đWeek Overview: Fed Speakers & Earnings Season Begins
And Google acquisition of Wiz?
Happy Sunday! We got our first negative CPI print since 2020, bringing the inflation rate to 3%! The index dropped by 0.1% from May, further boosting expectations of a rate cut by the September FOMC meeting.
We then saw PPI rise 0.2%, which was 0.1% above projections. The Labor Department attributes this increase in prices to a jump in margins by 1.9%.
JPM 0.00%â reported earnings on Friday, July 12. Hereâs how they performed:
Earnings: $4.26 per share adjusted vs. $4.19 estimate of analysts surveyed by LSEG
Revenue: $50.99 billion vs. $49.87 billion estimate
The company states their great quarterly performance is because of investment banking fees, reaching $2.3 billion in fees which beat expectations by $300 million. My view is that we can expect all the other major banks to report similar successes for their earnings.
âWeek Overview TLDR:
To start the week off, Powell will be speaking at 12:00 PM EST. This comes after CPI and PPI data. Expect Powell to reiterate that the economy is back on the disinflationary path, and maybe even a hint to the first rate cut in September. Banks like Goldman Sachs report this week, and then NFLX 0.00%â & TSM 0.00%â kick off our tech summer earnings season.
Monday, July 15: Fed Powell Speaks 12:00 PM EST
GS 0.00%â Earnings
Tuesday, July 16: US Retail Sales 8:30 AM EST
BAC 0.00%â & UNH 0.00%â Earnings
Wednesday, July 17: FOMC Member Waller Speaks
Thursday, July 18: Initial Jobless Claims 8:30 AM EST
TSM 0.00%â & NFLX 0.00%â Earnings
Friday, July 19: New York Fed President Williams & Atlanta Fed President Raphael Bostic speaks
AXP 0.00%â Earnings
đŁď¸Fed Powell:
Powellâs most recent testimony on Capitol Hill further emphasizes the Fedâs plan of wanting to see definitive evidence that inflation is trending down towards the 2% target. I expect the Fed to continue this narrative and start to tease the idea of a rate cut in September.
The Fed does not want to surprise the market by abruptly lowering rates or even having to re-raise rates. Powell states that the job market is strong, but not overheated. This has brought criticism from the Senate, with some senators concerned that keeping rates steady may begin to hinder the fortitude of the job market.
đŹNetflix Earnings
Similar to banks, NFLX 0.00%â will set the tone for the other tech earnings later in the month. The consensus EPS forecast for the quarter is $4.7 while the reported EPS same quarter last year was $3.29. With an almost 45x P/E ratio, Netflix will need to show continued strong growth to justify the premium they are trading at.
We saw Netflix fall a bit earlier this year after they announced they would stop reporting subscriber numbers and gave a cautionary outlook for the rest of the year. This will be the first quarter Netflix reports their performance without disclosing total number of subscribers. I expect Wall Street to scrutinize other financial measurements like their margins more to truly determine Netflixâs performance on the quarter.
You can view my deep dive into Netflixâs Q1 report here!
New Addition To NQ
Welcome to the NQ-100, SMCI 0.00%â ! Super Micro Computer Inc. is set to replace WBA 0.00%â in the Nasdaq top 100 companies at market open on July 22.
With an increase of over 200% YTD, there are rumors that SMCI 0.00%â will be the next to announce a stock split. We will have to see if that is coming up with earnings soon; a stock split will definitely push this stock higher with hype around it.
đťGoogle Acquisition?
GOOGL 0.00%â is rumored to be in talks to acquire the cybersecurity firm, Wiz for over $23 billion. If this deal goes through, this would be the companyâs largest deal ever yet. Wiz was reportedly considering IPOâing at a valuation of over $12 billion. Wiz helps large companies like BMW secure their data in the cloud, touting over $350 million in recurring revenue per year.
This acquisition would show Googleâs intention of doubling down on the cybersecurity sector. In 2022, Google had acquired the cybersecurity Firm Mandiant. If this goes through, more antitrust cases may be in the near future for Google. It would test and question a companyâs ability to just buy out rising companies in a certain sector.