Monday. Think you're going to crank it up slowly? Think if you close your eyes, you can pretend it's still Sunday night? Think again. Lots going on. Better just get your tail in gear and get rolling. You were sort of right in the first place. It's not Monday. It is "Prime Day."
The grandest shopping event of the year at online retailing giant Amazon (AMZN) kicks off this afternoon, and runs for a day and a half. Just to further juice the event and push loyalty, Prime members will also receive an additional discounts at brick and mortar Whole Foods locations. Huzzah. What's for dinner?
You thought the meeting between President Trump and Russian President Vladimir Putin in Helsinki -- coming in the wake of special counsel Robert Mueller's indictment of twelve additional Russian intelligence officers allegedly involved in interfering in the 2016 U.S. national elections -- was a big deal today, didn't you? Well it is, but, you are going to have to be aware this Monday is a lot more than Prime Day and the Helsinki summit. So, let's pull that melon housing your intellectual capacity away from the comfort of that pillow, and let's down some java. We've got work to do.
China's National Bureau of Statistics released second-quarter data for GDP, as well as a host of other high-level domestic monthly macro. There was something of a rebound in the growth of Chinese Retail Sales for June from May. However, for that month, growth rates continued to slow for both Industrial Production as well as Fixed Asset Investment. For the quarter, Chinese GDP printed at annualized growth of 6.7% -- down from the 6.8% that hit the tape for the first quarter.
As Chinese growth continues to slow and the nation wrestles with the U.S. on disputes involving trade as well as intellectual property rights, the PBOC has already eased monetary policy several times this year. One might expect that trend to continue. In related news, the IMF is expected to update their outlook for the global economy today. Oh joy.
Farnborough Air Show
The Aerospace and Defense industry, though hampered by trade concerns, looks forward to it's biggest event of the year just outside of London this week. This event, which alternates with the Paris Air Show, will run through Sunday. Headlines made at the show will move individual names as the week progresses. Farnborough was the turf of military aircraft over the weekend, where Lockheed Martin (LMT) was able to show off the firm's fighter craft to potential buyers. Now, it's time to get down to business. The commercial business.
On that commercial side, at last year's Paris Air Show, Boeing (BA) , and Airbus (EADSY) came away with close to 900 orders and commitments. To put that in perspective, after cancellations, year to date, Boeing has booked 460 orders to Airbus' 206. Who wins the air show? You may have noticed the movement made by EADSY last week. Interesting. Since July 9, Airbus American Depository Receipts (that trade over the counter) are up more than 8%, while BA shares have popped to the tune of nearly 5% themselves. Obviously some of that would have to do with the pressure that U.S. President Donald Trump brought to bear on NATO allies to meet their military obligations. Some of that move also likely has to do with expectations for announced order flow this week.
Demand for passenger craft is expected to see continued strength out of Asia. Does China need Boeing more than Boeing needs China? Perhaps investors will find a thing or two out about that this week. Keep in mind that legendary Airbus home-run hitter John Leahy retired late last year, and this will be the first one of these dog and pony shows that the firm will try to tackle without Leahy in 33 years.
Of course, there will be more than two dancers at the ball. One other name to keep an eye on will be General Electric (GE) . Not only will GE report its quarterly earnings this Friday, it needs to show that it can still sell engines for aircraft this week. Need to see a pop ahead of earnings? This might just be the play. According to Aviation International News, General Electric is expecting to deliver as many as 2900 commercial jet engines this year. On top of that, GE Aviation CEO David Joyce was reported by MarketWatch this morning as saying he expected to book more than $15 billion in deals at Farnborough this year.
I don't watch much scripted television. I do watch news shows almost constantly. I watch sports, or at least keep tabs on sports. Scripted TV? When I do indeed go there, like may modern day Americans, I rely upon streaming services such as Netflix (NFLX) . By the way, that Sam Elliot show, "The Ranch," Not too bad.
NFLX reports the firm's second quarter tonight. Consensus expectations are for EPS of $0.79 on revenue of $3.94 billion. The whispers are running about two cents above consensus, FYI.
In case you took your eye off the ball on Friday, NFLX gave up more than 17 clams on the session, or 4.28%. True, a nasty move on the day, with a close at $395.88. However, keep in mind that this name traded below $200 in early January. The catalyst for Friday's ugliness was a statement by Deutsche Bank analyst Bryan Kraft that "We don't see 2Q earnings as a positive catalyst for the stock."
Netflix, if you'll recall, absolutely crushed subscriber growth expectations for the first quarter. That metric is precisely what traders will look at tonight. The industry looks broadly for the firm to have added something in the ballpark of 1.2 million new domestic subscribers and a rough 5 million globally.
Oddly, while Kraft spoke on the potential for a short-term pullback on the name, he re-iterated his "Buy" rating, as well as his $360 price target. Understand that NFLX closed on Thursday at $413.50. Sometimes you just have to read something twice, or maybe 10 to 20 times, because you just can't believe your eyes. I am flat this name. My most recent position was a poorly timed short earlier this year. Will I play this game? Most likely.
Still, as usual, when it comes to FANG stocks ---- Facebook (FB) , Amazon (AMZN) , Netflix (NFLX) and Alphabet/Google (GOOG) , (GOOGL) -- this will be a decision that I make about 45 seconds before the closing bell. (AMZN, FB and GOOGL are Action Alerts Plus holdings.)
On the options side, late Friday a July 20 395 Straddle would still run you more than $36 -- meaning that's how far the name would have to run from $395 for the purchaser of such a strategy just to break even. That is kind of a tough call to make. There will almost surely be extreme degradation in the value of those premiums by tomorrow. You could end up with an event like October of 2017, when the name barely moved on earnings -- meaning that you lose on both ends of such a trade. If played, for me this will be an equity play and almost certainly smallish in nature. Frankly, I'm more fired up about the air show in London.
Economics (All Times Eastern)
08:30 - Empire State Manufacturing Index (July): Expecting 21.1, Last 25.
08:30 - Retail Sales (June): Expecting 0.5% m/m, Last 0.8% m/m.
08:30 - ex-Autos (June): Expecting 0.4% m/m, Last 0.9% m/m.
08:30 - Control Group (June): Expecting 0.4% m/m, Last 0.5% m/m.
10:00 - Business Inventories (May): Expecting 0.4% m/m, Last 0.3% m/m.
Today's Earnings Highlights (Consensus EPS Expectations)
After the Close: (NFLX) (0.79)