Weekly Market Update: Markets digest flood of earnings reports, improving data, and mixed reopening news
The week was characterized by more solid data, particularly from the US economy, where Consumer Confidence hit a 14-month high and personal income and spending numbers rose even more sharply than expected. The advance reading on US Q1 GDP was a few tenths below expectations but the 6.4% reading was still miles ahead of the Euro Zone’s Q1 contraction reported on Friday. Despite this and generally positive earnings results from many large-cap tech and consumer firms, equity markets struggled this week.
‘Reopening’ efforts continue in many regions though a surge of new Covid cases in India has raised concerns about a new virus variant spreading across Southeast Asia. As a result, several nations announced temporary bans on travelers from India. The FOMC’s latest policy statement downgraded the level of risk seen from the pandemic, and while Chairman Powell reiterated they will not be tapering QE any time soon, at least one hawk (Kaplan) said the committee should start discussing a plan for 2022. The US dollar slid the most in 9 months in April as the rest of the world's outlook brightened, though the dollar index perked up headed into the last day of the month. Meanwhile bitcoin steadied itself after last week’s slump. Commodity prices continued to climb, highlighted by a new all-time high in copper, and many corporations confirmed corresponding price raises during their earnings calls. For the week, the S&P edged up less than 0.1%, while the DJIA slipped 0.5% and the Nasdaq ended down 0.4%.
This week in corporate news, a slew of earnings came down the pike, especially from the world of Big Tech. Microsoft topped estimates amid robust demand for its cloud computing products and an impressive rise in personal computer shipments. Tesla shares fell after reporting a beat on record profit largely powered by bitcoin trading and regulatory credits. Google’s Q1 saw robust ad sales and the search giant announced a $50B share buyback. Facebook’s strong ad sales helped boost its Q1 revenue by nearly 50%. Amazon stock rose after a blowout Q1 report, announcing it more than tripled its profit. Apple handily beat consensus across all of its product categories in Q2, and the tech giant raised its dividend and boost buybacks, as well. Starbucks’ Q2 sales underwhelmed investors as lockdowns abroad keep a lid on growth.
Thoma Bravo said it would snap up security software developer Proofpoint in a $12.3B deal in what would be the largest cloud acquisition by any PE firm yet. Realty Income announced it would merge with Vereit in all-stock deal with combined enterprise value of ~$50B and then spin off its office properties into a REIT. Verizon is said to be exploring the sale of its media assets, including Yahoo and AOL, in a package that could be valued at $4-5B, half of what they paid for the pair of companies.
