The big dramatic pullback in Tesla

Behind Tesla pullback

Microsoft posted better than expected earnings after the close on Tuesday, which should help to firm up the FAANG stocks. Google posted 23% annual revenue growth, but missed analyst estimates a bit due to slowing YouTube growth to a 14% annual pace. However, Facebook/Meta Platforms continues to struggle with its operating margins and may remain a drag on FAANG.

Amazon and Apple will round out the FAANG earnings announcements this week. I will be especially interested in Apple’s comments on the Foxconn factories in China that make its products after it announces its latest quarterly results.

The big dramatic pullback in Tesla has a little more behind the speculations that Elon Musk might have to sell some of his shares to finance his successful $44B bid to take Twitter private. Tesla's profitability comes from its Shanghai plant where they make cars with iron phosphate batteries. It is imperative that Tesla gets that factory up and running. Otherwise, it is gonna crimp its second-quarter results. 

Energy stocks, fertilizer, shipping, and food stocks are expected to release record results.

Strong April finish?

Interestingly, NASDAQ has corrected 10% month to date many times. And every single time, it has gone up in the last three days of the month. So I'm expecting the market to finish somewhat on a positive note. April is a strong month historically. 

Soft landing

There is mounting evidence that inflation peaked in March as crude oil and other commodity prices moderate. The 10-year Treasury bond yield has also been noticeably weak this week, which is raising hope that market rates may have peaked near-term. 

The National Association of Realtors on Wednesday announced that pending home sales declined 1.2% in March as all four major regions it surveyed reported a decline.  Between tight inventory, higher mortgage rates, and affordability issues, pending home sales have declined for the past five months and have declined 8.2% compared to a year ago.  This is an example of a “soft landing” that the Fed is striving to engineer.

Finally, the Atlanta Fed on Tuesday cut its first-quarter GDP estimate to a 0.4% annual pace.  The consensus of most economists ranges from a -0.2% to 2% annual pace, so the Atlanta Fed is currently below the median estimate.

Coffee beans

U.S.-based crypto holders were able to generate $47 billion from trading Bitcoin and Co. last year. With estimated profits of $8.2 billion, $5.8 billion, and $5.8 billion, respectively, countries like the United Kingdom, Germany, and Japan are still in a different league than the United States.