Stocks survived day one of the trade war on Friday. It’s anyone’s guess if they can keep dodging bullets.
Dow Jones Industrial Average futures rose 98 points on Sunday as of 9:23 p.m., S&P 500 futures gained 7 points, and Nasdaq Composite futures advanced 21 points.
Here’s what’s on TheStreet’s radar in the week ahead.
Bring on the Apple Notes
With Apple (AAPL) shares down 2% over the past month on fears of slowing smartphone demand, look for Wall Street analysts to try and defend the tech giant’s stock ahead of its July 31 earnings report.
RBC Capital Markets analyst Amit Daryanani was first out of the gate on Sunday, reiterating an outperform rating and $210 price target on Apple.
Says Daryanani:
“We expect AAPL to post Jun-qtr results in-line/slightly above Street expectations driven by stable revenues, modest upside to GMs and buyback tailwinds. While FX could be a slight headwind, AAPL’s hedging program should offset it particularly when it comes to EPS & FCF. We think iPhone promotional activity this quarter was higher across carriers, which should support revenues and unit sell through in the quarter. Investor sentiment into Jun-qtr is more positive vs. what we saw last qtr, particularly given strength in services & buyback momentum. We think the higher ASP dynamic should continue in Sep-qtr, given iPhone X wasn’t a part of the mix last year until Dec-qtr and its pending launch impacted iPhone 8 sales last year. Overall, we see Sep-qtr revenues up mid/high-teens vs Sep-2017. On the GM side, in addition to ASP dynamic we should start seeing impact of lower NAND prices flowing through particularly with the launch of new iPhones. Finally, services momentum should remain strong and AAPL recently stated that subscription revenues are up 95% y/y. Net/Net: We see several levers that AAPL can use to convert low single digit unit/sales growth to mid-teens EPS growth: 1) Gross margin upside from cost downs, NAND tailwinds & yield efficiencies, 2) Services growth, & 3) Capital allocation. We maintain our Outperform rating and $210 price target.”
TheStreet’s founder Jim Cramer will likely touch on Apple during his July 11 Action Alerts PLUS monthly member call. Register to listen to Cramer’s current thinking on Apple here.
Trump Heads Across the Pond
President Donald Trump is expected to meet with United Kingdom Prime Minister Theresa May on Friday, July 13. The trip has been on-again, off-again for several months as the Trump administration expressed concern over the growing prospect of demonstrations and protests during his visit to London.
It seems his anxiety is well placed. Trump will not garner an official state visit and will not be addressing Parliament, which would typically be two honors bestowed upon a visiting president. Additionally, a 19-foot “Trump Baby” balloon was given the go-ahead to fly through the skies of London for two hours during the president’s visit. The “Trump Baby” earned the greenlight from London Mayor Sadiq Khan after more than 10,000 people signed a petition and donated more than $23,000 through a crowdfunding campaign to get it into the air.
Beyond avoiding the clouds above London, Trump and May are expected to talk trade and national security during the visit. Trump has been penciled in with Queen Elizabeth, as well. He’ll fly into London following a NATO Summit in Brussels earlier in the week.
Trade Takes Form
After Trump on Friday initiated $34 billion worth of tariffs on Chinese goods, Wall Street will watch carefully how markets digest the news. The week was slow, with low trading volume following from a shortened week. As Monday rolls around, market watchers will keep a keen eye out for how everything from tech to soybeans to pork handle the new order.
For what it’s worth, some are already lauding the president for the move. The U.S. trade imbalance with China during May totaled $43.1 billion, which was the smallest monthly deficit since October 2017 and tallied the largest three-month deficit reduction in a decade.
But on the flipside, China was quick to enact its own $34 billion of tariffs the same day Trump’s took effect. That could serve as a signal that the tit-for-tat rhetoric on trade tensions from Wall Street to Washington is more than just verbiage.
And on the Calendar…
Starting off the week in economic data is the consumer credit report for May due at 3:00 p.m. ET on Monday. FactSet analysts expect the measure to total $12 billion, up from $9.3 billion a month earlier.
At 10:00 a.m. ET on Tuesday, Wall Street will watch for the Job Openings and Labor Turnover Survey, or JOLTS report, for May. Economists are looking for 6.66 million, down from 6.7 million in the previous JOLTS reading.
On Wednesday at 8:30 a.m. ET, the Producer Price Index for June is expected. Analysts predict a gain of 0.15%, shrinking from the 0.5% gain a month earlier. And a day later on Thursday at 8:30 a.m. ET, the Consumer Price Index is expected to come in with 2.9% growth, nearly in line with the previous month’s 2.8%.
The Treasury budget for June will be released at 2:00 p.m. ET on Thursday. Economists predict a deficit of negative $91 billion, shrinking from the previous month’s negative $146.8 billion.
And import and export prices will be released at 8:30 a.m. ET on Friday. Analysts predict the Import Price Index to increase 0.1% for June, down from 0.6% in May. As for the Export Price Index, economists predict an increase of 0.2%, down from 0.6% in May.
And for the Federal Reserve, New York Fed Chief John Williams will speak in Brooklyn, New York, at 4:30 p.m. ET on Wednesday and Philadelphia Federal Reserve Bank President Patrick Harker will speak in Victor, Idaho, at 12:15 p.m. ET on Thursday.
