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On Tuesday, real GDP growth for Q1-24 and harmonized consumer price inflation (HICP) data from the Eurozone come out. Mainland China offers traders its April PMIs.
Loads of important manufacturing PMIs for April land, both Tuesday and Wednesday.
We have a two-day U.S. Fed meeting. A Fed Chair Jerome Powell presser is scheduled for 2 pm ET on Wednesday, May 1st.
On Friday at 8:30 am ET, a critical U.S. Federal nonfarm payroll report for April 2024 concludes this busy trading week.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) Tuesday & Thursday, the Last Two “Mag 7” Members Report Q1-24 Results.
The last of the "Magnificent Seven" mega-caps that drove a fiery stock rally in 2023 to report are Amazon AMC on Tuesday, and Apple AMC on Thursday.
Some of their peers such as Tesla and Facebook-parent Meta Platforms have given a mixed performance.
Apple shares have lost their luster in 2024, tumbling over 10%. The iPhone maker is expected to post a decline in first quarter earnings after China smartphone shipments fell 19%.
Amazon's cloud computing business will be in focus while investors will be attuned to the online retailing giant's view of consumer spending. Its shares are faring better so far this year, having risen 18% as of Wednesday.
Meanwhile, tech regulation is also on the front burner. President Joe Biden just signed legislation that bans TikTok in the U.S., if Chinese owner ByteDance fails to divest the short-video app over the next nine months to a year.
(2) Will 2024 Be a “Sell in May, and Go Away” Stock Market Regime?
Conventional wisdom has it that May is the ideal point to take profit on equities and lay low until later in the year.
"Sell in May and go away" is based on the premise that the best six-month period for stock market returns is November to April, while the leanest is May to October.
Over the last 50 years, the S&P500 (SPX) has gained an average of +4.8% between November and April, and just +1.2% between May and October, according to Reuters calculations.
However, this pattern fades over a shorter time-frame.
Over the last 20 years, the out-performance of November-April over May-October narrows to +1%.
Over 10 years, November-April has underperformed May-October by -1 percentage point and over the last five years, it has underperformed by -3 percentage points.
It might be time to find words that rhyme with “November."
(3) Will the FOMC cut their policy rate in 2024? If so, when?
Hints of whether the Fed still expects interest rate cuts at some point this year takes center-stage for investors at the central bank's meeting that concludes on Wednesday.
Rate action is unlikely, but comments from Fed Chair Powell about the potential for policy easing later in 2024 will be scrutinized.
In March, the Fed projected three rate cuts this year, but stronger-than-expected inflation reports are casting doubt on whether it will be able to ease policy that much — or that soon.
A ratcheting down of rate cut expectations has been a key factor behind the rise in Treasury yields and recent pullback in stocks.
Fed futures markets now predict some 35 bps of easing in 2024, down from 150 bps expected at the start of the year.
(4) On Tuesday, Traders Get to See Mainland China’s Caixin Manufacturing PMI.
Following last month's upside surprises on manufacturing activity in China, April's readings are set to indicate whether the long-awaited economic recovery is indeed gathering steam.
Official figures for China's purchasing managers' index (PMI) are due on Tuesday and the Caixin/S&P Global manufacturing PMI survey is expected shortly afterwards.
Upbeat data could revive animal spirits in the world's second largest economy, bringing relief to policymakers who have been trying to shore up growth and bolster investor sentiment.
Global investment houses have turned increasingly bullish on Chinese stocks, helping the blue-chip index (CSI300), tack on more than +10% from a February trough.
But Beijing has lately found itself in a bind over its currency. The yuan is sliding against a perky U.S. dollar, but is stronger against its major trading partners (CFSCNYI) — an unwelcome sign for China's export-reliant economy.
(5) On Tuesday, Traders Get to See Eurozone Inflation and GDP Growth Data.
Eurozone inflation and economic growth data due out on Tuesday could strengthen market bets for the European Central Bank to lower its deposit rate from a record 4% in June, although policy makers are not expected to move very fast thereafter.
