Netflix Grinding Out Long-Term Top

Netflix Inc. (NFLX) reports Q4 2021 results after Thursday’s closing bell, with market watchers expecting the streaming service to post a profit of $0.82 per-share on $7.71 billion in revenue. If met, earnings-per-share (EPS) will mark a 31% decline compared to the same quarter last year, when social distancing underpinned subscriber growth. The stock fell 1% after warning about Q4 results in October but recovered quickly, posting an all-time high about one month later.

Hit or Miss Entertainment Pipeline

Analysts are worried that creative execution remains ‘predictably erratic”, compounded by the high volume of new releases. Sadly, for every “Squid Game” mega-hit, Netflix has produced a treasure-trove of unwatchable garbage like the quickly cancelled “Cowboy Bebop”.  In addition, expensive one-off releases that include the poorly-reviewed ‘Red Notice’ have attracted a generous number of eyeballs but are showing little power to stoke slumping subscription rates.

The Benchmark Company analyst Matthew Harrigan reiterated his ‘Sell’ rating recently, warning that price increases could adversely impact bottom line growth, As he notes, “Valuation is vulnerable to inflationary expectations, given limited immediate free cash flow and possible consumer recalcitrance in tolerating price increases. All else equal, an increase in anchored inflation expectations to 4% from 2% … would lower our fair 2022 NFLX valuation to $390.”

Wall Street and Technical Outlook

Wall Street consensus now stands at a ‘Moderate Buy’ rating based upon 26 ‘Buy’, 7 ‘Overweight’, 10 ‘Hold’, 1 ‘Underweight’, and 3 ‘Sell’ recommendations. Price targets currently range from a low of $342 to a Street-high $800 while the stock is set to open Thursday’s session about $180 below the median $700 target. This poor placement highlights Main Street apathy due to high valuation, slowing subscription growth, and the broad rotation out of growth plays.

Netflix broke out above 2018 resistance at 425 in April 2020 and entered a powerful uptrend that topped out below 600 in July. That resistance level held into a September 2021 advance that ended just above 700 in November. Price action since that time has been dismal, yielding a failed breakout and persistent downdraft that’s quickly approaching broad support near the July 2020 low. The 18 month return to investors has now dropped to zero, consistent with a long-term top.

Catch up on the latest price action with our new ETF performance breakdown.

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

In The Spotlight – Big Wall Street Banks as the Main Power in S&P 500

Banks’ earnings

Big Wall Street banks are in the spotlight right out of the gate with Goldman Sachs set to release results before markets open. They will be followed by Bank of America, Morgan Stanley, and U.S. Bancorp tomorrow (Wednesday). Bank results got off to a mixed start on Friday. JPMorgan Chase, Citigroup, and Wells Fargo all topped profit estimates for Q4 but JPMorgan and Citi delivered disappointments in other areas.

In particular, investors are nervous about higher expenses that cut into Q4 profits for both JPMorgan and Citi and which both banks forecast would continue to weigh on results in 2022. JPMorgan and Citi also saw -11% decreases in trading revenue, with fixed income trading down by double digits for both.

There are also signs of slowing loan growth that some analysts worry is an early sign of slowing consumer demand for big-ticket items as inflation continues to climb. While banks will eventually benefit from higher U.S. interest rates that are anticipated in the year ahead, a big pullback in consumer lending is a threat to some of the more lofty Wall Street expectations had for the sector in 2022.

Global economy

Globally, not a lot changed over the extended weekend. China might have provided a bit of a surprise with additional monetary easing into a struggling GDP and sagging real estate prices. It’s worth noting, Omicron has now been detected in Beijing for the first time, just three weeks before the city is due to host the Winter Olympics. Now the Chinese are shutting down and suspending the sale of Olympic tickets to the public.

Tensions remain heated between Hong Kong activists and Chinese government officials. North Korea launched its fourth missile test this month. After North Korea’s missile test last week, the US announced sanctions on eight North Korean and Russian individuals and entities for supporting North Korea’s ballistic missile programs.

Tensions between the U.S. and Russia seem to be headed in the wrong direction with Russia over the weekend moving troops and equipment into Belarus for joint military exercises.

The so-called “Allied Resolve” drills are set to take place near borders with NATO members Poland and Lithuania, as well as Ukraine where Russia has maintained its alarming military presence.

Most U.S. military experts don’t really think Russia has any real intentions of invading Ukraine or any other EU country. However, Western countries also have increased their military presence along borders and other strategic locations which increases the chances that a broader conflict could “accidentally” be sparked.

Europe’s gas supplies are also at risk as Russia continues to dangle the threat of cutting them off. Most of the tension stems from Russia’s demand that former Soviet countries be barred from entering NATO, something the U.S. and other NATO allies have refused.

In the USA, we are heading deeper into earnings season and investors are going to be paying close attention to costs and expenses. As I mentioned, late last week, JPMorgan warned that higher expenses and higher spending on hiring in 2022 could create some headwinds.

Looking ahead, it will be interesting to see how many executive teams start providing guidance and warnings that corporate expenses are rising faster than anticipated and what if any damage will be due to profit margins?

Remember, some companies have said they are passing the additional rising costs on to the consumer while other companies are eating a majority of the higher expenses in an attempt to gain more market share.

How the stock market decides to differentiate the strategy and style could greatly impact money flow and valuations. Goldman Sachs, J.B. Hunt, Charles Schwab, Citrix, Concentrix, and Interactive Brokers report earnings today.

Data to watch

Tomorrow we have Alcoa, Bank of America, Kinder Morgan, Morgan Stanley, Procter & Gamble, and United Airlines.

Thursday we have American Airlines, Baker Hughes, Netflix, and Union Pacific.

Then next week we have big names like Apple, Boeing, Caterpillar, McDonalds, Microsoft and Verizon reporting earnings.

Let’s also not forget next week we have the first Fed FOMC meeting of the new year.

With the U.S. Federal Reserve getting ever closer to implementing its first rate hikes, which most anticipate will begin in March, investors are growing less enchanted with some of the high-growth and momentum stocks that saw outsized share price gains last year.

This trend is most evident in the tech-heavy Nasdaq where nearly half of the index’s stocks have fallen by -50% from their recent peaks. The Nasdaq itself is only down by about -7% from its most recent record high. The selloff has been very much concentrated in highly-leveraged companies that have yet to deliver a profit, as the prospect of higher rates reduce future profit potential. Earnings results from these high-fliers will likely be harshly scrutinized as Wall Street tries to separate the “wheat from the chaff,” so to speak.

On the economic data front, Empire State Manufacturing and the NAHB Housing Market are today’s highlights.

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

Markets Wary Of Oil And Bond Yield Highs, As Focus Shifts To Corporate Earnings

Asian shares were a mixed bag on Tuesday due to the absence of cues from Wall Street following a national holiday in the United States. But European and U.S. equity futures are flashing red amid a jump in Treasury yields, as investors brace for the Federal Reserve to raise interest rates four times this year to tame inflation.

Brent crude ventured to its highest level since 2014 due to geopolitical tensions in the Middle East, while gold struggled for direction above $1810. In the currency arena, king dollar pushed higher while the yen weakened this morning after the Bank of Japan concluded a two-day policy meeting with no major changes.

This will certainly be a big week for financial markets as investors juggle the various themes influencing global sentiment. Equity markets will look to company results for some direction as the fourth-quarter earnings season gets into full swing. Reports from the US banks who have so far reported paint a mixed picture with JP Morgan Chase, a financial bellwether, closing down more than six per cent on Friday after the bank said rising costs would curtail profits in 2022 even as it posted record full-year earnings. Heavyweights such as Goldman Sachs and Bank of America, as well as Netflix among many others will be under the spotlight this week.

The burning question on the minds of investors could be what impact rising inflation and the emergence of the Omicron variant will have on final quarter earnings. Should we witness another mixed or disappointing week of results, this could sap more confidence from stock market bulls, especially when considering that the broader S&P500 index is already down over 2% so far this year.

A wild week ahead for the Pound?

The British pound could be injected with volatility this week due to the series of key economic reports and potential political drama at Westminster.

Market expectations already remain elevated over the Bank of England raising interest rates next month, with traders pricing in around an 91% chance of a 25bp rate hike. The argument for higher rates may be reinforced this week if the pending data meets or exceeds forecasts.

On the political front, Prime Minister Boris Johnson remains under pressure to resign over ‘partygate’. Given how it has been reported that as many as 30 letters of no confidence in Boris Johnson have been submitted by Tory MPs, things are bound to get heated. A total of 54 letters of no confidence would have to be submitted to Sir Graham Brady, chairman of the 1922 Committee of backbench MPs, for a vote to be held.

