The Week Ahead: It’s Going To Be Fast, and Furious

Welcome to Advisorpedia's Week Ahead. The must listen podcast of your Monday.

What happened last week and ahead for this week.

Last week — what a week…

  • The start of the March quarter earnings season and a cornupcopia of data that that has us asking the Q: HAVE WE - investors - PRICED IN TOO MUCH OF AN ECONOMIC REBOUND OR NOT ENOUGH?
  • What does that data mean for the Biden Administration’s stimulus plans?
  • What about the cost side of the equation as signs point to rising input costs..
  • Since peaking on March 15th, the Russell 2000 index last week was over 4% lower whereas the S&P 500 has gone on to gain an additional 5%. So, over the last month or so, small cap stocks have lagged by over 9 percentage points.
  • Charles Schwab added more clients in just 3 months in Q1 of 2021 (3.2 million) than in all of 2020. Why? According to Schwab’s CEO - Greater interest in high-growth tech companies and meme stocks. 
  • Looking for something “cheap” to buy? Maybe as a hedge to your cryptocurrency exposure? Try the VIX at 16.9. Back to the level of complacency in mid-February 2020.
  • The rally in the DXY dollar index from the January 5th low of 89.4 to the March 30th nearby high of 93.3 has been totally snuffed out as Fed official after Fed official has refused to succumb to the bond vigilante pressure — and is at a crucial technical juncture as it tests the 50-day moving average in this most recent corrective phase. 
  • Retail Sales for March report blew away the already high expectations, jumping 9.8% MoM after a downwardly revised -2.7% contraction in February, handily beating expectations for a mere 5.9% increase amidst re-openings, warmer weather, and those $1,400 stimulus checks that were put to use. 
  • Fed Manufacturing data blew out the doors as well. Philly Fed Manufacturing Index for April saw the strongest growth in factory activity in the region in almost 50 years! Not too shabby Philly. 
  • Not to be outdone, the New York Empire State Manufacturing Index saw the strongest growth in business activity since October 2017 and came in at 26.3 from 17.4 versus expectations 19.5.
  • Mortgage applications for the week ended April 9 were down 3.7%, the sixth consecutive decline following last week’s 5.1% decline. The combination of rising rates, rising prices, and tight supply of homes is putting a damper on home sales and we expected to see March’s existing home sales to be below February’s levels.
  • We also got some of the final CPI data out of the euro area, but the commodity-induced March run-up had previously been flashed by the “flash” estimates.
  • AA anounced last week that it expects summer travel to hit pre-pandemic levels and will operate a nearly normal schedule.
  • National economic activity accelerated to a moderate pace from late February to early April. Outlooks were more optimistic than in the previous report, boosted in part by an acceleration in COVID- 19 vaccinations. Employment expectations were generally bullish.”
  • Coinbase (COIN) through a direct listing on the Nasdaq and it didn’t go quite as well as many had hoped. Nasdaq set a reference price of $225 but shares opened just over $380 and traded up to $429, but then sold off sharply into the close, finishing the day at $328. Still, it is now ranked at the seventh biggest new listing in the US of al time, so not exactly something to cry over. Thursday shares continued to struggle and closed lower again. To put the Coinbase market cap in context, it is now just below that of Intercontinental Exchange (ICE) and above that of Nasdaq (NDAQ).
  • American Eagle Outfitters (AEO) shared it is on track to exceed expectations with its Q1 revenue now seen as topping $1 billion, which implies a mid-teens increase compared to pre-COVID comparable from two years ago and the $904 million consensus. The company is set to report Q1 full results on May 1.
  • Ethan Allen Interiors (ETH) reported a record increase of 51.8% in written orders at its retail division for its FQ3 vs. the year ago quarter that was understandably impacted by the pandemic. The company expects to report consolidated net delivered sales of $177.0 million with adjusted EPS in the range of $0.56-$0.58 vs. the $0.47 consensus.
  • First quarter operating profit at Daimler AG’s (DDAIF) surged due to higher vehicle prices and strong demand in China powering its recovery from the effects of the coronavirus pandemic. 
  • Volkswagen (VLKAF) reported its global sales expanded 53% YoY in March while deliveries for the March quarter climbed 21% YoY to 2,431,900 vehicles.
  • Nvidia (NVDA:Nasdaq) are on fire this week after the company said its quarterly revenue is tracking above it previous guidance that called for $5.3 billion. While the company didn’t provide a more specific revenue range it said the upside relative to prior expectations was due to "broad-based strength" across its end markets.
  • Apple (AAPL) will hold its latest event on April 20 with the tagline “Spring Loaded” with expectations calling for updates to its iPad Pro, iPad mini and AirPods lines.
  • Equities are reacting to brightening economic prospects while the Federal Reserve intends to keep the monetary stimulus punch flowing for the foreseeable future. Given the robust economic data of late, we’ll be watching to see how it will affect the Biden administration’s ability to pass its massive stimulus plan. 

