Recession Risk: Which Sectors Are Least Vulnerable? If, and when, a recession ever occurs again in any of our lifetimes - certainly not in the golden age of Bidonomics, pain will be felt disproportionately as usual. Sectors which fare better will typically exhibit; Less cyclical exposure Lower rate sensitivity Higher cash levels Lower capital expenditures As such, Visual Capitalist's Dorothy Neufeld takes a look at the sectors most resilient to recession risk and rising costs, using data from Allianz Trade.  Recession Risk, by Sector As slower growth and rising rates put pressure on corporate margins and the cost of capital, we can see in the table below that this has impacted some sectors more than others in the last year: Generally speaking, the retail sector has been shielded from recession risk and higher prices. In 2023, accelerated consumer spending and a strong labor market has supported retail sales, which have trended higher since 2021. Consumer spending makes up roughly two-thirds of the U.S. economy. Sectors including chemicals and pharmaceuticals have traditionally been more resistant to market turbulence, but have fared worse than others more recently. In theory, sectors including construction, metals, and automotives are often rate-sensitive and have high capital expenditures. Yet, what we have seen in the last year is that many of these sectors have been able to withstand margin pressures fairly well in spite of tightening credit conditions as seen in the table above. What to Watch: Corporate Margins in Perspective One salient feature of the current market environment is that corporate profit margins have approached historic highs. As the above chart shows, after-tax profit margins for non-financial corporations hovered over 14% in 2022, the highest post-WWII. In fact, this trend has been increasing over the past two decades. According to a recent paper, firms have used their market power to increase prices. As a result, this offset margin pressures, even as sales volume declined. Overall, we can see that corporate profit margins are higher than pre-pandemic levels. Sectors focused on essential goods to the consumer were able to make price hikes as consumers purchased familiar brands and products. Adding to stronger margins were demand shocks that stemmed from supply chain disruptions. The auto sector, for example, saw companies raise prices without the fear of diminishing market share. All of these factors have likely built up a buffer to help reduce future recession risk. Sector Fundamentals Looking Ahead How are corporate metrics looking in 2023? In the first quarter of 2023, S&P 500 earnings fell almost 4%. It was the second consecutive quarter of declining earnings for the index. Despite slower growth, the S&P 500 is up roughly 15% from lows seen in October. Yet according to an April survey from the Bank of America, global fund managers are overwhelmingly bearish, highlighting contradictions in the market. For health care and utilities sectors, the vast majority of companies in the index are beating revenue estimates in 2023. Over the last 30 years, these defensive sectors have also tended to outperform other sectors during a downturn, along with consumer staples. Investors seek them out due to their strong balance sheets and profitability during market stress. Cyclical sectors, such as financials and industrials tend to perform worse. We can see this today with turmoil in the banking system, as bank stocks remain sensitive to interest rate hikes. Making matters worse, the spillover from rising rates may still take time to materialize. Defensive sectors like health care, staples, and utilities could be less vulnerable to recession risk. Lower correlation to economic cycles, lower rate-sensitivity, higher cash buffers, and lower capital expenditures are all key factors that support their resilience. Tyler Durden Sat, 12/02/2023 - 18:05.....»»