SUN 4/25 (CN) PBOC Dep Gov Fan Yifei: PBOC will continue to crack down on cross-border gambling, said dealing with cross-border gambling is a long-term task - US financial press MON 4/26 *(DE) GERMANY APR IFO BUSINESS CLIMATE SURVEY: 96.8 V 97.8E AAPL Raises US investment target to $430B over five years (prior goal $350B set in 2018); To add 20K new jobs, $1B on new NC campus PFPT To be acquired by Thoma Bravo for $176.00/shr in cash valued at $12.3B *(US) APR DALLAS FED MANUFACTURING ACTIVITY INDEX: 37.3 V 30.0E (US) Census Bureau: Texas to gain two seats in House of Representatives; NY and California to lose one seat each TSLA Reports Q1 $0.93 v $0.79e, Rev $10.4B v $9.92Be; Affirms it expects to achieve 50% annual growth in deliveries MAERSKB.DK Reports prelim Q1 Rev $12.4B, EBITDA $4B, EBIT $3.1B; raises FY guidance significantly
TUES 4/27 5.HK Reports Q1 Net $3.9B v $1.8B y/y, adj Pretax $6.4B v $3.0B y/y, Rev $13.3B v $13.7B y/y UBSG.CH Reports Q1 Net $1.82B v $1.60B y/y, Adj Pretax $2.29B v $2.00B y/y, Rev $8.7B v $7.9B y/y BP.UK Reports Q1 $0.78 v $0.43e, Rev $36.5B v $31.4Be; to buy back $500M in shares UPS Reports Q1 $2.77 adj v $1.63e, Rev $22.9B v $20.4Be; No plans to buyback shares GE Reports Q1 $0.03 v $0.02e, Rev $17.1B v $17.6Be MMM Reports Q1 $2.77 adj v $2.25e, Rev $8.85B v $8.36Be ADM Reports Q1 $1.39 v $1.00e, Rev $18.9B v $16.8Be FISV Reports Q1 $1.17 v $1.13e, Rev $3.56B v $3.56Be GLW Reports Q1 $0.45 v $0.42e, Rev $3.29B v $3.13Be; All segments grew double digits y/y, margin almost doubles PCAR Reports Q1 $1.35 v $1.27e, Rev $5.41B v $5.20Be PHM Raises FY21 deliveries to +30% (prior +20% y/y) - earnings call (US) Nevada reports Mar casino gaming Rev $1.07B, +73% y/y; Las Vegas strip Rev $501.5M, +67.2% y/y (highest casino reading since Feb 2013) *(US) APR RICHMOND FED MANUFACTURING INDEX: 17 V 22E *(US) APR CONSUMER CONFIDENCE INDEX: 121.7 V 113.0E (highest level in 14 months) TXN Reports Q1 $1.87 v $1.56e, Rev $4.29B v $3.97Be GOOGL Reports Q1 $26.29 v $15.46e, Rev $45.6B (ex TAC) v $42.5Be; Authorizes $50B share buyback
WEDS 4/28 DBK.DE Reports Q1 Net +€908M v -€43M y/y, Rev €7.23B v €6.58Be SAN.FR Reports Q1 Business EPS €1.61 v €1.53 y/y, Op €2.64B v €2.54B y/y, Rev €8.59B v €8.97M y/y 386.HK Reports Q1 (CNY) Net +18.5B v -19.2B y/y, Rev 577B v 555.5B y/y (US) Pres Biden reportedly to propose capital gains tax for wealthy as high as 39.6%; To propose $1.8T education, child care and paid leave package - press SHOP Reports Q1 $2.01 v $0.78e, Rev $989M v $856Me; Momentum continued into 2021 as digital commerce tailwinds BA Reports Q1 -$1.53 v -$1.17e, Rev $15.2B v $14.4Be ETH/USD Ethereum jumps to record high on report of EIB digital bond issuance - press *(US) DOE CRUDE: +0.1M V 0ME; GASOLINE: +0.1M V 0ME; DISTILLATE: -3.3M V 0ME *(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25% (AS EXPECTED); RISKS TO THE OUTLOOK REMAIN, INFLATION HAS RISEN BUT LARGELY REFLECTS TRANSITORY FACTORS (US) Fed Chair Powell: it is not time yet to start talking about tapering; in the meantime we will monitor progress toward our goals - post-decision Q&A GM Introduces Ultium Charge 360, a holistic charging approach to integrate charging networks; new partnership to have 60K public chargers from 7 networks on the same app in US & Canada, including Blink Charging, ChargePoint, EVgo, and Shell's Greenlots F Reports Q1 $0.89 v $0.16e, Rev $36.2B v $31.1Be; Sees losing ~50% of planned Q2 production and 10% of planned H2 production citing chip shortage FB Reports Q1 $3.30 v $2.36e, Rev $26.2B v $23.8Be F Global semiconductor shortage may not be fully resolved until 2022 - earnings slides VZ Reportedly exploring sale of media assets including Yahoo and AOL, package could be valued at $4-5B - press 2282.HK Reports Q1 (HK$) Adj EBITDA +84.4M v -122.7M y/y; Rev 2.3B v 2.1B y/y 005930.KR Reports final Q1 (KRW) Net 7.09T v 4.9T y/y; Op 9.38T v 9.3T prelim; Rev 65.4T v 65.0T prelim