Earnings to Watch This Week

Monday, April 19: Coca-Cola (KO:NYSE); IBM (IBM:NYSE); United Airlines (UAL:NYSE).

Tuesday, April 20: Abbot Labs (ABT:NYSE); AutoNation (AN:NYSE)Johnson & Johnson (JNJ:NYSE); Proctor & Gamble (PG:NYSE); CSX (CSX:NYSE); Netflix (NFLX:Nasdaq).

Wednesday, April 21: ASML (ASML:Nasdaq); Ericsson (ERIC:Nasdaq); NVR (NVR:NYSE); Verizon (VZ:NYSE);Chipotle Mexican Grill (CMG:NYSE); Lam Research (LRCX:Nasdaq); Las Vegas Sands (LVS:NYSE); Whirlpool(WHR:NYSE). 

Thursday, April 22: Alaska Air (ALK:NYSE); American Airlines (AAL:NYSE); AT&T (T:NYSE); Citrix Systems(CTXS:Nasdaq); SAP SE (SAP:NYSE); Southwest Air (LUV:NYSE); Union Pacific (UNP:NYSE); Intel(INTC:Nasdaq).

Friday, April 23: American Express (AXP:NYSE); Honeywell (HON:NYSE); Kimberly Clark (KMB:NYSE).

Advisorpedia's Week Ahead ... Powered by Tematica Research.

Resources: Tematica Research | Chris Versace | Lenore Hawkins


Future spending? Read this first. 

Roaring 20s? 

A must read every quarter from Hoisington Management



Lenore Hawkins, Chris Versace

Chris Versace  00:00

get hit brought to you by Advisorpedia and powered by Tematica research on automatic as Chief Investment Officer Chris Versace and let me say holy cow what a week last week was started March quarter earnings season. . .

a cornucopia of data that has is asking questions such as have we priced in too much of an economic rebound? Or not enough? What is it all mean for the Biden administration in their stimulus plans? What about costs and rising input costs? What does it mean for margins? I have so much stuff in here to help me break it all down faster than a speeding bullet able to digest economic data like no other the ability to turn a phrase like no one you've ever seen now your senior now you don't Tematica as chief macro strategist Lenore Hawkins, yo, yo,

Lenore Hawkins  00:47

yo, what's up?

Chris Versace  00:49

All I forgot, I forgot the biggest question of the week. Lenore? That Yes, it's who is going to get Caps shield?

Lenore Hawkins  00:58

Oh, Chris is wearing Captain America t shirts. Oh, excellent. And I don't I don't know that. I don't know if that can actually compared to my sparkle unicorn. Little headband with an actual unicorn horn.

Chris Versace  01:14

I was gonna say you had a pointy hat on. I wasn't sure why if you had to go into the corner for a little while or not sparkly

Lenore Hawkins  01:19

unicorn, sparkly unicorn.

Chris Versace  01:20

Got it. Got it. Got it. Yeah. Well, in order to give us some context for the markets last week, because on the one hand, markets are chugging hunger, we're sitting in today's for the s&p and the Dow.

Lenore Hawkins  01:33

But But not all parts of the market are checking higher, actually, since peaking on March 15. That's peaking is at a peak nose and sneaking a beat. The Russell 2000 index was over 4% down from that peak, the s&p 500 has added another bout roughly 5%. Over the past month, small cap stocks have actually lagged about nine percentage points. And then if we look at what's really going on with the small cap, and now keep in mind, we're hearing all about how the economy is going like gangbusters. Everything is just fantastic. Yes, great small cap. They're the ones that are most closely tied to the domestic market. And yet they're underperforming the large caps. small cap underperformance has been pretty broad base the weakness has been generally centered in the most cyclical sectors, also not consistent with the narrative of a phenomenal economy.