There are many jobs in the United States that have long hours, low pay, few benefits, clueless managers, or all of the above. Many Americans work in these positions that come with an exceptionally poor combination of low pay and higher incidences of injuries, from carpal tunnel syndrome to serious spinal injury. On top of […] The post This Is the Worst Job in America According to Data appeared first on 24/7 Wall St.. There are many jobs in the United States that have long hours, low pay, few benefits, clueless managers, or all of the above. Many Americans work in these positions that come with an exceptionally poor combination of low pay and higher incidences of injuries, from carpal tunnel syndrome to serious spinal injury. On top of that, many of these positions are declining in numbers, which increases job insecurity. A total of 495 occupations with data were considered to find the worst jobs in America. 24/7 Wall St. constructed an occupation index comprising three measures — projected employment growth, wages, and nonfatal injury and illness rate — using data from the U.S. Bureau of Labor Statistics. The three measures were weighed equally, which resulted in an occupation index score between zero and 100. Based on these measures, the lower the score, the worse the job.  People who weld, solder, or operate related machinery have the highest incidence of nonfatal workplace accidents, with 1,338 injuries per 10,000 workers, according to government figures. They earn a median annual wage of just $32,300, well below the median of $45,760 for all workers. On top of these issues, demand for these workers, currently numbered at about 32,000 nationwide, is projected to fall by nearly 8% by 2031, as robots continue to replace people in many manufacturing positions. Demand for nursing assistants and orderlies is growing as the U.S. population ages, but the workers needed to fill these positions barely earn a median annual salary of $30,000 (less for orderlies). Their rate of musculoskeletal injuries is comparable to firefighters and is way higher than police officers, construction workers, and even registered nurses, thanks to repeatedly lifting patients without assistance or protective gear. (Also see the labor laws your boss doesn’t want you to know about.) According to the Bureau of Labor Statistics, it is estimated that by 2031 there will be 4.7% more jobs in these occupations than the 1.34 million nursing assistants and 46,000 orderlies in the workforce as of 2021. However, the projected growth for all jobs is even higher, at 5.3% The worst jobs with the largest number of workers are nursing assistants, followed by licensed vocational nurses (entry-level health care providers), correctional officers, and paramedics. The fastest-growing jobs with high nonfatal injury rates are athletes, occupational therapy aides, and psychiatric technicians (aides who work in mental health facilities). (While these are jobs with high nonfatal injury rates, here are the 23 deadliest jobs in America.) With the exception of four professions, all of these jobs pay less than the $45,760 median wage for all workers, and all jobs except for athletes pay less than $49,000 annually full-time. Ambulance drivers earn the least among these occupations, at $29,120. Three other jobs earn less than $30,000: tire repairers, florists, and orderlies. Here are the worst jobs in America. 25. Tire repairers and changers Occupation index score: 41.6 out of 100 Projected growth, 2021-2031: 3.1% – #199 smallest change of 495 occupations Median wage, 2021: $29,580 – #38 lowest of 495 occupations Injury and illness rate, 2020: 368.3 per 10,000 employees – #25 highest of 495 occupations Employment, 2021: 95,300 24. Pourers and casters, metal Occupation index score: 41.1 out of 100 Projected growth, 2021-2031: -12.5% – #29 smallest change of 495 occupations Median wage, 2021: $45,850 – #216 lowest of 495 occupations Injury and illness rate, 2020: 261.8 per 10,000 employees – #54 highest of 495 occupations Employment, 2021: 6,700 23. Grinding and polishing workers, hand Occupation index score: 41.0 out of 100 Projected growth, 2021-2031: -18.7% – #13 smallest change of 495 occupations Median wage, 2021: $35,670 – #91 lowest of 495 occupations Injury and