Looking at the technical picture, GBPUSD remains bullish on the daily charts. However, there seems to be resistance around the 200-day Simple Moving Average at 1.3734. A decline towards 1.3600 could be on the cards after such a strong run since the December lows, before bulls snatch back momentum for a push towards 1.3700 and 1.3830.

Commodity spotlight – Oil

Brent crude marched into Tuesday’s session, with prices climbing to fresh seven-year highs as geopolitical tensions bubbled in the Middle East. Iran-backed Yemini fighters claimed to have launched drone strikes on the United Arab Emirates, the third-biggest OPEC producer. Brent is up almost 2% this week and has appreciated close to 13% since the start of 2022. Prices are above $87.70 this morning, with bulls eyeing $88 and $90 as upside targets.

Commodity spotlight – Gold

Gold could be flung into the firing line this week if the dollar regains its mojo and Treasury yields rally. The precious metal has displayed resilience in recent sessions and even took advantage of a softer dollar to push back above $1810.

However, given gold’s zero-yielding nature, the path ahead could be bumpy and perilous for the precious metal as interest rate rises become a reality. Although other factors such as inflation risks and Omicron uncertainty may support gold bugs, the pressure is piling up on gold.

Looking at the technical picture, prices remain within a choppy range. A breakdown below $1810 could open the doors towards $1800, 1786, and $1770. Should $1810 prove to be reliable support, bulls may eye $1831 and $1845.

By Lukman Otunuga Senior Research Analyst

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Best Stocks, Crypto, and ETFs to Watch – Bank of America, Netflix, Ethereum in Focus

Bank of America Corp. (BAC) sold off in sympathy with JPMorgan Chase and Co. (JPM) in Friday’s session, reacting to the Dow component’s surprisingly weak quarterly revenue. A second day of lower prices on Tuesday could set up a strong buy-the-news reaction when BAC reports in Wednesday’s pre-market session. The stock has the highest relative strength in the elite money center group and is nearing a critical test at 2006’s all-time high in the mid-50s.

Netflix Inc. (NFLX) has been sold aggressively in recent weeks, dropping 27% and failing a breakout above resistance at 600. The streaming giant bounced into Friday’s close after announcing an increase in monthly subscription prices. However, the hike is a two-edged sword because subscriber churn (new subs plus cancellations) could escalate, canceling out revenue gains. The company is likely to comment on the decision when it reports Q4 2021 earnings after Thursday’s closing bell.

SPDR S&P Retail ETF (XRT) fell to a 10-month low on Friday after December Retail Sales ex-auto fell 2.3%, compared to expectations for a 0.2% increase. The shortfall, during the critical holiday sales season, suggests that inflation is impacting consumer buying behavior. Even so, retailers reported strong October and November results, stoked by fears that supply chain disruptions could generate empty shelves. Despite that early buying pressure, smart traders will be watching the fund for a sell signal that offers timely short sale profits.

Ethereum (ETH) could be bottoming out after a two-month slide that relinquished 60% of the cryptocurrency’s value. ETH broke out above May resistance at 4,400 in November, failing the breakout just three weeks later. The subsequent decline reached support at the 50-week moving average about one week ago, with that level narrowly aligned at the .618 Fibonacci rally retracement level. Weekly Stochastics remains in a bearish cycle but is nearing the oversold level, with a bullish crossover set to issue an intermediate buying signal.

Dividend paying stocks continue to outperform growth and value plays in 2022 as investors look for ways to protect portfolios from rising inflation. Dow component Proctor & Gamble Co. (PG) could benefit from this rotation when it reports Q2 2022 earnings on Wednesday. The company is expected to earn $1.65 per-share on $20.34 billion in revenue during the quarter, with that profit perfectly matching results during the same quarter last year. PG, which posted an all-time high on Jan. 6, pays a respectable 2.18% annual dividend yield.

Catch up on the latest price action with our new ETF performance breakdown.

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

Key Events This Week: Busy Week of Asian policy Meetings Amid Policy Tightening Angst

Here are the key economic events and data releases to look out for this week:

Monday, January 17

CNH: China 4Q GDP, December industrial production and retail sales
US markets closed for Martin Luther King Jr. holiday

Tuesday, January 18

JPY: Bank of Japan decision
EUR: Germany ZEW survey expectations
GBP: UK November jobless claims, December unemployment
Goldman Sachs Q4 earnings

Wednesday, January 19

EUR: Germany December inflation
GBP: UK December inflation
GBP: Bank of England Governor Andrew Bailey speech
Bank of America Q4 earnings
Morgan Stanley Q4 earnings

Thursday, January 20

CNY: PBOC loan prime rate decision
JPY: Japan December external trade
AUD: Australia December unemployment
EUR: European Central Bank publishes Dec meeting account
USD: US weekly initial jobless claims
US crude oil: EIA inventory report
Netflix Q4 earnings

Friday, January 21

JPY: Japan December inflation
GBP: BOE policy maker Catherine Mann speech, UK December retail sales
EUR: Eurozone January consumer confidence

The potential for the removal of the liquidity punchbowl (aka monetary policy tightening) is dominating the market’s thinking at present.

The strong US CPI report released last week added more pressure on the US Federal Reserve to stat lifting rates earlier than once thought, potentially as soon as March. We’ve had numerous FOMC members recently marking a more hawkish bias to the committee’s views, including notably, the fabled dove Brainard in her Fed chair nomination appearance before the Senate.

Another Fed official, Waller, also mentioned the chance of five rates hikes this year, although he doesn’t favour a 50bp hike in March. It’s worth remembering that it is a US holiday on Monday, so their markets are closed, and the blackout period has started before the next Fed meeting on 26 January so there won’t be any more Committee members to listen out for on the wires.

Company earnings also continue with more bulge bracket US banks releasing their fourth quarter results. US stocks notched their second straight weekly decline, pushed lower by disappointing earnings from financial industry bellwether JPMorgan Chase which has clouded an already mixed outlook for the US economy.

S&P 500 daily chart

Asian policymakers in focus

We kick off the week with Chinese fourth quarter GDP (4% y/y vs. 3.3% est.), as well as December’s industrial production (4.3% vs. 3.7% est.) and retail sales (1.7% vs. 3.8% est.). The full-year GDP came in at 8.1%, slightly above the median estimate by economists but well above the government’s 2021 target of over 6%. Still, the data confirmed that the final quarter was losing momentum but the real test for the domestic economy will come in the first quarter of this year, due to current regional lockdowns on top of the ongoing woes in the property sector.

With this in mind, the PBoC lowered both the one-year medium-term lending facility rate abd the seven-day reverse repurchase rate by 10 basis points respectively, a move not seen in nearly two years, and also injected more liquidity into the financial system via US$110 billion in loans.

The Bank of Japan meeting on Tuesday is also getting some airtime after “sources” said it is thinking of a rate hike at some point beyond this year and debating how to manage the messaging. Inflation is picking up and possibly risks to prices may now be described as “balanced” but hitting the 2% inflation target is still a long way off.

USD/JPY daily chart

UK data to add pressure to the BoE

We get the usual mid-month data dump in the UK with signals about labour market strength, the pace of consumer price inflation and retail sales. These are the last official updates before the BoE meeting on 3 February, with CPI expected to rise above the forecast 5% going forward and a labour marker remaining tight.

GBP/USD daily

By Lukman Otunuga Senior Research Analyst

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Integration of the Blockchain is a Game Changer in the Cloud Computing Sector

Cloud computing and blockchain industries may very well have one property in common; both are growing rapidly while having the potential to revolutionize their respective fields. However, up until now, pioneers within the two industries have not yet found a common interest. That could soon change as projects have started embracing the idea of integrating the blockchain into the cloud computing sector, and we could soon see a future of endless possibilities.

The game-changing development could mean big things for both industries. The development of the cloud computing sector has been aided by several elements, including the increasing use of mobile devices and data storage and processing capability. However, the integration of blockchain technology into the cloud computing industry could turn out to be one of the most significant drivers of the age of cloud computing.

Decentralized Cloud Computing

Decentralized Cloud Computing is a decentralized network of nodes to provide cloud services. It is a type of cloud computing that relies on a distributed network of computers to provide services. This type of cloud computing is different from traditional cloud computing, which relies on a centralized network of computers.

There are several types of decentralized cloud computing. The first is one in which each node stores a certain amount of encrypted data pieces, and the second is one in which all nodes store the same data chunks, but they are separated into distinct parts (shards). The third approach to decentralized cloud computing is for one node (or a group of nodes) to collect the data and send it back to the user.

Blockchain Technology in Cloud Computing

Blockchain technology is a novel data storage created for Bitcoin, a digital currency. Blockchain technology differs from traditional databases in that it is decentralized. There is no central database, as there would be in a traditional database. Instead, the data is kept on a network of nodes.

