Weekly Market Update: Q1 earnings reports start strong, amplified by solid economic data
A strong start to earnings season from banks and a handful of deep cyclical companies combined with data showing the economy is growing at a rapid clip propelled stocks higher this week. The Dow gained a foothold above 34,000 for the first time and by Friday the S&P notched its 23rd all-time closing high this year. Weekly initial jobless claims fell to the lowest level since the onset of the pandemic more than a year ago, and a host of key readings including manufacturing and retail sales trounced consensus expectations. Adding to the momentum was a notable drop in U.S. government bonds yields, perhaps surprising some investors, in a week where the Treasury dumped another $124B in coupon supply onto the market. Oil prices rose and the Greenback fell to the lowest levels in about a month. Bitcoin also hit another new all-time high amid the direct listing launch of Coinbase, a popular crypto exchange. For the week, the S&P gained 1.4%, the DJIA was up 1.2%, and the Nasdaq added 1.1%.
In corporate news this week, the CDC issued a surprise announcement on Tuesday to recommend a pause on J&J vaccine distribution following six reported blood clot cases, and the regulatory agency plans to hold meetings late next week to further discuss the issue. Earnings season kicked off as the big financial houses released quarterly reports. JP Morgan posted a big beat on earnings amid strong trading, though loan demand remained challenged. Goldman Sachs and Bank of America both beat the street on Q1 profits and revenues amid strength in their investment banking and trading divisions. Morgan Stanley also saw strong numbers from its trading operations, though the bank noted its Archegos-attributed losses reached over $900M.
Alcoa reported a solid quarter, raising its FY21 alumina shipment guidance and pointing to an improvement in profitability and top-line growth. Dell announced it would spin off its 81% ownership stake in VMware following months of negotiations, a move that would generate $9B in proceeds for Dell as it seeks to pay down debt. Microsoft said it would acquire speech recognition and conversational AI services company Nuance for $19.7B, the software giant’s largest deal since it purchased LinkedIn five years ago. Thermo Fisher announced it would buy drug development researcher PPD for $17B in a boost to its pharmaceutical services business.
SUN 4/11 9988.HK CEO Zhang: Do not see material negative impact from exclusivity change required by regulator, will do more to help merchants lower operating costs; unaware of any other investigations by SAMR - post fine conference call
MON 4/12 SEV.FR Veolia and Suez reach agreement on merger; Suez to be acquired for €20.50/shr by May 14th *(EU) EURO ZONE FEB RETAIL SALES M/M: 3.0% V 1.7%E; Y/Y: -2.9% V -5.3%E UBER Reports Mar Gross Bookings reached highest level in history; Mobility Gross Bookings run-rate >$30B; On track to achieve FY21 adj EBITDA profitability - filing NUAN Confirms to be acquired by Microsoft for $56.00/shr in cash in deal valued at $19.7B (US) March NY Fed Survey of Consumer Expectations: Consumer optimism is rising amid higher inflation expectations NVDA To release its first data center CPU, a processor for giant AI and high performance computing workloads *(US) TREASURY'S $38B 10-YEAR NOTE REOPENING DRAWS 1.680%; BID-TO-COVER RATIO: 2.36 V 2.38 PRIOR AND 2.41 OVER THE LAST 8 REOPENINGS *(US) MAR MONTHLY BUDGET STATEMENT: -$660B V -$658.0BE (US) SEC said to have told accountants that warrants do not count as equity, trying to calm down SPAC frenzy with accounting talks (CN) Treasury Sec Yellen reportedly will Not designate China as a currency manipulator in biannual report – press
