Last week the Dow surged to an all-time high rising 1.1% or 409 points to close at 34,200. Trading volume for the week was up which indicates institutions are buyers in this rally. While stocks were off slightly today both IBD and BTS indicators remain positive. Corporate earnings are being reported and so far the results are well ahead of expectations with companies doing much better than expected.
The Economy and Earnings
Housing starts roared back in March with a broad based 19.4% gain in new home starts putting the reading at a level not seen since 2006. This reading was a snapback from February which saw starts fall due to severe winter weather.
Big banks reported earnings last week and the results were good. Bank of America saw its revenue decline 10% while net income grew 115%. JP Morgan posted a 2% revenue increase while net profit surged 324%. Wells Fargo even got into the act with an income increase of 77% while revenue fell 9%. The underlying theme with all of these banks was that with the economy improving they were allowed to pull money from loan loss reserves and these dollars went right to the bottom line. Several banks are announcing enlarged share buyback plans and going forward they are expected to increase cash dividends beginning after June 30th when restrictions are lifted.
Items of Interest
Crypto currency company Coinbase (COIN) came public and shares bolted to $429 per share before pulling back to the current levels. Today’s closing price was $333 per share. Coinbase is a platform to invest in and use crypto assets for retail and institutional users. Gurus are seeing lots of money flow into crypto but at the same time they recognize the “Wild West” nature of this new investing toy. Bitcoin over the weekend went from a high of $64,800 on Friday to $52,148 on Sunday due to a power outage in China and rumors the US Treasury was looking at launder money issues with crypto.
Last week Microsoft agreed to purchase Nuance Communications for $20 billion smackers. Nuance is a leader in voice recognition software especially in the medical field where its products are used in 77% of hospitals in the US. The acquisition is a key part of Microsoft’s strategy to compete against Amazon web services AWS in the AI healthcare and cloud space which is projected to grow globally at a 23% clip.