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In the Global Week Ahead, U.S. Earnings Season will remain a major focus of stock traders.
Most big tech reports come After the Market Closes (AMC), on the middle trading days:
Tuesday: AMC GOOGL and MSFT Wednesday: AMC FB Thursday: BMO TWTR AMC AAPL and AMZN
Zacks Research Director Sheraz Mian updated us on Q1 S&P500 results on April 21st.
“While Q1 earnings results have not been great, they are nevertheless not as bad as some in the market had started fearing ahead of the start of this earnings reporting cycle.
“Inflation remains a big headwind across the board, weighing on margins and profitability. But most companies are able to pass on the extra cost to end-consumers, who still remain in excellent shape.
“In fact, there is no evidence in the Q1 results that we have seen already of the feared moderation in economic growth or consumer spending:
Netflix’s (NFLX - Free Report) big disappointment notwithstanding, the tone and substance of management guidance and commentary also remains reasonable and reassuring.
We aren’t referring to Tesla (TSLA - Free Report) here whose blockbuster numbers may not offer universal read-throughs for the broader economy.
But Procter & Gamble’s (PG - Free Report) impressive results and guidance do lend themselves that type of reassuring read-through.
With respect to the Q1 scorecard, we now have Q1 results from 89 S&P500 members, through the morning of April 21st:
Total earnings for these 89 index members are down -2% from the same period last year on +9.2% higher revenues, with
78.7% beating EPS estimates and 69.7% beating revenue estimates.
The proportion of positive EPS and revenue beats is the lowest since the second quarter of 2020, which was the worst affected period of Covid 19.”
Here are Reuters’ latest five world market themes, reordered for equity traders—
(1) More Big Tech Earnings Results from the USA
It's been a gloomy year so far for U.S. stocks and for tech firms, and the ongoing earnings season could make it worse.
Netflix's share rout after reporting falling subscriber numbers has sparked trepidation about upcoming earnings from Facebook-parent Meta, Google-parent Alphabet, Apple and Amazon.
This so-called FAANG grouping benefited hugely from the low-rate, work-from-home environment.
But with interest rates on the rise, their shares have cumulatively lost some $2.5 trillion in market value this year.
Overall S&P 500 earnings are projected to expand +6.3%.
But Apple quarterly adjusted earnings-per-share are seen growing by just +2% versus the year-ago period, while a -0.7% dip is expected at Alphabet.
And EPS declines at Amazon and Meta could be as much as -49% and -24% respectively, Refinitiv data shows.
(2) European Earnings Results Coming In, Too
As the Ukraine war rages, European companies' full-year earnings revisions — the number of upgrades minus downgrades — have turned negative the first time since October 2020.
Q1 earnings growth will still be +25%, Refinitiv projects, possibly enough to lift a bearishly positioned market.
Yet, with more than 140 companies unveiling earnings during the April 25-29 week, there are questions over cost pressures and whether these can be passed to consumers.
Giants such as Nestle and Danone managed to grow Q1 earnings while raising prices, but smaller peers may struggle to do so.
Leading banks, including UBS, Deutsche, HSBC and Barclays also report; after a disappointing Q1 share performance, the prospect of higher rates is now lifting the sector.
(3) The Bank of Japan (BoJ) Updates its Monetary Policy, on Thursday
Ahead of Thursday's policy meeting, the Bank of Japan has left no doubt about its commitment to supercharged stimulus, leaping into markets to defend its 0% bond yield target -- even at the expense of a plunging currency.
The contrast between the BOJ and the hawkish Federal Reserve is at the heart of the yen's tumble to a two-decade trough near 130 per dollar.
The yen's -11% fall in the course of a month has prompted warnings from finance minister Shunichi Suzuki against rapid depreciation, putting markets on alert for an intervention. But BOJ Governor Haruhiko Kuroda has stuck to the view that yen weakness overall is a positive for Japan.
The IMF seems to agree. A senior official said yen moves were down to fundamentals and there was no need to change policy, including the BOJ's ultra-low rate stance.
(4) Russian Monetary Policy Gets Updated Friday
Russian central bank governor Elvira Nabiullina starts her new five-year term in charge of monetary policy with a big to-do list: dealing with a full-scale crisis caused by unprecedented and ever-widening Western sanctions.
The economy is expected to suffer its steepest contraction since the years following the 1991 fall of the Soviet Union, Russia is on the cusp of debt default and annual inflation has soared past 20%.
Still, Nabiullina may cut interest rates on Friday, possibly by 200 basis points, from the current 17%. That will partly reverse the emergency rate hike the central bank was forced into after the Kremlin's February 24 invasion of Ukraine.
Rate-setters are also expected to discuss lifting capital controls, and the need to recapitalize some banks.
(5) The French Election? Meh
In France, a Marine Le Pen presidency is not going to happen. Unlike in 2017, investors haven't had to fret this year that French presidential elections would result in “Frexit."
French bond yield premia over top-rated Germany are stable, as is the euro, unlike in 2017 when Le Pen espoused ditching the single currency.
Though Macron won easily on Sunday, he cannot count on a majority in June's parliament election.
