U.S. tech giants take the earnings season to a new pace today. Investors will still have to wait until the close of Wall Street, as tradition dictates that these companies publish after the bell. Microsoft and Alphabet are expected. The former is synonymous with quiet strength for investors. The latter is haloed by the title of the fastest growing US heavyweight in 2021, already 31%.
Tesla, the company of all superlatives, presented its financial performance for the period January to March. Profits are in line with expectations. The stock was losing some ground outside the session because margins bear the stigma of the component shortages that are hitting the entire sector. The results trajectory should allow the P/E, the ratio that compares capitalization to net income, to go from 395 this year to 110 in two years, in 2023. By comparison, Volkswagen's is at 8.5 times 2021 and 6.7 times 2023. Tesla is valued as a technology company and not as a car manufacturer. It is therefore very likely that the group will retain a nice premium over the pack of its pursuers. As for whether such a difference is deserved, the answer is "probably not", but all those who have assumed this position have taken a severe backlash for now. In any case, the financial performance of the California-based company allows Elon Musk to land a new banner of bonus shares at USD 70 each, or one-tenth of the current price, valued at USD 11 billion.
If results are shaping market trends, they are not the only events of the week. On Wednesday, the U.S. central bank will give its periodic update on rates and monetary policy. The Fed will likely be asked about recent macroeconomic trends, particularly the impact of soaring prices in certain sectors on inflation projections. On Thursday, the first estimate of U.S. Q1 GDP will be presented. Economists believe that annualized growth will be around 6.8%. An extremely high rate of growth that can be explained by a favorable base effect and the optimism born of the vaccination campaign.
UBS and its battery of monitoring tools pointed out yesterday that the global vaccination momentum has slowed for the first time in eleven weeks in the United States. On the other hand, a very clear trend is emerging between developed and emerging economies: the gap between the two blocks has never been so high since the beginning of the campaign. Current trajectories suggest that the vaccination rate in developed countries could reach 90% on average by the end of the year. In emerging countries, if trends continue, this rate could plateau at 30%. "The Indian slowdown is particularly disconcerting given the number of new cases per day," UBS points out. This lag is one to watch in the coming weeks as it could bring an additional variable to the global economic recovery equation.
Economic highlights of the day:
In the U.S., we have the FHFA home price index, the Richmond Fed manufacturing index and the Conference Board consumer confidence index. Earlier today, the Bank of Japan kept its rates unchanged and reduced its inflation expectations. South Korea reported GDP growth of 1.6% in the first quarter, higher than expected (1.1%).
The dollar edged up to EUR 0.8276. The ounce of gold remains in contact with the USD 1780. In the oil market, Brent crude oil rose to USD 66 per barrel and WTI to USD 62.4 per barrel. The T-Bond yield is relatively stable at 1.57%. Bitcoin is trading near USD 55,000.
* General electric reported a 20% year-on-year drop in its quarterly profit to $828 million, as a result of the impact of the coronavirus crisis on its aircraft engine business. however, the conglomerate confirmed its annual targets for earnings per share and free cash flow. the share is down 2.4% in premarket trading.
* 3m reported a 24.2% year-on-year increase in quarterly net income to $1.62 billion and a 13.7% increase in revenue, ahead of expectations, thanks in part to strong demand for its personal protective equipment, such as masks. the stock is down 1% in premarket trading.
* Tesla lost nearly 3% in premarket trading after releasing its quarterly results, with sales only slightly exceeding market expectations.
* Eli Lilly announced on Tuesday that it made a profit for the first three months of the year that fell short of wall street's expectations and lowered its adjusted annual profit forecast due to lower demand for its covid-19 treatments. the stock is down 4.7% in premarket trading.
* IPS reported quarterly revenue up 27% year-over-year to $22.9 billion on the back of a pandemic-related surge in online sales. the stock is up 7.5% in premarket trading.
* Raytheon Technologies raised the low end of its annual revenue guidance range on Monday, citing a strong backlog in its defense business and prospects for a recovery in the civil aviation market.
* Hasbro reported lower-than-expected quarterly sales of $1.11 billion.
* JetBlue airways reported a smaller-than-expected loss and revenues down 61% year-on-year but ahead of consensus. the airline's shares gained 1.7% in premarket trading.
* Lyft will sell its autonomous driving division to Toyota of japan for $550 million, the two companies announced on Tuesday. the VTC group now expects to return to a positive gross operating profit (Ebitda) in the third quarter and not in the fourth if the post-pandemic recovery continues.
* Gamestop has raised $551 million through a capital increase, capital that should enable the video game distributor to accelerate its transition to online sales.
* Gilead Sciences will send at least 450,000 doses of its Remdesivir treatment to india, which is experiencing a resurgence of cases of covid-19.