Stocks rally as Fed speakers get back on script, earnings support + Bank of England set to raise forecasts

Rotation and reflation remain the order of the day: The Dow Jones industrial average rose almost 100pts to a record close, whilst the S&P 500 edged up 0.1% and the Nasdaq fell another 0.4% as the big tech stocks had another choppy day. Energy and basic materials did well, while so-called bond proxies like utilities and real estate fell. US 10-year rates remain under 1.6%. Tech, growth and momentum continued to face pressure. Cathie Wood’s ARK Innovation ETF fell another 1% and trades about 30% off its highs struck earlier this year, down 10% YTD.

European stock markets bounced back strongly yesterday – the FTSE 100 rose 1.7% to settle one point below its post-pandemic intra-day peak at 7040, having broken this earlier in the day. The DAX added more than 2% to almost reverse all of Tuesday’s losses.

Markets are on the front foot again in early European trade this morning, with the FTSE 100 breaking out to a new post-pandemic peak at 7069. As consistently argued, UK equities trade at a discount to peers and should be well exposed to the strong cyclical recovery in the global economy as well as fiscal stimulus from the US. Meanwhile the DAX also firmed up by another 1% in early trade to 15,286 before paring gains somewhat. Bulls will want to finish today above Monday’s close at 15,236 in order to erase the big Tuesday reversal. Adding to the positive mood in Europe, shares in UniCredit and SocGen rallied over 4% as the Italian and French banks reported solid earnings. AB InBev rose almost 4% after reporting strong earnings. Ever-cautious Next raised its profit guidance for the year by £20m.

Following Yellen’s comments about raising rates to prevent overheating, a cornucopia of Fed speakers (Clarida, Mester, Williams, Evans, Rosengren and Kashkari) have swung behind the Fed’s policy stance to keep risk assets well supported. All have reiterated the Fed’s commitment to the cause (employment), helping to buoy risk after the Tuesday wobble. NY Fed president John Williams took the cue from Janet Yellen’s off-kilter remarks about raising rates to repeat the dovish mantra. Inflation will rise but will be temporary, he said, adding that he wouldn’t draw a line on where inflation would need to reach to prompt policy change. Chicago Fed president Charles Evans reiterated that policy would remain highly accommodative for some time, stressing that conditions for the ‘substantial further progress’ required by the Fed will not be met for a while. Cleveland Fed boss Loretta Mester said policymakers will be ‘deliberately patient’ regarding inflation. Boston Fed president Eric Rosengren said it’s too early to talk about tapering the Fed’s $120bn-a-month asset purchase programme. All on script and helping to lift the boats following Yellen’s mis-speak.

Shares in some drug makers fell after the US said it would support a patent waiver for Covid vaccines. Moderna fell 6%, Novavax was down 5%, whilst Biontech and Curevac are 12% lower today. Chinese drugmaker Cansino Biologics fell 15%.

Peloton stock tumbled 15% after the company recalled its treadmills following the death of a child in an incident involving one of the machines. Bank of America downgraded the stock, citing risks about bad publicity and a delay to future product launches. Baird and Stifel said this is a buying opportunity.

A £2.75bn auction of 10-year gilts sold at an average 0.924%, whilst the yield on the paper currently trades around 0.82% ahead of the Bank of England’s monetary policy decision today. It’s almost certain that the BoE will upgrade its economic and inflation forecasts in the quarterly Monetary Policy Report. More important will be the outlook across the full horizon of the bank’s forecast period – is the recovery sustained or are we dealing lower long-term potential growth and scarring? The Bank forecast a 4% decline in Q1 (quarter-on-quarter), however the data so far indicates that the contraction was milder than the February projection. There is no question about raising or lowering interest rates – the big question hanging over this meeting is whether the MPC chooses now to signal how and when it will begin to taper asset purchases. There has to be some tapering this year, the only question is really how much the bank is prepared to sound hawkish and do this early.

The economic recovery taking shape in the UK is surely encouraging and warrants the Bank slowly exiting emergency mode. However, with furlough set to run until September, there is not any immediate pressure for the MPC to take the lead in saying ‘we’re out of this’. Markets are currently pricing a small hike this year, and 50 basis points over the three years of the BoE’s forecast horizon. If it sounds too optimistic it raises the risks markets thinking more tightening is required.

GBPUSD trades a little higher this morning at 1.390 with bulls eyeing a push back to Monday’s highs at 1.3930 on any hints of BoE hawkishness. Meanwhile watch for today’s Scottish election results coming overnight and tomorrow – a majority for the SNP, or even a coalition of pro-independence parties – could energise calls for a second referendum. Whilst the current Tory government has made clear it will sanction one, grumblings north of the border create headwinds for sterling. A big win for the SNP could knock the pound back.

Ahead of tomorrow’s nonfarm payrolls report, ADP reported that US companies created 742,000 new jobs last month. This was the biggest jump since last September but was a little short of expectations. It could be a problem not of demand but of supply – companies seem to be finding it hard to find workers. This poses problems for growth (you cannot grow without the staff) and inflation (you have to pay more to attract workers). A culture of dependency like never before seen in the US is being bred by the Biden administration. Initial jobless claims data is released today, forecast at +540k.

Oil recovered after a bit of slip on yesterday’s inventory data. Whilst the EIA reported a large draw of nearly 8m barrels, gasoline stocks rose for a fifth straight week. After rising as high as $66.67 yesterday, WTI for June declined to just under $65 at one stage following the inventory report but has since reclaimed $65.80. Recovery to yesterday’s peak, corresponding with the Mar 15th swing high could, bring on an attack on the Mar 5/8 post-pandemic highs near $68.

Gold trades higher as US yields are a touch softer with bulls eyeing up another attempt to take out the 100-day and round number resistance at $1,800.

A chart showing gold performance on 6th May 2021.

Wochenausblick: Beschäftigungszahlen plus Zinsentscheidungen von BOE und RBA

Beschäftigungszahlen kommen diesen Freitag. Wir haben gesehen, wie die US-Wirtschaft im März wiedererwacht ist. Wir werden also sehen, ob die Dynamik anhält.

Außerdem erwarten uns Zinsentscheidungen der Bank of England und der Reserve Bank of Australia, aber wie es dieses Jahr immer zu sein scheint, erwarten wir keine großen Richtungswechsel. Es ist immer noch Earnings Season.

Hunderte Large Caps berichten von einem, für einige hervorragend gelaufenem Quartal.

Beschäftigungszahlen – kann April die super Zahlen vom März erreichen?

Die Beschäftigungszahlen für April werden am Freitag veröffentlicht. Der Fokus liegt auf dem US-Arbeitsmarkt, nachdem die Zahlen von März die Erwartungen übertroffen hatten, was ein Anzeichen dafür sein könnte, dass wieder Leben in die US-Wirtschaft einkehrt.

Die Zahlen stiegen um 916.000 im März – und übertrafen damit die Schätzung des Dow Jones von 675.000. Der größte Zuwachs wurde in den Freizeit- und Gastronomie-Bereichen verzeichnet, wo monatlich 280.000 Neuanstellung hinzugekommen sind.

Die Baubranche baute auf dem Erfolg des Vormonats auf und schaffte im Monat 110.000 neue Arbeitsplätze. Bildung erlebte einen Boom mit der Wiedereröffnung der Schulen in den USA. Lokale, staatliche und private Bildungseinrichtungen zusammen stellten im Monat 190.000 Beschäftigte ein.

Überall Zeichen für wirtschaftliches Wachstum. Die Geschäftsaktivität nährt sich dem Niveau vor der Pandemie und erreicht 93,4% auf Jefferies JeffData US-Wirtschaftstätigkeit-Tracker. Die Erwartungen an das BIP-Wachstum sind ebenfalls hoch.

