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In the Global Week Ahead, major Q3 U.S. earnings season actors reach the spotlight.
Mega-cap tech stocks likely receive major attention from traders.
- NFLX reports AMC on Tuesday, October 20th
- AMZN reports AMC on Thursday, October 22nd
Still, don’t ignore other bellwether tech names.
- IBM earnings on Monday
- SNAP on Tuesday
- TSLA on Wednesday
- INTC on Thursday
Below is the full assembly of major S&P 500 tickers that caught my eye—
On Monday: IBM, HAL, LOGI, CNDS and PPG.
On Tuesday: NFLX, LMT, PG, SNAP, TXN, TER and CP.
On Wednesday: TSLA, VZ, LRCX, KMI, CSX, BIIB, LVS, EW and CMG.
On Thursday: AMZN, T, INTC, AAL, NOC, LUV, UNP, STM and KMB.
On Friday, the final set of big tickers are: AXP, BCS, ITW, SCCO and VTR.
Next, I have Reuters’ five world market themes, reordered for equity traders.
(1) European Q3 Earnings Season Gets Underway
Just as tighter European restrictions to contain COVID-19 fuel concern about economic activity, the third-quarter earnings season about to start in earnest may prove a beacon of hope.
According to Refinitiv I/B/E/S data, analysts are increasingly upbeat on earnings from companies listed on the pan-European STOXX 600 index.
The expected decline, which peaked at more than -50% during spring when a large part of Europe was under strict lockdown, has softened to an average drop of -36.7% year-on-year, down from a -40% decline forecast a month ago.
There’s talk that analyst estimates may be too conservative. The STOXX 600 is currently trading just below the mid-point of the 10-percentage-point range it has held since June.
A positive third quarter could push stocks higher.
(2) Major Energy Sector Companies Report This Week
The week ahead also brings energy-sector earnings. Halliburton reported mixed results on Monday, Baker Hughes and Kinder Morgan report on Wednesday.
Uneven global growth and ample supply have pressured energy prices during U.S. President Donald Trump's term, with U.S. crude prices down around 20% since Trump's January 2017 inauguration. Energy is the only major sector in the S&P to be in the red since then.
A November election win for Democratic challenger Joe Biden could bring more unease about greater regulation and an emphasis on green policies.
So, stay away from energy stocks? Perhaps not -- Goldman Sachs does not expect the U.S. election to change its bullish outlook and reckons an overwhelming Democratic victory could be a positive catalyst for the sector.
(3) A 2nd Wave of COVID in Europe Spooks Risk Traders
The tone in markets suddenly appears to have echoes of March, when the coronavirus outbreak in Europe sparked a dash into safe-haven bonds and cash.
Increased restrictions to contain a second wave, including in capitals such as London and Paris, are fueling unease. Safe-haven German 10-year bond yields have tumbled 10 bps to levels last seen in March; and alongside U.S. and UK yields are set for the biggest weekly drop in months.
Investors are now watching for signs of economic damage -- the October flash purchasing manager index numbers for the Eurozone are due out Friday.
Not all bond markets will benefit from the jitters. Italian bond yields, which just a few days ago hit record lows on expectations of more central bank stimulus, have been hurt as investors ditch riskier assets.
That’s what happened in March. Déjà vu, anyone?
(4) Brexit Going to Be Hard
Britain’s messy divorce with the European Union is likely to remain in the spotlight, keeping the pound jittery in response to comments from both sides about whether or not a trade deal is likely before a final Dec. 31st deadline.
EU leaders agreed at their Oct. 15-16 summit to more talks but are ready for no deal. The three main areas of contention are fair competition, dispute resolution and fisheries.
The pound could gain from signs the UK will not quit the talks. But the prospect of negotiations dragging on, undermining the economic outlook just as the coronavirus cases rise again, could weigh on sterling.
(5) China’s Q3 GDP Growth Data +4.9%
China’s third-quarter growth data came out on Monday and showed the effects of the pandemic receding.
The world’s second-largest economy was expected to have grown 5.2% in July-September from a year earlier. An actual read of +4.9% is still faster than the second quarter’s 3.2%.
The yuan is priced for it and the global recovery practically depends on it, as Chinese demand and production keep the world economy ticking over.
This reading will support policymakers’ prudence, with Tuesday likely to usher in a sixth straight month with China’s benchmark interest rate on hold.
A rebound is also expected in retail spending, one soft spot. That could herald better spending globally when the virus ebbs.
