Happy Monday! Hope everyone had a relaxing weekend, because this week may be a roller coaster in the markets. There are a ton of big companies reporting their earnings this week – notably ones in social media (Facebook, Twitter, LinkedIn), healthcare (Merck, Amgen, Pfizer, Gilead), and energy (BP, Exxon, Chevron).
On top of the earnings news, the market is also expecting big news in the forms of durable goods, 3rd quarter GDP, and a Federal Reserve announcement that will affect interest rates. So without further ado, here’s a list of some key reports and commentary you may find interesting this week:
-I’m holding Twitter and Burger King ahead of earnings as short-term earnings plays so fingers crossed these go well.
-I’m thinking social media could go either really badly or really well this week, so I’m hesitant to get into both Facebook and Twitter this week, especially when Facebook was at $80 a share this past week.
-Luxottica has a near monopoly in the eye-wear manufacturing (turns out your Chanel sunglasses are made by them, not Chanel) and distribution (Sunglass Hut) industries, so I have my eye on them as a long term investment regardless of how earnings go.
Tuesday‘s Big Economic Report: the durable goods report. Durable goods are consumer products that are purchased infrequently (think appliances, tools, TVs). This report tells you how much consumers are spending on these products, and in theory the more consumers are spending, the better the economy is doing.
-Baidu is China’s search engine and with the amount Alibaba (another big Chinese internet company) has been in the news recently I’m thinking Baidu will be evenly more heavily analyzed than normal this time around. Along with the social media companies, I’m thinking the stock price movement after earnings will either be very good or very bad.
Wednesday’s Big Economic Report: The Federal Reserve (Fed) is expected to announce the completion of its quantitative easing program. Quantitative easing is the Fed’s bond buyback program. By buying US treasury bonds, the Fed drives up their price, and thereby keeps interest rates low (bond prices and interest rates move in opposite directions).
The Fed is ending the quantitative easing program now that the economy is pretty stabilized, in an effort to normalize interest rates again. A big issue with this for the stock market is that higher interest rates on bonds mean some people will want to buy bonds again instead of stocks, and this may cause stock prices to decline in response. I’m hoping that since we know about the end of the bond buyback program already (this is just the official announcement that it’s done) the effect will likely not be too great.
Big Economic Report: Q3 GDP (stands for Gross Domestic product). GDP is the value of all of the finished products created in the US last quarter. How big GDP is, and how much it grew over the previous year’s GDP, is a measure of how strong the economy is. The more products produced, and therefore the bigger the GDP, the better the economy is doing.
Phew, I am exhausted just writing the preview of this week, there is a ton going on! Be sure to check back in for updates on how these announcements turn out.
Side note: Can we discuss how much blue there is in this post!? I get that blue is a soothing color, but I didn’t realize before how many logos rely on blue. I’m trying to pick out logo colors for the blog right now and I’m thinking I should rule blue out in favor of some originality…