Stock Markets: Top 3 Things You Need To Know This Week

Keep in mind, this week is the official start of the US corporate earnings season and at the same time, there is going to be a lot of economic and inflation data being released as well as the latest headlines regarding Russia’s war in Ukraine.

It is also a short trading week with stock, bond, and commodity markets closed on Friday for Good Friday, which could bring some added volatility as we get closer to the long weekend.

SP500 Earnings

Most Wall Street traders recognize that the S&P 500 rally off the March 2020 lows was built on extremely strong US corporate earnings power. Several traders and investors are quick to remind us that prior to the Covid outbreak S&P 500 company earnings were averaging around $40/share per quarter. Fast forward to our last earnings report that showed 2021 Q4 earnings and we see an average of $55/share. In other words, there was a +38% jump in earnings from before the pandemic to our last quarterly estimates, which puts us fairly in line with the current price level of the S&P 500. The question is can US corporate earnings continue to show growth?

I worry because interest rates are starting to aggressively creep higher, wage inflation is real, energy inflation is real, the cost of doing business is obviously higher and supply chain dislocations are still creating supply-side imbalances.

China in the Spotlight

Remember, China’s lockdown in Shanghai continues. The lockdown began on March 28 in half the city but has since expanded to its entire population of around 26 million. A trucker shortage and closures of warehouses in Shanghai are also affecting nearby provinces of Zhejiang and Jiangsu, according to a recent note from Citigroup analysts.

The two provinces are major manufacturing hubs that produce about one-third of China’s total exports. Shipping experts warn the fallout will start to be felt in the months ahead as severe dislocations once again drive up shipping costs and exacerbate shortages of raw materials and other essential supplies. There are also lingering concerns about energy prices as Europe continues to debate the possibility of banning Russian oil and gas supplies. Such a move could bring another dramatic rise in prices as available global supplies get spread even more thin.

Data to Watch

The Atlanta Fed is now forecasting just +1.1% Q1 US GDP growth, whereas, three of their last four Quarterly readings were all above +6.1%. At the same time, there are a lot more investors and economists also starting to walk back their global economic growth estimates. Several sources are thinking Ukraine’s economic output will likely contract by -40% to -50%.

More economists are also forecasting a double-digit reduction in Russia’s GDP, as well as much larger reductions in countries like Belarus and Moldova. Growth estimates in the Central Europe region i.e. Bulgaria, Croatia, Hungary, Poland, and Romania are also starting to be reduced.

There was also more talk over the weekend that Russia could eventually start to default on some of its “external debt” for the first time since 1917.

As for this week, all eyes will be on Consumer Price Index, scheduled for release Tuesday morning, and the Producer Price Index scheduled for release Wednesday morning. Both will work to add a bit more color to our current inflation debate.

Also on Wednesday, we get the first batch of Q1 earnings from a few big names like JPMorgan, Black Rock, Bed, Bath & Beyond, and Delta. Then on Thursday the trade will be digesting the latest Retail Sales data and another round of earnings from names like Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanely, and United Health Group.

Keep in mind, several of the largest US banks might be reporting their biggest slowdown in investment banking revenue in years, as more and more “deals” have been getting put on the back-burner. Who knows how long this slowdown will last?

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

YOLO: The New Investment Strategy That Rakes in Millions to Young Investors, But Remains Risky

The adherents of the YOLO movement are a young bunch of diehard optimists believing in a single stock and its future performance, pitching in all the chips they have, while hoping for the best.

The meme phenomenon has spread far and wide beyond the obscure dark and not-so-dark humor online boards into the financial market, with crypto meme coin tickers taking up the precious characters of Tweets posted by some prominent investors like Elon Musk. But it has recently overspilled into the conventional financial industry of Wall Street, taking on the form of the YOLO movement.

This bizarre phenomenon has seen stocks being pumped beyond even the most optimistic prices by online message boards in an almost coordinated tidal wave that swept across the booming market through 2020 and 2021.

Birth of a legend

With over 80% of investors in YOLO stocks being born in the late 1990s, their overconfidence in continued market growth is staggering, allowing them to take on leverage in the form of credits and debts to start investing in selected stocks. And though there is no actual asset class that could be termed YOLO, it pertains to companies that have posted immense gains and generated headlines during the pandemic lockdown period.

Among the most notable examples over 2020 to 2021 are AMC Entertainment (AMC), which skyrocketed by over 2,000% in just under a year, and GameStop (GME)– up 5,232% in the past year. Others in the league are Bed, Bath & Beyond (BBY) with 328% gains, Blackberry (BB) – 113% year-to-date, and others.

It all started in early 2021 with GameStop Corp. (GME), which saw its stocks boosted by a group of Reddit users who started investing in it and attracted others to do so. The price soared tenfold from $4 in 2020 to $350 in early 2021. And though stocks eventually took a nosedive to $40 by February of 2021, the GME saga allowed some investors to make millions in short positions on its traction in under a few weeks.

Needless to say, a legend was born that took on a life of its own and spread like wildfire, feeding on the hype frenzy and the trusting nature of YOLO stock investors.

In fact, stocks with considerable short interest attract droves of buyers. In turn, the short-sellers have to start covering their positions by buying back the shares that they had previously borrowed and sold. Such a rush results in massive artificial demand fueled by message board posts, pushing prices up.

The risks

Youth is oftentimes described as a disease of inexperience. And rightly so, considering the young age of most investors in YOLO stocks. Such inexperience in true market dynamics is the reason why the strategy is extremely risky, as most investors in one-off stocks hyped by message boards have never seen a bearish market, nor have they any clue of what a market crash looks like.

Considering that, and the fact that many of them are investing borrowed funds, their life savings, or even their mom-&-pops’ money, is painting out an eerie picture of the potential consequences of what a sudden market crash or shakeup could result in.

Past the fun and excitement of YOLO investing lies the harsh reality that only a meager portion of quick in-&-out investors rake in millions on the strategy. The risks far outweigh the benefits, as the odds of losing all are roughly the same as making some.