Zacks #1 Rank (STRONG BUY) Stocks
In last Friday’s U.S. retail sales report for September, we learned about the strong growth of home improvement and garden supply buying.
Toolmakers. They are one of the stock areas benefitting from that! And our latest Zacks Rank upgrades picked it up.
(1) Stanley Black Decker (SWK - Free Report) : This is a $176 a share stock now, with a market cap of $28.2B. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of A.
(2) Makita (MKTAY - Free Report) : This is a $46.50 a share stock, with a market cap of $12.6B. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of B.
(3) Toro (TTC - Free Report) : This is a $87 a share stock, with a market cap of $9.3B. I see a Zacks Value score of F, a Zacks Growth score of B and a Zacks Momentum score of D.
Summary thoughts?
With Zacks Value scores of either D or F, I would warn you.
This Toolmaker stock trend has been played. Profit-takers are going to show up.
Key Global Macro
I would keep an eye on U.S. housing market statistics this week.
On Monday, Fed Chair Powell is scheduled to make a speech.
The US NAHB housing market index comes out. I see an 83 reading is consensus. This has been a strong area of the U.S. economy during COVID.
On Tuesday, Australia’s RBA puts out its minutes.
U.S. housing starts for September come out, as do Building Permits. 1.45M is the starts expectation, versus a 1.41M prior number. 1.5M is the permits expectation, versus a 1.47 prior number.
On Wednesday, the ECB’s President LaGarde is to speak.
The Fed’s Beige Book comes out.
On Thursday, Japan’s all industry activity index comes out. The prior reading was up +1.3%.
U.S. initial weekly jobless claims should be near the prior 866K number.
On Friday, Japan’s preliminary Jibun Bank manufacturing PMI comes out. 47.3 for October should follow the 47.7 seen in the prior month. Both are below the critical 50 expansion Rubicon.
The U.S. preliminary Markit manufacturing PMI also comes out. I see a 53.3 following a 53.2 the month prior. That is better.
Conclusion
One final big event, to watch, and watch out for…
The final U.S. Presidential Debate.
The event is broadcast to the nation at 9:00 pm EST (which is 6:00 pm PST) on Thursday, October, 22nd.
This debate is set to be physically held in Nashville, TN.
That’s it for me.
Regards,
John Blank
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.” Click to get it free >>
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Big Tech Reports: Global Week Ahead
In the Global Week Ahead, major Q3 U.S. earnings season actors reach the spotlight.
Mega-cap tech stocks likely receive major attention from traders.
Still, don’t ignore other bellwether tech names.
Below is the full assembly of major S&P 500 tickers that caught my eye—
On Monday: IBM, HAL, LOGI, CNDS and PPG.
On Tuesday: NFLX, LMT, PG, SNAP, TXN, TER and CP.
On Wednesday: TSLA, VZ, LRCX, KMI, CSX, BIIB, LVS, EW and CMG.
On Thursday: AMZN, T, INTC, AAL, NOC, LUV, UNP, STM and KMB.
On Friday, the final set of big tickers are: AXP, BCS, ITW, SCCO and VTR.
Next, I have Reuters’ five world market themes, reordered for equity traders.
(1) European Q3 Earnings Season Gets Underway
Just as tighter European restrictions to contain COVID-19 fuel concern about economic activity, the third-quarter earnings season about to start in earnest may prove a beacon of hope.
According to Refinitiv I/B/E/S data, analysts are increasingly upbeat on earnings from companies listed on the pan-European STOXX 600 index.
The expected decline, which peaked at more than -50% during spring when a large part of Europe was under strict lockdown, has softened to an average drop of -36.7% year-on-year, down from a -40% decline forecast a month ago.
There’s talk that analyst estimates may be too conservative. The STOXX 600 is currently trading just below the mid-point of the 10-percentage-point range it has held since June.
A positive third quarter could push stocks higher.
(2) Major Energy Sector Companies Report This Week
The week ahead also brings energy-sector earnings. Halliburton reported mixed results on Monday, Baker Hughes and Kinder Morgan report on Wednesday.
Uneven global growth and ample supply have pressured energy prices during U.S. President Donald Trump's term, with U.S. crude prices down around 20% since Trump's January 2017 inauguration. Energy is the only major sector in the S&P to be in the red since then.
A November election win for Democratic challenger Joe Biden could bring more unease about greater regulation and an emphasis on green policies.
