Barron's - USA (2021-11-22)

November 22, 2021

BARRON’S

11

PREVIEW THE PROBLEM: WINTER

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Monday 11/22Agilent Technologies

,

Keysight

Technologies

,and

Zoom Video

Communications

release quarterly

results.The National Association

of Real-

tors reports existing-home sales forOctober. The consensus estimate is fora seasonally adjusted annual rate of6.19 million homes sold, 100,000fewer than in September. Existing-home sales hit their post-financial-cri-sis peak at 6.73 million last Octoberand have fallen for much of this year,partly due to supply constraints, espe-cially at the lower-price end of thehousing market.Tuesday 11/23Analog Devices

,

Autodesk

,

Best

Buy

,

Burlington Stores

,

Dell Tech-

nologies

,

Dick’s Sporting Goods

,

Dollar Tree

,

Gap

,

HP Inc.

,

J.M.

Smucker

,

Jacobs Engineering

Group

,

Medtronic

,and

VMware

report earnings.IHS Markit releases

both the Manu-

facturing and Services PurchasingManagers’ indexes for November. Ex-pectations are for a 59.5 reading forthe Manufacturing PMI and 59 for theServices PMI. Both figures are slightlymore than the October data. Both in-dexes are off their peaks from earlierthis year, but higher than their levelsfrom a year ago.Wednesday 11/24Deere

reports fiscal fourth-quarter

2021 results.The Federal Open Market

Commit-

tee releases minutes from its early-November monetary-policy meeting.The Census Bureau

releases the

durable-goods report for October.Economists forecast a 0.2% month-over-month increase in new orders formanufactured durable goods, to $262billion. Excluding transportation, new

orders are seen rising 0.5%, matchingthe September gain.The BEA reports

personal income

and spending for October. The con-sensus call is for a 0.4% monthly in-crease in income after a 1% declinein September. Personal spendingis expected to rise 1%, month overmonth, a faster clip than September’s0.6% gain.Thursday 11/25U.S. bourses

and fixed-income mar-

kets are closed in observance ofThanksgiving.Friday 11/26It’s Black Friday

, one of the busiest

shopping days of the year and thetraditional kickoff to the holidayshopping season. The National RetailFederation estimates that a record$851 billion will be spent by U.S.consumers this November andDecember, a 9.5% increase from lastyear. U.S. exchanges have a shortenedtrading session on the day afterThanksgiving. The Nasdaq and NewYork Stock Exchange end trading at1 p.m., and the bond market closes at2 p.m. Coming Earnings

Consensus Estimate

Year ago

MAglient Technologies(Q4)

$1.

0.

Urban Outfitters (Q3)

0.

0.

ZoomVideo (Q3)

1.

$0.

T Analog Devices (Q4)

1.

1.

Autodesk(Q3)

1.

1.

More Earnings on Page 66.Consensus EstimateDay

Consensus Est

Last Period

M

October ExistingHome Sales

6,200,000 6,290,

W

October DurableOrders

0.00%

0.34%

Q3 GDP

2.3%

2.0%

OctoberWholesale Inventories

0.6%

1.4%

NovemberMichigan Sentiment- f

66.

66.

OctoberNew Home Sales

782,

800,

OctoberPersonal Income

0.40%

-1.0%

Unless otherwise indicated,times are Eastern.a-Advanced;f-Final;p-Preliminary; r-Revised

Source:FactSet

For moreinformationabout comingeconomic reports- and what theymean -go to Barron’s free EconomicCalendarat http://www.barrons.com

The BEA reports its second estimate of third-quarter gross domestic product. Economistsforecast a 2.2% annualized rate of growth,

Wednesdayhigher than the BEA’s preliminary estimate of 2% from late October.

Coal: Unloved,But Still HereSmall word choices mean a lot in climate-change agreements.At the COP26 meeting, the phrase most countries wantedwas a deal to “phase out” coal. What they got, after interven-tions by China and India, was a “phase down” of coal.

Investors are less mixed about coal’s future. Shares of

U.S. producer

Peabody Energy

fell 8% on Monday, while

Arch Resources

stock was off 6.6%. The VanEck Vectors

Coal exchange-traded fund closed in December, returning$35 million in assets to shareholders. At its height, the ETFhad more than $900 million in assets.

Still, the coal deal is a landmark, and more than 20 coun-

tries agreed to stop building or permitting coal plants. But ifIndia and China don’t reduce coal use, it will be tough to limitglobal warming to 1.5 degrees Celsius. The Climate ActionTracker consortium found that COP26 pledges would pro-duce twice the greenhouse-gas emissions by 2030 needed tomeet the goal. “There’s a nearly one-degree gap between gov-ernment current policies and their net-zero goals,” says BillHare, CEO of consortium member Climate Analytics.

The problem: European and Asian countries are compet-

ing for natural gas and relying on coal and gas to get themthrough winter. Countries “aim to prioritize supply securityover environmental goals, at least through the mediumterm,” writes Prakash Sharma, Wood Mackenzie’s Asia-Pa-cific head of markets and transitions. To hit the goal, coal’sshare in power generation needs to fall to less than 5% by2050, from 35% in 20

20, Wood Mack

enzie estimates.

Getting there will depend on how fast the world builds

solar, wind, and battery capacity, and whether technologieslike carbon capture can mitigate coal’s effect.

—Avi Salzman

Low EnergyDespite rising global demand for coal,investors have not been kind to coalproducers lately.Stock Performance of PeabodyEnergy and Arch Resources,2019to2021YTD Tough MathTo reach carbon net-zero by 2050requires replacing a huge amount ofcoal-fired power generating capacity.Global Share of Coal-Fired PowerGeneration in the Net-ZeroScenario, 2010 to 2050 Sources: FactSet; Int’l Energy Agency

Arch ResourcesPeabody Energy

2019

’

’

• -25 -50 -

0

25%

E=estimate.

Unabated CoalNon-Fossil Power

2010

’

’30E

’40E

’50E

0

(^755025)
100%
Illustration by Elias Stein