Inflation worries are giving a pause to one of the most anticipated and positive earnings seasons in recent memory. Over 75% of companies reporting earnings for Q1 so far have exceeded expectations for revenue and EPS, but three times as many companies have mentioned inflation in those reports over last year.
The rising cost of materials, transportation, and labor are beginning to affect the bottom line of large companies and many have already begun to pass on those increases to consumers. Some of those companies are now losing share value such as Coca-Cola and Procter & Gamble with others like Boeing and Caterpillar reporting inflation pressure as well.
Currencies & Commodities
Bitcoin has settled in around the 55k level as we forecasted yesterday, but it may be bolstered further after reports that JPMorgan will offer a new cryptocurrency fund to their clients. Additionally, many investors are using BTC as a hedge against inflation so we expect it to continue to rise albeit slower than yesterday.
Copper should continue to rise today, but with a few more pullbacks in the process. This should provide many opportunities for traders to profit off both the up and the down movements as patterns and signals will likely be strong.
AUD/CHF hit an early reversal point and is declining currently. We anticipate this to be today’s trend for the pair, but it won’t be a dramatic drop.
CAD/CHF has reached a peak for its recent uptrend and will pull back today. Look for a decline towards the 0.736 level without much up and down movement in the chart.
USD/JPY is performing well and the uptrend will likely march further today. We see the 108.5 level as very possible barring any significant economic news that might slow the US dollar.
Summary: Earnings Season shows good results, but inflation is keeping investors tentative.
Procter & Gamble is under huge downward pressure due to poor sales forecasts for the coming year among other issues. We see the downtrend continuing today perhaps as low as the 126 level before experiencing a bounce from value buyers. Look to profit early on the drop and then later on the bounce.
Coca-Cola has been experiencing wave upon wave of negative attention from their social justice efforts and market share of the soft drink and juice markets. Investors are concerned that the company has poor management and direction and that earnings will be hurt in the short and long run. We see the current downtrend on Coca-Cola continuing today.