Good morning Rebels! The indices look red to start the day. This, after Walmart came out last night and cut their profit outlook — dragging down names like Amazon (AMZN), Dollar General (DG), Five Below (FIVE), Costco (COST) and more by multiple percent.
However, the major indices have pared back much of the losses accrued overnight. This is after this week’s first set of meaningful earnings from companies like UPS, Coke (KO), GM, GE, and McDonalds (MCD).
All this amidst the backdrop of an incredibly busy week for the U.S. economy, a massive Chinese bank scam, and a European conflict that continues to threaten the gas supply (Nat. Gas is up more than 7% this morning).
Let’s get into the news.
July 26th Earnings Results: UPS, KO, GM, MCD
McDonalds Earnings: EPS Beat, Revenue Miss
McDonalds reported an EPS beat of +3.39% ($2.55 vs $2.47 expected), and a revenue miss of -1.78% ($5.72B vs $5.82B expected).
Net sales fell overall due to the conflict in Russia and Ukraine, however same-store sales grew by 9.7% quarter-over-quarter. McDonalds was able to pass on prices to the consumer which helped the fast food restaurant to exceed profit margins despite revenue headwinds.
MCD is trading flat on the earnings release, up a fraction of a percent in the premarket.
UPS Earnings: EPS and Revenue Beat
UPS reported an EPS beat of +4.22% ($3.29 vs $3.16 expected) and a revenue beat of +0.63% ($24.77B vs $24.61B expected).
The beat in UPS was driven mostly by domestic parcel revenues, (domestic revenues rose 7.4% this quarter, and 11.9% in revenue-per-piece) however the company warned that volumes in those domestic parcels would continue to decline until fuel and transportation costs could abate. Despite this, UPS reiterated its calendar year guidance of $102B in revenue.
UPS is trading lower on the earnings release, down -2.59% in the premarket.
Coke Earnings: EPS and Revenue Beat
KO reported an EPS beat of +4.70% ($0.70 vs $0.67 expected) and a revenue beat of +6.94% ($11.30B vs $10.57B expected).
Despite facing higher costs for aluminum and other key goods, Coke beat earnings handily with help from increasing global sales volume and higher pricing. Also helpful to the soda brand was increasing sales at restaurants, theaters, and other venues as the consumer continues to spend more on entertainment and travel. Perhaps most impressively, Coke nearly doubled it’s guidance for organic revenue growth from 7-8% to 12-13%.
KO is trading higher on the news, up more than a percent in the premarket.
GM Earnings: Big EPS Miss, Revenue Beat
GM reported an EPS miss of -13.64% ($1.14 vs $1.32 expected), and a revenue beat of +4.11% ($35.76B vs $34.35B expected).
GM was not bright in its outlook. The earnings report was characterized by the impact of a possible incoming recession, though the company still believes it will hit its full-year earnings target. The company reported a 40% loss in China-sales due to the lockdown, supply chain pain as it relates to chips continuing to impact the company, and GM is still far behind its lofty EV aspirations in comparison to electric vehicle titan, Tesla (TSLA).
Despite this seemingly awful news, the stock is only down -1.27% in the premarket — a victory, if you ask Snapchat.
Case-Shiller National Home Price Index: Housing Prices Continue to Cool
Home price growth slows down once again in May according to the Case-Shiller National Home Price Index. This is the second month in a row. Notably, housing prices are still gaining, just at a slower rate. In April housing prices grew 20.6% year over year. In May, housing prices grew 19.7% year over year. However this is a sign that the Fed’s process of tightening economic conditions and raising rates is having an effect at cooling the hot demand that characterized the post-pandemic housing market.
IMF Lowers GDP Forecast
International Monetary Fund (IMF) Cuts Global GDP Forecast to 3.2% (-0.4%) in 2022 and 2.9% (-0.5%) in 2023 on the back of continually rising global inflation, the unending conflict between Russia and Ukraine, and Chinese headwinds related to the zero-Covid policy.
Looking Ahead to an Important 3 Days
Don’t forget that as the week goes on, the size and importance of the companies reporting earnings continues to grow. Alphabet (GOOG), Microsoft (MSFT), Visa (V) and more are set to report tonight. All three will have a massive impact on the market, and Alphabet’s earnings will have a particularly high impact on ad-driven businesses.
Week-Ending July 29th Earnings Calendar
Source: Earnings Whispers
As well, don’t forget the many economic events coming throughout the remainder of the week. If you were only going to pay attention to two, those would have to be the Wednesday FOMC meeting at 2PM EST and the US GDP on Thursday morning before the market opens.
July 29th Economic Calendar: Every important event ahead
PMO: Pre Market Open
AMC: After Market Close
Bold, underlined events signify high relative importance.
Tuesday – Moderate Relative Importance
- PMO: Earnings from GE, McDonalds (MCD), Coke (KO), UPS
- 7AM: IMF WEO Economic Outlook Update
- 8AM: US New Home Sales (June)
- 8AM: US Consumer Confidence (July)
- AMC: Earnings from Microsoft (MSFT), Alphabet (GOOG), Visa (V), Chipotle (CMG), Texas Instruments
- 7:30PM: Australia CPI (Q2)
Wednesday – High Relative Importance
- 12AM: Germany Consumer Confidence
- PMO: Earnings from Shopify (SHOP), Boeing (BA), Spotify (SPOT)
- 6:30AM: US Durable Goods Orders (June)
- 6:30AM: Retail and Wholesale Inventories (June)
- 2PM: FOMC Meeting (Expected Rate Hike: 75bps, chance of 50bps or 100bps)
- 4PM: Earnings from Meta (META), Ford (F), Qualcomm (QCOM), Teladoc (TDOC)
Thursday – Highest Relative Importance
- PMO: Earnings from Pfizer (PFE), Valero (VLO), Mastercard (MA), Merck (MRK)
- 8:30AM: US GDP Q2
- US Bureau of Economic Analysis will release its advance estimate of economic growth. After Q1 GDP retraction, this data will inform the market whether or not the US is currently in a recession. Unquestionably, this is the most important event of the week, and will have a high impact on the market. Expected: 0.4% GDP Growth QoQ. Conversely, the Atlanta Fed’s GDPNow indicator predicts that Q2 GDP is currently -1.6%. Any negative growth here all but confirms a recession… unless you ask Janet Yellen. Yellen, who said this weekend that she isn’t seeing “any sign of US recession” told Meet the Press that “Two consecutive quarters of negative GDP growth is not a recession.” Which is… an interesting take. We’ll see if the market agrees.
- AMC: Earnings from Apple (AAPL), Amazon (AMZN), Roku (ROKU), Intel (INTC)
Friday – Moderate Relative Importance
- 2AM: Germany GDP Q2
- 2AM: Italy GDP Q2
- 3AM: Eurozone GDP Q2
- 3AM: Eurozone CPI (July)
- PMO: Earnings from Exxon Mobil (XOM), Chevron (CVX), Proctor & Gamble (P&G), Abbvie (ABBV)
For more quick takes on this morning’s market-moving news, check out 60 Seconds With Jon Najarian!