Join Tematica Research's Chief Macro Strategist, Lenore Hawkins, and Chief Investment Officer, Chris Versace, as they discuss and debate what's driving the market and the economy this week.
"Well, we have almost made it through what was the busiest week of earnings season for the S&P 500, a lot of economic data, and an FOMC decision! Lots of news, but there was little downside associated with any of them as equities continue to defy gravity AND 2021 is already a third over! "
Monday we’ll be looking at the final Markit and ISM Manufacturing PMIs for April for how the exceptionally strong manufacturing sector is evolving with ISM data tending to be more influenced by global economic growth and foreign earnings than IHS Markit PMI. We will also be looking at Construction Spending for March, which fell for the first time in February after four consecutive months of gains, to see if residential construction is still red hot and what about new office space these days?
Tuesday brings Total Vehicle Sales for April in light of weak inventory levels due to the semiconductor chip shortage. We’ll also look at Factory Orders for March, which had dropped 0.8% in February, the first decline in April 2020.
Wednesday brings the ADP Employment report for April which is basically a private sector preview of the week’s biggest report, the April Employment report from the Labor Department that comes on Friday. Given the consecutive pandemic-era record low reports for initial jobless claims over the past few weeks. Expectations are for 750k new jobs from the ADP report after March’s increase of 517k. We will also get the Markit and ISM Service sector reports, which should show material improvements as lockdowns have been easing and we can finally repair the lockdown-induced(perhaps a wee bit of wine inspired) 9pm self-administered haircuts.
Thursday we will be looking to see if the recently impressive downward trend in Initial Jobless Claimscontinues. We will also get the preliminary Nonfarm Productivity Report for Q1 which will likely show a decline given the rate of hiring in the first quarter.
Friday brings what will be the most impactful report, April’s Non-Farm Payroll report which is expected to see an increase of 925k jobs after an increase of 916k in March.
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Lenore Hawkins, Chris Versace
Chris Versace 00:05
This is the week ahead brought to you by advisor pedia and powered by automatic research. . .
Lenore Hawkins 00:33
It totally worked.
Chris Versace 00:41
I don't know. But somehow I have a feeling that over the next however long this conversation is you'll do it in spades because you always do. So. Welcome back to the United States. People don't need to know why you're back to the United States. But you are I hear you got your vaccine. First one Congratulations, join the club go USA. But But Lenore talked to me about this past week that we finished up because it was extremely busy. You know, Biden spoke, the Fed spoke. We had you know, at one point, I think we had more than 10% of the s&p 500 report on a single day. So much going on. And we ended the month of April. So do what you do so well. And help us put some context and perspective around this.
Lenore Hawkins 01:28
Yeah. And this year, so far, a third over?
Whoa, say that again?
Lenore Hawkins 01:36
We're a third way through 2021. Oh,
Chris Versace 01:40
no, no, no, no. You mean we're just 16 months into 2020?
Lenore Hawkins 01:45
That is a very true statement.
Chris Versace 01:48
Yeah, the only other big the only big other big surprising thing on this is I know you're gonna get to this later. But Bitcoin up 80% year to date crazy.
Lenore Hawkins 01:58
Now, that's just Well, it's probably gonna keep I mean, obviously, it's bitcoins, a lot of volatility. But I wouldn't be surprised to see it ending the year a whole hell of a lot higher than it is today. But outside of Bitcoin, last week's performance, it was really, as it's been for most of the year, it was really all about market cap. And here, top better. top performing index was actually ready with the Russell microcap index. And that outperformed the dow by about a factor of 3x. Little over 3x. I mean, that's just amazing to me. And even in between those two extremes, market caps just been really strongly correlated with performance. small caps have been performing the best so far this year and large cap really just not doing as well not able to keep up. That's what we've seen last week, the year to date. And even though towards the end of the first quarter, we kind of saw the opposite play out a little bit. There was a short reversal, we reverted back to smaller is better. Yeah,
Chris Versace 03:07
I see. I think that's a little surprising, because coming out of 2020, you know, big tech was all the rage. We had that little kerfuffle earlier in the year with trade treasuries. And I think people expected big tech to, you know, continue to push forward. But you're right, it was really the rustle in its small cap constituents that have I mean, they have been the performer year to date.
