Tim Cook Is The Kingmaker

The S&P 500 crossed the tape at a new all-time high. Mega cap growth continued to lead the way, sparked by an impressive reversal in Tesla (TSLA), which serves as a reminder that you can occasionally trip these stocks up, but you cannot keep them down – sometimes not ever for an hour. Overall market breadth was even in key measures, as the overall tug of war continues.

Grab the Champagne

Both professional active investment managers and individual investors are feeling a lot more greedy than fearful.

To see the charts, click here, and here.

But Don’t Pop the Cork, Yet

Individual investor bullish sentiment for the next six months has rocketed from very depressed levels to its highest point in four months. The 21-percentage point sprint over the last two weeks has lifted bullishness well above its historic range while bearishness is near it historic average, which means more investors are getting out of the neutral lane.

To see the chart, click here.

Five Year Inflation Signal

Yesterday, the five-year breakeven popped 6.14% to 2.94, which matches the all-time high initially reached on March 22, 2005.

Inflation is becoming a stubborn beast, putting more pressure on central bankers to allow the pot to cool off from this boil.

Gut Punch

My goodness, there was pure carnage after the close.  Stocks were pummeled on poor financial results and guidance.

Snap (SNAP)

• $1.07 billion revenue consensus $1.10 billion
• $0.17 eps consensus $0.08
• 306 million DAU +57m or 23%

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Guidance

• $1.17 to $1.21 billion revenue consensus $1.36

The initial reaction to Snap results was a 25% haircut in the stock price and strong selling across the social media landscape.  The big news came from the admission that Apple’s privacy changes impacted its ad business.

The company’s revenue missed Wall Street expectations after its advertising business was disrupted by privacy changes Apple measuring solution.  Company CEO, Evan Spiegel, warned when the change was announced earlier this year it would sting a little.

Last night, he admitted this was more than a sting as the new measures make it more difficult for advertising partners to measure and manage their ad campaigns for IOS.  Facebook (FB) reports on Monday and everyone is on pins and needles to see if the Snap situation was company specific or a major problem for all social media companies.

Spiegel also blamed the supply chain and labor issues for reducing the short-term appetite to generate additional customer demand through advertising.  I’m not sure, but he might have blamed weather this winter as well.

Intel (INTC)

• $18.10 billion consensus $18,24 billion
• $171 eps consensus $1.11

Guidance

• $18.30b FY22 revenue consensus $18.26b
• $0.90 eps consensus $1,02

Whirlpool (WHR)

• $6.68 billion revenue consensus $6.12 billion
• $5.49 eps consensus $5.73

Portfolio Approach

We moved Paypal (PYPL) from Technology to Financials in our Hotline Model Portfolio.

Today’s Session

Everything revolves around the supply chain crisis and those flotilla of ships in US ports.

RIP

American flirted, and tasted, and even wanted to love alcohol infused seltzer and plant-based meat, but on second thought.

• Boston Beer Company (SAM)- lost $4.76 the street was looking for a gain of $4.52 – the reason a massive $7.73 charge for Hard Seltzer
• Beyond Meat (BYND)-  cut guidance citing a decline in demand at grocery stores

Reopening Trends

American Express (AXP) - billions show all the key areas of reopening spending moving in the right direction and restaurants are already above 2019 levels.