Stocks To Watch: Central Banks Take Center Stage

Summary:

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The spotlight will be on the Federal Reserve, Bank of England, and Bank of Japan next week amid a new ratcheting up of inflation worries. Rate decisions are also in due from the central banks of Norway, Sweden, and Switzerland. In the U.S., the Fed’s FOMC is not expected to raise rate (full preview), but could tilt a little more to the hawkish side after a stronger-than-anticipated inflation report for August. Economic reports due during the week include updates on housing starts, crude oil inventories, and initial jobless claims. Meanwhile, the biggest earnings report of the week will be the FedEx (NYSE:FDX) print. The corporate calendar is loaded, with Oracle’s (NYSE:ORCL) CloudWorld, Pinterest’s (PINS) Analyst Day, the North American International Auto Show, and TechCrunch Disrupt, some of the notable events. The week could also see some extra drama on the political front as the countdown continues toward a potential government shutdown on October 1. Investors will also have their eyes on the battle between the United Auto Workers union and Detroit automakers, which could start to have ramifications for dozens of stocks. Weighing in on the auto sector disruption, Seeking Alpha analyst Doron Levin called the UAW strike a self-inflicted wound for a declining Detroit-based auto industry, while other analysts have said Tesla (TSLA) looks like a clear beneficiary from the labor squabble.

Earnings spotlight: Monday, September 18 – Stitch Fix (SFIX).

Earnings spotlight: Tuesday, September 19 – AutoZone (AZO), Steelcase (SCS), and Apogee Enterprises (APOG).

Earnings spotlight: Wednesday, September 20 – FedEx (FDX), General Mills (GIS), and KB Home (KBH).

Earnings spotlight: Thursday, September 21 – Darden Restaurants (DRI) and FactSet Research (FDS).

Volatility watch: Short interest levels are elevated on Kohl’s (KSS) and Eos Energy Enterprises (EOSE). Options trading volume is higher than normal on Nikola (NKLA) and Altimmune (ALT).

IPO and spinoff watch: Iconic German sandal and clog maker Birkenstock (BIRK) could start trading soon. The company has not yet offered any details on the size or price range for the IPO. Birkenstock is backed by LVMH Moët Hennessy (OTCPK:LVMHF)’s private equity arm L Catterton and LVMH Chief Executive Officer billionaire Bernard Arnault’s family office.

FOMC preview: Futures trading implies a +90% probability that the Federal Reserve will maintain the target range for the federal funds rate at 5.25% to 5.50% at the FOMC meeting. Economists also expect no change to the Fed’s balance sheet policies as it stays in a data-dependent mode. Ahead of the meeting, UBS said a balanced message from Powell and gang is likely because the economic outlook has not changed dramatically since the Jackson Hole gathering. “Powell is likely to note up front that the job is not done on inflation and the Fed will stay the course in order to get inflation back to 2%,” previewed the firm. Investors will have the Summary of Economic Projections to dissect. The consensus expectation is that the 2023 median policy rate forecast will show one more 25 point hike, for a terminal rate of 5.50% to 5.75%. However, there is some thinking that the 2024 rate expectation could shift higher due to the very latest data readouts.

FedEx earnings preview: FedEx Corporation (FDX) is forecast to report revenue of $21.8B and EPS of $3.73 for FQ1. The company is expected to see a sequential drop in Express segment and Ground segment revenue, while Freight segment revenue is expected to grow on higher revenue per hundredweight. The shipper’s operating ratio is expected to jump to 98.1% from 93.2% in FQ4. Some key events that may have helped FedEx (FDX) during the quarter, include the exit of Yellow from the LTL market, a revenue boost tied to the UPS-Teamsters labor showdown, and the net benefit of higher fuel prices. Bank of America thinks discussion on the FedEx earnings call on costs and pricing will be crucial in determining the direction of FDX shares. The shipping giant recently announced that it would increase shipping rates and customs clearance service fees on imports after January 1, 2024. FedEx Express shipping rates will increase by an average of 5.9% for U.S. domestic, export, and import services. The Memphis-based company will also hike shipping rates for its Ground and Home Delivery units by the same percentage. FedEx Freight shipping rates will increase by an average of 5.9% to 6.9% for U.S. shipments.