Die ISM PMI-Zahlen für das produzierende Gewerbe werden diese Woche ebenfalls erwartet. Ein weiterer Wirtschaftsindikator nach der exzellenten Leistung im März. Der Index lag letzten Monat bei 64,7% und zeigte einen deutlichen Anstieg der Produktionsaktivität im Vergleich zum Vorjahr.

Der Fokus liegt darauf, den Impuls in diesen überlebenswichtigen Wirtschaftsbereichen zu erhalten.

Keine Politikänderung der Bank of England diesen Monat

Erwarten Sie auf der Sitzung der Bank of England am 6. Mai keine Änderung der Geldpolitik. Die viel besseren wirtschaftlichen Aussichten deuten jedoch darauf hin, dass die Bank ihren Notfallmodus früher zurückfahren kann.

Der Fokus wird darauf liegen, wann das MPC sich dazu entscheidet bekanntzugeben, die derzeit bei wöchentlichen Käufen von 4 Milliarden GBP liegende quantitative Lockerung später im Jahr zurückzufahren.

Der Rückgang des BIP im ersten Quartal war nicht so schlimm wie befürchtet, da die Wirtschaft eine weitaus größere Widerstandsfähigkeit gegenüber dem dritten Lockdown als dem ersten gegenüber zeigte, während der Erfolg von Impfungen deutlich wird und die Aufhebung aller Beschränkungen bis zum 21. Juni immer wahrscheinlicher wird.

Es besteht daher das Risiko, dass die Bank beim Treffen bekanntgeben wird, Anleihenkäufe früher als der Markt es vielleicht erwartet zurückzunehmen. Das wäre vermutlich positiv für den Pfund Sterling, da die Devisenmärkte weiterhin die Falken des MPC unter Preis bewerten.

Die Bank sagt eine Abnahme von 4% im ersten Quartal voraus (Quartal zu Quartal). Allerdings deuten die Zahlen bisher darauf hin, dass das Schrumpfen bisher milder war, als in der Vorhersage vom Februar angenommen. Wachstumsschätzungen für das ganze Jahr könnten vom jetzigen 5% Stand nach oben korrigiert werden. Dies kann Munition für eine frühere Zurücknahme liefern, die MPC könnte es jedoch vorziehen, länger zu warten (z. B. im Juni, wenn das Ausmaß der Wiedereröffnung besser einzuschätzen sein wird), um in der zweiten Jahreshälfte eine stärkere Zurücknahme zu veranlassen.

Keine Änderungen des Leitzins für RBA, aber Verlängerung der quantitative Lockerung möglich

Die Reserve Bank of Australia spiegelt die BOE wider und wird voraussichtlich keine wesentlichen Änderungen in der Politik vornehmen, wenn Philip Lowe und Co. ihre Bekanntmachung zur Zinsrate veröffentlichen.

„Der Vorstand wir den Zinssatz nicht anheben, bis die tatsächliche Inflation nachhaltig bei 2 bis 3% liegt. Dafür müsste das Lohnwachstum aber deutlich höher liegen, als das derzeit der Fall ist“, sagte RBA Gouverneur Philip Lowe in einer Erklärung im März. Der Zins liegt für die vorhersehbare Zukunft bei 0,10%.

Erhebliche Beschäftigungszuwächse und ein insgesamt angespannter Arbeitsmarkt sind die Faktoren, die Lowes zum Handeln zwingen werden. Zurzeit sieht die RBA eine Rückkehr frühsten 2024.

Stattdessen könnten wir eine Verlängerung der quantitative Lockerung in Australien sehen. Westpac-Analysten gehen davon aus, dass ein drittes Anleihekaufregime in Höhe von 100 Milliarden USD auf dem Weg ist, um „die Entscheidung zu ergänzen, die Yield Curve Control (YCC) -Richtlinie zum Kauf der Anleihe vom November 2024 zum Barkurs von 0,1% zu verlängern“.

Insgesamt ist die Stimmung der RBA gut.

In der Stellungnahme vom März, sagte die Zentralbank: „Die wirtschaftliche Erholung in Australien ist bereits in vollem Gange und stärker als erwartet. Die Arbeitslosenquote viel auf 5,8% im Februar und die Anzahl der Menschen mit Anstellung ist wieder auf das Niveau vor der Pandemie zurückgekehrt.“

„Das BIP stieg im Dezemberquartal um starke 3,1 Prozent, was durch einen weiteren Anstieg des Haushaltskonsums im Zuge der Verbesserung der Gesundheitssituation gefördert wurde. Man geht davon aus, dass die Erholung mit überdurchschnittlichem Wachstum in diesem und im nächsten Jahr anhält. Die Finanzen von Haushalten und Geschäften stehen gut da und sollten weitere Ausgaben stützen.“

Die Earnings-Season an der Wall Street geht weiter

Large Caps bereiten sich diese Woche auf ein weitere Welle von Gewinnberichten an der Wall Street vor.

Bisher sieht es so aus, als wäre durchgehen ein überdurchschnittliches Quartal für die berichtenden Unternehmen. Laut dem Earnings Insight-Bericht von FactSet vom 23. April haben Unternehmen bisher ein um 23,6% über den Erwartungen liegendes Gesamtergebnis gemeldet.

Big Hitter wie Apple und Alphabet verzeichneten starke Quartale, obwohl einige große Tech-Player wie Spotify und Netflix bei wichtigen Abonnenten- und Benutzerkennzahlen schlechter als erwartet abschnitten.

In der Vorschau für diese Woche erwarten uns eine Reihe Large Caps mit Berichten. Tech-Firmen wie PayPal und Square führen die Schlange an, genau wie Covid-19-Impfstoff-Pionier Pfizer. Die Impfkampagne hat maßgeblich dazu beigetragen, dass die Volkswirtschaften wieder zur Normalität zurückkehren. Daher erwarten wir wahrscheinlich ein erfolgreiches Quartal für das Pharmaunternehmen.

Sehen Sie unten für eine Übersicht über die Large Caps, die ihre Gewinnberichte in der kommende Woche veröffentlichen.

Top Wirtschafts-Daten

Date  Time (GMT+1)  Currency  Event 
Mon 03-May  3.00pm  USD  ISM Manufacturing PMI 
       
Tue 04-May  5.30am  AUD  Cash Rate 
  5.30am  AUD  RBA Rate Statement 
  Tentative  AUD  Annual Budget Release 
  11.45pm  NZD  Employment Change q/q 
  11.45pm  NZD  Unemployment Rate 
       
Wed 05-May  10.00am  EUR  EU Economic Forecasts 
  3.00pm  USD  ISM Services PMI 
  3.30pm  USD  US Crude Oil Inventories 
       
Thu 06-May  12.00pm  GBP  BOE Monetary Policy Report 
  12.00pm  GBP  MPC Official Bank Rate Votes 
  12.00pm  GBP  Monetary Policy Statement 
  12.00pm  GBP  Official Bank Rate 
  3.30pm  USD  US Natural Gas Inventories 
       
Fri 07-May  1.30pm  CAD  Employment Change 
  1.30pm  CAD  Unemployment Rate 
  1.30pm  USD  Average Hourly Earnings m/m 
  1.30pm  USD  Nonfarm Employment Change 
  1.30pm  USD  Unemployment Change 

Top Geschäftsberichte

Date  Time (GMT+1)  Currency  Event 
Mon 03-May  3.00pm  USD  ISM Manufacturing PMI 
       