Lenore Hawkins 03:28
Well, it kind of makes sense when you think about first off 2020, who was going to survive that, like you needed to be big, and you needed to be tech, because tech could handle what was happening with the pandemic, right? You don't want to be like,
Chris Versace 03:40
you know, what, not just handle. But if we think about how we had to pivot our lives, tech
Lenore Hawkins 03:46
was arrived. Yeah, tech was the answer. So big tech did really well. And also, those companies that are very large, had more access to capital a little bit easier for them to get through the tough stuff. But now we're having a very different dynamic in that the US economy is in a much different shape than the rest of the world. And we'll get to that a little bit later. So with the domestic economy being so much stronger on a relative basis, even though it's not super heavy, we're still we're still recovering. We're still trying to get out, unemployment out so great. With the domestic economy doing so great compared to the rest of the world. It really is kind of a domestic story. And what we've actually seen even though we keep talking about all these really lofty valuations is that the micro cap ETF is actually the top performing ETF if you're looking at Mark by market cap over the last week, and also year to date, and it's also the only ETF that isn't overbought, and it's just barely above its 50 day moving average. So that's really different. We've also seen where the NASDAQ market is, is now because you know the NASDAQ has really been kind of the where it was the strongest performer in 2020. It's been struggling a little bit more, right. It's the those large tech the That composite is starting to push up against it's February peak, and it's the only major stock index that hasn't yet kind of cleared that early peak. Any pullback from the current levels probably going to mean that we're going to have some more sideways consolidation.
Chris Versace 05:14
What's interesting on that, and we'll get to some companies that this happened to in a little bit. But last week, companies that even though they delivered unbelievable year over growth, more than 40%, more than 50% Yeah, yeah, it was kind of like, that's all you got, huh? And lately, yeah, yeah, it's fascinating to me. And we get to them, we'll talk about, you know, the different sets of numbers, you know, formal consensus, whisper numbers and other things. But when the market kind of shrugs when companies put up such stellar performance, I think it goes hand in hand with what you're saying about the resistance that the NASDAQ in particular is about to hit.
Lenore Hawkins 05:56
Yeah, there's just been there's there is a blow my mind. And if it shy of, it's not like, Oh, my mind and then some.
Chris Versace 06:06
But but it's fair, though, right? Because
Lenore Hawkins 06:09
we blow my mind. They weren't doing it in 2020.
Chris Versace 06:12
Well, absolutely true, right. But when you've got, you know, the Fed and no taper tantrum, likely anytime soon, Biden is pouring the stimulus on recent stimulus checks are hitting companies are gonna face unbelievable year over year comps, you know, June quarter over quarter, you know, it's got to be, you know, picture perfect, I think in the in the current quarter, to really drive a lot of incremental upside, you know, and how much better than perfect can they be? That's the question,
Lenore Hawkins 06:46
apparently not enough so far. So far, we'll
Chris Versace 06:51
walk walk us through some of what I was kind of hinting at, with this improving economy. You know, vaccination levels going higher. Restrictions falling by the wayside, more so in the US, not in a little bit in the UK, not so much all of Europe or India, but walk us through the economic data that you were paying attention to.
Lenore Hawkins 07:11
So the big probably the biggest news this week, two things was the GDP for the first quarter and the FOMC. And then the feds Open Market Committee meeting that that's their when they come out to the market and say, Okay, here's what's going on with interest rates. And it was expected that nothing was going to be changed, and nothing really was changed. And it was,
Chris Versace 07:32
did you how did you count how many times you heard your favorite word or 2021?
Lenore Hawkins 07:36
Oh, my God, transitory did like a Fed drinking game of transitory you probably wouldn't make it through the press conference. It was? Well, it would make the whole conference afterwards a little bit less of a snooze fest. This really was.
Chris Versace 07:58
But to be fair, we don't want it to be exciting. We want to know more
Lenore Hawkins 08:02
I long for when we really don't give a damn what the Fed has to say, because they're not a major market mover. So I'm happy. The problem is now that the Fed is still so major. Kitt, we were
Chris Versace 08:14
Sorry, sorry to cut you off. I was gonna say, looks like you'll be hanging on for that till 2023.
