Tech Time: Microsoft, Advanced Micro Devices, Alphabet Report After Closed Today
It’s time for us all to wear federal hats, whether they’re ready or not. again. Only six weeks after the last Federal Open Market Committee (FOMC) meeting, we’re back together today. A regular press conference featuring Federal Reserve Chairman Jerome Powell will take place shortly after the meeting ends tomorrow at 2:00 pm EST, and analysts do not expect a change in policy. Hmm. Trading may be a bit slow before all of this, which is a kind of typical when investors wait for the latest from Powell and the company. The key indices did not move much in the overnight session. That said, the Fed could be the third most important event this week after gross domestic product (GDP) and technology revenue. For this afternoon, Tech is at the center of revenue from Alphabet (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT), and Advanced Micro Devices (NASDAQ: AMD). All the details are further down. According to FactSet, this revenue season is now about one-third finished, with 84% of companies exceeding Wall Street’s consensus revenue estimate. This is well above the average level of positive surprises. This indicates that the analyst may have been too conservative. General Electric (NYSE: GE) performed very well, but stock prices fell slightly. Starbucks (NASDAQ: SBUX) will also be reported later. It may be interesting. Unlike last month, the Fed has not obtained a “dot plot” of interest rate outlooks for Fed officials this time, as investors are waiting for their views on the latest strong data. To do that, we have to wait until the FOMC meeting in mid-June. However, Powell may be asked to comment on recent booming economic data and higher-than-expected inflation. The Federal Reserve Board has returned to a healthy employment situation at the top of its list, with both the last two first unemployment claims reports and March salaries suggesting progress. It may be interesting to know Powell’s thoughts on these numbers and what they mean in the future. That said, it’s very surprising to hear Powell say something about becoming more hawkish soon. The Federal Reserve’s foot seems to be firmly planted in the dovish camp, and Federal Reserve futures suggest that there will be no change in interest rate policy this year. Powell seems to want to see some more solid employment reports, including May salaries, before making any new announcements about the employment situation. It’s a kind of unfortunate timing for the Federal Reserve Board to end Wednesday. The day before Powell and the rest of us first saw the government’s estimate of gross domestic product (GDP) growth in the first quarter (see below). Thursday also brings in the first unemployed billing data of the week. It would be nice to see further improvements for two weeks in a row. However, less than 600,000 will extend the streak of the report below that level. It’s still high, but there are significant improvements months after 700,000 to 800,000 new claims a week. Prior to Covid, the average was well below 300,000, but it’s unclear when it will return to these types of levels. Heart of Tech Line-up With the exception of Microsoft and the Alphabet Approach Plate Fed, this week’s earnings remain hot and heavy, highlighted by several major semiconductor companies (see below). After today’s closing there is MSFT and Alphabet (GOOGL), and after Wednesday’s Closing Bell there is also Apple (NASDAQ: AAPL). Amazon (NASDAQ: AMZN) will hit Thursday. Tomorrow we’ll take a closer look at AAPL and AMZN, but with MSFT and GOOGL, cloud computing results will probably be higher on the notable list of most investors, along with forecasts for the next quarter. In the second quarter of last year, GOOGL’s advertising revenue declined as companies curtailed advertising spending within Covid. When the economy began to open, GOOGL benefited from a rebound in advertising costs. This is a big problem considering that it accounted for about 81% of the total revenue of GOOGL last time. The question is whether that strength continued in the first quarter. The Google Cloud platform also performed surprisingly well last year, but still accounts for only a small portion of total revenue, far behind competitors such as MSFT and AMZN. See if that aspect of the company has gained more traction. Inventories have gone bankrupt in recent months and have increased by about 35% year-to-date. The recent announcement that MSFT has acquired artificial intelligence (AI) software company Nuance Communications (NASDAQ: NUAN) for $ 20 billion comes to mind when the company reports its third-quarter earnings later today. The same is true for regular suspects such as the cloud and Office. , And LinkedIn. When last reported by MSFT, Azure revenue increased by 50% in the second quarter and total commercial cloud revenue increased by 34%, setting high standards for MSFT. That’s not all. Other major companies reporting in the coming days include Starbucks, Amgen (NASDAQ: AMGN), Caterpillar (NYSE: CAT), Baxter (NYSE: BAX), Ford (NYSE: F), Facebook (NASDAQ: FB). It is included. The straps on those seat belts. Tesla’s quarter was fully charged, but