Tue 04-May  5.30am  AUD  Cash Rate 
  5.30am  AUD  RBA Rate Statement 
  Tentative  AUD  Annual Budget Release 
  11.45pm  NZD  Employment Change q/q 
  11.45pm  NZD  Unemployment Rate 
       
Wed 05-May  10.00am  EUR  EU Economic Forecasts 
  3.00pm  USD  ISM Services PMI 
  3.30pm  USD  US Crude Oil Inventories 
       
Thu 06-May  12.00pm  GBP  BOE Monetary Policy Report 
  12.00pm  GBP  MPC Official Bank Rate Votes 
  12.00pm  GBP  Monetary Policy Statement 
  12.00pm  GBP  Official Bank Rate 
  3.30pm  USD  US Natural Gas Inventories 
       
Fri 07-May  1.30pm  CAD  Employment Change 
  1.30pm  CAD  Unemployment Rate 
  1.30pm  USD  Average Hourly Earnings m/m 
  1.30pm  USD  Nonfarm Employment Change 
  1.30pm  USD  Unemployment Change 

Fed sticks to its guns, Apple and Facebook earnings blowout

The Federal Reserve remains resolutely firm. Jay Powell reiterated that the central bank is not even close to talking about tapering bond purchases, a move that would begin to unwind some of the extraordinary accommodation delivered in the wake of the pandemic. The Fed chair said the US economy is still a long way from achieving the progress required to dial back stimulus – over 8m jobs are still lost and that means we need several blowout jobs reports to get there. Powell also stressed that policymakers are not worried about inflation and think any price pressures will prove temporary.  The Fed is doubling down here and sticking to its guns. Advance GDP numbers due to today should show the US economy roaring back. 

 

All this should be a green light for stocks, but the markets are wary right now as they tread record highs and all this stimulus is priced in and the macro outlook well understood. The US 10-year bond yield moved to test the 1.65% level. US stock markets closed marginally lower, though the small cap Russell 2000 managed to eke out a small gain. Futures point to solid gains for Wall Street later today when the cash equities open. European stock markets are largely higher in early trade today, with the FTSE 100 popping its head above 7,000 again on a raft of largely positive corporate updates.

 

Apple reported another stunning quarter, with sales soaring from last year and a fresh round of buybacks. The company raised the dividend by 7% to $0.22 per share and announced $90 billion in share buybacks. Apple revenues grew more than 50% year-on-year, with total sales of $89.58bn vs around $77bn expected. EPS came in at $1.40 vs $1.00 expected. At all levels, we can see Apple outperforming even the most bullish expectations. The core iPhone business saw sales up 65% to $47.94 billion vs. $41.43 billion estimated. This was stunning – the iPhone remains the golden goose and way in which consumers become part of the Apple ecosystem. Services – a higher margin business that includes things like the Cloud, App Store, Apple Music – grew revenues by 26.7%. Revenues in China rose 87% – albeit this was in comparison to a quarter last year in which China was most affected by the pandemic. Shares rose 2% in the after-hours market. A really exceptional quarter – it’s not a surprise that it exceeded quite a low bar, but noteworthy just by how much.

 

Facebook shares advanced 6% in after-hours trading as the company reported posted forecast-beating revenues and earnings. However, the company warned investors that growth could slow as new Apple privacy policies would make it harder to targe ads on social media. I’m fairly used to Facebook using earnings calls to warn that rates of growth could slow in future, and I think investors are too. Earnings per share came in at $3.30 vs $2.37 expected on revenues of $26.17bn, which were about $3bn more than expected and up 48% on a year before. Net income rose 94% to $9.5bn. Average revenues per user came in at $9.27 vs. $8.40 expected. 

 

BT confirmed it is looking to sell its TV business.  This has been a long time coming – the vast sums BT paid to secure football rights was always at odds with the core business. In a statement responding to press speculation, the company says “early discussions are being held with a number of select strategic partners, to explore ways to generate investment, strengthen our sports business, and help take it to the next stage in its growth”. Whilst clearly the pandemic has badly hit sport, BT has never set too well in the content space; there are many with deeper pockets who do content. Ballooning costs left BT paying a hefty bill for sports that wasn’t being covered. It’s further evidence of chief executive Philip Jansen ripping up the Gavin Patterson era playbook to focus squarely on the Openreach rollout and modernise BT. 

 

Shell raised its dividend after beating expectations thanks to higher oil prices and improved margins in its chemicals business. Adjusted net income rose 13% from a year before. Net debt fell $4bn. Meanwhile French firm Total said profits are back to pre-pandemic levels as adjusted net income hit $3bn, higher than the pre-crisis first quarter of 2019. 

 

Unilever shares rose over 2% as the company announced it will commence a €3bn share buyback scheme next month after a 5.7% jump in sales in the first quarter. Most (4.7%) came from higher volume, with just 1% from stronger pricing. For 2021 Unilever stuck to its target of underlying sales growth to be within 3-5%, with the first half at around the top of this range. Management also pointed to additional supply chain costs, with rising commodity and freight prices a factor as margins are seen declining a touch in the first half before picking up later in the year. Ongoing covid restrictions in some areas of the world continued to support in-home sales, whilst the slackening of restrictions in some geographies boosted out of home sales. Mayonnaise and ice cream were strong sellers. India and China both posted strong double-digit growth against a backdrop of strict lockdown measures which impacted the prior year. 

 

NatWest reported Q1 2021 operating profit before tax of £946 million and an attributable profit of £620 million. This was boosted by the reversal of provisions for bad loans as government support schemes reduced the amount of loan delinquency banks had anticipated. NatWest booked at net impairment credit of £102m. But shares fell as the total income was a slight miss, coming in at £2.66bn vs £2.7bn expected. Net interest margin fell 2bps to 1.64%. Shares declined more than 3% in early trade. Standard Chartered continued the run of positive news from the large banks as it recorded underlying pre-tax profit rising 18% to $1.4bn as lower impairment charges and strong cyclical recovery in the global economy offsetting lower interest margins. Return on tangible equity rose 220bps to 10.8% and management reaffirmed their view that income will start growing again in the second half of the year and for impairment charges to reduce significantly.

 

Smith & Nephew shares rose 6% to the top of the FTSE 100 after reporting Q1 revenue up 6.2% on an underlying basis (11.5% reported) to $1.264bn. This included 3.4% from foreign exchange and 1.9% from acquisitions, whilst the quarter also included two more trading days than the equivalent 2020 period. 

Apple earnings preview: not crunch time yet

So far it looks very much like profit margins are holding up, earnings are rising fast at most companies and earnings expectations are doing fine. Wednesday sees the big one: Apple.

Shares in Apple are up just 1.5% YTD but the stock has nevertheless enjoyed a stellar run up in the last 12 months and in the last month has rallied from a trough around $116 to $134 by Tuesday to get back close to the all-time high. The pandemic has been good for Apple but the value rotation has crimped gains this year. But this remains a go-to stock with immense potential and expectations are not too high for once, albeit with the stock trading at about 36x trailing 12-month earnings it’s looking pretty rich. Here are a few things to look out for from Wednesday’s Apple earnings.

Apple is seen reporting EPS of $1 on $77.30bn in revenues. Last quarter it blew past expectations posting all-time record revenue of $111.4 billion, up 21% year over year, and quarterly earnings per diluted share of $1.68, up 35%.

Guidance: Apple has declined to offer guidance since the pandemic struck, so investors will be keen for this to change now that the clouds of the coronavirus are lifting. The capital return programme (see below) update is usually made alongside the March quarter and so now would be a reasonable time to star offering some guidance for the coming quarters.

iPhone: Still the golden goose, but there are concerns about a softening in demand as well as lower demand in China. Demand will be decent, with about a third of the iPhone installed base up for renewal, albeit we likely see some moderation from the last quarter. Overall, the Street may underappreciate the resilience in iPhone demand from the delayed launch last year and picks up market share thanks to stimulus cheques.

