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The U.S. Week Ahead (Mar 9-13): As Equities Tank, What Do Corporations Think…?

By:

Senior Market Analyst at Interactive Brokers

A long list of U.S. companies will be flocking to several industry conferences in the week ahead, amid a maelstrom of disruptions, including widespread global illnesses and advancing new technologies.

Read part one of this story here.

The heavy slate of events is set to include updates, discussions and outlooks on the communications, industrials, healthcare and consumer sectors, as fears about the novel coronavirus infect supply chains, and the increasing use of social commerce takes another swipe at traditional retailers.

Events in the week ahead will feature J.P. Morgan’s Industrials Conference, which runs from March 10-12 in New York City.

March 10–12

  • J.P. Morgan’s Industrials Conference (New York, NY)

The meeting falls against a gloomy backdrop of increasing jitters about the ongoing COVID-19 scare.

Several companies that have joined the fight to stave-off the recently unleashed respiratory illness had seen a spike in their stock prices, amid rising demand for their products and services, before taking a more recent downturn as global risk aversion spurred a mass exodus from riskier assets.

Jitters spur downturn in sanitation stocks as supply chains get disprupted

U.S.-based firms, including Clorox (NYSE: CLX), 3M (NYSE: MMM) and Honeywell International (NYSE: HON) had been generally in the spotlight, as an increasing number of consumers waxed more cautious about contracting the virus.

Minnesota-based industrial and consumer goods company 3M said in late January, for example, it was increasing global production of its personal protective equipment products – including respirators – in response to the outbreak.

The firm noted it observed a rise in demand in China, as well as in other regions, and has been working with customers, distributors, and government and health officials to help them obtain needed supplies.

Also, Honeywell had reportedly ramped-up on its face mask production, citing a surge in demand for the product across North America, Europe and China.

In intraday trading Friday, shares of 3M and Honeywell – both slated to attend J.P. Morgan’s Industrials Conference – were down 1.5% and 3.23%, respectively, according to the IBKR Trade Workstation.

Meanwhile, as domestic and international travel – whether commercial passenger or industrial freight – also suffers from virus-related restrictions, investors will likely be keen to receive corporate responses to those developing situations as supply chains, and economic conditions, become further disrupted.

J.P. Morgan noted that its three-day event will provide both equity and debt investors an opportunity to explore key industry trends and individual company strategies through formal presentations and one-on-one and/or group meetings with companies in the aviation, transportation and industrials sectors.

The bank anticipates more than 500 equity and credit investors to attend, as well as 70 presenting companies.

March 10–11

  • BofA Securities 2020 Consumer & Retail Technology Conference (New York, NY)

The retail sector will also come into focus in the week ahead, with BofA Securities’ 2020 Consumer and Retail Technology Conference, slated to be held in New York.

While market participants expect the growth of on-line shopping to continue undeterred, and as data analytics, or ‘Big Data’, generally helps drive more nuanced, user-specific decisions, brick and mortar retailers have typically struggled and failed to compete with the digital momentum.

Demise of Brick and Mortar Businesses lifts EMT ETF

Indeed, in-store shopping experiences generally appear to lack enough entertainment stimulus, experienced staff and authentically engaging customer service needed to compete with the convenience and speed of digital check-out and delivery processes.

Some anecdotal evidence suggests that it is not unusual to find abandoned registers and skeletal staff with less-than-ideal product expertise roaming the floors among larger retailers such as Bed Bath & Beyond (Nasdaq: BBBY) and Macy’s (NYSE: M).

In fact, the general lack of in-store enthusiasm is likely having an adverse impact on the Macy’s brand in general, as the store recently said it will close around 125 stores in lower-tier malls and cut roughly 9% of its workforce, or about 2,000 positions, as part of a  three-year strategy – aptly titled ‘Polaris,’ likely as a nod to its iconic star-emblem branding.  

traditional retailers stocks plunge as advanced tech and covid-19 take a toll

Macy’s, as well as Lowe’s (NYSE: LOW) and Levi Strauss & Co (NYSE: LEVI), are each listed as among the participants in BofA Securities’ 2020 Consumer & Retail Technology Conference.

Meanwhile, on-line retailers appear to be suffering from the general malaise spurred by COVID-19.

The recent downbeat performance of certain retail-related exchange-traded funds (ETFs), for example, including industry disruptor ProShares Long Online/Short Stores ETF (NYSEARCA: CLIX) and the Amplify Online Retail ETF (NASDAQ: IBUY), suggest consumers may generally be waxing cautious about discretionary spending in general.

Instead, the uptick in the Proshares Decline of the Retail Store ETF (NYSEARCA: EMTY) appears to be grabbing the spotlight.

According to McKinsey & Company, U.S. retailers in 2017 and 2018, alone, had vacated a quarter of a billion square feet, while continuing to announce thousands of additional store closures through 2019.

the inverse relationship between Simon property group REIT and EMTY ETF

These empty retail spaces have bled into the value of certain real estate investment trusts (REITs) such as Simon Property Group (NYSE: SPG) – which owns malls where store closures such as Sears (OTCMKTS: SHLDQ), Kmart, Toys “R” Us and – more recently – Forever 21 have been growing more frequent.

Investors tuned-into corporate industry conferences in the week ahead may glean further updates on how trends in the communications, industrials, healthcare and consumer sectors are developing, as well as management responses to the novel coronavirus and associated consumer spending appetites.

In the meantime, select the Event Calendar option in the IBKR Trader Workstation for a full list of U.S. and global corporate events and earnings, dividend schedules, economic data, IPOs and more.

TWS events calendar
Disclosure: Interactive Brokers

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Author Security Holding: No Positions

The author does not hold any positions in the financial instruments referenced in the materials provided.

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