Lenore Hawkins 08:19
Yeah, exactly. So listening to the comments out of it, there was a few little changes. The last meeting, the Fed said that they can can improving metrics had turned up recently that so basically, confidence is getting a little bit better. Um, the prior meeting the FOMC, said that sectors most adversely affected by the pandemic remain weak this time around, they said, but they've shown some improvement. transient was just constant mentioned. I think one of the things that was really interesting is that palsson directly from pallys, for the economy as a whole payroll employment is about 8.4 million below its pre pandemic level. The unemployment rate remains elevated at 6% in March, and this figure understates the shortfall in employment, particularly as participation in the labor market remains notably below pre pandemic levels. So again, that's something you and I talked about a lot that the unemployment rate is actually one of the least useful metrics to look at, you wouldn't really want to look at where the labor force participation rate is. And that means how many people who could be working right there in the right age range, are actually actively participating in the labor market, either they have a job or they're looking to get a job. And that's really gone down a lot. And they also called out what we've been hearing a lot of is that the economic downturn has not fallen fully on all Americans. And those least able to shoulder the burden have been the hardest hit. And particularly the high level of joblessness has been especially severe for low wage workers in the service sector and for African Americans and Hispanics. That's something we've been hearing all around that this has been this that case shape recovery.
Chris Versace 10:04
So let's just visit on this a second, because I hear what you're saying that there are more people that are not working right. Compared to that before the pandemic hit. But we're seeing companies now really poor on the earnings power light, like we were talking about a few minutes ago. And even others, like restaurants in the light, they are starting to put a positive your reader comparisons with fewer people. What are we to make of that?
Lenore Hawkins 10:33
Well, it's basically what we saw, the pandemic really accelerated the trend that we were already seeing since the great financial crisis. Since then, we just haven't seen a whole lot of impressive wage growth, right, what we have seen is incredible asset, price inflation. So if you already own assets, if you're well invested in the stock market, if you own a home, those kinds of things are going up in price an awful lot. But if your overall financial condition is based on just your paycheck, those things haven't been moving a whole lot. And, again, those jobs that are lowest paying for the jobs that were least able to shift into the kind of virtual world that we needed to shift into. And those businesses that were not businesses that can easily shift into the more virtual world, you know, more service businesses, like a restaurant like hair salons and things like that. Those companies, those businesses, they were least able to do well during the pandemic and their employees were really stable. So the people also who were kind of lower paid, the companies that they work for a lot of the time, those companies have also suffered the most. So it's kind of a one two hit.
Chris Versace 11:49
Yeah, I think there's some blend in there. Automation. Technology and, and our our favorite word, robots.
Yeah, the robots, not my robot.
Chris Versace 12:03
Okay, so So, talk to me now about because I joked a little bit earlier that you're back in the US, you were in Europe, but clearly, things are not the same.
Lenore Hawkins 12:14
Oh, my god, no. So flying like leaving Europe and landing here. It's just the most surreal experience in Italy, which is where I am most of the time, and my my family's over in Ireland. And it's still on a pretty severe lockdown. Now, well, officially, it's pretty severe, people are bloody sick and tired of it. So you do actually see a lot of white collar work still going on. And they're they're allowing for the most part, like people to go to the office, you're supposed to do a lot more social distancing than people really are, because everyone is sick of it. But again, when you're in Europe, airports, pretty empty, not a whole lot going on there. And then I like him to be us, like, Oh, my God, where are all these people coming from? And just you could see the overall just the way people move around and interact is just completely different. Europe is still scared, and people are not not nearly as much it is going on economically than in the US. And GDP. Really the reports we got this week really told the same story. The first quarter GDP estimate for the US came in at 6.4%, quarter over quarter, and that's a little over 7% annualized. That's after the fourth quarter of 2020 was up 1.6%. So there's two quarters in a row that are actually three for the US that are doing really well. On the other end of the pond, you've got contraction, both the fourth quarter and the first quarter for most of the companies, Germany was the weakest Spain was in contraction, Italy was a contraction, France was the only one that the major companies or countries that managed to do pretty well. But overall, the eurozone was in negative territory. What was interesting, though, looking at the US is, first off, how great would GDP have really been if we didn't see a 60% surge in government benefits? And if you want to put that on an annualized basis as a 550% increase in government handing money out to people,
Chris Versace 14:17
checks, baby checks,
Lenore Hawkins 14:18
yep. to the to the tune of about 6 trillion, right. So that's And what was interesting too, if we break down, looking at what the winners were what areas really saw a lot of growth in the in the domestic economy that had the economy from 2019 kind of continued on a fairly stable basis, if you look at the contrast is really interesting. Like people are just buying an insane amount of recreational goods. If we were to assume 2019 those sectors grew kind of everybody about 2% ish. Instead, you saw a 26% increase in recreational that that's just incredible furnishings and durable household equipment, right? people buying couches or buying new appliances. But again, the dual doing this deal. Yep, in the first quarter boom, well, there's, there's definitely there's more of a shift like people who have spent so much time in their home that even if maybe you're thinking of going to the office a bit more, home has really gotten a different focus. And that's still getting a lot of money. But again, think about who's doing this, who's the residential investment, information processing equipment. So these are all the areas that did that did well during the payment damage, or households where the income generation, what didn't get that affected, or nearly as affected as it did for people who are say, working in a retail store?
