Break out those rally hats.
With an impressive first quarter earnings season just about done, investors appear to have liked what they saw after initially being unimpressed. Dow Jones Industrial Average futures popped 60 points on Sunday as of 6:11 p.m., S&P 500 futures gained 5 points, and Nasdaq Composite futures rose 15 points. The action points to sustained momentum in the week ahead following the major indices gaining a bullish bias last week.
Here’s what the market will soon have on its plate.
Tesla’s Talent Exodus Continues
The grueling path toward profitability and an unpredictable CEO in Elon Musk might be taking their collective toll on some Tesla (TSLA) execs.
Matthew Schwall, who had been the director of field performance engineering at Tesla, has left the company to join rival Waymo according to The Wall Street Journal. A Tesla spokesman didn’t confirm nor deny Schwall’s departure via an email exchange with TheStreet.
“He [Schwall] joins a long list of Tesla Autopilot executives who have (mostly) gone to Google (GOOGL) /Waymo, which apart from operating its own pre-commercial experimental service, also has licensed its autonomous “brain” to Fiat Chrysler (FCAU) , Honda (HMC) and Jaguar Land Rover, for incorporation into their 2020-2022 vehicles,” says auto industry analyst Anton Wahlman.
Schwall’s departure comes hot on the heels of Tesla’s senior vice president of engineering Doug Field deciding to step away from the company to spend more time with his family.
“Doug is just taking some time off to recharge and spend time with his family. He has not left Tesla,” the Tesla spokesman said.
With Tesla trying to ramp production of its Model 3 in the hopes of reaching profitability later this year, the exits of top engineers should be a concern for investors. That investor base also includes the big-thinking Musk, who recently invested a fresh $10 million in the company via stock purchases.
Keep in mind, Tesla only has three executives on its management team. The last thing it needs to witness is what looks to be a talent exodus under that thin team.
Alphabet is a holding in Jim Cramer’s Action Alerts PLUS.
It’s Blockchain Week
Experts in cryptocurrency and blockchain technology will descend upon New York this week as the greatest minds in finance meet with next-generation startups for Blockchain Week.
The full week of events includes Consensus 2018, one of the foremost crypto and blockchain conferences, which TheStreet will be attending and voraciously covering. On the speaking slate for Consensus are hundreds of influencers and executives from former JPMorgan Chase & Co. (JPM) blockchain head Amber Baldet to Jack Dorsey, the CEO of Twitter Inc. (TWTR) and Square Inc. (SQ) .
The packed schedule of Blockchain Week-related events taking place in the finance capital of the world could have a significant impact on the prices of actual cryptocurrencies, too.
JPMorgan Chase is a holding in Jim Cramer’s Action Alerts PLUS.
Trade Deals Take Focus
Nearly a week out from President Donald Trump’s decision to withdraw the U.S. from the Iran nuclear deal, a number of geopolitical issues remain unresolved. Trade is chief among them.
Representatives from the U.S. and China, which are the world’s two largest economies, met in Washington on Friday to discuss ongoing trade disputes, a U.S. Treasury official told Reuters. The talks were billed as a follow-up to high-level discussions that took place in Beijing last week and a precursor to Chinese Vice Premier Liu He’s upcoming visit to Washington.
Trade talks led by Treasury Secretary Steven Mnuchin the week before failed to come up with any meaningful compromise to thwart promised U.S. tariffs on up to $150 billion worth of Chinese goods and China’s intention to retaliate with similar levies.
Meanwhile, House Speaker Paul Ryan said in remarks last week that he needs a draft of a new Nafta deal by May 17 if Washington plans on the current Congress voting on the matter. The May 17 deadline is pursuant to the U.S. Trade Promotion Authority regulations, which Ryan took part in authoring. If President Trump wants to pass a new version of Nafta through this Congress before highly contested midterms, it’s effectively now or never, Ryan suggested.
And on the Economic Calendar…
On Monday, T-Mobile U.S. Inc. (TMUS) will report earnings. Cleveland Federal Reserve President Loretta Mester will speak in Paris, while St. Louis Fed President James Bullard will speak in New York.
Tuesday, earnings are scheduled for Dick’s Sporting Goods Inc. (DKS) and Home Depot Inc. (HD) . Retail sales statistics for April are also expected at 8:30 a.m. ET Tuesday. FactSet economists forecast a reading of 0.4% growth, down slightly from 0.6% a month earlier. San Francisco Fed President John C. Williams will speak in Minneapolis.
For Wednesday, look for earnings from Cisco Systems Inc. (CSCO) and Macy’s Inc. (M) . At 8:30 a.m. ET Wednesday, the U.S. Census will release housing starts for April. Economists expect a reading of 1.319 million, in line with the previous month. Also Wednesday, Atlanta Fed President Raphael Bostic will offer an economic update in his home state.
On Thursday, earnings are expected from JCPenney Co. (JCP) , Action Alerts PLUS holding Nordstrom Inc. (JWN) , Nintendo Co. (NTDOY) and Walmart Inc. (WMT) .
Friday, Campbell Soup Co. (CPB) and Deere and Co. (DE) are set to report earnings.
As the calendar suggests, earnings season is coming to a close.
For the first quarter, with 91% of the companies in the S&P 500 reporting, 78% of S&P 500 companies have reported a positive EPS surprise and 77% have reported a positive sales surprise, according to FactSet data. If 78% is the final number for the quarter, it will mark the highest percentage since FactSet began tracking this metric in the third quarter of 2008.
In the first quarter, the blended earnings growth rate is 24.9%. If 24.9% is the actual growth rate for the quarter, it will mark the highest earnings growth since the third quarter of 2010, when the rate was 34%.
The forward 12-month price to earnings ratio for the full S&P 500 is 16.5, well above both the five-year (16.1) and the ten-year (14.3) averages.
