Traders Market Weekly: Holiday Sales and Jobs

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    The highlight of the economic calendar looks be the release of the minutes of the last FOMC meeting. While that meeting took place before the release of the October CPI report, the market could see a jolt when hawkish tone of members is seen in black and white.


    Earnings with Best Buy (NYSE:BBY), Dollar Tree (DLTR), and DICK’s Sporting Goods (DKS) from the consumer sector some of the headliners.

    On Wall Street, Citi U.S. equity strategist Scott Chronert has already warned of a “consumer-led recession” in 2023, which could be amplified even more if the retail heavyweights continue to reel in expectations.

    On the global stage, the World Cup could have impact on certain sectors and select stocks as the soccer tournament plays out.


    Earnings spotlight: Monday, November 21 J.M. Smucker (SJM), Weber (WEBR), Agilent (NYSE:A), Dell (DELL) and Urban Outfitters (URBN), and Zoom Video (NASDAQ:ZM).

    Earnings spotlight: Tuesday, November 22 Baidu (BIDU), Best Buy (BBY), Dollar Tree (DLTR), DICK’s Sporting Goods (DKS), and Abercrombie & Fitch (ANF), HP Inc. (HP), and Autodesk (ADSK).

    Earnings spotlight: Wednesday, November 23 – Deere (DE) and Guess (GES).

    Earnings spotlight: Friday, November 25 – Titan Machinery (NASDAQ:TITN).


    Soccer World Cup:

    The opening match of the 2022 World Cup is scheduled for November 20 with Qatar playing Ecuador. The soccer tournament will run through December 18 and is expected to attract 5B viewers to make it the most watched sporting event in history.

    The men’s World Cup will be the first with widespread sports betting legal in the U.S. sports betting reporter Geoff Zochonde previewed that the obvious candidates for a World Cup sports betting lift would be DraftKings (NASDAQ:DKNG) and FanDuel (DUEL). He also thinks the World Cup could also be an opportunity for smaller operators in the U.S. that have roots outside the country to showcase deeper betting markets to their American clientele during the tournament. Bet365 and Super Group’s (SGHC) Betway are two betting sports betting shops to watch

    Roundhill Investment’s Will Hershey thinks the World Cup could benefit Entain (OTCPK:GMVHF), as well as European betting stock peers such as Kindred Group (OTC:KNDGF) and 888 Holdings (OTCPK:EIHDF). Looking at the beverage sector, Bank of America tipped that Ambev (NYSE:ABEV) typically sees an incremental boost in beer sales during the World Cup, while Evercore ISI said it sees a big tailwind for Anheuser-Busch InBev (BUD) this quarter from the global focus on the tournament.

    Wells Fargo thinks the unique timing of the World Cup around the holidays sets up well for Electronic Arts (EA). Taking a broader view, Wells Fargo noted one of the winners from the World Cup could be the host nation of Qatar itself. The event is seen having the potential to enhance Qatar’s status on the global stage and make the tiny wealthy nation more influential over economic affairs going forward.

    Companies with relationships in Qatar include JetBlue (JBLU), ConocoPhillips (COP), Exxon Mobil (XOM), and TotalEnergies (TTE). Qatar’s sovereign wealth fund is planning to raise its 5% stake in Swiss lender Credit Suisse (CS) by participating in a stock offering.


    Corporate events:

    It is a very light list of events in the week ahead due to the Thanksgiving holiday in the U.S.

    The headliner may be the Digital World Acquisition Corp. (DWAC) shareholder meeting set for November 22 to vote on extending the period of time for completing a SPAC deal. DWAC CEO Patrick Orlando has reportedly been calling investors with as few as 20 shares to convince them to vote in favor of a one-year extension to complete a transaction.

    Shares of DWAC are down more than 75% from their high in March.

    Shareholders with Angel Pond Holdings (NYSE:POND) are also scheduled to vote on November 22 on the deal to take open source database software player MariaDB public in a SPAC deal.


    Morgan Stanley advised investors that the beverage sector is a potential shelter from the macroeconomic storm given strong pricing power, limited volume demand elasticity, and a post-COVID topline recovery in away-from-home volume.

    The firm noted that Q4 U.S. scanner data is looking strong and numerous beverage companies have more robust long-term secular topline growth drivers than other household product stocks.

    Analyst Dara Mohsenian and team named Monster Beverage (MNST) as its top sector pick off what it sees as strong category growth, an expanding U.S. category with recent healthier products, and international market share gains. The firm also has an Overweight rating on Constellation Brands (STZ) on its view evidence is building for rebounding beer topline growth and strong momentum with key brands Modelo Especial, Corona Extra, and Pacifico. PepsiCo (PEP) is also a favorite of Morgan Stanley. The beverage powerhouse is said to have accelerated organic sales growth at a level that is not yet priced into valuation.


    Notable conferences:

    Needham Consumer Tech/E-Commerce Virtual Conference, the TD Securities Technology Conference, and the Cormark Securities Diversified Conference.


    Barron’s mentions:

    The cover story delves into how this holiday shopping season could see retail bifurcation in which lower-end and higher-end stores are the main channels through which Americans shop and the large middle tier of retail sees pressure. Adding weight to the theory, a recent UBS study indicated that for the first since 2014 more Americans were planning to shop for gifts this holiday at discount stores than department stores.

    The publication sees more near-term upside for Dollar General (DG), TJX Companies (TJX), Ulta Beauty (ULTA), and Walmart (WMT) than Gap (GPS), Kohl’s (KSS), Macy’s (M), and VF Corp. (VFC). Cell tower REITs American Tower (AMT), Crown Castle (CCI), and SBA Communications (SBAC) landed a favorable writeup this week. All three tower REITs are noted to be selling at compelling prices despite showing strong earnings results.


