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Weekly Feed Mins Read

Kristal Weekly Feed | 06th May 2019

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Got only 15 seconds? Here’s what you need to know.

Here’s a succinct summary of major global events that transpired last week.

Positives

1. Fed leaves interest rates on hold citing low inflation

2. Nasdaq at record high on account of better than expected jobs report

3. Apple share price surge after Q1 results

Negatives

1. Alphabet drops more than 8% after Q1 results wiping more than $60 billion of market cap

2. Crude oil prices down 2% for the week posting a second weekly loss

Now for more detail.

Positives

1. Fed leaves interest rates on hold citing low inflation

What You Should Know

Fed leaves interest rates on hold in a target between 2.25% and 2.5%, meeting market expectations though Donald Trump, who urged the Fed to cut the rate by 1% as he said economic growth would be much faster if Fed eases the policy. On a yearly, overall inflation and inflation for items other than food and energy have declined and are running at 1.6% well below 2%.

What You Should Lookout For

The Fed’s balance sheet is currently $3.9 trillion, most of which is comprised of Treasury and mortgage-backed securities. The committee lowered the cap on the amount of Treasury from $30 billion to $15 billion proceeds that will roll off the balance sheet reach month. Market expects Fed to hold rates steady for a while, then assign a 67% chance of a rate cut by the end of the year.

Suggested Reading:

Fed Leaves Interest Rates Unchanged as Low Inflation Persists

2. NASDAQ at record high on account of better than expected jobs report

What You Should Know

The April jobs report produced 263,000 new jobs compared to expectations of 217,000 in April, helping drive down the unemployment rate to a 49-year low of 3.6%, topping economists’ estimates polled by MarketWatch for monthly job gains of 217,000. The Nasdaq on Friday closed at a record high at 8,164, and the S&P 500 just closed off its record high at 2,945 and all sectors closed positive for the day.

What You Should Lookout For

Earnings will continue to be a driver for the markets in the next week, with about 50 S&P 500 companies reporting, including media names like Disney, News Corp and Viacom. S&P 500 companies are now expected to see profit growth of about 0.7%, compared to expectations for a contraction of 2% at the start of April.

Suggested Reading: 

Trade talks closing in on finish line as markets weigh inflation data, earnings in week ahead

3. Apple share price surge after Q1 results 

What You Should Know

Apple’s share price surged more than 5% post Q1 earnings despite iPhone sales dropping by 17%. The surge in share price is due to upbeat commentary by the CEO on China and Wearables. The CEO also highlighted that iPhone declines in the last few weeks of March were significantly smaller than they were to start the quarter.

What You Should Lookout For

Analysts have reiterated buy rating on Apple and have raised target price as they believe investors will react favourably to Tim Cook’s commentary around improvements in China demand with iPhone units troughing during the December quarter.

Suggested Reading:

Apple’s stock is surging after earnings, but analysts aren’t that impressed

Negatives

1. Alphabet drops more than 8% after Q1 results wiping more than $60 billion of market cap

What You Should Know

Alphabet shares sank 8% after revenue fell below analysts estimates. Even though revenue increased 17%, revenue was $36.3 billion compared to expectations of $37.3 billion. The 17% revenue increase was much lower than 28% in the last quarter and more than 20% or more in prior periods. The drop in the share price wiped more than $60 billion off Alphabet’s market cap.

What You Should Lookout For

Revenue deceleration was enough for analysts at Stifel who downgraded the stock to hold from buy and said that the unexpected degree of revenue deceleration potentially lead us to believe the multiple on shares may be challenged to move meaningfully higher over the next year.

Suggested Reading:

Alphabet drops after reporting a slowdown in ad revenue

2. Crude oil prices down 2% for the week posting a second weekly loss

What You Should Know

Brent Crude closes the week at $70.85 a barrel, down 1.8% for its first weekly loss in five weeks. U.S. West Texas closed the week at $61.94 per barrel, down 2.2% this week, for its second straight weekly decline. Better than expected US jobs report increased the expectation that crude demand will stay strong. Gains in the oil market, were limited by a spike in U.S. crude inventories rising oil production, that hit a record 12.3 million barrels per day last week.

What You Should Lookout For

Saudi Arabia, the world’s top crude exporter is expected to produce 10 million bpd in May, higher than in April but still below its 10.3 million bpd quota under the OPEC deal. Oil prices were under pressure by Russia pumping clean oil towards western Europe again, after several countries stopped imports last week because of contamination.

Suggested Reading:

U.S. oil prices rebound from 1-month low, but post a second weekly loss

Disclaimer

The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.

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