Chris Versace  02:28

You know, what's interesting about that, though, is earlier this year, small caps and high growth stocks, NASDAQ related stocks were trading off as the 10 year Treasury yield rose higher, but this past week, it actually fell Trump rather dramatically towards the end of the week, what do you make of that

Lenore Hawkins  02:47

priced in stuffs already priced in? There was an awful lot of this is going to be fantastic priced in. So when we look at those small caps, you had cyclical that was actually getting hit harder than the defensive. So like utilities, were performing fairly well versus financials, materials, consumer discretionary energy all got hit hard. And then if you look at the s&p 600 versus the s&p 500, let's look at the small cap versus the large cap, you see that every single sector in the s&p 600, that same sector lagged significantly behind its equivalent in the s&p 500. She put all that together, and you have a pretty decisive risk off signal that's really beneath the surface, even if the s&p keeps making new all time highs. Now, this is quite the disconnect. We're going to be monitoring this in the weeks and maybe months to come. Because how this disconnect resolves is really going to determine where the market is going to go next.

Chris Versace  03:42

Absolutely, absolutely. And despite all that, you were telling me that Charles Schwab did something that was almost unthinkable.

Lenore Hawkins  03:50

Yeah, so Charles Schwab actually added more clients in the first three months of the first quarter, about 3.2 million than it did in all of 2020. Now, according to Schwab CEO, that's because there's been greater interest in those guess what high growth tech companies and

Chris Versace  04:08

oh, mean stocks. Now, we talked about this several weeks ago, right here on this program, when we were concerned about potential survey data that said, Amen. A lot of folks are going to take their survey, they're sorry, the relief checks, and they're going to put them into the market into me, and I may be for you, but certainly for me, that feels very calm, bubbly type of time.

Lenore Hawkins  04:33

Yeah, it does. I mean, I'm, we're seeing bubbles all over the place. Okay. One place you're not seeing a bubble up one placement is both a Jeep is the Bix, it's um, you know, back below 17. It's back to that level of incredible complacency that we saw in mid February of 2020.

Chris Versace  04:54

What about see the thing there is I don't think most people realize they can buy the VIX.

Lenore Hawkins  05:00

It's good time to do it good. protection on it's real cheap.

Chris Versace  05:04

Well, we'll we'll get to that I you know, there's a lot of euphoria in the numbers and you know, earnings season, which we'll talk about seems to be starting off on a stronger foot. But as we'll get to it, it's that cost side of the equation, those input costs that could be vulnerable. There's there's always a shoe to drop more often than not. And that very well, could be it. But before we get to that, talk to me about some of the other new data that you were eyeing out last week.

Lenore Hawkins  05:28

Yeah. So last week, a report came out from Bernstein that found over 25% of us publicly traded companies. So one out of four failed to actually generate positive net income year last year, and that is the highest proportion in at least the past 50 years, one out of four didn't generate any positive manickam. Now 37% of technology generated a loss in 20. But that wasn't exactly a concern in 2020, the tech subset generated a 65% equal Weighted Total return despite 37% generating a loss, and 92% market cap weighted return last year, that's way over the 40% figure for the domestic tech sector as a whole. Now, that run app has helped to format some really fancy valuation 36% of the money losing tech universe enjoys a market cap equivalent to at least 15 times sales, which tops the previous 33% peak in 2001, as well as the 24% log during the depths of the financial crisis. So yeah, it's pricey.

Chris Versace  06:32

So I wonder what that data would look like, you know, on a fourth quarter or first quarter, 2021 annualized basis when we factor in all the specs that have happened?

Lenore Hawkins  06:42

Exactly, that's gonna get real interesting as we get the data, because this takes a bit to get this.

