Trending right along this week into earnings reports. So far so good and the only hiccup was that the Biden administrated proposed a doubling of capital gains taxes which caused the S&P to plummet mid-day on Thursday. However, you can barely see it on the chart below as the market is trending higher out of a deep recession. Inflation risk is also rising as supply chains are tight causing upward pressure on prices. We will hear from CEOs soon enough about recovery prospects and inflationary pressures that may impact their margins. The next few weeks will unleash a flood of earnings so stay tuned.
The S&P 500 Index has formed a trend channel from the March 2020 low that is divided into top and bottom trend channels. The peak to trough from 2020 has an “echo” or a fibonacci extension at 4147 at the top of the chart which is a significant resistance barrier that was overcome on April 15th. The S&P is consolidating above this level which is a good sign that higher prices are likely. This level also now becomes a key support level that we can look to hold to gauge the health of the overall uptrend in the coming months.
It really is all about chart patterns and earnings reports over the next few weeks so here are a few notables for next week:
Monday: Tesla, OTIS & Ameriprise Financial.
Tuesday: Google, Microsoft, MMM, General Electric, Hasbro, Jet Blue, Eli Lilly, Pulte, Raytheon, Sherman Williams, UPS, Amgen, Pinterest, Starbucks, Texas Instruments, Visa and Mondelez.
Wednesday: Apple, Boeing, Boston Scientific, Hess, Yum! Brands, EBay, Discover and Ford.
Thursday: Amazon, McDonald’s, Altria, Citrix, Mastercard, Merck, Gilead, Caterpillar and Twitter.
Friday: Chevron, Clorox, Exxon Mobile and Pitney Bowes.
Chart of the Week!
According to CB Insights, there were more than 650 unicorn startups (companies valued at $1 billion or more) valued at a combined $2.2 trillion in the world as of April 2021. It is only a matter of time before their IPOs.
Economic & Central Banking Snippets
- Jobless claim fell to +547,000 last week – the lowest level since the pandemic started last spring.
- New home sales totaled 1.021mm in March which was well above the February reading of 846k. The sales figures in the southern states matched the 2005 bubble peak as migration to the sunbelt states steadily increase.
- Australia’s manufacturing and services composite index rose to 58.8 from 55.5 with both components higher. Price pressures remain. “Ongoing supply chain disruptions continued to exert upward pressure on inflation. The flash results highlighted the steepest increases in both input costs and selling charges since the inception of the survey.” (WSJ)
- Another sign of a tightening labor market: employers having trouble staffing up. The Fed’s beige book, an anecdotal survey of economic conditions, reported shortages of drivers; entry-level, low-wage and skilled workers; child-care and information-technology staff; specialty trades; and nurses. Federal data show some 7.4 million jobs were open in February, above the pre-pandemic level.
- Existing Home Sales for March totaled 6.01mm which was less than expected as a lack of inventory is to blame. The months’ supply was just 2.1 vs 2.0 in February and that is 4 months below the historical average. All cash buyers totaled 23% of purchases vs 22% in February and 19% in the two prior months. The NAR chief economist said “Consumers are facing much higher home prices, rising mortgage rates, and falling affordability, however, buyers are still actively in the market.”
- The relentless climb in U.S. home prices and tightening supply threaten to cool the hottest housing market in 15 years. The median price for existing home sales rose to $329,100 in March, a new high according to the National Association of Realtors. Prices soared 17.2% last month from a year earlier, marking the biggest price increase in NAR data going back to 1999. (WSJ)
Macro Snippets
- The Supreme Court curbed the Federal Trade Commission’s power to recover ill-gotten gains from companies and individuals who cheat consumers. Thursday’s ruling would require the FTC to rely on more limited legal provisions to seek financial recoveries on behalf of defrauded consumers.
- Intel‘s new chief executive said a global chip-supply shortage could stretch two more years as the company posted weaker quarterly earnings. (WSJ)
- American Airlines posted a $1.25 billion net loss this week – marking its fifth consecutive quarterly loss. Revenue was just over $4 billion, down nearly 53% from the more than $8.5 billion it posted a year ago. (Investopedia)
- Venmo is releasing a feature that will allow users the option to store, buy, and sell popular cryptocurrencies. Similar to PayPal, Venmo will support four different cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.
- The U.S. House of Representatives passed a bill that would give state-authorized marijuana businesses easier access to banking services. The bill would prohibit federal banking regulators from penalizing financial institutions for providing banking services to cannabis businesses. It passed Monday night on a 321-101 bipartisan vote. (Investopedia)
That is all for now and thank you for being a subscriber!
Regards,
President – Kisco Capital