illness rate, 2020: 92.3 per 10,000 employees – #206 highest of 495 occupations Employment, 2021: 16,100 22. Ambulance drivers and attendants, except emergency medical technicians Occupation index score: 40.8 out of 100 Projected growth, 2021-2031: -1.0% – #113 smallest change of 495 occupations Median wage, 2021: $29,120 – #24 lowest of 495 occupations Injury and illness rate, 2020: 333.2 per 10,000 employees – #34 highest of 495 occupations Employment, 2021: 11,900 21. Athletes and sports competitors Occupation index score: 40.7 out of 100 Projected growth, 2021-2031: 35.7% – #492 smallest change of 495 occupations Median wage, 2021: $77,300 – #411 lowest of 495 occupations Injury and illness rate, 2020: 1,280.5 per 10,000 employees – #2 highest of 495 occupations Employment, 2021: 15,800 20. Coil winders, tapers, and finishers Occupation index score: 40.6 out of 100 Projected growth, 2021-2031: -17.9% – #17 smallest change of 495 occupations Median wage, 2021: $38,360 – #164 lowest of 495 occupations Injury and illness rate, 2020: 139.7 per 10,000 employees – #137 highest of 495 occupations Employment, 2021: 11,400 19. Tool grinders, filers, and sharpeners Occupation index score: 40.6 out of 100 Projected growth, 2021-2031: -7.9% – #56 smallest change of 495 occupations Median wage, 2021: $38,430 – #167 lowest of 495 occupations Injury and illness rate, 2020: 300.8 per 10,000 employees – #42 highest of 495 occupations Employment, 2021: 6,300 18. Floral designers Occupation index score: 40.5 out of 100 Projected growth, 2021-2031: -21.0% – #9 smallest change of 495 occupations Median wage, 2021: $29,880 – #49 lowest of 495 occupations Injury and illness rate, 2020: 28.7 per 10,000 employees – #363 highest of 495 occupations Employment, 2021: 44,400 17. Data entry keyers Occupation index score: 40.5 out of 100 Projected growth, 2021-2031: -24.7% – #4 smallest change of 495 occupations Median wage, 2021: $35,630 – #90 lowest of 495 occupations Injury and illness rate, 2020: 13.1 per 10,000 employees – #430 highest of 495 occupations Employment, 2021: 155,900 16. Licensed practical and licensed vocational nurses Occupation index score: 40.3 out of 100 Projected growth, 2021-2031: 6.3% – #318 smallest change of 495 occupations Median wage, 2021: $48,070 – #268 lowest of 495 occupations Injury and illness rate, 2020: 608.4 per 10,000 employees – #9 highest of 495 occupations Employment, 2021: 657,200 15. Electronic equipment installers and repairers, motor vehicles Occupation index score: 40.0 out of 100 Projected growth, 2021-2031: -23.4% – #7 smallest change of 495 occupations Median wage, 2021: $40,670 – #188 lowest of 495 occupations Injury and illness rate, 2020: 92.4 per 10,000 employees – #205 highest of 495 occupations Employment, 2021: 9,200 14. Emergency medical technicians and paramedics Occupation index score: 39.8 out of 100 Projected growth, 2021-2031: 6.9% – #336 smallest change of 495 occupations Median wage, 2021: $36,930 – #117 lowest of 495 occupations Injury and illness rate, 2020: 554.2 per 10,000 employees – #11 highest of 495 occupations Employment, 2021: 261,000 13. Switchboard operators, including answering service Occupation index score: 39.6 out of 100 Projected growth, 2021-2031: -24.0% – #6 smallest change of 495 occupations Median wage, 2021: $30,150 – #64 lowest of 495 occupations Injury and illness rate, 2020: 21.3 per 10,000 employees – #394 highest of 495 occupations Employment, 2021: 49,000 12. Textile knitting and weaving machine setters, operators, and tenders Occupation index score: 38.7 out of 100 Projected growth, 2021-2031: -15.1% – #24 smallest change of 495 occupations Median wage, 2021: $33,990 – #85 lowest of 495 occupations Injury and illness rate, 2020: 227.3 per 10,000 employees – #69 highest of 495 occupations Employment, 2021: 17,000 11. Print binding and finishing workers Occupation index score: 38.7 out of 100 Projected growth, 2021-2031: -24.8% – #3 smallest change of 495 occupations Median wage, 2021: $36,590 – #107 lowest of 495 occupations Injury and illness rate, 2020: 93.8 per 10,000 employees – #201 highest of 495 occupations Employment, 2021: 42,200 10. Cutters and trimmers, hand Occupation index score: 37.0 out of 100 Projected growth, 2021-2031: -28.4% – #2 