To The Moon

Two things, Fed speeches and earnings.

Christopher Waller, a hawkish Fed governor, continued his hawkish rhetoric before the bell today, saying that despite last week's good news on consumer prices, "we have some way to go" before the US central bank stops raising rates.

"It's good that we're finally seeing some evidence that inflation is starting to come down," Waller said. "We need to see this inflation-impacting behavior continue and slowly start to come down before we really start to think about taking our brakes off."

Mr Waller argues that "the 7.7% rise in CPI is huge" and that the pace of decline is not the focus. The focus is still on the ultimate inflation target.

I think some media outlets have translated this to mean that Fed officials believe there are reasons to slow the pace of rate hikes soon, which is very dovish, but it doesn't really make much sense to focus on that.

This is the final week of earnings season for the U.S. stock market. Looking back over the past two months, the results have been very poor, but the broader market has maintained a steady upward trend. The reason for this is that after the big valuation kill after Jackson Hole, the real earnings season will have less of an impact.

The problem is the next earnings season, known as Q4, with analysts predicting that more than half of the S&P 500 sectors could be in an earnings recession before the next reporting season, with revenue expectations now at their lowest levels since 2019. I don't think it's going to happen in the next quarter either. I think it's going to happen after this earnings season, when the Nasdaq and S&P are probably peaking and we'll see where it goes.

Here are the highlights of this week's earnings:

Monday: Tyson Foods$Tyson(TSN)$ , the largest US meat producer, reported earnings before the bell on Monday and said sales could rise to a record next year due to "solid earnings", although it missed its adjusted earnings per share forecast as inflation fears prompted consumers to buy less pork and prepared meals in exchange for cheaper products, Adjusted earnings per share were $1.63, below the average of $1.70. The company expects its cost-cutting program to target more than $1 billion this fiscal year, a year ahead of schedule.

Tuesday: Walmart$Wal-Mart(WMT)$ , releasing its third-quarter results before the bell, is projected to benefit from a strong back-to-school season and a consumer shift to value amid rising costs, per Bloomberg Intelligence. Still, inflation is causing a shift in the mix of sales and margins as customers spend more on food and less on discretionary items. The company’s inventory will be of note, as it tried to sell-through excess stock and minimize markdown risk ahead of the holiday season. Generally, retail sales fell in October, as more promotions from inventory-laden sellers led to falling net sales despite increased traffic. Still, Walmart, along with peer Target (TGT US) due to report on Wednesday, saw October non-cash sales that were up year-over-year, aided by the flight to value.

• Home Depot $Home Depot(HD)$ is due before the bell, and is expected to report resilient same-store sales growth for the third quarter, with consensus calling for around 3%, due to increasing retail sales at home centers, according to Bloomberg Intelligence. The growth could be supported by higher prices, partly due to inflation, which would offset a sixth quarter of declines in the number of transactions. Still, though Home Depot’s exposure to professional customers will help it outperform peer Lowe’s (LOW US), which reports its own results Wednesday, overall industry demand is expected to fall through the end of the year and into 2023 given the housing market decline amid rising mortgage rates.

Wednesday: Nvidia$NVIDIA Corp(NVDA)$ results are due after the closing bell, and the most valuable chipmaker in the US is expected to deliver year-over-year drops in both revenue and earnings for the first time in two years. Its gaming segment may take the biggest hit as economic conditions continues to weigh on demand which could call for cuts to guidance, according to Bloomberg Intelligence. Investors will look for commentary about the company’s elevated exposure to China, where it originates about 25% of sales, after the Biden administration expanded restrictions on semiconductor sales to the country last month. Earlier this week, Nvidia announced it began the production of a new chip that is said to conform to the new export rules, hoping to recover revenue put at risk by government action. The company has lost almost half its value this year, following three straight years of gains in the stock market.

Thursday: Gap$Gap(GPS)$ reports after the closing bell. Investors will seek signs of earnings growth after the owner of Old Navy and Banana Republic brands pulled its full-year guidance and ended its partnership with Kayne West and his Yeezy Gap label. Bloomberg consensus is calling for adjusted EPS of $0.01 for the third quarter, down 83% from last quarter’s surprise profit. The apparel retailer’s turnaround, which includes an ongoingCEO search, the axing of 500 corporate jobs and an impairment charge to address inventory glut, will take several quarters to complete, according to analysts at Argus Research.

• Alibaba$Alibaba(BABA)$ is due before the opening bell. The Chinese e-commerce behemoth could report its first year-on-year expansion in adjusted Ebita margin since 2019, thanks to narrower losses expected at its online food delivery platformEle.me and its Southeast Asian arm Lazada, Bloomberg Intelligence wrote. The retailer said Sunday that gross merchandise value from its Singles’ Day shopping event was roughly in line with last year, although it broke from its past tradition of disclosing the full sales results from the promotion. In the upcoming fiscal second-quarter report, Wall Street analysts are expecting sales to grow by 4.3% — down from the 29% gain seen in the same period last year — mirroring revenue concerns raised by JPMorgan when they cut the price target in September.

Friday:JD.com$JD.com(JD)$ reports before the market open. Third-quarter results from China’s second-largest online retailer will come on the heels of the Singles’ Day shopping spree and peer Alibaba’s earnings, with Bloomberg consensus projecting the highest gross margin in two years. Improved product mix and platform fees could compensate for higher fulfillment expenses stemming from the country’s mobility curbs, Bloomberg Intelligence wrote. Nevertheless,BI also pointed out that potentially weaker business sentiment in China could drag down service revenue contribution in the current quarter.

Thanks to tiger friends support. If you are interested in options, you can join my discord：Options YYDS​​​​​​​​​​​​​​​​​​

also tiger options group：Tiger Options Club