Chris Versace  06:47

Okay, now, you I think you're tied a little more to the banks when they report their earnings. Not that I'm not but I think you're looking as a proxy for future economic growth, loan volume growth, right,

Lenore Hawkins  06:59

less than a stock and more is what the heck's going on in the economy. While these banks are pouring, they're just fantastic results. Everyone's cheering. I gotta say, one of the things that came out for me it was a bit more important was the actual shrinkage in their loan book. The year over year trend and outstanding private sector credit at Wells Fargo was down 13.2% at Goldman down 4.8. And at JP Morgan down point four. So wait a minute, we have this glorious expanding economy, and yet the banks are shrinking their loan books.

Lenore Hawkins  07:32

Yeah, it's really been dragging their money has been investment banking, because as we all know, the Mark has been going crazy, right? So trading and investment banking has been doing fantastic. But the the economy side of these businesses, the loan bucks.

Chris Versace  07:45

No, it's just another lesson that you've really got to dig into what's driving the business quarter to quarter it just because you have great headline numbers. You know, it doesn't mean that everything is moving the way you want it to be. And we see that all the time in economic data as well. But one place, we didn't see it. In economic data. One area that surprised to the upside with a lot of unbelievable subcomponents that were that were just off the charts in the month of March were retail sales, right?

Lenore Hawkins  08:15

Yeah, retail sales last week just absolutely blew the doors off. On a year over year basis, retail sales were up 27.7%. Now, that's the single largest increase by an enormous margin that we've ever seen. The prior record was 11.2. So let me say that again. 27.7%, compared to the prior record of 11.2, from March of 1994. I but but then again, like let's think about put that in context that's comparing this past month, March to last year when that was the start of I'm not leaving the damn house.

Chris Versace  08:50

Exactly. Right. Exactly. Right. But we had some tips that that was coming. You know, I think last week, we talked about buckle or retailer that had some ungodly, I want to say greater than 50% year over year growth in March. So there were some signs that the consumers were they were getting out, they might have been addressing some pent up demand. And of course, spending those relief checks.

Lenore Hawkins  09:14

Yeah, turns out when you throw 14 $100 at people, they might actually spend it. I mean, so far, we have seen an unbelievable level of fiscal stimulus. And it turns out, when you toss all that money into the economy, people might actually spend a bit. What's interesting to take a little step back the four largest month over month games in retail sales, going all the way back to 1992. Have Pat come in the past 12 months. So when you took put that roughly like 5 trillion in stimulus, which is for context, almost 24% of GDP. You put that out into the economy from the federal the federal government and you get some spending.

Chris Versace  09:54

So one of the things that I'm always kind of marveling at is this accelerated shift towards You know, digital shopping, we talk about it all the time because of our digital infrastructure and connectivity index that we have. But how do we quantify? Can we quantify the degree to which you know, this non store category in the monthly retail sales report has gained wallet share?

Lenore Hawkins  10:17

Yeah. So we can look at the percent of spending, the total spending where it went. And if we look going back to say, let's start January 2020. Right, so kind of before this pandemic began, give us an idea of how things have shifted, well, non store has gained about 2.1% of wallet share. And on the other end of the spectrum, bars and restaurants have lost 2.3% not a big surprise mean, you can't go right, a lot of places you can't go. Building Material has gained point eight, right, we're stuck at home. And out the house sporting goods have gained 2.3% of the wallet share, right because we're not going on trips, we're kind of bored. So going out and engaging in sports, gas stations have lost point 6% well get you're not going to work. You're just stuck working from home.

Chris Versace  11:07

Right. So it to me, I think as we get this data, it's going to be careful going forward if you're careful to watch for inflection points. And I think if we dig dig really deep into the retail sales report, I was surprised by granted, they're easy comparisons, but you know, restaurants and drinking establishments, you know, tremendous year over year growth, so much so in March, that it actually closed, the gap in the first quarter data was down ever so slightly. So this is going to be something to monitor. And it will confirm I think, what people are suspecting in terms of rising vaccination levels, the reopening in the comfort of going back out into the real world.

Lenore Hawkins  11:47

And now that you brought up the taking the longer view and looking at that big picture, what I think is actually concerning is that retail sales are more than 17% higher than the peak from 14 months ago. Now what that really means is that retail sales are higher today than they would have been had we not had the pandemic.

Chris Versace  12:10

I can't be sustainable.

