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The holiday-shortened week ahead will be light on earnings reports and corporate events as the calendar winds down in 2022. History is on the side of a Santa Clause rally with the stock market historically seeing more gains than losses during the last trading week. Market indexes have been prone to get pushed higher during the low-volume week as tax-loss strategies and year-end investing tips the scale to the bull side. However, the Santa Claus rally precedent could be tested this year with recession and interest rates fears high. Also in the mix, investors are also uncertain how to interpret economic releases in the environment. “The bulls can’t win,” noted economist Edward Yardeni. “If the economic indicators are too strong, the Fed will have no choice but to tighten until a recession occurs. If they are weak, then a recession might be coming sooner,” he noted. As for individual stocks next week, keep an eye on NIO (NYSE:NIO) with the Chinese electric vehicle maker holding an annual investor event, while Tesla (TSLA) looks to break its six-session losing streak.
Earnings spotlight: Tuesday, December 27 – GreenTree Hospitality Group (GHG).
Earnings spotlight: Friday, December 30 – Uxin Limited (NASDAQ:UXIN).
Spotlight on NIO: Chinese electric vehicle startup NIO will hold its annual NIO Day event on December 24 at the Binhu International Convention and Exhibition Center in Hefei. NIO is expected to unveil two new models and a new power station product at the event. There is speculation that a NIO EC7 could be announced as the brand’s second SUV-coupe model. An announcement on the 2023 NIO ES8 or ET5 Station Wagon are other possibilities. The reveal of the new Power Swap 3.0 station could be significant with the new system expected to be much improved over the first iterations. Some media reports indicated the new power station could store 22 battery packs that could make 24 swaps a day. NIO operates more than over 1,200 Power Swap stations in China, with most of them Power Swap 2.0 units, capable of storing up to 13 battery packs and could make 312 swaps daily. Looking ahead, NIO is expected to release five models in the first half of 2023.
Healthcare watch: Clinical-stage biotech TG Therapeutics (NASDAQ:TGTX) is in the spotlight in the week ahead with the action date for the company’s Biologics License Application for ublituximab for relapsing forms of multiple sclerosis arriving. Share soared more than 50% in November after Chief Executive Michael Weiss said that the company has started labeling discussions with the FDA ahead of a potential U.S. approval for the therapy. Roche (OTCQX:RHHBY) (OTCQX:RHHBF) will also be on watch with the FDA expected to make a decision on mosunetuzumab for relapsed or refractory follicular lymphoma. The biologic received conditional marketing in Europe in August under the name Lunsumio. If approved in the U.S., mosunetuzumab would become the first bispecific antibody approved for non-Hodgkin’s lymphoma. Looking ahead to the new year, Bank of America tipped that earnings pre-announcements could jolt shares of Alnylam Pharmaceuticals (ALNY), Amicus Therapeutics (FOLD), Neurocrine Biosciences (NBIX), and Ultragenyx (NASDAQ:RARE). Meanwhile, healthcare companies with new product launches that could provide updates regarding launch metrics and FY22 revenue in early January include Apellis Pharmaceuticals (APLS), argenx (ARGX), and Ascendis Pharma (ASND).
Eyes on auto: Investors have a complicated setup for the automobile sector in 2023 to consider, with recession worries and a sharper focus on profitability bumping up against expected easing of production headwinds. Bank of America has a conservative forecast for volume in 2023, with automakers not appearing to be in a rush to ramp up production and the macro overlay a greater risk. J.D. Power also expects 2023 to carry a high level of uncertainty as several markets could be dealing with a recession and potential affordability concerns. Of note, higher pricing coupled with increasing interest rates on loans continue to push up monthly loan payments. The research firm still forecast a 6% increase in global auto sales to 85.7M units with an improved situation in China raising the outlook slightly from just a month ago. Meanwhile, the auto outlook from S&P Global Mobility carries a countercyclical narrative. Expected production levels are expected to continue to increase, even as economic conditions are expected to deteriorate through the early stages of next year. “The advancing production levels, along with reports of sustained retail order books, recovering stock of vehicles, and a fleet sector that remains starved for product, should provide some impetus to auto demand levels even as an economic recession looms,” updated S&P. For the U.S., the firm projects calendar-year 2023 sales growth of 7% to volume of 14.8M units in the U.S. Of note, the firm said next year will see the sustained advance of battery electric vehicles. Further electrification progress in 2023 could be fueled by a long list of product rollouts. Some of EV models that could create some buzz include Cadillac (GM) Lyriq, Lexus (TM) RZ, Fisker (FSR) Ocean, Genesis GV60, Chevrolet Equinox EV, GMC Hummer SUV, Chevrolet Blazer EV, Hyundai (OTCPK:HYMLF) Ioniq 6, Jeep (STLA) EV, Mercedes-Benz (OTCPK:MBGAF) EQE, Nissan (OTCPK:NSANY) Ariya, Polestar (NASDAQ:PSNY) 3 and 4, as well as the long-awaited Toyota (TM) bz4x SUV. Of course, those new models will enter the market with Tesla (TSLA) ramping up production levels in the U.S. and automakers looking for their models to qualify for the full amount of the EV tax credit.