Mac and iPad: Can very strong demand for home computing products like Macs and iPads hold up the pandemic abates? Whilst vaccinations are driving a lifting of lockdowns, I still see a strong demand from WFH and home education trends globally.

Ecosystem: Revenues from Services remains a central plank of the investment thesis and with a growing installed base this should continue to deliver. Last quarter Services growth reached +24% with the first quarter of Apple One subscription bundles helping to lift the category.

Returns: I think this quarter will underline just how strong the free cash flow is and investors are going to start to see more cash coming their way after a record year for sales. Apple could aggressively add to share buybacks and increase the dividend to as much as $0.90, implying a 10% increase.

Last quarter’s summary: Apple shares fell in the aftermath of its January earnings report covering the holiday quarter. Revenues hit a record $111.4bn, well ahead of forecasts and representing 21% year-on-year growth thanks to broad-based gains across its product suite. The iPhone 12 launch quarter was exceptionally strong, with sales +17% in iPhone, taking the installed base for iPhones to 1bn from 900m. Mac revenues rose 21% yoy, whilst iPad sales jumped 41%. As noted in our preview, growth in personal computer sales driven by pandemic trends such as work from/stay at home was always likely to boost Mac and iPad sales. Growth in Other Products – devices like the Apple Watch and AirPods, climbed to 29% yoy. Services growth reached +24% with the first quarter of Apple One subscription bundles helping to lift the category. The growing installed iPhone user base should further support Services growth in the coming quarters, we noted at the time. We also noted very strong international sales (now 64% of total sales vs 61% a year ago), whilst revenues from Greater China rose 57%. The confidence in Apple fiscal first quarter earnings was well justified and the slight pause in the shares reflects a little profit taking after a strong run in 2020 whilst the lack of guidance for the second quarter was a thorn. A record-breaking quarter but it should not be seen as a high watermark for Apple.

Forecasts

Apple Q1 2021 earnings forecast.

Analysts

Apple Q1 2021 analyst sentiment.

Earnings season: estimate-topping stocks to watch

It’s the final week of April: a time that traditionally brings opportunities for earnings-driven volatility.

Many companies reporting their quarterly earnings have strong track records of beating analyst estimates and subsequently seeing their share prices rise.

Bespoke Investment Group, as reported by CNBC, has pulled together the below list of firms that, 90% of the time, beat estimates, and enjoy average day-after jumps of at least 1%.

Stock Company EPS beat % Average 1 day % price move
TDY Teledyne Tech 100 2.18
AVNT Avient 100 1.5
TRU TransUnion 100 1.27
NGVT Ingevity 100 1.74
GFF Griffon Corp 100 11.41
OPI Office Properties 100 2.62
UFI Unifi Inc 100 2.33
CSGP CoStar Group 96.7 2.18
EXPO Exponent 96.6 1.56
SHOP Shopify 95.7 3.54
PATK Patrick Industries 94.7 1.2
JBT JBT Corp 93.5 1.75
MA MasterCard 93.2 2.09
SLAB Silicon Labs 92.3 1.29
SYNH Syneos Health 92.3 3.22
FB Facebook 91.4 2.52
SPSC SPS Commerce 90.7 1.66
ABBV AbbVie 90.3 1.26
SPGI S&P Global 90 1.6

 

These reports suggest earnings are off to a great start this quarter. Companies have so far reported aggregate earnings 23.6% above expectations, according to FactSet. If the trend continues, then we’ll be looking at the highest surprise percentage since FactSet began recording the metric in 2008.

Interestingly, amongst the megacap tech companies reporting this week, Facebook is the only one to make the list. Bespoke highlights its average day-after jump of 2.5%. Facebook reports quarterly earnings today after the closing bell.

Facebook’s average analysts‘ price target was up approximately up 14% over Friday’s level on Tuesday, trading at $342.37 per share, feeding into potential longer-term upsides.

Shopify, the Canadian e-commerce company, has consistently been one of the fastest growing stocks for the past 3 years. Since 2018, Shopify shares have grown a massive 700%.

MasterCard is also a bit of a big hitter with a proven ability to come out above analysts’ expectations. The credit card firm beats predictions 93% of the time. MasterCard currently enjoys an 85% buy rating on Wall Street, reports FactSet, with the stock up 9% year-to-date.

Looking to small caps, some of those on Bespoke’s list as consistently punching above their weight, estimates-wise, include Office Properties Income Trust and TransUnion.

Tesla questions remain, BP and HSBC profits leap, GME roars higher on equity offering

Record highs for the S&P 500 and Nasdaq yesterday failed to really kick start the European session this morning with the major bourses all looking a bit sloppy in the face of a raft of big corporate earnings announcements. We’re into the meat of earnings season proper now with 173 S&P 500 companies that account for around half the market capitalisation are reporting this week. So far so good: of those that have already reported, revenues are up 10% on average, while earnings are up by a third. A stunning turnaround from last year’s pandemic washout, driven by a combination of massive fiscal stimulus, extraordinarily accommodative monetary policy and a vaccine-led cyclical bounce back of epic proportions.

Tesla posted better-than-expected earnings in the first quarter. The company posted GAAP net income of $438m with earnings per share coming in at $0.93 on $10.39 billion in revenue, up 74% from a year ago. Some $518m in regulatory credits helped, whilst it added $101m to its bottom line from the sale of Bitcoin after its $1.5bn ‘investment’ announced in February. Is this an automaker or not? I have been very sceptical about this Bitcoin position and what it exposes the company to. Shares slipped more than 2% in after-hours trade following the results. Still, it was a record quarter for sales and progress is being made on the delayed new models with the new Model S landing on customers’ driveways by May 2021 and Model X deliveries to commence in Q3. Tesla also pointed to Model Y production ramps at Fremont and Shanghai going well. Meanwhile buildout of Berlin ‘Gigafactory’ is continuing to move forward, with production and deliveries remaining on track for late 2021, Tesla said. Chip shortages are a problem, but Tesla suggests it’s finding ways around. And although margins did pic up, there are maybe some questions over margins with the lower average selling prices – excluding regulatory credits the margins in the core auto business were 22%. I don’t think these results really tell us an awful lot more than we already know about Tesla.

BP profits jumped to $2.6bn, easily beating analyst expectations and well ahead of last year. Looney says the company is in good shape. As he puts it, these results really put to rest some of the fears investors may have had around this stock as it’s managed to reduce net debt ahead of schedule and is delivering shareholder returns. Looney seems really committed to pushing the dividend, which I suppose you can do if you are not doing any more oil and gas exploration. Still, he better keep some back for those wind turbines. BP is confident that China and the US will drive the recovery in crude demand.

The reduction in net debt is eye-catching, with the figure down around $18bn in the last year from $51.4bn to $33.3bn, meeting the objective a year early. Reported profit for the quarter was $4.7bn, compared with $1.4bn profit in Q4 2020 and a loss of more than $4.3bn a year before. Underlying replacement cost profit came in at $2.6bn, compared with $0.1bn for the previous quarter. BP said this was driven by an exceptional gas marketing and trading performance, significantly higher oil prices and higher refining margins. Dividend of 5.25 cents per share declared and shares rose more than 2% in early trade in London.

