Pro Perspectives 4/15/21

April 15, 2021

We heard from JP Morgan, Goldman Sachs and Wells Fargo yesterday.  They all crushed estimates and put up huge earnings growth, compared to the same time last year.  Today, we heard from Citibank and Bank of America.  Same story.

As we discussed, the banks have a war chest of loan loss reserves that they will continue to move to the bottom line at their discretion.  That means they have a large inventory of positive earnings surprises they will present to us for several quarters to come.  Stocks like positive earnings surprises.  That said, the initial moves in a few of these stocks have been down, as bank CEOs are doing their best in the earnings calls to avoid an overexuberance in the outlook.  It just creates a little cheaper levels to buy from.

Remember, we've talked what the confluence of huge government spending, ultra-easy Fed policy, and vaccinations will do to both earnings and economic data this year, as we compare it to the lockdown data of last year.  As I said, the numbers are going to be "mind-blowingly big." 

With that, we had the retail sales report this morning from the month of March.  The April to March growth was 10%.  The March 2021 to March 2020 growth was 28%.  Wait until we get to the year-over-year economic data for the quarter.

The data will continue to be a fire under stocks.  And despite the Fed's best efforts recently to quell inflation fears, the inflation hedges look to be on the move again, after a pause.  Here's another look at the line in gold we've been watching.  Gold is bouncing …

Meanwhile the dollar has been steadily making lower lows since the new quarter/month started.  

This market observation, combined with the big economic and earnings data growth ahead of us, is a formula for another leg higher in the "global reset of asset prices."