As we approach the open... - 4/30/21

  As we approach the open... - 4/30/21

As we approach the open of US equity trading, we are finally getting a little bit of that weakness I was anticipating for this week with indices solidly in the red led to the downside by small caps with the RUT indicated to open down little more than one percent, NDX eight tenths, and SPX six tenths.  NDX weakness is despite AMZN completing the "five-fecta" (my made up term) of revenue and earnings beats from the Big 5, smashing EPS estimates (and trading up this morning, although according to Investopedia might want to watch the next few weeks).  

In earnings news: 

Amazon (AMZN 3556 .80, +85.49): +2.5% after beating top and bottom-line estimates and guiding Q2 revenue above consensus. Chevron (CVX 104.24, -2.66): -2.5% as revenues missed (EPS in line). AbbVie (ABBV 112.00, +1.11): +1.0% after beating top and bottom-line estimates and raising its FY21 EPS guidance to in-line with consensus estimates. Twitter (TWTR 57.10, -7.99): -12.3% as the midpoint of its Q2 revenue guidance was below consensus and mDAU figures/guidance did not impress investors. The company beat EPS estimates. Western Digital (WDC 74.48, +3.35): +4.7% after beating top and bottom-line estimates and guiding fiscal Q4 revenue and EPS above consensus. Clorox (CLX 178.25, -7.69): -4.1% after missing revenue estimates and lowering its FY21 EPS guidance. 

Also, XOM beat EPS and revenues and huge beat on operating cash flows.  Cap ex revised down further.

Few others from this morning.

  

Here's the Seeking Alpha roundup of Thursday's key earnings.

Mentioned Investopedia which noted that AMZN was in an unusual technical position (at the top of its Keltner Channel) ahead of its earnings which, ironically, proceeded a massive EPS beat last time it was in such a position (sound familiar?).  In that case, it then promptly went into a 13% correction.  Hopefully we don't see that this time.

Finally here's the latest sector heat map from Bespoke.

Asia

Major Asian equity markets ended the week on a lower note. Japan's Nikkei: -0.8%, Hong Kong's Hang Seng: -2.1%, China's Shanghai Composite: -0.8%, India's Sensex: -2.0%, South Korea's Kospi: -0.8%, Australia's ASX All Ordinaries: -0.8%.

In economic data, Chinese manufacturing PMI's (one is larger and one is smaller companies, but I honestly get which is which mixed up) came in mixed but both remained above 50 and up for the 12th consecutive month, while Japanese data was very solid with lots of big beats, S Korean was mixed and Australian prices came in a little hot: 

China - China's April Manufacturing PMI 51.1 (expected 51.7; last 51.9) and Non-Manufacturing PMI 54.9 (last 56.3). April Caixin Manufacturing PMI 51.9 (expected 50.8; last 50.6)

Japan - March Industrial Production 2.2% m/m (expected -2.0%; last -1.3%) and Unemployment Rate 2.6% (expected 2.9%; last 2.9%). March Housing Starts 1.5% yr/yr (expected -7.4%; last -3.7%). April Tokyo CPI -0.6% yr/yr (last -0.2%) and Tokyo Core CPI -0.2% yr/yr, as expected (last -0.1%). April Manufacturing PMI 53.6 (expected 53.3; last 52.7).  Japanese Consumer Confidence Index Apr: 34.7 (exp 34.2; prev 36.1)

South Korea - March Industrial Production -0.8% m/m (expected 0.1%; last 4.4%); 4.7% yr/yr (expected 4.2%; last 0.9%). March Retail Sales 2.3% m/m (last -0.8%). Cyclical Leading Index Change Mar: 0.2 (prev 0.2)

Australia - Q1 PPI 0.4% qtr/qtr (last 0.2%); 0.2% yr/yr (last -0.1%).  Private Sector Credit (M/M) Mar: 0.4% (exp 0.3%; prev 0.2%) 

Japan's Cabinet approved the release of a JPY500 bln reserve to support businesses affected by the coronavirus pandemic.  The approval rating of South Korea's President Moon fell to a record low of 29%.

Europe

Major European indices trade near their flat lines while Italy's MIB (-0.7%) underperforms. STOXX Europe 600: -0.3%, Germany's DAX: +0.1%, U.K.'s FTSE 100: -0.2%, France's CAC 40: -0.4%, Italy's FTSE MIB: -0.7%, Spain's IBEX 35: -0.1%.

In economic data EU GDP in general came in better than expected although confirming double dip recession but Germany missed estimates while employment generally beat and prices came in a bit hot.

EU - March Unemployment Rate 8.1% (expected 8.3%; last 8.2%). April CPI 0.6% m/m (last 0.9%); 1.6% yr/yr, as expected (last 1.3%). Flash Q1 GDP -0.6% qtr/qtr (expected -0.8%; last -0.7%); -1.8% yr/yr (expected -2.0%; last -4.9%).

