Sunday, April 26.2015
As expected many companies have been reporting that the strong dollar has had a negative impact on revenue. The US dollar is up 12.1% since last June against the main trading partners. It saw its lowest weekly and daily close in two months ahead of some key events this coming week and given how essential rate speculation has been to this 9 month rally, this week’s FOMC meeting and GDP data are crucial. A first look at Q1 GDP is set to come out on Wednesday before the opening.
Expectation is for a significant moderation and anything lower than that will be a red flag on the economy. The FOMC will wrap up a two day meeting at 2PM on Wednesday. Don’t look for any policy shifts but do be aware of any change in language hinting at timing on interest rates.
Durable goods numbers on Friday looked good initially but pulling apart the data revealed that businesses kept cutting back their investment plans in the face of what they see as a softening US economy. Other recent reports has shown sluggish data on retail sales, employment and housing starts. This could add up to the Fed pushing back rate hikes until later in the year.
The healthcare sector has surged year-to-date, being the leading sector in the S&P, up 8.7%. We have major companies reporting this week. Caution as this sector has the highest put/call ratio since 2007. BSX,PFE, MRK,BMY report on Tuesday and GILD and CELG on Thursday. Watch for drug pricing and news about drug studies over the actual EPS and revenue numbers.
AAPL reports earnings on Monday after the close. EPS $2.19 is the estimate but the whisper number is $2.26. The numbers outside the EPS and revenue might tell you more than those actual numbers. Pay attention to guidance and the China numbers on iPhone sales. Conference call is scheduled for 5PM EST.
Other key stocks reporting this week are TWTR and UPS on Tuesday, MA on Wednesday, XOM and V on Thursday.