Another week is here and investors continue to battle with rising inflation, recession fears and an energy crisis. Everyone is desperately trying to analyse all the macroeconomic factors to figure out how it will impact the stock market.
But this might not be the best strategy. Peter Lynch (a very successful investor) famously said that if you spend 13 minutes trying to predict the market based on economics, you’ve wasted 10 minutes.
With that in mind, let’s take a look at the biggest events of the week. But more importantly, we’ll turn our attention to corporate earnings which are far more important for those who invest for the long term.
The inflation genie
Ted Sarandos (co-CEO of Netflix) recently confirmed that Netflix will begin experimenting with a new, low-cost, ad-supported plan. This is a completely new strategy for Netflix, so the company has signed a deal with Microsoft to help support this business model.
The news comes at a fairly difficult time for the streaming giant. Not only is the competition becoming increasingly fierce (for example, Paramount has adopted its own ad-supported streaming model and is expanding its services in Europe), but just this year, for the first time, Netflix lost a considerable number of subscribers (over 200,000).
“Our revenue growth has slowed considerably,” Netflix acknowledged in its letter to shareholders. “Covid clouded the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to the Covid pull forward.”
With this uncertain backdrop, analysts are trying to forecast what Netflix’s numbers will look like when the company reports half-year earnings on July 19th. As always, the key figure to watch is subscriber growth. At this point in time, no-one expects Netflix to immediately recover the lost subscribers. But who knows, maybe this time Netflix will deliver a surprising plot twist!
Banks, banks, banks
- On July 18th, before the market opens, Bank of America and Goldman Sachs will release their quarterly earnings report. 2021 was a good year for banks. Can we say the same about this year too? Both stocks have lost several percentage points since the start of the year, following the broader market lower.
- Another bank will report its figures on July 19th: Ally Financial. It’s one of the most popular credit institutions in the US, and its shares also did well in 2021.
Keep an eye on your portfolio!
Earnings season and corporate results can have a big impact on the US and European markets. If you want to take advantage of these quarterly results, check out this article and find out how to kickstart your investing routine.
Economic and earnings calendar
Monday – Trade balance of Italy (May); Bank of America results.
Tuesday – Consumer price index in the Eurozone (June); US building permits (June); Netflix results.
Wednesday – UK Consumer Price Index (June).
Thursday – Homes Sold in the USA (June); Trade Balance of Japan (June).
Friday – ECB interest rate decision (July).
We’ll be back next week with another edition of the BUX Breakdown. In the meantime, have a great week on the markets!
All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.