Lenore Hawkins  12:12

It just exactly. As our we've had this massive pandemic, we've had unemployment, the likes of which we have not seen since World War Two, we've had economic contraction on a global basis, the likes of which we've never seen. And yet us retail spending is better today than it would have been had we not had the pandemic I'm gonna call for there being some distortions and well, all that that stimulus, which brings up what you and I have been talking about is all of this great data that we've gotten in because we can you know, a little bit on the manufacturing data that came in last week as well from the Philly fed from New York Empire State also just blew the doors off they were much stronger than expected. going to be interesting those conversations in DC. Hmm. Do we really need this massive stimulus package when we're getting all this data that saying the economy is just going stronger than ever?

Chris Versace  13:05

Right? But, but the other side of that is, you know, we make fun of this word. It's the feds favorite word. transitory Yeah. How how transitory is all of this is is this a lot of stimulus, pent up demand? That will be you know, as things open, will it be a one two month blip of unbelievable numbers, only detail back down to more normalized levels? Because, let's be honest, over the last year, I haven't bought any clothes. Have you bought any clothes?

Lenore Hawkins  13:39

And are you really gonna, are you gonna when you do go out and go buy stuff? Are you really gonna buy enough to make up for all that? Right? I mean, we've another good point was that we saw the initial Unemployment Claims last week fell to the lowest level that we've seen since the band pandemic began. They fell to 576,000 from 769. A week before, way below what was expected at 700. Now that's fantastic. Except to your point, Chris. There's still 16 point 9 million people continuing to collect jobless benefits. 16 point 9 million. I don't think they're feeling like the economy's all that fantastic. So I get all the moratoriums, moratoriums on like the the mortgages that are getting paid and they can't get people out there's moratoriums for renters. So there's there's a lot going on underneath the surface that's being covered by these one off just injections of cash basically from the federal government.

Chris Versace  14:38

Well, let's let's stick with that transitory and almost if you will, this spending notion where you know you and I know that dollars only go so far and if prices take higher the ability to spend actually shrinks so way you know, coming into the last week we saw intermediate and in process goods, the march PPI was warmer than expected, almost suggesting, hey, down the road, we might see this warming inflation turn a little hotter. What did you see this past week? That might suggest? Yeah, that is the case.

Lenore Hawkins  15:12

Well, we're still saying I, I'm still not buying that one. I mean, yeah, we did see some price increases out of the Federal Reserve's are manufacturing that goods, the prices paid. And the prices charged were are up substantially. But let's just think about where we are today. A year from a year ago, we had demand crash at second home. So you had this massive crash in demand. And the demand crash faster than supply could constrict? Well, now we've had this some 5 trillion of stimulus, and we're opening things back. And so big surprise, 5 trillion a stimulus plus people can finally get out their house. And look, demand is rising really fast and son of a gun if demand isn't rising a lot faster than supply can keep up with it. And on top of that, like it's not just the supply can't keep up. It's more the supply chains, which you and I have talked about this quite a few times. But that supply chains could take some time to get that that ironed out. I will point out if you're thinking about that inflation, we still have that nearly 17 million people. So collecting unemployment. And the other bit of data that came out that kind of got lost in the shuffle was capacity utilization last, right, right in March was actually weaker than expected. It actually rose to just 74.4 from 73.4. But it was expected to go to 75.5. So capacity utilization. We're still below where we could be still fairly low. So you've got excess capacity, you have less you've got slack in the labor pool. How can we get long term inflation go when I got more people looking for work than I got that I can get to work and I got excess capacity?

Chris Versace  16:57

So you're not buying it?

Lenore Hawkins  16:59

No buying it long term? Not yet. Not yet. I mean, I always look at the data world and on top of that, looking at the data as it comes but so far, I still see too much data that's telling me the big picture transitory Yes, but longer term.

Chris Versace  17:13

Okay, so when you see it, the term real not transitory, you're gonna whisper in pauwels ear.

Lenore Hawkins  17:21

I think by the time we see it, my eyes just don't see it happening.

Chris Versace  17:27

Okay, that's fine. What? What data are you paying attention to this week.

