🎢Equity Market Outlook⏳

While major indices had a rosy start for the week, the risks remain for the stock market, such as earnings, inflation and the expectation of the pace of tapering by central banks globally.

The inflation and central bank stimulus remain a highlight of worry as investors are placing higher weightage on the current corporate earnings. The focus is on how companies cope with supply chain disruption and its impact on profits.

Pika World believes corporate earnings will temporarily take the prime seat and fade off in early November for the FOMC meeting.

📺Netflix: Earnings Beat📺

The subscriber growth is better than expected as it continues to see more growth in the first quarter. The company added 4.4 million net new subscribers, which beat estimates of 3.5 million. For the fourth quarter, it expects to add another 8.5 million net new subscribers, ahead of forecasts of 8.4 million by Wall Street

Revenue was up 16.3% compared to a year ago, and profit stood at $3.18 per share. However, the operating margin had a mixed picture. While they were up 23.5% from 20.4% last year, it was down from 25.2% seen in the June quarter.

Pika World sees momentum in the stock but has not initiated a position.

🚽Zillow: Downgraded in a sea of Weakness🚿

The company was downgraded as near-term outlooks is cloudy. Since the company did not plan to sign up any new contracts to buy homes till 2021, it is believed to lose considerable market share to peers like Opendoor.

While analysts are still optimistic about the business model, they stay on the sideline as the management utilizes iBuying to grow its business. Pika World had not initiated any position on the company and remain on our radar for possible entry.

💎Space Tourism, a lucrative business model?💎

Virgin Galactic has been hitting the walls as there are growing pains to be a successful business model. The stock was downgraded as the company stopped flights tests for nine months to improve its spaceships.

The news was nothing less than a disappointment and shock for investors who are eyeing for rapid commercialization to happen. Unfortunately, the lack of any revenue-generating engine means it will be a rough patch for the company after some episodes of euphoria and a strong run in the stock price.

It is a space that is of interest to Pika World, but we remain on the sideline.

💰Evergrande: A sign of relief for On-shore bondholders⏰

According to some reports, the weakening Chinese developer had paid around $19 million on its onshore coupon. This move reflects the group’s favour towards the domestic markets, given intense regulator scrutiny on how the company is solving its $305 billion of debt.

Nonetheless, investors are concerned with the multiple missed payment on many of its offshore bonds in recent weeks, which is now on a 30-day grace period, failure to pay leads to default. Despite the saga, the Chinese government had downplayed the risk of the Evergrande debt issue and the ability to contain the risk.

📮What’s on the Menu Today?

At 10.30 pm, we will have Crude Oil Inventories which we expect a dramatic decline to 2.233M.

FOMC Member Quarles will speak at 1 am.

It is Oct 20, Wednesday, at 705 am in Singapore and 7.05 pm in New York. As trading becomes tougher, Pika World hopes to be with you towards a successful quarter ahead!