Wall Street Breakfast: The Week Ahead

Economic reports in the week ahead

The US election on November 8 will steer some attention away from investors locked in on the Federal Reserve. The consensus expectation is that a divided government between the White House and Congress will lead to more political gridlock and a potential slowdown for some of President Biden’s agenda. Historians note the stock market has outperformed with a divided government over the returns generated in the years following the same party controlling the Senate, the House and the Presidency. Analysts warn that a scenario that could rattle the market would be any lack of clarity with regard to Senate control if results are contested. Meanwhile, the economics calendar will be dominated by the October consumer price index report. Earnings will also continue to roll in next week, with Disney (NYSE:DIS), Rivian Automotive (NASDAQ:RIVN), Rolox (RBLX) and Nio (NIO) some of the notable reporters. The earnings season has been lackluster so far in general with only 70% of S&P 500 Index companies posting better-than-expected earnings compared to 85% a year ago and 24% missing EPS estimates vs. 13% a year ago. Outside the US, it will be another week of reading the tea leaves in China with Apple (AAPL) supplier Foxconn in the middle of a lockdown region that is slated to run through November 9.

Earnings spotlight: Monday, November 7 Mosaic (MOS) and Take-Two Interactive (TTWO).

Earnings spotlight: Tuesday, November 8 Disney (DIS), DuPont (DD), Norwegian Cruise Line Holdings (NCLH), Disney (DIS), Occidental (OXY), Lucid Group (LCID), and GlobalFoundries (GFS).

Earnings spotlight: Wednesday, November 9 – Hanesbrands (HBI), DR Horton (DHI), Roblox (RBLX), Coupang (CPNG), Unity Software (U), and Rivian Automotive (RIVN).

Earnings spotlight: Thursday, November 10 – Phillips 66 (NYSE:PSX), Brookfield Asset Manager (BAM), Nio (NIO), Tapestry (TPR), and Ralph Lauren (RL).

Earnings spotlight: Friday, November 11 Polestar Automotive (NASDAQ:PSNY).

IPO preview: Online game developer Snail (SNAL) and oncology drug developer Acrivon Therapeutics (ACRV) are expected to start trading in the week ahead. The IPO lockup period expires for a block of shares of Bausch + Lomb (BLCO).

Price check: The October inflation report release will be one of the headline events of the week. Headline inflation is expected to fall to +8.0% in October from +7.8% in September and core CPI is seen moderating to +0.4% month-over-month from +0.6%. Services inflation is once again anticipated to be the primary driver of core inflation in October, although data on asking rents continues to suggest that a moderation is on the way. Bank of America noted that transportation services prices and new auto prices, food/beverage prices and apparel prices are still elevated, but medical care services prices, used car prices, food/beverage prices and apparel prices are forecast to have moved lower.

Rivian one year later: The one-year anniversary of the red-hot Rivian Automotive (RIVN) IPO arrives next week. Shares of the electric vehicle maker soared to as high as $179.47 following the splashy debut and traded with a market cap above the valuations for Ford (F) and General Motors (GM) for a while. With shares now down 82% from their all-time high, the investor vibe on Rivian is much different with higher interest rates, supply chain snarls, and risk-off trading in the mix. The EV upstart still has plenty of bullish support on Wall Street, including from Morgan Stanley (Overweight, price target $60) with its long-term thesis. Analyst Adam Jonas and team believe that the company should be able to get through most or all of FY23 before a capital raise is needed. “We believe further control of spending/cash burn + improved production ramp leads nicely to increased disclosure and around potential IRA benefits which can support Rivian’s aggressive battery cell and module on-shoring plans through the FY24 horizon,” updated the firm. Rivian is due to report earnings on November 9 with the product timeline, view on profitability and update on the Amazon (AMZN) partnership some of the key items to watch.

corporate events: Zoom Video Communications (NASDAQ:ZM) will hold an Investor Day on November 8 to cover business strategy, opportunities, metrics, and initiatives. The presentation takes place during the company’s Zoomtopia event, which has been a share price catalyst in the past. Companies holding investor day events on November 9 include Phillips 66 (PSX), Procore Technologies (NYSE:PCOR), and First Republic Bank (NYSE:FRC). Also keep an eye on Okta (NASDAQ:OKTA) with the company’s Oktane22 Keynote and Investor Day expected to turn heads. Shares of Okta have rallied in the past after the annual event. Fisker (NYSE:FSR) will be closely watched at the end of the week with the electric vehicle maker holding a factory tour and offering test drives for analysts and journalists at Magna’s facilities in Austria. The sneak peek comes ahead of the November 17 start date for production of the Ocean electric vehicle. Read Seeking Alpha’s Catalyst Watch for a detailed list of events next week.

Investor tactics: Investors look to play short-term volatility have a new roadmap to consider. Evercore ISI recently updated its TAP list, which is comprised of tactical calls made around near-term events expected to have a short-term impact on share prices impact. The list of stocks seen outperforming in the near-term included Arista Networks (ANET), Becton, Dickinson & Co. (NYSE:BDX), CH Robinson Worldwide (NASDAQ:CHRW), Canada Goose Holdings (GOOS), CDW Corporation (CDW), Duolingo (DUOL), Edwards Lifesciences (EW), GoDaddy (GDDY), Thermo Fisher (TMO), Viridian Therapeutics (VRDN), and Zimmer Biomet Holdings (ZBH). The list of stocks tipped to underperform in the near term includes Azenta (AZTA), Block (SQ), Canadian Pacific Railway (CP), and Zillow Group (ZG)

Barron’s mentions: Tesla (NASDAQ:TSLA) is the subject of the cover story this week as the publication dives into the question if the Twitter distraction will knock the company off track at a critical time. Some critics have warned that a preoccupied Elon Musk and potential hits to the Tesla brand could create anxiety with investors just as the Berlin and Austin Gigafactories ramp up production to meet the company’s 50% annual growth target. Meanwhile, bullish-leaning analysts have reminded that Tesla’s (TSLA) management bench may be much deeper than it is given credit with Franz von Holzhausen (design chief), Ashok Elluswamy (driver-assistance software), and Lars Moravy (vehicle engineering) all said to be executing at a high level autonomously. One of the pullouts from the Barron’s breakdown is that the best thing Tesla can do right now is to focus on branding Tesla as Tesla.

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