Gross domestic product (GDP) in the Eurozone currency bloc probably expanded by just +0.1% in the first quarter, year-on-year, economists polled by Reuters expect the data to show.
April inflation numbers could also convince the ECB it's time to cut, after consumer price growth slowed unexpectedly to +2.4% in March and policymakers signaled that the central bank was willing to move.
But with U.S. inflation running hot and the Fed viewed as likely to hold rates high, markets price 60 bps of cuts by the ECB this year as it remains wary of the euro weakening too much against a supercharged dollar.
Zacks #1 Rank (STRONG BUY) Stocks
(1) Hess (HES - Free Report) : This is a $161 stock with a market cap of $49.0B. It is found in the Oil & Gas – Integrated U.S. industry. I see a Zacks Value score of D, a Zacks Growth score of B and a Zacks Momentum score of C.
Image Source: Zacks Investment Research
Headquartered in New York, Hess is a leading oil and natural gas exploration and production company.
The upstream energy player primarily operates in the prolific offshore Guyana resources. The company’s operations are also spread across key resources like the U.S. Gulf of Mexico, and offshore Suriname and Canada.
Hess has achieved numerous world-class oil findings in the Stabroek Block, situated off the coast of Guyana. These discoveries account for more than 11 billion Boe in gross recoverable resources within the block.
In addition to enhancing the company's production prospects and subsequently leading to improved profit margins, Guyana's advantageous growth projects exhibit lower greenhouse gas emissions than the majority of oil and gas-producing resources worldwide.
In offshore Guyana resources, Hess has 30% operating interests and is planning for six floating production, storage and offloading vessels (FPSO). This can make its aggregate expected production capacity of more than 1.2 million gross barrels of oil per day from the key resources by 2027-end.
In addition to its offshore resources, the firm has a strong presence in onshore plays, including the prolific North Dakota Bakken shale play, where it holds numerous premium untapped drilling locations.
The company also has a footprint in the midstream business through its roughly 38% consolidated ownership interest in Hess Midstream LP. Through this business, the company generates stable fee-based revenues. The midstream operations comprise gathering, compressing and processing natural gas and fractionating natural gas liquids.
Thus, Hess primarily conducts its operations through two segments — Exploration and Production and Midstream. With almost 67% of its profits being generated from upstream operations, it is worth noting that in 2023, the company produced 394 barrels of oil equivalent, of which crude oil and natural gas liquids combined contributed to almost 75% of total production.
(2) Interactive Brokers (IBKR - Free Report) : This is a $117 stock with a market cap of $48.6B. It is found in the Financial – Investment Bank industry. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of B.
Image Source: Zacks Investment Research
Incorporated in 1977 and headquartered in Greenwich, CT, Interactive Brokers Group Inc. operates as an automated global electronic market maker and broker.
The company specializes in routing orders, besides executing and processing trades in securities, futures, foreign exchange instruments, bonds and mutual funds on more than 150 electronic exchanges and market centers worldwide.
In the United States, Interactive Brokers conducts its business primarily from Greenwich and Chicago.
Across the globe, it conducts business through offices in Canada, the U.K., Ireland, Switzerland, Hungary, India, China (Hong Kong and Shanghai), Japan, Singapore and Australia. As of Dec 31, 2023, the company had more than 2,900 employees.
Since 2017, the company has been working continuously to wind down its Market Making segment and focus more on the Electronic Brokerage segment. In April 2020, Interactive Brokers announced that its market making activities were almost insignificant and hence decided not to report its operations through two separate segments.
Prior to its IPO in 2007, Interactive Brokers conducted business through a limited liability company (LLC) structure. In connection with the IPO, the company purchased 10.0% of the membership interest in IBG LLC. As of Dec 31, 2023, Interactive Brokers’ primary assets were its ownership of 25.4% of the membership interests in IBG LLC. The remaining 74.6% of the membership interests were held by IBG Holdings LLC.