HSBC profits rose 79% from a year ago on a mixture of improving economic conditions and a reduction in provisions for bad loans. Among other things, the company noted solid growth in Hong Kong and UK mortgages. Interestingly for a bank that has been seen to put all its eggs in one Asian basket as other regions have been less profitable, all regions were profitable in Q1 and notably the UK bank reported pre-tax profits of over $1bn in the quarter. Reported profit after tax was up 82% to $4.6bn, while reported profit before tax rose 79% to $5.8bn. The bank said that reduced revenues, which fell 5% $13bn, continued to reflect low-interest rates. Provisions for bad loans were less than expected, particularly in the UK, mainly reflecting a better economic outlook and government support schemes. As such reported provisions for bad loans was a net release of $0.4bn, compared with a $3.0bn charge a year ago. Shares rose a touch in early trade.

Sticking with banks – UBS this morning admitted it took a $774m hit from the Archegos fiasco. This is not as large as the $5.5bn for Credit Suisse, but nevertheless shows how the fallout was wider than initially thought. Despite this, profits at UBS rose 14% to $1.8bn. Wealth management profits rose 16%, whilst investment banking was down 42%. UBS, which has fallen 2% this morning on the update, says it has now unwound all its exposure to Archegos. Nomura meanwhile says it is 97% out and has taken a $2.3bn loss on its Archegos exposure, adding that it expects to book about $570m more in charges related to Archegos this financial year.

Shares in GameStop rallied almost 12% and added a further 9% in after-hours trade to hit $184.50 after the company completed its at-the-market equity offering. In an update to investors yesterday, management said they had sold 3.5m shares of common stock and generated aggregate gross proceeds before commissions and offering expenses of approximately $551m, Roughly, that means they got this offering off at about $157 per share. Net proceeds will be used to continue accelerating GameStop’s transformation as well as for general corporate purposes and further strengthening the company’s balance sheet.

As I previously argued, shareholders who have been bidding up the stock should be pleased by the offering. Although it entrails a meaty dilution, the cash call is entirely expected and without a big capital raise now that takes advantage of rally in the stock, Chewy.com founder Cohen might not have the cash to fulfil the ambition of becoming the Amazon of Gaming.

Elsewhere, oil prices trade higher with WTI back above $62 as OPEC’s technical committee stuck to an optimistic view of demand growth whilst also cautioning about the rise of the coronavirus in India, the world’s number three importer of crude. The technical committee, which met ahead of Wednesday’s meeting, indicated that demand growth is still seen around 6m bpd in 2021, whilst the stock surplus should be eliminated by the end of the second quarter. There are also concerns about Japan, the fourth largest importer of oil. Copper prices continue to advance, hitting a fresh 10-year high this morning, whilst US 10-year yields pulled back from 1.6% yesterday in a choppy session ahead of this week’s Fed meeting.

FOMC preview: Wait and see mode

The Federal Reserve kicks off its two-meeting today. This week’s meeting of the Federal Open Market Committee (FOMC) ought to pass off without too much fanfare or market noise. Even as the economic indicators improve, the Federal Reserve remains in emergency mode. The Fed should be thinking about thinking about tapering, but it likely will not want to signal this just yet. It remains the case, it should be noted, that the Fed is now in a reactive policy stance where it is waiting for the data to hit certain thresholds rather than acting pre-emptively. We also know that not only is the Fed happy to let inflation get hot, but it is also focused squarely not just on employment but the ‘right’ people getting jobs. It’s a central bank that is taking a political angle to its policy making. In any event, tapering of the Fed’s $120bn-a-month asset purchase programme will be signalled well in advance, and this is not the time to do it.

Bond yields have cooled somewhat since the March meeting, with the 10-year note chopping around in a 1.55%-1.60%. In any event, if the rise in nominal yields was not a worry then, it’s certainly not one now. Fed speakers including chairman Powell have made it clear they think rates will move up because of the screaming cyclical bounce, not because people are worried about inflation.

Meanwhile, since the March meeting the pace of vaccinations has meant over half of all adults in the US have had at least one vaccination. Jobless claims have hit the lowest since the pandemic struck more than a year before and retail sales are powering head. The IHS Markit composite PMI hit a record high in April as all corners of the economy picked up steam. Despite this the Fed will remain cautious with regards to the outlook, citing the risk of fresh infections. Chairman Powell will need to acknowledge the economic recovery in progress but seek to tamp down expectations. And despite the strong demand impulse combining with weak supply to put upwards pressure on prices, he will stick to the line that any inflation will be temporary.

Stocks creep higher, Tesla earnings ahead

European stocks trade higher in early trade on Monday, but there is not a lot of direction in the markets this morning. We’re in a holding pattern for the moment. Wall Street closed higher on Friday to end a very choppy week basically flat. European stocks have also put a rally that has been in play since November largely on pause. As discussed last week, the macro picture is largely understood, whilst the rally in bond yields has also paused. Vaccinations in the US and UK are positive, a startling rise in infections in India is a negative, but markets are largely looking through the bad with ample monetary and fiscal support. The confidence in the macro outlook could change, but PMIs last week didn’t suggest things were about to. Plans for higher US capital tax gains may not pass the Senate but could beget a spate of selling if lawmakers back it. Earnings this week should be important with a number of the largest growth and momentum names on the calendar. A Fed meeting this week should pass off without too much fanfare as policymakers lean on the economic rebound to do the heavy lifting. The dollar is keeping a little softer with the euro hitting its strongest since the start of March. Yields are keeping quiet too, helping gold maintain a bullish bias despite easing off a two-month high struck last week.

Sweeten the deal: shares in Tate & Lyle surged more than 6% as the company confirmed it is looking to sell its industrial sweetener business. In a statement this morning the company said it looking to sell a controlling stake in its ‘Primary Products’ business, which it says would deliver ‘enhanced shareholder value’.

Tesla (TSLA) is due to release first-quarter 2021 results today after the closing bell, kicking off a mammoth week for the big tech/growth/momentum earnings. Consensus estimates indicate earnings per share (EPS) of $0.79 on revenues of $9.92 billion. Earlier this month Tesla reported record Q1 sales, delivering 184,800 vehicles, more than double the 88,400 reported last year and about 10k ahead of expectations. The addition of Bitcoin to the Tesla balance sheet this year was portentous. The stock is down ~15% since the SEC filing on Feb 8th, but has recovered about 30% since hitting a low around $560 at the start of March to trade at $729 at Friday’s close.

A fatal crash in Texas has thrust the safety of the company’s Autopilot system into focus, although it is understood no one was at the wheel at the time. Autopilot is not meant to be left to control the vehicle exclusively, however there are concerns that people are liable to misunderstand the functionality of the system. Meanwhile it appears that the autopilot function was not engaged at the time of the crash. CEO Elon Musk tweeted on Monday: “Data logs recovered so far show Autopilot was not enabled & this car did not purchase FSD. Moreover, standard Autopilot would require lane lines to turn on, which this street did not have.”

Tesla has been forced to make a grovelling apology after a backlash from the state-run Chinese media following customer complaints. This is important – China is a key market for Tesla and other automakers who are seeking to tap the growing EV market in the world’s second-largest economy. Tesla has made a big investment in local production, which seems to be paying off. Tesla reported sales of $6.7bn in China last year, making it the second biggest for the firm after the US, whilst the Model 3 sedan was China’s best-selling electric vehicle in 2020. Meanwhile the Model Y is also proving popular, with production for the domestic market rising to 34,635 units in March, almost double the level in February.

The competition is getting fiercer for Tesla, and it remains the case that the chief bear thesis on the stock is that current valuations imply a massive market share gain from the traditional OEMs. Given the pace of progress they are making on the EV front, it seems hard to justify the Tesla multiple even allowing for ongoing sales growth and margin improvements.

