This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.
- Much of Corporate America seems to be banking on a continued strong economy – both Carnival Corp and Federal Express provided good outlooks for the rest of 2022.
- General Mills may shed light on whether consumers are still opting for name-brand cereals.
- Investors will be looking for Micron Technology to provide insight into the semiconductor supply chain in coming quarters.
What We Learned Last Week
The bad news about cruise operator Carnival Corp’s (CCL) earnings was the revenue shortfall: $2.4 bn vs $2.76 bn consensus. Consumers are getting more cautious about vacation and spending plans given high inflation and recession risks.
The good news is that CCL said nothing about people canceling cruises they booked earlier in the year. It is up to 91% capacity, and it seems on track to be fully operational later this year. That, of course, could change in coming months. And even if CCL can return to full operations, whether (or to what extent) it can pass on higher costs to its passengers and maintain its margins remains to be seen.
Federal Express (FDX) delivered what is becoming a familiar refrain from Corporate America – yet another sunny outlook, with projected earnings for FY 2023 exceeding analysts’ estimates. A new CEO is taking over. You might have thought he would manage expectations downward rather than upward, to give himself a low bar.
- Apparel and shoe giant Nike (NKE) reported solid sales and EPS beats, suggesting demand remains firm for its luxury products. Its supply chain appears under control, if still challenging.
- Cereal maker General Mills (GIS) and spice producer McCormick (MKC) rely on the power of their brand names to keep consumers returning for more. Can they maintain that hold as more consumers substitute store brands for name brands to cope with price rises?
- Software companies have mostly done well this year, but Paychek, Inc (PAYK) provides payroll and benefits systems to smaller Russell 2000 companies that have been mauled in the equity market this year. Will that affect their investments in business software?
- Retail sales data shows spending on booze is still soaring two years into the pandemic. We will see if Constellation Brands (STZ) is riding that wave.
- Walgreen Boots (WBA) may indicate how consumer spending for both the basics and more discretionary items is shaping up.
- Micron Technology (MU) earnings and outlook will be closely scrutinized for insights about the semiconductor supply chain for the rest of 2022.
Over a 30-year career as a sell side analyst, John covered the structured finance and credit markets before serving as a corporate market strategist. In recent years, he has moved into a global strategist role.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
Enter your email to read this Macro Hive Exclusive
START 30-DAY FREE TRIAL
Already have a Macro Hive Prime account? Log in