Well folks, as the earnings season winds down we still have an action-packed week in the markets with many consumer goods issuers reporting through to Wednesday and multiple economic updates being released through the week. Read on for a review of this Q3 reporting period, your daily trade idea and stories on Donald’s return to Twitter as well as a deep dive into what’s driving the world’s egg shortage.
Markets in Review
Equity indices are trading down in the pre-market with futures on the Dow, S&P and Nasdaq respectively -1, -29 and -45 bps at the time of writing. The S&P doesn’t seem to be posturing for a down day despite trading near the higher end of its oscillation. Funds have flowed from the fixed income and precious metals space signalling risk-on sentiment - moreover, the largest catalyst will likely be a toss-up between the new home sales figure reported on Wednesday or the FOMC meeting minutes depending on how hawkish or dovish the tone takes.
Lastly, below is a review of this earnings season by the numbers as well as a roundup of the issuers reporting through the week: Earnings Scorecard: For Q3 2022 (with 94% of S&P 500 companies reporting actual results), 69% of S&P 500 companies have reported a positive EPS surprise and 71% of S&P 500 companies have reported a positive revenue surprise. Earnings Growth: For Q3 2022, the blended earnings growth rate for the S&P 500 is 2.2%. If 2.2% is the actual growth rate for the quarter, it will mark the lowest earnings growth rate reported by the index since Q3 2020 (-5.7%). Earnings Guidance: For Q4 2022, 55 S&P 500 companies have issued negative EPS guidance and 27 S&P 500 companies have issued positive EPS guidance. Valuation: The forward 12-month P/E ratio for the S&P 500 is 17.2. This P/E ratio is below the 5-year average (18.5) but above the 10-year average (17.1).
Long: The J. M. Smucker Company (SJM-NYSE) | Timeline: 3 days
The J. M. Smucker Company (SJM), which manufactures and markets branded food and beverage products worldwide, reported a solid earnings report this morning. The company beat earnings and revenue estimates by 9.89% and 1.41%, respectively, as Smuckers continues to deliver “organic top-line growth across all businesses, driven by the strength of the portfolio, the ability to recover cost inflation, and manage the supply chain environment." (Mark Smucker, CEO and Chairman). (Full Story) Referring to the chart, SJM has sustained a bullish trend throughout this year amid the macroeconomic pressure, rising about 19% from early March. That said, the price per share has been oscillating through this upwards price channel for the better part of this quarter, and as traders catch wind of the good news, SJM is likely to continue this bullish momentum toward its previous resistance level.
Zooming out...
Trump’s Social Media Minefield As you’ve probably heard, the 45th President’s Twitter account was reinstated over the weekend.
Detractors are already fuming, with a number stating their intentions to leave the platform as a result. Surprisingly, CBS news is amongst this list, as on Friday they announced their pausing of activity on Twitter due to the new “uncertainty” of the platform. While his supporters and those who just enjoy his poetic commentary are thrilled with the news, it’s unconfirmed that he’ll even return to the platform as it conflicts with the struggling Truth Social. Aside from Twitter, the former President has yet to be reinstated on Facebook even after declaring his Presidential campaign. This presents a moral, and legal quagmire as depending on how Facebook as an entity is categorized, a lack of reinstatement could be seen as election interference. Bird Flu Blues An egg shortage the likes of which hasn’t been in decades has hit the UK, with big box stores implementing rationing for consumers. These headlines inspired our team to look into the bird flu that is ravaging the world. In the UK and Europe 48 million birds have been killed in an effort to stop the spread of the disease from 2021-2022. The impacted area covers from Portugal to Norway, to Ukraine, affecting 37 countries so far. As of 2020, the continent held 2.35B chickens, meaning that roughly 2% of the total population has been culled. In a relative sense, the United States is better off as they boasted 9.22B chickens in 2020, and have culled 49M as of November 9th. Meaning they’ve only eliminated 0.52% of the total chicken population. With that being said, any marginal price increases caused by further outbreaks would be detrimental to consumers already left vulnerable by multi-decade-high levels of inflation.
Making headlines...
FTX Owes Its 50 Biggest Unsecured Creditors More Than $3 Billion
Sam Bankman-Fried’s bankrupt crypto empire owes its 50 biggest unsecured creditors a total of $3.1 billion, new court papers show, with a pair of customers owed more than $200 million each. (Full Story)
Wall Street Wants to Believe Xi’s Money-Minting Markets Are Back
More than two years of growth-squelching policies sent international investors fleeing China. It’s taken all of two weeks to lure them back. (Full Story)
Humbled Central Bankers Scale Back Their Ambitions
Once seen as the world’s go-to economic crisis fighters, central bankers are now desperately trying to contain a problem they allowed to happen: inflation. That’s eroded their credibility in the eyes of investors and society at large.(Full Story)
European teams abandon plan to wear 'OneLove' armbands at World Cup amid threats of punishment
The captains of seven European nations will not wear anti-discrimination armbands in World Cup games after threats from FIFA to show yellow cards to the players. (Full Story)
Chart of the Day: Black Friday Consumer Data
"Finance is a gun. Politics is knowing when to pull the trigger."
- Mario Puzo
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