Wall Street Breakfast: Next Week

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Next week’s economic reports

The US elections on November 8 will divert some of the attention of investors locked in the Federal Reserve. The consensus expectation is that a government divided between the White House and Congress will lead to more political gridlock and a potential slowdown of some of President Biden’s agenda. Historians point out that the stock market has outperformed under a divided government in the returns generated in the years after the same party controlled the Senate, the House and the Presidency. Analysts warn that one scenario that could rock the market would be a lack of clarity regarding control of the Senate if the results are challenged. Meanwhile, the economic calendar will be dominated by the Consumer Price Index report for October. Earnings will also continue to rise next week, with Disney (NYSE:DIS), Rivian Automotive (NASDAQ:RIVN), Rolox (RBLX) and Nio (NIO) among the featured reporters. Earnings season has been lackluster so far overall, with just 70% of S&P 500 index companies posting better-than-expected earnings compared to 85% a year ago and 24% missing EPS estimates vs. to 13% a year ago. Outside of the US, it will be another week of reading the tea leaves in China with Apple supplier (AAPL) Foxconn amid a region lockdown that is scheduled to last until November 9.

Earnings Spotlight: Monday, November 7 Mosaic (MOS) and Take-Two Interactive (TTWO).

Earnings Spotlight: Tuesday, November 8 Disney (DIS), DuPont (DD), Norwegian Cruise Line Holdings (NCLH), Disney (DIS), Occidental (OXY), Lucid Group (LCID), and GlobalFoundries (GFS).

Earnings Spotlight: Wednesday, November 9 – Hanesbrands (HBI), DR Horton (DHI), Roblox (RBLX), Coupang (CPNG), Unity Software (U), and Rivian Automotive (RIVN).

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Earnings Spotlight: Thursday, November 10 – Phillips 66 (NYSE:PSX), Brookfield Asset Management (BAM), Nio (NIO), Tapestry (TPR) and Ralph Lauren (RL).

Earnings Spotlight: Friday, November 11 Polestar Automotive (NASDAQ:PSNY).

Initial Public Offering Preview: Online game developer Snail (SNAL) and oncology drug developer Acrivon Therapeutics (ACRV) are expected to start trading in the coming week. The IPO lock-up period expires for a block of Bausch + Lomb (BLCO) shares.

Price check: The publication of the October inflation report will be one of the main events of the week. Headline inflation is expected to fall to +8.0% in October from +7.8% in September and core CPI is expected to moderate to +0.4% month on month from +0.6%. Once again, services inflation is expected to be the main driver of core inflation in October, although data on demanded rents continue to suggest a moderation is on the way. Bank of America noted that prices for transportation services and new car prices, food/beverage prices, and clothing prices remain high, but prices for health care services, used car prices, food/beverage prices, and clothing prices have moved lower.

Rivian a year later: The first anniversary of the Rivian Automotive (RIVN) IPO comes next week. Shares of the electric-vehicle maker soared to $179.47 after the flashy debut and traded at a market capitalization above valuations of Ford (F) and General Motors (GM) for a time. With shares now 82% below their all-time high, the investor environment in Rivian is very different with higher interest rates, supply chain grunts and risky trading in the mix. The EV upstart still has plenty of bullish support on Wall Street, including from Morgan Stanley (overweight, $60 price target) with his long-term thesis. Analyst Adam Jonas and his team believe the company should be able to make it through most or all of FY23 before a capital raise is needed. “We believe that increased spend control/cash burn + improved production ramp very well leads to increased disclosure and around potential IRA profits that can support Rivian’s aggressive battery cell and module installation plans during the horizon of fiscal year 24”, updated the firm. Rivian is due to report earnings on November 9 with product timeline, profitability view and Amazon (AMZN) partnership update some of the key items to watch.

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Corporate events: Zoom Video Communications (NASDAQ:ZM) will host an Investor Day on November 8 to cover business strategy, opportunities, metrics and initiatives. The presentation takes place during the company’s Zoomtopia event, which has been a stock price catalyst in the past. Companies holding investor day events on November 9 include Phillips 66 (PSX), Procore Technologies (NYSE:PCOR), and First Republic Bank (NYSE:FRC). Also keep an eye on Okta (NASDAQ:OKTA) with the company’s Oktane22 Keynote and Investor Day expected to turn heads. Okta shares have risen in the past after the annual event. Fisker (NYSE:FSR) will be closely watched later in the week with the electric vehicle maker holding a factory tour and offering test drives for analysts and journalists at Magna’s facility in Austria. The preview comes ahead of the November 17 start date for production of the Ocean electric vehicle. Read Seeking Alpha’s Catalyst Watch for a detailed list of next week’s events.

Investor Tactics: Investors looking to play short-term volatility have a new roadmap to consider. Evercore ISI recently updated its TAP list, which is made up of tactical calls made around short-term events that are expected to have a short-term impact on share price impact. The list of stocks seen to outperform in the short term included Arista Networks (ANET), Becton, Dickinson & Co. (NYSE:BDX), CH Robinson Worldwide (NASDAQ:CHRW), Canada Goose Holdings (GOOS) , CDW Corporation (CDW ), Duolingo (DUOL), Edwards Lifesciences (EW), GoDaddy (GDDY), Thermo Fisher (TMO), Viridian Therapeutics (VRDN), and Zimmer Biomet Holdings (ZBH). The list of stocks with a tendency to underperform in the short term includes Azenta (AZTA), Block (SQ), Canadian Pacific Railway (CP) and Zillow Group (ZG)

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Barron mentions: Tesla (NASDAQ:TSLA) is the subject of this week’s cover story as the publication dives into the question of whether the distraction of Twitter will sidetrack the company at a critical time. Some critics have warned that a worried Elon Musk and possible blows to the Tesla brand could create anxiety among investors just as the Berlin and Austin Gigafactories ramp up production to meet the company’s 50% annual growth target. Meanwhile, bullish analysts have been reminded that Tesla’s management bank (TSLA) may be much deeper than realized with Franz von Holzhausen (chief designer), Ashok Elluswamy (driver assistance software) and Lars Moravy (vehicle engineering) is all said to be running at a high level autonomously. One of the takeaways from Barron’s breakdown is that the best Tesla can do right now is to focus on branding Tesla as Tesla.

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