Your Weekly Blip 4/26/21

Your Weekly Blip 4/26/21

Over the past week the Dow traded in sideways fashion near an all-time high. At the close of last week the Dow had pulled back about 175 points or 0.48% at 34,043 on lower trading volume with earnings reports coming in generally better than expected. Both IBD and BTS indicators remain positive. More reports are due this week with companies like Tesla, Microsoft and Amazon posting results for the quarter.
The Economy and Earnings
IBM reported its first revenue gain in 3 years as the planned expansion into cloud computing begins to bear fruit. The company reported Q1 revenue of $17.7 billion up 1% while net income dropped 4% but was higher than guru estimates. Shares of Big Blue moved higher as the street responded positively to the report.
Harley Davidson jumped to a multiyear high after a strong earnings report which saw revenue climb 10% while net income jumped 229%.
Freeport McMoRan posted a 73% jump in revenue and a profit of $953 million up from a loss of $549 million in the year ago quarter. Copper production was up 24% while the average copper price surged 62%. Benchmark copper prices recently hit a 9 year high.
Single family home sales shot up 20.7% in March and are now up 31.9% from pre-covid high. Headwinds exist in the form of low inventories and affordability. Inventories are down 50.7% from a year ago which is a massive drop while at the same time lumber prices remain high. One builder I talked to this weekend said a year ago he was buying CDX plywood for $14 per sheet and today he pays $50 for the same product.
Pricing pressures are being seen in various ways. Firms like Procter & Gamble and Coca-Cola unveiled price increases last week during their earnings announcements. The higher prices are because of higher commodity and input costs and are part of the reason why the consumer price index posted its largest monthly rise since 2012.
Items of Interest
Washington State passed a 7% capital gains tax which is designed to affect folks with stock gains in excess of $250,000. While the tax could face legal challenges it is important to note that it is focused on stock gains in non-retirement accounts. Real-estate or small business gains appear to be exempt at this point. Call us if you have questions about it. We will be monitoring how this unfolds.