Morning Watchlist: Sunday Edition
The Week in Review A quick note from Behind the Markets
It's Sunday morning, and this week the loudest voice in the market isn't allowed to talk.
The Federal Reserve entered its pre-meeting blackout this weekend — no speeches, no hints, nothing until the October 27–28 decision that Wednesday's hot inflation report turned into a coin flip. Futures lean toward December for the next move, but "lean" is doing a lot of work in that sentence.
So for one week, earnings do the talking. Wall Street expects S&P 500 third-quarter profits to grow more than 30%, according to LSEG — and after a week when the market sold everything built on borrowed money, the week ahead is when the companies that pay cash hand in their homework.
Three stories this morning. Three pairings.
Let's get into it.
1) Steel Rings Monday's Opening Bell
The reporting week is bookended by two steelmakers before most investors finish their first coffee. Monday morning, Cleveland-Cliffs — the loudest name in American steel — is expected to swing from a 45-cent loss a year ago to a 24-cent profit, on revenue up about 21% to $5.72 billion. Wells Fargo upgraded it two weeks ago. Monday night, Steel Dynamics follows.
Why is steel suddenly one of the better businesses in America? Washington expanded the Section 232 steel tariffs in April, and the US-Canada trade war has since run a wall through the world's busiest steel-trading border — a wall with casualties on both sides of it: Cleveland-Cliffs shut operations at its own Canadian unit, Stelco, in Hamilton, Ontario in late September. Meanwhile the buyers keep coming. Steel Dynamics says customer order activity is strong, led by non-residential construction, energy, automotive, and industrial demand — the data-center build-out runs on beams and decking, not just chips — with "persistently low customer inventories" propping up prices.
And here's the part the crowd hasn't fully priced. Steel Dynamics already told you how the quarter went: in mid-September it guided third-quarter earnings to $5.34 to $5.38 a share. A year ago it earned $2.74. That's a double, pre-announced.
The pairing: Steel Dynamics (STLD) — Buy
Steel Dynamics is the junkyard and the mill under one roof: it buys yesterday's cars and appliances as scrap, melts them in electric furnaces, and sells tomorrow's beams — the recycling arm feeds the mills. (Encore, our October 11th pick, buys totaled loans; this one buys totaled cars. The junkyard business is having a year.) Its fabrication backlog sits nearly 50% above a year ago and stretches into early 2027, its new Mississippi aluminum mill has all three cold mills running with first commercial shipments due this quarter, and it bought back $261 million of stock during Q3 alone.
At Thursday's close near $241, the trailing P/E is 21.9 — the S&P's own multiple. But that trailing number gets rewritten Monday night: management's guide annualizes to better than $21 a share, which prices the run rate near 11 times. The honest caveats: run-rate math on a cyclical is the steel aisle's version of memory's oldest trap — spreads mean-revert; a quick US-Canada handshake folds the tariff umbrella (the risk we've carried on Eagle Materials and Commercial Metals since August); 5% money is a standing tax on the construction that drives demand; and the stock actually fell 4% the day it published that guidance, so the news is not a secret. It trades about 17% below its 52-week high of $288.74, with a small 0.9% dividend — the buyback is the payout.
2) The Robot Takes Its Road Test
Car week. General Motors reports Tuesday morning. Tesla reports Wednesday after the close, and Goldman Sachs says the numbers barely matter: Full Self-Driving, robotaxi, and Optimus updates will move the stock more than the $0.43 consensus EPS on roughly $27.9 billion of revenue. Tesla's third-quarter deliveries of 486,532 already beat estimates, and its Cybercab now runs limited service in Austin. (Our own exam lands between them — Lithia, the dealer we bought September 27th, reports Wednesday morning.)
So the whole aisle spends Wednesday arguing about who drives the car. Nobody argues about the seatbelt.
