MAGA Earnings - Your Money April 30th 2021

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Wow what a week. Between an avalanche of earnings, a Federal Reserve rate decision and President Biden’s First speech to Congress, I think investors could not decide which way to play things. No question the top stories though were the mega cap tech stocks including Tesla, Apple, Amazon, Alphabet, Microsoft and Facebook and while most of them beat on one or more metrics, Wall Street was unforgiving if they did not exceed estimates in all categories. It’s hard to understate the significance of the big beats by the “mega techs” as they powered ahead during this pandemic. Even Canada’s Mega Tech Darling Shopify rallied hard after reporting blow out earnings as shoppers switch to online purchases.

Unfortunately, President Biden also unveiled his America First Spend and Tax agenda that left some investors worried that after tax corporate profits face a very uncertain future. When you factor in rising input costs like copper and lumber, it is clear to bond investors that inflation is also on the horizon. It caused both bond yields and the US Dollar to creep higher. That had a negative impact on gold and silver prices but not the other two commodities. As for Crude Oil, it started out with a bang this week, but slipped after a slightly higher weekly inventory stat on Wednesday followed by reports of increased production from Iran. Still Crude Oil closed at $63.58 with natural gas at $2.98. Once the virus gets back under control in Europe, India and parts of Europe, we could see a bigger demand supply imbalances.

Meanwhile back in North America, we get an avalanche of earnings next week, but I cannot help think that rising profits will lead to inflation sooner rather than later. Store shelves have thinned out from Canadian Tire to Home Depot. Shippers cannot get containers into North America fast enough. Historically shortages lead to price increases. That is good news for profits in the short run but not so much in the long run. On the plus side, Disney Land is open for business again…at least for California residents.

Stay Safe and Happy Trading.

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Steve Bokor

Steve Bokor

Portfolio Manager