Things you need to know.
- Jay hold the line and stays put – NOTHING changed
- Apple and FB – blow the roof off
- Biden addresses the nation – ‘inaction is not an option’
- The Dollar breaks down, 10 yr Treasury is up
- Oil kissing $65 – what’s next
- Try the Apple Pie (Who doesn’t love Apple Pie?)
Stocks were mixed going into the 2 pm FED announcement and remained mixed during the press conference…10 yr. treasuries hovered around 1.61%, (this morning its trading at 1.65%), the dollar weakened, and gold was unchanged…. The tension that had been building all day turned to relief when Jay took control of the podium and put the boogeyman to bed…. Saying:
“Inflation will spike higher (we know this) …Rising inflation pressures are likely to be one-time patterns, partly because the very low inflation reading of last March and April are about to drop out….”
“The FED does not need to get all the way to its goals to taper asset purchases, but it’s a long way to go to hit them….” – putting that issue to bed.
“No one should doubt that the fed will use its tools to address any sustained inflation risk….” – again reiterating his ongoing narrative.
“Some of the things in the equity markets do reflect froth…. but the FED takes a broad perspective on financial stability…” – here is where they are missing the boat – in my opinion – define ‘froth’.
By the closing bell – the Dow was down 164 pts, the S&P off 4 pts, the Nasdaq was off 39 pts while the Russell added 2 pts…. essentially nothing…. after all that – that is what we got????
He made one thing quite clear – It is NOT time to begin to talk taper never mind begin to taper…saying that when it is time – the FED will allow plenty of time for investors and the markets to react…. but that time is NOT NOW….
Oh boy……Ok – the elephant in the room is not really an elephant…. even though it looks like an elephant….it must be something else…. but it is not an elephant….and so we go….and this is setting the tone for today’s action……then.
After the bell – we heard from both Apple and Facebook – and as you might imagine – they did not disappoint…..in fact – they performed so well that the stocks shot up in the after hours session as investors and traders celebrated…Apple reported $1.40 vs. 0.99/cts, Total Revenues up 54%, while iPhone, iMacs, iPads and Other service revenues exploding higher – Gross Margins up 42.5% and they authorized a $90 billion share buyback program – stock being quoted up $4 to $137.50.
Facebook – earnings and revenues surged here as well. They monetized EVERY SINGLE USER on all their platforms…. FB, IG, and WhatsApp…. …. Capisce? Beating on top, bottom, and every other line…. they expect ad revenues to continue to increase while average daily users and average monthly users declined (just a bit). Ad sales up 46%, earnings up 93% on Revenues of $26.2 billion vs. the expected $23.7 billion. FB is quoted up $21 at $328/sh.
And as a result – US futures are surging…. almost having waited to get this confirmation – as if it really needed to wait – was there even a chance that would disappoint? No….so at 5:30 Dow futures are up 115 pts, S&P’s up 26 pts – which will take us up and thru 4200 like a hot knife thru butta, the Nasdaq ahead by 138 pts and the Russell adding 12 pts.
And tonight, we are getting AMZN…. where the expectation is calling for $9.69/sh…. if they mimic GOOG or AAPL then look for their earnings to come in somewhere between $13.50 – $17 share….and expect them to also beat on every revenue line they have…I mean are we even gonna go there? AMZN is up 11% ytd and just $100 below the September high of $3552…. which it could easily pierce on the news…unless of course they pierce it during the day today!
Today is also the biggest earnings day of the week…. look for 50 plus names – or 11% of the S&P to report including heavy weights – CAT, MCD, MRK, CMCSA, GILD, TWTR, X, WDC – and if the recent trend holds true then 84% of those will beat on both top and bottom lines….
Eco data today includes: Initial jobless claims – exp of 540k, Cont. Claims of 3.59 mil, 1strelease of 1st Qtr. GDP and that is expected to come in at +6.6% – this is not a surprise…a surprise will be if it misses or if it surges well beyond that expectation….and finally Pending Home Sales of +4.4% m/m.
European markets are all higher as investors there are celebrating the most recent FED comments which then solidify what the ECB will do next…because if you remember – Christy Lagarde (ECB President) told us last week that the ECB will not react until the FED acts first and if that is true – then the ECB is not doing anything until 2024 either! At 5:30 am the FTSE +0.59%, CAC 40 + 0.42%, DAX -0.37%, EUROSTOXX +0.08%, SPAIN +0.34% and ITALY +0.01%.
DXY – let go…unable to hold onto the trendline at $91.04 after the FED confirmed that nothing has changed…. Last night it closed at $90.60 down from $91.04 – recall that I have been telling you that a failure at the trendline could take the dollar down to the 89.90/90 level.
Oil is guess what? UP! – trading at $64.43/barrel. The dollar weakness helping to support oil as well as the continuing recovery demand story…. Period…there is nothing else to say…. While we remain in the $60/$65 range – if the dollar weakens further – we could tease and attempt to kiss $70/barrel.
The S&P closed at 4183 – and while it did breach 4200 yesterday – if for only a quick second it appears ready to blow right thru it this morning like a hot knife thru butta…. Joey’s speech getting rave reviews on some of the main street media stations while Tim Scotts rebuttal is getting rave reviews on some of the other media outlets. Joey’s comment that while he is ‘amenable to compromise, inaction simply is not an option’ suggests that the Dems are prepared to go it alone…so the $2.4 trillion + the $1.8 trillion packages paid for by huge tax increases is all but done…. final tax rates to be decided soon…. I expect capital gains to go to 28% while they eliminate the Fed 33% & 35% personal rates and jump from 28% to 39.5% with no rate in between…. So, let us see….
Remember – the broad channel remains 3960/4400 – 4200 would have proved hard if the FED changed policy…but they did not so the sky is the limit now. Expect investors/trader and algo’s to focus on all the positive and eliminate the negatives for today.
Text INVEST to 21000 to get my digital business card – give me a call if you want to discuss what I can do for you. You can now get a video version of this note on my IG (Instagram) feed – my handle is Kennyp1961 (https://www.instagram.com/kennyp1961/)
Take Good Care
Chief Market Strategist, Consultant
kpolcari@slatestone.com
Apple Pie & Ice Cream
Who does not love Apple Pie and Vanilla Ice Cream?
For this you need – 2 tablespoons all-purpose flour, plus more for dusting, readymade pie crust, 2 Granny Smith apples, peeled, cored, and sliced, 3/4 cup sugar, plus additional for pie top, Zest, and juice of 1 lemon, 1 1/2 teaspoons cinnamon, 1/2 teaspoon nutmeg,2 tablespoons unsalted butter, 1 large egg, beaten.
Preheat your oven to 375 degrees.
Roll out the pie crust – on a floured surface. – lightly butter the pie dish – and then place one of the doughs into the pie plate.
In a large bowl – mix apples, sugar, lemon zest and juice, spices, and flour. Toss well. Pout the mix into pie pan. – always add a bit of butter….and then take the other half of the pie crust and cover the pie. Using your thumb and forefinger – make a ‘ribbon’ by crimping the edge. Using a butter knife – cut 2 or 3 vents into the top.
Brush the top with the beaten egg, and finish by sprinkling a bit of sugar on top.
Place in oven and bake for about 45 mins or so…. You want a nice golden-brown crust – remove and let cool. Serve with your favorite vanilla ice cream.
Enjoy.
Buon Appetito.