Germany's Germany's Q1 GDP -1.7% qtr/qtr (expected -1.5%; last 0.5%); -3.3% yr/yr (exp ected -3.6%; last -2.3%). 

France's March PPI 1.0% m/m (last 0.9%) and March Construction Spending -1.1% m/m (expected 0.4%; last 0.3%). Consumer Spending (M/M) Mar: -1.1% (exp 0.5%; prev 0.0%). April CPI 0.2% m/m, as expected (last 0.6%); 1.3% yr/yr, as expected (last 1.1%). Flash Q1 GDP 0.4% qtr/qtr (expected 0.1%; last -1.4%).

Italy's March Unemployment Rate 10.1% (expected 10.3%; last 10.2%). April CPI 0.4% m/m, as expected (last 0.3%); 1.1% yr/yr (expected 1.0%; last 0.8%). Q1 GDP -0.4% qtr/qtr (expected -0.5%; last -1.8%); -1.4% yr/yr (expected -1.6%; last -6.6%)

Spain's Spain's March Retail Sales 14.9% yr/yr (last -6.1%). Flash Q1 GDP -0.5% qtr/qtr, as expected (last 0.0%); -4.3% yr/yr (expected -4.2%; last -8.9%).

U.K.'s April Nationwide HPI 2.1% m/m (expected 0.5%; last -0.3%); 7.1% yr/yr (expected 5.0%; last 5.7%).

German Green Party +7 PPTs To 25% In YouGov Poll - DPA 

- Merkel's Bloc -12 PPTs To 24%

France looks to extend curfew to June 2nd but will phase in reopening before then.

While Barclay's CEO predicts an unprecedented boom for the UK.

US Data

Early reports out are personal income and spending and employment cost index.

I'll have more detail after the open on the first, but fueled by stimulus payments, massive increase in personal income, and while we did get a tickup in spending nothing close so savings rate which therefore also soared (to 27.6%).

US Personal Income Mar: 21.1% (est 20.2%; prevR -7.0%; prev -7.1%) US Personal Spending Mar: 4.2% (est 4.1%; prev -1.0%) US Real Personal Spending Mar: 3.6% (est 3.7%; prev -1.2%)

Prices (PCE) increased by a hefty 0.5% headline and 0.4% core which was a tenth higher than expected on the core.

US PCE Deflator (M/M) Mar: 0.5% (est 0.5%; prev 0.2%) US PCE Deflator (Y/Y) Mar: 2.3% (est 2.3%; prev 1.6%) US PCE Core Deflator (M/M) Mar: 0.4% (est 0.3%; prev 0.1%) US PCE Core Deflator (Y/Y) Mar: 1.8% (est 1.8%; prev 1.4%)

Employment costs came in a little hot.

US Employment Cost Index Q1: 0.9% (est 0.7%; prev 0.7%)

Commodities/Currencies/Bonds

Bonds - Bonds not reacting to the PCE or ECI data this morning around flat levels.

Dollar - A bit green testing underside of 100-DMA.

VIX - Remains subdued falling into the 16's.

Crude - After busting to new 2-month highs, promptly falling back this morning now below yesterday's lows at $63.40 WTI.  As of now still looks good and this is just backing and filling but I really thought we'd get another day at least of gains.

Largest refined products mover forecasts more product movement this Spring then 2019.

Nat Gas - Continues to consolidate just under $3.

Gold - Basically unchanged sitting on 20-DMA area.

Copper -  Green again this morning, but below yesterday's highs for now.

Misc.

Random stuff:

I neglected in my GDP breakdown to note that inventories contracted (subtracting from GDP) in first quarter by a not insignificant 2.64%.

As inventories are very lean (as we know from inventories report as well as from PMI's) this will be "paid back" in restocking in future quarters, as noted also by RenMac.

And when you take that into account (as well as the drag from trade with imports outstripping exports significantly), domestic demand exceeded 4Q19.

Also mentioned that investment was generally positive with some big numbers.  Here's a great chart showing how everything is moving in the right direction.

Latest BoA survey of fund manager sees them slowing equity buying and moving more into cash and bonds but remaining with historically high level of equity exposure.

While higher quality companies have made a comeback against lower quality.

And Buybacks coming to European company near you.

And a place where it's probably for the best to have machines replacing human jobs.

Canadian GDP came in a touch light.

Canadian GDP (M/M) Feb: 0.4% (est 0.5%; prev 0.7%) Canadian GDP (Y/Y) Feb: -2.2% (est -2.3%; prev -2.3%)

And there are no recessions for military spending anymore.

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