A Very Big Week For Earnings Season

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In his Daily Market Notes report to investors, Louis Navellier wrote:

Big Week For Earnings

A very big week – earnings season begins and inflation numbers are on deck.

The significant earnings this week include (all before the bell): Tuesday; Pepsico (NASDAQ:PEP), Wednesday; Delta Airlines (NYSE:DAL), Thursday; JP Morgan (NYSE:JPM)  & Morgan Stanley (NYSE:MS), and Friday; Wells Fargo (NYSE:WFC) & Citibank (NYSE:C).

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Earnings will be very revealing, the outlook for the 2nd half more so, as far as the state of consumer demand and the impact of inflationary pressures on profit margins and revenue growth. There is already early downward pressure with 71 S&P companies having already issued negative guidance versus outlook given in 1st Q earnings, the highest since 4Q19.

Energy earnings are supporting the whole market with the overall S&P currently forecast to see +5.7% earnings growth, but without including energy names the balance has a forecast of -3.0%.

In advance of the earnings nervousness, this morning, stocks are lower with the S&P down over 1% and the NASDAQ down over 2%, and the VIX up a couple of points but still at an unstressed level of 26.6.  The US 10-year Treasury is down 10bps to 3.00% with the 2-year down 8bps to 3,04%, still a troubling inverted yield curve but not one that reflects fears of runaway inflation.

Oil And Gas Prices

Crude oil is down $2 to below $103 while natural gas is up 9% to $6.61 as Russia has shut down a major pipeline into Europe for maintenance with some people wondering if Russia will leave it shut as a bargaining chip in the still ongoing war in Ukraine. 

Today, China shut down Macau for a week due to rising Covid cases hitting gaming stocks exposed there hard.  The Covid situation in China continues to generate uncertainty on demand as well as possible further supply chain problems. China also imposed anti-monopoly rule fines on several of their technology companies hitting Alibaba (BABA) now down 8.5% on the day, and the other companies fined.

The Twitter (NYSE:TWTR) acquisition by Elon Musk looks headed for court as Musk is attempting to cancel the transaction due to uncertainty on the number of Bot accounts, with the stock down 7% to $34.20, now 37% below the proposed $54.20 buyout price.

Stay Nimble

The June CPI numbers come Wednesday, Thursday the PPI, and Friday consumer sentiment and June retail sales. It's a very big week of information that will set the tone for the rest of the summer and will likely result in meaningful volatility in either direction depending on how the chips fall.

Investors need to be nimble and prepared to chase a relief rally or add to bargains in quality names in a correction.

Coffee Beans

According to a global survey, the United Arab Emirates was the country with the highest number of adult gamers in 2022, with 91% of residents saying they gamed at least occasionally, the majority playing on mobile phones. In the U.S., the highest number of adults reported gaming on consoles instead of on computers and mobile phones. Source: Statista. See the full story here.