Big Earnings Week! Many Markets Closed for Easter Monday

What You Need to Know Today

• Stocks continue to build a base

• Two more Unicorns take the mkt by storm

• Many mkts Closed today for Easter Monday

Stocks ended the holiday shortened week on an upbeat – better retail spending numbers, better Initial Job Claims, better Continuing Claims, better Consumer Comfort and more earnings that continue to ‘beat the estimates' all adding to the pre-holiday celebration...........the Dow added 110 pts, the S&P tacked on nearly 5 pts the Nasdaq advanced by 2 pts and the Russell 2000 lost 2 pts.... Industrials were the big winners ( thus the Dow up 0.42%) as we heard from a couple of the manufacturers (Snap-On Tools +6% - SNA and United Rentals – URI + 8%) – that ‘beat the number' helping to push the S&P Industrial ETF – XLI – up over 1%. Healthcare names which have gotten clobbered of late – down 7% in 5 days managed to try and find a bottom here and attempt to rally.....the ETF – XLV ending the day up slightly – but it was up....and that's good. Most of the other sectors gained only fractionally – which speaks to why the broader mkt ended slightly higher....

Trading remained light ahead of the holiday weekend and with only about 20 S&P companies reporting so far – investors continue to play it close to the vest....waiting for this week and next to assess the state of the union as the bulk of the S&P 500 reports hit the tape.........so far nearly 83% of those reporting have beaten the estimates ( that is about 10% ahead of normal) but don't forget – estimates have been slashed so the bar is quite low.....

The broader action on Thursday was relatively muted...but there were two IPO's that drove the excitement.... Pintrest (PINS) and Zoom (ZM)– both were successful launches and the media latched right onto their performance......suggesting that the appetite for ‘Unicorns' continues unabated....In the financial world a Unicorn is any tech startup company that has reached a $1 bil value based on private investments....and on Thursday two more of these Unicorns hit the big time.

Pintrest (PINS) – brought 75 mil shares at $19/sh debuted on the NYSE......the stock opened up 25% at $23.75 and ended the day even a bit higher at $24.40.....as investors went all in - and then ZOOM (ZM) – which brought 20 mil shares at $36/sh listed on the NASDAQ mkt place and we saw that IPO surge by 81% opening at $65 share as investors apparently couldn't get enough of it.........which begs the question.....do investors know more than the bankers – who were paid big bucks to represent and sell this issue? Didn't the bankers tell them that $36 was a fair price on Wednesday evening? Or did the sellers want to sell their shares a an artificially lower price so that the first day of trading would see the stock explode higher – giving the impression to the mktplace that you ‘have to have this unicorn' in your portfolio? (Part of the game is about optics and a stock that surges 81% on the first day gathers a lot of attention) - Yes – Zoom does actually make money - they earned $7.58 mil in net income in 2018 and revs surged to $330.5 mil – but the assumption was that the bankers knew that and so their pricing would have reflected that and investors willing to buy this IPO also knew that – SO – if that's the case – then why the mispricing? I mean if you were the seller and you sold your stock at $36/sh on Wednesday evening and then less than 12 hrs later investors were willing to pay $65 share does that wreak of bankers being out of touch or the sellers not understanding? I mean the whole investment banking process is supposed to gauge demand at a range of prices to properly price the issue (leaving some ‘pop' in the stock) – but an 80% pop on day 1? It feels to me that someone didn't do their homework...and while you say – what's the big deal – the sellers that sold stock – still own more so they are happy, no matter what....and I say that's a total crock.........but hind sight is 20/20.....and while it feels a bit ‘irrational' – it was a small deal (20 mil shares) .....so there are a number of factors at play here..... Only time will tell.....so stay tuned.

Is this mania surrounding all of these ‘unicorns' feeling a bit "dot comm'ish" - remember 1998/2000? When anything that had dot com in its name caused investors to go into a frenzy? Remember how that all ended? Or how it undermined the economy and it destroyed trust in the system – recall how the Nasdaq index soared by 258% between October 1998 – March of 2000 as the dot.com craze went full tilt before completely coming unglued and falling 68% between March 2000 and April 2001....just sayin'. I hope I'm wrong and that the company and the insiders who sold the stock on the IPO were willing to accept a lower price for the benefit of watching the stock POP!

Asian mkts traded mixed overnight with Australia and Hong Kong closed for Easter Monday. Volumes were light in post-holiday trading. Japan +0.08%, China came under pressure and fell 2.31% as chatter over the path of future monetary policy rages on. The message here is that the PBoC (Peoples Bank of China) won't be so stimulative. Japan's Prime Minister Shinzo Abe is travelling to Europe to meet leaders of the EU and then to the US to meet with Donny later this week.

European mkts are also closed for trading for the Easter Monday Holiday.

US futures were up overnight but are down 5 pts this morning. Eco data today includes Chicago Fed Survey – exp of 2.55 and Existing Home Sales – exp -3.8% Later in the week we will get Richmond Fed, New Home sales, Mortgage Apps, Durable goods, Capital Goods Orders and Cap Goods Shipped and on Friday we get first release of 1st Qtr GDP – exp of 2.2%. Analysts will be watching this report intently for clues about how the gov't shutdown that lasted for 33 days might have affected the economy.

It is sure to be another week of big earnings...with nearly 100 companies reporting – highlights include tech names AMZN, FB, TWTR, MSFT...... On the back burner we still have trade talks that are progressing and as long as we move the ball down the field – it's all good. A range of central banks around the world are due to make monetary policy statements – BoJ (Japan), BoC (Canada), Riksbank (Sweden) and BoR (Russia) – none are expected to surprise or move the mkts at all.

The S&P tried to break out last week, but kept getting derailed at the 2915 ish level...and while she never really backed off she is finding resistance there and she found it again overnight. If this week – she succeeds in piercing up and thru then expect the bulls to challenge the October intraday highs of 2939 swiftly – especially if we keep ‘beating the estimates'. A change in tone (if at all possible) could see the mkt back off to the 2850 level where I think it will find support.