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- 👉 The Investing Week Ahead: 10/23/23
👉 The Investing Week Ahead: 10/23/23
~$60B acquisitions...
Welcome to your new week.
We hope you had a great weekend and are enjoying the fall weather. There’s a LOT to touch on this week, and we want to move quickly — let’s dive in!
Key Earnings Announcements:
Google, Meta, Microsoft, and more.
Monday (10/23): Cadence, Calix, Cliffs, HBT Financial, Logitech, Philips
Tuesday (10/24): 3M, Alphabet, Coca-Cola, General Electric, General Motors Microsoft, RTX, Snap Inc., Spotify, Teladoc Health, Texas Instruments, Verizon, Visa
Wednesday (10/25): ADP, Align, Baker Hughes, Boeing, General Dynamics, Hilton, IBM, Meta, O’Reilly Auto Parts, QuantumScape, ServiceNow, ThermoFisher Scientific, T-Mobile
Thursday (10/26): Altria, Amazon, Capital One, Chipotle Mexican Grill, Dexcom, Enphase, Ford, Hershey, Intel, Merck, Northrop Grumman, Royal Caribbean, Skechers, Southwest Airlines, Tractor Supply Co., Valero, United States Steel, UPS
Friday (10/27): Abbvie, Alliance Resource Partners, AutoNation, Charter Communications, Chevron, Colgate-Palmolive, ExxonMobil, Newell Brands, Phillips 66, T Rowe Price
What We’re Watching:
Alphabet’s most recent earnings report was highlighted by Consolidated Revenues of $74.6 billion (+7% YoY), Total Cost of Revenues of $31.9 billion (+6% YoY), and Search remaining the largest contributor to revenue growth.
Microsoft’s most recent earnings report featured a call for lower revenue guidance than analysts had predicted — in part due to weakness in the segment that contains Windows.
Growth came in under +10% for three consecutive quarters for the first time since 2017.
Meta’s most recent earnings report celebrated double-digit revenue growth for the first time since Q4’21.
Zuckerberg also announced that Meta’s Q3 forecasts were better than analysts had been expecting. This time around — analysts want to hear more about engagement across platforms, ARPU implications from that engagement, and the current state of the Threads app.
Investor Events / Global Affairs:
Chevron (CVX) acquires Hess (HES) right after ExxonMobil (XOM) acquires Pioneer (PXD), and Europe’s balance sheet unwinding is a major headache.
Chevron (CVX) — Another MASSIVE Energy Acquisition
Chevron (CVX) has announced a $53 billion stock deal to acquire Hess (HES) — marking the second major merger in the U.S. oil industry over just the last few days.
The news follows Exxon Mobil's (XOM) $60 billion bid for Pioneer Natural Resources (PXD). This move intensifies the competition between Chevron and Exxon as they aim to develop oil drilling in Guyana — a nascent oil-producing region.
This major acquisition also signifies Chevron's commitment to investing in fossil fuels amidst strong oil demand and the need for inventory replenishment after years of under-investment. The deal involves offering 1.025 Chevron shares for each Hess share — with a total deal value of ~$60 billion, including debt.
The European Central Bank’s (ECB) Balance Sheet Problem
The European Central Bank (ECB) will announce its next interest rate decision on Thursday (10/26). The ECB is expected to hold rates steady after firing off 450 bps of rate hikes since July 2022.
The reason to keep an eye on their decision is because the ECB is facing a challenge with how to ensure its policies continue to work effectively as it attempts to unwind €5.3 trillion ($5.63 trillion) in bond holdings and long-term loans.
As it seeks to shrink its balance sheet and transition away from unconventional liquidity tools — officials are contemplating various approaches.
Some are looking to the Bank of England's demand-led approach, which relies on banks borrowing the money they need and striving for a leaner balance sheet. However, this would require changes to the ECB's lending and borrowing rates setup.
Another option is a return to the pre-crisis system of controlling the amount of money supplied to banks, with market rates rising as funds become scarcer. This would reestablish the main refinancing rate as the benchmark.
If all of this is a bit confusing to you — the bottom line is that the European Central Bank wants to restore the proper functioning of markets. Like the U.S. — they grew their balance sheet exorbitantly and now are trying to determine how to delicately unload.
Major Economic Events:
GDP, Core PCE, and the 20-City Home Price Index highlight an important economic week.
Monday (10/23): N/A
Tuesday (10/24): S&P Case-Shiller Home Price Index (20 Cities), S&P Manufacturing PMI (Flash), S&P Services PMI (Flash)
Wednesday (10/25): New Home Sales
Thursday (10/26): Durable Goods, GDP, Pending Home Sales, Retail Inventories (Advanced), U.S. Trade Balance in Goods (Advanced), Wholesale Inventories (Advanced)
Friday (10/27): Consumer Sentiment, PCE Index, Personal Income, Personal Spending,
What We’re Watching:
The most recent GDP reading for the United States came in with an expectedly lackluster +2.1% growth rate. With economists predicting a double to +4.2% for Q3…. there’s some high expectations to meet.
The most recent Core PCE reading came in a +3.9% YoY — matching forecasts for September’s release. This go-round is expected to land at +3.7% YoY. Remember — this is the Fed’s preferred inflation measure.
If you’re starting your investing journey or are interested in buying T-bills yielding 5% or more, consider visiting Public.com.
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.
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