So, the real test for markets may be yet to come.
Why? Look past any French election, to another shocking possibility. What seemed impossible in January may come to pass soon: a Russian sovereign debt default.
Top Zacks #1 Rank (STRONG BUY) Stocks
Let’s look into a set of overlooked names now on our #1 list this week:
(1) America Movil (AMX - Free Report) : This is the big Mexican wireless telco provider. The shares price at $21, making for a market cap of $68.6B. I see a Zacks Value score of D, a Zacks Growth score of F and a Zacks Momentum score of D.
(2) Uber Technologies (UBER - Free Report) : This is the big taxi surrogate. Shares price at $32 each, making for a market cap of $62.2B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of F.
(3) NTT Data (NTDTY - Free Report) : This is the big Japan telco. Shares price at $19 each, making for a market cap of $25.8B (much less than Mexico’s American Movil!). I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of D.
Poor Zacks momentum scores on international stocks remain concerning. They have not turned around. Yet.
Key Global Macro
Keep this context in mind, as you peruse this week’s macro prints and monetary events.
The Japanese Yen is plummeting in the face of rising U.S. Treasury yields, lifting off in front of expectations of more Fed Funds rate hikes.
On Monday, Japan’s unemployment rate should be 2.7%, consistent with last month’s reading.
Japan’s job to applicant ratio? It is low at 1.22. Unlike the USA, this economy is not stirring.
On Tuesday, the U.S. Case-Shiller Home Price Index (HPI) should be up +18.4% y/y. This is lower than last time’s +19.1% y/y reading. Is this red-hot market perceptibly slowing?
U.S. Durable Goods orders (ex-transportation) should be up +0.5% in March, after printing -0.6% in February.
On Wednesday, Australia’s RBA trimmed mean CPI should be +3.4% y/y. It was +2.6% in the prior reading.
On Thursday, the Bank of Japan (BoJ) rate decision comes out. They are not going to move off -0.1% short-term policy rates, even in the face of stunning Fed rate hikes.
U.S. Q1 GDP (in a preliminary reading) should be +6.0%, down from +7.1% in the prior quarter. Let’s see what actually comes out. I have noted +1.7% as the outlook here, due to Omicron.
On Friday, the Swiss National Bank (SNB) Chairman Jordan speaks. This is interesting now, as the Fed rate hikes stir up trouble here too.
Conclusion
Enjoy the spring weather in the Northern Hemisphere, and keep on top of the geopolitics flowing out of Russia’s invasion of Ukraine.
The May 9th date is attracting attention in global headlines.
May 9 is Victory Day, marking the Russian defeat of Nazi Germany in 1945 at the end of World War II.
The Kremlin has staged massive shows of strength to mark the day.
The weeks leading up to May 9th could be pivotal in Russia's invasion of Ukraine.
We shall see, shortly, about that.
That’s it for me.
Warm Regards,
John Blank
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Does May 9 Matter? Global Week Ahead
In the Global Week Ahead, U.S. Earnings Season will remain a major focus of stock traders.
Most big tech reports come After the Market Closes (AMC), on the middle trading days:
Tuesday: AMC GOOGL and MSFT
Wednesday: AMC FB
Thursday: BMO TWTR AMC AAPL and AMZN
Zacks Research Director Sheraz Mian updated us on Q1 S&P500 results on April 21st.
“While Q1 earnings results have not been great, they are nevertheless not as bad as some in the market had started fearing ahead of the start of this earnings reporting cycle.
“Inflation remains a big headwind across the board, weighing on margins and profitability. But most companies are able to pass on the extra cost to end-consumers, who still remain in excellent shape.
“In fact, there is no evidence in the Q1 results that we have seen already of the feared moderation in economic growth or consumer spending:
With respect to the Q1 scorecard, we now have Q1 results from 89 S&P500 members, through the morning of April 21st:
Here are Reuters’ latest five world market themes, reordered for equity traders—
(1) More Big Tech Earnings Results from the USA
It's been a gloomy year so far for U.S. stocks and for tech firms, and the ongoing earnings season could make it worse.
Netflix's share rout after reporting falling subscriber numbers has sparked trepidation about upcoming earnings from Facebook-parent Meta, Google-parent Alphabet, Apple and Amazon.
This so-called FAANG grouping benefited hugely from the low-rate, work-from-home environment.
But with interest rates on the rise, their shares have cumulatively lost some $2.5 trillion in market value this year.
Overall S&P 500 earnings are projected to expand +6.3%.
But Apple quarterly adjusted earnings-per-share are seen growing by just +2% versus the year-ago period, while a -0.7% dip is expected at Alphabet.
And EPS declines at Amazon and Meta could be as much as -49% and -24% respectively, Refinitiv data shows.
(2) European Earnings Results Coming In, Too
As the Ukraine war rages, European companies' full-year earnings revisions — the number of upgrades minus downgrades — have turned negative the first time since October 2020.
Q1 earnings growth will still be +25%, Refinitiv projects, possibly enough to lift a bearishly positioned market.
Yet, with more than 140 companies unveiling earnings during the April 25-29 week, there are questions over cost pressures and whether these can be passed to consumers.
