Don’t Lose Sight of These Earnings Reports While Covid-19 Dominates the News

Big Media has changed from droning on about the election, to all Covid-19, all the time.

The primary reason, of course, is President Trump catching Covid-19 and being admitted to Walter Reed National Military Medical Center for treatment.

As I’m writing this, the top four stories in most of the big financial news outlets are all Covid-19-related:

  1. A new federal committee formed at the recommendation of the CDC and HIG has announced plans on who should get a future Covid-19 vaccine first, and how to deploy it (front line health care workers and first responders at the top of the list, etc.).
  2. New York City is locking down nine ZIP codes and closing down indoor and outdoor dining and non-essential businesses, essentially bringing those parts of the city back close to April’s lockdowns.
  3. Medical experts are raising the alarm about China’s rapid and high risk testing of experimental Covid-19 vaccines; it also raises the question of why they’re rushing out a vaccine if they really have contained the virus within their borders as they claim.
  4. The UK has developed a new, stricter lockdown plan to go into effect in parts of the country – the plan isn’t final, but a rising case load if unchecked could trigger different alert levels if approval is received.

This Could Put an End to COVID-19 and Kick Off a Potential 34,900% Sales Surge

Mind you, this is all on business feeds – before I even get to the actual business news.

And yet markets are responding to all this by rising overnight, being up 0.75% as I’m writing this.

In short, markets are still up to their old tricks. The new Covid-19 lockdowns are still very localized, and so continue to be overshadowed by stimulus and the fear of missing out that have been pushing stocks higher.

Until this changes, markets will continue rising after every pullback.

But rising markets don’t lift all stocks, as earnings this week will show.

Tomorrow morning, Paychex Inc. (PAYX) will give its quarterly report. The company does payroll processing and HR for small and medium businesses, so its report will give us good insight on how that segment of the economy is doing. The stock has been bumping up against four-month resistance levels.

I expect a good report will make it break through to new highs.

Then on Thursday morning, three other companies will give important earnings reports. Two are Covid-19 casualties – Carnival Corp. (CCL) and Delta Air Lines Inc. (DAL). Despite Friday’s proposed airline bailout, expect bad news from both. Travel, especially in cramped quarters with lots of other people around, is still months away from recovering at best.

The third Thursday morning report should be a much more pleasant one. Domino’s Pizza Inc. (DPZ) has outperformed pretty much everybody this year, and is still rising. Expect more good things in this report, and keep an eye on whether the company thinks growth will continue through the end of the year.

There might be a small sell-the-news moment for Domino’s here, but the stock is a buy whether or not that happens.

Great trading, stay safe out there and God bless you,

D.R. Barton, Jr.

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