Earnings & central bank decisions ahead!

00:00:00: Markets are starting the week on a firm footing this morning, supported by renewed peace hopes in the Middle East and is strong start to earning season as well.

00:00:09: Because of solid majority of S&P's five hundred companies that reported their earnings so far have beaten expectations keeping bullish narrative alive despite growing cracks in macroeconomic backdrops and weakening fundamentals.

00:00:23: For now though markets and investors appear willing look through weakness focusing instead resilient corporate performance and the prospect that software economic data could eventually bring policy support along with it.

00:00:36: The question is, how long this divergence between fundamentals and equity resilience can last?

00:00:42: So welcome to Swisscote's Daily Market Talk!

00:00:44: It's Monday April twenty seventh.

00:00:47: I'm Ipekos Kardeshkeya.

00:00:49: We will talk about what to expect in a new week But before we do And as always Please keep in mind That opinions are my own This isn't financial advice.

00:01:04: This show is brought to you by SwissQuote.

00:01:07: So mood across the global financial market is slightly better this morning than it was into weekend as Iran reportedly offered US a proposal to re-open the Strait of Hormuz, A move that could pave way for the continuation of peace talks between two parties.

00:01:23: As great really Asian equities are up this morning, the Nikkei and Cosby in the CIS rally to fresh all time high levels at start of this week.

00:01:32: most U.S.-European features point out positive start.

00:01:36: the

00:01:36: U.K.'s

00:01:37: future is looking flat this morning as a slight retreat that we see in energy prices on PEACE HOPE IN THE MIDDLE EAST is waiting for an appetite there.

00:01:47: USQED is presently trading near the AUSD ninety-eight point sixty dollars per barrel level at the time I'm talking this morning and losses could accelerate if the PEACE hopes improve, you know music.

00:01:59: And these PEACE HOPES along with resilient earnings keep major markets in the bullish mood!

00:02:05: Indeed, the AAII survey showed that the bullish sentiment improved among investors over past week despite rising inflation expectations around the globe due to rising energy prices and early signs of deterioration in their economic data.

00:02:21: Sentiment indicators in the main street, however tell a completely different story.

00:02:27: Data released on Friday confirmed that US consumers' sentiment fell to lowest levels on record in April due to spiking energy prices rising inflation worries and affordability concerns.

00:02:41: So how long can equity markets and underlying economic health diverge?

00:02:47: The answer is It could diverge for a while as the deteriorating economic fundamentals are also positive news, because an economy in difficulty would encourage Federal Reserve and other central banks to is their monetary policies to give support and that's great news for valuations.

00:03:08: And look, PNG with jumped & gave back a part of GAZE on Friday after announcing an earning speed in the first quarter this year also said brands around hundred dollar per barrel level would cost billion US dollars after a tax compared to pre-war levels.

00:03:26: But yes, but not for everybody because these problems are exactly why investors return the technology names again that seem less affected by this supply chain problem due to the Middle East war.

00:03:39: and there's other news on the wire of course Because After Amazon Boogal announced last week they will invest ten billion US Dollars in Anthropic And wait, potentially thirty billion US dollars more to make sure that they remain well positioned in the AI race.

00:03:55: In return, Anthropik will spend hundred billion US Dollars to secure upto five gigawatts of compute power for its AI models from Amazon and another five gigawatt from Google.

00:04:06: beef up their cloud revenue.

00:04:09: What a wonderful world!

00:04:11: No Middle East crisis there, no supply chain disruptions just revenues turning round and investors are actually liking it.

00:04:19: Another good news on the wire is that the DOJ suddenly dropped its investigation into Federal Reserve Chair Jim Powell On the renovation of The Feds HQ, remember to clear away for Kevin Warsh.

00:04:31: To take the helm off the Fed.

00:04:33: because yes, Kevin Wash is willing to cut interest rates though he said that He would behave like a grown-up and not be a sock puppet to the White House.

00:04:43: But the idea of lower interest rate appealed to Mr.