The majority must approve any modifications to the data of nodes, and blockchain technology is extremely safe. There’s also no single point of failure because if one node goes down, it doesn’t impact the rest.

Blockchain technology is utilized in cloud computing, allowing users to outsource their computing needs. The Blockchain can alter how we do cloud computing because of its decentralized nature. Hence users access the Internet and compute peer-to-peer without relying on servers or other infrastructure.

It’s also beneficial for cloud storage because it helps to keep data secure and tamper-proof. Companies may trust that their data is safe and secure. Cloud Computing became a necessity during the Covid-19 pandemic due to social distancing and working from home.

With its emphasis on decentralization, transparency, and security, Blockchain has become a highly significant and innovative technology for cloud storage in the current era of decentralized clouds.

Blockchain and IoT are already being used in many industries. This is referred to as BCoT in Cloud of Things. It’s being investigated as a potentially massive field for various industrial applications. Because the standard CoT infrastructures are based on centralized communication methods, they encounter problems of ineffectiveness.

The second major issue is that most current CoT systems must rely on any third party for trust. The network structure’s challenge is the last one: it raises communication latency. It necessitates greater power consumption for IoT devices due to significant data transmission, making large-scale CoT installations in practice difficult.

In light of the difficulties CoT is facing and the characteristics of Blockchain, integrating blockchain functions with CoT appears to be a good idea to overcome CoT’s drawbacks.

Decentralized Cloud Computing Solutions

One thing that many of the options presented as alternatives to conventional cloud computing solutions have in common: their choice to operate using a decentralized or peer-to-peer architecture. Cudos, Ankr, StorX Network and Akash are just a few of the most well-known decentralized cloud computing systems.

Cudos took a huge gamble when using an innovative architecture that approaches interoperability and security. The platform’s consensus is achieved using the Byzantine Fault Tolerant Proof of Staking (DPoS) algorithm and Tendermint core. This creates a hybrid system that eliminates scalability issues while retaining high decentralization and security.

Ankr has a secure ecosystem that offers cloud computing resources to connect to web3 and use blockchain node hosting services. This solution now provides developing and staking capabilities for nearly 40 blockchain protocols. Cosmos, Polkadot, Bitcoin, Compound, Elrond, and other platforms are supported.

Akash Network is working on a Supercloud in which anybody with a computer can operate as a cloud services provider. To improve scalability and provide inherent interoperability, Akash uses Tendermint and Cosmos SDK. There is also the benefit of reduced transaction costs and compatibility with all cloud-based applications.

StorX Network is a cloud storage platform that uses blockchain technology to guarantee safe and transparent storage. It’s a peer-to-peer decentralized Storage Network. The XinFin Blockchain Network powers it as Distributed Cloud Storage. The StorX Network Mainnet is based on the XRC-20 utility token, which runs the StorX Network data storage marketplace.

Benefits of Integrating Blockchain to Cloud Computing

It’s no surprise that cloud computing has permeated all business processes and operations. Cloud computing is fundamental to everything from watching Netflix to daily email communications. Blockchain applications, alone or in combination with other technologies, provide a plethora of benefits.

When cloud computing is integrated with blockchain technology, the main problem, security, and privacy, get addressed. Blockchain also aids in providing more transparency by creating a decentralized and distributed trust model.

Data deletion from one computer does not erase data stored on other devices on a blockchain network. As a result, there is no danger of data loss or alteration. Data on a blockchain is irremovable. It allows for clear documentation of data usage, including where, when, and how it is being used and by whom.

Blockchains are governed by codes, eliminating the need for third-party rules, making them a more secure alternative.

Conclusion

Blockchain is changing industries for the better, including healthcare, agriculture, finance, banking, and more. Cloud has become so essential to today’s business environment that its excessive dependency and associated dangers can be hazardous. The cloud’s security, compliance, and centralized architecture might be a significant business risk.

However, Blockchain has a significant impact on storage, transactions, and business processes. As a result, combining Blockchain with the cloud to get more security and decentralization while getting better authorization, privacy, and efficiency is the way forward.

Wall Street Week Ahead Earnings: Goldman Sachs, Procter & Gamble, United Airlines, and Netflix in focus

The following is a list of earnings slated for release January 17-21, along with a few previews. A number of big companies will report earnings in the week ahead, including Goldman Sachs and Bank of America, Procter & Gamble, Netflix, and a number of transportation companies. Investors will carefully monitor the latest news on the rapidly spreading Omicron coronavirus variant to see how it affects earnings in 2022.

Earnings Calendar For The Week Of January 17

Monday (January 17)

No major earnings are scheduled for release. The stock market in the U.S. will be closed in observance of Martin Luther King, Jr. Day.

Tuesday (January 18)

IN THE SPOTLIGHT: GOLDMAN SACHS

The New York-based leading global investment bank Goldman Sachs is expected to report its fourth-quarter earnings of $11.89 per share, which represents a year-over-year decline of about 2% from $12.08 per share seen in the same period a year ago.

The world’s leading investment manager would see a decline in revenue of nearly 1% to $11.65 billion from a year ago. It is worth noting that in the last two years, Goldman Sachs has surpassed market consensus expectations for profit and revenue most of the time.

“We expect Goldman Sachs to report mixed results, with revenues outperforming the consensus estimates and earnings missing the expected figure. The investment bank reported better than expected results in the last quarter, with the top-line increasing 26% y-o-y. This was driven by significant growth in the investment banking business, followed by higher global markets and consumer & wealth management revenues,” noted analysts at TREFIS.

“While investment banking grew on the back of growth in mergers &acquisitions (M&A) and equity underwriting deal volumes, global markets benefited from higher equity trading revenues. Similarly, the consumer & wealth management segment gained from an increase in outstanding loan balances. That said, the top-line was partially offset by negative growth in the asset management division, primarily due to lower equity investment revenues. We expect the same trend to continue in the fourth quarter. We estimate Goldman Sachs’ valuation to be around $447 per share which is 14% above the current market price.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 18

TICKER COMPANY EPS FORECAST
BAC Bank of America $0.78
SCHW Charles Schwab $0.83
CNXC Concentrix $2.54
HWC Hancock Whitney $1.33
IBKR Interactive Brokers $0.74
JBHT J.B. Hunt Transport Services $2.0
MBWM Mercantile Bank $0.85
ONB Old National Bancorp $0.38
PNFP Pinnacle Financial Partners $1.56
PNC PNC Financial Services $3.62
PRGS Progress Software $0.62
SBNY Signature Bank $3.92
TFC Truist Financial $1.27
UCBI United Community Banks $0.63

 

Wednesday (January 19)

IN THE SPOTLIGHT: PROCTER & GAMBLE, UNITED AIRLINES

PROCTER & GAMBLE: The world’s largest maker of consumer-packaged goods, is expected to report its fiscal second-quarter earnings of $1.66 per share, which represents year-on-year growth of just over 1% from $1.64 per share seen in the same period a year ago.

The Cincinnati, Ohio-based consumer goods corporation would post revenue growth of over 3% to $20.4 billion from a year ago. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

“We believe strategy changes can sustain Procter & Gamble (PG) LT topline growth in the 4% range. In the US, a strong breadth of performance and share gains give us confidence that market share momentum is sustainable and supports LT topline growth above HPC peers. While near-term pressures from commodity/freight inflation will impact margins, we believe PG has stronger pricing power than peers, particularly with share gains,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

PG trades at ~22.5x CY22e EPS, an HSD% discount to HPC peers CLX, CL and CHD, and looks compelling given our call for higher LT PG growth.”

UNITED AIRLINES: The major U.S. airline company is expected to report a loss for the eight-consecutive time of $-2.12 in the holiday quarter as the aviation service provider continues to be negatively impacted by the ongoing COVID-19 pandemic and travel restrictions.

However, that would represent a year-over-year improvement of about 70% from -$7.0 per share seen in the same period a year ago. The Chicago, Illinois-based airlines would post revenue growth of over 130% to $7.94 billion.

“Despite some headwinds around staffing issues, we expect United Airlines (UAL) to guide to a continued sequential improvement with capacity guided to be down in the 17-18% range in Q1, which incorporates domestic capacity down in the 1% range, while international capacity remains down 27%,” noted Sheila Kahyaoglu, equity analyst at Jefferies.