smallest change of 495 occupations Median wage, 2021: $30,230 – #66 lowest of 495 occupations Injury and illness rate, 2020: 56.7 per 10,000 employees – #281 highest of 495 occupations Employment, 2021: 8,200 9. Word processors and typists Occupation index score: 36.1 out of 100 Projected growth, 2021-2031: -38.2% – #1 smallest change of 495 occupations Median wage, 2021: $44,030 – #195 lowest of 495 occupations Injury and illness rate, 2020: 40.3 per 10,000 employees – #327 highest of 495 occupations Employment, 2021: 46,100 8. Telephone operators Occupation index score: 35.1 out of 100 Projected growth, 2021-2031: -24.5% – #5 smallest change of 495 occupations Median wage, 2021: $37,630 – #139 lowest of 495 occupations Injury and illness rate, 2020: 249.8 per 10,000 employees – #61 highest of 495 occupations Employment, 2021: 4,000 7. Psychiatric aides Occupation index score: 32.3 out of 100 Projected growth, 2021-2031: 4.6% – #266 smallest change of 495 occupations Median wage, 2021: $30,260 – #67 lowest of 495 occupations Injury and illness rate, 2020: 771.9 per 10,000 employees – #7 highest of 495 occupations Employment, 2021: 41,000 6. Correctional officers and jailers Occupation index score: 31.7 out of 100 Projected growth, 2021-2031: -10.3% – #39 smallest change of 495 occupations Median wage, 2021: $47,920 – #261 lowest of 495 occupations Injury and illness rate, 2020: 688.1 per 10,000 employees – #8 highest of 495 occupations Employment, 2021: 402,200 5. Psychiatric technicians Occupation index score: 31.7 out of 100 Projected growth, 2021-2031: 10.9% – #407 smallest change of 495 occupations Median wage, 2021: $36,570 – #104 lowest of 495 occupations Injury and illness rate, 2020: 941.8 per 10,000 employees – #5 highest of 495 occupations Employment, 2021: 98,000 4. Occupational therapy aides Occupation index score: 31.4 out of 100 Projected growth, 2021-2031: 13.6% – #426 smallest change of 495 occupations Median wage, 2021: $33,560 – #84 lowest of 495 occupations Injury and illness rate, 2020: 975.0 per 10,000 employees – #4 highest of 495 occupations Employment, 2021: 3,500 3. Orderlies Occupation index score: 29.3 out of 100 Projected growth, 2021-2031: 4.7% – #271 smallest change of 495 occupations Median wage, 2021: $29,990 – #58 lowest of 495 occupations Injury and illness rate, 2020: 887.8 per 10,000 employees – #6 highest of 495 occupations Employment, 2021: 46,200 2. Nursing assistants Occupation index score: 26.0 out of 100 Projected growth, 2021-2031: 4.7% – #271 smallest change of 495 occupations Median wage, 2021: $30,310 – #68 lowest of 495 occupations Injury and illness rate, 2020: 1,023.8 per 10,000 employees – #3 highest of 495 occupations Employment, 2021: 1,343,700 1. Welding, soldering, and brazing machine setters, operators, and tenders Occupation index score: 14.7 out of 100 Projected growth, 2021-2031: -7.9% – #56 smallest change of 495 occupations Median wage, 2021: $38,580 – #171 lowest of 495 occupations Injury and illness rate, 2020: 1,337.6 per 10,000 employees – #1 highest of 495 occupations Employment, 2021: 32,300   Methodology To find the worst jobs in America, 24/7 Wall St. constructed an occupation index comprising three measures — projected employment growth, wages, and nonfatal injury and illness rate — using data from the U.S. Bureau of Labor Statistics. Each measure was normalized and weighted equally in the index, resulting in an occupation index score between zero and 100. The lower the score, the worse the job based on these measures.  Projected employment growth from 2021 to 2031 came from the Bureau of Labor Statistics’ Employment Projections program. Median annual wage for 2021 is for non-farm wage and salary workers only and came from the same source, citing the Occupational Employment and Wage Statistics program of the BLS. Nonfatal occupational injuries and illnesses involving days away from work per 10,000 full-time workers in 2020 came from the BLS’ Survey of Occupational Injuries and Illnesses Data. A total of 495 occupations with data were considered. Sponsored: Find a Qualified Financial Advisor Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now. The post This Is the Worst Job in America According to Data appeared first on 24/7 Wall St.......»»