Chris Versace 15:44
I can neither confirm nor deny rehabbing of cabinets might be underway in some locations.
Lenore Hawkins 15:50
Exactly. People, people looked at their house and said, All right, and all that time here and fix it. I think another thing that was interesting coming out of the GDP report was, you know, all this talk about inflation, really. Okay, so let's look at the GDP, the best that the core PC deflator could do. That's a personal consumption expenditure deflator could do was to rise and a 2.3% annual rate. Okay, that's not inflation out of the ballpark. And the year over year trend is up to just like 1.6%, it was at 1.4%, last quarter. And this time back in 2020, it was actually a 1.8%. So, you know, again, inflation's in that, in that what's really interesting is if you look at that, look at what's going on with that number, and then look at what's going on with input costs, the base metals, up over 50%, textiles up nearly 20%, raw industrial prices at nearly 30%. And at this point, that's all we were getting?
Chris Versace 16:54
Well, it's gonna be interesting, you know, because during the earnings season, we saw a number of companies, you know, Chipotle, a whirlpool, Procter and Gamble, trying to think of another competitor Procter and Gamble, Kimberly Clark, they're all announcing price increases in the high single digits to low double digits for a variety of products. And they're saying, We've got to combat you know, COVID incremental, COVID costs year over year, we've got to combat rising input costs, and there are certain inputs, as we know, like lumber that are just through the roof, it's gonna be interesting to see if these price increases stick and to what extent they are able to overcome raw material, other input prices. Because as I look at it to me, looking forward, I'm really wondering about the margin impact and the bottom line impact from this Dynamic Input cost price increases, it's gonna be interesting to watch
Lenore Hawkins 17:53
just how long lasting those input costs are, because like we've said you had Yeah, I mean, the feds got completely been shaken up like nobody's business. It's gonna take to all settle down.
Chris Versace 18:07
According to Clorox you can now get Clorox wipes. So, yeah.
Lenore Hawkins 18:13
There's so much other good news we got in the economy was the initial jobless claims. Still doing great. So week after week, those initial jobless claims are coming in at new lows. We like to see that trend. One of the other things that was really interesting, and we heard this kind of seconded by car manufacturers this past week, was it according to data from Edmunds trade in values for used cars rose to a record high of this this kind of the median of $17,080 in March, that's a 20.8% year over year increase with inventory of used cars down 36%. year over year.
Chris Versace 18:54
What's that? That's not you know, when I hear that, and we'll we'll get into this in a little bit. You know, Ford has said repeatedly throughout the march quarter that they were having to idle production lines, and some others did, too. So it's not that surprising that you know, people would be looking for used cars, just because the amount of cars that can be on lots is probably going to be lower than what people were expecting, but still a good time to sell your car if you got one.
Lenore Hawkins 19:21
Yep. Okay. Yeah, the inventory just is so tight. So about move on to this. We'll try to do a little quick recap on what earnings last week last week. Oh, trying to be quick. Last week. It was really a lot about
tech. Oh, it was it was Yeah, go ahead.
