Welcome to Advisorpedia's Week Ahead. The must listen podcast of your Monday.
What happened last week and ahead for this week.
Last week — what a week…
The start of the March quarter earnings season and a cornupcopia of data that that has us asking the Q: HAVE WE - investors - PRICED IN TOO MUCH OF AN ECONOMIC REBOUND OR NOT ENOUGH?
What does that data mean for the Biden Administration’s stimulus plans?
What about the cost side of the equation as signs point to rising input costs..
Since peaking on March 15th, the Russell 2000 index last week was over 4% lower whereas the S&P 500 has gone on to gain an additional 5%. So, over the last month or so, small cap stocks have lagged by over 9 percentage points.
Charles Schwab added more clients in just 3 months in Q1 of 2021 (3.2 million) than in all of 2020. Why? According to Schwab’s CEO - Greater interest in high-growth tech companies and meme stocks.
Looking for something “cheap” to buy? Maybe as a hedge to your cryptocurrency exposure? Try the VIX at 16.9. Back to the level of complacency in mid-February 2020.
The rally in the DXY dollar index from the January 5th low of 89.4 to the March 30th nearby high of 93.3 has been totally snuffed out as Fed official after Fed official has refused to succumb to the bond vigilante pressure — and is at a crucial technical juncture as it tests the 50-day moving average in this most recent corrective phase.
Retail Sales for March report blew away the already high expectations, jumping 9.8% MoM after a downwardly revised -2.7% contraction in February, handily beating expectations for a mere 5.9% increase amidst re-openings, warmer weather, and those $1,400 stimulus checks that were put to use.
Fed Manufacturing data blew out the doors as well. Philly Fed Manufacturing Index for April saw the strongest growth in factory activity in the region in almost 50 years! Not too shabby Philly.
Not to be outdone, the New York Empire State Manufacturing Index saw the strongest growth in business activity since October 2017 and came in at 26.3 from 17.4 versus expectations 19.5.
Mortgage applications for the week ended April 9 were down 3.7%, the sixth consecutive decline following last week’s 5.1% decline. The combination of rising rates, rising prices, and tight supply of homes is putting a damper on home sales and we expected to see March’s existing home sales to be below February’s levels.
We also got some of the final CPI data out of the euro area, but the commodity-induced March run-up had previously been flashed by the “flash” estimates.
AA anounced last week that it expects summer travel to hit pre-pandemic levels and will operate a nearly normal schedule.
National economic activity accelerated to a moderate pace from late February to early April. Outlooks were more optimistic than in the previous report, boosted in part by an acceleration in COVID- 19 vaccinations. Employment expectations were generally bullish.”
Coinbase (COIN) through a direct listing on the Nasdaq and it didn’t go quite as well as many had hoped. Nasdaq set a reference price of $225 but shares opened just over $380 and traded up to $429, but then sold off sharply into the close, finishing the day at $328. Still, it is now ranked at the seventh biggest new listing in the US of al time, so not exactly something to cry over. Thursday shares continued to struggle and closed lower again. To put the Coinbase market cap in context, it is now just below that of Intercontinental Exchange (ICE) and above that of Nasdaq (NDAQ).
American Eagle Outfitters (AEO) shared it is on track to exceed expectations with its Q1 revenue now seen as topping $1 billion, which implies a mid-teens increase compared to pre-COVID comparable from two years ago and the $904 million consensus. The company is set to report Q1 full results on May 1.
Ethan Allen Interiors (ETH) reported a record increase of 51.8% in written orders at its retail division for its FQ3 vs. the year ago quarter that was understandably impacted by the pandemic. The company expects to report consolidated net delivered sales of $177.0 million with adjusted EPS in the range of $0.56-$0.58 vs. the $0.47 consensus.
First quarter operating profit at Daimler AG’s (DDAIF) surged due to higher vehicle prices and strong demand in China powering its recovery from the effects of the coronavirus pandemic.
Volkswagen (VLKAF) reported its global sales expanded 53% YoY in March while deliveries for the March quarter climbed 21% YoY to 2,431,900 vehicles.
Nvidia (NVDA:Nasdaq) are on fire this week after the company said its quarterly revenue is tracking above it previous guidance that called for $5.3 billion. While the company didn’t provide a more specific revenue range it said the upside relative to prior expectations was due to "broad-based strength" across its end markets.
Apple (AAPL) will hold its latest event on April 20 with the tagline “Spring Loaded” with expectations calling for updates to its iPad Pro, iPad mini and AirPods lines.
Equities are reacting to brightening economic prospects while the Federal Reserve intends to keep the monetary stimulus punch flowing for the foreseeable future. Given the robust economic data of late, we’ll be watching to see how it will affect the Biden administration’s ability to pass its massive stimulus plan.
Earnings to Watch This Week
Monday, April 19: Coca-Cola (KO:NYSE); IBM (IBM:NYSE); United Airlines (UAL:NYSE).
Tuesday, April 20: Abbot Labs (ABT:NYSE); AutoNation (AN:NYSE); Johnson & Johnson (JNJ:NYSE); Proctor & Gamble (PG:NYSE); CSX (CSX:NYSE); Netflix (NFLX:Nasdaq).
Wednesday, April 21: ASML (ASML:Nasdaq); Ericsson (ERIC:Nasdaq); NVR (NVR:NYSE); Verizon (VZ:NYSE);Chipotle Mexican Grill (CMG:NYSE); Lam Research (LRCX:Nasdaq); Las Vegas Sands (LVS:NYSE); Whirlpool(WHR:NYSE).
Thursday, April 22: Alaska Air (ALK:NYSE); American Airlines (AAL:NYSE); AT&T (T:NYSE); Citrix Systems(CTXS:Nasdaq); SAP SE (SAP:NYSE); Southwest Air (LUV:NYSE); Union Pacific (UNP:NYSE); Intel(INTC:Nasdaq).
Friday, April 23: American Express (AXP:NYSE); Honeywell (HON:NYSE); Kimberly Clark (KMB:NYSE).
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