The pairing: Autoliv (ALV) — Buy
Autoliv is the world's largest maker of airbags and seatbelts, supplying nearly every major automaker on both sides of Wednesday's argument. A robotaxi fires the driver, not the seatbelt. If anything, a car with no driver's seat is all passenger seats — and safety regulation only ratchets in one direction.
At $116 Friday morning, the $8.5 billion company trades at 13.7 times trailing earnings against the S&P's 21, pays a 3.0% dividend, and sits mid-range in its 52-week band of $99 to $132 — with the average analyst target up at $134.85. It takes its own exam Friday morning: consensus calls for $2.26 on $2.73 billion. Honesty about the discount: last quarter it missed EPS by three cents (revenue beat, up 3.3%), half of the twelve covering analysts sit at Hold, and Jefferies' target sits right at the price. The risks, plainly: global car production is the squeezed consumer's showroom, and the tariffed steel we just celebrated in section one is Autoliv's input bill — it has to keep passing those costs through. The kill: production rolling over while safety content per vehicle stalls.
3) The First Christmas Report Card
Tuesday morning is the week's most crowded hour — GE Aerospace, GM, RTX, Northrop, and 3M all report before the bell. The smallest name on the list may read furthest ahead: Hasbro.
Toy shelves are stocked in the third quarter. Retailers place their holiday orders months before you see a single elf, which makes Tuesday's print the year's earliest reliable look at Christmas — ten weeks out. Consensus expects $1.88 a share, up 11.9%, on $1.47 billion of revenue. Hasbro has beaten estimates four quarters straight, by an average of 23.6%.
Its secret is cardboard. Wizards of the Coast — the Magic: The Gathering engine — is razors-and-blades printed on card stock: the game is cheap to join and the cards never stop coming. The Street models about $586 million from Wizards and digital gaming this quarter, with the traditional toy business near $847 million.
The pairing: Hasbro (HAS) — Watch
So why not Buy at 15.1 times forward earnings (17.7 trailing) against the S&P's 21? Because the crowd got to the toy chest first. The stock is up 37% in a year to $98.41 as of Thursday's close, about 8% from its $106.98 high; insiders sold $50.2 million of stock over the past twelve months with zero open-market buys; and Zacks' model — after four straight beats — doubts this particular print. That's the FirstCash shape from Friday's edition: right story, crowded register. The entrance: Tuesday's report converting the beat streak into a raised holiday guide at a saner price, or a markdown toward the high-$80s. The kill: a squeezed-shopper Christmas — the same wallet Dollar General and the whole trade-down migration track — trimming reorders, import costs squeezing toy margins, or that modest 2.5% Wizards growth estimate hardening into a trend.
Before You Go
That's the watchlist: steel's pre-announced double on Monday, Christmas's first report card on Tuesday, and the robot's road test on Wednesday — with a muzzled Fed watching from the back row. Two pieces of housekeeping. First, a calendar correction: Lam Research reports Wednesday after the close, a week earlier than the October 28th date we'd been carrying — the entrance is unchanged, the exam just moved up. Second, our own report cards stack deep: Synchrony, Ally, Western Alliance, Nasdaq, and Hasbro's print Tuesday; Crown Castle's entrance exam, Knight-Swift, First American, Moody's, Lithia, and CME Wednesday; Valero, FirstCash, and Deckers Thursday; SLB and Autoliv Friday; and next Sunday, Brazil votes — StoneCo's named entrance, win or washout.
The week's biggest moment comes Wednesday after the close, when Tesla, Meta, IBM, Texas Instruments, Lam Research, and Crown Castle all report within the same hour. Meta matters most: it's the first of the hyperscalers — the five companies expected to spend some $1.2 trillion on AI next year, per Goldman — to answer the only question last week left standing. Not whether the demand is real; TSMC settled that. Whose checkbook is paying for it. Meta builds from its own cash flow. Watch how the market treats the ones that don't.
Have a wonderful Sunday.
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Written by Behind The Markets