Earnings Season's Peak, Fed's Decision and Tesla's Decline

28 Apr 2021

The earnings season is reaching its climax today. And so far, this is one of the best seasons in US history. Four out of five companies that have already reported have published the best financial results, or at least in terms of forecasts. Tellingly, the markets have largely ignored this: according to data compiled by Bloomberg, on average, the shares of S&P 500 companies after the published reports rose by less than 0.1%. The reason is that the markets were hoping for even better results.

Let’s consider Tesla for example. The best ever financial results: maximum income, maximum profit. But stocks rained down yesterday. That is, for us, this is not surprising, because we consider the shares to be incorrectly valued at times and a decrease in their price is a natural thing. But we still can't believe that the markets have finally begun to read the financial statements, have learned to add numbers (with a profit of 483 million, revenues from sales of regulatory loans amounted to 518 million, add to this 100+ million additional income from the sale of Bitcoins and get a good hundreds of millions of losses) or compare the facts (Toyota needs a week to produce the same number of cars that Tesla produces in a quarter, but Tesla's capitalization is 3 times more).

Today the Fed will announce the results of a two-day meeting of the Committee on Open Market Operations. It is definitely not worth waiting for surprises. Powell, like a mantra, has been repeating for several months in a row the idea that the rate will not be raised in the foreseeable future, and the Central Bank is not planning to change the parameters of monetary policy. And in general, if they even begin to think in the direction of tightening monetary policy, the Fed will warn in advance.

Nevertheless, this event is of exceptional importance, which means that the markets will look forward to it. Moreover, a bigger half of the experts believe that already in the fourth quarter of this year the size of the quantitative easing program will be reduced.