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Earnings Exceed Projections Amid Recession Concerns

Investors appear to have exchanged their fleece jackets for crystal balls – everyone on Wall Street appears to be predicting a recession. However, warnings of a recession have recently gotten muted, and an increasing number of experts believe that any slump will be moderate.

Data of businesses

Source: Nasdaq

According to statistics, around 69% of S&P 500 businesses exceeded profits per share projections for the third quarter, while 71% exceeded revenue estimates. 

Those figures are still lower than the 5-year and 10-year averages for S&P 500 corporations, but they are far from symptomatic of an economic disaster.

Corporation Profits

Earnings Release

The earnings season is coming to an end, we do still have some major announcements on the deck this week starting with tech companies on Monday. Agilent Technologies released information about its quarterly earnings. 

The medical research company’s quarterly earnings came in at $1.53 per share, $0.14 higher than analysts’ consensus expectations of $1.39.

Dell Technologies also released the third-quarter financial report for fiscal 2023. Its revenue decreased by 6% to $24.7 billion. Operating income hit a record high of $1.8 billion, up 68%, or 7.1% of revenue.

On the other hand, non-GAAP operating income hit a record high of $2.4 billion, up 22%, or 9.6% of revenue, at a record high of $2.4 billion. Non-GAAP net income was $1.7 billion while net income from continuing operations was $241 million. 

Non-GAAP diluted earnings per share were $2.30 while diluted earnings per share were $0.33.

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Medtronic plc

Medtronic is a multinational manufacturer of medical devices and therapies, including insulin pumps, pacemakers, and diabetic treatments. The company is set to disclose earnings before the market opens on November 22, 2022.

The report will cover the fiscal quarter that ends in October 2022. According to analysts, the consensus EPS projection for the quarter is $1.28. Last year, the reported EPS for the same quarter was $1.32. 

Analog Devices, Inc.

Analog Devices is a global leader in the design, manufacture, and marketing of high-performance analog, mixed-signal, and digital signal processing (DSP) integrated circuits (ICs) used in nearly all types of electronic equipment.

Analog Devices, Inc. is expected to announce earnings before the market opens on November 22, 2022. The report will cover the fiscal quarter that ends in October 2022. The consensus EPS projection for the quarter is $2.58, based on analysts, forecasts. In the same period the previous year, the reported EPS was $1.73. 

Vmware, Inc.

Vmware, Inc. is expected to release earnings on November 22, 2022. The company is a market leader in multi-cloud services for all apps, allowing digital innovation while maintaining organizational control. According to Investment analysts, the consensus EPS projection for the quarter is $1.02. Last year, the reported EPS for the same quarter was $1.23. 

Autodesk, Inc.

Autodesk, Inc. is slated to disclose earnings after the market close on November 22, 2022. The report will cover the fiscal quarter that ends in October 2022. The consensus EPS projection for the quarter is $1.07, based on expert forecasts.

Last year, the reported EPS for the same quarter was $0.68. Autodesk’s aim is to provide designers and engineers with the tools they need to make the impossible possible. 

Dollar Tree, Inc.

Dollar Tree, Inc. is an American multi-price-point chain of discount variety stores that is slated to disclose earnings before the market opens on 11/22/2022. The report will cover the fiscal quarter that ends in October 2022.

According to investment analysts’ forecasts, the consensus EPS projection for the quarter is $1.17. Last year, the reported EPS for the same quarter was $0.96. 

Economic Calendar Readings

In the US, Monthly Retail Sales increased 9% above September totals, topping the monthly inflation index of 4%, however much of this rise was due to inflation pressure on consumer essentials.

The Richmond Fed manufacturing index, initial jobless claims, October durable goods orders, and November PMI data are all on the economic agenda for the coming week, though the data slate is mostly empty Monday.

Here is what is upcoming this Tuesday;

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RBA Governor Lowe’s Speech

In the early Asian session, the AUD/JPY pair is trading sideways as investors await a speech from Reserve Bank of Australia (RBA) Governor Philip Lowe before making an informed judgment. The risk profile’s mixed responses are also putting risk-sensitive assets on the sidelines.

The RBA Governor’s speech will shape future monetary policy action. Inflationary pressures are at an all-time high, driven by considerable price increases from service suppliers. In each monetary policy, the RBA raises its Official Cash Rate (OCR). 

Canada Retail Sales (MoM)

The dollar’s recovery has paused again, as risk markets appear to have stabilized. Overall, the Swiss franc is the second strongest currency this week, trailing only the US dollar. The yen is the weakest performer, followed by the Australian and New Zealand dollars. 

The Euro and the Pound are mixed, with the Pound holding the upper hand. While numerous central bankers will speak, Canadian retail sales will be a highlight of the day. Hopefully, more decisive market actions will occur. 

Japan Core CPI y/y

Later today, Japan will publish BoJ Core CPI, the favored inflation gauge of the Bank of Japan. As inflation keeps rising, the indicator has accelerated for eight months running. The National Core CPI increased from 3.0% to 3.6% last week. 

It is doubtful that the BoJ will alter its policies in response to a higher-than-expected reading. Inflation is only a short-term problem, according to Governor Kuroda, and it should peak at roughly 3%.

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USD/JPY Technical

USD/JPY Technical

The yen has fallen 20% versus the dollar this year as a result of the bank’s unyielding position, which has limited interest rates on Japanese government bonds. The government has responded with significant currency interventions rather than raising interest rates to halt the yen’s slide.

Such unilateral actions are unlikely to have a lasting impact given that the Fed is still hiking rates aggressively and that the US/Japan rate differential is only increasing.

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Author

  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.