Lenore Hawkins 19:36
There's a lot of time Amazon was the last of the Big Five tech stocks to report earnings and like the others blew it away. Knocked out ballpark. Yeah. The other for Facebook and alphabet game ground. But Apple and Microsoft actually pulled back on strong earnings and like you were saying, I mean, talk to me about Apple Apple was such a free and knock it out of the ballpark and still
Chris Versace 20:00
What do you think? Well, I think we can tie it to the following words. The current quarter, the company forecast, strong double digit year over year growth, quarter over quarter decline will be greater than prior quarters due to and here it is. iPhone supply demand balances. So they I, what I suspect they're doing is what they usually do, right, they're being purposely nebulous, and they might be playing a little too much into the spillover of chips, the chips shortage from the automotive industry. And I say that, because in a little bit, we're pulling something forward here, Ford said that they actually see the auto chip shortage, correcting towards the back half of the current quarter. So I don't think it's going to be really all that bad. But remember to that the second quarter, June quarter for Apple is one of the seasoning weakest for the company. It's really the back half the year when they once again introduce new iPhone models that will really see a huge push and remember to compared to 2020, the new lineup is going to push the percentage of 5g product even higher across the entire iPhone portfolio. And yes, those are likely to carry higher ASP. So Apple is going to be just fine.
Lenore Hawkins 21:16
The upgrade it's really amazing when you consider how massive Apple is that it can still generate this level.
Chris Versace 21:25
That's not that's not what Tim Cook says we're a tiny little company, we can only do we can only we can only make certain investments. So countries I know so you're right about Apple, Amazon just crushed it across the board. Guidance was better than expected. We saw you know, similar results at cybersecurity companies like Ford, Annette, you know, where their service revenue was up double digits, product sales were up double digits, Billings were up double digits. It's just unbelievable. But remember to and we'll see more of this next week about cybersecurity companies. You and I believe that cybersecurity is a growth market because of the pain points that are created with the increasingly connected society that we live in. More points that are vulnerable, more cybersecurity spending.
Lenore Hawkins 22:20
So stuff goes online, more stuff still.
Chris Versace 22:24
Correct. Yeah, pirate or whatever. But anyway, we were talking about Ford. And, you know, when they reported they reported, you know, good March quarter results, but I think what happened was they
Lenore Hawkins 22:38
well, UPS was was more than four times estimates.
Yeah, yeah. Well, yeah, that
was pretty good.
Chris Versace 22:46
Yeah, I think people were pricing in the worst or baking in the worst in terms of ups for the quarter. But it was the cut in their EBIT guidance. That was from eight to 9 billion down to 5.5 to 6.5. That is a hatchet, taking out expectations of iron ore sought 40 ish percent of a notch, just amazing, massive, its massive. And what's what's fascinating about that, is Volkswagen sales up in march up 53%. I could not believe it up 21% for the march quarter, even Chinese newbie company, Neo, I mean, their sales were up almost I can't even believe this number 500% year over year, almost unbelievable. A more modest, I believe it was up mid teens, compared to the December quarter because they've been ramping so strongly over the last several quarters. But it's amazing that Ford is having such problems. And I think what it ties back to is that they are really tied to the auto chip supplier Renaissance that had a fab fire early in the quarter. Now even on their conference call, Ford was saying that Renaissance serves about two thirds of the auto chip market. I see this as a huge opportunity for companies like NXP Semiconductors that also serve that market in a very big way. I would not be surprised at NXP, which reported wonderful, wonderful results across all its major segments including auto for the march quarter comes out of this fiasco, and net shear gainer,
Lenore Hawkins 24:24
you've got to imagine other chip makers that are not anywhere near as dominant in the auto sector. They're gonna have customer stand. Okay, we need we need to be less dependent on this one on one company.
Chris Versace 24:39
Yeah, it's, it's gonna be great for those guys. Now, you were saying something about alphabet, Google and productivity.
