👉 The Investing Week Ahead: 5/15/23

Boomers will be offloading billions upon billions of dollars worth of small businesses as they reach their retirement / final days. Our suggestion would be to always keep your ear to the ground as to how you could gain ownership or revenue from an existing “Boring Boomer Business.”

Here’s a link to a solid book on the subject — The HBR Guide to Buying a Small Business. (not sponsored)

What We’re Watching:

Target’s last earnings report saw its CFO note that they “expect our business to generate first quarter comparable sales in a wide range, from a low single-digit decline to a low single-digit increase. This reflects our expectation for continued strength in our frequency businesses, offset by softness in discretionary categories.”

Alibaba is expected to speak much more in-depth about the division of the company into six businesses. China will also be releasing a barrage of economic data this week, which could have an additional impact on the stock around earnings time.

Walmart’s last earnings report bragged about +7.3% Revenue Growth, +8.3% Walmart U.S. Comp Sales, Over 20% Global Ads Business Growth, and +$16.0B Returns to Shareholders YTD. Shareholders of WMT are looking for improvement to Q4’s -5.5% Operating Income (-21.3% for the last full year.)

Home Depot’s last earnings report featured forecasts of sales growth and comparable sales growth being approximately flat in 2023 (as compared to fiscal 2022).

Meanwhile — largely due to a $1 billion investment in frontline workers — a guide for a 14.5% operating margin in 2023 came in lighter than the 15.1% consensus.

You can learn more about the full situation by reading the beginning of this post.

The EU decision comes after the United Kingdom Competition and Markets Authority (CMA) blocked the deal last month due to concerns that it would reduce competition in the gaming market.

“They would replace a free, open and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale. This is one of the reasons the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal.” — CMA CEO Sarah Cardell

Here’s a link to our past write-up about this situation, which we remain cautiously optimistic on. There is certainly doubt and uncertainty, but the EU approval is a big win.

Here’s a link to a Tweet from our friend Lulu — Activision Blizzard’s Chief Communications Officer — with more details.

What We’re Watching:

The Conference Board returns to the headlines this Thursday, releasing the newest edition of its Leading Economic Indicators.

In March, existing-home sales retreated -2.4% to a seasonally adjusted annual rate of 4.44 million. Sales declined -22.0% from one year ago.

The inventory of unsold existing homes rose +1.0% from the prior month to 980,000 at the end of March, or the equivalent of 2.6 months' supply at the current monthly sales pace.

“The housing market has started to recover, and this is a problem for the Fed because more demand for housing will boost home prices and rents, and with housing having a weight of 40% in the CPI, this will make it more difficult to get inflation down from currently 5% to the Fed’s 2% inflation target.” — Torsten Sløk, Apollo Chief Economist

The history books recall Paul Volcker (1979-1987) as the Fed Chair that crushed inflation, and Ben Bernanke (2006-2014) as the Fed Chair that fought off crisis after crisis.

Now the question has arrived — can Jerome Powell (2017-present) do both?

We’ll learn more from a closely-watched conversation between Bernanke and Powell later this week.

Palantir (PLTR) stock is up +47% YTD, but is littered with question marks.

Bulls argue that products targeting both commercial and government clients will lead to growing revenue streams over time. They’re also excited about the use of A.I. to bolster sales growth.

Bears note that Palantir’s long road to GAAP profitability and the total addressable market isn’t large enough to reach colossal growth.