Intuition and message board posts from users pursuing their own interests are far from ideal investment consultants. When taking on the murky path of YOLO investing, one must never forget about portfolio diversification — a pillar of investment management that most young investors simply disregard.

Apart from offering some interaction with a community of concurring investors that may vanish as quickly as the investment in hyped stocks, YOLO is not a sound long-term investment strategy. The mere fact that YOLO stocks were chronic underperformers is a clear indicator that their price spikes are doomed to be grounded the moment the hype wears out.

However, if one is eager to try out YOLO investing, the first step would be to select the proper stocks. Reddit channels like Wallstreetbets are the go-to venue, where heated discussions and real-time updates can shed light on potential unicorns and gems. Doing some proper research is also vital, making sure that selected companies have high short interest and available call options, so essential for leveraged investments and bets on positive price traction.

Invest cautiously

YOLO is a fad, a fleeting phenomenon that is certainly not for the average or inexperienced investor. Such stocks are best suited for professional traders with leverage to spend, while novice or entry-capital market players should opt for lower-risk instruments like growth stocks, value stocks, dividend stocks, and large-cap stocks of major companies.

Considering that a great many YOLO investors entered the market out of boredom during the first lockdowns, or after being chatted into it by friends and message board users, the risks they bear with every cent injected are immense. YOLO is more like gambling with borrowed money, where the chances are teetering on the edge of the blade either way.

Far worse is the fact that YOLO stocks serve the experienced investor and the lucky few, attracting droves of fresh liquidity providers by splaying a handful of success stories as the norm of future stock performance for all involved. With less experience and even less money than previous generations, YOLO investors are playing naked with fire.

Wall Street Week Ahead Earnings: Caesars Entertainment, Home Depot, Lowe’s and Moderna in Focus

Investors will focus on December quarter earnings for stocks that are economically sensitive, which should show better profits than technology stocks. Increasing Treasury yields and risk aversion could hit the stock market hard over the coming months. In addition, investors will closely monitor the latest news on the rapidly spread Omicron coronavirus variant to see how it impacts earnings in 2022.

Earnings Calendar For The Week Of February 21

Monday (February 21)

The New York Stock Exchange and NASDAQ will all be closed on Monday, February 21 for President’s Day.

Tuesday (February 22)


CAESARS: The largest casino-entertainment Company in the U.S. company is expected to report its fourth-quarter loss of $-0.71 per share, up over 58%, better compared to a loss of $-1.7 per share seen in the same period a year ago. The Las Vegas-based company would post revenue growth of over 77% to $2.58 billion.

Caesars Entertainment (CZR) is currently trading at below its historical NTM multiple on 2023e EBITDAR, despite our expectation of >1,000bps higher core casino margins and faster growth. We believe regional casino markets (55% of mix) have structural tailwinds from customers acquired post-COVID and sports betting legalization,” noted Thomas Allen, equity analyst at Morgan Stanley.

“We expect CZR to improve its sports betting / iGaming market share in coming qtrs, a key driver to Gaming stocks in recent years. High leverage now (7.5x at YE21) but significant FCF and a planned Vegas asset should drive leverage to ~5x by YE22, opening up a broader investor base.”

HOME DEPOT: The largest home improvement retailer in the United States is expected to report its fourth-quarter earnings of $3.22 per share, which represents year-over-year growth of over 17% from $2.74 per share seen in the same period a year ago.

The home improvement retailer would post revenue growth of over 7% to $34.6 billion. The company has beaten consensus earnings estimates in most of the quarters in the last two years, at least.

“We are Overweight Home Depot (HD) given its best-in-class nature and structural housing tailwinds beyond N-T disruption from COVID-19. The stock seems attractively valued in the context of a potential 2021/2022 economic/housing boom,” noted Simeon Gutman, equity analyst at Morgan Stanley.


CNP CenterPoint Energy $0.33
HR Healthcare Realty Trust $0.44
HD Home Depot $3.22
M Macy’s $1.91
MDT Medtronic $1.38
PANW Palo Alto Networks $-0.42
TOL Toll Brothers $1.26


Wednesday (February 23)


Home improvement retailer Lowe’s is expected to report its fourth-quarter earnings of $1.69 per share, which represents year-over-year growth of over 27% from $1.33 per share seen in the same period a year ago. The company that distributes building materials and supplies through stores in the United States would post revenue growth of over 2% to $20.82 billion.

“We view Lowe’s (LOW) favourably given its longer-term transformation opportunity and structural industry tailwinds, with substantial near-term uplifts from COVID-19 spending shifts that likely translate to longer-term sales retention,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“Assuming a healthy underlying housing backdrop, we think comps can accelerate longer-term from stronger sales/sq ft trends, driven by e-comm accelerating, better in-stocks, product refreshes/exclusive launches, greater traction with Pro initiatives, and removing friction from the customer shopping experience. Combined with productivity initiatives, this should enable EBIT margin expansion going forward.”


BBWI Bath & Body Works $2.25
BCS Barclays $0.29
EBAY eBay $0.82
HEI Heico $0.57
NTAP NetApp $1.07


Thursday (February 24)


Moderna, the biotech company focused on drug discovery, is expected to report its fourth-quarter earnings of $8.62 per share, which represents year-over-year growth of over 1,340% from a loss of -$0.69 per share seen in the same period a year ago.

The Massachusetts-based biotechnology company would post revenue growth of 1,075% to around $6.71 billion.

“We are Equal-weight Moderna. While we believe there is long-term upside for Moderna, we believe the significant valuation increase associated with the success of the COVID-19 vaccine limits the near-term upside,” noted Matthew Harrison, equity analyst at Morgan Stanley.

“The company has taken an industrialized approach to developing mRNA based therapeutics and has rapidly generated a broad pipeline of 21 programs, 11 of which have entered clinical development. We believe Moderna’s mRNA drug development platform is more diversified and scalable compared with competitors, and is validated through broad partnerships with Merck and AstraZeneca. We see vaccines and rare diseases as the key valuation drivers of the company.”


