Market Preview Week Of Jan. 23-27: Credit Cards, Railroads, Housing

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Q4'22 earnings season picks up steam next week. While the headliners are Microsoft (MSFT) and Tesla (TSLA), I’m focused on credit card companies Capital One Financial (COF) and American Express (AXP), railroads Union Pacific (UNP) and CSX Corporation (CSX), and home builder DR Horton (DHI) because they will give us important insight into the state of the American economy.

COF reports on Tuesday morning and AXP releases earnings on Friday morning. I want to see if the credit stress that showed up in Discover’s (DFS) results last week shows up in theirs as well.

Next I’ll be focused on the railroads, with UNP reporting on Tuesday morning and CSX reporting on Wednesday afternoon. A lot of goods are moved around the country via rail, so I want to see what Revenue Carload volumes look like. This could be an indicator that the economy is slowing.

Lastly I’ll be focused on DHI to see if it confirms the huge slowdown in new contracts KB Homes (KBH) reported a couple weeks ago.

If you look at the charts, you can see that none of these stocks have been hit very hard, besides for COF. I think they’re priced for a soft landing. If we get the hard landing I expect instead, they may have a lot of downside. Let’s see which narrative the data supports.

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