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In the Global Week Ahead, we add substantially to our stack of Q4 earnings reports.
Zacks Research Director Sheraz Mian wrote--
We now have Q4 results from 66 S&P 500 members, or 13.2% of the index’s total membership.
Total earnings (or aggregate net income) for these 66 companies are up +0.3% from the same period last year on +0.6% higher revenues, with 87.9% beating EPS estimates and 78.8% beating revenue estimates.
We expect this favorable trend to strengthen and accelerate as we get into the heart of the Q4 earnings season this week, with more than 350 companies on deck to report results, including 113 S&P members.
By the end of this week, we will have seen Q4 results from more than 35% of S&P 500 members.
Importantly, this week’s line-up includes a representative cross section of the economy, ranging from traditional bellwethers like:
By the end of this week, we will have a lot more confidence in our initial positive view of Q4 earnings season.
Next are Reuters’ five world market themes, reordered for equity traders.
(1) FAANG Stocks Report
Outpaced by a late-2020 surge in so-called value stocks, tech shares have roared back amid the pandemic’s unrelenting march. That is reflected in recent hefty gains for Russell’s 1000 “growth” index versus its value counterpart.
The gains could extend when Apple, Microsoft and Facebook report earnings. Also on deck is Tesla, which recently joined the S&P 500.
The results could push the combined market capitalization of the FAANGs — Facebook, Amazon, AAPL, Netflix and Google-parent Alphabet — back above their all-time peak of $6.16 trillion.
Netflix has done its part; robust subscription numbers reported on Jan. 19 have boosted its shares 17%. Now there are high expectations for the rest. Morgan Stanley has boosted the price target for Apple, declaring themselves “buyers ahead of what we expect to be a record December quarter print.” Microsoft reports on Jan. 26, followed by Apple, Facebook and Tesla a day later.
(2) European Earnings Season Gets Busier
Europe’s STOXX 600 firms are expected to report a 26% earnings drop during the Q4 season which has just got under way. But that is history — let’s look instead at the January-March 2021 season when a 44% profit jump is predicted.
Such a surge seems intriguing given new continent-wide lockdowns. The explanation lies in consumer cyclicals, which Refinitiv I/B/E/S predicts will post an eye-popping 3,118% profit gain, versus the pandemic doldrums of Q1 2020.
Drilling down to single stocks, Daimler (1,471%), Fiat Chrysler, now Stellantis (177%) and Volkswagen (602%) turn out to be the largest contributors. Carmakers have seen their biggest earnings revisions in a decade and it is boosting their shares to 14-month highs.
(3) Money Flowing into Hong Kong Stocks
Record amounts of Chinese money are flowing into Hong Kong stocks, pushing the Hang Seng index above the 30,000 mark, making it a global top performer and putting a floor under Chinese companies blacklisted by Washington.
The inflows have also pushed Hong Kong interbank rates to multi-year lows, meaning authorities may not even need to inject cash, as they usually do in the run-up to February’s Lunar New Year holiday.
An upcoming $5 billion IPO from Chinese online video company Kuaishou may draw in even more mainland money.
For a city rocked by pro-democracy unrest since 2019, this endorsement of its markets is a positive. Unless, that is, one views this as another sign of China’s growing political and financial stranglehold on the special administrative region.
(4) Virtual Davos World Economic Forum (WEF) Happens
It is the end of January, so time for the Davos World Economic Forum (WEF), and Chinese President Xi Jinping, German Chancellor Angela Merkel, Japanese Prime Minister Yoshihide Suga and European Central Bank chief Christine Lagarde are among this year’s big-name speakers.
But Davos was not spared the pandemic hit; instead of gathering at the Swiss ski resort, the world’s great and good will do so virtually.
With the global economy deep in crisis, there is no shortage of topics: soaring unemployment and debt levels, growing income inequality and climate change.
And, like everyone else, the WEF is pinning hopes on normality returning: it plans a face-to-face meeting in Singapore in May.
(5) GDP Data Comes in for Europe
The coming week brings preliminary Q4 GDP data from France, Spain and Germany. Okay, the data is outdated and we already know the first quarter will show an activity dip from lockdown extensions. But let’s not be too hasty in dismissing the end-2020 numbers.
If economies fared better than expected, this would provide a cushion for the blow coming this quarter — that is the conclusion some reached after 2020 growth in powerhouse Germany turned out less bad than feared.
Also pay attention to Germany’s January inflation numbers, out Thursday. Those could show that a reversal in VAT cuts is easing the downward pressure on prices. In short, amid the pain inflicted by lockdowns, some positives might well lurk.
Top Zacks #1 Rank (STRONG BUY) Stocks
I pulled together a potpourri of interesting large-cap stocks this week.
(1) XPO Logistics (XPO - Free Report) : This is in the Transportation – Services industry, and is much like a small FedEx or UPS. But for critical and service-sensitive shipments.
