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The biggest week of the earnings season will keep investors heads on a swivel with Microsoft (MSFT), UPS (UPS), Meta Platforms (META), Boeing (BA), Pfizer (PFE), Apple (AAPL), and Amazon (AMZN) just a few of the powerhouses due to report. While the economic calendar includes updates on new homes sales, consumer confidence, durable goods, Q2 GDP and the PCE price index – the two-day FOMC meeting will be the major event of the week. The Federal Reserve is expected to raise the target range for the federal funds rate by another 75 points to 2.25% to 2.50%, although futures trading still implies a 20% chance of a 100-point hike. Heading into the meeting, virtually every FOMC participant has stated firmly that reducing inflation is the top priority at present, but also steered away from tipping off a 100-point bazooka. BNP Paribas reminds that the Fed’s preferred financial market recession predictor, the near-term forward spread, remains upward sloping. “Despite a massive growth deceleration this year, which may seem to indicate that the US economy is heading into a recession, a hard landing can be avoided, in our view – but its a close call,” previews the firm into the big week. Investors may end the week with a clearer view on recession risk,
Earnings spotlight: Monday, July 25 – NXP Semiconductors (NXPI), Whirlpool (NYSE:WHR), and F5 (FFIV).
Earnings spotlight: Tuesday, July 26 – General Motors (GM), General Electric (GE), Microsoft (MSFT), Alphabet (GOOG), Visa (V), Coca-Cola (KO), McDonald’s (MCD), UPS (UPS), Unilever (UL), Texas Instruments (TXN), and Chipotle (CMG).
Earnings spotlight: Wednesday, July 27 – Humana (HUM), Boeing (BA), Meta Platforms (META), Qualcomm (QCOM), Bristol-Myers Squibb (NYSE:BMY), Shopify (SHOP), Ford (F), Qualcomm (QCOM), and Kraft Heinz (KHC).
Earnings spotlight: Thursday, July 28 – Valero Energy (VLO), Pizer (PFE), Anheuser-Busch InBev (BUD), Mastercard (MA), Southwest Airlines (LUV), Barclays (BCS), Pfizer (PFE), Merck (MRK), Intel (INTC), Altria Group (MO), Southern Company (SO), Apple (AAPL), Amazon (AMZN), and Comcast (CMCSA).
Earnings spotlight: Friday, July 29 – Exxon Mobil (XOM), Procter & Gamble (PG), Chevron (CVX), AbbVie (ABBV), and Charter Communications (CHTR).
IPO watch: Esports platform developer Mobile Global Esports (MGAM) is expected to start trading next week. The company is focused on the emerging esports market in India. Other IPO events to watch are the analyst quiet period expiration on Ivanhoe Electric on July 25, as well as the IPO lockup period expirations on Credo Technology (NASDAQ:CRDO) and Knightscope (NASDAQ:KSCP) for certain block of shares.
SPAC watch: Shareholders with Waldencast Acquisition Corp. (NASDAQ:WALD) meet on July 25 to vote on taking skin care brands Obagi & Milk Makeup public in a three-way SPAC deal that will value the new company at $1.2B. On July 27, two SPAC deals go to a vote with shareholders with Duddell Street Acquisition Corp. (DSAC) meeting to vote on taking AI-driven enterprise SaaS company FiscalNote public and shareholders with Brookline Capital Acquisition (NASDAQ:BCAC) meeting to vote on taking cancer drug firm Apexigen public. Shareholders with CHW Acquisition Corporation (CHWA) vote on July 28 on the deal to take dog walking and pet services company Wag Labs public. Wag competes with Rover (ROVR), which went public last year.
Dividend watch: Brazilian oil producer Petrobras (NYSE:PBR) could announce dividends of between $10B to $14B relative to its second-quarter results when it reports on July 28, according to Credit Suisse. That huge payout would represent a dividend yield of up to 20% in a single quarter. Some other quarterly dividend payout predictions include hikes from Wells Fargo & Company (WFC) to $0.30 from $0.25, Wingstop (NASDAQ:WING) to $0.20 from $0.17, OFG Bancorp (OFG) to $0.17 from $0.15, Cintas (NASDAQ:CTAS) to $1.07 from $0.95, and Marathon Oil (MRO) to $0.09 from $0.08.
Apple earnings preview: Apple (AAPL) is in line to report earnings on July 28 for a quarter that saw significant disruption from the COVID-related slowdowns in China. The latest read from analysts is that iPhone demand is holding up slightly better than expected, although the macro backdrop has tempered enthusiasm somewhat over the trajectory for a back half of the year that includes the iPhone 14 launch. Morgan Stanley thinks the Apple earnings call has added significance this quarter, with management’s macro commentary likely to be relatively guarded. In the background, high-income consumer sentiment is flashing signs of caution and a strong U.S. dollar is causing Apple to hike prices in some international markets. That all adds up to the potential that FY23 consensus revenue and EPS marks may be too high. On a more positive note, Wedbush Securities reminds that Apple continues to focus on a robust product pipeline and services ramp into 2023. The 2023 product setup could be a reason to buy the dip in Apple if earnings disappoint.
