The Monday Briefing - Omicron, jobs figures, and some notable company earnings

Remember when Zoom was a fixture of our lives during lockdowns? It became so prominent as a way to maintain socially distanced communication that the term ‘zoom fatigue’ became a thing.

With Zoom’s (NASDAQ: ZM) share price down 20% last week as a reaction to management guidance of a more tempered outlook, it looked like much of the world was moving on from the heavy restrictions of the pandemic.

That was until news broke of the Omicron variant, in which Zoom picked back up somewhat as investors speculated social distancing measures may come back. It is too early to tell if the variant is more transmissible, with data to be analysed and released in around two weeks time. We'll be waiting for the results of the data before we jump to conclusions.

Moving onto some important economic figures that were released last week, US GDP for Q3 came in at 2.1% quarter on quarter growth, and the print for initial jobless claims was 199,000. This was below economists’ expectations of 260,000, which is a positive sign for the US economy.

The Core PCE Index was recorded to be 0.4%, in line with expectations. As we have noted, this is a key indicator of inflation that the Federal Reserve takes a close look at, so we were content to see these figures.

Looking towards the week ahead, it will be Australia’s turn to report GDP figures, which are expected to come in at 0.5% growth from the previous quarter.

Back to the US, we have a keen focus on the Purchasing Manager Index releases from ISM for both manufacturing and non-manufacturing. The ISM Manufacturing PMI is expected to come in at 61.0, where anything above 50.0 shows growth in activity. This index gives an indication of manufacturing activity such as new orders, production, employment, and supplier deliveries. The ISM Non-Manufacturing PMI is expected to be 65.2.

Regarding employment, nonfarm payrolls is expected to grow by 530,000, and the unemployment rate is expected to be 4.5%, down 0.1% from October.

There will also be some notable companies reporting next week.

As a recent addition to our Global Growth Portfolio, we are eagerly awaiting the earnings results from Salesforce.com (NYSE: CRM).

Many of the features we look for in an investment opportunity shows up with Salesforce.com. This includes being a company that is growing market share in a market that has a growing TAM (think growing their share of the pie in a growing pie), room for margin expansion, low churn rate, cross-selling ability, scale, and the goodwill that comes with their products known for being the best available. Its earnings per share is expected to come in at $0.92, with revenue of $6.8 billion.

Other companies reporting include tech companies Hewlett Packard (NYSE: HPQ) and Docusign (NASDAQ: DOCU) with revenue expected to come in at $7.39 billion and $532.61 million respectively. Consumers Dollar General (NYSE: DG) and Kroger (NYSE: KR) are also reporting, with earnings per share expected to come in at $2 and $0.65 respectively.

Have a great week,

Sam Waldron - Research Analyst