Morning Minutes 4/14/2020

Morning Minutes

Stocks Rebound on Earnings Season Kickoff and China Trade Data

April 14, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Stock markets around the world have been climbing overnight, boosted by better than expected trade figures out of China and news that in Europe, Italy and Spain are starting to ease some of their lockdown measures this week as coronavirus case growth subsides. China posted a $19.9B trade surplus for March, which was better than the $18.0B surplus the street had expected and February’s $71B deficit. Exports were down 6.6% which was less than the 15.0% decline investors had been expecting.

This positive news propelled Asia Pacific markets upward overnight, including a 3.1% gain for Tokyo and a 1.6% gain for Shanghai. China-sensitive copper is up 0.5%. European markets are mixed with the Dax up 1.0% and the FTSE down 0.75%. Gold has levelled off near $1,760/oz. Crude oil continues to struggle with WTI down 2.0% near $21.75/bbl and Brent down 0.9%.

In North America, US index futures are up this morning with Dow futures rising 265 points or 1.1% clawing back about two-thirds of yesterday’s 328-point, 1.4% decline. Earnings season has officially started today with mixed results. Some of the big themes this morning were strong personal product sales, big increases in loan loss provisions at big banks and no dividend cuts so far.

Johnson & Johnson beat the street on both sales ($20.7B vs street $19.4B) and earnings per share ($2.30 vs street $2.00) significantly. Pharmaceutical sales rose by 8.7% over year while personal product revenues increased by 9.2%. The company raised its dividend by 6.3% but cut its 2020 EPS guidance to $7.50-$7.90 from $8.95-$9.10.

JPMorgan Chase reported EPS of $0.78, well short of the $1.84 street estimate. The shortfall was mainly due to a $6.8B increase in loan loss provisions. Revenues were down only 3% relative to the 69% drop in net income and trading revenues popped 32% to $7.2B.

Wells Fargo reported EPS of $0.01, short of the $0.33 street estimate as the bank increased its loan loss provisions by $3.1B. Management noted that credit card fees were down 6% over year in the quarter.

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