Ahead of Monday morning in Wall-ywood, US Futures are lower by around 0.4-0.5% at lunchtime in Sydney as traders sleep the sleep of the wicked in preparation for another huge week of inflated numbers, corporate earnings and economic decision making.
For fans of the US Federal Reserve – at long last, the 2022 ‘The Symposium in Jackson Hole’, is upon us.
The annual display of obscene awkwardness brings together your top shelf central bankers, busy-body finance ministers, overpaid academics and prominent, possibly conflicted financial market participants from there and yonder.
This year’s meeting, entitled “Reassessing Constraints on the Economy and Policy,” starts Thursday in Wyoming.
I for one am pumped and am going to write about it below, or even in another article, depending on just HOW pumped I get.
Last week in America
But first up – yes, them bond yields rose as US shares tumbled on Friday, denying Wall Street what would’ve been a notable fifth-straight week of gains as central bankers kept the aviary predominantly hawkish.
That Nasdaq also closed lower for the first time in more than a month of business. The tech-heavy composite index, a surprise gung-ho outperformer during the post-May recovery, fell 2% on Friday, and 2.6% for the week. The S&P 500 fell 1.2% while the Dow Jones Industrial Average gave away 0.2%.
These not altogether awful numbers represent the largest weekly decline for all three of the adult US benchmarks in almost six weeks.
I guess the obvious question – or is it an elephant – in the room is are we banking on a continuation of the creaking confidence which has lifted US markets, or are we biding time for a panic pullback?
US traders are a fickle bunch and didn’t react well on Friday when Treasury yields strengthened, nor did they take on the chin the unyieldingly hawkish comments that the raptors running the Federal Reserve have been offering.
Arguing that inflation is here to stay, the Hawk’s Hawk – St Louis President Fred Bullard – last week came straight out on behalf of another 75 basis point nudge at next month’s meeting, which was enough to see Wall Street call in the nets.
This Week in America
Wall Street is bracing for another high-impact run of corporate earnings and market moving data. But first let’s touch base with Mars:
Elon Musk of Tesla AND Twitter fame spent Sunday in California talking about a 25% price hike for Tesla’s premium driver assistance thingy called Full Self-Driving (FSD).
After wide release of FSD Beta 10.69.2, price of FSD will rise to $15k in North America on September 5th.
Current price will be honored for orders made before Sept 5th, but delivered later.
— Elon Musk (@elonmusk) August 21, 2022
It’s not heaps – hitting US$15,000 from $12,000 next month – so, quite attractive.
Shelon Musk pic.twitter.com/p6M7EAAPdE
— Playwell Mini Martoz (@MiniMartozFN) August 21, 2022
That’s a better lead for Musk than the looming Tesla Stock Split Part 2, which is going ahead on August 24 and follows the electric vehicle maker’s 5-for-1 stock split of 2020.
Shareholders approved the 3-for-1 stock split at the company’s annual meeting earlier this month. Unlike a lot of Musk’s ideas it’s not rocket science – upon the morning of August 24, TSLA investors will suddenly have two extra shares for every one share they own.
Why? Because adding volume not value helps make a super expensive stock like the FAANG babies actually affordable to the punters and the retail investors, the ones more susceptible to the Tweets and treats offered by Messrs. Musk et al.
Tesla (TSLA)
eToro’s Josh Gilbert told Stockhead when Tesla’s shareholders voted in favor of the latest 3-for-1 stock split, the move was a great way to make its shares more accessible to a broader investor base.
“Although it won’t change underlying fundamentals, the split can improve liquidity and allow better allocation of stock compensation, with employee equity becoming a key factor in attracting new talent over recent years.”
“Data shows there is a pick-up in retail ownership and often a jump in share price after a split,” he added.
Since 1980, among the S&P 500 companies that announced stock splits returned an average of 25.4% over the following 12 months.
Similarly our mates over at AMC Entertainment are planning to debut their APE shares in New York under the ticker symbol… APE.
Each APE represents a one hundredth interest in a share of AMC’s authorized Series A convertible participating preferred stock. The gaming giant everyone likes to game says it will issue one APE unit as a dividend for every share of common AMC stock.
US earnings this week:
With local investors about to cop a week full of earnings season ejecta, thank goodness there’s but a few more reports among the S&P 500 yet to drop this week. According to S&P, of the Index’s circa 95% which have so far reported, about 3 out of 4 have beaten expectations.
Monday, August 22,
Zoom Video (ZM)
Wall Street expects Zoom to earn 93 cents per share on revenue of $1.12 billion. This compares to the year-ago quarter when earnings came to $1.36 per share on revenue of $1.02 million.
Zoom shares have had their share of zoom moments – jumping almost 50% from the deep troughs of mid-May.
The video conferencing company which was probably behind COVID-19 and suddenly went from zero to $600 hero at the time, is trading at around $100 at the moment.
There’s less pandemic, more competition (looking at you Microsoft) and the tech firm is getting handed a few more broker downgrades on weaker outlooks.
Most recently, Citigroup downgraded ZM to Sell from Neutral, warning of “new hurdles to sustaining growth.” In these conditions, ZM will want to book some decent numbers this week, but more importantly offer investors some plucky forward guidance on upbeat revenue and earnings forecasts.
Tuesday, August 23
Intuit (INU), Medtronic (MDT); and JD.com (JD)
Beijing-based JD.com is China’s No. 2 e-commerce company. Shares in JD rebounded from March lows but remain about 17% down this year. Like other key Chinese tech names, this US-listed e-commerce giant is totally exposed to the whims of both US and Chinese regulators but might do better listing in Honkers too (a la Alibaba). Analysts say Q2 revenue growth is headed for a record low due to weak domestic demand and China’s zero-COVID policies.
Wednesday, August 24
Salesforce.com (CRM) and Snowflake (SNOW): and Nvidia (NVDA)
Another tech tyrant to watch this week is the also downwardly revised US chipmaker Nvidia (NVDA).
Wall Street worriers are worried that another downward guidance revision on the back of the one they offered in June could tear a hole in NVDA’s joie de vivre. Tough times admittedly for chip-making, and NVDA did go out of its way in June to try and reset expectations as waning gaming demand and weaker-than-expected data center revenue fell sharply on shot-to-pieces supply chains.
Bank of America (BoA) analysts are an admirer, however and see some money-making catalysts ahead in the near-term like a few decent releases and improved data center custom. Apparently the Nvidia GPU Tech Conference in late September 19-22 is also seen as a major potential stock price catalyst.
Thursday and Friday, August 25/26
Dollar General (DG), Dollar Tree (DLTR), and Workday (WDAY), Marvell Technology (MRVL), Peloton Interactive (PTON)
NASDAQ IPOs this week
Starbucks Group Holdings Ltd. (NASDAQ:STBX) is expected to start trading on Wednesday. This is a Malaysia-based firm which provides advertising services and a mobile platform for retailers to hyper-connect with customers.