(KRON) — In today’s installment of Winners & Losers, financial expert Rob Black discusses rising stock markets, heat waves around the world and Netflix’s upcoming earnings report.
Winner: Markets rise as investors watch earnings
The stock market is rebounding from a Monday selloff as better-than-expected earnings provide a boost confidence.
Yesterday, Apple announced that it was pausing hiring, signaling that some companies are preparing for lower-than-expected profits.
Markets are now awaiting earnings from key players after the close, including Netflix (NFLX) and J.B. Hunt Transport Services (JBHT). If results continue to be satisfactory enough, that could push the market up past key levels.
US homebuilder sentiment falls to its lowest level since the early days of pandemic. It’s taking longer to build a home due to “a lack of lumber, appliances, cabinetry, electrical transformer equipment, land to build on and workers,” Robert Dietz, chief economist for the National Association of Home Builders, told USA Today.
The US only produces 12% of the world’s chips, down from 37% in 1990. China now accounts for almost 10% of global sales.
Chevrolet has unveiled a $45,000 electric Blazer with up to 320 miles of range to take on Ford’s popular Mustang Mach-E. The high performance version is called the Blazer EV SS and will cost you $66,000.
Loser: Heat waves are dominating summer
Extreme heat has besieged nearly the entire Northern Hemisphere this year.
Currently, Europe is simmering in its third heat wave of the summer.
On Sunday alone, Portugal and Spain reported more than 1,000 heat-related deaths.
Last summer, 1,400 died in the Pacific Northwest heat wave in July.
Is there an investment? Air-conditioning distributor Watsco (ticker: WSO), the heating, ventilation and air conditioning, or HVAC, distributor.
Watsco stock has dropped on the downturn in the housing market. New houses, after all, need new air conditioners.
Worries about a possible recession also linger over a stock that depends on people having enough money to spend.
Watsco’s does sell new ACs, but repairs and replacement parts account for 85% of its sales.
There is no Amazon of air conditioners, so it’s nearly impossible to trade down for cheaper parts given that they are available only in stores and not online.
It helps that government regulations mandate that air conditioners get more efficient over time as older refrigerants are phased out.
Shifting populations also help, as the need for air conditioning rises as people migrate south.
Watsco pays a nice dividend. Right now, it sits at 3.6%.
Loser: Netflix buckles up for critical earnings call
A year ago, Netflix’s dominance of the entertainment industry felt easy.
But then came a disastrous earnings report in April, and summer blockbusters like “Top Gun: Maverick” jolted the box office back to life.
Netflix’s earnings report tonight could be as bloody as an episode of Squid Game.
Danger Things . . . Netflix lost subscribers for the first time in history in the first quarter, and forecasts warn it could lose another 2 million in the second.
The streamer’s stock has fallen around 70% so far this year.
There will be hell to pay if they report a number that is significantly higher than the 2 million loss being thrown around.
Netflix still holds a couple of (literal) show-stopping tricks up its sleeve:
First: ads. Netflix has a treasure trove of customer data. Netflix is now embracing advertisements with an ad-supported subscription tier slated to launch by the end of the year.
Second: Netflix is swapping its greenlight anything and everything mantra for a focus on launching massive franchises, starting with this weekend’s release of “The Gray Man.”
Streaming Sabotage: Disney+ is pulling levers to try to reach its target goal of 230 to 260 million subscribers by the end of 2024, surpassing Netflix as the leading service. The race is on.