ADSK Autodesk $0.89
AXON Axon Enterprise $-0.07
SQ Block $-0.06
CVNA Carvana $-0.76
DELL Dell Technologies $1.94
DISCA Discovery $0.84
GCI Gannett $-0.03
NTES NetEase $0.82
NKLA Nikola $-0.46
VMW VMware $1.44
ZS Zscaler $-0.57


Friday (February 25)

AES AES Corp. $0.46
CNK Cinemark Holdings $-0.16
DSX Diana Shipping $0.30
SSP E.W. Scripps $0.46
FL Foot Locker $1.46


Why Bed Bath & Beyond Stock Is Up By 8% Today

Bed Bath & Beyond Stock Rallies Despite Disappointing Quarterly Report

Shares of Bed Bath & Beyond have started today’s trading session with significant gains after the company released its quarterly results.

The company reported revenue of $1.88 billion and an adjusted loss of $0.25 per share, missing analyst estimates on both earnings and revenue.

The company noted that while sales were slow in September and October, they improved in November. Bed Bath & Beyond added that customer demand was strong but supply chain issues put pressure on sales, leading to a negative impact of $100 million in the quarter. According to the company, the impact was even higher in December.

What’s Next For Bed Bath & Beyond Stock?

While the report missed analyst estimates, traders rushed to buy the stock at the beginning of today’s trading session. Later, the stock found itself under pressure, but maintained healthy gains.

It looks that some market participants are ready to bet that supply chain problems are temporary and Bed Bath & Beyond will be able to successfully navigate the inflationary environment in 2022.

Analysts are a bit sceptical, and their estimates continued to move lower in recent weeks. Currently, analysts expect that Bed Bath & Beyond will report earnings of $0.78 per share in fiscal 2022 and earnings of $1.44 per share in fiscal 2023, so the stock is trading at roughly 10 forward P/E.

Back in 2021, the stock enjoyed several rallies as traders attempted to squeeze short sellers during the “meme stock” mania. The momentum was not sustainable, and Bed Bath & Beyond stock finished the year 2021 near $14.50 after touching highs at $53.90 in January 2021.

The short interest in Bed Bath & Beyond stock remains significant, but it looks that the interest in short squeezes (and “meme stocks” in general) has declined significantly. In this light, Bed Bath & Beyond will have to come up with real catalysts for its stock to have a chance to gain sustainable upside momentum.

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

What do FOMC ‘minutes’ Mean for the Stock Market?

When the Fed might begin unloading its bond holdings has fast become a red hot topic. The “minutes” released yesterday from the central bank’s December meeting indicate nearly all members favor starting the balance sheet reduction as soon as this year.

Monetary policy tightening

Investors largely view this sort of action as a form of monetary policy tightening designed to slow the economy and most believed it was still at least a year or even two away.

The Fed is currently on track to stop adding to its nearly $8.2 trillion worth of Treasuries and mortgage-backed securities by mid-March.

For what it’s worth, this is only the second time in its history that the Fed has embarked on an asset purchase “taper” program. After completing the previous (and first) “taper” in 2014, the Fed essentially maintained its balance sheet until 2018, when it began allowing some bonds to roll off. That was ended in 2019 however, when demand for bank reserves outstripped the Fed’s supply, causing volatility in short-term money markets and forcing the Fed to again add to its balance sheet.

Not surprisingly, investors are worried about the Fed once again making a misstep, especially considering that its balance sheet is twice the size it was in 2018.

It’s also worth noting that the Fed hasn’t lifted its benchmark interest rate since 2018.

Interest rates hike

Wall Street currently anticipates anywhere from two to four rate hikes this year, so this is another area where investors worry the central bank could get it wrong. The possibility that they simultaneously attempt to both raise rates and reduce asset holdings means double the chances of missing the mark.

As there is no Fed policy meeting in February, many Wall Street insiders fear that officials could move too aggressively at the upcoming January 25-26 meeting as they face increasing pressures to beat back inflation.

Nothing in recent data provides a reason the Fed might suddenly strike a more dovish tone, either. That includes the job market, which has struggled to return to pre-pandemic levels and which many bulls have hoped might sway the Fed to maintain supports for longer. However, even with nearly 4 million fewer jobs than what the U.S. had in January 2020, the Fed considers the labor market to be mostly healed.

Yesterday, ADP‘s private payroll report showed that employers added almost +900,000 workers in December, which is more than double the +400,000 gain expected from the Labor Department’s official report due on Friday. While the two data sets have diverged greatly in recent months, Friday’s report is still largely expected to exceed expectations.

Today, investors will be digesting the ISM Services Index. Most attention will be focused on the “prices paid” component, which fell slightly in November but was still the third-highest reading ever recorded. Other economic data today include International Trade and Factory Orders. Finally, earnings worth noting include Bed Bath & Beyond, Bridgestone, Conagra, Sanderson Farms, and Walgreens.

Earnings Week Ahead: Walgreens Boots Alliance, Constellation Brands and Acuity Brands in Focus

With the stock market ending 2021 on a strong footing, investors will carefully monitor the latest news on the rapidly spreading Omicron coronavirus to see how it affects the U.S. economy and earnings in 2022. The following is a list of earnings slated for release January 3-7, along with a few previews. Although next week’s earnings are unlikely to have much of an effect on major market movements, it is sufficient to gauge investors’ sentiment.

Earnings Calendar For The Week Of January 3

Monday (January 3)

No major earnings are scheduled for release.

Tuesday (January 4)

SGH Smart Global Holdings $1.74


Wednesday (January 5)

RPM RPM International $0.86
SMPL Simply Good Foods $0.35
UNF UniFirst $2.15


Thursday (January 6)


WALGREENS BOOTS ALLIANCE: The blue-chip pharmaceutical name is expected to report its fiscal first-quarter earnings of $1.22 per share, which is unchanged from the same period a year ago. The Deerfield, Illinois-based retail pharmacy provider’s revenue is predicted to slump more than 9% to around $32.9 billion.

