Week Ahead: Apple, EVs, Bitcoin proxy & Macquarie in the spotlight...
What's happening in markets: US earnings season is at the half-way mark; eyes on Apple, EVs, the Bitcoin proxy & Macquarie
- So far we've seen the strongest US earnings in a year. This week 150 S&P 500 companies are due to report with all eyes on Apple's $Apple(AAPL.US)$ results on Thursday and its outlook, particularly in China. Overall, Apple's earnings are expected to have risen 8%, despite sluggish iPhone sales. Block's $Block(SQ.US)$, $Block Inc(SQ2.AU)$ results on Thursday will also be watched like a hawk, as the Square platform is somewhat of a Bitcoin proxy, as that's how most of Block's money is made. Block's Cash App is poised for a 26% jump in revenue, as its customers rose in the quarter.
- Ladies and gentleman, if positive earnings trends and earnings beats continue, equities should theoretically remain somewhat supported.
- So far, 63% of S&P500 $SPDR S&P 500 ETF(SPY.US)$, $iShares Core S&P 500 ETF(IVV.US)$, $S&P 500 Index(.SPX.US)$ companies posted earnings growth, with average earnings growth of about 6%. Also, 80% of companies have beat analysts' expectations, which is another positive sign. Diving deeper, the most earnings growth has come from the continued turnaround in the consumer discretionary sector. Royal Caribbean $Royal Caribbean(RCL.US)$ earnings gained 1,300% in the quarter, Domino's $Domino's Pizza(DPZ.US)$ earnings grew 50%, according to Bloomberg. The Communications sector has seen the second strongest earnings. Meta's $Meta Platforms(META.US)$ earnings led the sector higher, rising 167%, with Alphabet's $Alphabet-C(GOOG.US)$ earnings following, up 46%.
- Outside of US earnings, focus will be global auto giants results, showing the pace of electric vehicle take up, with eyes on Toyota ($TOYOTA MOTOR CORP(TOYOF.US)$) earnings, after BYD ($BYD COMPANY(01211.HK)$) delivered record preliminary third quarter earnings. Toyota has been leading hybrids, and car running on hydrogen fuel cells, but now it's making a belated push into EVs, and plans to triple output by 2025, and produce about 190,000 next year. All in all, EV makers are expected to see margin growth, supported by lower lithium prices, which is offsetting the impact of higher price competition.
- And lastly bank earnings will also be focus, as Australian financial giant, Macquarie ($Macquarie Group Ltd(MQG.AU)$)reports on Friday, with the investment bank expected to see a 27% slide in half year net income and also downgrade future guidance amid subdued deal related activity. Will this be yet another wake up call, that investors can get better returns from elsewhere?
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Trading and investing ideas, in uranium, electricity, and war-time tension
The 'war-time tension' playbook remains in focus
- The investing and trading playbook remains steadfast; with geopolitical tension keeping markets on edge, investors should be positioning their portfolios accordingly. The campaign is expected to last anywhere from six weeks to six months, according to people familiar.
- If tension escalates, upside looks promising in safe-haven assets such as gold, and short dated government bonds, the defence sector and oil.
- Individuals and investment managers alike will and can be investing in gold companies, gold ETFs, government bond ETFs, defence stocks and defence ETFs, as well as oil companies and oil ETFs.
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Uranium stocks to see long-term upside
- Hedge fund managers are cranking up exposure to uranium stocks to capitalize on likely further upside in uranium prices due to rising energy demands.
- Since 2020, the uranium price has gone up almost 190%, that includes the 12-month 40% jump in price. This price growth fueled the Global X Uranium ETF ($Global X Uranium ETF(URA.US)$) to gain 25% in a year, and 231% from its 2020 low.
- What's behind this you ask? Uranium power is somewhat limited and there is a global push for uranium as it's one of the 'cleanest', most dense forms of green energy and it requires a lot less materials from the earth to produce. The International Energy Agency (EIA) is estimating global nuclear power needs to double by mid-century from 2020 levels, to meet the net zero commitment.
- This target has been underpinned by rising demand in Europe, Asia and Africa for nuclear reactors. Old facilities are getting their lifespans extended, while China is continuing to build out its nuclear fleet. This is what is driving uranium prices, uranium company's shares and theURAETF.
- Some fund managers are saying, the promising uranium price outlook will trigger“dramatic upside, 50%, 100%, possibly more," in some uranium equites.
- So, if you believe in the uranium narrative, you could consider a position in the Global X Uranium ETF $Global X Uranium ETF(URA.US)$ for the long term, given the 2050 goal remains in sight.
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Electricity bills to surge again. It's time to offset higher costs
- I don't know about you, but n the past year, my power bill has doubled. Not only have Australian's electricity bills risen considerably, but they're likely to rise again, and globally too.
- In Australia power bills at the wholesale level have risen by 50% in price since July 2023. But had you invested in Australia's biggest electricity seller/provider, AGL $AGL Energy Ltd(AGL.AU)$, their shares would have grown 35% in price (from December, to today). Meaning, if you invested $5,000 last year, your investment in AGL $AGL Energy Ltd(AGL.AU)$ would have made you a profit of $1,750 (over that time). And your $5k would now be worth $6,750. [Also note; past returns, are not an indication of future returns].
- Estimates in the US from the International Energy Agency are suggesting US power bills will rise 8% next season, for their upcoming winter. So, if you already haven't, consider investing in companies that are going charge higher prices, see higher profits and likely share price growth, so you, can in turn make more money, than you are spending on bills.
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For more US earnings to watch this week, click here.
Invest in your financial future.
Team moomoo.
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Author
30 Oct 2023