Underwhelming guidance dominates the mega-cap stocks; particularly as we all noted in high-multiple Semiconductors, which took it on the chin well beyond the original slower outlook from ON Semi., and more recently everything from Intel to KLAC and of course Tesla.

I suspect the Tesla remarks and Elon's comments about Chinese industry for the most part overtaking everyone else combined, if we don't embrace tariff or quota approaches. Shades of the past; when 4 decades ago I forewarned the demise of American industry to outsourcing if we didn't protect our workers as subsequently we did not. Rationalizations about AI contributing to automotive is a bit premature (agree longer term); but it's not a reason to be super-bullish on Tesla for now. So I don't dismiss the idea of TSLA as partially an 'AI play' in the future; just suspect it's spin for now by analysts who chased it into a top.

However, for that and other stocks, you have the buyback window starting; a superficial method of supporting stocks; often because a company has few if any worthy directions to point money that would be more productive, not just a shareholder (insiders mostly) pleasing move, to employ their funds.

Among these discussions in financial media about mega-cap multiple excess; a theme I've focused on for quite awhile, they are starting to recognize what's been so tough, the smaller-cap sector of disruptive and innovative stocks. For sure it's taking forever, but in a friendlier monetary environment, and with hurt unfolding to the mega-caps, there is at least a glance being made toward for sure what are laggards, but also so beaten down that valuation risk is lower.

Market X-Ray finds S&P trolling around the higher level extended range as traders have mixed views about earnings growth (shy of optimist desires); and ahead of an FOMC meeting (less than ebullient earnings flows will also tend to temper the Fed's zeal, which I already believe had been throttled recently).

Next week should be the peak flow of this Earnings Season. A number will be solid; but what the past week shows is not surprising: 'take no prisoners when numbers are missed'. Of course a big challenge will be Apple's tepid results.

Among others we watch, Chevron had mediocre results in their last go-round; sold off a bit; but them rallied. Ponder that again; and even in Apple if they go into yet another buyback binge, and sell-off then rally. Microsoft also comes; should be fine, but again it's one that already had a superb move.

So PCE matters the most to the Fed, they say; but the glide-path conforms to what the Fed has outlined they want to pursue. They were too low for too long as you know and are trying not to have stayed too high for too long recently; a nod to realizing they don't want to seriously harm the patient in the course of a presumed desire to heal. The terminal rate needs not to be too restrictive.

Monetary policy is an arcane artform, and this time the outcome fortunately is about what we've had in mind: essentially 'soft-ish'; neither too soft nor hard. I think it's not just about 'yields', but 'normalcy' in maintaining acceptable levels, for business, and without further impeding Housing and Consumer affairs. For those old enough to recall, real world rates in the 4-6% area are fairly normal.

I suspect they'll move a bit lower as the year evolves, but not too low, lest the Fed trigger another cycle of extremes, which is completely uncalled-for now. It was needed during the pandemic, but wasn't exfiltrated from soon enough as you know; and there is no underlying feeling of economic euphoria in general public attitudes; so despite some political slogans aside, DC just needs calm.

Bottom line: Aside any surprises (not anticipated) from the FOMC meeting; of course all eyes will be focused on mega-cap earnings. Among the reports in coming days are Alphabet (Google), Microsoft, Apple, Meta, Amazon as well as others. Many believe Apple will be tepid with guidance; Meta mixed; Google strong and Amazon alright, but dampening expectations.

Oh yes; our AMD will report Tuesday (likely good guidance); Starbucks (not so hot); GM (mediocre); while Wednesday also sees Boeing; Friday we'll get Jobs numbers (should be decent) plus both ExxonMobil & Chevron. It's a week of 'facts & figures'; combined with stresses regarding Ukraine & Israel.

Probably all of them will reflect on restraints or restrictions on Social Media as you have voluntary as well as compulsory guidelines (which any half-wit teen can circumvent hah) across the Nation; or prohibition for all under 16 (Florida) which may prove to be unconstitutional (slightly naive but likely attempted).

With the high multiples in the mega-caps it's hard to come-up with narratives any rosier than they have before; and I doubt they will. So there is some slight concern for more 'bumps' and air-pockets; even speed-bumps for those going higher later. Not talking about ultimate highs; just limits on accelerating now.

I think it would be healthy to have a down week ahead; but can't be sure of it. If we do get that, the pattern set-up for a late winter rally would be improved. If we do get S&P holding-up into higher highs into early February (original call as you know); that's fine but it's going to be running on fumes and riskier.

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