As we approach the open... - 4/29/21

 As we approach the open... - 4/29/21

Busy morning so didn't get a chance to proofread so apologize for any typos.

As we approach the open, US equity futures are at the top of their overnight range which was basically a steady drift upwards led by the NDX on the back of strong results from Apple and Facebook after the close last night.  NDX indicated up 1.21%, RUT 0.86% and SPX 0.75%.  

In earnings news Apple (AAPL 137.31, +3.73): +2.8% after beating top and bottom-lines estimates with strong beats across all product categories, guiding Q3 revenue to be up "strong double digits," raising its dividend by 7%, and authorizing an increase of $90 billion to the existing share repurchase program. Facebook (FB 239.50, +22.40): +7.3% after beating top and bottom-line estimates. Facebook also said it expects revenue growth rates to "significantly decelerate" in the second half of this year due to strong comparisons from the prior year. Caterpillar (CAT 235.00, +2.70): +1.2% after beating top and bottom-line estimates. Merck (MRK 75.71, -1.38): -1.8% after missing top and bottom-line estimates, although it did guide the midpoint of FY21 EPS above consensus. McDonald's (MCD 230.95, -1.46): -0.6% despite beating top and bottom-line estimates. 

Interestingly, CAT noted guidance was lowered because they also are having trouble getting semi's.  

Some others from yesterday from Seeking Alpha:

And here are some other notable ones this morning

On the latter two, mentioned that oil earnings were expected to be strong a few days ago.  Looks like that's coming through in the results.

As a side note, if you like earnings beats, check out the banks.

Asia

Major Asian equity markets ended Thursday on a mostly higher note while Japan's Nikkei was closed for Showa Day. Japan's Nikkei: CLOSED Hong Kong's Hang Seng: +1.0% China's Shanghai Composite: +0.5% India's Sensex: +0.1% South Korea's Kospi: -0.2% Australia's ASX All Ordinaries: +0.4%.

In economic data: S Korean manufacturing index for May beat.  This was the highest level in ten years.

Japanese equity markets will close after today for a three-day closure at the start of next week. 

WSJ today reporting on China really starting to put the squeeze on property development.

And looks like they're going to be fining Tencent as well.

While they prepare for a record travel holiday.

Europe

Major European indices trade on a mostly higher note while Germany's DAX (-0.5%) lags. STOXX Europe 600: +0.3% Germany's DAX: -0.5% U.K.'s FTSE 100: +0.7% France's CAC 40: +0.4% Italy's FTSE MIB: +0.1% Spain's IBEX 35: +0.5%.

In economic data EU confidence beat led by business confidence with industrial confidence hitting an ATH (consumers were flat and remained negative)... 

Eurozone Economic Confidence Apr: 110.3 (est 102.2; prevR 100.9; prev 101.0) Eurozone Consumer Confidence Apr F: -8.1 (prev -8.1)

Eurozone Industrial Confidence Apr: 10.7 (est 4.0; prevR 2.1; prev 2.0) Eurozone Services Confidence Apr: 2.1 (est -8.5; prevR -9.6; prev -9.3)

... while credit pulled back a touch... 

EU March M3 Money Supply 10.1% yr/yr (expected 10.2%; last 13.3%). March Private Sector Loans 3.3% yr/yr (last 3.0%) and March loans to nonfinancial corporations 5.3% yr/yr (last 7.1%). 

... and German employment missed and prices were a bit hot overall putting a bit of pressure on European yields: 

Germany's April Unemployment Change 9,000 (expected -10,000; last -6,000) and Unemployment Rate 6.0%, as expected (last 6.0%). March Import Price Index 1.8% m/m (expected 1.0%; last 1.7%); 6.9% yr/yr (expected 6.0%; last 1.4%)Italy's March PPI 0.9% m/m (last 0.5%); 2.7% yr/yr (last 0.7%).  

Spain's April CPI 1.2% m/m (last 1.0%); 2.2% yr/yr (expected 1.3%; last 1.3%). Q1 Unemployment Rate 15.98% (expected 16.60%; last 16.13%)

France looks to extend curfew to June 2nd.

US Data

Early reports out are jobless claims and GDP.  I'll have deeper dives on both, but here are the initial highlights.

Jobless claims came in a little above expectations and on a seasonally adjusted basis ticked up a touch from last week.  Continuing claims a bit lower but still above exp's.

But as I've said repeatedly, take it all with a grain of salt.

GDP came in a touch under exp's with consumption beating a bit and core PCE actually a little light but over the Fed's 2% number.  Headline inflation blew away the estimate.

US GDP Annualized (Q/Q) Q1 A: 6.4% (est 6.7%; prev 4.3%)

US Personal Consumption Q1 A: 10.7% (est 10.5%; prev 2.3%) US GDP Price Index Q1 A: 4.1% (est 2.6%; prev 2.0%) US Core PCE (Q/Q) Q1 A: 2.3% (est 2.4%; prev 1.3%)

Commodities/Currencies/Bonds

Bonds - With the headline price index coming bit hot and European yields pushing up, 10-yr yields continue to drift upwards moving towards my short-term target of a test of 1.7%.  

Dollar - Getting a bit of support from bonds but barely green.

VIX - Remains subdued in 17's.

Crude - Mentioned yesterday that if it could get over last week's highs technicals were set up, and that's what we're seeing as it sort of took off after breaking that level up a couple percent now to $65.20 (WTI) highest since mid-March and now conclusively busting that head and shoulders pattern which says to me a test of the 52-week high at $68 may be coming.

Nat Gas - Continues to push up closer to the $3 level (June contract).

Gold - Just can't get going and is in jeopardy of losing its favorable technicals.  Needs to hold the 20-DMA that its currently testing.

Copper -  Green again this morning, and I believe now at an ATH.

Misc.

Random stuff:

RenMac says "momentum trumps sentiment".  I agree over intermediate to long term, but I think short term sentiment excesses get worked off one way or the other.

Not just the US where savings rates have moved much higher (presumably strengthening consumer balance sheets in most cases).

Given the track record of economists, this makes me even more in the transitory camp.

I guess at least we're not declining a la China.

US venture fund bets are starting to really pay off.

While NYC to fully reopen on July 1.  This will likely put some pressure on others that have been holding back on moving in this direction.

And, huh?

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