How Bad Will Earnings Suck This Quarter?

Tale of the Tape: 

Good evening everyone and welcome back to this surreal market. We hope you enjoyed the 3-day weekend and had a chance to chill your bones. 

Technically, stocks closed mixed today as the Nasdaq managed a win, up .48%, even as all other indices closed at least 1% lower.

The divergence came off the stellar outperformance of big cap tech. Tesla closed up 13.6%, Intel closed up 2.6%, and Apple closed up 2% to name a few.

The two that really caught our eye, though, were Netflix and Amazon. Amazon closed up 6.17% less than .1% from an all time closing high, while Netflix closed up 7%, its highest close since July 2018. All this strength even as Rome burns. (See below for more).

After a huge week last week, financials and small caps are back to their old tricks. They trade like garbagio. The S&P Financial Sector closed down 3.58% and the small cap Russell 2K closed down 2.78%. 

If you’re making the case that last week was a countertrend rally, then big cap tech higher, financials and small caps underperforming, and markets lower is precisely the formula we’d expect to return to today – which is what we got.

Meanwhile, Wells Fargo and JP Morgan report before the open tomorrow so all hands on deck. How bad will they miss?

S&P 5002,761-1.01%
Nasdaq8,192+0.48%
Russell 20001,212-2.78%
Dow Jones23,390-1.39%

COVID IMMUNITY

Amazon and Netflix seem to be immune to coronavirus. $AMZN closed up 6.17%, only $1.35 off its all time closing high from February 2. $NFLX +7.01%, closed at its highest level since July 2018. 

These are world class products that benefit from people being holed up for what seems like an eternity. They are huge companies with combined market capitalization of $1.35T. At $1.08T, Amazon is “only” $180B  away from having the largest market cap in the U.S. Microsoft is still the big daddy at $1.258T.

Whatever, both stocks are working into the teeth of a legit market crash.

Here’s today’s Finviz heatmap. $AMZN & $NFLX, total standouts. 

Amazon to Expand Shipments of Nonessential Items, Continue Adding StaffWSJ

28.67%

Here’s a great S&P 500 chart shared by Ian McMillan. Ian points out that the swing from the March 23 low to the April 9 high was the exact same percent as the move from the low to high dating back to December 2018 through July 2019. The exact same percentage move, this time in a matter of days. 28.67%. Wild.

The Trouble with Quibi

Lots of hype last week around the Quibi launch, the mobile only streaming media startup infused with a ton of cash and the venerable Meg Whitman at the helm. You might recall they ran a Superbowl ad in February pre-launch and people were like – wha? …

Huge shout out here to Alice and Faye and The High Tea Substack. They pen a great newsletter if you want to keep your fingers on the culture/media pulse.

So Quibi launched and it looks like the numbers are not good so far. Downloads trailed off fast.

The money quote from High Tea’s missive captures how out of touch Quibi may be in a world where people just want to share stuff with their friends and followers. They write,

Imagine our surprise when we quickly learn that with Quibi, social sharing is off the cards. 

So strict in fact, that if you try to screen grab, the app has an in-built function which detects your squeeze and automatically turns the screen black. Sharing now feels illegal and wrong which goes against everything TikTok taught us. In today’s world, where our only connection to the outside world (and our bestest pals) is through online platforms, this UX decision just hits…different. 

Brutal!

Today on Stocktwits…

Teaching my 2 year old candlestick formations. Start ’em early. 😁😁😁

Via Warren Kalunji

Earnings Tomorrow…

J.P. Morgan and Wells Fargo kick off earnings seasons tomorrow before market open.



Be sure to know when your stocks are reporting. Here’s the full earnings calendar.

Links that Don’t Suck

The Pandemic Could Be an Opportunity to Remake Cities

The Economics of Hospital Beds via NPR

N.F.L. Bows to Marijuana’s New Status

Ageless Photos from Nat Geo’s Archives

NOISEY Bompton: Growing up with Kendrick Lamar

Apollo Hedge Fund Jumps 6% on Well-Timed Shorts, High-Grade Debt