As of Dec 31st, 2023, Interactive Brokers had $128.4 billion in total assets, $3.8 billion in cash and cash equivalents and $14.1 billion in total equity. As of the same date, Interactive Brokers’ total customer accounts were 2.56 million and total customer Daily Average Revenue Trades (DARTs) were 1.93 million.
(3) JD.com (JD - Free Report) : This is a $29 stock with a market cap of $44.5B. It is found in the Mainland China Internet Commerce industry. I see a Zacks Value score of A, a Zacks Growth score of A, and a Zacks Momentum score of F.
Image Source: Zacks Investment Research
JD.com, Inc. operates as an online direct sales company in Mainland China.
The company, through its website www.jd.com and mobile applications offers a selection of authentic products.
It offers computers; mobile handsets and other digital products, home appliances; automobile accessories; clothing and shoes; luxury goods including handbags, watches and jewelry, furniture and household products; cosmetics and other personal care items; food and nutritional supplements; books, e-books, music, movies and other media products; mother and childcare products; toys, sports and fitness equipment; and virtual goods.
JD.com, Inc. is based in Beijing, China.
Key Global Macro
Tuesday is a big day for Mainland China and Eurozone macro data. Friday offers the U.S. Federal nonfarm payroll report for April.
On Monday, the MAR household unemployment rate for Japan comes out. 2.5% is consensus. The prior reading was 2.6%.
Japan’s retail trade number for MAR are also due. MAR retail sales growth should be +2.2% y/y, well below the +4.6% y/y FEB mark.
On Tuesday, Mainland China’s private company Caixin Manufacturing PMI for APR is out. The MAR reading was 51.1.
China’s NBS manufacturing PMI also come out for APR. The MAR reading here was 50.8.
The China NBS non-manufacturing PMI for APR also comes out. In MAR, this was a stronger 53.
The Eurozone core Harmonized Index of Consumer Prices (HICP) for APR is out. Consensus thinks +2.8% y/y for APR. The prior MAR reading was +2.9% y/y.
Eurozone real GDP growth should be up +0.2% y/y in Q1-24. The prior Q4-23 quarter showed a +0.1% y/y real GDP growth reading.
On Wednesday, Japan’s Jibun Bank manufacturing PMI for APR should be 49.9. The prior MAR reading was 49.9 too.
U.S. ADP job additions for APR look to be +180K, in line with the prior +184K.
The ISM manufacturing PMI for APR should be 50, after a 50.3 prior MAR print.
The FOMC issues its monetary policy statement. Chair Powell holds a presser. No policy rate change from 5.5% is expected.
On Thursday, the Eurozone HCOB manufacturing PMI for APR is out. I see 45.6 is consensus. The prior reading was 45.6 too.
On Friday, U.S. nonfarm payrolls for APR should be +210K, after a prior +303K MAR print. The APR household unemployment should remain steady at 3.8%.
Conclusion
Let’s finish with Zacks Research Director Sheraz Mian’s latest Q1-24 earnings points.
Zacks Q1-24 S&P500 earnings season points came out on April 24th:
(1) The picture emerging from the Q1-24 earnings season is one of steady improvement and resilience.
The earnings growth pace is modestly accelerating, and earnings estimates for the coming periods are starting to increase.
On the flip side, revenue growth remains on a modestly decelerating trend, and companies are struggling to beat revenue estimates.
(2) Total earnings for the 139 S&P500 members that reported Q1-24 results were up +4.6% from the same period last year, on +3.4% higher revenues.
Image: Bigstock
Apple and Amazon Report: Global Week Ahead
In the Global Week Ahead, Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) report Q1-24 results.
On Tuesday, real GDP growth for Q1-24 and harmonized consumer price inflation (HICP) data from the Eurozone come out. Mainland China offers traders its April PMIs.
Loads of important manufacturing PMIs for April land, both Tuesday and Wednesday.
