities, emerging market equities, MLPS, and REITs.
ETF Enhanced Dividend Model – A group of high-yielding ETFs that utilize options to enhance yield through collecting option income.