“Remaining in a Net Loss Position into Q1. We expect a continued sequential decline in CASM-ex to 11.63¢, which reflect a 9% increase vs. 2019 levels, which compares to the 13% increase we expect in Q4. Nonetheless, UAL will remain in a net loss position in Q1, before turning positive in Q2.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 19

TICKER COMPANY EPS FORECAST
AA Alcoa $2.5
ASML ASML Holding $4.3
CFG Citizens Financial Group $1.16
CMA Comerica $1.6
DFS Discover Financial Services $3.48
FAST Fastenal $0.36
FUL H.B. Fuller $1.06
KMI Kinder Morgan $0.27
MS Morgan Stanley $1.83
PACW PacWest Bancorp $1.06
PG Procter & Gamble $1.66
STT State Street $1.93
USB U.S. Bancorp $1.13
UAL United Airlines $-2.12
WTFC Wintrust Financial $1.56

 

Thursday (January 20)

IN THE SPOTLIGHT: NETFLIX

The California-based global internet entertainment service company NetFlix is expected to report its fourth-quarter earnings of $0.82 per share, which represents a year-over-year decline of over 30% from $1.19 per share seen in the same period a year ago.

However, the streaming video pioneer would post revenue growth of over 16% to $7.71 billion. It is worth noting that the company has beaten earnings per share (EPS) estimates just thrice in the last two years.

“We believe share performance is highly dependent on increasing global membership scale. Proven success in the US and initial international markets provides a roadmap to success in emerging markets, and scale should allow Netflix (NFLX) to leverage content investments and drive margins,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“Higher global broadband penetration should increase the Netflix (NFLX) addressable market, driving member growth and providing further opportunity given NFLX’s global presence. Longer-term, we see the ability to drive ARPU growth, particularly given increased original programming traction.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 20

TICKER COMPANY EPS FORECAST
AAL American Airlines $-1.72
CSX CSX $0.42
FITB Fifth Third $0.91
ISRG Intuitive Surgical $1.01
KEY KeyCorp $0.56
MTB M&T Bank $3.24
NTRS Northern Trust $1.82
OZK Bank OZK $0.98
PPBI Pacific Premier Bancorp $0.85
PPG PPG Industries $1.2
RF Regions Financial $0.49
SASR Sandy Spring Bancorp $1.1
SIVB SVB Financial $6.29
TRV Travelers $3.77
UNP Union Pacific $2.66
WBS Webster Financial $1.11

 

Friday (January 21)

TICKER COMPANY EPS FORECAST
ALLY Ally Financial $2.0
FHB First Hawaiian $0.47
HBAN Huntington Bancshares $0.37
INFO IHS Markit $0.71
SLB Schlumberger $0.39

 

Preview: What to Expect From NetFlix’s Earnings Next Week

The California-based global internet entertainment service company NetFlix is expected to report its fourth-quarter earnings of $0.82 per share, which represents a year-over-year decline of over 30% from $1.19 per share seen in the same period a year ago.

However, the streaming video pioneer would post revenue growth of over 16% to $7.71 billion. It is worth noting that the company has beaten earnings per share (EPS) estimates just thrice in the last two years.

According to ZACKS Research, Netflix expects earnings per share of 80 cents in the fourth quarter of 2021. Zacks Consensus Estimate is pegged at $1.07 per share, higher than the company’s projection but down 10.08% from the quarterly figure reported a year ago.

In the fourth quarter of 2021, Netflix expects to have 222.06 million paid subscribers globally, an increase of 9% from the previous quarter. Revenue is expected to reach $7.71 billion, representing a 16.1% increase over last year. Based on Zacks Consensus Estimates, revenues are expected to be $7.70 billion, lower than the company’s expectations.

Netflix stock slumped nearly 3% to $65.86 on Friday. The stock rose over 12% so far this year after falling more than 2% in 2021.

Analyst Comments

“We believe share performance is highly dependent on increasing global membership scale. Proven success in the US and initial international markets provides a roadmap to success in emerging markets, and scale should allow Netflix (NFLX) to leverage content investments and drive margins,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“Higher global broadband penetration should increase the Netflix (NFLX) addressable market, driving member growth and providing further opportunity given NFLX’s global presence. Longer-term, we see the ability to drive ARPU growth, particularly given increased original programming traction.”

Netflix Stock Price Forecast

Thirty-one analysts who offered stock ratings for Netflix in the last three months forecast the average price in 12 months of $662.93 with a high forecast of $800.00 and a low forecast of $342.00.

The average price target represents a 28.87% change from the last price of $514.42. From those 31 analysts, 23 rated “Buy”, five rated “Hold” while three rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $700 with a high of $900 under a bull scenario and $440 under the worst-case scenario. The firm gave an “Equal-weight” rating on the internet television network’s stock.

Several other analysts have also updated their stock outlook. UBS cut the target price to $690 from $720. Moffett Nathanson lowered the target price by $5 to $460. Baird slashed the target price to $575 from $680. Stifel cut the target price to $660 from $690.

Technical analysis also suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator are giving a mixed signal.

Check out FX Empire’s earnings calendar

Blockbuster to Become a Netflix Headache Thanks to DAO

Blockbuster Video and its Great Demise

Back in the 1990s, Blockbuster LLC, better known as Blockbuster Video or just Blockbuster, was a global brand name. Reportedly, Blockbuster had 9,094 stores and employed more than 84,000 across the U.S and countries worldwide. The peak came in 2004 before online video streaming services hit the home entertainment market.

To compete, Blockbuster had offered DVD-by-mail, streaming, video-on-demand, and cinema theatre in addition to its video stores.

Adding to Blockbuster’s demise was the 2008 global financial crisis and other video-on-demand and streaming services.

In 2010, the franchise filed for bankruptcy protection and was subsequently purchased by Dish Network. Just 1,700 stores remained at the time of the acquisition.

At the time of writing, however, the only remaining franchised store (!) can be located in Bend, Oregon, U.S.A.

DAO Looks to Dethrone Netflix

This week, news hit Twitter of plans to raise $5m to give Blockbuster a new lease of life.

Successful fundraising of $5 million would allow BlockbusterDAO to buy Blockbuster Video from its current owners Dish Network. The mission, should investors wish to accept, is to turn it into “the first-ever DeFilm (decentralized) streaming platform and a mainstay of both the Web3 brands and products.” BlockbusterDAO also has aspirations of driving the platform to become “the powerhouse in the future of the film industry.”

BlockbusterDAO plans to raise the $5m or more by way of BlockbusterDAO NFT mints priced at 0.13E each. The team also plans to raise awareness and use a PR campaign to build pressure on Dish Network to sell Blockbuster and then register all intellectual property in the name of the DAO.

Audiences to Decide the Outcome of Moves and Series

BlockbusterDAO’s vision is an incredible and enticing one. Imagine networks having a say on the final version of a script. Voters could also influence casting and more. Making all the decisions on blockchain also brings transparency and quite possibly a film industry revolution that would prize the power from the likes of Metro-Golden-Meyer and other Hollywood elites.

Netflix Alert

While it is certainly too early to write off the likes of Netflix, many had a similar view of Blockbuster before its demise. As we all learned in the global financial crisis, nothing is too big to fail. And so, it could be quite feasible that BlockbusterDAO not only brings Blockbuster Video back to life but also revolutionizes the film industry. It is a mouth-watering prospect and Netflix execs may be kicking themselves for not coming up with the idea first…

As at Wednesday, 29th December’s close, Netflix Inc’s (NFLX) share price stood at $609.59. For the current month of December, Netflix Inc. is down 5.45% versus a 1.47% gain for the NASDAQ. Year-to-date, Netflix Inc. is up 12.7% versus a 22.3% gain for the NASDAQ.

Netflix 301221

Earnings Calendar Quiet Next Week: What to Expect in the Markets in 2022

With stocks heading into what has historically been a good time of year for stocks, investors will carefully monitor the latest news on the rapidly spreading Omicron coronavirus variant to see how it affects the U.S. economy and company earnings in 2022. The following is a list of earnings slated for release December 27-31, 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 December 27

Monday (December 27)

TICKER COMPANY EPS FORECAST
QIPT Quipt Home Medical $0.01

 

Tuesday (December 28)

TICKER COMPANY EPS FORECAST
CALM Cal-Maine Foods $0.28
NEOG Neogen $0.17

 

Wednesday (December 29)

TICKER COMPANY EPS FORECAST
FCEL Fuelcell Energy $-0.02
NG Novagold Resources $-0.03

 

Thursday (December 30)

TICKER COMPANY EPS FORECAST
CRON Cronos Group $-0.09
IBRX ImmunityBio $-0.2
SAFM Sanderson Farms $3.8
MKC McCormick $0.8

 

Friday (December 31)

No major earnings are scheduled for release.

What to Expect in the Markets in 2022

The year 2021 is drawing to a close and analysts and investors are already looking forward to the year 2022. In a year in which 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.

“We expect solid economic and earnings growth in 2022 to help U.S. stocks deliver additional gains next 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.

According to a stockmarket.com report, three FAANG stocks will be closely watched next 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.

