December 7, 2020 BARRON’S 13
PREVIEW
RIDING HIGH WITH TESLA
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Monday 12/
Coupa SoftwareandToll Brothers
announce quarterly results.
Ecolabhosts a webcast to discuss its
environmental, social, and corporate
governance, or ESG, strategy.
SL Green Realtyholds its annual
investor conference for institutional
investors.
The Federal Reservereports con-
sumer credit data for October. Out-
standing consumer credit, which to-
tals nearly $4.2 trillion, is on pace for
a yearly decline for the first time in a
decade.
Tuesday 12/
AutoZone,Brown-Forman, and
Chewyreport quarterly earnings.
Newmonthosts a conference call to
announce its 2021 financial guidance
and discuss its longer-term outlook.
Salesforce.comholds its annual
investor day.
The National Federationof Inde-
pendent Business releases its Small
Business Optimism Index forNovem-
ber. Consensus estimate is for a 103
reading, slightly less than the Octo-
ber figure. The index currently
stands at a postpandemic high.
Wednesday 12/
Campbell Soupreports first-quarter
fiscal-2021 results.
Agilent TechnologiesandLowe’s
hold investor meetings.
Starbuckshosts its biennial investor
day.
The Bureau of LaborStatistics re-
leases the Job Openings and Labor
Turnover Survey, or JOLTS, for Octo-
ber. Economists forecast 6.44 million
job openings on the last business day
of October, roughly even with the
September data.
Thursday 12/
Adobe,Broadcom,Costco Whole-
sale, andOraclehost conference
calls to discuss earnings.
Walt Disneyholds an investor day
to expound on its direct-to-consumer
strategies.
The BLS releasesthe consumer
price index forNovember.Expecta-
tions are for 1.1% year-over-year rise,
while the core CPI, which excludes
volatile food and energy prices, is seen
gaining 1.5%. This compares with
increases of 1.2% and 1.6%, respec-
tively, in October.
Friday 12/
The University of Michiganreleases
its Consumer Sentiment Index for
December. Consensus estimate is for a
76.3 reading, slightly belowNovem-
ber’s 76.9.
The BLS releasesthe producer price
index for November. Economists fore-
cast a 0.1% month-over-month bump,
after a 0.3% rise in October.
Coming Earnings
Consensus Estimate Year agoMCasey’s General Store (Q2) $2.75 $2.Smartsheet (Q3) -0.14 -0.Stitch Fix (Q1) -0.16 0.Toll Brothers (Q4) 1.23 1.TAutoZone (Q1) 17.40 14.More Earnings on Page M36.Consensus Estimate
Day Consensus EstLast PeriodM October Consumer Credit $17.0 bil $16.2 bilT Q3 Productivity 4.9% 4.9%W October JOLTS Job Openings 6,436,000 6,436,TH November CPI 0.10% 0.00%November Treasury Budget -$200.0 bil -$284.1 bilF November PPI 0.10% 0.30%Michigan Sentiment - p 77.0 76.Unless otherwise indicated, times are Eastern. a-Advanced;
f-Final; p-Preliminary; r-Revised Source: FactSetFor more information about coming economic reports- and what they mean - go to Barron’s free Economic
Calendar at http://www.barrons.com
The European Central Bank announces its
monetary-policy decision. The ECB is expected
to keep its key interest rate unchanged at nega-
tive 0.5%, but it might announce new stimulus measures.
Thursday
Convertibles’
Winning Ways
Convertibles, hybrid securities that offer the security of a
bond and the upside of a stock, are having a blowout year.
“The convertible market in 2020 has experienced the good
version of the perfect storm,” says David King, co-manager
of the $2 billionColumbia Convertible Securitiesfund,
which was up 39% throughNovember.
The largest convertibles exchange-traded fund, the $6 bil-
lionSPDR Bloomberg Barclays Convertible Securities,
is trading at $79 and has returned 45% so far in 2020. Con-
vertible returns are the highest since 2009, topping the S&P
500 index, which is up 15% year to date, and junk bonds,
which gained 4.2% through the end ofNovember.
The strength in the $325 billion sector reflects many fac-
tors, notably the rise ofTesla,which has the largest weight-
ing in U.S. convertibles at 9%. Tesla accounts for half of the
36.6% return on the ICE BofA U.S. Convertibles index
throughNovember. Its largest convertible issue, a 2% bond
due in 2024, has risen more than sixfold to $938—its face
value is $100. Tesla stock is up sevenfold to $590.
There have also been big gains in reopening stocks like
Carnival,Southwest Airlines,Lyft,andPioneer Natural
Resourcesthat sold convertibles to shore up balance sheets
when the economy plunged. King notes that the sector also
benefited from stay-at-home companies likeWay-
fair,Chewy,Etsy,andZillowthat also issued convertibles.
Michael Youngworth,BofA Securities’ head of global
convertible strategy, says that convertibles have been
driven by the “asymmetric” nature of the market: “Con-
vertibles capture more return on the upside than on the
downside.”—Andrew Bary
Blowout
The leading convertibles ETF
outpaced the S&P in 2020.
Source: FactSet
Power Train
Nearly half of convertible perfor-
mance came from Tesla stock’s
performance in 2020.
SPDR Bloomberg Barclays
Convertible Securities ETF and
S&P 500 index, 2019 to YTD 2020
SPDR ETF
S&P 500
2019 ’
0
25
50
75%
2020
0
200
400
$
Tesla Shares, YTD 2020
Illustration by Elias Stein