Netflix earnings, Tesla earning, Airlines earnings — what to expect

The Yahoo Finance panel breaks down what to expect in a stacked week for the market as we await Netflix, Airlines, and Tesla earnings. Watch as the panel discusses how these most recent earnings could shape the market.

Video Transcript

- Yeah. And to Brian's point, I mean, we really saw a lot of that S&P 500 rally in the middle part of the week. That was after JPMorgan chase kind of kicked off earnings season with the big banks really across the board towards the latter part of next week reporting.

Loan growth, that wasn't necessarily there quite yet. But that the green shoots could be there for you kind of some more underlying fundamental demand for credit in the later part of this year. Maybe quarter four or even the first quarter of next year.

And that optimism was a big reason why. I think we saw markets rally. But what's been really interesting to me has just been bond yields across the board.

When you take a look at the US 10 year this morning appearing to rip higher, I think I saw a 161 basis point handle on the 10 year. I think it's could honestly go up even a little bit higher as we saw in some of the early morning action in the world's most liquid market there.

But what's also interesting is that it's not just US yields that are really getting a rally here, we've seen the 10 year bond up about three to four basis points. I was watching the 10 year gilt also in the UK up about four basis points. And then the 10 year French bond also up three basis points.

So I this is just a global story. Maybe that's not necessarily pinned to well it's the US financial sector that's doing well. I think it appears to be some optimism that money can go into riskier yielding assets with the Delta variant maybe becoming a little bit more subsided.

We know that some of those tra-- travel advisory restrictions have been lifted between the United States and a lot of these European countries as well. So that's likely bode well for just the return to normalcy, which I think is a big thesis broadly for yields going higher because we know that they've been really low with central banks around the world pinning them lower. We'll see if that changes with some of these other central banks. Maybe shifting to a more normal-- normalized note in the months to come.

- Yeah, and where-- I wanted to come back to Bitcoin as well because that's going to be a big focus this week sort of on the side of earnings and everything else with the introduction of that Bitcoin ETF, which as I said the ProShares ETF expected to begin trading tomorrow. We're going to be talking a lot about this. We're talking to grayscale's. Michael Sonnenshein a little bit later today.

They had an application for a spot Bitcoin ETF several years ago. They withdrew that. Maybe they're going to come out with another application again. And then we're going to speak to someone from ProShares tomorrow as well.

Brian Sozzi, that was yet another of the topics that you wrote about in the Morning Brief.

- Yeah, cool sweet 1,600 words here. I'm still trying to figure out how I whip that up. But anyway, look Coinbase, you could see a rerating in the stock here. Ahead of that, really as that optimism comes back into the market for crypto here. Potentially ETFs rolling out here.

You're seeing Coinbase shares up 11% over the past five sessions here. So the market is starting to re-rate Coinbase shares, which is really done nothing since the IPO. I believe the stock was down 27% or so since the company debuted.

These constant fears of fee compression that have not lived up to expectations. Coinbase has printed some, some pretty good results since IPO ing. And I look at Mark Palmer, a friend of the show here coming out recently $500 price target on Coinbase. So at least from his perspective, he is seeing a potential Coinbase rerating.

And again, up 11% over the past five sessions here. That's a big move down. A little bit in the market here.

But again, when you're seeing price targets potentially at $500 for Coinbase, there's a lot to be said for that.

- Yeah. But remember, we also talked to Christian Bolu from autonomous who said he thinks we're going to see a dramatic rerating in the opposite direction, right? He is not a bull to say the least on Coinbase.

So you know, not everybody is-- is all balled up on that particular stock. I want to dig a little bit more into some of the earnings that we are expecting for this week. I think it's safe to say the more key ones from an excitement perspective are going to be Netflix and Tesla.

Netflix just because it's Netflix, there's a lot of excitement about around squid game, et cetera. Tesla, which is sort of had a stealthy rally in the past six months or so. And that one's going to be interesting.

And then, of course, there's the read through in terms of supply chains, which are going to be important for all these companies. One that's not listed there as Procter and Gamble, which is out tomorrow, and supply chain, and input costs are going to be really important for that one.

But really it's hard to choose which of these to be most excited about or most interested in. Brian Sozzi, I know you have your-- your favorites.

- I'm excited about every single earnings report that we are going to be walloped over the head with over the next five days. I want all of them. And I want--

- Pace yourself. Pace yourself.

- All right.

- But pace yourself.

I-- think I know. Right. I know. We're all excited about Tesla, all excited about the other earnings. But I think for being a P&G, tomorrow is very telling.

I think the market has forgotten that P&G warned of almost a $2 billion commodities hit three months ago. I mean, the stock is certainly hung in there. I would be concerned if you're out there trading this name into earnings here about P&G warning about even more inflation on top of the nearly $2 billion hit. It guided to a couple of months ago.

Everything we have heard on the inflationary end seen, on the inflationary front since P&G last reported over the summer has been even more inflationary. Resins up, oil prices up, cotton prices up, packaging prices up here. So P&G could really be under the gun tomorrow.

- Yeah, no, I think that's really going to be a big story across all the earnings. I mean, you look at that chart ahead of you that showed all the earnings that we're expecting this week. This is kind part of earnings season, where after the thematic kind of cohesiveness of having all the bank earnings at one time.

You start to go all over the place. Because what's good for Netflix might not be good for Chipotle, might not be good for Anthem Blue Cross Blue Shield, right? These are all completely different companies in different industries.

But what's interesting is to kind of bring it all full circle. But the whole story for earnings season this quarter really has been rising estimates, right? We've seen rising estimates 3% headed into this third quarter earnings season.

And a lot of that is despite supply chain issues and the impact of the Delta variant. So whether or not these price pressures allow these companies at the same time to also increase the margin space that they have is an interesting question because it's not as binary as well. If you have to increase prices, that means that you're going to be less profitable.

In many cases, companies can become more profitable when they raise prices even if labor and materials costs increase, right? If you only have one bullets or increase prices, maybe you just go for the full gamut and increase prices dramatically.

So I think this is going to be a big question for the third quarter. Pace yourself, Brian. I had an energy drink for the first time. My heart couldn't stop. I don't even know how you're going to survive this week.

- Well, we got a whole case, buddy.

- And-- and the last thing I would say is, you know, we keep talking supply, supply, supply when it comes to many of these companies and what they're doing in terms of prices. The reason they can raise prices is not just because, you know, their input costs are going up, it's because people still want to buy this stuff.

And so I'm also going to be paying close attention to commentary around demand. Is demand still robust? The implication if they're raising prices is that it is.

But I'll be looking for explicit commentary around demand as well. And if that is lacking, that then I think is perhaps a warning sign. So one more thing to watch during earnings season. Put it on the list. Fire up those energy drinks. We are going to be ready.

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