The Morning Call---Earnings expectations keep rising

 

The Morning Call

 

4/24/24

 

I am taking a long weekend. Back on Monday.

 

The Market

         

    Technical

 

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/bonds-stocks-bid-bad-news-buyers-trump-cta-sellers

 

I like Lance Roberts and agree with most of his analysis. However, this piece that addresses the viability of gold in the current environment is a bit convoluted. Specifically, if rising debt slows economic activity/earnings growth, why would the simultaneous rise in liquidity favor stocks (slower earnings growth) versus commodities (gold)? I include it for its different perspective.

https://www.advisorperspectives.com/commentaries/2024/04/23/reflation-trade-new-bullish-narrative-lance-roberts

 

            The strong dollar may not last.

            https://www.bloomberg.com/opinion/articles/2024-04-23/this-strong-dollar-is-nothing-to-fear?srnd=homepage-americas&sref=loFkkPMQ

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications fell 2.7% while purchase applications were down 1.0%.

 

Month to date retail chain store sales were stronger than in the prior week.

 

                          March new home sales rose 8.8% versus estimates of +2.7%.

                          https://www.advisorperspectives.com/dshort/updates/2024/04/23/new-home-sales-jump-march-2024

 

The April flash manufacturing PMI was 49.9 versus predictions of 52.0; the flash services PMI was 50.9 versus 52.0; the flash composite PMI was 50.9 versus 52.2.

https://www.zerohedge.com/markets/us-pmis-scream-stagflation-manufacturing-contracts-prices-rise-heaviest-job-cuts-gfc

 

The April Richmond Fed manufacturing index was -7, in line.

                          https://www.advisorperspectives.com/dshort/updates/2024/04/23/richmond-fed-manufacturing-activity-remained-slow-april-2024

 

 

March durable goods orders rose 2.6% versus forecasts of +2.5%; ex transportation, they were up 0.2% versus +0.3%---but with another of those downward revisions of prior reports.

https://www.zerohedge.com/economics/durables-goods-orders-suffers-biggest-yoy-decline-covid-lockdowns

 

 

                        International

 

The April German business climate index was 89.4 versus consensus of 88.9; the April current conditions index was 88.9 versus 88.7.

 

The April UK business optimism index was 9 versus expectations of 2; the April industrial trends orders index was -23 versus -1.

 

                        Other

 

                          It’s the economy, stupid.

                          https://www.aei.org/economics/its-the-economy-stupid/

 

            The Fed

 

              LaGarde’s comments notwithstanding, the ECB may be somewhat Fed dependent.

              https://www.wsj.com/economy/global/ecb-will-consider-feds-progress-when-deciding-on-rate-cuts-de-guindos-says-35b6c9b6?mod=economy_lead_pos3

 

Diverging growth between the US and ECB will likely lead to diverging monetary policies.

 https://www.wsj.com/economy/global/eurozone-rebound-lags-u-s-growth-as-divergence-takes-hold-537b0ac6?mod=economy_lead_pos1

 

 

            Recession

 

              The latest Q1 nowcast.

              https://www.capitalspectator.com/us-q1-gdp-report-looks-set-for-slowdown-in-thursdays-release/

 

            War in the Middle East

 

              Oil may be shedding its risk premium too fast.

              https://www.bloomberg.com/news/newsletters/2024-04-23/oil-is-shedding-its-mideast-fear-premium-too-fast?srnd=homepage-americas&sref=loFkkPMQ

 

    Bottom line.

 

            Strategic asset allocation.

            https://alhambrapartners.com/2024/04/21/weekly-market-pulse-situation-normal/?src=news

 

            Earnings expectations keep rising.

            https://www.apolloacademy.com/strong-sp-500-earnings-expectations/

 

            Some analysts believe that the sell off has further to go.

https://finance.yahoo.com/news/jpmorgan-warns-stock-market-sell-off-has-further-to-go-080049554.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuY2FwaXRhbHNwZWN0YXRvci5jb20v&guce_referrer_sig=AQAAAC1V8-m267svNrXbZ6ee2E6mQkGyrA4Q7dojYgQqnrqHO9YDLkSWNf-ah_BeStyoYy33b2EFYs6k_makDGOBihGtkISncoGbfaW7bMKDTOgbu1ocoWa-qnxp4sxIwERT1BYdrk6psN6yhaDfNunalirEL1l7JTt1qYhqj7QmkA4v

 

 

    News on Stocks in Our Portfolios

 

General Dynamics press release (NYSE:GD): Q1 GAAP EPS of $2.88 misses by $0.05.

Revenue of $10.7B (+8.6% Y/Y) beats by $400M.

 

Canadian National Railway press release (NYSE:CNI): Q1 GAAP EPS of C$1.72.

Revenue of C$4.25B (-1.4% Y/Y).

 

Canadian National Railway (NYSE:CNI) declares CAD 0.845/share quarterly dividend, in line with previous.

 

 

What I am reading today

 

           

 

 

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