Traders Market Weekly: Valuation Matters in Earnings Season

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    Japan’s May Household Spending -1.9% m/m (expected 0.8%; last 1.0%); -0.5% yr/yr (expected 2.1%; last -1.7%). May Current Account surplus JPY128 bln (expected surplus of JPY186 bln; last surplus of JPY501 bln). June Bank Lending 1.3% yr/yr (last 0.7%) and June Economy Watchers Current Index 52.9 (last 54.0)


    Major European indices trade in mixed fashion.

    Bank of Italy Governor Visco said that the ECB intends to call for a 25-bps rate hike at the July meeting, adding that a bigger hike could be made in September if medium-term inflation expectations remain elevated. Germany’s biggest landlord, Vonovia, will restrict residential heat at night in the fall.

    —Equity Markets—

    STOXX Europe 600: -0.2% (+2.0% week-to-date)
    Germany’s DAX: +0.2% (+0.7% week-to-date)
    U.K.’s FTSE 100: -0.8% (-0.% week-to-date)
    France’s CAC 40: -0.5% (+0.7% week-to-date)
    Italy’s FTSE MIB: +0.1% (+1.0% week-to-date)
    Spain’s IBEX 35: -0.8% (-0.5% week-to-date)


    France’s May trade deficit EUR13.00 bln (expected deficit of EUR12.80 bln; last deficit of EUR12.70 bln). May Current Account deficit EUR3.90 bln (last deficit of EUR2.70 bln) o Italy’s May Industrial Production -1.1% m/m, as expected (last 1.4%); 3.4% yr/yr (expected 4.0%; last 3.9%)


    The S&P 500 futures are down 25 points and are trading 0.6% below fair value.
    The Nasdaq 100 futures are down 146 points and are trading 1.2% below fair value.
    The Dow Jones Industrial Average futures are down 92 points and are trading 0.3% below fair value.

    The futures for the major indices have pulled back ahead of the open.


    Energy futures are mixed with WTI crude oil futures up 0.7% to $103.45/bbl.
    Natural gas futures are down 2.2% to $6.14/mmbtu.
    Unleaded gasoline futures are down 0.9% to $3.39/gal.

    Treasury yields are on the rise.
    The 2-yr note yield is up ten basis points to 3.13% and the 10-yr note yield is up seven basis points to 3.08%.


    Levi Strauss (LEVI 17.05, +0.64, +3.9%): Levi Strauss beats by $0.06, beats on revs; reaffirms FY22 EPS guidance, revs guidance; also increases dividend by 20%
    Occidental Petroleum (OXY 62.55, +1.08, +1.8%): 10% owner Berkshire Hathaway (Warren Buffett)bought 12,042,470 shares at $56.69 – $59.50 worth ~$698 mln.
    WD-40 (WDFC 185.78, -19.07, -9.3%): WD-40 misses by $0.21, misses on revs; guides FY22 EPS below two analyst estimate, revs below two analyst estimate.
    GameStop (GME 127.78, -7.34, -5.4%): GameStop’s CFO departs as the company announces layoffs.
    Twitter (TWTR 37.28, -1.51, -3.9%): Twitter’s moving lower as Elon Musk’s bid to buy the company is in jeopardy, according to The Washington Post. Twitter is also laying off 30% of its talent acquisition team, according to the WSJ.
    Nu Skin Enterprises (NUS 41.94, -1.75, -4.0%): Nu Skin guides Q2 revenue below consensus, citing COVID-related factors in China, the conflict in Ukraine, and a general economic downturn.
    XPO Logistics (XPO 50.50, +2.04, +4.2%): XPO Logistics was upgraded to Overweight from Equal-Weight at Morgan Stanley.


    The employment situation report for June did nothing to deter the market from thinking that the Fed is going to remain on an aggressive rate-hike path. That is the key takeaway from the report, which was solid in terms of nonfarm payrolls growth (372,000) and still solid in terms of average hourly earnings growth (+5.1% year-over-year). It is likely being thought, too, that wage-based inflation pressures are apt to be sticky considering the labor force participation rate slipped in June to 62.2% from 62.3%.

    US Adds Jobs in June with Government Only Major Category Shedding Jobs.


    Yield Check:
    2-yr: +9 bps to 3.12%
    3-yr: +8 bps to 3.15%
    5-yr: +7 bps to 3.12%
    10-yr: +6 bps to 3.07%
    30-yr: +4 bps to 3.23%


    Dow 31,339.53 -45.02 -0.14%
    S&P 500 3,899.40 -3.22 -0.08%
    Nasdaq 11,635.31 13.96 0.12%
    GlobalDow 3,514.29 8.25 0.24%
    Gold 1,740.70 1.00 0.06%
    Oil 104.70 1.97 1.92%


    and a few more great songs of past to kickoff the WEEKEND 🙂


    July 10 – 16, 2022 FEAR NOT Brave Investors Where have we been and where are we going? Join our weekly market thread on Traders Community… Image: Twit
    [See the full post at: Traders Market Weekly: Valuation Matters in Earnings Season]

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