Weekly Markets Planner: Economics Calendar, Company Earnings, Investor Relations Events

Insights into key market performance and economic trends from Dan Kemp, Morningstar’s global chief research and investment officer.

The Morningstar US Market Index rose 0.9% over the past week as earnings season gathered momentum. Financial services companies were a key driver, as results from index heavyweight Bank of America BAC were well-received. Morningstar’s Investment Management team continues to see opportunities in US banks and many other parts of the investing universe, despite the apparent overvaluation of the US market at the index level. You can find out more in our recently published Global Convictions document.

In contrast, energy stocks fell sharply (2.7%), reversing gains seen earlier in the month, as the Brent Crude benchmark oil price fell to $73 per barrel. This decline coincided with the publication of the International Energy Authority’s World Energy Outlook, which suggests there will be excess energy supply for the foreseeable future due to the transition to more renewable sources. Morningstar recently published a report on the US renewable energy market.

You can track the earnings season calendar here and find out what Morningstar’s equity analysts make of the results here.

As the US presidential election approaches, we will likely be bombarded with confident predictions about how each potential outcome would impact capital markets and investing. Such predictions are dangerous, for two reasons. First, politics is naturally responsive to events, and an administration’s priorities can change dramatically. Second, our political views tend to infuse our forecasts, as we find it difficult to imagine that a party we oppose will benefit the country, so we naturally overweight the probability of views that align with our own.

Making investment decisions on this basis can lead to surprises that derail one’s portfolio. To avoid this, ensure your portfolio is not aligned with a single outcome. This can be likened to the difference between driving a race car and an SUV. A race car will get you somewhere quickly, provided the conditions on the track are as expected, but it will struggle if the track is rutted or winding. In contrast, an SUV will be slower in perfect conditions but will cope more successfully if the road is challenging. It is tempting to build a portfolio like a race car perfectly calibrated for your expectations (including political expectations). However, an SUV is a much better option, since the future is uncertain.

To determine whether you have an SUV or a race car, consider how your portfolio would perform if your worst fears about the election were realized. If such a scenario disturbs you, it may be worth adjusting your holdings to make your portfolio more flexible and able to withstand whatever the next few weeks throw at us. Morningstar portfolio manager John Owens recently wrote an article about this following a summer visit to Joshua Tree National Park.

This week’s most significant news will likely be Wednesday’s release of the Federal Reserve’s “Beige Book.” This anecdotal assessment of the US economy will be incorporated into investors’ expectations about the future of interest rates. It may impact bond prices and economically sensitive industries. However, since it’s competing for attention with the ongoing earnings season and noise from the election, only extreme conclusions are likely to gain much notice.

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Highlights of This Week’s Market and Investing Events

Monday, Oct. 21: Leading Indicators earnings from Zions Bancorporation ZION
Tuesday, Oct. 22: Earnings from GE Aerospace GE, General Motors GM, Verizon Communications VZ
Wednesday, Oct. 23: Existing Home Sales, Federal Reserve Beige Book, earnings from Coca-Cola Company KO, AT&T T, Boeing BA, ServiceNow NOW, Tesla TSLA
Thursday, Oct. 24: Initial Unemployment Insurance Claims report, Purchasing Managers Index Composite, New Home Sales, earnings from American Airlines Group AAL
Friday, Oct. 25: Durable Orders

Check out our full weekly calendar of economic reports, consensus forecasts, and corporate earnings.

For the Trading Week Ended Oct. 18

The Morningstar US Market Index rose 0.89%.
The best-performing sectors were utilities, up 3.28%, and real estate, up 2.95%.
The worst-performing sector was energy, down 2.74%.
The yield on 10-year US Treasury notes stayed the same at 4.08%.
West Texas Intermediate crude prices fell -8.86% to $69.37 per barrel.
Of the 703 US-listed companies covered by Morningstar, 490, or 70%, were up, 0 were unchanged, and 213, or 30%, were down.