“More volatile equity markets in 2022: At face value our global macro forecasts suggest a continued benign backdrop for equities in 2022 with strong nominal (and real) GDP growth, moderating inflation through the year and no rate hikes from any of the G3 central banks. However, underneath the surface we think there are a number of reasons to suggest that global equities’ serene progress over the last 18 months will become somewhat more volatile going forward as earnings growth slows, bond yields rise, and corporates continue to juggle the challenges of disrupted supply chains and elevated input costs. We think that these issues weigh most heavily on the US equity market but are more optimistic elsewhere, especially in Europe and Japan, where our risk/reward frameworks still look quite appealing,” noted Michael J. Wilson, equity analyst at Morgan Stanley.

“Underweight US stocks: Slower EPS growth and higher starting valuations versus global peers leave us underweight the S&P, where our target of 4400 implies 5% downside potential. Risk/reward looks more appealing for Europe and Japan: We are overweight Europe and Japan (8% and 12% upside potential, respectively), where we see the best EPS growth for 2022 and where valuations have already reset to more attractive levels. We remain neutral on EM and China for now. Recommendations: Potential for sector and style dispersion feels more limited than usual. We are overweight financials across all regions and positive on energy in Europe and EM. Consumer discretionary is a high-conviction underweight in the US,” Morgan Stanley’s analysts added.

We wish you a happy, healthy New Year!

Tech Giant Amazon restores Cloud Services Following Multiple Power Outages

Numerous apps and websites were affected when Amazon’s cloud services went offline. However, the tech giant has rectified the issue, and the platforms are now back online.

Amazon Restores Cloud Services

Tech giant Amazon announced earlier today that it had restored its cloud services following the third power outage it had experienced so far this month. The power outages affected the services of numerous websites and applications.

Earlier reports revealed that one of Amazon’s data servers on the US East Coast experienced a brief power outage. The power outage caused several internet-based service providers to experience service downtime. At the time, Amazon Web Service (AWS) said, “We can confirm a loss of power within a single data center within a single Availability Zone (USE1-AZ4) in the US-EAST-1 Region. This is affecting availability and connectivity to EC2 instances that are part of the affected data center within the affected Availability Zone,”

However, the tech company said it has now rectified the issue, and all the services are now back online. The latest outage affected the services of the office messaging app Slack, with users experiencing difficulties with file uploads, message editing, and other services.

The power outage that occurred earlier this month affected the services of some leading platforms, including streaming platforms Netflix and Disney+, trading app Robinhood and Amazon’s e-commerce store.

AMZN has Underperformed Recently

The shares of Amazon have underperformed in recent months, with the multiple power outages affecting the company’s activities. At press time, AMZN is trading at $3,410 per share, up by 0.05% in the past 24 hours.

AMZN’s tech
AMZN’s technical indicators show the stock is bearish at the moment. Source: FXEMPIRE

However, over the last four weeks, AMZN’s value has dropped by more than 4%. Regardless, AMZN has performed averagely this year, with its price up by only 4.6% over the last 12 months. The recent outages haven’t done the stock price any favors, and AMZN could end the year trading around the $3,400 level.

If Amazon experiences any outages before the end of the month, AMZN could trade below the $3,400 mark heading into 2022.

OMIC Rallies by Over 900% Thanks to the Omicron Covid Variant

The cryptocurrency market is notorious for being volatile, and the prices of cryptocurrencies can surge by hundreds of thousands of percentages because of a trend. The Omicron coin is the latest beneficiary of a market rally, thanks to a trend.

WHO Names New Covid Variant Omicron

A new Coronavirus variant B.1.1.529 was discovered in South Africa last week, leading to a massive reaction by the various financial markets. Amidst the financial markets recording losses, the World Health Organization (WHO) named this latest Covid variant Omicron.

This latest development caused a little-known coin OMIC, the native coin of the decentralized reserve currency protocol Omicron, to surge by over 900%. The cryptocurrency shares the same name as the newly detected COVID variant.

According to data obtained from Crypto.com, OMIC rallied from $70 per coin on Friday to reach a new all-time high at $711 on Sunday. The rally represents an over 900% increase in price within the space of two days.

OMIC has since cooled down, and it is now trading at $375 per coin. Despite that, some investors FOMO’d and bought the cryptocurrency while it was rallying.

Crypto Market can be Irrational

Although the cryptocurrency space has numerous coins with excellent utilities, investors sometimes invest in meme tokens and other shitcoins. The SQUID token scam easily comes to mind.  Investors poured hundreds of millions of dollars into the project following the popularity of Netflix’s Squid Game series. However, the developer rugged, pulled and ran away with the money.

 

Some cryptocurrency market participants are obviously not pleased with the rally experienced by the OMIC coin as they believe it is just another meme token. According to some investors, the rally of coins such as OMIC sounds dumb. Some investors could record massive losses once the coin retraces back to its previous trading price.

OMIC’s price continues to decline despite the broader cryptocurrency market rallying at press time.

Situation on Major US Stocks

Apple climbs higher after another symmetric triangle pattern.

Amazon breaks the horizontal resistance and aims north.

Berkshire Hathaway goes down after the false breakout above the crucial horizontal resistance.

eBay is on the lower line of the channel up formation.

Goldman Sachs is more or less in the same situation but bounces with a promising hammer.

3M breaks the lower line of the wedge and aims south.

Netflix, with an evening star pattern and a false breakout above an important horizontal resistance.

Walmart, Covestro, Airbus and Westfield inside of symmetric triangle patterns. Here, a breakout should happen soon and will show us a direction to follow in the next few weeks or months.

Walt Disney Shares Slump Premarket After Subscribers Growth Disappoints

Walt Disney shares slumped nearly 5% in pre-market trading on Thursday after the family entertainment company reported lower-than-expected earnings and revenue in the fiscal fourth quarter as slow growth in streaming users fell short of analysts’ expectations.

The Burbank, California-based company reported Q4 revenue of $18.53 billion in the fourth quarter, missing the Wall Street consensus estimates of $18.79 billion. The company reported earnings per share of $0.37, below the market consensus estimates of $0.52 per share.

Disney+ added 2.1 million subscribers, way below the market expectations of 10.2 million. That was also the tiniest jump since the streaming video service was launched, Reuters reported. Following this, Walt Disney shares fell nearly 5% to $166.30 in pre-market trading on Thursday.

By 2024, the company plans to have 260 million customers, and management expects the recent slowdown to be temporary.

Analyst Comments

Disney posted a weak end to fiscal 2021 as Disney+ only added 2.1 million customers, its lowest quarter yet, to end the year at 118 million subscribers. Still, the Disney+ subscriber base increased by 44.4 million in fiscal 2021, well ahead of the 18.4 million new users added at Netflix over the same period,” noted Neil Macker, senior equity analyst at Morningstar.

“While Netflix is the much larger service with almost 214 million subscribers around the globe, Disney+ is only available in just over 60 countries, many of which were added in the last year. Even with the slower-than-expected subscriber growth this quarter, we still project robust long-term growth for the service. We maintain our wide moat and fair value estimate of $170.”

Walt Disney Stock Price Forecast

Twenty analysts who offered stock ratings for Walt Disney in the last three months forecast the average price in 12 months of $215.32 with a high forecast of $263.00 and a low forecast of $175.00. The average price target represents a 23.43% change from the last price of $174.45. From those 20 analysts, 16 rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

However, technical analysis suggests it is good to sell now as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong selling opportunity.

Morgan Stanley gave the base target price of $210 with a high of $250 under a bull scenario and $135 under the worst-case scenario. The firm gave an “Overweight” rating on the entertainment company’s stock.

“Impact on our Overweight (OW) thesis: Our OW thesis on Walt Disney (DIS) shares is based on the view that Disney is one of a shortlist of global streaming platforms that can achieve significant scale and profitability, which combined with the earnings growth at its Parks business offers investors adjusted EPS growth from $2 in FY21 to $10 in FY25. In addition to this growth, the earnings mix shift will move away from legacy media earnings towards streaming and parks which should be accretive to ROIC and the multiple,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“The F4Q results and the updated outlook was a mixed bag with respect to our thesis, but ultimately we see the negative near-term revisions as tied to the timing of content delivery in streaming and operating leverage at parks.”

Several other analysts have also updated their stock outlook. CFRA cut the target price by $20 to $200. Barclays slashed the target price to $175 from $210. Guggenheim cut the target price to $205 from $215. JPMorgan raised the target price to $230 from $220.

Check out FX Empire’s earnings calendar

Netflix Subscriber Numbers Buoyed by ‘Squid Game’

Netflix’s third-quarter earnings are out. Results were buoyed by the company’s blockbuster show, Squid Game. Shares of Netflix were up by as much as 3% before surrendering those gains in the extended-hours market.