The company has been able to beat earnings per share (EPS) estimates most of the time in the last two years. According to ZACKS Research, for the full-year earnings to be $4.91 per share and revenue of $131.5 billion.

Walgreens Boots Alliance operates a top 2 retail pharmacy chain in the US as well as Boots Pharmacy in Europe. The new Health Segment, guided to contribute as much as 60% to LT EPS growth in FY25 and beyond, carries significant investment requirements and integration risk. Management’s inexperience in healthcare could cause growing pains,” noted Ricky Goldwasser, Equity Analyst at Morgan Stanley.

“Risk of core operations slipping as focus increasingly shifts to healthcare.”

CONSTELLATION BRANDS: Beer and wine seller is expected to report its fiscal third-quarter earnings of $2.82 per share, which represents year-over-year growth of nearly 9% from $3.09 per share seen in the same quarter a year ago.

The New York-based Fortune 500 international beverage alcohol company revenue is predicted to slump more than 6% to around $2.28 billion. The company has been able to beat earnings per share (EPS) estimates twice in the last four quarters and revenue in all four.

According to ZACKS Research, for the full-year earnings to be $10.01 per share and revenue $8.64 billion.

“While Constellation Brands historically made its bones as a winery and distillery, we now view the firm as one of the most stellar brewers across our global coverage. After parlaying AB InBev’s antitrust quandary (as it sought to acquire Mexican brewer Grupo Modelo) into exclusive U.S. ownership rights to brands like Corona and Modelo, we see the firm’s overall Mexican beer portfolio as auspiciously situated at the confluence of unwavering secular and demographic trends. With an enviable growth profile and best of breed margins, we have confidence that the beer business can thrive even amid an evolving industry landscape,” noted Jaime M. Katz, Senior Equity Analyst at Morningstar.

“The firm’s outlook is not completely rosy, particularly with its wine and spirits business in flux. It has divested lower-quality brands as it places more intentionality behind its “high growth, high margin “long-term strategy, but the remaining brands (such as Meiomi, Kim Crawford, Svedka vodka, and High West craft whiskey) will still face rife competition. Constellation’s foray into explosive-growth categories like hard seltzer are also demanding nontrivial investment, given the competitive intensity and brand equity already built up by the incumbents. Nevertheless, we believe the experience of the management team will allow the firm to navigate these risks.”


BBBY Bed Bath & Beyond $0.03
CAG ConAgra Brands $0.67
FC Franklin Covey $0.05
HELE Helen of Troy $2.87
KRUS Kura Sushi USA $-0.16
PSMT PriceSmart $0.95
SCHN Schnitzer Steel Industries $1.63
WDFC WD-40 $1.25


Friday (January 7)


The lighting and building management firm is expected to report its fiscal first-quarter earnings of $2.2 per share, which represents year-over-year growth of over 17%, up from $1.87 per share seen in the same period a year ago.

The Atlanta, Georgia-based company would post year-over-year revenue growth of more than 11% to around $ 880.24 million. The company has been able to beat earnings per share (EPS) estimates most of the time in the last two years.

“We remain constructive on Acuity’s product breadth, top-notch agent channel, and leadership in control integration. This positioning should allow the company to outperform the market, even when macro challenges present themselves. The company boasts a 40%+ gross margin and has a strong cash flow generation profile,” said Jeffrey Osborne, equity analyst at Cowen in Oct 6 research note.

“As macro conditions improve we expect more large-scale higher-margin projects will begin to move off the sidelines. This should help to further support the company’s margin profile longer term. We believe that Acuity is differentiated relative to its peers and has an early lead in the intelligent building market thanks to its Distech and Atrius products. Longer-term, we see an opportunity in the UVC germicidal market and believe the company is well-positioned given its many partnerships in the space.”


AYI Acuity Brands $2.2


What to Expect in the Markets in 2022

In 2021 the S&P 500 has returned more than 15% for the third straight year, investors have to wonder whether there will be any more upside in the stock market over the coming year. The S&P 500 have risen about 27% last year, and the index’s P/E ratio is above its long-term average, which raises concerns about overbought conditions. A forward price-to-earnings ratio of 21.3 significantly exceeds the long-term average of 15 for the S&P 500.

In addition, earnings are expected to slow down this year after a strong 2021. In light of the newly hawkish U.S. Federal Reserve and the ever-evolving virus, analysts and investors are having a difficult time gauging the future direction of the stock market.

With the high inflation rate, investors are facing more uncertainty as they attempt to justify record stock prices, and the fast-spreading new Omicron variant is putting an end to the optimistic hopes that the global economy would improve by 2022.

“We expect solid economic and earnings growth in 2022 to help U.S. stocks deliver additional gains (this) year. If we are approaching—or are already in—the middle of an economic cycle with at least a few more years left (our view), then we believe the chances of another good year for stocks in 2022 are quite high. We believe the S&P 500 could be fairly valued at 5,000–5,100 at the end of 2022, based on an EPS estimate of $235 for 2023 and an index P/E between 21 and 21.5,” noted Ryan Detrick, CMT, Chief Market Strategist, LPL Financial.

“Prospects for above-average economic growth and accompanying earnings gains in 2022 point to another potentially good year for stock investors. While the pandemic is not completely behind us as the COVID-19 Omicron variant spreads rapidly (though with a high proportion of mild cases), and there are several other risks to watch, particularly inflation, stocks have historically done well in mid-cycle economies. We do not expect 2022 to be an exception,” LPL Financial’s Detrick added.

Jurrien Timmer, Fidelity’s global macro director, believes that stocks are poised to deliver positive returns in 2022, but not as much as they did this year, due to a slowdown in earnings growth and a tightening of monetary policy by the U.S. Federal Reserve.

“Since the brief-but-sharp 35% decline almost 2 years ago, US stocks have risen to record highs, thanks in part to the timely and massive fiscal and monetary policy response to COVID-19 and the resulting lockdowns,” noted Jurrien Timmer, director of global macro in Fidelity’s Global Asset Allocation Division.