THURS 4/29 AIR.FR Reports Q1 adj Net €362M v -€481M y/y, Adj EBIT €694M v €281M y/y, Rev €10.5B v €10.3Be 066570.KR Reports Prelim Q1 (KRW) Net 998.3B v 1.0T y/y; Op 1.52T v 1.52T prelim; Rev 18.81T v 18.81T prelim NOKIA.FI Reports Q1 €0.07 v €0.01e, Rev €5.08B v €4.86Be RDSA.NL Reports Q1 CCS EPS $0.42 v $0.37 y/y, Adj CCS Net $3.23B v $3.06Be, Rev $55.7B v $60.0B y/y* UNA.NL Issues Q1 trading update: Rev €12.3B v €12.1Be; To commence up to €3B share buyback in May BAVA.DK Reports new preclinical data for COVID-19 vaccine candidate ABNCoV2 confirming potential for broad protection against SARS-CoV2 Variants; May be looking at the first universal COVID-19 vaccine *(DE) GERMANY APR NET UNEMPLOYMENT CHANGE: +9.0K V -10.0KE; UNEMPLOYMENT CLAIMS RATE: 6.0% V 6.0%E 3328.HK Reports Q1 (CNY) Net 21.95B v 21.5B y/y, NII 38.55B v 36.7B y/y *(EU) EURO ZONE APR ECONOMIC CONFIDENCE: 110.3 V 102.1E 3988.HK Reports Q1 (CNY) Net 54.0B v 52.6B y/y, Op Income 157.9B v 148.5B y/y VER To merge with Realty Income in all stock deal with combined EV of ~$50B (US) Mayor De Blasio: To fully reopen NYC on July 1st MA Reports Q1 $1.74 v $1.57e, Rev $4.2B v $3.97Be *(DE) GERMANY APR PRELIMINARY CPI M/M: 0.7% V 0.5%E; Y/Y: 2.0% V 1.9%E *(US) Q1 ADVANCE GDP ANNUALIZED Q/Q: 6.4% V 6.6%E; PERSONAL CONSUMPTION: 10.7% V 10.5%E *(US) Q1 ADVANCE GDP PRICE INDEX: 4.1% V 2.6%E; CORE PCE Q/Q: 2.3% V 2.4%E *(US) MAR PENDING HOME SALES M/M: 1.9% V 4.4%E; Y/Y: 25.3% V 27.5%E (US) Labor Secretary Walsh: Most US gig workers should be classified as employees (US) White House Press Sec Psaki: still evaluating report of directed energy attack near the White House AMZN Reports Q1 $15.79 v $9.65e, Rev $108.5B v $105.1Be SWKS Reports Q2 $2.37 v $2.34e, Rev $1.17B v $1.15Be *(CN) CHINA APR MANUFACTURING PMI (GOVT OFFICIAL): 51.1 V 51.8E (13th month of expansion)
FRI 4/30 *(FR) FRANCE Q1 PRELIMINARY GDP Q/Q: 0.4% V 0.0%E; Y/Y: 1.5% V 1.0%E AZN.UK Reports Q1 Core EPS $1.63 v $1.48e, Rev $7.32B v $7.26Be *(DE) GERMANY Q1 PRELIMINARY GDP Q/Q: -1.7% V -1.5%E; Y/Y: -3.3% V -3.6%E *(EU) EURO ZONE MAR UNEMPLOYMENT RATE: 8.1% V 8.3%E *(EU) EURO ZONE APR ADVANCE CPI ESTIMATE Y/Y: 1.6% V 1.6%E; CPI CORE Y/Y: 0.8% V 0.8%E *(EU) EURO ZONE Q1 ADVANCE GDP Q/Q: -0.6% V -0.8%E; Y/Y: -1.8% V -2.0%E AAPL EU confirms it has charged Apple with antitrust violations over App Store payments in Spotify dispute - press XOM Reports Q1 $0.65 adj v $0.59e, Rev $59.2B v $55.2Be; Affirms FY21 capex plan, to further cut costs *(US) MAR PCE DEFLATOR M/M: 0.5% V 0.5%E; Y/Y: 2.3% V 2.3%E *(US) MAR PERSONAL INCOME: 21.1% V 20.2%E; PERSONAL SPENDING: 4.2% V 4.1%E (US) Apr Chicago Purchase Managers (PMI): 72.1 v 65.3e (highest level since December 1983) *(US) APR FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 88.3 V 87.5E (US) Biden Admin to ban travel to US from India by most non-US citizens due to pandemic - press (US) White House: TSA extending face mask requirement for all travelers on US transportation through Sept 13th