Lenore Hawkins  17:32

So in the coming week be again, looking at mortgage applications, because we're seeing some real warning signs flashing in in the housing market. mortgage application volume volumes have fallen now and nine in the past 10 weeks. And by get this and epic 32% over those 10 weeks, during the 10 weeks purchase indexes slid 16.5% and the refinancing index collapsed almost 39% that that's robbing homeowners of the kind of cash like flow source they had in between stimulus checks where they're kind of cashing money out of their homes, you know, back to using the home as an ATM. So I'll be looking at mortgage applications coming up this week and Wednesday. I'm also looking at the usual you know, the weekly jobless claims this one this jump that we had the last week was at the drop was that kind of a one off was it was it trick was a trick was a transplant story. Right? That's that's like the the year of 2021 transferring large existing home sales can be looking for that and those leading indicators and sales.

Chris Versace  18:36

Right, exactly. Okay. So let's switch over to stocks that we were paying attention to this week. And the first one, you know, I think was more in your wheelhouse to be candid, which was the Coinbase IPO. Why? Why? Why? Why did that jump out to you?

Lenore Hawkins  18:50

so well. That was the first real quick krypto truly real crypto company that went and hit the public market. The expectations were pretty high. It went it went public through a direct listing on the NASDAQ so it wasn't really an IPO. It didn't go quite the women hoped and now now's Dec set a price of $200 which really didn't mean that much. Shares open just over 380 traded up to almost 430 but then they sold off really sharply another close finishing the day actually below where they started at 328. Now big picture that is still ranked the seventh largest new listing in the US of all time, so not exactly something that I think those early investors in Coinbase are crying over. But Thursday the shares continue to struggle and again closed lower. Now to put the market cap of Coinbase in context it is now just below that of Iran went to enter the Intercontinental exchange

Chris Versace  19:52

ice the ice ice

Lenore Hawkins  19:54

the ice and …

Chris Versace  19:56

bigger than that of NASDAQ. So wait, wait, wait, wait, did you just give me to it Ice Ice Baby dddddd. Okay, all right. Well, the other big thing we had last week was, we alluded to this earlier was a slew of bank earnings. And again, good reported numbers blowing out top and bottom line expectations, but it's the mix that really matters. And I think we'll get a little more of that in this coming week as a couple of those stragglers report. The other big one that was I think, really a surprise was what happened with J and J and its vaccine. You know, not only is that going to slow the pace of vaccinations here in the US, but also elsewhere. I think it's gonna raise a lot more suspicion about these vaccines, because remember, this comes on the heels of what happened in Europe with ash with the AstraZeneca. Okay,

Lenore Hawkins  20:47

yeah, we did not need this. We did not need a second vaccine. That's that's blood clot problematic. Really?

Chris Versace  20:53

How happy was I that I got two shots and Madonna?

Lenore Hawkins  20:57

Yeah, I feel pretty good right now, although it was only women of childbearing age that seemed. So I feel like you're probably in the clear, by the way.

Chris Versace  21:09

I've been telling I've been meaning to tell you something. All right. So you saw a long time. But yeah, so so. So just moving on. Some other data points and earnings that kind of jumped out, you know, confirming what we were saying about the march retail sales report, American Eagle. You know, they reported that their first quarter revenues of over a billion, that's a mid teens increase, compared to two years ago, not last year, two years ago. That's unbelievable.

Lenore Hawkins  21:39

Like retail sales are higher today than they would have been without the pandemic. It's just bonkers, crazy. Turns out you were telling me people still real excited about that greenhouses?

Chris Versace  21:48

Well, I'm not but yes, there are people who are Ethan Allen interiors, they reported a almost 52% increase year over year in written orders, which is unbelievable, it seems I would have thought that after last year, the way people pivoted to, to their spending, you know, I'm not going into awareness, flip up my home, that sort of thing, or I'm gonna buy a second home because I can't vacation anywhere else, I would have thought that the bulk of this would have kind of been behind us. But this is a massive, massive increase. But but but it's not just, you know, clothing in the home, we're seeing unbelievable numbers. In the auto sector, Daimler came out reported unbelievable first quarter profits, because of strong demand in China. And as well as the overall recovery that they're seeing Volkswagen did the same thing. Their global sales expanded 53% year over year in March, and overall deliveries for the first quarter were up 21% year over year. And remember that their mix, Daimler and Volkswagen skews a little more outside the US. So that really tells you something about the recovery that's underway from the pandemic. But here's the weird thing. We keep hearing about this automotive chip shortage and idling production. So I'm a little concerned that we're as good as those numbers were in March, April and May or may not be as strong as what people are thinking.