Lenore Hawkins 24:47
Yeah, so um, one of the interesting things is, alphabet reported that it saved about almost 270 million in expenses from company promotions. Traveling and entertainment during the march quarter, compared to 2020. And on top of this past like week, we've heard that many of the big banks have been talking about how they have a duty to actually not go back to the pre COVID levels of of travel. part is the environment there, you know, as we're moving more ESG, they're trying to reduce their carbon footprint. And part of it is to shareholders in saying like, Look, we've learned how to live without all this business travel, if we can reduce our expenses that's in the best interest of shareholders. So it's kind of a two prong thing. And you look at that and think, Okay, so this does not bode well for the travel sector, because the business travel is really where they make their money, not on vacation travel.
Chris Versace 25:55
Oh, absolutely. Same thing with the airlines.
Lenore Hawkins 25:58
Yes. What I mean, I mean, the whole airline can tell it's all about business travel. It's not really any holidays. Yes, but your real bread and butter is as business travelers. Well, I
Chris Versace 26:09
think, you know, I'm going to pull something forward. You know, I think next week when we hear from Hilton Hyatt, in Avis, it's gonna be interesting to see what they see as the economy reopens. If you're forecasting things to get back to 2019 levels, just like a lot of the restaurants either have already said or have already done. So I think that's gonna be something to watch. But let's let's just talk about that little elephant in the room that we alluded to earlier. Which was that, you know, even though handset shipments were stronger than expected you know, Qualcomm put up great numbers they up their 5g smartphone forecast sky works, revenues in the march quarter of 53%. year over year. I mean, how much better does it have to get the only beat ups by two cents? And they guided in line? So you would say that's a pretty solid quarter. That was pretty good. But they missed this whisper number that had APS expectations even higher than the published number in this. Yeah, this is where this is where it gets dangerous. Because, you know, consensus, CPS numbers are out there. You can get them on Yahoo Finance, you can get them on Bloomberg first.
Lenore Hawkins 27:21
Official, it's not necessarily what the market really looking for.
Chris Versace 27:25
Right? Exactly right. That's these whisper numbers. And those are much harder to come by. You know, so it's it's tricky, tricky, tricky, but, you know, what I would suggest to folks is when you see something like this with the sky works when we know they have a tremendous tailwind behind their back even they're given their business and they're putting up huge numbers. When a stock sells off after that, that to me signals an opportunity to revisit potentially adding or buying that name if you don't already own it. And here's the thing. Also last week, the company talked about acquiring the auto and infrastructure business from Silicon Labs that to me says they are leaning head and shoulders into 5g because you and I know the nor that the connected car autonomous driving infrastructure, our key growth markets with 5g it's not just smartphones,
Lenore Hawkins 28:20
and also those Evie electric vehicles that they require a roughly three times as many chips as a combustion engine.
Now the demand is going up.
Chris Versace 28:32
Yeah, yeah. Now the other example of Sorry, I didn't live up to what you were expecting was Twitter. Now, again, good results for the most part, they missed a little bit on their global ma use, but the guidance just not as robust as people were expecting and that stock got hit. Now the difference here is that well, I can get behind sky works. I don't think I can get behind Twitter. I just don't think I can do it.
Lenore Hawkins 28:59
Well, they lost the tweeter in chief
Chris Versace 29:04
l Trumpy Yeah, I guess. I guess they you know, I was waiting for him to come out after the Twitter results and See I told you folks horrible company
Lenore Hawkins 29:11
without me. You need me.
Chris Versace 29:13
Yeah, exactly. Exactly. Alright, so that was last week. This week. We are going to try and go fast because there are 1500 companies reporting it is going to be busy and it's going to be out of control. So let's first off let's just try and group a few things together. You know, a number of earnings reports are going to be had that should provide additional color on the speed of the reopening over the coming quarters. You know, the ones that we're gonna be watching as regards to this Uber Lyft Hilton, Hyatt Hotels, Avis budget as we said before and Expo logistics because as you know, Lenore if stuff is moving the economy is rocket.
