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Wednesday January 19, 2022



Alphabet Reports Earnings

Alphabet Inc. (GOOGL) reported first quarter earnings on Tuesday, April 27. The parent company of Google, YouTube and Nest beat revenue and earnings estimates, causing shares to rise more than 4% after the release.

Alphabet announced revenue of $55.31 billion for the quarter, up from revenue of $41.16 billion in the same quarter last year. Revenue exceeded analysts' expectations of $51.70 billion.

"Over the last year, people have turned to Google Search and many online services to stay informed, connected and entertained," said Alphabet CEO Sundar Pichai. "We've continued our focus on delivering trusted services to help people around the world. Our Cloud services are helping businesses, big and small, accelerate their digital transformations."

The company reported first quarter earnings of $17.93 billion. This is up from earnings of $6.84 billion reported during the same quarter last year.

The Mountain View, California-based company reported $44.7 billion of its quarterly revenue was generated from advertising. YouTube ad revenue increased 49% year-over-year. Google Cloud revenue increased 46%. The company approved stock repurchases of up to $50 billion.

Alphabet Inc. (GOOGL) shares ended at $2,353.50, up 2.1% for the week.

Starbucks Reports Second Quarter Earnings

Starbucks Corporation (SBUX) reported its quarterly financial results on Tuesday, April 27. The coffeehouse chain reported increased revenue but missed analysts' estimates.

The company reported second quarter net revenue of $6.7 billion, up 11.2% from $6.0 billion reported in the same quarter last year. Analysts expected revenue to reach $6.8 billion.

"I am very pleased with our progress to date in fiscal 2021, as our second quarter results demonstrated impressive momentum in the business with full sales recovery in the U.S.," said Starbucks President and CEO Kevin Johnson. "Our strong results validate our ability to adapt to changes in our environment and the needs of our customers."

Starbucks' net income for the quarter increased to $659.4 million. This is up 100.8% from earnings of $328.4 million in the same quarter last year.

Starbucks opened five net new stores in the second quarter, generating 3% year-over-year unit growth. The company ended the quarter with 32,943 stores globally. Comparable sales for the quarter increased 9%, with a decrease of 10% in comparable transactions offset by a 22% increase in the average ticket. There were 22.9 million active loyalty program members in the second quarter, up 18% year-over-year.

Starbucks Corporation (SBUX) shares ended the week at $114.49, down 2.1% for the week.

Tesla Reports Quarterly Earnings

Tesla, Inc. (TSLA) released its first quarter earnings report on Monday, April 26. The electric automotive company posted better-than-expected quarterly revenue, but shares fell 3% in after-hours trading.

Revenue came in at $10.39 billion for the quarter, up 74% from $5.99 billion during the same quarter last year. This beat analysts' expected quarterly revenue of $10.29 billion.

"In Q1, we achieved our highest ever vehicle production and deliveries," the company stated in its earnings release. "This was in spite of multiple challenges, including seasonality, supply

chain instability and the transition to the new Model S and Model X."

The company posted net earnings of $438 million for the quarter. This was up from $16 million at this time last year.

Tesla reported delivery of 182,847 vehicles from its Model 3 and Model Y vehicle lines, setting a record for the first quarter. The company also delivered 2,030 older Model S and Model X vehicles. The company expects to deliver a minimum of 750,000 vehicles in fiscal year 2021. Tesla's revenue increase was partially attributed to $101 million realized from cryptocurrency sales in the quarter. The company purchased $1.5 billion in "digital assets" in the quarter.

Tesla, Inc. (TSLA) shares ended the week at $709.44, down 4.3% for the week.

The Dow started the week at 34,044 and closed at 33,875 on 4/30. The S&P 500 started the week at 4,185 and closed at 4,181. The NASDAQ started the week at 14,052 and closed at 13,963.

U.S. Treasury Yields Rise

U.S. Treasury yields increased following the Commerce Department's release of the first-quarter Gross Domestic Product (GDP). The Federal Reserve policy meeting concluded on Wednesday with yields moving upward in response to policy indicators.

On Thursday, the GDP for the U.S. was released indicating annualized growth of 6.4% for the first quarter. Economists expected GDP growth of 6.5%. Treasury yields increased in response to the strong economic growth data.

"This signals the economy is off and running and it will be a boom-like year," said chief economist at Moody's Analytics, Mark Zandi. "Obviously, the American consumer is powering the train and businesses are investing strongly."

The 10-year Treasury note opened the week of April 26 at 1.56% and hit a high of 1.68% on Thursday, April 29. The 30-year Treasury bond yield opened the week at 2.24% and reached a high of 2.36% on Thursday.

On Wednesday, the Federal Reserve announced its intent to maintain short-term interest rates at near zero rates. The Federal Open Market Committee (FOMC) decision to hold rates steady was unanimous, despite the FOMC noting strong growth and recovery in the economy.

"The sectors most adversely affected by the pandemic remain weak but have shown improvement," the Federal Reserve stated in an FOMC press release. "Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses."

The 10-year Treasury note yield closed at 1.63% on 4/30, while the 30-year Treasury bond yield was 2.29%.

Mortgage Rates Up Slightly

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, April 29. Mortgage rates held steady with the 30-year fixed rate mortgage remaining below 3%.

This week, the 30-year fixed rate mortgage averaged 2.98%, up from last week's average of 2.97%. Last year at this time, the 30-year fixed rate mortgage was at 3.23%.

The 15-year fixed rate mortgage averaged 2.31% this week, up from 2.29% last week. During the same time last year, the 15-year fixed rate mortgage averaged 2.77%.

"In light of the rising COVID caseloads globally, U.S. Treasury yields stopped moving up a month ago and have remained within a narrow range as the market digests incoming economic data," said Sam Khater, Freddie Mac's Chief Economist. "The good news is that with rates under 3%, refinancing continues to be attractive for many borrowers who financed before 2020. But, for eager buyers, especially first-time homebuyers, inventory continues to be extremely tight and competition for available homes to purchase remains high."

Based on published national averages, the national savings rate was 0.06% as of 4/19. The one-year CD averaged 0.14%.

Published April 30, 2021

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