This is the most important week of earnings. On Wednesday, we will get Alphabet (GOOG), Microsoft (MSFT), Amazon (AMZN), and Meta (META) earnings. Given the AI-oriented strength in the latest market run, the outlook and spending plans of the Magnificent 7 will be key to keeping the momentum going. The next day, we get Apple (AAPL). This is in addition to literally hundreds of other earnings reports this week.
The situation in Iran remains unresolved. Negotiations are not really happening, and brinkmanship continues. Energy prices are creeping up, and time marches on with the dislocations of and distillate flows. In the short run, the US is benefiting, and crude exports are soaring.
Today we’re seeing a bit of a reversion to the mean with growth and momentum names pulling back after a blistering run, up 13.1% and 14.4% in a month. It’s interesting that global equities remain strong YTD, with most of the gains in the last month, despite the turmoil in energy markets.
Interest rates are modestly higher today, due to the threat of inflation, as energy and especially distillate costs filter into the economy. Agricultural costs continue to march higher, now up 7.3% YTD, and a shortage of fertilizer supplies could do some real damage to this year’s harvests.
The markets continue to remain optimistic that the Iran situation will be resolved sooner rather than later. The AI theme is very much alive and well, especially seen in semiconductors, up 34% in a month. This will be confirmed with this week’s important earnings by the biggest spenders on data centers.
Momentum remains positive.