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  • 👉 The Investing Week Ahead: 11/14/22

👉 The Investing Week Ahead: 11/14/22

"We're not that tight. Real rates are barely positive a year out..."

14 Nov

Thoughts and prayers to Idaho and Virginia.

We typically like to have these Week Ahead posts go out by late morning (Eastern Time), but we had a tough time focusing on much of anything this morning. Our condolences to anyone dealing with the losses of life at the University of Idaho or the University of Virginia.

We know thousands of subscribers to this newsletter are business / economics students — so the recent news has likely hit struck a nerve for many of you. We hope that you can all feel safer on college campuses in the future than you may feel right now.

— Christian Blackwell, Rate of Return Co-Founder, UVA ‘20

Now let’s dive into the investing week ahead!

While the chart above may appear a bit confusing — the takeaway is that Goldman Sachs doesn’t expect Core CPI or Core PCE to consistently remain below 3% until at least 2024. This means that while the Fed may need to lessen the severity of rate hikes, they would likely need to continue hiking rates for a longer period of time.

Whenever the Fed does decide to drop to +50 bps instead of the +75 bps increases as of late — we’d expect a consistent +25 bps increase for a prolonged period of time.

Key Earnings Announcements:

Walmart, Target, Home Depot, Lowe’s, and more lead the way for a retail-palooza.

Monday (11/14): Clear Secure, Ginkgo Bioworks, Monday.com, Nu Holdings, Oatly, Tower Semiconductor, Tyson, Weber

Tuesday (11/15): Advanced Auto Parts, Aramark, Home Depot, Krispy Kreme, Sea Limited, Tencent Music Entertainment, Valvoline, Walmart

Wednesday (11/16): Bath & Body Works, Cisco, Lowe’s, Nvidia, On Holding, Sonos, Star Bulk Carriers, Target, TJMaxx, ZIM Integrated Shipping

Thursday (11/17): Alibaba, Applied Materials, Gap, Kohl’s, Macy’s, Palo Alto Networks, Ross, Williams-Sonoma

Friday (11/18): Foot Locker, JD.com, Spectrum Brands

Spotlight Returns to Retail:

Walmart, Target, and Home Depot lead a stacked lineup of retail companies reporting earnings this week. On Wednesday, the Commerce Department will be releasing its monthly retail sales report for October. Bloomberg estimates a headline increase of +1.0% after spending was flat the month prior.

See above for Walmart’s massive outperformance vs. the S&P 500 this year. Analysts will be watching the following:

Investor Events / Global Affairs:

Amazon carries the torch for headcount cuts and some notable Investor Days to keep on your radar.

  • Amazon (AMZN) Layoffs

Beginning as soon as this week, Amazon is expected to cut thousands from its headcount. The layoffs are expected to be targeted for corporate employees and could primarily affect Amazon’s devices business — which includes its Alexa products.

The cost-cutting comes after the devices unit of Amazon has lost ~$5 billion annually for the past few years. While the total number is unknown, sources close to Amazon expect layoffs to reach about 10,000 employees — less than 1% of Amazon’s global workforce.

The holiday shopping season is critical for Amazon, and usually, one where the company has increased its headcount to meet demand. But Andy Jassy, who took over as CEO in July 2021, has been in cost-cutting mode to preserve cash as the company confronts slowing sales and a gloomy global economy. — Ashley Capoot, CNBC

  • General Motors (GM) and Procter & Gamble (PG) Investor Days

On this Thursday, both GM and P&G will be hosting investor day events.

  • GM CEO Mary Barra is expected to outline a plan for GM to go from selling ~44,000 EVs this year in the US (at a loss) to becoming one of the nation’s biggest (and most profitable) EV producers.

  • P&G executives are expected to discuss P&G's integrated strategic choices for balanced growth and value creation.

GM — “If investors can walk away feeling better about 2023 macro resilience and with more granularity across several imminent growth levers, we think the stock can work from here.” — Citi

P&G — “…continued high commodity and transportation costs, inflation in the upstream supply chain and in our own operations, accelerating headwinds from foreign exchange, geopolitical issues, COVID disruptions impacting consumer confidence and historically high inflation impacting consumer budgets.” — P&G Q1’23 Earnings Transcript

Major Economic Events:

Retail Sales coming in soft could interestingly help keep the market afloat. A strong report could help support that the Fed needs to send a stronger message about how frivolous consumers are with their money.

Monday (11/14): NY Fed Inflation Expectations, Speeches by Fed Vice Chair Brainard & NY Fed President Williams

Tuesday (11/15): Bloomberg November Economic Survey, Empire Manufacturing, PPI Final Demand, PPI Excluding Food, Energy, & Trade

Wednesday (11/16): Capacity Utilization Rate, Import Price Index, Industrial Production, NAHB Home Builders’ Index, Retail sales, Speech by Fed Governor Waller

Thursday (11/17): Building Permits, Housing Starts, Philadelphia Fed Manufacturing Index, Speeches by ATL Fed President, STL Fed President, Fed Governor Bowman, & Fed Governor Jefferson

Friday (11/18): Existing Home Sales, Leading Economic Indicators

Update from “The Fed Whisperer”

“The New York Fed's survey of consumer inflation expectations shows they moved up (i.e., the wrong way) last month, reversing several months in which inflation expectations fell” — Nick Timiraos, Wall Street Journal

Events-Driven Winners:

Which stocks moved the most last week.

Our friends at LevelFields scrub through thousands of data points each week to determine how events impact stock prices.

Key events in the market remain focused around the two words that we’ve been hearing oh so often — Buybacks and Layoffs.

If you’re starting your investing journey or want to change to a cleaner, social-focused investing platform, 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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