How to Profit Off the Barbie Movie and Inflation (July 10-July 14)
Happy Sunday everyone and welcome back to the Rippy Global weekly outlook. The markets closed last week down slightly after hotter than expected jobs data. Goldman Sachs reiterated their end-of-year price target of 4500 on the S&P 500 by the end of the year, expecting modest earnings growth. So far, risk on assets are outperforming the market, with Bitcoin being the top performer as seen in this graph from Goldman:
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One thing the market is looking forward to this week is the June CPI inflation report. Analysts are expecting CPI to come in at 3.1% on a year-over-year basis. This week will be shaping up how the second half of the year will look in terms of macro and how the Fed is going to play the inflation game.
The CPI is expected to rise 0.4% month-over-month meaning that since January, the index will have increased by 5.9% on an annualized basis. This is leading some investors to believe that the June report may mark a bottom tick in the disinflation process. Higher rates is worse for stocks and the fear is that inflation remains excessively sticky and the stock market, which believes the Fed will soon cut rates, is wrong and the Fed will have to keep rates higher for longer.
Energy stocks closed off the week strong as well, specifically oil stocks. Saudi Arabia and Russia announced production cuts that amount to ~5% of global demand. US inventories fell as well, finally showing a shift in the sector with tightening of supply.
Earnings season also starts this week with Delta Airlines on Thursday and then the banks on Friday. Traders will be watching to see how strong the banking sector is with comments from JP Morgan’s CEO Jamie Dimon being closely monitored.
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#1) Earnings season kicks off this week with the large banks reporting on Friday. This quarter will be interesting. Managing director at Goldman Sachs says JP Morgan’s deal with First Republic Bank could lead to a surprise in revenue and to also watch Wells Fargo as they may benefit from having less capital markets exposure.
#2) On Monday, FDA data for many names will be reported, including $DERM and $FBIO. The Fed Reserve Vice Chair for Supervision will also be speaking on banks at 10 AM.
#3) On Tuesday, the quiet period for Cava (recent hot restaurant IPO) will end for sell side analysts so watch for analyst ratings on the stock and volume. Prime Day also beings for Amazon and may bring volume to that name and other small retailers.
#4) On Wednesday, delivery stocks like Doordash and Uber will be impacted by seeing what a judge rules on legislation for minimum wage for delivery workers. The CPI report will also release at 8:30 AM. The Fed will also release their Beige Book report and speak on their new FedNow payment tool.
#5) On Thursday, OPEC will publish the monthly oil report and the PPI inflation report will be released in the morning as well.
#6) On Friday, Rocket Labs has their launch date for NASA set and the big banks kick of earnings season.
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S&P 500
The S&P 500 ($SPX index) is cooling off after a strong run.
My key breaks are $4482 for bulls and $4386 for bears.
The best ways to play the S&P 500 are via. SPY/SPX options or SPXL (3X Bull S&P 500 ETF.
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INDIVIDUAL STOCKS & LEVELS
Let’s recap some of the levels of some popular names:
TSLA
EV stocks had an amazing week, but I think they can cool off here with Tesla and Rivian (my pick from last week @ $16, it’s now $25!) both having many gaps to fill to the downside.
AAPL
Apple just broke the $3T market cap and is in a pennant here. After a huge run for the first half of 2023, this may have a bit of a cool off period here, or it may go for the next leg up, but it’s all dependent on how it breaks out of this pennant.
MAT
Last week I told you that the catalyst for RIVN’s huge run would be the EV numbers and that was a great call, but this week I’d like to get a bit more experimental. With the super hyped Barbie movie coming out on the 19th, it turns out Mattel owns the rights to the brand with Barbie making up ~20% of their revenue. If this name gets a dip this week this may be in play.
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Insider Activity
In terms of insider trades, BDTX is the only notable buy to me.
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High Short Interest Stocks (MarketWatch)
#1 - CVNA 56% SI
#2 - ALLO 49% SI
#3 - BYND 42% SI
#4- ATIP 42% SI
#5 - LCID 38% SI
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Top Options Trades on Friday
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Thanks for reading this weekend’s article, have a great week!
-Adit Dayal