    Disney (NYSE:DIS) rose in premarket trading after announcing a major leadership change. The entertainment giant revealed that former CEO Bob Iger will return to the chief executive role, as Bob Chapek leaves the position. On the news, DIS jumped 9% before the opening bell.

    A change in the firm’s top position also impacted Builders FirstSource (BLDR). The supplier of structural building products revealed the resignation of CEO Dave Flitman in order to accept another professional opportunity. Company executive Dave Rush will serve as interim CEO, while BLDR launches a formal search for a new chief executive.

    Domino’s Pizza (DPZ) has reportedly signed an agreement with General Motors (GM) to buy 800 Chevy Bolts to be used as delivery vehicles. According to the Wall Street Journal, the EVs will be used at 37 locations owned by DPZ and hundreds of franchisees.

    J. M. Smucker (SJM) reported a quarterly profit that topped expectations and raised its full-year forecast. The packaged food maker’s Q2 revenue climbed almost 8% from last year to reach $2.21B. Looking ahead, SJM predicted adjusted EPS of $8.35-$8.75, compared to its prior outlook of $8.20-$8.60.

    Rivian Automotive (RIVN) is the focus of complaints filed against it by employees at a plant in Illinois. The accusations, leveled along with the United Auto Workers, relate to safety concerns at the EV maker’s facility in Normal, Illinois. RIVN has disputed the charges.



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    Following disappointing earnings #WaltDisney up big after appointing Robert Iger as CEO.

    Upgrades, $NFLX well wishes,
    Follows activist investor Trian Fund Management more than $800 million stake
    $DIS 101.32, +9.52, +10.4%

    MoffettNathanson analyst Michael Nathanson upgraded Disney (DIS) as a result of the return of the 71-year-old Iger, noting that he expects the chieftain to look at everything that has been done since he left and Bob Chapek took over.

    “Putting it all together, we expect the new CEO to re-examine and re-direct Disney’s current streaming strategy, honestly deal with the challenges confronting its linear networks by cutting back on non-essential sports, change the centralized approach to content procurement established under former CEO Chapek and manage the company forward with discipline, sound strategy and flawless execution,” Nathanson wrote in a note to clients.

    The analyst added that the stock’s multiple “will likely move higher as these new changes are implemented.”

    Even Netflix (NFLX) CEO Reed Hastings commented on the news, as he tweeted that he wished Iger would have run for President of the United States and that the long-time Disney CEO is “amazing.”

    Needham analyst Laura Martin, who has a hold rating on Disney (DIS), noted that Iger’s return, effectively immediately and for at least two years, according to The New York Times, should help shareholder value in a number of ways, including his “calming, patient, diplomatic style of handing conflicts” inside the company.

    Martin also noted that there will be a focus on raising return on invested capital, including cutting streaming losses faster, as well as handling external issues, such as Florida’s Parental Rights in Education Act, colloquially known as the “Don’t Say Gay” legislation, in a more “deft” manner.

    Iger has previously come out in opposition of the legislation and Disney (DIS), under Chapek, was initially silent on the legislation before Chapek faced internal pressure to denounce it. In doing so, he also angered politicians in Florida, where Disney has more than 100,000 employees at Walt Disney World.

    Martin also noted that the return of Iger would help stop the exodus of people at the company and positively impact Disney’s (DIS) ability to negotiate deals and partnerships because of how respected he is.

    Bank of America anlyst Jessica Reif Ehrlich, who has a buy rating, noted that Iger’s return should be “well-received,” but given that he hand-picked Chapek, it is a bit of a curious event.

    “We now expect Iger to fully re-evaluate several of the recent strategic initiatives and corporate restructurings over the past two years, which could create some near-term uncertainty on direction of the company,” Reif Ehrlich explained.


    Equity indices in the Asia-Pacific region began the week on a mostly lower note.

    Japan’s Nikkei: +0.2%,
    Hong Kong’s Hang Seng: -1.9%,
    China’s Shanghai Composite: -0.4%,
    India’s Sensex: -0.8%,
    South Korea’s Kospi: -1.0%,
    Australia’s ASX All Ordinaries: -0.3%.


    Hong Kong’s October CPI 1.8% yr/yr (expected 2.0%; last 4.4%)
    New Zealand’s October Credit Card Spending 24.8% yr/yr (last 34.0%)
    There were continued concerns about China maintaining its zero-COVID policy, which would put continued pressure on growth.
    Macau stepped up its coronavirus testing requirements for visitors from the mainland.
    Property developers underperformed after the People’s Bank of China maintained its one- and five-year loan prime rates.
    The approval rating of Japan’s cabinet has fallen to a fresh low of 30.5%. The Reserve Bank of New Zealand shadow board expects the official cash rate to be increased by 75 bps on Wednesday.


    Major European indices trade on a mostly lower note while Spain’s IBEX (+0.3%) outperforms.

    STOXX Europe 600: -0.3%,
    Germany’s DAX: -0.6%,
    U.K.’s FTSE 100: UNCH,
    France’s CAC 40: -0.2%,
    Italy’s FTSE MIB: -1.2%,
    Spain’s IBEX 35: +0.3%.


    Germany’s October PPI -4.2% m/m (expected 0.9%; last 2.3%); 34.5% yr/yr (expected 41.5%; last 45.8%)
    Germany’s PPI decreased in October, representing the first month-over-month drop since May 2020.
    European Central Bank chief economist Lane said that the upcoming December rate hike will not be the last, adding that it is too early to consider a pause in the hiking cycle.
    British government officials are reportedly looking at forming a Swiss-style relationship with the EU.
    Italy is reportedly planning to increase spending by EUR30 bln in 2023.

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