So far this year, shares of Netflix have rallied nearly 20%, and investors want to know whether the stock has more gas in the tank left for gains. Competition among content streaming companies has been heating up from the likes of Disney+, HBO Max, AppleTV+ and others.

But if Netflix can keep winning shows like Squid Game coming, then it won’t have too much to worry about, a disappointing Q4 outlook notwithstanding. In addition, the company is making a push into the gaming market, which will further diversify its revenue stream. Netflix can finance its own growth plans and has no need for external financing as it continues to redirect its cash toward expanding.

Glass Half Full

The content streaming giant grew its subscriber numbers in Q3 by 4.38 million to nearly 214 million, surpassing Wall Street estimates. Netflix’s subscriber growth resumed after a bit of a slowdown in the wake of the pandemic-year.

Thanks to the strong performance, fueled largely by Korea’s Squid Game, Netflix forecasts it will add another 8.5 million subscribers in Q4, which again tops analyst expectations. In fact, Netflix said Squid Game’s popularity is “amazing,”  capturing the viewership of more than 140 million member households and rising to the top of the heap in over 90 countries.

Netflix’s operating margin improved to 23.5% thanks to lower than expected spending on marketing and the timing of that spending. The company’s Q3 earnings came in at $1.45 billion, or $3.19 per share, surpassing analyst estimates. Revenue increased by 16% to almost $7.5 billion.

Facebook Bump

When Facebook suffered an outage, users apparently flocked to the content streaming site for entertainment. Netflix said it experienced a 14% pop in engagement while Facebook’s services were down “for several hours” around the world.

Netflix Outlook

Things took a turn for the worse in Netflix’s Q4 outlook. The company forecasts a Q4 operating margin of 6.5%, down from 14% in the year-ago period. The company blames its “backloaded big content release schedule.

Corporate Earnings To Drive Sentiment

This will a big week for equity markets as the third-quarter earnings season gets in full swing. Since corporate results officially kicked off last week, the reports have painted a positive picture with major US banks smashing analyst forecasts. Big names like Netflix, Tesla and Intel among many others will be under the spotlight this week as investors pay close attention to their earnings.

The key questions on the minds of investors will be what impact higher inflation, supply chain disruptions and labour shortages have on third quarter numbers. Should we have another solid week of results, this may inject S&P500 bulls with enough confidence to venture into uncharted territory beyond its all-time high.

Currency spotlight – GBPUSD

It has not been a great start to the week for sterling which has weakened against most G10 currencies. Bulls struggled to draw inspiration from Bank of England Governor Andrew Bailey’s hawkish remarks over the weekend with expectations rising over the Bank of England raising interest rates at its November meeting. However, concerns around economic growth and stagflation fears continue to weigh on the pound. All eyes will be on Governor Bailey’s speech this afternoon which could provide more hints on interest rate moves.

Looking at the technical picture, the GBPUSD is up this morning on the back of a weaker dollar. Prices are approaching the 100-day Simple Moving Average around 1.3810. A strong move above this point could push the GBPUSD towards the 200-day Simple Moving Average around 1.3850.

Commodity spotlight – Gold

Gold prices are advancing this morning, gaining roughly 0.7% thanks to a weaker dollar and lower Treasury yields. The precious metal is likely to be influenced by conflicting forces this week as investors juggle growth concerns and inflation fears amid prospects of tighter monetary policy.

Should the dollar continue to weaken, gold has the potential to rechallenge $1800, a level just above the 100-day and 200-day Simple Moving Average. In the meantime, intraday bulls seem to be in the driving seat with the first level of interest at $1784. If the 50-day Simple Moving Average offers resistance and weakens bullish momentum, prices could decline back towards $1760.

By Lukman Otunuga Senior Research Analyst

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Are Stock Bulls Back On A Track?

Earnings beats have actually been coming in at a wider margin than average, contrary to lingering fears that supply chain disruptions, material shortages, and climbing costs would lead to disappointing Q3 results.

Q3 Earnings

The big beats now have S&P 500 companies on track to post +30% earnings growth for Q3. Most Wall Street insiders are now expecting Q4 earnings to show right around +20% earnings growth.

Today’s earnings highlights include Albertsons and State Street. Some of the big names reporting later this week include Netflix, Haliburton, Johnson & Johnson, United Airlines, and Procter & Gamble on Tuesday; and Biogen, IBM, Verizon, and Tesla on Wednesday; American Airlines, AT&T, Chipotle, Intel, Snapchat, and Southwest Airlines on Thursday.

The following week is even more highly anticipated as many of the biggest names in the stock market will be reporting.

Economic data

In economic data today, Industrial Production for September is expected to dip due to a combination of Hurricane Ida and supply chain constraints. Supply chain challenges also likely lowered builder sentiment in the October NAHB Housing Market Index due today as well. The supply-side shortages of both materials and labor continue to weigh on economic growth outlooks for the last part of 2021.

However, most bullish analysts have adjusted their 2022 growth projections higher, believing lost growth this year will be made up next year. The labor market is expected to get a boost thanks partially to the dramatic decline in Covid cases, which are down nearly -50% since early-September.

The extreme worker shortage in some sectors has already led to rapid wage growth with hourly earnings in September up +4.6%, led by an increase of nearly +11% in leisure and hospitality. That is what’s considered “sticky” inflation, meaning that it is not likely going to be reversed.

Likewise for consumer goods’ prices that have been creeping higher as manufacturers try to offset higher costs. If wage growth can mostly keep pace with inflation, bulls will likely remain less concerned that rising prices will crush economic growth. In fact, Retail Sales released Friday showed no signs of consumer spending slowing down with sales climbing +15% in September, despite obviously higher costs for many goods. The thought of the economy heating back up quickly is both good and somewhat bad.

There now seems to be more talk on Wall Street about the likelihood of two rates hikes next year rather than just one. There’s actually even some talk of perhaps three rate hikes being possible in 2022, especially if the supply-chain complications continue to create higher prices and fuel higher inflation.

The biggest wildcard right now appears to be the global energy shortage which is already pushing up costs for both consumers and manufacturers and threatens to accelerate headline inflation far beyond wage growth.

Any energy “crisis” will likely only be temporary but it still potentially translates to several quarters of slower growth than many Wall Street bulls have been penciling. If it leads to a massive surge higher in inflation in the months ahead, it also could also pressure the Federal Reserve to pull forward its timeline to begin hiking interest rates.

Technical analysis

ES ##-## (Daily) 2021_10_18 (3_38_51 PM)

SP500 futures are testing daily MA50. With the strong accumulation in this market, I will not be surprised to see a base-building above moving average. If that happens, investors will gain more confidence. Thus, we can see money flowing aggressively into the stock market again. The weakness of the USD gives additional strength for indexes. In that case, bulls will target at least 4600 (important Gann level on a daily chart).

Breaking below 4250 is a game-changer. However, in the absence of bearish macroeconomic factors, we have more chances to see a bullish scenario.

Take Five: China, FAANGs, Turkey and Christmas Fears Loom Large

And for many, the big question: Is Christmas cancelled?

1/CHARTING CHINA

From an Evergrande-induced property market crisis to power shortages halting production lines supplying Apple and Tesla, the world’s no. 2 economy has plenty to worry about.

Data released on Monday showed gross domestic product (GDP) grew 4.9% in July-September from a year earlier, the weakest clip since the third quarter of 2020 and missing forecasts.

Overall industrial output edged just 3.1% higher in September from a year earlier, marking the slowest growth since March 2020, during the first wave of the pandemic.September new construction starts slumped for a sixth straight month, the longest spate of monthly declines since 2015.

But retail sales bucked the negative trend to grow 4.4%, faster than forecasts and the 2.5% growth in August, and the surveyed nationwide jobless rate fell from 5.1% to 4.9%.

The latest readings have increased expectations that policymakers will do more to shore up growth and to prop up the faltering recovery.

2/PROFIT STREAM

Netflix kicks off third quarter reporting on Thursday for the ‘FAANG’ group of big U.S. tech and growth companies of Facebook, Apple, Amazon, Netflix and Google-parent Alphabet.

The video streaming company said “Squid Game” has become its biggest series launch ever, while last month “The Crown” won the best drama series Emmy award. Netflix also bought video game creator Night School Studio in a push to diversify.

Netflix’s stock price has climbed some 16% in 2021, broadly in line with the S&P 500 and in the middle compared to the other FAANG stocks. Other companies due to report results next week include Tesla, Johnson & Johnson, and Intel.

3/INFLATION SPOTTING

Markets will look for signs that production bottlenecks, supply chain strains, labour shortages and surging energy prices are starting to undermine future profits when Europe’s earnings kick off.

With rates hikes in the works to fend off inflation stickiness, financial and energy sectors are set to thrive as rising yields dent the appeal of so-called growth stocks.

