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Another day of sideways U.S markets as investors digested more corporate earnings and a Fed that reiterated its commitment to remain accommodative until the U.S further progresses on its economic goals. Fed Chair Jerome Powell sees strong employment growth and rising inflation as transitory. See recap from (CNBC).
Next FOMC meeting on June 16th is setting up to be the most important one yet post-pandemic as reopening will have progressed a lot more by then. Will the Fed finally use its tools?
Here are the numbers:
Federal Reserve Keeps Fed Funds Range Unchanged at 0.00% to 0.25%
Fed Discount Rate Unchanged 0.25%
FOMC: Voted 11-0 For Fed Funds Rate Action
Fed Maintains $80 Billion Treasury Buying, $40 Billion MBS Buying, Per Month
Headlines
🏗 Infrastructure Update President Biden is scheduled to speak in his first joint session address to Congress tonight at 9:00pm ET. Biden will most probably advocate for his $4 Trillion infrastructure package to both senators and house representatives. Watch live (Here).
🚘 The Auto Bubble? Demand for cars in the U.S is skyrocketing with forecasts for April 21’ to be one of the highest months ever in auto sales, recording a 121% year over year increase. The chip shortage is forcing U.S automakers to operate with tight inventories which is launching prices considerably higher but also a similar phenomenon for used vehicles. More from (GMA).
with no further due, the tale of the tape:
Tale of the tape
As of 4/28/21 close.
Markets
📈 US Indexes, Rates and Volatility (VIX) All 4 major indexes were directionless on Wednesday’s trading session. Energy led the way clipping a +3% gain as crude oil continues its climb to a 1-month high. Rates were raising early in the day until the Fed released its statement, easing rates to settle just above 1.60%. the VIX once again has been somewhat stable and also settled down later in the day. Can the fear index continue its downward trend?
Here’s a look on every sector in the S&P500 from SPDR.
Earnings
⚙️ Qualcomm Incoming CEO and current President Cristiano Amon had a wonderful Q1, beating expectations in both top and bottom lines. Cristiano expressed that the company is taking active steps to mitigate the supply shortage. More Details from (CNBC).
👥Facebook Smashed expectations beating on both top and bottom lines. Look at these crazy numbers, even with user growth slowing down, the company was able to make more revenue per user, sending revenue to a whole new level.
🍎Apple Quarterly results came way better then expected with a beat in both EPS and revenue. Apple was fueled by strong demand for its iPhone 12 5G models, iPad and Mac computer products. Analysts now estimate the company will make full year revenue of more than $70 Bln! That’s more than the entire GDP of a lot of countries… More from (WSJ)
Full U.S Earnings Calendar (Here)
Corporate News
💥 UFC is coming to the markets Parent company Endeavor Group Holdings raised $511 Mln in its 2nd attempt to go public via IPO. The company was priced 24$/share and will begin trading tomorrow under ticker “EDR”. Private investors include Silver Lake, Elliot mgmt and KKR. The offering was led by big banks: MS, GS, JP Morgan and DB. Details from (BBG).
💶 Biggest Buybacks yet Tech behemoths Apple and Google have both received approval for an increase in its buyback programs. Apple will buy 90B of its own stock and Google will buy 50B of its stock as well. This is followed by an incredible quarter by both companies, where expectations by Wall St analysts were completely overthrown.
📞 Verizon Unwind Telecom giant Verizon is exploring sale of its media assets AOL and Yahoo, led by Private Equity firm Apollo Global Management. Verizon joins AT&T in unwinding parts of its business to focus on its core businesses. More from (Reuters).
The Cannabis Industry: U.S Legalization
🍁 The cannabis industry has had a wild ride in the U.S for the past years. Legalization efforts by cannabis advocates has progressed substantially, making it clear that widespread cannabis use in the U.S is just a matter of time. Senate Majority Leader Chuck Schumer is an outspoken supporter of legalization and has been working on several initiatives for marijuana legalization, the most important ones being Federal Legalization and the SAFE Banking Act.
This is how the U.S legalization roadmap currently stands:
source: Twitter @Todd_Harrison
The SAFE Banking Act grants protections for depository institutions that provide financial services to cannabis-related legitimate businesses. This means that cannabis companies in the U.S, who have been operating along the federal lines by using cash, will finally be able to access the U.S banking system.
Canadian and U.S Cannabis-related companies have operated under very different business landscapes. Canadian operators have enjoyed federal legalization since late 2018, whereas the U.S operators (better known as MSOs), are just beginning to turn things around. Some interesting notes (Here).
The ecosystem of cannabis companies include Cultivators, Consumption products (i.e. edibles, drinks), agricultural tech, Real Estate (cannabis farms), Multi-operators, etc.
The recent acceleration in U.S state legalization, including monster states like NY, VI, NJ and AZ, has spurred M&A activity in the space, with companies going on shopping sprees to gain exposure to new markets. Can the industry finally catch a break? We will see.
Cannabis Basket
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Disclaimer: I am not a financial advisor. This is not a recommendation to buy or sell any securities. When investing, always do your own research and asses your own risk.