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Investors can better understand how the Fed’s tightening cycle will play out after inflation data arrives next week with the consumer price index, the producer price index and an update to unit labor costs. At the moment, Fed officials are indicating that they expect the target interest rate to rise to a range of 3.50% to 4.00% by the end of the year. However, the bond market is yet to reflect that level, even after Treasuries sold off on Friday after the July jobs report came in. If inflation reports surprise to the upside, speculation of an intermeeting rate hike by the Fed could be aroused and lead to some bigger moves in the bond market. The week’s schedule includes Tyson Foods (TSN), Take-Two Interactive (NASDAQ: TWO), Disney (DIS) and Rivian Automotive (NASDAQ:RIVN) as some of the notable companies heading to the earnings confessional, while the JP Morgan Auto Conference is expected to feature some interesting updates, including several from the electric vehicle players.
Earnings Spotlight: Monday, August 8 Luckin Coffee (OTCPK:LKNCY), Dominion Energy (D), Tyson Foods (TSN), American International Group (AIG), Palantir Technologies (PLTR), and Take-Two Interactive Software (TTWO).
Earnings Spotlight: Tuesday, August 9 -Emerson Electric (EMR), Sysco (SYY), Globalfoundries (NASDAQ:GFS), Norwegian Cruise Line Holdings (NCLH), Coinbase Global (COIN), and Wynn Resorts (WYNN).
Earnings Spotlight: Wednesday, August 10 -Disney (DIS), Honda Engine (HMC), Coupang (CPNG), Surprise box (JACK), Wendy’s (WEN), Cyber Ark (CIBR), and Fox (FOX).
Earnings Spotlight: Thursday, August 11 – Cardinal Health (CAH), Brookfield Asset Management (New York Stock Exchange: BAM), Rivian Automotive (RIVN), US Foods (USFD), and Illumina (ILMN).
Earnings Spotlight: Friday, August 12 – Holdings in virgin orbit (NASDAQ:VORB).
IPO clock: The scaled-down initial public offering for electric sports boat developer Forza X1 (FRZA) is expected to begin trading on August 11. IPO lock-up periods expire at SKYX Platforms Corp (SKYX) and Modular Medical (MODD) on August 9. Both shares are trading well below their initial public offering. price level
Dividend Clock: Companies projected to increase their quarterly dividend payments include
Tyson Foods earnings preview: Tyson Foods (TSN) will publish its earnings in a report that will closely watch the meat and packaged goods sector for signs of a curbing effect on consumption. Consensus estimates are for Tyson to report revenue of $13.3B and EPS of $1.97. By volume, beef sales are forecast to fall 3% for Tyson and pork sales are forecast to decline 5%. Beef and chicken prices are higher than a year ago to help offset higher animal feed and transportation costs, but pork prices have actually declined. Analysts believe Tyson’s margin outlook will determine which way the stock will move after the earnings print. Current full-year margin expectations are for an adjusted beef operating margin of 11.5%, an adjusted pork operating margin of 5.4%, an estimated adjusted chicken operating margin of 5.6% and an estimated prepared foods adjusted operating margin of 9.2%. “The beef margin could contract as herd liquidations began to accelerate amid droughts and high feed costs, reducing cattle supply,” Bloomberg Intelligence analyst Jennifer Bartashus warned earlier. from the TSN report.
Take-Two Interactive Earnings Preview: Take-Two Interactive (TTWO) will report earnings on August 8 based on revenue expectations of $1.09 billion, EPS of $0.86, and net bookings of $6.5 billion, including the Zynga business. Analysts have been cautious on TTWO due to the risk of consumer spending being pressured by a recession, unproven franchises, and some questions about Grand Theft Auto iterations. Potential catalysts for a stock price rebound include stronger-than-anticipated Zynga numbers and more details on immersive core games.
Inflation reports: Next week’s reports on consumer prices and producer prices will keep the focus on inflation again. The July CPI report is expected to show a slight moderation in the headline figure to +8.7% yoy from +9.1% in June. Core CPI is forecast to rise 0.6% on a month-to-month basis. Bank of America expects strong impressions in housing, transportation and recreation, as well as another month of broad-based firmness in commodity prices. Looking ahead, airfares and used car prices are expected to drop in the coming months to take some pressure off the American consumer. The Producer Price Index is forecast to show a 0.3% rise in July, slowing from June’s 1.1% pace. Excluding food, energy and business services, the PPI is expected to rise 0.4% month over month. Economists believe that the price reports may support some of the discussion on peak inflation, but will also support the consensus view that the Federal Reserve will raise the target interest rate by 75 points at the September meeting.