Lenore Hawkins 29:52
Chris Versace 29:57
when he said the second One is, you know, we've got the combination of improving employment, stimulus checks, consumer spending, and contactless payments is it all coming together, and the results from PayPal and square will let us know that those are the big groups. But as we really ease into the, you know, drink from the fire hose, let's talk about a couple of specifics. On Monday. It's gonna be this gonna be one to watch. And I'm not saying that little word because you're my gal pals. Here we go. As the pandemic restrictions continue to ease and people slowly return to the office, we know Lenore, that personal grooming will quickly come back into vogue the way we got to showering, showering, you know, clean your hair make, want to smell good, want to look better? That's exactly right. And if they're preparing for this snap back, we'll go work, we're going to want to watch not only what they report, but really what their inventory levels are, are they rising anticipation, of greater demand. So that's one we're going to want to watch another one. Again, we all know that the shift to digital learning has happened. It's been great for Chegg, but how does that company see students learning I'm talking modality here through the summer and then into the fall as a lot of schools start to reopen in, you know, kids of all ages, myself included, get ready to return to the classroom.
Lenore Hawkins 31:33
And I'm going to be looking at xpo logistics. One of the things I want to hear from them as they apparently are driving an electric truck through real world situations in the San Francisco Bay Area over the next nine months Am I going to be giving feedback to company produces at Daimler on how the AV rig performs and the truck is going to be charged overnight with a company we talked a lot about with CHARGE point charger. They've also been doing some interesting things with AI in shipping. The company announced that over 400,000 downloads for the expo Connect app that uses machine learning to analyze data history and market conditions within seconds and helping shippers and carriers get smarter about buying and selling capacity more efficiently in real time. That's that goes back to what you and I have been talking about with how the pandemic puts such stream it really pushed hard on getting smarter on using AI on using automation to make better decisions cut costs, you assets use resources more efficiently.
Chris Versace 32:44
Now, those are the ones we're watching on Monday.
Lenore Hawkins 32:47
Chris Versace 32:48
so Tuesday a little more rapid fire we're gonna have camping world and look the camping industry has been on fire do they continue to see that as perhaps people return to more normalized vacationing, we've also got Pfizer Ferrari underarmour Activision, McAfee, which is a cybersecurity company is going to report they should be benefiting, unfortunately, from the higher profile hacks earlier in the year. But why I really want to pay attention to this report into Cuellar, is they sold their enterprise facing business to a private equity group during quarter? What are they gonna do with the proceeds? Will they want an m&a spree? What about a special dividend? That's what I want to know. Tuesday also has matched and Zillow brings us to Wednesday. As we were talking about earlier, Ford reported last week says it sees the worst of the auto chip shortage ending sometime later in the current quarter. We're going to want to look for confirmation for General Motors that reports on Wednesday. We also want to hear more about its Eb strategy. Wednesday also brings results from Lumber Liquidators, and look housing data. We know it's been strong year over year, but as we were talking about earlier, with rising inputs, we're concerned about the surge in lumber prices and what it may mean for housing affordability going forward. We're going to check in lumber
Lenore Hawkins 34:03
to go from not affordable to really, really, really are you kidding me not affordable?
Chris Versace 34:09
Well, I want to see how transitory they see this rise in input prices. That's going to be the real thing. And then we've got Etsy as well. And then just going hand in hand with what we said about Estee Lauder. weightwatchers reports on Wednesday and COVID-19 not gonna COVID No, okay, I was thinking COVID was in 2020. Do you mean 90?
Lenore Hawkins 34:30
I'm thinking that we all put our Look,
Chris Versace 34:33
I know. I know. And look. I'ma speak for myself. I would not think to speak for you. swimsuit seasons coming up in this boy's got to get getting a little bit of shape if he does want to be embarrassing. So I'm suspecting I'm not the only person and I don't mean that with you. I just mean people in general. You know, but following the pandemic, is that supposition right that a lot of people have to get in shape for the holidays. Sorry for the summer swimsuit season. We'll find out now. That was Wednesday. Thursday Lenoir What are we watching one of your favorite companies? You must I think you single handedly support them in Amazon That's what I think. I
Lenore Hawkins 35:11
really there Yeah. I definitely I think I've got to be the only person who's actually brought a peloton. Bike all the way to Italy. It caught off you know, you make
Chris Versace 35:25
that sound like you carried it on your back which we both know you didn't do?
Lenore Hawkins 35:30
No FedEx did it. Yeah, let's just say I'm still in chats with FedEx about how good of a job they did.
Chris Versace 35:39
Alright, so So what so what do you what are you looking for?
