Enhanced Investor Weekly Macro Report


Jonathan Lepre and Adam Wood, Harvard University

Published by Aaron Gose

April 15th - 20th

Market Snapshot:

Volatility paved the way for gains in most major indexes for the past week. Trade War fears with China were quickly surpassed and replaced with new political tension brought on by the Syrian missile strikes led by the United States, France, and Britain.

Strong earnings also helped improvement in the broad-based market as large-cap financial equities posted stable net income and earnings per share valuations; however, some investors were expecting more impressive results in justification of increased volatility, volume, and tax cuts in Q1. To no surprise, J.P. Morgan led the street during the recent earnings week as the investment bank posted record-setting net income at $8.7 billion, an increase of 35% from a year ago. Citigroup subsequently grew by 13%; Wells Fargo increased by 5% and PNC reported a 16% rise in earnings.

The Dow Jones Industrial Average rose by 427.38, along with the S&P 500 composite increasing by 51.83. Optimistic views from FB shareholders after Mark Zuckerberg’s testimony before Congress on Tuesday and Wednesday led to gains for the single stock as well as the tech comprised NASDAQ which now has increased by 2.94% year to date, to a level of 7,106.65 (+191.64 on the week).

 

 

Weekly Macro Outlook For The Upcoming Week:

Volatility is expected this week as tension between the White House and Moscow rises in response to the Syrian missile strike. The market opening bell Monday morning will be interesting to see how traders are repositioning themselves in a time of political disagreement and tension globally.

Another significant week of earnings reports are due out in a variety of sectors: Bank of America and Netflix will start out the week before market open Monday morning, Goldman Sachs, Johnson & Johnson, IBM, and United Healthcare will announce on Tuesday. Morgan Stanley and American Express will report on Wednesday, proceeded by Blackstone on Thursday. General Electric and Honeywell will bring the earnings week to a close. The earnings results of the above industry leaders are expected to be positive, as 20% growth is projected this earnings season with the help of the tax cuts.

The US Commerce Department will release statistics covering March retail sales on Monday. Economists are anticipating retail sales rising 0.4% for the month, coming off a disappointing February decline of 0.1%.

 The Federal Reserve Beige Book, reports on building permits, housing starts, and industrial production is also due to be released this week.

China Q1 GDP will be released on Tuesday, as the country as expected to report an increase of 6.8% growth.

United Kingdom inflation metrics will be announced on Wednesday. Economists are expecting a core inflationary increased of 2.4% to 2.5%, with annual CPI remaining constant.