“Now as 2022 begins, I expect the markets to mean-revert back to trend-like growth, and for the Fed to take the first steps on the road back to a neutral monetary policy,” he added.

As stock market trends continue to change rapidly in the pandemic world, it is becoming increasingly difficult to predict future stock performance, especially with analysts and investors dealing with hawkish central banks, on the one hand, and the risk of a further economic shutdown on the other.

According to a report, three FAANG stocks will be closely watched this year. In the context of the broader stock market’s recovery, tech stocks are once again in focus. Among the most successful stocks in the sector, the FAANG stocks shine brightest as S&P 500 companies with a tech component make up a large portion of the index. In case you’re not familiar, this group of stocks includes Meta Platforms (formerly known as Facebook), Amazon, Apple, Netflix, and Google’s parent company Alphabet will be in focus in 2022.

Stock Market Correction: One More Spark to Light the Fire?

While the USD Index was largely flat on Sep. 30, the EUR/USD closed at a new 2021 low. And because the currency pair accounts for nearly 58% of the movement of the USD Index, its performance is material. Moreover, while I’ve been warning for months that the Fed and the ECB are worlds apart, the EUR/USD still hasn’t priced in the magnitude of the divergence.

Please see below:

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To explain, the chart on the right is where you should focus your attention: the purple bars above depict the change in investors’ hawkish central bank bets since Sep. 20, while the pink diamonds above depict the performance of various currencies during that same timeframe. If you analyze the column labeled “USD,” you can see that the Fed’s hawkish rhetoric has ramped up bets on further tightening.

However, if you analyze the pink diamond near the bottom of the purple bar, you can see that the U.S. dollar’s performance hasn’t matched the fervor. Conversely, if you analyze the column labeled “EUR,” you can see that investors’ expectations of lower-for-longer Eurozone interest rates haven’t budged, and the euro has held up quite well.

For context, the GBP (11.9% of the USD Index’s movement) and the CAD (9.1% of the USD Index’s movement) have largely offset one another. With the former not pricing in any of investors’ hawkish bets and the latter pricing in nearly all of investors’ hawkish bets, the divergence is largely a wash. However, with the U.S. dollar still underpriced and few upside catalysts available for the euro, more EUR/USD downside should commence over the medium term.

Supporting that argument, Jeremy Stretch, Head of G10 FX Strategy at CIBC Capital Markets, told clients that “the ECB is intent upon maintaining favorable financing conditions to perpetuate the recovery narrative. As a consequence, we expect the central bank to consider PEPP transitioning into the Asset Purchase Programme [APP].” And with that, “slower growth into 2023 will help limit medium-term price gains.

Although headline HICP risks testing 13-year highs, the ECB’s adjusted inflation remit will allow the bank to look through short-term price spikes, especially as core prices are expected to remain relatively well-contained. Alongside fiscal policy developments, that will promote a lower-for-longer trajectory for interest rates, and as a result, a weaker EUR in 2022.”

And advocating for just that, ECB Governing Council Member Mario Centeno told CNBC on Sep. 27 that “we were fooled by some news on inflation in the past, which prompted us to act in the wrong way, so we don’t want, definitely, to commit the same sort of errors this time…. We need to guarantee favorable financing conditions to all sectors in our economy as we go out of [the] crisis, and we are not yet there, we are not yet out of the woods.”

And how does all of this impact Centeno’s taper timeline?

TextDescription automatically generatedSource: CNBC

In addition, while the ECB’s PEPP program should conclude at the end of March 2022, its APP program isn’t going anywhere. And when the central bank announced its PEPP “recalibration” on Sep. 9, I warned that the ECB’s liquidity spigot should remain on full blast much longer than the Fed’s.

I wrote:

While the deceleration may seem like a monumental shift, the move is much more semblance than substance: net APP purchases will still be reinvested “for an extended period of time past the date when [the ECB] starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favorable liquidity conditions and an ample degree of monetary accommodation.”

Likewise, with many ECB officials aiming to avoid a “cliff effect” when the PEPP program unwinds, Reuters reported that the central bank could expand its APP program to offset the damage. The bottom line? Tapering in Europe is nothing like tapering in the U.S.

Please see below:

TableDescription automatically generated with medium confidence Source: Reuters

Reverse Repos Strike Again

Also supporting a stronger U.S. dollar, the Fed’s waterfall of QE is running out of reservoirs. And after 92 counterparties drained nearly $1.605 trillion out of the U.S. financial system on Sep. 30, the Fed’s daily reverse repurchase agreements hit another all-time high.

Please see below:

Graphical user interfaceDescription automatically generatedSource: New York Fed

To explain, a reverse repurchase agreement (repo) occurs when an institution offloads cash to the Fed in exchange for a Treasury security (on an overnight or short-term basis). And with U.S. financial institutions currently flooded with excess liquidity, they’re shipping cash to the Fed at an alarming rate. And while I’ve been warning for months that the activity is the fundamental equivalent of a taper – due to the lower supply of U.S. dollars (which is bullish for the USD Index) – as we await a formal announcement from the Fed, the U.S. dollar’s fundamental foundation remains robust.

Furthermore, with the Fed’s daily reverse repos averaging $642 billion in June, $848 billion in July, $1.053 trillion in August, and $1.211 trillion in September, the accelerated liquidity drain further supports a stronger U.S. dollar.

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Stock Market On Its Last Legs?

What’s more, with the safe-haven bid also an important piece of the USD Index’s puzzle, the stock market’s recent struggles still haven’t manifested into a full-blown correction. However, with seasonal factors signaling more weakness ahead, a profound drawdown of the S&P 500 could accelerate the pace of the USD Index’s uprising.

Please see below:

ChartDescription automatically generated

To explain, the blue and green bars above track the average monthly performance of the S&P 500 after a new U.S. President takes office. If you analyze the columns labeled “Sep” and “Oct,” you can see that the end of summer often elicits the worst monthly performances. And while the S&P 500 capped off September with a 1.19% decline, the weakness should continue in October.