Lenore Hawkins 35:42
So with with peloton, one of the things I want to hear from them, and this really goes to kind of a more of a macro picture is their CEO actually even got to the point where he sent out emails all pals and people say, look, we're doing our best. We're trying to get these these bikes and treadmills out to you. But shipping complexity is just through the roof. And costs are are outrageous. He was saying that the shipping costs had become many, many multiples of what they'd normally were that they were just sucking it up and get to deal with it. What are they seeing now? I'm looking to see anybody talking about All right, shipping is starting to normalize. I also want to hear what are they seeing? in like, way out there? What are they seeing the trends? Is there a slowdown? Or is a five kind of wonder, are people just gonna get much a lot more comfortable with the people who would buy a peloton? Are they just gonna get more comfortable with doing this all from home because one of the interesting things we're seeing with peloton is kind of similar to what you saw with Facebook where you can have these network effects. The more people who are on a peloton, the more people end up being on it, because you just hear about it so much you start feeling like I gotta I gotta go check this out.
Chris Versace 37:00
Well, I'm curious to what you know, if you look across the internet and other forms of social media, you're seeing a lot of competing devices come out, right? So they have the bike they have the tread, but we're seeing, you know, the connected mirrors that are giving you workouts, rowing machines, versa, climbers, all that are connected in with classes. So I want to know, do they see these as competitors? Or, you know, they have been on a little bit of an acquisition and when they bought pre positioned spree, right. So is there is there a chance that they might be warming up to do m&a? So, after? Also on Thursday, we've got axon we got beyond me carvana Planet Fitness, how could a gym have a no grunt zone? I don't understand that. And then the other big one is going to be is universal display. This is the company that sells the chemicals that makes organic light emitting diode displays. Those are the beautiful displays you see on your smartphones. We want to understand what is the roadmap for them in terms of more smartphone models? Yes, but also the roadmap, other applications beyond automotive interior lighting, the Holy Grail is general illumination. That's the kind you have in your home or in the office. So what is that timetable? Lenore? I'm going to pitch it to you. All right.
Lenore Hawkins 38:20
I'm excited to give you the rapid fire for rapid coming week, Monday, we're looking for the final market. And I SM that's market not that's market it and isn manufacturing pmis for April to see, you know, how strong are these? And so far we've been seeing that sector it's just but knocking it out of the ballpark construction spending? Where is it residential versus anybody interested in building an office space around? Tuesday brings total vehicle sales. And you know, in light of what we've been seeing with all the weak inventory, what's going on that so what happened in April with vehicle sales Wednesday. Now that's going to be the highlight of the the the actually more the preview of the Friday's labor report with the ADP employment report. So How good was it in April? We know it was good. Was it really, really good? And also where are the jobs coming in? Because again, what we have been seeing is that that case shape where the higher income, those jobs come along a lot faster than the the lower paid jobs will also be getting service sector from market and isn. service sector clearly has been dragging behind the manufacturing. That's people actually physically because it's service, more in touch. How much better is that been getting? Thursday we get the usual initial jobless claims, hoping to see that continue to improve and non farm productivity for q1. Expect to see a bit of a downturn in productivity because as we've seen employment really ramp up when people get hired. You these things, if you think about it, it's kind of make sense. When you see a cut to payrolls, you know, companies panic and payrolls get cut, productivity tends to go up because, oh, you just fired a bunch of my co workers and I don't want to lose my job, I have to now do their work. And I'm gonna work my butt off, because I don't want to lose the job. Productivity tends to go up when you see employment go down. And conversely, when you hire a bunch of people back on, it takes a bit for ramping up. So productivity tends to take a hit Friday, it'll be the big report of the week. That's the non farm payroll report, which is expected to see an increase of 925,000 jobs after an increase of 916 in March. And again, we'll be looking for where the strong sectors
Chris Versace 40:43
Now, catch your breath. That was quite a bit. Let me handle this next part, which is, at the end of the week, we're going to recommend that folks really revisit the GDP expectations for the June quarter that are put out by both the Atlanta fed and the New York Fed, because this is the first real solid set of not only April data, but solid data for the start of the second quarter. Exactly right. So when you look at those expectations today, they there is a step down compared to that 6.4% for the march quarter, the question will be, are we going to start to see that rise and if so, by how much and that little more with that.
That's the week ahead.
Cut the check!
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