Amazon earnings preview: Amazon (AMZN) will report earnings on July 28 to subdued expectations due to late-quarter F/X pressure and the impact of inflation. While a strong Prime Day event in July and solid recent reads on consumer spending are expected to support revenue guidance from the e-commerce giant, Jefferies warns that Q3 operating income outlook could be revised lower due to worsening inflation and tough comparables. The OI guidance cut is seen being the last guide-down and a potential clearing event for improving sentiment. JPMorgan named Amazon its top 12-month FANG stock and still sees $70B of 2023 profit potential from 3P, AWS and advertising that can be better realized as retail pricing normalizes and the logistics network is optimized. Even with estimates tightened, AMZN trading at 11.3X the 2023 EBITDA estimate is noted to be a discount to the historical average. Amazon’s (AMZN) earnings report and guidance could impact a number of companies. Aterian (NASDAQ:ATER) generates 93% of its revenue from the e-commerce giant, while NovaBay Pharma (NBY) Plug Power (PLUG) both lean on AMZN for more than 40% of sales. Meanwhile, Netgear (NTGR) and Simply Good Foods (SMPL) have seen their shares prices move in tandem with Amazon 88% of the time in the week after earnings.
Back to school breakdown: The spending outlook for the back-to-school season looks more muted this year as indicated by a proprietary survey run by research firm Gordon Haskett. The firm said 37% of respondents plan to spend more on back-to-school items than a year ago versus 52% a year ago with gas and food inflation impacting household spending sentiment. Apparel and school supplies are expected to see the largest category bumps and electronics is seen lagging. Dollar stores and off-price retailers are forecast to see the largest uptick as prime BTS shopping destinations. Dollar Tree (DLTR) and Macy’s (M) were singled by the firm as two retail chains with a notable increase in consumer interest within the spending survey.
Short squeeze candidates: S3 Partners published a list of the crowded short trades based on factors like total short dollars at risk, short interest as a true percentage of a company’s tradable float, stock loan liquidity, and trading liquidity. Based on the firm’s proprietary scoring method, the stocks most at risk of seeing a short squeeze include Faraday Future Intelligent Electric (NASDAQ:FFIE), Canoo (GOEV) Gossamer Bio (GOSS), Verve Therapeutics (VERV), Lightwave Logic (NASDAQ:LWLG), Beam Therapeutics (NASDAQ:BEAM), Cowen Group (NASDAQ:COWN), Veru (VERU), Beyond Meat (NASDAQ:BYND), and Fate Therapeutics (FATE), Lordstown Motors (RIDE), Rocket Companies (RKT), Dutch Bros. (NYSE:BROS), Fisker (FSR), Marathon Digital (MARA), GameStop (GME), and Lucid Group (LCID). The stocks in the crowded short list all have incurred double-digit percentage mark-to-market losses over the last 30 days coupled with mark-to-market losses over the last seven days.
SPAC watch: Shareholders with Waldencast Acquisition Corp. (WALD) meet on July 25 to vote on taking skin care brands Obagi & Milk Makeup public in a three-way SPAC deal that will value the new company at $1.2B. On July 27, two SPAC deals go to a vote with shareholders with Duddell Street Acquisition Corp. (DSAC) meeting to vote on taking AI-driven enterprise SaaS company FiscalNote public and shareholders with Brookline Capital Acquisition (BCAC) meeting to vote on taking cancer drug firm Apexigen public. Shareholders with CHW Acquisition Corporation (CHWA) vote on July 28 on the deal to take dog walking and pet services company going Wag Labs public. Wag competes with Rover (ROVR), which went public last year.
Corporate events: Shareholders with Spirit Airlines (NYSE:SAVE) are lined up once again on to vote on the buyout offer from Frontier Group (ULCC). Later in the week, the JetBlue (JBLU) offer expires. There is a good chance the airline buyout drama extends into August. Amazon (AMZN) will hold its annual AWS re:Inforce learning conference on July 26. On the same day, Zenvia Inc. (NASDAQ:ZENV) will hold the first Investor Day in the company’s history with presentations focused on the long-term plan and how it envisions the future of CX. REE Automotive Ltd. (NASDAQ:REE) will hold a hybrid event on July 28 that includes a business update, Q&A session with management, and on-site participation for analysts and investors. Read more about the events that could impact shares prices next week in Seeking Alpha’s Catalyst Watch.
Barron’s mentions: Amazon (AMZN) makes the cover this week just ahead of the e-commerce giant’s earnings report. The bullish points laid out on Amazon include an advertising business that has annualized revenue of close to $40B, which is nearly four times the size of Twitter (TWTR) and Snap (SNAP) combined. Amazon is also said to have turned into a media powerhouse with the weekly NFL rights to a key night, as well as a growing logistics powerhouse that increasingly rivals FedEx (FDX) and United Parcel Service (UPS). Of course, there is also the AWS business that accounts for 16% of the company’s sales and more than 100% of its profit to offset the money-losing businesses. Redburn Research analyst Alex Haissl made the case that AWS is now the strongest cloud provider overall, with a platform that includes raw data storage, database software, applications, and analytics. That makes a potential AWS spinoff down the road an enticing reason to buy Amazon now with shares down more than 30% YTD.
Sources: EDGAR, Bloomberg, CNBC, Reuters,