Last week’s Shanghai auto show displayed the range of competition from local Chinese rivals such as Xpeng, Nio and Geely. Mercedes recently said it will launch a range of new electric vehicles, including a battery-powered version of its S-Class saloon, in the next 18 months. Other rivals like BMW, VW and Audi have also seen their electric vehicles met with approval. For Tesla, things are only going to get tougher.

Wochenausblick: Geschäftsberichte von Apple und Tesla, Fed-Treffen und US-BIP im Fokus

Uns erwartet diese Woche ziemlich viel. Wir beginnen mit der Fed, obwohl wir hier nichts Großes erwarten. Dennoch optimistische Aussichten für das US-BIP, während Indikatoren für das Verbrauchervertrauen auf dem Weg sind.

Weiter werden die PMI-Zahlen zur herstellenden Industrie in China veröffentlicht, nach 13 Monaten durchgehenden Wachstums.

Uns steht außerdem eine Lawine neuer Geschäftsberichte bevor, da die Earnings Season an der Wall Street mit Apple, Facebook, Tesla, Alphabet und Microsoft weitergeht, die alle ihre Quartalszahlen liefern werden.

Fed-Treffen: Keine großen Änderungen am Horizont

Amerika befindet sich langsam auf dem Weg zurück zur Normalität. Die Impfkampagne macht Fortschritte, die Menschen kehren zur Arbeit und Freizeit zurück, die Beschränkungen und Lockdowns lockern sich und die Wirtschaft wächst.

„Sie können sehen, wie sich die Wirtschaft öffnet, wie die Passagierzahlen in Flugzeugen steigen und die Leute in Restaurants zurückkehren“, sagte Fed-Vorsitzender Jerome Powell kürzlich in einem Interview mit dem Economic Club. „Ich glaube wir beginnen eine Zeit schnelleren Wachstums und größerer Arbeitsplatzschaffung, und das ist gut.“

Was bedeutet das also für die Entscheidung der Fed diese Woche zum Zinssatz? Die FOMC trifft sich diese Woche vor dem Hintergrund von Spekulationen, dass die aktuelle Politik des billigen Gelds nicht die Richtige sein könnte.

Mit drei Konjunkturpaketen, die mehr Liquidität in die Wirtschaft pumpen, und historisch niedrigen Zinsen, sehen einige die Inflation am Horizont. Große Veränderungen sind diese Woche jedoch nicht wahrscheinlich. Bis mindestens 2023 werden keine Änderungen der Zinssätze erwartet, und die Anleihekäufe werden mindestens bis Ende dieses Jahres im aktuellen Tempo fortgesetzt.

Powell hat die Kriterien für einen großen Umschwung der Politik benannt:

  • effektiv vollständige Erholung des Arbeitsmarkts
  • Inflation erreicht 2%
  • Inflation über 2% für einen nachhaltigen Zeitraum

Keiner dieser Zustände treffen bisher zu. Nichtsdestotrotz verbessern sich die Zahlen am Arbeitsmarkt. Die Arbeitslosigkeit ist auf 6% gesunken. Die zusätzlich durch Bidens Konjunkturpakete geschaffene Liquidität könnte außerdem die Konsumgüterpreise antreiben. Bedingungen für eine Zinsänderung stehen im Raum.

Aber erwarten Sie deshalb keine Änderung der Politik bei der Pressekonferenz der FOMC. Der Kurs wird ab jetzt gehalten.

Höhenflug des US-Quartals-BIP erwartet

Mit der Wiederbelebung der US-Wirtschaft, sind die Vorhersagen für das US-BIP im ersten Quartal elektrisierend.

Im vierten Quartal 2020 stieg das BIP-Wachstum von 4,1% auf 4,3%, da die US-Verbraucher ihr Geld aus dem Konjunkturpaket auf den Kopf hauen. Konsumausgaben war bisher der wichtigste Antrieb, aber andere Bereiche der Geschäftsinvestitionen tragen ebenfalls zum wirtschaftlichen Aufschwung bei. Exporte stiegen um 22,3%. Auch die Unternehmensinvestitionen in geistiges Eigentum, Vorräte und Wohnimmobilien stiegen.

Alle schön und gut – aber der richtige Boom könnte uns noch bevorstehen. Schätzungen für das BIP im Q1 2021 sind außergewöhnlich hoch.

Die Fed in Atlanta kommt in den jüngsten Schätzungen zum BIP vom 16. April auf ganze 8,3%. Der wichtigste Treiber ist hier das persönliche Einkommen. Im Januar stieg das Vermögen der privaten Haushalte um 2 Billionen USD, die Ausgaben stiegen um 2,4%. In Kombination mit den anderen, eine Rolle spielenden Faktoren, wie höheren Beschäftigungszahlen, Konsumausgaben und gestiegener Industrieproduktion, ist für das Rezept für ein hohes BIP-Wachstum alles vorhanden.

Zusätzliche Konjunkturpakete sind auf dem Weg. Mit dem Voranschreiten des Impfprogramms und der Öffnung weiterer Bereiche für individuelle Ausgaben ist ein Wachstum des BIP wahrscheinlich. Die Herausforderung ist, das Wachstum zu erhalten.

Kann das US-Verbrauchervertrauen hoch bleiben?

Es ist sehr wahrscheinlich, denn das Verbrauchervertrauen erreichte im März ein Einjahreshoch, und seitdem haben sich die Dinge in Bezug auf Impfstoffe, Wiedereröffnung und Konjunkturpakete nur verbessert. Dem Zustand des Impfprogramms und der Wirtschaft nach zu urteilen, wird dies im April vermutlich fortlaufen.

Lassen Sie uns ein Auge auf die Zahlen vom März werfen, um die Stimmung im April einzuschätzen. Letzte Woche waren Verbraucher optimistisch, was den Arbeitsmarkt betrifft. Sie waren mit der Aufhebung der Einschränkungen für kleine Geschäfte feierlich gestimmt. Der Gedanke an zusätzliches kostenloses Geld aus weiteren Konjunkturpaketen hebt die Stimmung.

Große Ticketartikel wie Autos, Häuser und Haushaltsgeräte stehen künftig auf den Einkaufslisten der US-Verbraucher, da eine Sparschwemme und zusätzliches Regierungsgeld die Kaufkraft erhöhen.

In Punkten nahm die Umfrage des Confidence Boards 19,3 Punkte zu und erreichte im März so 109,7. Das ist der höchste Stand seit einem Jahr und der höchste Punktanstieg seit April 2004.

Die Stimmung im März war gut. Wird sich das im April fortsetzen?

PMI für das verarbeitende Gewerbe in China: Kann sich der Sektor erholen?

Chinas PMI-Daten für das verarbeitende Gewerbe werden diese Woche veröffentlicht und die wirtschaftliche Erholung des Landes gewinnt an Fahrt.

Der Index vom März zeigte eine Zunahme im Vergleich zu den Zahlen vom Februar, ein Anstieg von 50,6 auf 51,9. Während das Wachstum immer noch ein historisches Tief für die chinesische Produktion ist, deutet ein Wert von über 50 darauf hin, dass der Sektor wächst. Tatsächlich zeigen die PMIs seit 13 Monaten durchgehendes Wachstum.

Produktionskapazitäten waren während des Mondfests geschlossen, sind jetzt aber wieder verfügbar. Das ist teilweise die Ursache für den Anstieg des PMI, aber es spielen auch wichtigere Faktoren eine Rolle. Vor allem die Erholung der Weltwirtschaft.

Bestellungen haben zugenommen, sodass die chinesischen Fabriken wieder mehr zu tun haben. Die US-Konjunkturpakete führen zu höherer Nachfrage nach Verbrauchsgütern – gute Nachrichten für die Besitzer chinesischer Fabriken. Zusätzlich führen heimische und internationale Bestellung von Maschinen wie Baggern zu weiterem Wachstum im Sektor.