Giants such as Nestle and Danone managed to grow Q1 earnings while raising prices, but smaller peers may struggle to do so.
Leading banks, including UBS, Deutsche, HSBC and Barclays also report; after a disappointing Q1 share performance, the prospect of higher rates is now lifting the sector.
(3) The Bank of Japan (BoJ) Updates its Monetary Policy, on Thursday
Ahead of Thursday's policy meeting, the Bank of Japan has left no doubt about its commitment to supercharged stimulus, leaping into markets to defend its 0% bond yield target -- even at the expense of a plunging currency.
The contrast between the BOJ and the hawkish Federal Reserve is at the heart of the yen's tumble to a two-decade trough near 130 per dollar.
The yen's -11% fall in the course of a month has prompted warnings from finance minister Shunichi Suzuki against rapid depreciation, putting markets on alert for an intervention. But BOJ Governor Haruhiko Kuroda has stuck to the view that yen weakness overall is a positive for Japan.
The IMF seems to agree. A senior official said yen moves were down to fundamentals and there was no need to change policy, including the BOJ's ultra-low rate stance.
(4) Russian Monetary Policy Gets Updated Friday
Russian central bank governor Elvira Nabiullina starts her new five-year term in charge of monetary policy with a big to-do list: dealing with a full-scale crisis caused by unprecedented and ever-widening Western sanctions.
The economy is expected to suffer its steepest contraction since the years following the 1991 fall of the Soviet Union, Russia is on the cusp of debt default and annual inflation has soared past 20%.
Still, Nabiullina may cut interest rates on Friday, possibly by 200 basis points, from the current 17%. That will partly reverse the emergency rate hike the central bank was forced into after the Kremlin's February 24 invasion of Ukraine.
Rate-setters are also expected to discuss lifting capital controls, and the need to recapitalize some banks.
(5) The French Election? Meh
In France, a Marine Le Pen presidency is not going to happen. Unlike in 2017, investors haven't had to fret this year that French presidential elections would result in “Frexit."
French bond yield premia over top-rated Germany are stable, as is the euro, unlike in 2017 when Le Pen espoused ditching the single currency.
Though Macron won easily on Sunday, he cannot count on a majority in June's parliament election.
So, the real test for markets may be yet to come.
Why? Look past any French election, to another shocking possibility. What seemed impossible in January may come to pass soon: a Russian sovereign debt default.
Top Zacks #1 Rank (STRONG BUY) Stocks
Let’s look into a set of overlooked names now on our #1 list this week:
(1) America Movil (AMX - Free Report) : This is the big Mexican wireless telco provider. The shares price at $21, making for a market cap of $68.6B. I see a Zacks Value score of D, a Zacks Growth score of F and a Zacks Momentum score of D.
(2) Uber Technologies (UBER - Free Report) : This is the big taxi surrogate. Shares price at $32 each, making for a market cap of $62.2B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of F.
(3) NTT Data (NTDTY - Free Report) : This is the big Japan telco. Shares price at $19 each, making for a market cap of $25.8B (much less than Mexico’s American Movil!). I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of D.
Poor Zacks momentum scores on international stocks remain concerning. They have not turned around. Yet.
Key Global Macro
Keep this context in mind, as you peruse this week’s macro prints and monetary events.
The Japanese Yen is plummeting in the face of rising U.S. Treasury yields, lifting off in front of expectations of more Fed Funds rate hikes.
On Monday, Japan’s unemployment rate should be 2.7%, consistent with last month’s reading.
Japan’s job to applicant ratio? It is low at 1.22. Unlike the USA, this economy is not stirring.
On Tuesday, the U.S. Case-Shiller Home Price Index (HPI) should be up +18.4% y/y. This is lower than last time’s +19.1% y/y reading. Is this red-hot market perceptibly slowing?
U.S. Durable Goods orders (ex-transportation) should be up +0.5% in March, after printing -0.6% in February.
On Wednesday, Australia’s RBA trimmed mean CPI should be +3.4% y/y. It was +2.6% in the prior reading.
On Thursday, the Bank of Japan (BoJ) rate decision comes out. They are not going to move off -0.1% short-term policy rates, even in the face of stunning Fed rate hikes.
U.S. Q1 GDP (in a preliminary reading) should be +6.0%, down from +7.1% in the prior quarter. Let’s see what actually comes out. I have noted +1.7% as the outlook here, due to Omicron.
On Friday, the Swiss National Bank (SNB) Chairman Jordan speaks. This is interesting now, as the Fed rate hikes stir up trouble here too.
Conclusion
Enjoy the spring weather in the Northern Hemisphere, and keep on top of the geopolitics flowing out of Russia’s invasion of Ukraine.
The May 9th date is attracting attention in global headlines.
May 9 is Victory Day, marking the Russian defeat of Nazi Germany in 1945 at the end of World War II.
The Kremlin has staged massive shows of strength to mark the day.
The weeks leading up to May 9th could be pivotal in Russia's invasion of Ukraine.
We shall see, shortly, about that.
That’s it for me.
Warm Regards,
John Blank