Morning Minutes 4/29/2020

Morning Minutes

US GDP, Earnings and Oil Inventories In Focus

April 29, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

US index futures are all up about 1.5% this morning amid a flurry of economic and earnings reports. Dow futures are up 405 points as they accelerate upward from yesterday’s 32-point dip. European markets are also on the rise this morning with the Dax up 0.6% and the FTSE up 1.0%.

US Q1 GDP numbers were mixed. Headline GDP fell by 4.8% which was worse than the 4.0% drop the street had expected, but personal consumption spending rose by 1.8% which was better than the $1.6% street estimate.

Crude oil is bouncing back this morning with WTI up 18.5% trading near $14.65/bbl and Brent crude up 6.4% near $21.75. Investors responded positively to a smaller than expected increase in US API oil inventories (9.9 mmbbls vs previous week 13.2 mmbbls) announced last night which helped to ease fears of running out of storage capacity a bit. Weekly DOE inventories are due at 10:30 am EDT with the street expecting a storage build of 10.6 mmbbls, down from 15.0 mmbbls a week earlier. Earnings season for Big Oil starts tomorrow with ConocoPhillips followed by ExxonMobil and Chevron on Friday. Investors may look to these reports for indications of exploration, development or production cuts.

Earnings reports overnight and into this morning have been mixed once again.

Google parent Alphabet is up 8.4% in premarket trading after beating the street on sales ($41.1 vs street $40.3B) but missing expectations on EPS ($9.87 vs street $10.33). Management indicated that after dropping off sharply in March, advertising sales appear to be stabilizing.

Starbucks reported EPS of $0.32, down from $0.53 in the same quarter a year ago and short of the $0.34 street estimate. Management noted that same store sales were down  60%-70% at the end of March and that the current quarter may also be difficult but also that it’s China stores are reopening and that it plans to start reopening more stores in May.

Boeing is up 6.4% in premarket action despite the company reporting worse than expected sales and losses and management suggesting it and could take 2-3 years for travel to recover from the current slowdown as investors await this morning’s management conference call for possible production and expense cuts.

General Electric reported an 8% decline in sales to $20.5B and EPS below expectations ($0.05 vs street $0.08) as gains in health care sales were not enough to offset declines in aviation and electric power equipment sales.

Ford lost $0.23 per share last quarter, more than the $0.12 per share loss the street had expected, and suggested losses could double in the current quarter.

After the close today results are due from Microsoft, Mastercard, Tesla Motors, Facebook and others.


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