Week ahead. Trading & investing ideas in Oil, defence, & stingy pre-Christmas spending. Plus CPI is ahead & earnings season kicks off

We cover why the oil price could continue to rebound from last week's 8% sell-off, with energy companies to watch, which have been upgraded by analysts. Plus, why look at domestic stingy pre-Christmas spending beneficiaries' stocks, and glance at defence companies that could rally amid the strikes in Israel. Plus, what to watch amid US inflation being released. And finally, US earnings season kicks off; three big banks and US consumer spending giants will reveal how much pain the US consumer is in.

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The oil price has already gained back 4% of last week's 8% drop for several reasons. Many are thinking the oil price could head to higher as supply is thinning and demand is picking up. Firstly, China returned to work after its longest public holiday in the second half of 2023. The Mid-autumn festival saw consumption and travel boom, with Macao recording its highest ever arrivals and hotel occupancy on record. Plus the Hamas attacks on Israel caused traders to be concerned about potential supply disruptions, with Iran reportedly being behind the attacks. And, all this is at a time when the US oil strategic oil reserve is at its lowest level since 2022.

If you are interested in investing in an oil business, it's worth noting that Wall Street has seen the most earnings upgrades in energy companies ahead of US earningsseason kicking off this week. Also recall the upgrades to energy companies come after the oil price jumped about 28% last quarter, which will boost energy companies' earnings.

Given US and Australian consumers have ran out of savings, fuel prices are up, along with electricity bills, families will likely be travelling domestically or upgrading cars and home entertainment ahead of Christmas. It will probably be a stingy Christmas. So, consider what companies earnings could grow from now to Christmas and thus potentially their share prices. Potential beneficiaries may include;

Separately, also think about potential beneficiaries of Black Friday sales (24 November).

Firstly if markets correct (fall 10% for example), remember, to stay calm. Some of the most successful investors have made most of their money in bearish markets, as they can buy quality businesses at cheaper prices. Over time, quality stocks have also been able to historically ride out many market storms and deliver compounding returns to investors.

However, it is worth considering what companies could benefit from an escalation in military action. Recall that most countries spend 2% of their national income on defence. But in times of duress, spending on defence rises, and thus defence companies shares have historically rallied in times of tension and war like conditions. Here is a list of the US's biggest defence companies to consider.

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- This week's release of the US inflation for September, which the Fed will look at, will likely show US inflation has continued to slow, but interest rates need to stay higher for longer, as price rises are still above the Fed's target. That's not ideal for US companies carrying high debt, especially at a time when households have less cash than they had before the pandemic, and when overall company earnings are slowing with economic growth.

- This comes at a time when the IMF cut its forecast for global growth to 3% for this year and next, the IMF sees 1.8% this year for US growth and 1% next.

- Fed speaker Michelle Bowman reiterated her call that interest rates will need to rapidly increase further to return inflation to the Fed's 2% goal. She said inflation is still "too high" and rising energy prices could have reversed some of the Fed's progress.

- The US consumer price index (CPI) print for September (released October 12) is expected to show inflation rose 0.3% month on month. Core inflation growth (which the Fed looks at) is expected to show prices fell to 4.1% YoY growth, down from 4.3%. What is alarming is beneath the surface, the rise of energy prices and goods prices. Consumers are paying higher fuel and used-car prices, and these pressures are likely to be reflected in September's data.

Invest in your financial future.

& Stay safe.

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The information is general in nature and has been prepared without considering your financial objectives, situation or needs.Consider the appropriateness of this information in light of your personal circumstances before making investment decisions.