Detroit auto show: The public part of the North American International Auto Show will run all week even as the United Auto Workers strike against General Motors (GM), Ford (F), and Stellantis (STLA) dominates talk in the industry. The auto show will include more electric vehicles this year and throw a spotlight on the future of mobility. The focus of Ford (F) during the week will be on creating buzz for the latest version of the F-150 pickup. The new F-150 will have a different front grille, dark-colored headlamps, a Pro Access Tailgate, and additional features. The base powerplant for the workhorse truck will be a 3.3-liter V6 engine. The F-150 is expected to go on sale next year at a starting price of $35,570. Other vehicles being revealed at the Detroit show include an all-new GMC Acadia large crossover SUV and updated version of the Jeep Gladiator from Stellantis (STLA), which could be called the Wrangler pickup truck. The 2024 version gets a new front grille, power seats and standard side curtain airbags. GM’s (GM) Cadillac will be showing off the refreshed CT5 luxury sports sedan for the 2024 model year. The model features a standard 2-liter turbocharged four-cylinder engine with 237 horsepower and an optional 3-liter twin-turbo V6 with 335 horsepower. Other brands on display will include Audi, Bentley, BMW, GM’s Buick/Cadillac/Chevrolet, Chrysler, Dodge, Fiat, Honda, Hyundai, Infiniti, Jaguar, Jeep, Kia, Lexus, Lincoln, Maserati, Mercedes-Benz, Polestar Automotive (PSNY), Ram, Toyota, Volkswagen, and Volvo. Going even a step further, Ford (F) and Stellantis (STLA) will have their own indoor tracks, with hills and angled climbs as part of their displays. Notably, Tesla (TSLA) is participating in the show in a rarity for the Austin-based automaker. Outside of auto, the Air Mobility Experience will be returning this year to the show, with product displays from AIR and Alef Aeronautics. AIR and Alef are described as electric vehicle take-off and landing vehicle groundbreakers. Alef Aeronautics will bring the Alef Model A, which can reportedly drive on the street and fit in a regular lane, take off vertically and fly overhead above traffic.

Key events: Oracle (ORCL) will hold its four-day CloudWorld event in Las Vegas. The event will cover all things Oracle (ORCL), including AI on OCI, the progress of Oracle Autonomous Database, the company’s multi-cloud strategy, and the use of Oracle Analytics throughout the portfolio. CEO Safra Catz will give a keynote address and Uber (UBER) CEO Dara Khosrowshahi will be a featured speaker. Microsoft (MSFT) will hold a special event in New York City that is expected to feature details on new hardware products and an update on the latest AI innovations across the company. CEO Satya Nadella and other Microsoft executives from product groups covering Microsoft 365, Surface, Windows, and Bing will present. Amazon (AMZN) will hold a Devices and Service Event. Last year, the Seattle-based tech giant revealed the Kindle Scribe and fifth-generation Echo Dot at the event. Analysts expect to hear about new Echo and Fire TV devices this year. CrowdStrike (CRWD) CEO George Kurtz will give a talk on “The Future of Cybersecurity and Generative AI” at the Fal.Con Conference. Intel (NASDAQ:INTC) will hold its Innovation Day, which has led to share price gains in the past. Other notable events of interest include Myriad Genetics’ (MYGN) Investor Day, Boston Scientific’s (BSX) Investor Day, Driven Brands’ (NASDAQ:DRVN) Investor Day, Avient’s (NYSE:AVNT) Sustainability Day, Procore’s (NYSE:PCOR) Investor Day, and Exxon Mobil’s (XOM) Product Solutions Spotlight. On the M&A front, shareholders with Magellan Midstream Partners (NYSE:MMP) will vote on the deal for the company to be acquired by ONEOK (OKE) for $25.00 in cash and 0.667 shares of ONEOK stock for each outstanding Magellan common unit. Check out Seeking Alpha’s Catalyst Watch for a full preview of the key events.

Conference schedule: The conference schedule is heavy again. The headliners for the week include the CL King Annual Best Ideas Conference, the J.P. Morgan Annual U.S. All Stars Conference, the Wells Fargo Consumer Conference, and the TD Cowen FutureHealth Conference.

Quant ratings: Stocks with recent quant rating changes include Alphabet (GOOG) to Strong Buy from Hold and Tenable Holdings (TENB) to Strong Buy from Hold. See the stocks with the very highest rated Seeking Alpha Quant Ratings.