We have a two-day U.S. Fed meeting. A Fed Chair Jerome Powell presser is scheduled for 2 pm ET on Wednesday, May 1st.
On Friday at 8:30 am ET, a critical U.S. Federal nonfarm payroll report for April 2024 concludes this busy trading week.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) Tuesday & Thursday, the Last Two “Mag 7” Members Report Q1-24 Results.
The last of the "Magnificent Seven" mega-caps that drove a fiery stock rally in 2023 to report are Amazon AMC on Tuesday, and Apple AMC on Thursday.
Some of their peers such as Tesla and Facebook-parent Meta Platforms have given a mixed performance.
Apple shares have lost their luster in 2024, tumbling over 10%. The iPhone maker is expected to post a decline in first quarter earnings after China smartphone shipments fell 19%.
Amazon's cloud computing business will be in focus while investors will be attuned to the online retailing giant's view of consumer spending. Its shares are faring better so far this year, having risen 18% as of Wednesday.
Meanwhile, tech regulation is also on the front burner. President Joe Biden just signed legislation that bans TikTok in the U.S., if Chinese owner ByteDance fails to divest the short-video app over the next nine months to a year.
(2) Will 2024 Be a “Sell in May, and Go Away” Stock Market Regime?
Conventional wisdom has it that May is the ideal point to take profit on equities and lay low until later in the year.
"Sell in May and go away" is based on the premise that the best six-month period for stock market returns is November to April, while the leanest is May to October.
Over the last 50 years, the S&P500 (SPX) has gained an average of +4.8% between November and April, and just +1.2% between May and October, according to Reuters calculations.
However, this pattern fades over a shorter time-frame.
Over the last 20 years, the out-performance of November-April over May-October narrows to +1%.
Over 10 years, November-April has underperformed May-October by -1 percentage point and over the last five years, it has underperformed by -3 percentage points.
It might be time to find words that rhyme with “November."
(3) Will the FOMC cut their policy rate in 2024? If so, when?
Hints of whether the Fed still expects interest rate cuts at some point this year takes center-stage for investors at the central bank's meeting that concludes on Wednesday.
Rate action is unlikely, but comments from Fed Chair Powell about the potential for policy easing later in 2024 will be scrutinized.
In March, the Fed projected three rate cuts this year, but stronger-than-expected inflation reports are casting doubt on whether it will be able to ease policy that much — or that soon.
A ratcheting down of rate cut expectations has been a key factor behind the rise in Treasury yields and recent pullback in stocks.
Fed futures markets now predict some 35 bps of easing in 2024, down from 150 bps expected at the start of the year.
(4) On Tuesday, Traders Get to See Mainland China’s Caixin Manufacturing PMI.
Following last month's upside surprises on manufacturing activity in China, April's readings are set to indicate whether the long-awaited economic recovery is indeed gathering steam.
Official figures for China's purchasing managers' index (PMI) are due on Tuesday and the Caixin/S&P Global manufacturing PMI survey is expected shortly afterwards.
Upbeat data could revive animal spirits in the world's second largest economy, bringing relief to policymakers who have been trying to shore up growth and bolster investor sentiment.
Global investment houses have turned increasingly bullish on Chinese stocks, helping the blue-chip index (CSI300), tack on more than +10% from a February trough.
But Beijing has lately found itself in a bind over its currency. The yuan is sliding against a perky U.S. dollar, but is stronger against its major trading partners (CFSCNYI) — an unwelcome sign for China's export-reliant economy.
(5) On Tuesday, Traders Get to See Eurozone Inflation and GDP Growth Data.
Eurozone inflation and economic growth data due out on Tuesday could strengthen market bets for the European Central Bank to lower its deposit rate from a record 4% in June, although policy makers are not expected to move very fast thereafter.
Gross domestic product (GDP) in the Eurozone currency bloc probably expanded by just +0.1% in the first quarter, year-on-year, economists polled by Reuters expect the data to show.
