The Investing Week Ahead: 7/18/22
Earnings expectations keep getting slashed, Twitter & Tesla awkwardly report earnings back-to-back, the algos hate 'SoMe' stocks, the story of "BlackPebble," and a much needed housing update.
Happy ‘World Listening Day’.
And you should probably listen to this: 77% of the first S&P 500 stocks to report their third quarter estimates were cut. The average earnings change has been a -3.06% slash — which is no small “rounding error.” This didn’t go unnoticed in the financials sector, with giants like Bank of America slashing their stock market forecasts and calling for a “mild recession” this year.
With a barrage of new earnings coming up, let’s keep a gauge on how many more companies are downgrading their expectations. If you want to stay ahead on what’s to come — a great source is the new MNE MKR Newsletter. From the same folks that brought you Morning Brew’s Money Scoop, it’s a once-per-week newsletter that gives you wallet-impacting news, tips, and insights. A pairing better than buffalo wings & football — be sure to get both Rate of Return and MNE MKR in your inbox!
The Investing Week Ahead - Too Long, Didn’t Read:
⚡ The earnings spotlight shines on Twitter drama, Blackstone, & financials leaders.
⚡ Events from Bloomberg Crypto, Microsoft ‘Inspire’, & the National Retail Federation.
⚡ Economic indicators are highlighted by housing data & S&P Global’s PMI reports.
Key Earnings Announcements:
Remaining financials companies have a high bar set from last week, Twitter & Snap get the eyes of social media investors, and don’t forget about legendary stocks like Domino’s.
Monday (7/18): Bank of America, Charles Schwab, Goldman Sachs IBM, Prologis
Tuesday (7/19): Ally, Citizens Financial Group, Halliburton, Hasbro, Interactive Brokers, J&J, JB Hunt, Lockheed Martin Pinnacle, Netflix, Novartis
Wednesday (7/20): Abbott, ASML, Baker Hughes, CSX, Discover, M&T Bank, Nasdaq, Tesla, United Airlines
Thursday (7/21): American Airlines, AT&T, Blackstone, Boston Beer Co, Capital One, Domino’s Pizza, Mattel, Nokia, Philip Morris, Snap Inc
Friday (7/22): American Express, Twitter, Verizon
What We’re Watching:
Blackrock and Blackpebble?: BlackRock cofounders Steve Schwarzman and Larry Fink have a funny story behind the similarity between the original company’s name and Schwarzman’s own Blackstone spin-off. They originally settled on the name BlackRock together (instead of BlackPebble), and once Schwarzman branched out a bit — Blackstone was born. They considered using ‘pebble’ — but thought it might not be taken very seriously. And thus, ‘rock’ and ‘stone’ were the winners! Anyway, Schwarzman is an icon in the investment management world and we’ll be keeping an eye out for his version of an economic ‘heat check’.
Social Media Mayhem: Snapchat and Twitter kick off the social media earnings season — and there’s a lot on the line. Of course, we’ll all be watching to see what Twitter says after the brutal break-up with Elon Musk. However, we think this SoMe earnings season is much more than that drama. Interestingly, we dropped some of the most popular names in the space into a portfolio on Seeking Alpha and found that their Quant Ratings are significantly lower than the public consensus on if these companies are ‘Buys’. People think they’re beat up and ripe for upside, the algos think they have a lot more pain ahead. Let’s see who’s right!
Bloomberg hosts a Crypto Summit, Elon Musk has some questions to answer, the National Retail Federation (NRF) hosts major players, and Microsoft hopes to inspire.
Monday (7/18): Google Stock Split, Nikola Outstanding Shares Vote
Tuesday (7/19): Bloomberg Crypto Summit, Microsoft Inspire Event Begins, National Retail Federation Webinar
Wednesday (7/20): Elon Musk Answers Questions After Tesla Earnings
Thursday (7/21): Social Media Companies Eye Snap Earnings
Friday (7/22): GameStop Stock Split, Drama Expected From Twitter Earnings
All Week: Farnborough Airshow (Aviation Industry “Conference”)
What We’re Watching:
Inspiration in the Air: Held on Tuesday and Wednesday, the Microsoft ‘Inspire’ event is the company’s largest partner event of the year. It focuses on Microsoft Cloud and B2B partnerships that allow the world’s third-largest company to scale. Partnerships with giants like Adobe, BMW, Intel, and NVIDIA will be highlighted in detail. Events of this caliber are always worthwhile to check in on — as future developments and programs are often revealed.
Calming the Storm: Amid all of the horrible news in the crypto world, Bloomberg is hosting an interestingly-timed conference for the industry. Key focuses will be: The Macro Forces in 2022, The Regulatory Outlook, Sustainability, Web3.0 / Metaverse / Blockchain Gaming, and The “Crypto Winter.” Speakers include leaders from all over, but tickets are $750+. Just check back in with us for anything important!
Retail Recap: We love paying attention to what the National Retail Federation (NRF) has to say because they have some of the best data on our favorite places to shop. The highlight of their event will be noteworthy updates on Costco (COST), Dollar General (DG), Dollar Tree (DLTR), Target (TGT), and Walmart (WMT). Just for kicks — below are the top spots of their recent Top 100 Retailers of 2022 List:
Major Economic Updates:
Understanding the Fed’s impact on housing and S&P Global’s supply chain check-in.
Monday (7/18): NAHB Home Builders’ Index
Tuesday (7/19): Building Permits, Housing Starts
Wednesday (7/20): Existing Home Sales
Thursday (7/21): Jobless Claims, Leading Economic Indicators, Philadelphia Fed Manufacturing Index
Friday (7/22): S&P Global U.S. Manufacturing PMI & Services PMI
What We’re Watching:
Home is Where the Bills Are: We’re ecstatic to get a better picture of how the Fed’s actions have impacted the housing market. As you can tell from the graphic at the top of this section, mortgage payments have skyrocketed. Remember — one of the main goals of the FOMC is to make housing more affordable. In order to do that, it drives up interest rates, hoping that people will slow down on buying overpriced places of living. Our expectation? That these numbers will come in having done some serious damage. Just take a look at the inventory of Austin, Texas housing in June (below). As explained in my video here — when rates are astronomical, it often doesn’t make any sense to splurge for that new house.
S&P Global Breaks It Down: Toward the end of the week, S&P Global reveals its Purchasing Managers’ Indices for both Manufacturing and Services. Similar to how ADP provides a non-government alternative to the Jobs Report, S&P Global provides a bit of an alternative to our typical inflation gauges. For example, they found that U.S. factory activity was the lowest in June since July of 2020 (below). We’ll be keeping tabs on their opinions of supply chain disruptions, buyer stagnation, and employment levels for some of the country’s most critical industries.
Events Driven Winners:
What specific events are moving stocks the most?
Our friends at LevelFields scrub through thousands of data points each week to determine how events impact stock prices.
Referencing the social media sentiment in the Key Earnings Announcements section — it seems that a lot of investors are ready to jump back into ‘SoMe’ names. Pinterest (PINS) has taken a beating, down nearly -71% over the past year. However, it received a significant boost thanks to Elliott Management taking a ~9% stake in the company. While we don’t have time to break it all down today — click here for the interesting story behind “one of Wall Street’s toughest activist investors.” Shoutout to LevelFields for bringing this story to our attention through their alerts!
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Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.