00:04:47: Kevan Warsh And the white house actually loving it Now.

00:04:50: Warsh also willing to trim the size of the fed's balance sheet which I think will become Complicated given the weakening appetite for the US Treasury's globally these days, but some say that it will be possible with deregulation of the banks allowing banks to need less excess cash.

00:05:07: That would in return allow a smooth normalization off this Fed's balance sheet.

00:05:11: So let's see.

00:05:12: But the good news is that?

00:05:13: The u.s Is deregulating and the fed is not obliged to trim the size office balance sheet.

00:05:19: It can simply keep buying if things are not looking good anyway.

00:05:23: The mixture of soft economic data and DOJ news pool, the US two-year yield lowered on Friday pushing the S&P five hundred to a fresh record high as well.

00:05:33: Along with optimism around strong earnings there!

00:05:37: And the week looks promising with potential peace talks and more earnings coming in.

00:05:41: One hundred eighty companies are due to report their results this week including Microsoft, Meta Google, Amazon but also Qualcomm Coca-Cola, Verizon.

00:05:57: But big energy names like ExxonMobil and Chevron following a quarter which was full of twists & turns that probably benefited to big energy companies due to the rising energy prices we saw in Venezuela.

00:06:13: So far, twenty-eight percent of the S&P five hundred companies reported their first quarter results and eighty four percent of them printed a positive EPS surprise.

00:06:24: And eighty one percent have reported a positive revenue surge rise.

00:06:28: The earnings growth rate now stands at fifteen point one per cent .And if that fifteen point One Percent is the actual growth rate for the first quarter of two thousand twenty six it will mark the sixth consecutive quarter of double digit year-over-year earnings growth reported by the S&P.

00:06:50: That's not bad at all given the political and geopolitical and global trading mess!

00:06:55: In Europe, attention will be on banks, carmakers, AVMash and total energies.

00:07:00: The picture here is a little bit more mixed in the US of course with luxury and car makers feeling the heat off war headlines global trade tensions and tariffs, as well the Chinese EV competition.

00:07:11: And given Europe's limited exposure to technology that again took a driving seat towards the North, we could eventually see European stocks lag behind their American peers who are very heavily technologically exposed.

00:07:27: On the monetary policy front, well... The new week will be a busy one for major central banks.

00:07:33: Federal Reserve, Bank of Japan, European Central Bank, Bank Of England and Bank Canada are expected to meet this week And hold their policies unchanged.

00:07:43: But uncertainties obviously persist as Middle East war continues.

00:07:47: Energy prices sit at significantly higher levels today than before the War and economies Are dealing with slowing economic activity rising price pressures.

00:07:56: Now many of these central banks actually turned less hawkish over the past weeks, hoping that the energy prices spike we see due to the Middle East.

00:08:04: tensions will remain temporary and they could get away by just waiting for energy prices to come lower thanks to demand destruction as we can see today.

00:08:15: The evidence that this letter is happening will likely keep central bankers alert but patient before acting on rights.

00:08:24: Good news is that the US dollar is sharply down this morning and it has been depreciating over the past weeks despite the tensile political environment, and leather decreases inflationary pressures all around the world due to a stronger U.S.

00:08:39: Dollar.

00:08:40: In this context, your dollar holds ground about its two hundred day moving average which stands near one point sixteen seventy five level while the dollar yen is bumping his head against offered into the one hundred sixty psychological level as the yen bears know that the waters become too dangerous about that level due to risk of direct effects intervention threats.

00:09:02: In short, it looks like the dollar yen is good to be shorted today near the one-hundred and sixty level with limited upside risks.

00:09:09: but whether could come significantly lower to make anyone benefit from an eventual Japanese yen appreciation has yet.

00:09:17: So this is all for this Monday morning.

00:09:19: I'm Ipek Oskar Deshkaya and thank you for joining me, And Thank You For All Your Beautiful And Supportive Comments!

00:09:35: your reactions and questions below as usual.

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00:09:57: So I will meet again tomorrow and until then, good day trading!

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