I see a $120 share price tag, and a market cap of $11.0B. There is a Zacks Value score of B, a Zacks Growth score of C and a Zacks Momentum score of D.
(2) The Mosaic Company (MOS - Free Report) : Is it finally time for the fertilizer players to shine?
I see a $238 share price and a $10.8B market cap. There is a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of C.
(3) Newell Brands (NWL - Free Report) : This is a lesser-known $25 Consumer Staples stock. Think about Paper Mate, Sharpie, Dymo, EXPO, Parker, Elmer’s, Marmot, Oster, Rubbermaid, Sunbeam, FoodSaver, Graco, Baby Jogger and others.
This stock gets to a $10.4 market cap. I see a Zacks Value score of C, a Zacks Growth score of A, and a Zacks Momentum score of D.
As large-cap stocks, these ‘hot’ ones demonstrate a few sources of building demand strength, both for the U.S. and global economy.
Key Global Macro
A mid-week FOMC meeting is the big event. Just the Jay Powell presser afterwards matters to traders.
On Monday, the German IFO indexes come out. Business Climate may go from 92.1 to 92.0. Current Assessment may go from 91.3 to 90.7. Expectations may go from 92.8 to 93.2.
Comparatively, the Chicago Fed’s National Activity Index for December comes out. The prior month was up +0.27%. Given holiday shutdowns, don’t expect much, and the markets won’t care.
On Tuesday, the Case-Shiller U.S. House Price Index should be up a strong +6.9% y/y.
On Wednesday, there is a Fed rate decision and a Fed Chair Powell press conference. 0.25% on the Fed Funds rate will stick around. Guaranteed.
On Thursday, Euro area services sentiment should be -17.7, consumer confidence -15.5 and industrial confidence -7.2. All bad data. All will be ignored by stocks there.
Q4 U.S. GDP growth gets a preliminary reading. I see +2.8% in Q4 (q/q) after +3.7% (q/q) showed up in the prior month.
On Friday, the U of Michigan consumer sentiment index should be 81.3. Still well below the 90, closing in on 100 level of ebullience.
We get U.S. Personal Consumption Expenditure data. Personal spending may have fallen -0.5% in December, after falling -0.4% in November. Shutdowns again. It will be ignored.
Conclusion
The biggest market news surely flows from big FAANG stocks reporting this week.
They are considered (by many) to be the five most popular and best-performing American technology companies.
Last week, the Netflix earnings report finally stirred these beasts, after a multi-month period of share price consolidation.
Have a Great Week Trading!
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.”
Image: Bigstock
The Heart of Earnings Season: Global Week Ahead
In the Global Week Ahead, we add substantially to our stack of Q4 earnings reports.
Zacks Research Director Sheraz Mian wrote--
We now have Q4 results from 66 S&P 500 members, or 13.2% of the index’s total membership.
Total earnings (or aggregate net income) for these 66 companies are up +0.3% from the same period last year on +0.6% higher revenues, with 87.9% beating EPS estimates and 78.8% beating revenue estimates.
We expect this favorable trend to strengthen and accelerate as we get into the heart of the Q4 earnings season this week, with more than 350 companies on deck to report results, including 113 S&P members.
By the end of this week, we will have seen Q4 results from more than 35% of S&P 500 members.
Importantly, this week’s line-up includes a representative cross section of the economy, ranging from traditional bellwethers like:
By the end of this week, we will have a lot more confidence in our initial positive view of Q4 earnings season.
Next are Reuters’ five world market themes, reordered for equity traders.
(1) FAANG Stocks Report
Outpaced by a late-2020 surge in so-called value stocks, tech shares have roared back amid the pandemic’s unrelenting march. That is reflected in recent hefty gains for Russell’s 1000 “growth” index versus its value counterpart.
The gains could extend when Apple, Microsoft and Facebook report earnings. Also on deck is Tesla, which recently joined the S&P 500.
The results could push the combined market capitalization of the FAANGs — Facebook, Amazon, AAPL, Netflix and Google-parent Alphabet — back above their all-time peak of $6.16 trillion.
Netflix has done its part; robust subscription numbers reported on Jan. 19 have boosted its shares 17%. Now there are high expectations for the rest. Morgan Stanley has boosted the price target for Apple, declaring themselves “buyers ahead of what we expect to be a record December quarter print.” Microsoft reports on Jan. 26, followed by Apple, Facebook and Tesla a day later.
(2) European Earnings Season Gets Busier
Europe’s STOXX 600 firms are expected to report a 26% earnings drop during the Q4 season which has just got under way. But that is history — let’s look instead at the January-March 2021 season when a 44% profit jump is predicted.
Such a surge seems intriguing given new continent-wide lockdowns. The explanation lies in consumer cyclicals, which Refinitiv I/B/E/S predicts will post an eye-popping 3,118% profit gain, versus the pandemic doldrums of Q1 2020.
Drilling down to single stocks, Daimler (1,471%), Fiat Chrysler, now Stellantis (177%) and Volkswagen (602%) turn out to be the largest contributors. Carmakers have seen their biggest earnings revisions in a decade and it is boosting their shares to 14-month highs.
