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Morning Commentary

TIME FOR YELLEN

By Charles Payne, CEO & Principal Analyst
1/19/2021 10:19 AM

After a nice three-day weekend, I’m sure investors are eager to see what happens from here. We enter the market in a more cautionary manner - perhaps because it was a long weekend and also amid the mounting questions.

All of these questions offset the bull case I laid out even before the election. Household balance sheets are healthier than ever, and people are sitting on piles of cash – and ready to get more.

Yellen for More

This excess cash has led Goldman Sachs (GS) to hike its economic outlook for 2021 once again.  Assuming the big cash portions of the Biden rescue plan are approved.

2021 Economic Outlook

Post Biden Plan

Pre Biden Plan

Gross Domestic Product

6.6%

6.4%

Unemployment Rate

4.5%

4.8%

There is no doubt a ton of money will pour into this economy, and the only question is how quickly it will go to work. A big part of that answer is related to vaccine distribution and the removal or easing of lockdown restrictions.

We are hearing more governors and mayors speak out loud about the negative consequences of such draconian actions. As for distribution,  I think the Federal Emergency Management Agency (FEMA) and the National Guard should help with this (I suggested this to a lot of powerful people for months). There will only be a small demonstrable uptick in coverage. It all depends on supply.

However, the coverage of increased efforts will paint a more upbeat message that could also get folks to get off the sofa. Remember that a large portion of success is to believe you can be successful. 

The confirmation hearings for Janet Yellen to serve as the next Treasury Secretary begins today. It will give us greater insight into the lengths the former Fed chair is willing to go to reboot the U.S. economy and rewrite injustices of yesteryear.  

Hint: Wall Street will love it, as she pounds the table (in her own way) to flood the zone. 

Market Mood

Larger equity indices were slightly lower last week, in part to big names pulling back the broad market that sizzled and winners kept winning. During the week, more than 1,000 names on the NASDAQ hit new 52-week highs. There were eight billion more up than down volume. That’s conviction!

Market Breadth (Week)

NYSE

NASDAQ

Advancing

1,827

2,384

Declining

1,402

1,544

52 Week High

673

1,027

52 Week Low

34

59

Up Volume

13.8 billion

20.9 billion

Down Volume

10.7 billion

12.7 billion

Stock of the Day

Watch Netflix (NFLX), which reports today after the close. The company has the uncanny ability to miss over and over and over. And yet, it finds a way to climb to new highs after initial hits to the share price.

Earnings Trends

Actual

vs Cons

Reaction 1 week

Reaction 1 day

April 21, 2020

$1.65

-$0.08

-8.3%

-4.6%

July 16, 2020

$1.81

-$0.25

-9.4%

-6.5%

Oct 29, 2020

$1.74

-$0.39

-7.3%

-6.3%

Actually, Netflix has a remarkable record of missing Wall Street’s consensus. Management has posted bottom-line results that missed the consensus in seven of the last eight quarters.

Moreover, company earnings have missed in 15 of the last 21 releases going back to October 2015. The stock stumbled for almost a year, before breaking out of a cup and handle formation. And onto its mind-boggling and vastly enriching multi-year rally.

This week implies that the moves in companies scheduled to report are generally significant. Standouts include:

Portfolio Approach

 

We took profits on a couple positions on Friday and we are adding a new position in Technology today in our Hotline Model Portfolio.

Today’s Session

The markets are headed higher, as the earnings parade continues.  This morning, Goldman (GS) and Bank of America (BAC) reported earnings.   GS surpassed consensus on the top and bottom lines. Revenues were outstanding, driven by higher net revenue across all segments, although mostly fueled by strong global markets and investment banking. GS results come in the wake of JPMorgan Chase’s (JPM) strong quarterly results. On the other side of the spectrum, Bank of America (BAC) reported disappointing results and the stock is indicating lower.


Comments
TIME FOR YELLEN

I've decided to move to Venezuela. Oh wait! I'm already there. Didn't even have to change my address.




prettydirect on 1/19/2021 8:44:12 AM
GOOD LUCK WITH MONEY GOING WHERE IT SHOULD, POLITICANS HAVE A WAY A SAYING ONE THING THEN SPENDING THE MONEY ON UNRELATED STUFF.

Charles Welch on 1/19/2021 10:20:31 AM
One cannot expect their ship to come in if they never send it out! Mine left port this morning! First trade with Unstoppable Prosperity!!!

RONALD D SHARP on 1/19/2021 11:33:57 AM
Oh, it's so exciting.  Good luck and make sure to keep at Ronald.  CP

Charles Payne on 1/19/2021 11:41:21 AM
 

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