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Afternoon Note

Architect

By Charles Payne, CEO & Principal Analyst
4/28/2021 1:10 PM

Question of the Week

Are you willing to pay higher taxes for more social safety net programs?

Post your answer below.

In just a few moments, we will hear from Fed Chair Jerome Powell. He has to navigate a number of hurdles, as he recognizes how well the economy is doing, and yet, justify why historic levels of accommodation must remain in place.

I actually wonder what kind of nickname Powell should have, considering the conundrum of his own design? 

Greenspan was considered the “Maestro”

Volker was buddy to his family but was “The Hammer” to the market

There was “Helicopter Money” Bernanke

A Wall Street economist called Yellen “The Reluctant Hiker”

I think the “Architect.”  I’ll ask some brilliant folks on my show this afternoon.   For now, the Fed will not hike, but will Powell telegraph a reversal in policy?  It’s a tough one indeed.

Earnings Parade Continues

Meanwhile, the number one and five market cap companies in the market are reporting after the close.  Apple(AAPL) and Facebook (FB) will post the latest results, as both grapple with individual issues.  These stocks have been juggernauts for a long time, but in the last three months, Apple has underperformed.

Relative Stock Performance

12 months

3 months

AAPL

+92%

-4%

FB

+68%

+12%

NDX

+61%

+5%

 

Earnings and Stock Moves

Its clear, buying and holding these stocks have been the way to go. But investors have been shaken out from time to time, so it’s important to know recent reaction trends (past year).  For the most part, these stocks trade higher one week after earnings than the initial reaction.

AAPL Earnings Reaction

One Week

One Day

Jan 2021

-4.3%

-2.1%

Oct 2020

+4.1%

-5.0%

Jul 2020

+17.2%

+9.4%

Apr 2020

+4.2%

-1.0%

 

FB Earnings Reaction

One Week

One Day

Jan 2021

-1.6%

-2.2%

Oct 2020

+4.3%

-6.9%

Jul 2020

+13.3%

+8.3%

Apr 2020

+6.3%

+4.2%

Holding Pattern

The S&P 500 has been in a holding pattern for about a month ahead of today’s news.  As you all know, I consider the two hours after the FOMC decision to be pure emotions and think the next day is a better reflection on how investors feel about the news.


 

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