As evidence, Bed Bath & Beyond’s stock plunged by more than 22% on Sep. 30. And with supply chain disruptions and weak demand clashing with U.S. policy uncertainty, optimism is on shaky ground. For example, the retailer’s second-quarter adjusted EPS came in at $0.04 vs. $0.52 expected, while revenue came in at $1.99 billion vs. $2.06 billion expected. Moreover, the company slashed its third-quarter adjusted EPS guidance to between flat and $0.05, with revenue ranging from $1.96 billion to $2 billion. Analysts were expecting figures of $0.28 and $2.02 billion respectively.

And while I’ve highlighted the issue on several occasions, CFO Gustavo Arnal lamented the fervor of surging freight costs. He said during the company’s Q2 earnings call:

“What we’re seeing now in the second quarter is, look, significant freight cost increases well above what we had anticipated. We had anticipated 240 basis points. We got 360 basis points. We’re still projecting some sequential increase in freight costs as we go from Q2 to Q3.”

Furthermore, CEO Mark Tritton said that the Delta variant has also “created a challenging and volatile environment:”

“In August, the final and largest sales month of Q2, traffic unexpectedly slowed, and, therefore, sales did not materialize as we had anticipated. External disruptive forces such as the resurgence of COVID-19 cases and growing Delta fears created a challenging and volatile environment. This is particularly evident in large southern states, such as Florida and Texas, as well as California, which, in aggregate, represent approximately 30% of our total sales. From July to August, traffic trends evolved in this state and worsened by double-digit percentages.”

As a result:

“As the quarter progressed, particularly in August, conditions worsened relative to our thoughtful preparations. The speed of industry inflation and lead time pressures outpaced our plans to offset these headwinds, and as a result, we did not pivot fast enough, especially on price and margin recovery.”

The bottom line? With the U.S. dollar already supported by a strong technical and fundamental foundation, a profound correction of the S&P 500 could be the next spark that lights the bullish fire. And with earnings season beginning in early/mid-October, more disappointments like what we witnessed with Bed Bath & Beyond could encourage the next correction. More importantly, though, given the PMs’ strong negative correlations with the U.S. dollar, a sharp move higher in the greenback could coincide with a sharp move lower in the PMs.

In conclusion, the PMs rallied on Sep. 30, but the bearish thesis remains unchanged: the USD Index is poised for an upward re-rating and U.S. Treasury yields still have the medium-term wind at their backs. Moreover, with the general stock market showing signs of stress, a real bout of panic could also uplift the USD Index and upend the PMs. As a result, lower precious metals prices should materialize over the next few months.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and silver that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported.

The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


Why Bed Bath & Beyond Stock Is Down By 25% Today

Bed Bath & Beyond Stock Falls After Quarterly Report Misses Analyst Estimates

Shares of Bed Bath & Beyond found themselves under strong pressure after the company released results of its second fiscal quarter. Bed Bath & Beyond reported revenue of $1.99 billion and adjusted earnings of $0.04 per share, missing analyst estimates on both earnings and revenue.

The company stated that traffic slowed significantly in August and sales missed company’s expectations. According to Bed Bath & Beyond, fears about the Delta variant of coronavirus were the main driver behind the slowdown in traffic.

In addition, the company was hit by supply chain problems and cost inflation. In fact, inflation was higher than the “significant increases” already anticipated by the company!

A combination of lower sales and higher costs has put material pressure on the company’s financial results in the second fiscal quarter. In the fiscal 2021 third quarter, Bed Bath & Beyond expects to report revenue of $1.96 billion – $2 billion and adjusted earnings of $0.00 – $0.05 per share.

What’s Next For Bed Bath & Beyond Stock?

Currently, analysts expect that Bed Bath & Beyond will report earnings of $1.51 per share in the current year and $2.14 per share in the next year, so the stock is trading at 8 forward P/E. However, earnings estimates have began to move lower in recent weeks and will move further down after the earnings report.

It should be noted that Bed Bath & Beyond stock has previously enjoyed support from the “meme crowd” of retail traders who were buying stocks which were popular on social media.

In Bed Bath & Beyond’s case, fundamentals have already began to put pressure on the stock, which is a warning for investors in other “meme stocks” like GameStop or AMC.

It remains to be seen whether speculative traders will rush to buy the company’s shares after the pullback as it looks that problems with global supply chain and higher costs will remain in the upcoming months. The stock will need positive catalysts to gain upside momentum.

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

Bed, Bath & Beyond Crushed After Earnings

Bed, Bath & Beyond Inc. (BBBY) is trading at a 52-week low on Thursday morning after missing fiscal Q2 2021 estimates by a wide margin and lowering Q3 earnings-per-share (EPS) guidance below consensus. The specialty retailer posted a profit of just $0.04 per-share during the quarter, missing expectations by an outsized $0.48, while revenue fell a disturbing 26.2% year-over-year to $1.99 billion, about $700 million below expectations.

Red Flag Warning for Retailers

Comparable sales fell 1% year-over-year, reflecting slower-than-expected August traffic trends in reaction to the Delta variant, but Q2 2020 metrics were skewed by reverberations after the March lockdown last year. The guidance takedown was steep, dropping Q3 EPS to $0.00 or slightly above, compared to a healthier $0.29 per-share. This warning signals an uptick in retail management bearishness compared to most Q2 reports.

Mall complexes have been under pressure for years due to the secular rotation out of brick and mortar sales and into e-commerce. The pandemic super-charged these headwinds, forcing department stores to shut down less profitable operations that have kept many malls afloat in recent years. The closing of Sears and J.C. Penney has contributed to this phenomenon, impacting Bed, Bath & and Beyond because many locations surround these dying properties.