April inflation numbers could also convince the ECB it's time to cut, after consumer price growth slowed unexpectedly to +2.4% in March and policymakers signaled that the central bank was willing to move.
But with U.S. inflation running hot and the Fed viewed as likely to hold rates high, markets price 60 bps of cuts by the ECB this year as it remains wary of the euro weakening too much against a supercharged dollar.
Zacks #1 Rank (STRONG BUY) Stocks
(1) Hess (HES - Free Report) : This is a $161 stock with a market cap of $49.0B. It is found in the Oil & Gas – Integrated U.S. industry. I see a Zacks Value score of D, a Zacks Growth score of B and a Zacks Momentum score of C.
Image Source: Zacks Investment Research
Headquartered in New York, Hess is a leading oil and natural gas exploration and production company.
The upstream energy player primarily operates in the prolific offshore Guyana resources. The company’s operations are also spread across key resources like the U.S. Gulf of Mexico, and offshore Suriname and Canada.
Hess has achieved numerous world-class oil findings in the Stabroek Block, situated off the coast of Guyana. These discoveries account for more than 11 billion Boe in gross recoverable resources within the block.
In addition to enhancing the company's production prospects and subsequently leading to improved profit margins, Guyana's advantageous growth projects exhibit lower greenhouse gas emissions than the majority of oil and gas-producing resources worldwide.
In offshore Guyana resources, Hess has 30% operating interests and is planning for six floating production, storage and offloading vessels (FPSO). This can make its aggregate expected production capacity of more than 1.2 million gross barrels of oil per day from the key resources by 2027-end.
In addition to its offshore resources, the firm has a strong presence in onshore plays, including the prolific North Dakota Bakken shale play, where it holds numerous premium untapped drilling locations.
The company also has a footprint in the midstream business through its roughly 38% consolidated ownership interest in Hess Midstream LP. Through this business, the company generates stable fee-based revenues. The midstream operations comprise gathering, compressing and processing natural gas and fractionating natural gas liquids.
Thus, Hess primarily conducts its operations through two segments — Exploration and Production and Midstream. With almost 67% of its profits being generated from upstream operations, it is worth noting that in 2023, the company produced 394 barrels of oil equivalent, of which crude oil and natural gas liquids combined contributed to almost 75% of total production.
(2) Interactive Brokers (IBKR - Free Report) : This is a $117 stock with a market cap of $48.6B. It is found in the Financial – Investment Bank industry. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of B.
Image Source: Zacks Investment Research
Incorporated in 1977 and headquartered in Greenwich, CT, Interactive Brokers Group Inc. operates as an automated global electronic market maker and broker.
The company specializes in routing orders, besides executing and processing trades in securities, futures, foreign exchange instruments, bonds and mutual funds on more than 150 electronic exchanges and market centers worldwide.
In the United States, Interactive Brokers conducts its business primarily from Greenwich and Chicago.
Across the globe, it conducts business through offices in Canada, the U.K., Ireland, Switzerland, Hungary, India, China (Hong Kong and Shanghai), Japan, Singapore and Australia. As of Dec 31, 2023, the company had more than 2,900 employees.
Since 2017, the company has been working continuously to wind down its Market Making segment and focus more on the Electronic Brokerage segment. In April 2020, Interactive Brokers announced that its market making activities were almost insignificant and hence decided not to report its operations through two separate segments.
Prior to its IPO in 2007, Interactive Brokers conducted business through a limited liability company (LLC) structure. In connection with the IPO, the company purchased 10.0% of the membership interest in IBG LLC. As of Dec 31, 2023, Interactive Brokers’ primary assets were its ownership of 25.4% of the membership interests in IBG LLC. The remaining 74.6% of the membership interests were held by IBG Holdings LLC.
As of Dec 31st, 2023, Interactive Brokers had $128.4 billion in total assets, $3.8 billion in cash and cash equivalents and $14.1 billion in total equity. As of the same date, Interactive Brokers’ total customer accounts were 2.56 million and total customer Daily Average Revenue Trades (DARTs) were 1.93 million.