Lenore Hawkins  23:15

And I think that is something to be thinking about looking at this reporting season. Our people like he is and Alan, blowing it out of the water just an unbelievable increase, or is that really going to continue? Are we really going to see this increase in retail spending that that is that is part of the problem with when understandably, you know, we're all terrified the economy crashing people out of work? Well, the stimulus gets thrown in. But you know, I've talked about this a lot. It does remind me a little bit, but on a much bigger scale the cash for clunkers. Yeah, this right, where the spending, it gets kind of confusing in there, because you're bringing forward a bunch of spending. Ethan Elena, they're gonna be able to keep this up? Probably not?

Chris Versace  24:04

Well, I think that speaks to one's ability and arguable willingness to look underneath what's really happening and why those numbers are so strong and in the immediate term, as opposed to those people who are like it's going to continue bar ever, because we because we know it can't. So Two other quick things. One, you know, there's been a lot of talking about this chip shortage Nvidia killed it. You know, their business is on fire, they're courting their quarterly revenue is going to be above what they guided and they were guiding for 5.3 billion and here's the thing. They're saying it is strength across the board for their end markets. Now. Let's be clear, they do very little like three 4% of their business is an auto their primary drivers are graphics chips in data centers. And then on top of that, on top of that Taiwan semiconductor came out and not only did they beat the market order for revenue and UPS but they lifted their outlook for the current quarter. So the people who are reading into this expansion of the chip shortage into other markets, you got to be very careful what you're doing.

Lenore Hawkins  25:13

Yeah. If they're not, they're not apples,

Chris Versace  25:17

Though they're not. And that was a very good segue. That was a very good segue. By the way, Mark. I felt pretty good about that. Smooth like a baby's bottom. So with that, with Apple, the only big news there is they are going to report the earnings in a couple of weeks. But ahead of that on April 20, they are going to have their latest new product introduction event with the tagline spring loaded, not really sure what that means. But the expectation is more iPad pros, more iPad minis air pods. I'm still waiting.

Lenore Hawkins  25:46

I guarantee you that they're going to come out with some new air pods. I absolutely guarantee it. And you know how?

Chris Versace  25:52

You just bought some new ones?

Lenore Hawkins  25:53

Yeah, exactly. There's gonna be I wouldn't be surprised that there's new air pods, and a new Mac Book Pro. 14 inch probably right, because I just bought a MacBook Pro 13 inch didn't want it.

Chris Versace  26:06

They won't they won't. They won't go they No, no, no. You might. You might you might be right. But I think you were a little broad. They won't go 13 to 14, they'll go 1315 1515

Lenore Hawkins  26:17

They something it's going to be bigger. It's going to be what I wanted, because they like to mess with me.

Chris Versace  26:22

Just saying it's gonna be bigger. It's what I wanted. Don't mess with me.

Lenore Hawkins  26:27

That's exactly what's gonna happen. I'm just gonna have to cry. Oh, my God.

Chris Versace  26:31

Yeah, we gotta move on. Because I got Yes, yeah, yeah, let's do that. Alright, so last week, we had about 95 companies reporting this coming week, boom, 325. And then once again, it will be closely clustered on for some reason. Thursdays. I don't know why they do that. But they do. Again, Monday make the pain just all once. I don't know. Some somebody the the earnings. Gods don't like Fridays for some reason, or people who work on Fridays. So let's talk about what we're going to be paying attention to. Right out of the gate on Monday, we got Coca Cola, IBM, United Airlines, Coca Cola, the key is going to be their comments on takeaway, sorry, away from home, which is restaurants, what are they seeing in the volumes of restaurant related businesses? What's the cadence? And then what is it on a geographic basis, not just the US looking at United,

Lenore Hawkins  27:24

United so united commented last week that they're adding 24 new routes by Memorial Day, delta commented that they're going to reopen the the ever awful middle seat in May. The security of travelers everywhere. And American Airlines announced last week that it actually expects this one really surprised me it expects summer travel to hit pre pandemic levels close to it. And is expected to operate nearly a normal schedule with about 90% of their norm domestically and about 80% International by summer, which is surprising just given to somebody who's traveled internationally from the US, because that's basically you're on a plane and it's just a lot of crickets.