(3) Money Flowing into Hong Kong Stocks
Record amounts of Chinese money are flowing into Hong Kong stocks, pushing the Hang Seng index above the 30,000 mark, making it a global top performer and putting a floor under Chinese companies blacklisted by Washington.
The inflows have also pushed Hong Kong interbank rates to multi-year lows, meaning authorities may not even need to inject cash, as they usually do in the run-up to February’s Lunar New Year holiday.
An upcoming $5 billion IPO from Chinese online video company Kuaishou may draw in even more mainland money.
For a city rocked by pro-democracy unrest since 2019, this endorsement of its markets is a positive. Unless, that is, one views this as another sign of China’s growing political and financial stranglehold on the special administrative region.
(4) Virtual Davos World Economic Forum (WEF) Happens
It is the end of January, so time for the Davos World Economic Forum (WEF), and Chinese President Xi Jinping, German Chancellor Angela Merkel, Japanese Prime Minister Yoshihide Suga and European Central Bank chief Christine Lagarde are among this year’s big-name speakers.
But Davos was not spared the pandemic hit; instead of gathering at the Swiss ski resort, the world’s great and good will do so virtually.
With the global economy deep in crisis, there is no shortage of topics: soaring unemployment and debt levels, growing income inequality and climate change.
And, like everyone else, the WEF is pinning hopes on normality returning: it plans a face-to-face meeting in Singapore in May.
(5) GDP Data Comes in for Europe
The coming week brings preliminary Q4 GDP data from France, Spain and Germany. Okay, the data is outdated and we already know the first quarter will show an activity dip from lockdown extensions. But let’s not be too hasty in dismissing the end-2020 numbers.
If economies fared better than expected, this would provide a cushion for the blow coming this quarter — that is the conclusion some reached after 2020 growth in powerhouse Germany turned out less bad than feared.
Also pay attention to Germany’s January inflation numbers, out Thursday. Those could show that a reversal in VAT cuts is easing the downward pressure on prices. In short, amid the pain inflicted by lockdowns, some positives might well lurk.
Top Zacks #1 Rank (STRONG BUY) Stocks
I pulled together a potpourri of interesting large-cap stocks this week.
(1) XPO Logistics (XPO - Free Report) : This is in the Transportation – Services industry, and is much like a small FedEx or UPS. But for critical and service-sensitive shipments.
I see a $120 share price tag, and a market cap of $11.0B. There is a Zacks Value score of B, a Zacks Growth score of C and a Zacks Momentum score of D.
(2) The Mosaic Company (MOS - Free Report) : Is it finally time for the fertilizer players to shine?
I see a $238 share price and a $10.8B market cap. There is a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of C.
(3) Newell Brands (NWL - Free Report) : This is a lesser-known $25 Consumer Staples stock. Think about Paper Mate, Sharpie, Dymo, EXPO, Parker, Elmer’s, Marmot, Oster, Rubbermaid, Sunbeam, FoodSaver, Graco, Baby Jogger and others.
This stock gets to a $10.4 market cap. I see a Zacks Value score of C, a Zacks Growth score of A, and a Zacks Momentum score of D.
As large-cap stocks, these ‘hot’ ones demonstrate a few sources of building demand strength, both for the U.S. and global economy.
Key Global Macro
A mid-week FOMC meeting is the big event. Just the Jay Powell presser afterwards matters to traders.
On Monday, the German IFO indexes come out. Business Climate may go from 92.1 to 92.0. Current Assessment may go from 91.3 to 90.7. Expectations may go from 92.8 to 93.2.
Comparatively, the Chicago Fed’s National Activity Index for December comes out. The prior month was up +0.27%. Given holiday shutdowns, don’t expect much, and the markets won’t care.
On Tuesday, the Case-Shiller U.S. House Price Index should be up a strong +6.9% y/y.
On Wednesday, there is a Fed rate decision and a Fed Chair Powell press conference. 0.25% on the Fed Funds rate will stick around. Guaranteed.
On Thursday, Euro area services sentiment should be -17.7, consumer confidence -15.5 and industrial confidence -7.2. All bad data. All will be ignored by stocks there.
Q4 U.S. GDP growth gets a preliminary reading. I see +2.8% in Q4 (q/q) after +3.7% (q/q) showed up in the prior month.
On Friday, the U of Michigan consumer sentiment index should be 81.3. Still well below the 90, closing in on 100 level of ebullience.
We get U.S. Personal Consumption Expenditure data. Personal spending may have fallen -0.5% in December, after falling -0.4% in November. Shutdowns again. It will be ignored.
Conclusion
The biggest market news surely flows from big FAANG stocks reporting this week.
They are considered (by many) to be the five most popular and best-performing American technology companies.
Last week, the Netflix earnings report finally stirred these beasts, after a multi-month period of share price consolidation.
Have a Great Week Trading!
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 >>