Die Zukunftsaussichten werden durch große Ausgabenpläne in Übersee gestärkt. Joe Bidens Mammut-Infrastrukturplan wird bereits hungrig von chinesischen Herstellern von Baumaschinen und Material beäugt, wenn er denn Zustande kommt. In den Staaten wird Profit gesehen.

China ist laut Chinas National Bureau of Statistics auf dem Weg zu einem super ersten Quartal. Das BIP-Wachstum lag als Folge eines Wirtschaft-Booms, der selbst das hervorragende US-Wachstum in den Schatten gestellt hat, bei dem Rekordwert von 18,3%.

Während der kurzfristige Ausblick optimistisch stimmt, bleiben die Fragen zur Nachhaltigkeit. Die Exporte, Treibstoff für Chinas Produktion, stiegen im ersten Quartal 2021 insgesamt um 38,7%. Diese atemberaubenden Zahlen wurden jedoch durch den Rückgang der Exportaktivitäten zwischen Februar und März etwas gemildert. Sicherlich ein Grund zur Sorge. Die Veröffentlichung der PMIs diese Woche werden also interessant werden.

Tech-lastige Woche in der Earnings Season

Wall Street bereitet diese Woche sich auf eine neue Ladung Geschäftsberichte vor. Wie immer in der Earnings Season, kommen die Berichte schnell und in Menge.

Diese Woche liegt der Fokus im Tech-Bereich. Es erwarten uns Berichte von Apple, Amazon, Facebook und Tesla. Tesla wird interessant, einfach um zu sehen, welchen Einfluss die Entscheidung, Milliarden für Bitcoins auszugeben, auf die Finanzen hatte. Berichte in der Vergangenheit deuteten darauf hin, dass sie dieses Jahr mehr Geld mit Kryptowährungen gemacht haben, als mit dem Verkauf von Autos.

Apples Finanzbericht kommt nach dem 2021 Event der Firma. Eine schöne neue Farbe für das iPhone 12 plus eine Regenbogenvielfalt für die iMacs, Updates für das Apple TV und mehr wurden bekanntgegeben – aber der Fokus liegt ganz klar auf den Verkaufszahlen des iPhone 12. Mit sechs von zehn im ersten Quartal verkauften Smartphones, könnte Apple ein weiteres Rekordquartal erwarten.

Wir sehen ebenfalls Gewinne von den Ölkonzernen ExxonMobil, BP, Shell, TOTAL und Chevron, die wahrscheinlich nicht so kolossal sein werden wie die von Apple. ExxonMobil sagt, dass wiedererstarkende Ölpreise besser Zahlen als erwartet bedeuten könnten. Durch das große Eis-Chaos in Texas könnten aber auch Verluste in Höhe von 800 Millionen USD anstehen. Werden wir weitere große Verluste bei den Großen erleben?

Sehen Sie unten, für eine Übersicht über die Large Caps, die diese Woche berichten.

Top Wirtschafts-Daten

Date  Time (GMT+1)  Currency  Event 
Mon 26-Apr  9.00am  EUR  German IFO Business Climate 
       
Tue 27-Apr  Tentative  JPY  BOJ Outlook Report 
  Tentative  JPY  Monetary Policy Statement 
  Tentative  JPY  BOJ Press Conference 
  3.00pm  USD  CB Consumer Confidence 
       
Wed 28-Apr  All day  All  OPEC-JMMC Meeting 
  2.30am  AUD  CPI q/q 
  2.30am  AUD   Trimmed Mean CPI q/q 
  1.30pm  CAD  Core Retail Sales m/m 
  1.30pm  CAD  Retail Sales m/m 
  3.30pm  USD  US Crude Oil Inventories 
  7.00pm  USD  FOMC Statement 
  7.00pm  USD  Federal Funds Rate 
  7.30pm  USD  FOMC Press Conference 
       
Thu 29-Apr  2.00am  NZD  Final ANZ Business Confidence 
  1.30pm  USD  Advance GDP q/q 
  1.30pm  USD  Advance GPD Index q/q 
  1.30pm  USD  Unemployment claims 
  3.00pm  USD   Pending House Sales 
       
Fri 30-Apr  2.00am  CNY  Manufacturing PMI 
  9.00am  EUR  Germany Prelim GDP q/q 
  1.30pm  CAD  GDP m/m 

 

Top Geschäftsberichte

Date  Company  Event 
Mon 26-Apr  Tesla  Q1 2021 Earnings 
  Vale  Q1 2021 Earnings 
  Canadian National Railway Co.  Q1 2021 Earnings 
  Philips  Q1 2021 Earnings 
     
Tue 27-Apr  Microsoft  Q3 2021 Earnings 
  Alphabet (Google)  Q1 2021 Earnings 
  Visa  Q2 2021 Earnings 
  Novartis  Q1 2021 Earnings 
  Texas Instruments  Q1 2021 Earnings 
  Starbucks  Q2 2021 Earnings 
  HSBC  Q1 2021 Earnings 
  GE  Q1 2021 Earnings 
  3M  Q1 2021 Earnings 
  AMD  Q1 2021 Earnings 
  BP  Q1 2021 Earnings 
  Mondalez  Q1 2021 Earnings 
  Chubb  Q1 2021 Earnings 
  Capital One  Q1 2021 Earnings 
     
     
Wed 28-Apr  Facebook  Q1 2021 Earnings 
  Apple  Q1 2021 Earnings 
  QUALCOMM  Q2 2021 Earnings 
  Boeing  Q1 2021 Earnings 
  Moody’s  Q1 2021 Earnings 
  NOVATEK  Q1 2021 Earnings 
  Spotify  Q1 2021 Earnings 
  Ford Motor Corp  Q1 2021 Earnings 
     
Thu 29-Apr  Amazon  Q1 2021 Earnings 
  Samsung  Q1 2021 Earnings 
  MasterCard  Q1 2021 Earnings 
  China Construction Bank  Q1 2021 Earnings 
  McDonald’s  Q1 2021 Earnings 
  Royal Dutch Shell  Q1 2021 Earnings 
  Bank of China  Q1 2021 Earnings 
  Sony  Q4 2020 Earnings 
  Caterpillar  Q1 2021 Earnings 
  TOTAL  Q1 2021 Earnings 
  Airbus  Q1 2021 Earnings 
  S&P Global  Q1 2021 Earnings 
  Gilead  Q1 2021 Earnings 
  Sinopec  Q1 2021 Earnings 
  BASF  Q1 2021 Earnings 
  Baidu  Q1 2021 Earnings 
  Equinor  Q1 2021 Earnings 
     
Fri 30-Apr  Alibaba  Q4 2020 Earnings 
  ExxonMobil  Q1 2020 Earnings 
  AstraZeneca  Q1 2021 Earnings 
  BNP Paribas  Q1 2021 Earnings 
  Colgate-Palmolive  Q1 2021 Earnings 

Biden tax plan weighs on stocks, Bitcoin tumbles

European equity indices opened a tad lower on Friday morning after stocks fell on Wall Street on reports Joe Biden is planning to slap much higher capital gains taxes on the wealthy. This was always part of the equation when we looked at the implications of a Biden presidency, but markets have been pepped up on a mix of fiscal stimulus, the Fed’s extraordinarily accommodative stance, a strong cyclical impulse from the vaccine-led reopening and a bounce back in earnings. The major averages fell in lockstep, dropping by almost 1% , though the Russell 2000 ended the session flat as the selling was led chiefly by the longer-term growth names like Tesla and Amazon. The Dow Jones finished the day at 33,815, a decline of more than 300 pts. The S&P 500 closed down 0.92% at 4,134 and the Nasdaq Composite notched a similar decline to finish at 13,818. The FTSE 100 opened lower and is heading for a decline of more than 1% for the week. As of send time the CAC 40 had inched into the green. I would not describe risk as being offered as such; it’s been a pretty choppy week and I would be equally unsurprised if stocks turned around this afternoon and ended the week higher as I would if Wall Street led a sharp decline into the weekend.