TUES 4/13 *(UK) FEB MONTHLY GDP M/M: 0.4% V 0.5%E *(DE) GERMANY APR ZEW CURRENT SITUATION SURVEY: -48.8 V -54.1E AGC Confirms to merge in deal to go public with Grab, a Superapp for Deliveries, Mobility and Financial Services in Southeast Asia, in deal valued at $39.6B (largest SPAC deal so far) FAST Reports Mar net sales $531.4M, +12.4% y/y JNJ US FDA and CDC confirm recommending pause on J&J vaccine after 6 reported blood clotting cases *(US) MAR CPI M/M: 0.6% V 0.5%E; Y/Y: 2.6% V 2.5%E (UK) BOE chief economist Haldane to step down from role following June meeting - press SAP.DE Reports prelim Q1 (Non-IFRS) EPS €1.04 v €0.85 y/y; Op profit +24% y/y; Rev €6.35B v €6.52B y/y; Cloud Rev +13% y/y at cc; raises FY21 guidance *(US) TREASURY $24B 30-YEAR BOND REOPENING DRAWS 2.320%; BID TO COVER 2.47 V 2.28 PRIOR AND 2.39 OVER LAST 8 REOPENINGS
WEDS 4/14 IEA Monthly Oil Report: oil prices may be pressured in coming months on supply JPM Reports Q1 $3.31 adj v $3.05e, Managed Rev $33.1B v $30.1Be; Loan demand still "challenged" *(US) DOE CRUDE: -5.9M V -2.5ME; GASOLINE: +0.3M V +0.5ME; DISTILLATE: -2.1M V +1ME F To schedule downtime at plants for weeks of April 19th and 26th due to chip shortage - press DELL Dell Technologies to spin-off 81% of VMWare stake as a public co NSANY Adjusting production schedules at North American plants for rest of April due to semiconductor shortages JNJ CDC advisory panel on JNJ's Covid vaccine decides Not to vote today; says need more data and will reconvene as quickly as possible
THURS 4/15 2330.TW Reports Q1 (NT$) Net 139.7B v 117.1B y/y, Op 150.5B v 128.5B y/y, Rev 362.4B v 310.6B y/y; Says chip shortage could continue into 2022 BAC Reports Q1 $0.86 v $0.65e, Rev $22.8B v $21.9Be - press *(TR) TURKEY CENTRAL BANK (CBRT) LEAVES ONE-WEEK REPO RATE UNCHANGED AT 19.00%; AS EXPECTED PPD Confirms to be acquired by Thermo Fisher for $47.50/shr in cash valued at $17.4B plus $3.5B assumption of debt *(US) APR EMPIRE MANUFACTURING: 26.3 V 20.0E *(US) MAR ADVANCE RETAIL SALES M/M: 9.8% V 5.8%E; RETAIL SALES (EX-AUTO) M/M: 8.4% V 5.0%E *(US) APR PHILADELPHIA FED BUSINESS OUTLOOK: 50.2 V 41.5E DAL Reports Q1 -$3.55 v -$2.94e, Rev $4.15B v $3.87Be; saw cash generation in Mar *(US) MAR INDUSTRIAL PRODUCTION M/M: 1.4% V 2.5%E; CAPACITY UTILIZATION: 74.4% V 75.6%E *(US) APR NAHB HOUSING MARKET INDEX: 83 V 83E (US) Atlanta Fed GDPNow raises Q1 GDP to 8.3% from 6.0% JBHT Reports Q1 $1.37 v $1.18e, Rev $2.62B v $2.49Be AA Reports Q1 $0.79 v $0.48e, Rev $2.87B v $2.66Be DAI.DE Reports Q1 Prelim Adj EBIT €4.97B v €3.99Be (vs €719M y/y) *(CN) CHINA Q1 GDP Q/Q: 0.6% V 1.4%E; Y/Y: 18.3% V 18.5%E (record annualized growth)
FRI 4/16 (TR) Turkey said to have banned payments in Cryptocurrencies; effective Apr 30th *(EU) EURO ZONE MAR FINAL CPI Y/Y: 1.3% V 1.3%E; CPI CORE Y/Y: 0.9% V 0.9%E (CN) China reportedly has given permission to import large amounts of Gold - press *(US) MAR HOUSING STARTS: 1.739M V 1.613ME; BUILDING PERMITS: 1.766M V 1.750ME *(US) APR PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 86.5 V 89.0E; 1-year inflation expectations: 3.7% v 3.3%e