👉 The Investing Week Ahead: 7/24/23

Exciting to see Mattel (MAT) stock move toward year-to-date highs after seeing the box office numbers. That’s enough on the movie magic though… we’ve got a massive week on our plates!

What We’re Watching:

Google’s cloud services arm — Google Cloud — has come into focus as one of the key catalysts for business growth. This includes Google Workspace, which thousands of you probably use on a daily basis. Revenues from the segment were $7.45 billion in first-quarter 2023. The figure accounted for 10.7% of total revenues (+28% YoY). We’re interested to see if this segment continues to soar.

There’s uncertainty surrounding Microsoft Azure, as its growth has been decelerating for the past several quarters. Analysts will be looking to hear about the Azure cloud platform, as well as commentary around the Activision Blizzard (ATVI) deal.

Meta’s stock explosion has partly been fueled by the prospects of the company’s digital advertising, AI investments, and new social media platform — Threads. We’re interested to hear what Zuckerberg has to say about one of the most wild quarters in the company’s history.

Verizon is a head-scratcher for many. The stock has had ugly performance over the last five years, but has a massive dividend payout to those that remain loyal. I believe Verizon has a stronger balance sheet and positioning than AT&T (T), and that’s why I recently opened a small position in VZ. Wireless providers naturally come with some risk due to the amount of debt that they take on — but this is a ticker I’ll be following closely around its Tuesday earnings report.

Another dividend stock — XOM is hovering around a modest PE multiple of 7. Compare that to the average 30+ PE multiple of Big Tech leaders, and this looks like a heck of a value. Analysts do worry about the company’s operating profit and want to hear more about their quest for lithium. ExxonMobil is considered one of the primary ‘bellwether’ stocks, so we’re sure to better understand the status of the energy market after this week’s report.

“And soon we shall bid adieu to the twitter brand and, gradually, all the birds” — Elon Musk, Twitter Executive Chairman

“It’s an exceptionally rare thing — in life or in business — that you get a second chance to make another big impression.

Twitter made one massive impression and changed the way we communicate. Now, X will go further, transforming the global town square. X is the future state of unlimited interactivity — centered in audio, video, messaging, payments/banking — creating a global marketplace for ideas, goods, services, and opportunities.

Powered by AI, X will connect us all in ways we’re just beginning to imagine.”

— Linda Yaccarino, Twitter CEO

“A strike, which could come as soon as Aug. 1, could have significant consequences for the company, the e-commerce industry and the supply chain…

UPS handles about one-quarter of the tens of millions of packages that are shipped daily in the United States, according to the Pitney Bowes Parcel Shipping Index. Experts have said competitors lack the scale to seamlessly replace that lost capacity.” — Noam Scheiber, The New York Times

What We’re Watching:

Above shows the expectations for a 25 bps rate hike this week, and then the expectations for the Fed’s September meeting.

You can be pretty certain that a rate hike is coming this week, but the consensus belief is that this is the second-to-last rate hike. There’s an 83% chance that the Fed will hold the interest rates steady in September after a hike this week. The expectation is two more total before the end of the year.

It’s also interesting that the most ‘hawkish’ of Fed Presidents — James Bullard of St. Louis — stepped down from his position this month…

There’s been a ton of quality inflation news over the last few months, and it should all be celebrated. However, Core PCE — the Fed’s preferred inflation gauge — is not one of them.

Core PCE has proven to be incredibly sticky, indicating that the prices paid by consumers for goods and services (without the volatility of food and energy) actually aren’t improving much at all. This week’s reading is massively important for giving the Fed an understanding of its effectiveness.

The wheat ETF (WEAT) is on a tear — and we never would have known without LevelFields.

Russia recently withdrew from the Black Sea Grain Deal, which could ultimately lead to higher wheat prices. The action was an effort to get reconnected to the SWIFT international payment system, which it was severed from last June.

The wheat ETF (WEAT) soared and LevelFields alerted before the move. You can read more here.