As we approach the open... - 4/27/21

  As we approach the open... - 4/27/21

As we approach the open of US equity futures, mild tilt to the upside with the small caps continuing to lead for a third day with the RUT indicated up around three tenths, NDX and SPX closer to a tenth.

Some earnings news this morning - Tesla (TSLA 720.84, -17.36): -2.4% despite beating top and bottom-line estimates, reporting a 240 bps increase in automotive gross margin from Q4 due to lower costs, and saying it expects annual growth for vehicle deliveries to be above 50% this year. UPS (UPS 188.73, +12.92): +7.4% after beating top and bottom-line estimates. General Electric (GE 13.16, -0.41): -3.0% after missing revenue estimates, although it also beat EPS estimates. Eli Lilly (LLY 179.75, -7.47): -4.0% after missing top and bottom-line estimates. 3M (MMM 197.79, -1.84): -0.9% despite beating top and bottom-line estimates. Also, NVS missed slightly on rev's and EPS, BP big beat on earnings, adds $500M in buybacks for Q2, maintains div, and achieved debt target, ADM crushes revenue and EPS estimates, and RT misses revenues, beats on EPS, raises low end of guidance and boosts buyback to $2B.

One thing to note this earnings season is that as last couple we are seeing year ahead earnings estimates drift upwards as we go through earnings season which we typically don't see, particularly to this extent.  Here's a visual representation.

To the point that now next twelve months earnings are above 2019 (and this was from last week, it's even better now).

Asia

Major Asian equity markets ended Tuesday on a mixed note. Japan's Nikkei: -0.5% Hong Kong's Hang Seng: -0.2% China's Shanghai Composite: UNCH India's Sensex: +1.2% South Korea's Kospi: -0.1% Australia's ASX All Ordinaries: -0.2%.

In economic data: Chinese corporate profits while S Korean 1QGDP beat exp's, and Hong Kong imports were both up solidly m/m - Imports 21.7% m/m (last 17.6%) a nd Exports 26.4% m/m (last 30.4%).

Bank of Japan made no changes to its policy stance and Governor Kuroda acknowledged that the bank's 2.0% inflation target will not be reached before the end of his term. The central bank now expects Japan's economy to expand 4.0% in the current fiscal year, up from the previous forecast for growth of 3.9%. 

Meanwhile, China Set To Report First Population Decline Since 1949 - FT

Europe

Major European indices trade modestly lower. STOXX Europe 600: -0.2% Germany's DAX: -0.2% U.K.'s FTSE 100: -0.2% France's CAC 40: -0.1% Italy's FTSE MIB: -0.2% Spain's IBEX 35: -0.1%.

In economic data: U.K.'s April CBI Distributive Trades Survey 20 (expected -5; last -45); Italy's April Business Confidence 105.4 (expected 102.5; last 101.9) and Consumer Confidence 102.3 (expected 102.0; last 100.9).

Germany starting to release details of recovery plan - German FinMin Scholz: German Recovery Plan Is For Spending Of About EUR28B.

Also, 21% minimum corporate tax idea continues to gather momentum.

US Data

Redbook was out this morning but I can't figure out how to see anything but y/y which is worthless so pausing that until later this year.  Couple of home price indexes out with FHFA a little light but Case Shiller a little hot.  I might see if there's something interesting in this and report on it tonight. 

 I'll also give some detail on the consumer confidence number and Richmond Fed tonight, those come out at 10 am ET.

Commodities/Currencies/Bonds

Bonds - 10-yr yields continue to remain very subdued just gently riding up the 50-DMA but remaining firmly in trading range of last week or so.  This could change today, though, as there's a large 7-year auction today.

Dollar - Also continues to trade muted above that trendline but below a lot of resistance.

VIX - Basically flat at 17.36.  

Crude - Up a bit, remaining firmly in the trading range of the past week but above 20 and 50 DMA's.

OPEC+ JJMC meeting has gotten underway.  This is not the policy meeting which is scheduled for tomorrow.  I'll update if anything interesting comes from this body.  Russia already throwing some cold water on things - Russian Deputy Energy Minister Sorokin Says Oil Prices Of $45-$50 Per Barrel Is Long-Term Balanced Price

Nat Gas - Building on yesterday's gains to a new 2-month high.  Technicals remain pretty solid although money flow getting very overbought.

Gold - Trading around flat levels moderate upside bias but below last week's highs.

Copper -  Continues to build on yesterday's break to new 10-year highs.

Soy - Might have to add a "Misc" section to this part.  Today's limit up misc commodity is soy.

Iron ore could be tomorrow's.

Misc.

Random stuff:

Looks like we've sort of plateaued on TSA traveler count.  I'd imagine this will move higher in a couple of months as summer travel season kicks off but international will likely take a while longer.

Threat of delisting not stopping Chinese firms from listing in the US.

Great chart from Liz Ann Sonders that shows how correlations increasing (so things moving together more) is normally indicative or higher volatility and drawdowns.  Haven't seen it yet (but it would be consistent with my "roadmap" for next two weeks).

As would seasonals which are not great for this week.

No threats of prescription drug price cuts?  I'm not sure health care investors even know how to handle such a situation. 

Manchin continues to push the agenda.  

While Green party continues to gain momentum in Germany.

And who would have guessed that shipping is doing great? ;-)  UPS up 7% (despite refusing to give guidance) and world's largest ocean shipper notes "exceptionally strong demand".  

As things continue to improve in the US.

To see more content, including summaries of some of today's economic reports and my nightly Summary go to https://sethiassociates.blogspot.com