(3) JD.com (JD - Free Report) : This is a $29 stock with a market cap of $44.5B. It is found in the Mainland China Internet Commerce industry. I see a Zacks Value score of A, a Zacks Growth score of A, and a Zacks Momentum score of F.
Image Source: Zacks Investment Research
JD.com, Inc. operates as an online direct sales company in Mainland China.
The company, through its website www.jd.com and mobile applications offers a selection of authentic products.
It offers computers; mobile handsets and other digital products, home appliances; automobile accessories; clothing and shoes; luxury goods including handbags, watches and jewelry, furniture and household products; cosmetics and other personal care items; food and nutritional supplements; books, e-books, music, movies and other media products; mother and childcare products; toys, sports and fitness equipment; and virtual goods.
JD.com, Inc. is based in Beijing, China.
Key Global Macro
Tuesday is a big day for Mainland China and Eurozone macro data. Friday offers the U.S. Federal nonfarm payroll report for April.
On Monday, the MAR household unemployment rate for Japan comes out. 2.5% is consensus. The prior reading was 2.6%.
Japan’s retail trade number for MAR are also due. MAR retail sales growth should be +2.2% y/y, well below the +4.6% y/y FEB mark.
On Tuesday, Mainland China’s private company Caixin Manufacturing PMI for APR is out. The MAR reading was 51.1.
China’s NBS manufacturing PMI also come out for APR. The MAR reading here was 50.8.
The China NBS non-manufacturing PMI for APR also comes out. In MAR, this was a stronger 53.
The Eurozone core Harmonized Index of Consumer Prices (HICP) for APR is out. Consensus thinks +2.8% y/y for APR. The prior MAR reading was +2.9% y/y.
Eurozone real GDP growth should be up +0.2% y/y in Q1-24. The prior Q4-23 quarter showed a +0.1% y/y real GDP growth reading.
On Wednesday, Japan’s Jibun Bank manufacturing PMI for APR should be 49.9. The prior MAR reading was 49.9 too.
U.S. ADP job additions for APR look to be +180K, in line with the prior +184K.
The ISM manufacturing PMI for APR should be 50, after a 50.3 prior MAR print.
The FOMC issues its monetary policy statement. Chair Powell holds a presser. No policy rate change from 5.5% is expected.
On Thursday, the Eurozone HCOB manufacturing PMI for APR is out. I see 45.6 is consensus. The prior reading was 45.6 too.
On Friday, U.S. nonfarm payrolls for APR should be +210K, after a prior +303K MAR print. The APR household unemployment should remain steady at 3.8%.
Conclusion
Let’s finish with Zacks Research Director Sheraz Mian’s latest Q1-24 earnings points.
Zacks Q1-24 S&P500 earnings season points came out on April 24th:
(1) The picture emerging from the Q1-24 earnings season is one of steady improvement and resilience.
The earnings growth pace is modestly accelerating, and earnings estimates for the coming periods are starting to increase.
On the flip side, revenue growth remains on a modestly decelerating trend, and companies are struggling to beat revenue estimates.
(2) Total earnings for the 139 S&P500 members that reported Q1-24 results were up +4.6% from the same period last year, on +3.4% higher revenues.
78.4% beat EPS estimates. 59.7% beat revenue estimates.
(3) Looking at Q1-24 as a whole, we expect total S&P500 earnings to be up +4.4% from the same period last year on +3.9% higher revenues.
This follows the +6.8% earnings growth, on +3.9% higher revenues in Q4-23.
(4) Upward revisions to the Energy sector have been a big contributor to the recent favorable revisions trend for Q2-24.
But it is hardly the only sector enjoying favorable revisions.
Half of the 16 Zacks sectors have experienced positive estimate revisions since the start of April.
That’s it for me.
Have a successful week trading and investing!
Warm Regards,
John Blank, PhD.
Zacks Chief Equity Strategist and Economist