So, stay away from energy stocks? Perhaps not -- Goldman Sachs does not expect the U.S. election to change its bullish outlook and reckons an overwhelming Democratic victory could be a positive catalyst for the sector.
(3) A 2nd Wave of COVID in Europe Spooks Risk Traders
The tone in markets suddenly appears to have echoes of March, when the coronavirus outbreak in Europe sparked a dash into safe-haven bonds and cash.
Increased restrictions to contain a second wave, including in capitals such as London and Paris, are fueling unease. Safe-haven German 10-year bond yields have tumbled 10 bps to levels last seen in March; and alongside U.S. and UK yields are set for the biggest weekly drop in months.
Investors are now watching for signs of economic damage -- the October flash purchasing manager index numbers for the Eurozone are due out Friday.
Not all bond markets will benefit from the jitters. Italian bond yields, which just a few days ago hit record lows on expectations of more central bank stimulus, have been hurt as investors ditch riskier assets.
That’s what happened in March. Déjà vu, anyone?
(4) Brexit Going to Be Hard
Britain’s messy divorce with the European Union is likely to remain in the spotlight, keeping the pound jittery in response to comments from both sides about whether or not a trade deal is likely before a final Dec. 31st deadline.
EU leaders agreed at their Oct. 15-16 summit to more talks but are ready for no deal. The three main areas of contention are fair competition, dispute resolution and fisheries.
The pound could gain from signs the UK will not quit the talks. But the prospect of negotiations dragging on, undermining the economic outlook just as the coronavirus cases rise again, could weigh on sterling.
(5) China’s Q3 GDP Growth Data +4.9%
China’s third-quarter growth data came out on Monday and showed the effects of the pandemic receding.
The world’s second-largest economy was expected to have grown 5.2% in July-September from a year earlier. An actual read of +4.9% is still faster than the second quarter’s 3.2%.
The yuan is priced for it and the global recovery practically depends on it, as Chinese demand and production keep the world economy ticking over.
This reading will support policymakers’ prudence, with Tuesday likely to usher in a sixth straight month with China’s benchmark interest rate on hold.
A rebound is also expected in retail spending, one soft spot. That could herald better spending globally when the virus ebbs.
Zacks #1 Rank (STRONG BUY) Stocks
In last Friday’s U.S. retail sales report for September, we learned about the strong growth of home improvement and garden supply buying.
Toolmakers. They are one of the stock areas benefitting from that! And our latest Zacks Rank upgrades picked it up.
(1) Stanley Black Decker (SWK - Free Report) : This is a $176 a share stock now, with a market cap of $28.2B. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of A.
(2) Makita (MKTAY - Free Report) : This is a $46.50 a share stock, with a market cap of $12.6B. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of B.
(3) Toro (TTC - Free Report) : This is a $87 a share stock, with a market cap of $9.3B. I see a Zacks Value score of F, a Zacks Growth score of B and a Zacks Momentum score of D.
Summary thoughts?
With Zacks Value scores of either D or F, I would warn you.
This Toolmaker stock trend has been played. Profit-takers are going to show up.
Key Global Macro
I would keep an eye on U.S. housing market statistics this week.
On Monday, Fed Chair Powell is scheduled to make a speech.
The US NAHB housing market index comes out. I see an 83 reading is consensus. This has been a strong area of the U.S. economy during COVID.
On Tuesday, Australia’s RBA puts out its minutes.
U.S. housing starts for September come out, as do Building Permits. 1.45M is the starts expectation, versus a 1.41M prior number. 1.5M is the permits expectation, versus a 1.47 prior number.
On Wednesday, the ECB’s President LaGarde is to speak.
The Fed’s Beige Book comes out.
On Thursday, Japan’s all industry activity index comes out. The prior reading was up +1.3%.
U.S. initial weekly jobless claims should be near the prior 866K number.
On Friday, Japan’s preliminary Jibun Bank manufacturing PMI comes out. 47.3 for October should follow the 47.7 seen in the prior month. Both are below the critical 50 expansion Rubicon.
The U.S. preliminary Markit manufacturing PMI also comes out. I see a 53.3 following a 53.2 the month prior. That is better.
Conclusion
One final big event, to watch, and watch out for…
The final U.S. Presidential Debate.
The event is broadcast to the nation at 9:00 pm EST (which is 6:00 pm PST) on Thursday, October, 22nd.
This debate is set to be physically held in Nashville, TN.
That’s it for me.
Regards,
John Blank
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”
Click to get it free >>