Crime is up and down in the US in 2023, depending on the type of crime.  FBI statistics have often been used for measurements, but that may change. More recent information comes from the think tank Council on Criminal Justice. It showed murders down through the first half of the year across the 34 cities […] The post America’s Most Dangerous City appeared first on 24/7 Wall St.. Crime is up and down in the US in 2023, depending on the type of crime.  FBI statistics have often been used for measurements, but that may change. More recent information comes from the think tank Council on Criminal Justice. It showed murders down through the first half of the year across the 34 cities measured. However, property crime was up 34% from the first half of last year. As is the case with most demographic statistics, figures vary widely from state to state and city to city. A new study from Scholaroo titled “Safest Cities to Live in the U.S.” looked at 150 major US cities. The research also showed the most dangerous metros. Among the measures were the number of police officers, murders, sexual assault, sex offenders, and robberies. These were used to create an index. The authors wrote about the top of the list, “These cities not only provide a sense of security but also offer a high quality of life to their residents.” The “safe” list was topped by St. Paul, MN, the twin city of Minneapolis, with a score of 101. The lower the city’s number, the safer it is considered. It was followed by Port. St. Lucie, FL, and Cranston, RI. At the far end of the list were several cities that were large when America’s industrial sector was booming. The bottom of the list belonged to Detroit, which often does very poorly on this kind of ranking. Detroit was followed by Memphis, Baltimore, and Cincinnati. Another measure of metros includes the drunkest states. Detroit has been considered so dangerous recently that it has been called “The Murder Capital of America.” The city has been plagued by trends that often go hand in hand with crime rates. The population has dropped by half since 1950. Detroit’s median household income is $34.762, about half the national average. The poverty rate is almost 32%, which is more than double the national figure. The demographic trends are such in Detroit that it is unlikely to ever be a safe city again. Sponsored: Want to Retire Early? Here’s a Great First Step Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances? Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free. Click here to match with up to 3 financial pros who would be excited to help you make financial decisions. The post America’s Most Dangerous City appeared first on 24/7 Wall St.......»»

Trian Partners said it would take its "case directly to shareholders" after Disney rejected Nelson Peltz's request for board seats. Nelson Peltz wants seats on Disney's board.Reuters Nelson Peltz is launching a second proxy battle at Disney, ramping up the pressure on CEO Bob Iger. The activist investor's fund, Trian Partners, said it would take its "case directly to shareholders." The statement comes after Disney rejected Peltz's request for seats on the board. Nelson Peltz signaled he would launch a new proxy challenge against the Walt Disney Company, in a statement that ramped up the pressure on CEO Bob Iger.Peltz's Trian Partners fund, which holds a $3 billion stake in the entertainment giant, said it would take its "case directly to shareholders" after Iger turned down the activist investor's request for board representation."Since we gave Disney the opportunity to prove it could 'right the ship' last February, up to our re-engagement weeks ago, shareholders lost $70 billion of value," Trian said. "Disney's share price has underperformed proxy peers and the broader market over every relevant period during the last decade and over the tenure of each incumbent director."Disney's stock price is up about 3.5% in 2023, meaning it's lagging the benchmark S&P 500 index, which has climbed 19% year-to-date. It's valued at just under $170 billion, some $40 billion less than Netflix.Disney's move Wednesday to nominate Morgan Stanley CEO James Gorman and former Sky chief Jeremy Darroch to its board is "an improvement from the status quo," but won't "address the root cause behind the significant value destruction and missteps that this board has overseen," Trian added.Peltz has been loading up on Disney shares since February, when he called time on a first proxy battle against the House of Mouse after it agreed to cut costs by laying off about 7,000 employees.Trian had been seeking at least three seats on the Burbank, CA-based entertainment powerhouse's board, according to a Reuters report citing unnamed sources.Disney has also faced questions from shareholders about who'll succeed Iger as CEO when his contract ends in 2026. The former weatherman made a dramatic return to the company last year after Bob Chapek's dismissal.Blackwells Capital, another Disney shareholder, stood by Iger and praised the nominations of Gorman and Darroch. Its CEO Jason Aintabi slammed Peltz's proxy battle."Mr Peltz and Trian need to withdraw this costly and disruptive effort to displace experienced voices in the boardroom and substitute them with Mr. Peltz and his nominees," he said in a statement."Mindless, drum-beating activism is not the right strategy for shareholders. Disney's board is acting in the best interests of all shareholders and should be allowed the time to focus on driving value at one of America's most iconic companies without this fatuous sideshow," he added.Read the original article on Business Insider.....»»

The S&P 500 index rose 8.9% in Nov, tech stocks (Nasdaq 100) up 10.8%. Bond yields dropped; metal commodities thrived as the Fed hinted at rate cuts in 2024. VIX at pre-pandemic low; Berkshire Hathaway relying on 'buy & hold' thesis. read more.....»»

