The economic calendar is normal, with an emphasis on housing and sentiment data. Earnings season is in full swing and expectations remain high. We have witnessed improvement on several fronts. Since that is not very newsworthy, the punditry will be asking: Where can we find some fresh fears?

Last Week Recap

In my last edition of WTWA I asked whether strong earnings were already reflected in stock prices. That was a good guess, as each good earnings report was explained as “strong” or “anticipated,” depending upon whether the stock subsequently moved higher or lower.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. I especially like the version updated each week by Jill Mislinski. She includes a lot of valuable information in a single visual. The full post has even more charts and analysis, so check it out.

The gain for the week was about 0.5%, and the trading range was only about 2%. I summarize actual and implied volatility each week in our Indicator Snapshot section below.


Amazon has over 100 million subscribers to their “Prime” service, including 55% of the households in the US. (Barron’s)

Nearly half of crypto traders do not pay taxes. (MarketWatch).

Google’s web presence dominates everyone else put together. (Visual Capitalist)

The News

Each week I break down events into good and bad. For our purposes, “good” has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news – and you should, too.

The Good

  • High frequency indicators remain positive (New Deal Democrat).
  • Industrial production increased 0.5%, down from 1.0% in February, but beating expectations of 0.3%. (Jill Mislinski, and see the Big Four update below)
  • Hotel occupancy broke records in Q1. Some astute readers pointed out that a past analysis was wrong because of holiday timing. Mrs. OldProf, who reads both the posts and the comments each week, jumped on this. “See, your readers agree with me!” Thirty-eight years and as mistake-prone as ever. Calculated Risk provides analysis and this chart.
  • Retail sales increased 0.6%, beating expectations of a 0.4% bump.
  • Mortgage delinquency rates are lower. Those thirty days past due – 3.73%. In foreclosure – 0.63%. (Calculated Risk).
  • Corporate earnings are strong, regardless of the chosen metric – beat rate, size of earnings and revenue beats. John Butters reports:

    To date, 17% of the companies in the S&P 500 have reported actual results for Q1 2018. In terms of earnings, more companies are reporting actual EPS above estimates (80%) compared to the 5-year average. In aggregate, companies are reporting earnings that are 5.9% above the estimates, which is also above the five-year average. In terms of sales, more companies (72%) are reporting actual sales above estimates compared to the five-year average. In aggregate, companies are reporting sales that are 1.6% above estimates, which is also above the five-year average.

    Brian Gilmartin agrees, but is more concerned about the effect of higher interest rates.

  • Corporate cash is increasing (WSJ) suggesting room for higher dividends and more stock buybacks. David Templeton explains, illustrating with this chart.
  • Housing starts for March hit a seasonally adjusted annual rate of 1319K, beating expectations by 4%. Building permits of 1354K also beat expectations. Calculated Risk comments on the data (mostly due to multi-family starts) and also on Homebuilder Confidence – down one point at 69, but still on “firm ground.”
  • The Bad

  • Jobless claims were almost unchanged from last week at 232K, but this was 5K worse than expectations. (Bespoke)
  • The Beige Book supported the current Fed picture of modest growth, but also had some warnings about the impact of current policies. Companies mentioned spikes in aluminum and steel prices. (Business Insider).
  • Leading indicators increased only 0.3%. This is a gain, of course, but smaller than the February pace of 0.7% and slightly below expectations of 0.4%. Jill Mislinski provides analysis and charts.

    The Ugly

    How about something that is responsible for 2.3 million annual deaths? From the International Energy Agency:

    Today around 2.8 billion people – 38% of the global population and almost 50% of the population in developing countries – lack access to clean cooking. Most of them cook their daily meals using solid biomass in traditional stoves. In 25 countries, mostly in sub-Saharan Africa, more than 90% of households rely on wood, charcoal and waste for cooking. Collecting this fuel requires hundreds of billions of hours each year, disproportionately affecting women and children. Burning it creates noxious fumes linked to 2.8 million premature deaths annually.

    Timothy Taylor explains:

    The report estimates that an investment of an additional $42 billion, above and beyond what is already happening, would be needed by 2030 to provide access to clean cooking for the 2.3 billion people who otherwise will not have access to clean cooking by that time. At one level, $42 billion is a lot of money: at another level, it’s almost an absurdly cheap price to pay for the potential benefits.

    The Week Ahead Calendar

    We have a normal economic calendar, featuring housing data, Consumer confidence and sentiment, and the first look at Q1 GDP. Corporate earnings reports will again be the most important real news.

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