Weekly Macro Update: US Manufacturing, Unemployment and Earnings
Average Weekly Hours of Manufacturing:
Average weekly hours of manufacturing data is complied monthly by the Department of Labor statistics. The number of hours worked tends to rise during economic expansion when industrial production rises, and contracts during periods of economic decline. In December the average weekly hours of manufacturing rose to 41.3 hours, back to levels seen in January 2020, suggesting that US manufacturing has largely recovered from the virus.
Source: Federal Reserve Economic Data. Chart created by The Macro Mail.
Initial Claims:
Weekly initial unemployment claims is a leading economic indicator put together by the Department of Labor tracking the number of initial claims for unemployment insurance filed by individuals after separation from an employer. Despite early improvements on this front, initial claims now appear range-bound, and there is no meaningful news on this front. With vaccine penetration still low it is unlikely that there will be any drastic improvements in the short-term.
Source: Federal Reserve Economic Data, chart created by The Macro Mail
Earnings:
Earnings season is in full swing, with several big players including Alibaba, Exxon Mobil, Amazon and Alphabet reporting this week. Here are a few of the companies to look out for…
Alibaba (BABA) reported its earnings before market open today. The ecommerce giant was the subject of antitrust concern after Chinese regulators suspended the much-awaited IPO of Ant Financial. The company reported a 37% jump in revenue YoY and outperformed analyst expectations. Notably, the company’s cloud computing business was profitable for the first time ever. This division will be key to BABA’s future.
Exxon Mobil (XOM) also reported this morning pre-market. The oil major reported an EPS of 3 cents/share, outperforming expectations but still hit hard hard by the crash in oil prices - the culmination of a drop in demand and a price-war between Saudi Arabia and Russia. Going forward, with crude above $50/barrel Exxon expects to maintain its attractive dividend yield. The stock is currently up 2% premarket.
Amazon (AMZN) reports today after market close. Despite the core business being catalyzed by the COVID-19 pandemic, the stock has done nothing since September as investors have already priced in the impact of a boost in online orders and AWS demand. The stock is trading at a NTM P/E of 88.3x and analysts are expecting revenues to increase 27% YoY to $95.5 billion and adjusted EPS to rise by 80% to $9.03.
Alphabet (GOOG) is also reporting after market close today. The tech-giant returned a solid 31% in 2020 and trades at an NTM-P/E of 32.8. The key metric that analysts are looking at is Google’s cloud revenues, which have grown by at least 43% YoY. Google competes with Amazon, Microsoft and Alibaba in this space. Analysts are estimating earnings-per-share of $15.50 versus $15.35 in Q4 2019.
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