stocks aren’t rewarding Following the busy earnings yesterday afternoon, the latest updates on the EV Universe and Tesla’s (NASDAQ: TSLA) earnings were featured. Equities fell in pre-market trading, even though they outperformed earnings and appeared to be quite impressive on many other indicators. Ironically, one of the areas they were most good at in TSLA’s earnings was selling chunks of Bitcoin holdings. That probably only reflects that the market as a whole is close to record levels, as many stocks have fallen below this earnings season with good results. As we are talking about, expectations are high and it takes a lot of time to rise. The theme so far this season has been to have a good quarter, but your stock may not always be rewarded. Today’s Chart: The Story of Two Products. Looking back on last year on this chart, gold (/ GC-candlestick) and crude oil (/ CL-purple line) are basically trading. Crude oil hit a 14-month high last month due to strong US economic growth, but is now well below that. Gold has been trying to make a comeback lately, but it’s still well below levels since the beginning of the year. If the Federal Reserve Board remains dovish, it may give more support to gold. Data source: CME Group. Chart Source: thinkorswim® platform. For illustration purposes only. Past performance does not guarantee future results. GDP Watch: Of all the government data coming out on the network this week, few are more relevant than the preliminary GDP report for the first quarter released Thursday. According to research firm Briefing.com, Wall Street consensus is up 6.5%. After a 4.3% increase in the previous quarter, it’s not that bad. However, the Atlanta Fed’s GDP Now meter is even better than that of the analyst community, with a forecast of 8.2%. Needless to say, GDP rarely sees such measurements. The Goldman Sachs (NYSE: GS) report recently predicted overall growth of 8% for the full year. This will be the best annual performance in about 70 years. Obviously, given that the recession was included in 2020, this goes against a simple comparison. A more important question, and perhaps the Federal Reserve Board, is asking whether this type of growth can bring the economy back to its pre-covid state. Some indicators, such as manufacturing and housing, have improved since the pre-Covid era. Other things like unemployment and income aren’t there yet. About chip patrols: Two major semiconductor companies, Texas Instruments (NASDAQ: TXN) and Advanced Micro Devices, will report after today’s financial results. A little more detail on what Intel (NASDAQ: INTC) said in last week’s report will help you get the land before you get to them. ]INTC’s first-quarter earnings and earnings exceeded analysts’ expectations, but the quarter did not end without setbacks. First of all, overall sales were almost flat. This raises questions about how other chip makers behaved this quarter. INTC data center chip sales increased last year due to home demand, but chip makers are facing fierce competition from AMD and Nvidia (NASDAQ: NVDA) in that area. Look for AMD to shed more light on today’s data chip competition. On the downside, Apple, which uses INTC chips, is starting to look to produce its own chips for the Mac line. INTC said it plans to invest $ 20 billion in the development of a new chip manufacturing plant. INTC aims to be one that manufactures not only its own chips but also other chips, rather than outsourcing product design to the foundry to complete it. This can be a crucial move for the chip giant. What do TXN and AMD think in response to this news? Is vertical integration the current state of the industry? Can INTC’s move in this direction pose a competitive challenge? You may have a chance to know after the store closes. Yield suspension may depend on Europe: As the Fed gathers in Washington this week, there is still much debate on Wall Street as to why Treasury yields haven’t continued to rise. The 10-year yield peaked at nearly 1.78% at the end of last month, but this morning it is close to 1.58%. One possible reason, according to some analysts, is the lack of competition from the major German Bund yields. The Bund recently showed a yield of minus 0.25%. This means that the spread between the US and European benchmark rates is about 180 basis points. This is up from about 150 basis points earlier this year. As long as the US yield premium is so high, US Treasuries can stay at a level that attracts yield-hungry investors. This buying interest pushes up the underlying asset and lowers yields. However, the European economy could turn around. This means that spreads can narrow and compete with European and other global bond markets. This is one of the potential highlights in May, especially if Europe is making further progress in vaccination. If the Bund yields begin to rise, especially if US inflation in the coming months is as strong as in March, the 10-year Treasury yields could appear to be steadily rising. It will be higher. A weak bond auction on Monday strengthened the bullish potential for yields. TD Ameritrade ® commentary for educational purposes only. Member SIPC. 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