While all four of the major market indexes are trading off today, oil prices are getting some lift following comments from the International Energy Agency's Executive Director Fatih Birol that oil producers may have to reconsider their output policies following a demand recovery in China and surging demand for jet fuel.
Birol isn't the first thought leader to comment on this likelihood and last week we heard from both Starbucks (SBUX) and Estee Lauder (EL) that they see a more pronounced lift in China's economy in the second quarter with even more in the back half of 2023.
We've seen that ripple through to gas prices, which have rebounded off their recent lows and are now modestly higher than they were this time last year. Before you jump the gun, let's remember that oil and gas prices rose considerably in February of last year before spiking in February, which means companies will be facing far more friendly energy prices compared to last year.
Next week brings the next report from OPEC, and we'll be reviewing those comments for further indications of a potential production increase and what it could mean for our shares of the Energy Select Sector SPDR Fund (XLE) .
After today's market close, one-time portfolio holding Skyworks (SWKS) will report its December quarter results. Given its position as a RF semiconductor supplier to the smartphone market but a number of others as well including IoT and automotive, we'll be rather curious to what it has to say following earnings report last week from Apple (AAPL) and NXP Semiconductor (NXPI) .
The comments on those non-smartphone markets will help shape our entry point thoughts as it relates to Bullpen resident Marvell (MRVL) , following comments last week from Meta Platforms (META) and others of more restrained data center spending ahead vs. recent years.
On the smartphone market, we expect Skyworks's comments to mesh with those from Qorvo (QRVO) last week as well as those from Taiwan Semiconductor (TSM) and Micron (MU) earlier this year. However, how the market reacts to its results and guidance will be what we're watching far more closely, wanting to see if the shift in market sentiment when it comes to tech is still underway.
Reports making the rounds today suggest headwinds are blowing harder when it comes to Microsoft's (MSFT) approval from the UK's Competition and Markets Authority for its pending acquisition of Activision (ATVI) . We'll look for changes in language and other signals tonight when Activision reports its quarterly results.
You should remember that we haven't baked anything into our outlook for Microsoft - as we've seen more than a few times that it's best to wait until a deal in consummated before re-jiggering assumptions and benefits tied to would be synergies.