Wall Street and Technical Outlook

Wall Street consensus is mixed, with a ‘Hold’ rating based upon 2 ‘Buy’, 1 ‘Overweight’, and 13 ‘Hold’ recommendations.  Unfortunately for bulls, 5 analysts now recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of just $19 to a Street-high $44 while the stock opened Thursday’s session more the $3 below the low target. Sadly, the warning suggests many analysts will reduce current targets at both ends.

Bed, Bath, & Beyond topped out near 80 in 2013 and broke down from a topping pattern in 2015, entering a downtrend that plunged to a 24-year low in March 2020. It broke out above the 2019 swing high at 17.79 in October, entering a two-legged advance that posted a 6-year high in January 2021. A lower June high filled out a heavy topping pattern that’s now broken 2021 support in the low 20s. The October 2020 unfilled gap at 14.31 looks like the downside target.

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

Disclosure: the author held no positions in aforementioned securities at the time of publication.

The Shares Of Bed Bath & Beyond Dips As Supply Chain Issues Affects Sales

The shares of Bed Bath & Beyond are down by more than 25% at Thursday’s pre-market trading as the company reports that supply chain issues have affected its sales.

Supply Chain Issues Affects Sales

The shares of Bed Bath & Beyond have been underperforming over the past few hours after the company reported that supply chain issues had affected its sales in recent months. The company’s stock price is down by more than 20% at Thursday’s pre-market trading session, making it one of the worst performers today.

The decline in traffic last month affected Bed Bath & Beyond’s fiscal second-quarter sales. Chief Executive Mark Tritton said the big-box retailer is currently facing some supply chain issues. Furthermore, the rising inflation levels have negatively affected Bed Bath & Beyond’s revenue in the previous quarter.

According to Bed Bath & Beyond’s earnings report, the revenue in the previous quarter was $1.99 billion, which is lower than the $2.06 billion expected by Wall Street analysts. The company’s adjusted earnings per share in the fiscal second quarter was 4 cents, which is also lower than the 52 cents that were estimated by the market analysts.

In the last quarter, Bed Bath & Beyond lost roughly $73 million or 72 cents per share. This is poor considering it made a net income of $217.9 million, or $1.75 per share in the same period last year. Its revenue also declined by 26% from the same quarter last year.

BBBY Stock Price Dips By More Than 25%

These poor performances have led Bed Bath & Beyond to slash its revenue and earnings outlook for the year. Furthermore, the company’s third-quarter guidance looks underwhelming, indicating that it doesn’t see the situation improving anytime soon.

BBBY stock chart. Source: FXEMPIRE

BBBY’s price is down by 28% in Thursday’s pre-market trading session. The company’s stock was trading at $22 at the close of the market on Wednesday, but it is now trading at $15.87 per share. Year-to-date, BBBY is down by roughly 7%. It started in 2021 trading at $18 per share, but it is now trading below that level.

With its current outlook, it is highly likely that the shares of Bed Bath & Beyond could suffer more losses over the coming days and months.

Earnings Week Ahead: IHS Markit, Micron, CarMax and Bed Bath & Beyond in Focus

Earnings Calendar For The Week Of September 27

Monday (September 27)

Ticker Company EPS Forecast
HRB H&R Block -$0.34

Tuesday (September 28)


IHS MARKIT: The leading provider of data and analytics to corporate is expected to report its fiscal third-quarter earnings of $0.83 per share, which represents a year-over-year decline of about 8% from $0.77 per share seen in the same period a year ago.

The company is expected to post revenue growth of over 9% to $1.17 billion. According to ZACKS Research, in all of the company’s last four quarters, earnings surpassed the consensus estimate. Earnings surprise has averaged 5.4% over its trailing four quarters.

IHS Markit is a leading supplier of information services across multiple verticals with an attractive business model. We believe the synergy potential with SPGI will lead to cost savings and access to underpenetrated revenue markets,” noted Toni Kaplan, equity analyst at Morgan Stanley.

“Recovery in auto sales from COVID-19 is occurring faster than previously anticipated. We expect the energy market to become more accommodative in ’21 and ’22 following the crude oil price rebound.”

MICRON TECHNOLOGY: The world’s leading semiconductor manufacturer is expected to report its fiscal fourth-quarter earnings of $2.33 per share, representing year-over-year growth of more than 115% from $1.08 per share seen in the same quarter a year ago.

The semiconductor company is expected to post revenue growth of over 30% to around $8.2 billion from a year earlier.


Ticker Company EPS Forecast
SMIN Smiths £39.71
INFO IHS Markit Ltd $0.83
THO Thor Industries $2.98
UNFI United Natural Foods $0.80
MU Micron Technology $2.33

Wednesday (September 29)

Ticker Company EPS Forecast
JBL Jabil Circuit $1.38
CTAS Cintas $2.75
WOR Worthington Industries $1.86
MLHR Herman Miller $0.54
NXT NEXT £37.38

Thursday (September 30)


CARMAX: The United States’ largest used-car retailer is expected to report its fiscal second-quarter earnings of $1.85 per share, which represents year-over-year growth of over 3% from $1.79 per share seen in the same period a year ago.

The Goochland County-based used car giant would post year-over-year revenue growth of over 28% to $7.0 billion.

BED BATH & BEYOND: The U.S.-based merchandise retailer is expected to report its fiscal second-quarter earnings of $0.52 per share, which represents year-over-year growth of around 4% from $0.50 per share seen in the same period a year ago.

The company that operates many stores in the United States, Canada, Mexico, and Australia would see a revenue decline of about 23% to around $2.5 billion.


Ticker Company EPS Forecast
KMX CarMax $1.85
MKC McCormick $0.73
PAYX Paychex $0.80
BBBY Bed Bath & Beyond Inc. $0.52

Friday (October 1)

No major earnings are scheduled for release.

Bed Bath & Beyond Shares Soar Following Massive Q1 Sales

The shares of Bed Bath & Beyond are soaring today after the company reported a massive increase in sales during the first quarter of the year. The company is now one of the best-performing stocks today.