Crypto Comeback Dreams: A major development in the cryptocurrency sector could happen next week ahead of Ethereum’s (ETH-USD) long-awaited transition to a proof-of-work protocol. The most anticipated event for Ethereum before the actual merger is the third and final testnet environment, which is called Goerli. A successful Ethereum merge test could add to the positive vibes already stirring after BlackRock (BLK) announced that it would offer institutional clients direct access to cryptocurrencies through its Aladdin product, starting with Bitcoin (BTC- USD). Crypto bulls are also pointing to positive news on the regulatory front after a bipartisan group of senators introduced a new bill classifying Bitcoin and Ethereum as commodities. Digital asset broker GlobalBlock said the move would mean those are the only cryptos that cannot be classified as securities, removing a major concern for marginalized institutions. He’ll keep an eye out for more news on that potential regulatory development. On the crypto calendar next week, the Futuristic Blockchain Conference will feature over 100 speakers, industry experts, and thought leaders to discuss blockchain technology, NFT, Metaverse, DeFi, Cryptocurrency, DAO. Ethereum founder Vitalik Buterin is set to make an appearance.
The data says: Nielsen figures for retail outlets will be reported with an increased focus on how demand for packaged goods, beverages, beer and spirits fared over the past four weeks and which companies may have gained market share. Coca-Cola (KO) has been outpacing PepsiCo (PEP) and Keurig Dr Pepper (KDP) in soft drink sales this year, and Constellation Brands (STZ) has been soaring in the spirits sector.
Corporate events: GlobalFoundries (GFS) will hold its Capital Markets Day event on August 10. GlobalFoundries and STMicro recently signed an agreement to jointly build and operate a new 300mm fabrication facility in Crolles, France, alongside STMicro’s existing facility. GFS is one of the stocks trading with a strong correlation to Taiwan news. Myriad Genetics (MYGN) will host an Investor Day event on August 11 to provide a strategic business update and overview of the company’s growth opportunities, research and development portfolio and technology initiatives. boeingNew York Stock Exchange:BA) must be updated in your orders and deliveries. Learn more about next week’s events that could affect stock prices in Seeking Alpha’s Catalyst Watch.
Featured conferences: The conference program is spearheaded by the JP Morgan Auto Conference. Companies to appear include Adient (ADNT0, Stoneridge (SRI), Ford Motor (F), Cepton (NASDAQ: CPTN), Gentherm (THRM), TrueCar (TRUE), TuSimple (TSP), Dana (DAN), (NASDAQ:GTEC), load flicker (NASDAQ: BLACK), Aptiv (New York Stock Exchange:APTV) and Rush Enterprises (RUSHA). Of those names, Tu Simple (TSP) may have the most to prove after The Wall Street Journal published safety concerns about the self-driving system despite 8 million miles driven. Certain auto stocks have seen share price jolts in the past after filings included trading guidance and updates. Other notable conferences include BTIG Biotech Conference, UBS Financial Services Conference, BofA Securities 2022 Cap SMID Ideas Conference, Oppenheimer 25th Annual Technology, Internet and Communications Conference, Wedbush PacGrow Health Conference , the Canaccord Genuity 42nd Annual Growth Conference, the BTIG Biotechnology Conference, the Jefferies 2022 Industrials Conference, and the Canaccord 42nd Annual Growth Conference.
Barron mentions: General Energy (New York Stock Exchange: GE) is recommended this week ahead of the company’s plan to split into separate aerospace, healthcare and power generation companies. The cover story argues that General Electric is trading for much less than the combined value of its three remaining pieces. The math on GE’s three businesses is said to be worth $160 billion, which is noted to be roughly double what GE is trading at right now. Worried about GE’s balance sheet? GE’s debt stands at about $32 billion, while total cash along with shares in oilfield services and equipment company Baker Hughes (BKR) and aircraft sales and leasing company AerCap Holdings (AER) add up to almost 20,000 million dollars. Barron’s notes that the resulting net debt of $12 billion is less than 2.0 times the $6.9 billion in EBITDA GE earned over the last 12 months versus the industry average of about 2.2 times.
Sources: EDGAR, Bloomberg, CNBC, Reuters