Tasters of the third-quarter earnings season from luxury giant LVMH, tech star SAP and steelmaker Outokumpu so far left no bitter after-taste. Now it is the turn of blue chips such as ASML Holding, Unilever, Barclays and ABB.

Earnings are seen jumping 46.7% year-on-year for pan-European STOXX 600 index constituents, though the gap between positive and negative revisions has been shrinking, vindicating the narrative Europe is cruising past peak growth.

4/CHRISTMAS, CANCELLED?

A year after coronavirus lockdowns dampened festive spirits, world leaders will be hoping supply disruption won’t be the Grinch that stole Christmas.

It may be more than two months away, yet panic buying of turkeys and festive goodies has begun amid supply chain chaos.

White House officials warn Americans may face higher prices and empty shelves this Christmas. The busy ports of Los Angeles and Long Beach are expanding operations to unload an estimated 500,000 containers waiting on cargo ships offshore.

Britain has urged consumers to buy normally after containers carrying toys and electrical goods were diverted from its biggest port because it was full.

Friday’s October flash purchasing managers indices (PMI) from Australia, Europe and elsewhere might illustrate supply chain pain. Germany business sentiment  is already suffering.

5/EMERGING WOES

Central banking is rarely dull in emerging markets, but Turkey outstrips most others for excitement.

A fresh batch of policy makers will meet https://www.reuters.com/world/middle-east/revolving-door-turkeys-last-four-central-bank-chiefs-2021-10-08 on Thursday after President Tayyip Erdogan instigated another reshuffle, clearing the way for more rate cuts in the face of stubbornly high inflation and sending the lira to fresh record lows.

But central banks elsewhere are busy ramping up rates. Hungary is expected to nudge up its benchmark on Tuesday to tackle a rise in inflation which prompted sharp rate rises elsewhere in central Europe.

Russia’s central bank will likely follow on Friday as policy makers have come out in droves warning of rising price pressures and unanchored inflation expectations.

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

(Reporting by Kevin Buckland in Tokyo, Danilo Masoni, Dhara Ranasinghe, Julien Ponthus and Karin Strohecker in London, Lewis Krauskopf in New York; compiled by Karin Strohecker; editing by Alexander Smith)

Best Stocks, Crypto, and ETFs to Watch This Week

Netflix Inc. (NFLX) is making headlines these days for Squid Games and a controversial Dave Chappelle special and the stock is flying, breaking out above tough resistance between 550 and 600. However, there’s considerable risk for shareholders when it steps to the earnings plate on Tuesday because subscriber growth has slowed in recent quarters, especially in the US market. Traders could punish the stock after the report if Q3 metrics continue to lag optimistic projections.

International Business Machines Corp. (IBM) has underperformed other tech stocks longer than most Millennials have been trading the financial markets, topping out all the way back in 2013. However, a fourth quarter spin-off of legacy operations is attracting widespread investor interest, lifting the laggard back to an 8-year trendline in the 140s. The old school behemoth’s report on Wednesday could be the catalyst that finally breaks the downtrend, opening the door to much higher prices.

Tesla Inc. (TSLA) has made steady progress since bouncing at the 50-week moving average in May and is now trading just 51 points under January’s all-time high at 900.40. It will have an opportunity to close the distance when it reports earnings after Wednesday’s close but cautious comments about China or supply constraints could prompt investors to have second thoughts. Wall Street analysts aren’t helping the bulls, with a consensus ‘Hold’ rating and median price target more than 70 points below Friday’s close.

Ethereum lifted into resistance at the .786 Fibonacci retracement level of the second quarter selloff last week, setting up a test at the 4,000 level. Bitcoin just sliced through its .786 retracement like butter, lifting above 60,000. However, Ethereum failed a breakout at this harmonic level in September, adding another layer of resistance. In turn, this suggests a two-sided strategy that buys a rally above 4,025 or sells short a decline through 3,800, whichever comes first.

US Natural Gas ETF (UNG) remains in a long-term downtrend, even though its nearly tripled in price since January 2021’s all-time low at 8.22. Three reverse splits since 2011 have sapped the life out of the long-term pattern, reducing the technical power of large percentage price moves. More importantly, the rally has just reached major resistance at the 200-week moving average at 23, significantly raising odds for profitable short sales in the fourth quarter.

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

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

Earnings Week Ahead: Steel Dynamics, NetFlix, Tesla, AutoNation and Honeywell in Focus

Earnings Calendar For The Week Of October 18

Monday (October 18)

IN THE SPOTLIGHT: STEEL DYNAMICS, STATE STREET

STEEL DYNAMICS: The U.S-based domestic steel producer and metal recycler is expected to report its third-quarter earnings of $4.62 per share, which represents year-on-year growth of over 800% from $0.51 per share seen in the same period a year ago.

The third-largest producer of carbon steel products in the United States would post revenue growth of over 114% to around $5.0 billion. The company has consistently beaten consensus earnings estimates for the last four quarters.

The company updated its earnings guidance for the third quarter of 2021 in September. For the period, earnings per share (EPS) were expected to be between $4.880-$4.920.

Steel Dynamics is nearing the end of a multi-year investment cycle centered around the construction of a new, state-of-the-art steelmaking mill which comes online in mid-2021, positioning STLD’s FCF generation to increase from 2021 onwards. The company has a proven track record of shareholder returns, and is poised to deliver greater returns for investors, especially through share buybacks,” noted Carlos De Alba, equity analyst at Morgan Stanley.

STATE STREET: The second oldest continually operating United States bank is expected to post third-quarter earnings of $1.92 per share, which represents year-on-year growth of over 30% from $1.45 per share seen in the same period a year ago. The revenue is expected to increase around 6% to $2.95 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 18

Ticker Company EPS Forecast
STT State Street $1.92
ACI AltaGas Canada $0.45
ELS Equity Lifestyle Properties $0.33
STLD Steel Dynamics $4.62
PACW Pacwest Bancorp $1.03
HXL Hexcel $0.08
SFBS ServisFirst Bancshares $0.96
FNB FNB $0.29
ACKAY Arcelik ADR $0.68
PHG Koninklijke Philips $0.62
ZION Zions Bancorporation $1.36

Tuesday (October 19)

IN THE SPOTLIGHT: NETFLIX, JOHNSON & JOHNSON

NETFLIX: The California-based global internet entertainment service company is expected to report its third-quarter earnings of $2.57 per share, which represents year-over-year growth of over 45% from $1.74 per share seen in the same period a year ago.

The streaming video pioneer would post revenue growth of over 16% to around $7.5 billion. In the last two years, the company has beaten earnings per share (EPS) estimates just thrice with a surprise of nearly 21%.

NetFlix’s better-than-expected third-quarter earnings results could help the stock hit new all-time highs. The company’s shares surged over 17% so far this year and it hit a record high of $646.84 on October 7.

NetFlix (NFLX) stock has emerged from its slump, jumping ~22% in <2 months. Estimates have remained relatively flat and NFLX now trades at 8.5x 2022E Rev, the top of its 3-year range. We expect 3Q net adds of 3.5MM and a 4Q guide of ~7-8MM. Squid Games has demonstrated the impact of a successful international strategy and, if done right, games like Oxenfree could achieve a similar Zeitgest moment. We remain ‘Buy’ rated with a price target of $737, representing 8.5x 2023 JEF Rev,” noted Andrew Uerkwitz, equity analyst at Jefferies.

JOHNSON & JOHNSON: One of the world’s largest and most comprehensive manufacturers of healthcare products is expected to post third-quarter earnings of $2.36 per share, which represents year-on-year growth of over 7% from $2.20 per share seen in the same period a year ago. The revenue to expected to increase over 12% to around $23.6 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 19

Ticker Company EPS Forecast
FMBI First Midwest Bancorp $0.42
DOV Dover $1.85
SBNY Signature Bank $3.70
MAN ManpowerGroup $1.91
JNJ Johnson & Johnson $2.36
PM Philip Morris International $1.56
BK Bank Of New York Mellon $1.01
TRV Travelers Companies $1.91
ERIC Ericsson $0.17
FITB Fifth Third Bancorp $0.91
SYF Synchrony Financial $1.51
KSU Kansas City Southern $2.09
CBSH Commerce Bancshares $0.98
ONB Old National Bancorp $0.36
AMX America Movil Sab De Cv Amx $6.43
AMOV America Movil Sab De Cv $0.31
FULT Fulton Financial $0.33
NFLX Netflix $2.57
ISRG Intuitive Surgical $1.17
CNI Canadian National Railway USA $1.42
OMC Omnicom $1.37
UAL United Airlines Holdings -$1.51
IBKR Interactive Brokers $0.75
WTFC Wintrust Financial $1.52
WDFC Wd 40 $1.24
UCBI United Community Banks $0.66
HAL Halliburton $0.28
SNV Synovus Financial $1.07
PG Procter & Gamble $1.59
IRDM Iridium Communications -$0.02
RNST Renasant $0.66

Wednesday (October 20)

IN THE SPOTLIGHT: TESLA

TESLA: The California-based electric vehicle and clean energy company is expected to report its third-quarter earnings of $1.52 per share, which represents year-over-year growth of 100% from $0.76 per share seen in the same quarter a year ago.

