Look Out: Inflation Impact on Earnings, Peloton Treadmills, Cryptocurrency Bubble Concerns to Drive Volatility

Corporate earnings will be the major focus in the week ahead, with investors especially zeroed-in on the impact of rising costs on margins. Investors will be looking for evidence that inflationary pressures are already having a negative influence on corporate profit margins.

CNBC is reporting that from Coca-Cola and IBM to Johnson & Johnson and Netflix, investors will hear from a broad swatch of corporate America. So far, with one week in, companies are beating earnings estimates by a wide margin of more than 84%, according to Refinitiv.

This three-month period is the first to be compared to year earlier profits that were affected by the pandemic. Profit growth for the S&P 500 is a stunning 30.2% for the quarter so far, based on actual reports and estimates. That makes it the best three-month period since the third quarter of 2010, according to FactSet.

In other news, the U.S. Consumer Product Safety Commission (CPSC) on Saturday warned consumers about the dangers of Peloton’s treadmill Tread+ after reports of multiple incidents of small children and a pet being injured beneath the machines.

The price of bitcoin tumbled over the weekend and was down as much as 19.5% from record highs posted by the popular cryptocurrency in the past week. The move comes after new concerns of a bubble in the cryptocurrency market.

US Regulators Warn Consumers on Dangers of Peloton’s Treadmill

Peloton shares could take a major hit on Monday after a warning from a key government safety agency.

“CPSC staff believes the Peloton Tread+ poses serious risks to children for abrasions, fractures, and death,” the safety regulator said in a statement, adding that consumers with children should stop using the product immediately.

Peloton in a response to the regulator’s statement said it was “troubled by the CPSC’s unilateral press release about the Peloton Tread+ because it is inaccurate and misleading.”

The company said there was no reason to stop using the Tread+, but children under 16 should not use the treadmill.

The regulator said it was aware of 39 incidents including one death and was investigating all known incidents related to the Peloton Tread+.

Bitcoin Tumbles from Recent High as Cryptocurrencies Take Weekend Hit

The price of Bitcoin dropped as low as $52,148.98 on Sunday morning, days after reaching an all-time high above $64,800. Ether and Dogecoin also saw their prices drop, following a week in which investors worried that the cryptocurrency market was in a bubble.

An unverified report on Twitter claimed that the U.S. Treasury Department could be looking to crack down on financial institutions for money laundering using cryptocurrency.

Coinbase shares could drop on the news since it could mean the cryptocurrency market could face tougher U.S. regulation. Last week, it became the largest cryptocurrency company to go public.

For a look at all of today’s economic events, check out our economic calendar.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.