Traders this week will sit up for a packed calendar of occasions, together with a number of days of congressional testimony for Federal Reserve Chair Jerome Powell, Tesla’s inaugural battery expertise occasion, and a handful of intently watched company earnings outcomes and financial knowledge releases.
Powell heads to Capitol Hill
Simply following the Federal Open Market Committee’s (FOMC) September monetary policy meeting, Fed Chair Powell is about to look earlier than Congress in three separate hearings, alongside Treasury Secretary Steven Mnuchin.
First, Powell and Mnuchin will on Tuesday seem earlier than the House Financial Services Committee to debate oversight of the Treasury Division’s and Federal Reserve’s pandemic response. They’ll then seem earlier than the Select Subcommittee on the Coronavirus Crisis on Wednesday, adopted by the Senate Committee on Banking, Housing, and Urban Affairs on Thursday.
Questions across the want for fiscal help amid the continuing coronavirus pandemic will seemingly be directed to each Powell and Mnuchin. Powell has repeatedly contended that each fiscal and financial coverage could be wanted to make sure a sturdy economic system restoration, whereas acknowledging that the contents of any additional fiscal coronavirus aid laws fall beneath Congress’s purview.
“The Fed can’t grant cash to specific beneficiaries. We are able to solely create applications or services with broad-based eligibility to make loans to solvent entities with the expectation that the loans will likely be repaid,” Fed Chair Powell stated in prepared remarks Wednesday throughout a press convention. “Direct fiscal help could also be wanted … The present financial downturn is essentially the most extreme in our lifetimes. It should take some time to get again to the degrees of financial exercise and employment that prevailed originally of this 12 months, and it might take continued help from each financial and financial coverage to attain that.”
On how and when that help may arrive, Powell added later throughout Wednesday’s query and reply session, “There’s an expectation amongst non-public forecasters and amongst FOMC contributors that there will likely be some additional fiscal motion. And there does appear to be an urge for food on the a part of all of the related gamers to doing one thing.”
“The query is how a lot and when,” he added. “Nobody has any certainty round that. However broadly talking, if we don’t get that, then there will surely be draw back dangers.”
In Congress, lawmakers have been locked in a greater than month-long stalemate over passage of one other spherical of virus relief-related fiscal stimulus.
Earlier this month, Senate Democrats blocked a $300 billion Covid-19 aid invoice – a so-called “skinny” invoice that they argued did not contain adequate support to handle the continuing coronavirus disaster. Democratic lawmakers have pushed for an about $three trillion deal, although Republican lawmakers have balked on the measurement of such a deal. Many considered the Senate’s failure to advance the slimmed-down aid package deal because the final probability earlier than the presidential election for congressional lawmakers to maneuver a aid invoice towards passage.
On financial coverage, the primary of this week’s testimonies comes lower than every week after the FOMC launched its September financial coverage determination, wherein officials unveiled for the first time more details on their outcome-based forward guidance for interest rates, and extra particularly, the situations beneath which a liftoff from their present near-zero could also be warranted. Fed Chair Powell is more likely to be questioned on the implementation of this steering, with the Fed suggesting it might hold charges near zero “till labor market situations have reached ranges in step with the Committee’s assessments of most employment and inflation has risen to 2 % and is on monitor to reasonably exceed 2 % for a while.”
Tesla Battery Day
On Tuesday, Tesla (TSLA) will host its extremely anticipated, inaugural firm occasion centered on unveiling new battery expertise.
CEO Elon Musk has teased the occasion in latest Twitter posts, saying on Sept. 11 that “many thrilling issues” will likely be revealed for the primary time on the occasion.
Many thrilling issues will likely be unveiled on Battery Day 9/22 ⚡️
— Elon Musk (@elonmusk) September 11, 2020
Questions round battery effectivity, prices, sizing, sturdiness and vary will seemingly take middle stage, as buyers and potential consumers search for the expertise to far surpass capabilities offered by combustion engines, and supply an incentive for purchasers to pivot towards battery electrical automobiles.
Wall Road analysts have largely been constructive on Tesla heading into the occasion. Piper Sandler late final week raised Tesla’s worth goal to $515 from $480 and reiterated its Obese score, citing the expanded alternative in Tesla’s vitality enterprise unit.
In the same vein, analyst Dan Ives of Wedbush raised his worth goal on Tesla to $475 from $380 and reiterated his Impartial score, calling Battery Day a probable “linchpin” occasion for the auto-maker.
“We imagine Musk & Co. are slated to announce quite a few new potential ‘sport altering’ battery developments at this occasion which has grow to be incrementally extra vital as competitors within the EV house continues to ramp each domestically and internationally,” Ives wrote in a observe Friday. “The expertise improvements round Giga/Fremont stay the important thing substances in Tesla’s success on the battery entrance and we imagine the corporate is getting nearer to saying the million mile battery at this extremely anticipated occasion.”
