Week Ahead: The war playbook, China's recovery and Telsa's earnings

Tesla, Lockheed Martin and Netflix quarterly earnings reports are on watch this week

Lockheed Martin's ($Lockheed Martin(LMT.US)$) earnings report is one to watch this week, with its shares rising 10% last week, on the premise that its sales will rise as it’s the largest US defense contractor, with 65% of its contracts being with the Department of Defence. The focus will be on its outlook, and what’s been happening this current quarter, given it’s ramping up production to replenish US stockpiles, and to support Ukraine. And now the thinking is that the US, will potentially send support to Israel. The company makes combat aircraft, helicopters, satellites, and spacecraft, as well as ship and submarine combat technology and missiles and missile defense systems. It’s also been serving on Australia for 70 years from supplying pilot training, aerospace security, Super Hercules planes. So this is a company to watch. Also watch the Defence ETF, iShares ITA.

Tesla's ($Tesla(TSLA.US)$) earnings on are on watch with its profits expected to be squeezed in the quarter, on deliveries falling and on Tesla’s cutting vehicles prices this month. Tesla’s still this year's third best performer in the S&P500 up 103%. Keep an eye on the Tesla leveraged ETF TSLL$DIREXION DAILY TSLA BULL 1.5X SHARES(TSLL.US)$, which seeks to maximise and profit off Tesla's shares moving up.

Netflix's ($Netflix(NFLX.US)$) revenue will also be on watch on Wednesday and it's expected to have grown 7.7%, more than double the previous quarter's 2.7% expansion. The streaming platform added more than six million new subscribers while cracking down on password sharing among viewers. Price increases in the US and Canada are also expected to have boosted revenue per member. More broadly, consider, that the five biggest companies in the S&P 500 Index; Apple Inc, Microsoft Corp, Alphabet, Amazon.com, and Nvidia account for about a quarter of the market's size. And their earnings are expected to jump 34% from a year earlier on average.

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Strategies for investing and trading amid the war in the Middle East

1- We are amid a potential major geopolitical event, which will likely cause volatility in markets to considerably pick up and cause market tremors. So if you are trading the broad equity market, maybe via the world's biggest ETFs IVV $iShares Core S&P 500 ETF(IVV.US)$, VOO $Vanguard S&P 500 ETF(VOO.US)$, or the QQQ $Invesco QQQ Trust(QQQ.US)$ for example, potentially consider de-risking or taking some profits off the table, when the market rallies.

2- The oil price rose 6% last week, and that will start to impact consumers in about a week. But the oil price could rise again on concerns oil supply will be disrupted, as 30% of the world's oil is from the Middle East. Plus demand is expected to pick up ahead of peak oil demand season (northern hemisphere winter). This is all coinciding with China demand picking up and mounting concern that the US will need to top up on their own oil stockpiles, which are low. So consider getting exposure to oil. Institutional buying is starting to rise in oil companies that will benefit from higher oil prices, Occidental Petroleum$Occidental Petroleum(OXY.US)$ shares jumped ~ 5% last week, its biggest jump since June when Warren Buffett's fund increased its stake in the company. More broadly, institutional positioning increased in the Energy Selector ETF (XLE) $Energy Select Sector SPDR Fund(XLE.US)$.

3- Last week the gold price made its biggest weekly gain since the collapse of Silicon Valley Bank. Gold prices and gold company shares traditionally rally in times of war. So with tension rising, it's worth gaining exposure to gold. You could consider the iShares MSCI Global Gold Miners ETF$Ishares Inc Msci Global Gold Miners Etf(RING.US)$, which tracks the world's largest gold companies. Including Newmont$Newmont(NEM.US)$, Barrick Gold $Barrick Gold(GOLD.US)$, Newcrest Mining$Newcrest Mining Ltd(NCM.AU)$, De Gray Mining $De Grey Mining Ltd(DEG.AU)$, and Gold Road Resources $Gold Road Resources Ltd(GOR.AU)$ .

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Consider companies that benefit from China's economic growth clawing up

China's recovery is starting to get some traction, supported by stronger public investment and monetary easing. And this should be reflected in the 3Q GDP data due Oct 18, plus, hopes linger that China will announce US$140 billion in stimulus, including on infrastructure.

Last week, mining giant's BHP $BHP Group Ltd(BHP.AU)$ and Rio $Rio Tinto Ltd(RIO.AU)$ shares rose for the first time on a weekly basis in five weeks.

At the same time we have seen money managers buy into China's largest companies ranging from Tencent $TENCENT(00700.HK)$ , Meituan $MEITUAN-W(03690.HK)$, Ping An Insurance$PING AN(02318.HK)$, HSBC $HSBC HOLDINGS(00005.HK)$, Alibaba, etc .$BABA-SW(09988.HK)$. Some fund managers have been doing this via the HSI ESG Enhanced Index ETF, ChinaAMC HSI ETF.

Lastly, watch companies that make a large chunk of their revenue from China, as their shares may rally on positive news out of China (GPD, stimulus, etc.).

Tesla $Tesla(TSLA.US)$ makes ~22% of its revenue from China, Apple $Apple(AAPL.US)$ ~19% from China, Nike $Nike(NKE.US)$ ~ 14% of its revenue from China. BHP$BHP Group Ltd(BHP.US)$ makes 56% of its revenue from China, Rio Tinto $Rio Tinto Ltd(RIO.AU)$ 54% and Fortescue$Fortescue Metals Group Ltd(FMG.AU)$ makes 89% of revenue from China.

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The information is general in nature and has been prepared without considering your financial objectives, situation or needs. Consider the appropriateness of this information in light of your personal circumstances before making investment decisions.