- Equity markets set yet more record highs, big earnings week ahead.
- Refinitiv data shows 85.4% of reported earnings so far have beaten estimates.
- Will bears ever come out of hibernation and sell something, anything?
Another week, another record as the S&P 500 sets yet another new high. It seems at the end of every week we look ahead and wonder if this can keep going and yet it does! Will the runaway train derail or is it setting up for a serious dose of sell in May and go away? The roaring twenties beckon and the stock market is determined to get to the party early.
Earnings season continued unabated with some misses but equities just keep on nudging or blowing past estimates. At the time of writing, 123 companies from the S&P 500 have reported and 85.4% of them have beaten earnings estimates, according to Refinitiv. The long-term average earnings beat is 65%. This 65% does make you wonder just how good the analysts are if they get it wrong so often! The financial sector is the clear winner with a staggering 121.5% growth rate in earnings from a year earlier. The industrials sector is the laggard with a negative 15% earnings growth rate in Q1 2021 versus a year earlier.
Fund flows continue to go where only they can given the record ascent of equities. Refinitiv data shows equity fund ETFs attracted $4.4 billion in fresh capital and recorded their eleventh consecutive week of net inflows.
In terms of valuation metrics, the S&P 500 looks slightly less stretched than a week ago when the Relative Strength Index (RSI) flashed at dangerously high levels. The RSI has receded to 64 from near 80 a week ago.
The S&P 500 continues to stretch the record for how far above its long-term 200-day moving average the index could trade.
The number of S&P 500 stocks trading above their own 200-day moving average also continues near record highs.
So what could possibly go wrong? Well, we keep saying that every week and nothing does! Let us take a look at what is in store for us in inflation terms and see if that can wake up some bears out there.
Thank you to Charlie Bilello for always keeping things in perspective. Inflation it seems is everywhere except in the mind of the Fed.
House prices have more than doubled over the last ten years.
We have previously demonstrated the huge spike in Lumber prices and how this is feeding through to house prices. However, all commodities are setting multi-year highs. Oil is up nearly 300% in a year, copper has nearly doubled and house prices are also rising sharply.
All this has to result in inflation at some stage, but is the Fed in denial or does it have some magic alchemy to break in case of emergency. Either way the S&P 500 chart indicates a few sell signals, primarily with the AB=CD Down (sell) pattern and the MACD indicator looking dangerously close to a bearish crossover.
The week ahead sees the busiest earnings week of the season so far with 180 companies down to report next week.
2021-04-26 After Market Close Tesla
2021-04-27 Before Market Open General Electric
2021-04-27 After Market Close Amgen
2021-04-27 After Market Close Mondelez International
2021-04-27 Before Market Open 3M
2021-04-27 Before Market Open Eli Lilly
2021-04-27 Before Market Open Armstrong World Indus
2021-04-27 Before Market Open BP
2021-04-27 After Market Close Microsoft
2021-04-27 After Market Close Visa
2021-04-27 After Market Close Alphabet
2021-04-27 After Market Close Alphabet
2021-04-27 After Market Close Advanced Micro Devices
2021-04-27 Before Market Open Centene
2021-04-27 After Market Close Starbucks
2021-04-27 Before Market Open United Parcel Service
2021-04-27 After Market Close America Movil
2021-04-28 Before Market Open Banco Santander (Brasil)
2021-04-28 After Market Close Benchmark Electronics
2021-04-28 Before Market Open Yum Brands
2021-04-28 After Market Close Apple
2021-04-28 After Market Close Blackbaud
2021-04-28 Before Market Open General Dynamics
2021-04-28 After Market Close Facebook
2021-04-28 After Market Close eBay
2021-04-28 Before Market Open Teva Pharmaceutical Indus
2021-04-28 Before Market Open Deutsche Bank
2021-04-28 Before Market Open Boeing
2021-04-28 After Market Close Ford Motor
2021-04-28 After Market Close Qualcomm
2021-04-29 After Market Close Adtalem Global Education
2021-04-29 After Market Close NIO
2021-04-29 Before Market Open Northrop Grumman
2021-04-29 Before Market Open Comcast
2021-04-29 Before Market Open Altria Group
2021-04-29 After Market Close Gilead Sciences
2021-04-29 After Market Close Cousins Properties
2021-04-29 Before Market Open Mastercard
2021-04-29 Before Market Open Merck & Co
2021-04-29 After Market Close Twitter
2021-04-29 Before Market Open McDonald’s
2021-04-29 Before Market Open Bristol-Myers Squibb
2021-04-29 After Market Close Amazon.com
2021-04-29 Before Market Open Caterpillar
2021-04-29 After Market Close United States Steel
2021-04-30 Before Market Open Barclays
2021-04-30 Before Market Open Exxon Mobil
2021-04-30 Before Market Open Banco Santander Chile
2021-04-30 Before Market Open Chevron
2021-04-30 Before Market Open AbbVie
Source: Benzinga
Congratulations if you have made it down this far, I am exhausted just looking at that list and that is taking only the large companies. In total, 880 companies are down to report earnings next week.
Monday kicks off on the economic front with durable goods, Dallas Fed Manufacturing Index, and a few T-Bill auctions. The Dallas Fed is expected to come in at 23.4 from a previous 28.9. Tesla reports earnings after the market closes.
Tuesday brings the US house price index so keep an eye on what we spoke of above. Also on Tuesday, we get US Consumer confidence data. Microsoft and Google are the highlights on the earnings front.
Wednesday sees The Fed take centre stage with an expected no change to interest rates but the press conference may provide some tradeable comments. Apple and Facebook are the tech highlights while Boeing and Deutsche Bank also report.
Thursday is as always jobless claims day with 560k expected. US GDP is the big one on Thursday with a growth rate of 6.5% expected from a 4.3% previous number. Twitter, Mcdonalds, Amazon, and Caterpillar are the earnings highlights.
Friday, phew we made it, Chicago PMI is expected to fall from 66.3 to 63 in April. Michigan Consumer Sentiment Index is due to rise from 86.5 to 88 in April. Earnings highlights include ExxonMobil and Chevron.
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