Head of Saxo Strats
Summary: As the corporate earnings season approaches its final lap, Saxo's Peter Garnry takes a closer look at three key bluechips – Home Depot, Tencent and NVIDIA
The Q3 earnings season is losing steam with only 126 companies reporting earnings next week out of the 2,000 companies we track during the period. 90% of the companies in the S&P 500 Index have already reported earnings with positive earnings surprise across all sectors. In our previous Earnings Watch publications we have highlighted the earnings weakness in Europe, but the recent string of earnings releases have helped improving there. Revenue growth y/y is slightly higher in Q3, following dismal growth in the two previous quarters.
Today’s Earnings Watch publication focuses on Home Depot, Tencent and NVIDIA. The US housing market has been soft in the past year as mortgage rates have climbed on the back of tighter monetary policy. Home Depot’s earnings may be a first warning shot on housing cooling in the US as home improvement is partly driven by housing sentiment and the ability to take home equity loans.
Tencent is the worst performing large technology stock globally this year as China’s gaming addiction curb has hit sentiment hard with shares down 33% year-to-date. Tencent’s Q3 earnings are important for investor sentiment in China and Asian equity indices due to its index weight.
NVIDIA has been riding the boom in the semiconductor industry for years and last year saw a big boost from crypto mining operations. The big question is whether the comparables are getting too tough to beat and whether the semiconductor industry is hitting an intermediate peak here. Our view is that the US-China trade war will not see a deal anytime soon and the semiconductor industry is a strategic industry for both countries so the global supply chain in this industry could come under severe pressure in 2019.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