“In our opinion this battery expertise will likely be very superior, doubtlessly final for many years, face up to all kinds of climate/terrain, and be one other main milestone for the Tesla ecosystem,” he added. “In concept this battery will help an electrical automobile for 1 million miles and be a serious step ahead when competing vs. conventional gasoline powered automotive rivals from each an ROI and environmental perspective. One other linchpin to Tesla’s battery improvements and the Road’s focus of the upcoming Battery Day will likely be lowering battery manufacturing prices on a trajectory to the important thing $100/kWh threshold as this is able to give Tesla far more monetary flexibility round pricing on present and future EV fashions with worth parity.”
Nike, Costco earnings
Whereas this week’s earnings calendar will likely be comparatively mild, a pair intently watched corporations are set to report outcomes.
On Tuesday, athletic-wear large Nike (NKE) is predicted to report a year-over-year decline in each top- and bottom-line outcomes, as the corporate’s enterprise took one other quarterly hit from retailer closures and slower client spending through the pandemic. Adjusted earnings are anticipated to return in at 46 cents per share on income of $9.1 billion, representing declines of 47% and 15%, respectively, based on Bloomberg-compiled knowledge.
Telsey Advisory Group analyst Cristina Fernandez stated in a observe Friday that she expects Nike to report double-digit share declines in gross sales in every of its North America; Europe, Center East and Africa (EMEA); and Asia Pacific and Latin America (APLA) geographical segments, with short-term retailer closures and weakened client spending developments through the worst factors through the pandemic more likely to have weighed on outcomes. She expects these drops to be partially offset by prolonged gross sales development in China, which is additional alongside in its coronavirus-related financial restoration.
“By channel, we count on power in DTC [direct-to-consumer], pushed by sturdy development in each e-commerce and shops. Recall that on June 25, Nike commented that since its shops reopened in mid-Might, it had skilled optimistic development throughout areas, together with [double-digit] will increase in North America (90% of worldwide shops had opened on the finish of June),” Fernandez stated.
“We anticipate Nike will strike a optimistic tone on its earnings name round product innovation, the resumption of sports activities, the latest realignment of its organizational construction into males’s, ladies’s, and children, the rollout of 150-200 digitally-led, small-format shops throughout NA and EMEA, and its new Client Digital Acceleration technique, with a objective of digital representing 50% of Nike/accomplice gross sales vs. the prior objective of 30%,” she added.
Later within the week, warehouse large Costco (COST) will report quarterly outcomes on Tuesday, and is predicted to proceed rising as lingering pantry-stocking and dining-at-home developments assist enhance outcomes.
Costco already pre-reported monthly sales for August earlier this month, reflecting the corporate’s sturdy finish to the summer time. Web gross sales for the month alone grew 15% to greater than $13.5 billion. And for the 16-week fourth quarter ending August 30, Costco posted a 13% improve in web gross sales to $52.three billion.
Costco has additionally been receiving a lift from its e-commerce gross sales, and should talk about additional developments on this entrance in its earnings name this week. August e-commerce gross sales surged by 101.6%, as customers at each Costco and a plethora of different retailers leaned closely into making purchases on-line through the pandemic.
Monday: Chicago Fed Nationwide Exercise Index, August (1.19 anticipated, 1.18 in July); Family change in web price, second quarter (-$655 trillion throughout first quarter)
Tuesday: Present dwelling gross sales, August (6.00 million anticipated, 5.86 million in July); Richmond Fed Manufacturing Index, September (12 anticipated, 18 in August)
Wednesday: MBA mortgage functions, week ended September 18 (-2.5% throughout prior week); FHFA Home Worth Index, July month on month (0.5% anticipated, 0.9% in June); Markit US manufacturing PMI, September preliminary (53.5 anticipated, 53.1 in August); Markit US companies PMI, September preliminary (54.5 anticipated, 55.Zero in August); Markit US Composite PMI, September preliminary (54.6 in August)
Thursday: Preliminary jobless claims, week ended September 19 (845,000 anticipated, 860,000 throughout prior week); Persevering with claims, week ended September 12 (12.628 million throughout prior week); New dwelling gross sales, August (891,000 anticipated, 901,000 in July); Kansas Metropolis Fed Manufacturing Exercise Index, September (14 anticipated, 14 in August)
Friday: Sturdy items orders, August preliminary (1.4% anticipated, 11.4% in July); Sturdy good excluding transportation orders, August preliminary (1.0% anticipated, 2.6% in July); Non-defense capital items orders excluding plane, August preliminary (1.0% anticipated, 1.9% in July); Non-defense capital items shipments excluding plane, August preliminary (2.4% in July)
Friday: Jefferies (JEF) earlier than market open
Emily McCormick is a reporter for Yahoo Finance. Comply with her on Twitter: @emily_mcck
Learn extra from Emily: