The World Economic Forum in Davos, Switzerland, takes place from Jan. 19 to Jan. 23.Markus Schreiber/The Associated Press
It’s that time of the year. The global elite make their sacred pilgrimage to Davos aka the World Economic Forum to solve all our problems. It is estimated that there is one private jet for every four attendees. I’m sure that will come up in this year’s discussion: “How can we build prosperity within planetary boundaries?”
Here are five things to watch this week:
Davos Man: The World Economic Forum in Davos, Switzerland, takes place from Jan. 19 to Jan. 23. Davos is old hat for Mark Carney, who has been attending long before he was the Prime Minister. He is set to give a speech Tuesday on his vision for Canada and will be a speaker in a session for investors.
U.S. President Donald Trump will be returning to Davos and, despite facing a global audience, he will likely direct his messaging to the American people. “President Trump is expected to use his speech in Davos to focus on affordability, with a significant portion devoted to housing,” wrote Washington policy analyst Ed Mills of Raymond James in a note to clients. New measures that would expand housing supply, reduce mortgage rates and give better access to downpayment options could be teased, said Mr. Mills.
From an industry perspective, AI could also come up. “President Trump will be at Davos and we expect the role of U.S. tech stalwarts in building this 4th Industrial Revolution to be a major topic at WEF,” wrote Wedbush Securities managing director and senior equity research analyst Dan Ives.
Get the popcorn: Netflix NFLX-Q is turning out to be more dramatic than the season finale of Stranger Things. The streaming service is set to report results Tuesday after the bell but the results may take a back seat to its pursuit of Warner Brothers WBD-Q.
Shares are languishing at a nine-month low as investors are nervous that it may have to up its US$83-billion bid for the legendary Hollywood studio in an effort to fend off Paramount Skydance’s PSKY-Q hostile bid. This might overshadow results, which are expected to be robust featuring 25-per-cent profit growth and 17-per-cent sales growth.
However, if Netflix is willing to shell out US$83-billion to buy another studio, investors may be nervous about what that means for growth over the medium to long term, wrote Deutsche Bank analyst Bryan Kraft in a preview note to clients. “Netflix’s opportunity to gain incremental engagement from the linear TV ecosystem may be slowly dwindling without a more robust commitment to live programming, particularly in News and Sports,” said Kraft.
Bizarro world: It’s a strange situation when Netflix with double-digit growth is underperforming Intel INTC-Q of all companies, which has been a historical laggard and is expected to report a 6-per-cent drop in sales. Of course, Intel got to sit with the cool kids after the U.S. government took a roughly 10-per-cent stake in the semiconductor company back in August. While topline growth is struggling, it is expected to turn a profit compared to a loss last year, thanks to cost cutting.
After a near 140-per-cent rally over the past year, Citi is throwing in the towel on its sell call, upgrading the stock to neutral ahead of results. Thanks to heavy demand, rival Taiwan Semiconductor TSM-N is operating near capacity, and Intel could nab foundry market share, argued Citi analyst Atif Malik. “That said, we need to see Intel reverse share loss to AMD AMD-Q/ARM ARM-Q in its core CPU market to turn more constructive on the stock,” said Mr. Malik, explaining why he’s not upgrading it to a buy rating.
Mmm good? Industrials have had a great run, including 3M MMM-N, but one analyst isn’t recommending chasing the stock into earnings this week. 3M is set to report results Tuesday morning and, ahead of that, JPMorgan is downgrading the maker of Scotch tape and Post-it notes. 3M has been a turnaround story under chief executive officer Bill Brown, who is less than two years into the job. JPMorgan analyst Stephen Tusa argues 3M has turned around as much as possible and lower growth could be ahead.
Data dump: The Bank of Canada will get a peek at inflation and retail sales ahead of its rate decision on Jan. 28. First up, consumer prices are out Monday morning and expected to fall month-over-month, thanks to an estimated 8-per-cent drop in gas prices.
A few hours later, the Bank of Canada will release its Business Outlook Survey and, with uncertainty remaining elevated, we could be in for another downbeat report, according to Bank of Montreal. “We expect the [Business Outlook Survey] indicator to extend a three-year streak in negative territory, consistent with a slowdown in economic growth to end the year,” wrote BMO senior economist Shelly Kaushik.
Retail sales figures will round out the week with the flash estimate for December giving us a look at how well consumer spending held up “as real GDP growth looks to slow substantially in the fourth quarter,” wrote Ms. Kaushik.
In the Money with Amber Kanwar is Canada’s top investing podcast. New episodes out Tuesday and Thursday. Subscribe now at www.inthemoneypod.com