In the Global Week Ahead, earnings risks and opportunities multiply as 180 firms inside the S&P500 large-cap index release their latest third quarter results.
What are notable names? And what could they signal on the broader U.S. economy?
Watch Caterpillar (for guidance on heavy equipment demand), UPS (as a signal on consumer and business transactions growth), Boeing (worth listening to about the contentious U.S. trade outlook), and Amazon (on what they say on a second headquarters in the USA).
FANG (Facebook, Amazon, Netflix, Google) stock reports always become a focus. Realize Amazon shares posted total returns of about +32% YTD versus Netflix’s +58%. This important company could surprise to the upside on Thursday, Oct. 26th. That Megacap Tech earnings report plays out against a backdrop where Amazon’s share price has underperformed the past three months.
Also, traders get earnings reports from Intel, Microsoft, Alphabet (Google), Ford, GM, VISA, Capital One, 3M, McDonald’s, AT&T, Coca-Cola, Xerox, State Street, American Airlines, Merck and Colgate Palmolive.
At the end of the week, on Friday, a first estimate for U.S. third quarter GDP comes out. This much-watched U.S. top-line macro data should be OK, meaning not market moving.
Consensus estimates the third quarter’s growth at +2.5%. The Atlanta Fed’s GDPNow tracker has a +2.7% call as of Oct. 18th. Anything above +2.0% (given hurricane effects baked in) is likely to be ignored by traders. Hurricane losses to GDP growth should be mostly ignored by the Fed, too.
However, keep an eye on rebuilding stories from major reporting companies. They will find a way to boost GDP growth down the road.
Top Zacks #1 Rank (STRONG BUY) Stocks—
In the week ahead, I think Tech stocks will remain hot with both traders and investors.
Here are three to look into.
Facebook (FB - Free Report) is again a top stock at Zacks. The market cap is at an incredible $508 billion. However, the long-term VGM score is a C. The FANG stocks are not cheap, by any measure.
Micron (MU - Free Report) also remains a top stock. This is a chip stock with a $47 billion market capitalization. There are compelling scores here. Zacks long-term ratings show a Zacks Value score of A, a Growth score of A, and a Momentum score of A. What’s not to like?
Fujifilm Holdings (FUJIY - Free Report) : This a semiconductor photomask supplier, which is in demand these days, as the global chip market stay a hot spot. This $17 billion market cap Japanese stocks get a Zacks long-term VGM score of A too.
Key Global Macro—
Outside the USA, central Banks will be in the spotlight -- in the coming week.
On Wednesday, a Bank of Canada (BoC) monetary policy decision arrives. Don’t expect a policy rate change.
Also on Wednesday, the Central Bank of Brazil issues its latest monetary policy decision. See if Brazil’s central bank suggests growth is picking up.
On Thursday, the European Central Bank (ECB) issues its latest monetary policy and Mario Draghi holds a press conference. Expect the ECB to reduce its pace of bond buying.
Economists polled by Reuters think Mario Draghi will cut monthly purchases of bonds to 40 billion euros from 60 billion, although that reduction could be larger.
New U.S. home sales (Wednesday) and pending home sales (Thursday) can supply a better understanding. How did U.S. housing markets perform during September, after hurricanes struck Texas and Florida?
On Monday, Taiwan reports its latest unemployment rate. The prior was 3.76%. That nation also reports its industrial output. The prior there was 3.25% y/y.
On Tuesday, France reports its preliminary composite Purchasing Manager Index (PMI). The prior was 57.1. France’s preliminary manufacturing reading comes out too. The prior there is 56.1.
For Germany, the prior manufacturing PMI was 60.6. A new reading comes out.
The Eurozone composite PMI comes out.The prior was 57. The manufacturing prior was 58.1 and the services prior was 55.8.
A preliminary capacity utilization rate for Brazil comes out. The prior was 74%. The forecast is for 74.2%. 80% is a sound capacity utilization rate.
Mexico’s biweekly consumer price index (CPI) comes out. The prior was +6.17% y/y. The forecast is for 6.38% y/y.
On Wednesday, Brazil’s SELIC monetary policy rate should fall to 7.5% from 8.25%.
Germany’s influential IFO indices come out. The business climate sub-index should go from 115.2 to 116.0. The current conditions sub-index prior was 123.6. The expectations sub-index should go from 107.4 to 107.8.
An advance call on U.K. real GDP growth comes out. The prior was +1.5% y/y.
U.S. durable goods orders come out. Ex-transport had a prior reading of +0.5%.
The Bank of Canada (BoC) issues its monetary policy decision. The 1.0% rate is to stay fixed.
U.S. new home sales come out. The prior and forecast is for 560K.
On Thursday, ECB President Draghi issues a policy decision and holds a press conference.
U.S. initial claims look very low again, at 222K.
The Fed’s Kashkari speaks in Minneapolis.
On Friday, a U.S. advance reading on GDP comes out. The final reading was +3.1% for Q2. The Q3 first look is for +2.5% y/y.
The University of Michigan sentiment index comes out. The prior reading was 101.1.