A Big Week for Those with Pandemic-Related Holdings

North American markets today Monday, viewed several hours before the 9:30 a.m. EST opening look poised for a positive start with all major indicators in the green. However, the NASDAQ is wavering and there is a chance – though not a very likely one – that it could slip into the red during the morning.

That follows last week’s strong first quarter earnings numbers which many investors saw as a signal that profits will continue supporting the market for the remainder of 2021. That counterpoints with questioning about how long the Federal Reserve will continue rock-bottom interest rates.

About 87% of results have come in ahead of analysts' estimates for earnings per share, putting the quarter on track to have the highest beat rate on record going back to 1994, according to a Refinitiv analysis in a Reuters report.

The European markets are open and mixed at time of writing with the FTSE in the green and the CAC 40 and DAX in the red.

The safe havens of gold and silver are up while the British pound and Euro are up while the Canadian dollar is down but improving.                                                                                              

However, that relationship could change during the week, according to Jeremy Thomson-Cook, Chief Economist at London-based business payments specialist Equals Money. Thomson-Cook suggests that the combination of the Bank of England meeting and local elections could move sterling a couple of percent. He adds that “outsized moves (are) possible should the Scottish independence movement garner a lot of support or the Bank of England hints at reducing the stimulus it is currently providing to the United Kingdom economy.

Thomson-Cook suggests that the American greenback will weaken during Summer but that higher U.S. bond yields could affect this projection.

Meanwhile the Canadian dollar has been steadily appreciating against the American greenback, a slightly surprising change driven at least in part by commodity prices.

Outside of those projections, this is going to be an eventful week for investors who have – or are considering -- pandemic-related holdings.

The virtual World Vaccine Congress runs from Tuesday to Thursday and while COVID vaccine issues are only part of the agenda we can hope for some clues about the future of supply and research.

More vaccine clues should accompany two pharma reports. Pfizer Inc. reports first quarter earnings tomorrow. Investors are looking for sales figures of its COVID 19 vaccine and an outlook for the strength of its vaccine operations

Moderna Inc. reports first quarter results on Thursday and investors will also be watching for its outlook.

Ride haling companies Lyft Inc. and Uber Technologies report on Tuesday and Wednesday respectively and in both cases, investors will be looking for indications of increased revenues triggered by COVID 19 vaccines and easing of restrictions allowing individuals more freedom of movement. Wedbush Securities projects positive news for both companies according to Dan Ives, its Managing Director of Equity Research. We expect Uber's and Lyft's upcoming 1Q results, which should include a healthy profitability trajectory for 2021, to be a major step forward for ridesharing with a massive rebound in demand on the horizon,” he says.

“Both Uber and Lyft have highlighted recent surges in demand, outpacing growth in driver supply. That should pressure driver incentives, but also be balanced by stronger revenue per ride.” he suggests. “We view Uber and Lyft as strong recovery names to play the "roaring 20's" reopening theme around travel, back to the office/restaurants, etc. starting the summer.”

While Ives’s ‘Roaring 20’s’ comment may turn out to be an overstatement, Uber and Lyft are undeniably positioned to benefit from the recovery.

Two prime beneficiaries of the pandemic also report this week. PayPal Holdings Inc. is expected to report on Wednesday an increase in first quarter profits, demonstrating again the impact of increased online shopping and digital payments. Credit card processor Square Inc. reports on Thursday and will likely also show growth in online payments.

Also heading into the week, some analysts and observers question whether President Joe Biden’s spending plans will cause inflation, and some members of his own Democratic Party have worried that the spending will slow economic growth. U. S. Treasury Secretary Janet Yellen attempted to defuse these concerns yesterday on NBC’s Meet the Press. Yellen argued that the spending would be spread over a decade and that the Federal Reserve Bank has the tools necessary to deal with rising inflation. Federal Reserve Chair Jerome Powell has suggested that increased inflation would be ‘transitory’.

No one would dispute the vast economic credentials of Powell and Yellen, whose own CV includes four years as Federal Reserve Chair. Still, whether these projections prove accurate will take at least two years to prove and in the meantime market watchers will be watching for the inflationary effect of Biden’s plans, rising labor costs and commodity prices.

Related: Taking Inventory of the Recovery