Chris Versace  28:10

So well, it will be interesting, because I think Delta said this past week when they reported that their business is about 90% pre pandemic levels. But to your to your point international is they they didn't quite paint it the way you did with crickets. But they said it's nowhere near where it was before.

Lenore Hawkins  28:28

So it you know, a lot of where Americans travel is Europe, and I'm there and it's still closed for business. So it's a little tough to be coming here, man. What are you gonna do? You still can't come to Italy and go to a restaurant. Go get kid go to Ireland go to a restaurant, Spain, France, Germany, huh?

Chris Versace  28:45

What are you gonna do? Yeah, I'm gonna worry about what I'm gonna worry about who's reporting on Tuesday, which is going to be auto nation, j&j, Procter and Gamble and Netflix and with with auto nation. The question isn't gonna be so much about how many cars they're selling. But what are they seeing about new stock of cars in that availability? j&j, I really want to hear how they address what we talked about earlier with the vaccine, Procter and Gamble again, global not only what's happening on a global basis, for demand, but what kind of pricing power do they have now, coming out of the pandemic, you know, they tend to introduce annual price increases, let's see what they're going for this year. And remember, price increases, barring a spike in input costs tend to drop to the bottom line. So it'll be curious to see what happens there. And then Netflix, there are a couple things personally, one is lock and key coming back when a stranger things coming back. That sort of thing, but but from a from a business perspective, what do they see about the landscape now that Disney plus is killing it with subscriptions? And then the other one is, are they back to filming on a regular basis for their proprietary content? Yeah, and what's it so Wednesday we get some interesting semiconductor stuff asml and lamb research will be reporting given a restaurant. Let me get to that. But for but but for asml and lamb research it's going to be what are they seeing in terms of an outlook given the shortage that we're talking about the IP, Intel and Taiwan semiconductor, ratchet higher and capital spending over the next several quarters. And of course, the Biden plan to address semiconductor capacity here in the United States. And as far as my favorite restaurant goes, I don't see the capital grille reporting, so I'm not really sure what you're referring to.

Lenore Hawkins  30:43

You know,

Chris Versace  30:43

once your homie is good to put lay is good. I look, look, they keep pivoting their menu to stuff I like right. So like cauliflower rice, that's, that's grilled, not steamed. Very good. But we'll see we'll see I have yet to hit a chipolte Lane. But maybe one day I will.

Lenore Hawkins  31:00

I'll be looking at whirpool to I want to hear what they have to say about their supply chain. Because from people that I speak to particularly people I've been talking to in the furniture making business, and Italy, they're saying they've never seen anything like this where they literally have zero raw material inventory, they are just anything comes in the door, and they're doing whatever they can to make something with it because they cannot get their hands on anything because supply chains are so messed up. So I'll be looking to hear from Whirlpool, what's wrong with their supply chain.

Chris Versace  31:32

This can be one of those instances where scale really makes a big difference. So we'll see. Thursday, Alaska Airlines, American Airlines, Southwest, Southwest Airlines. So we will be paying attention to all of that, like we said before, about year over year comparisons, revenue miles and the outlook for opening their business. And then Intel. This is going to be interesting, because, you know, some of the third party data for PC sales and stuff has been very robust during the march quarter. What are they seeing in terms of data center business, that Intel? Are they getting their clock cleaned by the likes of Nvidia, which I suspect? The other thing is just more timing on this capital spending initiative that they're going on? And that brings us to Friday, where we've got American Express, again, how are people spending, what are they spending on? And then Kimberly Clark, the only reason I want to listen to this is you know, we were talking about supply chain issues and goddamnit I need to know if I'm going to get toilet paper or not.

Lenore Hawkins  32:33

Okay, thanks for sharing.

Chris Versace  32:34

Thanks for Jerry. Hey, not everybody's got to begin like several days like you do, what can I say?

Lenore Hawkins  32:42

And I think with that, that's the week ahead. Cut the check.


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