Las Vegas: The Nevada Gaming Control Board is due to issue its monthly report on gaming win for the state in what will be a closely watched report for the sector. The October report showed gross gaming revenue on the Las Vegas Strip rose 0.5% year-over-year to $706M despite the worsening economic backdrop. Weighing in on the report, CBRE Equity analyst John DeCree noted that after excluding poker from the monthly tally, gaming win was up 3.3% due to the different timing of the World Series of Poker a year ago. “Notably, Blackjack and slot win both reached all-time highs on the Strip in October, and total mass market gaming win (ex baccarat) was just 3% below the prior peak in November 2021 – painting a strong picture of Las Vegas and the core domestic consumer,” added DeCree. The key with the November report will be to see if that momentum sustained for another month and the surge in group and convention business continued. As far as Las Vegas goes, the companies with the highest mix of revenue exposure are MGM Resorts (MGM), Caesars Entertainment (CZR), VICI Properties (VICI), Golden Entertainment (GDEN), and Wynn Resorts (WYNN) at 23%.
Corporate events: Several SPAC deals will go to a shareholder vote on December 27. Watch for developments with Tailwind Acquisition’s (NYSE:TWND) deal to take laser maker Nuburu and Model Performance Acquisition’s (NASDAQ:MPAC) deal to take entertainment firm MultiMetaVerse public. The four-day San Diego Auto Show begins with a media event on December 30. Some of the automakers showing off new models include Hyundai (OTCPK:HYMLF), Nissan (OTCPK:NSANY), Stellantis’ (STLA) with the Ram and Jeep brands, Ford (F), and Volkswagen (OTCPK:VLKAF). Analysts will be watching the auto show closely for clues on pricing and incentives on 2023 modelsRead Seeking Alpha’s Catalyst Watch. for a more complete list of the week’s big events.
Box office: The weekend box office numbers for Avatar: The Way of Water will be closely watched after the first weekend fell short of Disney’s (NYSE:DIS) forecast. The movie’s second week is expected to spotlight if the James Cameron film will have long-term box office appeal. Of note, the next major blockbuster – Disney and Marvel’s Ant-Man and the Wasp: Quantumania – will not debut until February 17 in the U.S. It will also be a big weekend overall for theater stocks such as AMC Entertainment (AMC), IMAX (IMAX) and Cinemark (CNK) with the days between Christmas and New Year’s Day typically accounting for as much as 5% of the year’s total box office haul.
Barron’s mentions: The cover story this week delves into the growing robotics industry and the potential for robots to help with labor shortages by performing basic tasks like delivering pizza, sorting prescription drugs, fixing a tire, milking cows, recycling plant functions, lab work, and providing room service in a hotel. Global robotics sales rose to a record $15.5B in 2021 and are on track to grow another 10% this year, according to the International Federation of Robotics. Amazon (AMZN) was noted to be one of the leaders and has rolled out its first fully automated robot, called Proteus, for warehouses. For investors, the space can be a challenge with small software makers or early-stage growth stocks without much revenue or profit in the mix. The publication noted that larger players making robotic arms, chips, and components tend to be industrial conglomerates or tech firms with artificial intelligence as one of their businesses. For those interested in a long-term robotics play, the ROBO Global Robotics & Automation Index (ROBO) is a catch-all investment for the sector that includes Cognex (CGNX), Intuitive Surgical (ISRG), Tokyo-traded Fanuc, and Rockwell Automation (ROK) as top holdings.
Sources: EDGAR, Bloomberg, CNBC, Reuters
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