Yahoo, Amazon reports top week
Could help explain reason behind recent market rally
A slew of earnings reports this week could shed light on whether the recent market rally is rooted in company fundamentals or just the growing expectation that the Federal Reserve will put off hiking interest rates until next year.
Meanwhile, the recovering housing market highlights a light week of economic news and could perk up a U.S. outlook darkened last week by disappointing retail sales and another drop in industrial production.
Walmart’s stock plunged 10% last week on sharply lower guidance from the company, but that wasn’t enough to keep stocks from drifting higher after Fed policymakers signaled a rate increase this year is increasingly unlikely.
Walmart’s nemesis, Amazon, should provide hope that digital companies are ready to help pick up the earnings slack. Analysts expect the online retailer to report a 21% jump in revenue compared with the year-ago period, and a per-share earnings loss of 13 cents, down from 95 cents. Yahoo is also expected to notch a 15% jump in revenue, but that has meant higher customer acquisition costs. Its per-share profit is expected to tumble to 17 cents from 52 cents a year ago.
Traditional corporate giants will report this week as well. Ana- lysts are betting on Microsoft and IBM to maintain reasonably healthy profits amid falling revenue, while American Airlines is likely to see a big jump in earnings on plummeting fuel prices.
The economy also could deliver more encouraging news. On Monday, the National Association of Home Builders is expected to announce that builder sentiment remained near pre-recession levels this month. Mortgage applications have rebounded recently, notes Lewis Alexander, chief U.S. economist of Nomura. But RBC Capital Markets cautions that contractors’ perceptions could be tempered by their ongoing struggles to find workers.
Despite the worker shortage, housing starts have generally risen since March. Solid job and income growth are prodding many Americans to buy houses for the first time or upgrade. on a matter of vital importance to humanity’s future.
The areas in which we can hope to see progress include increasing the efficiency of operations, solutions to gas flaring, and carbon capture and storage. This week’s announcement sets out an agreed common path and commitments to share knowledge and learn from one another to upscale best practices and develop “next” practices to improve the industry’s performance as a whole. We may not be totally clear yet on how it will work, but the commitment itself is a genuinely new development in the oil and gas industry. These CEOs are not only putting their signatures to an agreement but also their faces, publicly committing themselves as much as their companies, employees and value chains. With the commitment of these CEOs comes the motivation and inspiration for hundreds of thousands of employees to be part of the solution.
While advocating against cynicism, I believe we need to hold these CEOs accountable to their promise and encourage them to deliver on the hopes they have raised. The same mechanisms that created the pressure to make this commitment — from consumers, investors and governments — will need to be deployed to monitor follow-through.
The world is changing quickly. Oil companies that started in a world of abundant resources now find themselves operating in a world driven by the abundance of data. All industries have to adapt to digitalization, the global spread of communications technology, the ability to leverage information and demands for transparency. These trends create scope for the oil industry to make rapid progress and to communicate their progress to all stakeholders.
Most projections indicate that oil — and even more certainly, gas — will be around for the next few decades. As we build up to the COP21 climate summit, we know that states can’t fix the problems of climate on their own. We need, and expect, the public sector and private sector to take responsibility, to define their roles and be proactive. The clock is ticking.
As we build up to the Paris COP21 climate summit, I believe we should examine how these CEOs plan to address climate change.