Coinbase (COIN) made its debut and came out of the gate with gusto. The first trade saw 8.8 million shares at $382, setting a single trade record of $3.3 billion. The stock got to $429.54 before losing altitude and stumbled into the closing bell. All in all, I would give the first day of trading a grade ‘C,’ as the stock finished up at 31%. 

There is no doubt; however, many were looking for more, as the stock struggled, the broad market did as well.

While all eyes were on Coinbase, the rest of the market began to drift lower. Hot tech names suffered from hot money traders bailing out to get a piece of the Coinbase action. The S&P 500 moved lower after the Beige Book release, or at least that’s what headlines say. I’m not sure what part of the report moved the stock market, as bonds were indifferent to improving signs from the anecdotal survey at regional Federal Reserve districts.

Beige Book

ZeroHedge pointed out that the sharp decline in the use of “Slow” and “Coronavirus”/”Covid,” which is a good sign in general.

Moreover, the word ‘moderate’ appeared 105 times from 73 times. Meanwhile, real wages have been edging lower. We already believe inflation will be short-lived, but perhaps it never matches the hype.

Inflation Signs

Import & Export Costs

There are signs of inflation, including a spike in year-to-year import prices, which increased 6.9% against export prices that rose by 9.1%.

The Fed Song & Dance

Before the closing bell, Fed Vice Chair-Richard Clarida stated they intend to allow inflation to remain well above 2.0% for a long time. However, at the same time, he acknowledged the job of maintaining the belief the Fed can contain inflation as the primary test.

Message of the Market

Utilities were higher again, but the most compelling action came from the Energy sector (more on that below). Financials had a seesaw session, but once investors heard the earnings calls, they bought Goldman Sachs (GS) and Wells Fargo (WFC). JPMorgan Chase (JPM) finished lower after CEO, Jamie Dimon, used the word “challenged” when talking about loan demand. 

He tried to take it back, but the dice is cast.

S&P 500 Index		-0.41%
Communication Services XLC		-1.03%
Consumer Discretionary XLY		-0.98%
Consumer Staples XLP		-0.09%
Energy XLE	+2.97%
Financials XLF	+0.60%
Health Care XLV		-0.01%
Industrials XLI	+0.13%
Materials XLB	+0.72%
Real Estate XLRE		-0.64%
Technology XLK		-1.04%
Utilities XLU	+0.44%

Overall, market breadth was slightly better, but not the stuff that speaks to a market at all-time highs.  Investors are certainly moving back to blue chips and cyclical names that benefit from the economy reopening.

Market Breadth	NYSE	NASDAQ
Advancing	1,921	2,282
Declining	1,359	1,894
52 Week High	292	199
52 Week Low	19	37
Up Volume	2.59B	1.63B
Down Volume	1.36B	2.48B

Gusher

It was a big day for crude oil, which has been wavering. Crude oil inventories declined by 5.98 million barrels, the biggest in two months, sending crude oil higher.

 

I really like the West Texas Intermediate (WTI) chart, which is forming a cup-and-handle formation. I especially like the way oil stocks reacted.

Portfolio Approach

We added to Consumer Discretionary yesterday in our Hotline Model Portfolio.

Today’s Session

In a sea of surprises this morning, perhaps the biggest is the fact the ten-year yield is moving lower.

Earnings Season

BAC - Beat EPS and Revs

• Revenue: (+0.1%) $22.8B vs $21.67 consensus
• EPS: $0.86 vs $0.62
• Provision for credit losses decreased to 1.9B from 8.5B
• Net Interest Income: %10.2B (-16%) y/y
• Net income of $881 million
• Record client balances: $3.5 trillion (+31%) y/y,
• Deposits: $326B (+24%) y/y
• Loans: $188B (+6%) y/y

C – Beat EPS and Revs

• Revenue: (-6.9%) $19.3B vs $18.34B consensus
• EPS: $3.62 vs $2.18
• Allowance for Credit Losses: $21.6B
• Total Non-Accrual Assets: $5.1B +21% y/y
• Consumer Non-Accrual Loans: $2.0B +17% y/y
• Corporate Non- Accrual Loans: $3.1B +25% y/y
• Geographical Segments
  • North America: $4.8B (-1%) y/y
  • EMEA: $3.7B +7%
  • Latin America: $1.13B (-20%)
  • Asia: $2.4B (-7%)

USB – Beat on EPS, Missed on Rev

• Revenue: (-5.2%) $5.47B vs $5.53B consensus
• EPS: $1.45 vs $0.94 consensus
• Average Total Deposits: $426.3M +17.5% y/y
• Average Total Loans: $293.9M (-1.2%) y/y
• Allowance for Credit Losses: $6.9B 
• Manufacturing Renaissance

The Philadelphia Fed Manufacturing Index soared to a read of 50 from a revised 44.5 (original read 51.8) beating consensus of 42.0 by a mile.   You have to go back almost 50 years to find stronger growth activity in area factories.

The Empire State Fed Manufacturing report came in at 26.3 against consensus of 20.0. 

Selling prices climbed at a record-setting pace of 34.9, as prices paid erupted ten points to 74.7 (highest since 2008).

Looking ahead, the cap ex index rose to 31.5 and the tech spending index climbed to 21.9, and there are signs of strong employment growth.

Retail sales crushed consensus, although, some on the street thought the number could be 10%.

March Monthly Sales Retail & Food Services	M/M	Y/Y
Headline	+9.8	+27.7
Motor Vehicle & Parts	+15.1	+71.1
Furniture	+5.9	+46.8
Electronics	+10.5	+28.5
Building Materials	+12.1	+29.4
Food & Beverage (at home)	+0.7	-11.8
Health & Personal Care	+5.7	+5.5
Gas Stations	+10.9	+34.8
Clothing	+18.3	+101.1
Sporting Goods	+23.5	+73.5
General Merchandise	+9.0	+4.6
Internet	+6.0	+28.7
Food & Beverage (away from home)	+13.4	+36.0

Comments

Well, we'll see what happens now! Thanks Charles. Lorin K on 4/15/2021 10:34:04 AM

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.