The high-performance electric vehicle manufacturer would report revenue of $13.16 billion. The electric vehicle producer has beaten earnings three times in the last four quarters.

“We expect Tesla will be upbeat in 3Q21 given record deliveries beating estimates by ~20k announced in early October. Furthermore, the company announced record sales of 56,000 in China with a total of 133,248 or 55% of total deliveries for the quarter coming from their Shanghai facility,” noted Jeffrey Osborne, equity analyst at Cowen.

“We look forward to management’s commentary on Tesla’s internal chip production strategy and capacity expansion plans. We also look forward to an update on the opening of the Berlin Gigafactory. Additionally, we look forward to an update on Tesla’s 4680 cells and the incremental deployment of its beta FSD. Finally, we look forward to an update on the timeline for Semi and Cyber truck release.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 20

Ticker Company EPS Forecast
ASML ASML $4.61
ABT Abbott $0.94
NEE NextEra Energy $0.73
BIIB Biogen $4.14
NDAQ Nasdaq Omx $1.71
NTRS Northern $1.67
BKR Baker Hughes Co $0.21
MTB M&T Bank $3.50
MKTX MarketAxess $1.46
LAD Lithia Motors $9.24
FHN First Horizon National $0.35
KNX Knight Transportation $1.06
BOKF BOK Financial $1.78
NEP Nextera Energy Partners $0.61
WSO Watsco $3.49
UNF UniFirst $1.81
SCL Stepan $1.42
TSLA Tesla $1.52
CSX CSX $0.38
CCI Crown Castle International $0.77
DFS Discover Financial Services $3.49
PPG PPG Industries $1.59
EFX Equifax $1.73
GGG Graco $0.64
REXR Rexford Industrial Realty $0.12
OMF OneMain Holdings $2.30
FR First Industrial Realty $0.22
THC Tenet Healthcare $1.03
LSTR Landstar System $2.46
SLM SLM $0.18
VMI Valmont Industries $2.49
SLG SL Green Realty -$0.12
LVS Las Vegas Sands -$0.18
SEIC SEI Investments $0.96
GL Globe Life Inc $1.90
TBK Triumph Bancorp $1.08
RUSHA Rush Enterprises $0.98
RLI RLI $0.59
UMPQ Umpqua $0.44
CNS Cohen & Steers $0.89
FTI FMC Technologies $0.02
TCBI Texas Capital Bancshares $1.10
STL Sterling Bancorp $0.52
ANTM Anthem $6.39
LRCX Lam Research $8.23
IBM IBM $2.53
KMI Kinder Morgan $0.24
URI United Rentals $6.84
CFG Citizens Financial $1.15
CMA Comerica $1.64
EXPO Exponent $0.40
MTG MGIC Investment $0.44
WGO Winnebago Industries $1.96
CVBF CVB Financial $0.37
CP Canadian Pacific Railway USA $0.93
MSM MSC Industrial Direct $1.27
UFPI Universal Forest Products $1.55
FCFS FirstCash $0.81
SNBR Scs Group Plc $1.43

Thursday (October 21)

IN THE SPOTLIGHT: AUTONATION

The Fort Lauderdale-based automotive retailer AutoNation is expected to report its third-quarter earnings of $4.16 per share, which represents year-over-year growth of about 75% from $2.38 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 47%. The automotive retail giant would post revenue of $6.5 billion.

“We are optimistic about the trajectory for new CEO, Mike Manley, previously in various leadership roles at FCA and Stellantis where he demonstrated leadership of highly complex organizations going through transformation changes in scale, scope and technology,” noted Adam Jonas, equity analyst at Morgan Stanley.

“Omni-channel strategy unclear and may result in loss of share. For New Vehicles, historically, market share & gross profit per unit have declined. For Used Vehicles, the standalone used car business model was unsuccessful in the late 1990s. The business mix/growth/margins are similar to the other traditional auto dealers, and the stock trades at a discount to its historical average and vs the dealer average.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 21

Ticker Company EPS Forecast
CROX Crocs $1.84
IQV IQVIA Holdings Inc $2.12
WAL Western Alliance Bancorporation $2.23
PSMT PriceSmart $0.73
SIVB SVB Financial $5.53
OZK Bank Ozk $0.97
CE Celanese $4.73
FFBC First Financial Bancorp $0.52
INTC Intel $1.11
TPH Tri Pointe Homes $0.91
OLN Olin $1.98
WRB W.R. Berkley $0.95
CSL Carlisle Companies $2.75
SNAP Snap -$0.10
MAT Mattel $0.72
VICR Vicor $0.46
CMG Chipotle Mexican Grill $6.30
ASB Associated Banc $0.44
INDB Independent Bank $1.02
GBCI Glacier Bancorp $0.71
SAP SAP $1.68
LUV Southwest Airlines -$0.27
VLO Valero Energy $0.86
WHR Whirlpool $6.11
PBCT People’s United Financial $0.33
AAL American Airlines -$1.09
FCX Freeport-McMoran $0.82
ALK Alaska Air $1.05
GPC Genuine Parts $1.64
AN AutoNation $4.16
SASR Sandy Spring Bancorp $1.09
ABB ABB $0.37
BCS Barclays $0.37
ATLCY Atlas Copco ADR $0.47
DHR Danaher $2.14
FAF First American Financial $1.82
BKU BankUnited $0.87
MMC Marsh & McLennan Companies $1.00
IPG Interpublic Of Companies $0.49
T AT&T $0.78
ALLY Ally Financial $1.95
WBS Webster Financial $1.08
NUE Nucor $6.93
UNP Union Pacific $2.49
EEFT Euronet Worldwide $1.42
TRN Trinity Industries $0.18
SAFE 3 Sixty Risk $0.35
GATX GATX Corp $1.07
KEY KEY $0.56
RCI Rogers Communications USA $0.81
PPBI Pacific Premier Bancorp $0.82
EWBC East West Bancorp $1.51
BX Blackstone $0.89
POOL Pool $3.85
DGX Quest Diagnostics $2.71
ALLE Allegion $1.30
HOMB Home Bancshares $0.44
TSCO Tractor Supply $1.64
SNA Snap-On $3.37
SON Sonoco Products $0.90
WSFS Wsfs Financial $0.88
RHI Robert Half International $1.40

Friday (October 22)

IN THE SPOTLIGHT: HONEYWELL INTERNATIONAL

The company which manufactures parts for planes made by Boeing and Airbus SE, Honeywell, is expected to report its third-quarter earnings of $1.99 per share, which represents year-over-year growth of about 28% from $1.56 per share seen in the same quarter a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of about 5%. The Charlotte, North Carolina-based company would post revenue growth of about 12% to $8.7 billion.

Last week, the company lifted its guidance for business jet deliveries and said the industry has almost completely shaken off the effects of the COVID-19 pandemic.

The worldwide technology and manufacturing company in its 30th annual Global Business Aviation Outlook forecasts up to 7,400 new business jet deliveries worth $238 billion from 2022 to 2031, up 1% in deliveries from the same 10-year forecast a year ago.

“We think that Honeywell (HON) stock currently is a better pick compared to Rockwell Automation stock, despite Rockwell’s revenue growing at a faster pace over the recent years. Honeywell trades at about 4.4xtrailing revenues, compared to 5.1x for Rockwell. Although both the companies saw a decline in revenue due to the pandemic, Rockwell has seen a sharp recovery aided by new orders and impact of ASEM, Kalypso, and Fiix acquisitions,” noted equity analysts at TREFIS.

Honeywell, on the other hand, is still seeing slower revenue growth, primarily due to its exposure to the aerospace segment, which was one of the worst-hit businesses during the pandemic. However, there is more to the comparison. Let’s step back to look at the fuller picture of the relative valuation of the two companies by looking at historical revenue growth as well as operating margin growth.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 22

Ticker Company EPS Forecast
VFC VF $1.16
GNTX Gentex $0.40
SAM Boston Beer $4.26
IHG Intercontinental Hotels $0.20
ALV Autoliv $0.82
AXP American Express $1.76
SLB Schlumberger $0.35
ROP Roper Industries $3.83
HCA HCA $3.96
CLF Cliffs Natural Resources $2.21
HON Honeywell International $1.99
RF Regions Financial $0.53
STX Seagate Technology $2.21
AIMC Altra Industrial Motion $0.82