The Biden administration is looking to raise the top marginal income tax rate to 39.6% from 37%, whilst also doubling capital gains tax to 39.6% for people earning more than $1 million. Tax the rich, hand it out to the poor. Sounds like furlough, but on a permanent basis. The big problem (one of many) in all this is the Senate – it would require support of all the Democrats in the upper chamber and this is far from assured. Stocks would probably be a lot lower if investors were really worried, and I think markets can overcome this move, even if it manages to pass through the Senate, which I don’t think it will. Nevertheless, coming off record highs and a good run up through the start of the year, the macro picture not really changing, rising Covid cases globally, strong earnings and other supportive factors largely priced in and the extent to which investors are ‘all in’ equities, we could be set for a downwards move in equities over the coming weeks. Beware seasonal factors (I dare not say ‘sell in May’…)

The economic picture continues to improve in the US. Initial claims for unemployment insurance fell to 547,000 last week, down from 576,000 the prior week and below the roughly 600,000 estimated. The number of continuing claims also fell.

Likewise, UK retail sales numbers were very positive in March as consumers opened their wallets ahead of the reopening of non-essential shops. Sales rose by 5.4% from February, well ahead of the 1.5% expected. Clothes, gardening goodies and specialist food items from bakers and butchers were in vogue.

Even Europe is showing immense resilience in the face of lockdowns – France’s Services PMI came in at 50.4 against 46.7 forecast, whilst the manufacturing survey surged to 59.12. The composite PMI rose to 51.7 from 50 previously, with the outperformance in services meaning it easily beat the 49.4 expected. Germany’s composite PMI came in at 56, still in expansion territory, but short of the 57 expected and down from the 57.3 in March.

The dollar is offered in early trade, with EURUSD jumping to 1.2050, Yesterday’s ECB presser high of 1.2070 is the main target for bulls. GBPUSD also tried to sustain a rally to 1.39 but hit resistance at 1.3890 and reversed a touch.

The euro remains steady following yesterday’s ECB meeting, which left markets on an even keel as the central bank managed to maintain its dovish stance and fend off chatter about wrapping up its emergency bond buying programme. Christine Lagarde played down any taper talk, saying this was ‘premature’ and that the recovery still has a long way to go. The yield on 10-year German bunds moved lower.

Bitcoin prices have tumbled. Spot trades under $48k this morning, meaning it’s down 25% from last week’s all-time high. The low tested several times in Feb at $44k is the big support. Basically, it seems to have been bid up on a lot of speculation (even more than usual) ahead of the Coinbase IPO and all this froth has evaporated like a lot of hot air. There has also been a cluster of regulatory reports and rumours that point to a clampdown and tighter regulation. JPMorgan analysts led by the closely-followed Nikalous Panigirtzoglou say the rollover in prices has been led by a steep liquidation in speculative futures positions. “Momentum signals will naturally decay from here for several months, given their still elevated level,” he says.

Shares in Coinbase are in for a hit should cryptos go further south. Also, Cathie Wood’s ARK Innovation ETF is still loading up on COIN – watch this one ,too. The Coinbase listing – the ultimate poacher-turned-gamekeeper moment – might have been the high watermark for Bitcoin.

I refer to two points we highlighted when Coinbase registered to go public:

1. Earnings are inextricably tied to crypto prices. This may be obvious, but it is interesting to see in black and white. “Our total revenue is substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform. If such price or volume declines, our business, operating results, and financial condition would be adversely affected.”

2. More than anything it’s highly dependent on Bitcoin. A majority of Coinbase’s net revenue is from transactions in just two crypto assets: Bitcoin and Ethereum. For the year ended December 31, 2020, Bitcoin, Ethereum, and other crypto assets represented 70%, 13%, and 13% of assets on the platform respectively. “If demand for these crypto assets declines and is not replaced by new demand for crypto assets, our business, operating results, and financial condition could be adversely affected” says the filing.

Caveat emptor and all that.

TSLA share price: What to watch from Q1 Tesla earnings

Tesla (TSLA) is due to release first-quarter 2021 results on Monday Apr 26th, after the closing bell. Consensus estimates indicate earnings per share (EPS) of $0.79 on revenues of $9.92 billion.

The company plans to webcast the conference call with analysts after the quarterly results at 17:30 (EST).

Tesla earnings: what to watch

Autopilot

A fatal crash in Texas has thrust the safety of the company’s Autopilot system into focus. Although it is understood no one was at the wheel at the time. Autopilot is not meant to be left to control the vehicle exclusively, however there are concerns that some drivers have misunderstood the functionality of the system. Meanwhile it appears that the autopilot function was not engaged at the time of the crash. CEO Elon Musk tweeted on Monday: “Data logs recovered so far show Autopilot was not enabled & this car did not purchase FSD. Moreover, standard Autopilot would require lane lines to turn on, which this street did not have.”

Deliveries

Earlier this month Tesla reported record Q1 sales, delivering 184,800 vehicles, more than double the 88,400 reported last year and about 10k ahead of expectations.

The strong first-quarter delivery numbers could send the stock nearly 15% higher, Mizuho Securities said earlier this week as it raised its price target on Tesla to $820 from $775.

“With a strong start to the year, we see upside to the TSLA 831K consensus deliveries given proposed Biden infrastructure package with $100B in EV rebates and potential extension and expansion of EV credits,” the analyst note said.

Bitcoin

The addition of Bitcoin to the Tesla balance sheet this year portentous. The stock is down ~13% since the SEC filing on Feb 8th, but has recovered about 30% since hitting a low around $560 at the start of March to trade at $744 by the time the market opened on Thursday, Apr 22nd. Mizuho are unfazed by the crypto exposure: “TSLA regulatory credit sales and Bitcoin could be NT tailwinds, offset by near-term product/mix headwinds.“

China

Tesla has been forced to make a grovelling apology after a backlash from the state-run Chinese media following customer complaints. This is important – China is a key market for Tesla and other automakers who are seeking to tap the growing EV market in the world’s second-largest economy. Tesla has made a big investment in local production, which seems to be paying off. Tesla reported sales of $6.7bn in China last year, making it the second biggest for the firm after the US, whilst the Model 3 sedan was China’s best-selling electric vehicle in 2020. Meanwhile the Model Y is also proving popular, with production for the domestic market rising to 34,635 units in March, almost double the level in February.

Competition

The competition is getting fiercer for Tesla, and it remains the case that the chief bear thesis on the stock is that current valuations imply a massive market share gain from the traditional OEMs. Given the pace of progress they are making on the EV front, it seems hard to justify the Tesla multiple even allowing for ongoing sales growth and margin improvements.

This week’s Shanghai auto show displayed the range of competition from local Chinese rivals such as Xpeng, Nio and Geely. Mercedes recently said it will launch a range of new electric vehicles, including a battery-powered version of its S-Class saloon, in the next 18 months. Other rivals like BMW, VW and Audi have also seen their electric vehicles met with approval. For Tesla, things are only going to get tougher.

Analysts are still split on Tesla stock

Analysts are mixed on Tesla earnings.

Hedge funds remain sellers

Hedge funds are Tesla stock sellers.

 

Take a position on Tesla ahead of its earnings report and start trading now.

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