Bed Bath & Beyond Records Huge Q1 Sales

Bed Bath & Beyond Inc., a US-based chain of domestic merchandise retail stores, reported its fiscal Q1 sales a few hours ago. The company recorded a nearly 50% surge in sales during the first quarter of the year, with initiatives such as launching new brands and remodeling stores, helping it to attract more customers.

Following its jump in sales, Bed Bath & Beyond Inc. reported earnings per share of 5 cents adjusted vs. 8 cents expected. Meanwhile, the revenue was $1.95 billion vs. $1.87 billion expected. The retail company also managed to reduce its net loss to $51 million, or 48 cents per share, from a loss of $302 million, or $2.44 per share in the same period last year.

Overall, net sales for Bed Bath & Beyond surged by 49% to $1.95 billion from $1.3 billion a year earlier, surpassing the $1.87 billion estimated by analysts. Digital sales accounted for 38% of the company’s total sales as more customers continue the trend of buying online and picking up the products at a nearby Bed Bath & Beyond store.

Chief Executive Mark Tritton said, “We’re in the early stages of our transformation. Our first-quarter results prove we continue to deliver profitable growth as we reestablish our authority in home.”

Bed Bath & Beyond Shares Up By 14%

Bed Bath & Beyond’s shares are rallying at the start of the trading session this morning. At the time of this report, Bed Bath & Beyond is trading above $32.5, which represents a 9% increase from its previous day’s trading price.

BBBY stock chart. Source: FXEMPIRE

Prior to the start of today’s trading session, over 23 million shares had changed hands, which is above its 10-day average volume of 5.7 million.

Today’s Market Wrap Up and a Glimpse Into Wednesday

Stocks finished modestly higher, with all three indices closing in the green. The S&P 500 managed to set another record, the broader market index’s fourth in a row, on robust economic data, though it finished off its highs of the session. Today marks the 33rd time that the S&P 500 has reached all-time-high territory year-to-date.

Homebuilders were a bright spot after S&P Case-Shiller revealed that home prices climbed close to 15% higher in April year-over-year on the heels of a 13.3% gain in March. The home price index hasn’t been at this level in more than three decades.

Tech stocks led by Apple powered the Nasdaq to its latest all-time high. Wall Street analysts are eyeing chip stocks as beneficiaries of the introduction of the iPhone 13. Along those lines, Skyworks Solutions advanced 4.5% today. Consumers are exhibiting great confidence, with the Conference Board’s June results coming in stronger than anticipated.

The Dow Jones Industrial Average barely eked out a win, no thanks to Caterpillar, which is down 11% in the month of June alone. Otherwise, inflation worries appear to have been shelved for now. Investors, however, have plenty more data to weigh this week that might help to determine whether the bulls will remain in control.

Active Stocks

  • Virgin Galactic shed 14% on the day. Investors who are eyeing the stock ahead of Richard Branson’s company’s first commercial trip to space might consider it a buying opportunity. Virgin Galactic is proceeding with test flights this summer. Rival space travel company Blue Origin, founded by Jeff Bezos, plans to make its first flight with passengers next month, the excitement for which could spill over into Virgin Galactic.
  • Context Logic, a mobile e-commerce company that is another meme stock play, gave back some recent gains, falling 7%. The stock, which trades under the symbol WISH, is up almost 75% in the month of June in this new market paradigm.

Look Ahead

Second-quarter earnings reports will start to come out in earnest in the coming weeks. On Wednesday, meme stock Bed Bath & Beyond will take the spotlight with its fiscal Q1 earnings report prior to the opening bell. The stock is trading higher by 1% in after-hours.

The ADP employment report comes out at 8:15 a.m. ET ahead of the all-important employment report on Friday. In addition, there are a couple of Fed officials scheduled to speak on Wednesday, including Atlanta Fed President Raphael Bostic and Richmond Fed President Tom Barkin.

Stocks Gear Up for Monday After Record-Setting Performance

Stocks rallied on Friday as investor fears about inflation faded even after the Federal Reserve turned unexpectedly hawkish recently. The S&P 500’s modest gains were enough to send the index to yet another record high, reaching 4,280.70.

Financial stocks helped to catapult the broader market index higher after banks passed the Fed’s stress test with flying colors, giving them the all-clear to distribute dividends and buy back shares once again. May personal consumption expenditures, data that monetary policymakers use to gauge inflation, rose 3.4% YoY, as expected, which helped to tame inflation worries.

The S&P 500 advanced 2.7% for the week, its biggest weekly gain since early 2021. The Dow Jones Industrial Average also closed in the green, fueled by gains of more than 15% in apparel stock Nike. Meanwhile, the Nasdaq took a slight step backward after feeling pressure from higher bond yields.

In early Sunday evening, stock futures are higher across the board as investors look to keep the rally going and potentially send the S&P 500 to another new peak. This week, all eyes will be on Friday’s employment report, but there are some stocks to keep an eye on in the interim.

Stock Spotlight

Nike might have risen by a double-digit percentage on Friday, but there could be more room for this growth stock to run. Not only did Nike see its quarterly revenue about double YoY, but both the company and Wall Street expect the good times to continue.

UBS analysts said in a report that Nike has not yet reached a top, as the company continues to benefit from a shift in consumer behavior toward healthier habits as well as its own digital push. UBS has a price target of USD 185 on the stock, which closed last week at USD 154.

Other Stocks to Watch

  • GameStop muscled its way into the large-cap scene. As expected, the meme stock was added to the Russell 1000 index after qualifying once its market cap ballooned by billions of dollars YTD.
  • On the earnings front, Bed Bath & Beyond, which has attained meme stock status among retail investors, will report its quarterly earnings on Wednesday.

Look Ahead

On the economic front, there are a handful of indicators to watch out for. On Thursday, the Construction Spending report will be released for May. Also on Thursday, investors will get a read on ISM Manufacturing for June after the index beat estimates in May, climbing to a reading of 61.2.

And finally, on Friday, the employment report for June will be released after the economy added nearly 560K new jobs in May. Wells Fargo predicts that the economy added 750K non-farm payrolls in June, according to a report.