U.S. stocks powered higher on Friday, shrugging off tough talk from Federal Reserve Chairman Jerome Powell about it being too early to talk about rate cuts. The Dow Jones Industrial Average DJIA gained about 294 points, or 0.8%, ending near 36,245, according to preliminary FactSet data. The S&P 500 index SPX rose 0.6%, while the Nasdaq Composite Index COMP gained 0.6%. All three indexes also ended the week higher for five straight weeks. The gains allowed the Dow to clinch its highest close since since January 2022, while the S&P 500 finished at its highest level since March 2022, according to Dow Jones Market Data. The powerful rally in equities since early November has been attributed to easing inflation, falling long-term Treasury yields and expectations for rate cuts next year The 10-year Treasury yield BX:TMUBMUSD10Y fell to 4.225% on Friday, after hitting 5% in October, ending the week at its lowest yield since early September, according to DJMD.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

The latest trading day saw Comcast (CMCSA) settling at $42.21, representing a +0.76% change from its previous close. In the latest trading session, Comcast (CMCSA) closed at $42.21, marking a +0.76% move from the previous day. The stock exceeded the S&P 500, which registered a gain of 0.59% for the day. Meanwhile, the Dow gained 0.82%, and the Nasdaq, a tech-heavy index, added 0.55%.The cable provider's shares have seen a decrease of 1.44% over the last month, not keeping up with the Consumer Discretionary sector's gain of 9.13% and the S&P 500's gain of 9.16%.The investment community will be closely monitoring the performance of Comcast in its forthcoming earnings report. The company is forecasted to report an EPS of $0.80, showcasing a 2.44% downward movement from the corresponding quarter of the prior year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $30.39 billion, down 0.52% from the year-ago period.Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $3.93 per share and revenue of $120.71 billion. These totals would mark changes of +7.97% and -0.59%, respectively, from last year.Investors might also notice recent changes to analyst estimates for Comcast. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 0.65% higher. Comcast is currently sporting a Zacks Rank of #2 (Buy).From a valuation perspective, Comcast is currently exchanging hands at a Forward P/E ratio of 10.65. This indicates a discount in contrast to its industry's Forward P/E of 12.44.It's also important to note that CMCSA currently trades at a PEG ratio of 1.03. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Cable Television was holding an average PEG ratio of 1.03 at yesterday's closing price.The Cable Television industry is part of the Consumer Discretionary sector. Currently, this industry holds a Zacks Industry Rank of 154, positioning it in the bottom 39% of all 250+ industries.The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Comcast Corporation (CMCSA): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

The stocks will join the S&P 500 index on Dec. 18......»»

Fed Chairman Jerome Powell took a cautionary tone, saying it would be "premature" to guess when policy may begin to ease. Aaron Schwartz/Xinhua via Getty Images US stocks jumped Friday despite Jerome Powell's attempt to dampen rate-cut hopes. The Fed chair said it would be "premature" to guess when policy might ease. He also acknowledged policy is "well into restrictive territory," suggesting the tightening cycle is over. US stocks rose on Friday, building on last month's monster rally, despite Jerome Powell's attempt to dampen rate-cut hopes.At Spelman College in Atlanta, the Federal Reserve chief said it would be "premature" to guess when policy might ease. That comes after Fed Governor Christopher Waller on Tuesday appeared to inch closer toward the prospect of rate cuts.And while Powell added that higher rates are still possible, he also acknowledged policy is "well into restrictive territory," suggesting the Fed's tightening cycle is over. Bond yields tumbled after the remarks."Jerome Powell's ostensibly hawkish message to financial markets today appears to be taken in stride as the major indexes remain in positive territory," Quincy Krosby, Chief Global Strategist for LPL Financial, said in a note on Friday.Here's where US indexes stood at the 4:00 p.m. ET closing bell on Friday:S&P 500: 4,594.63, up 0.59%Dow Jones Industrial Average: 36,245.50, up 0.82% (294.61 points)Nasdaq Composite: 14,305.03, up 0.55%Here's what else happened today:Here's a rundown of Wall Street's 2024 forecasts on the stock market.The "buy" signal flashing in stocks is dead, as the monster rally reaches overbought levels, Bank of America said.The bull market in stocks may be on its last legs as consumers start to tap out, a Wells Fargo strategist said.In commodities, bonds and crypto:West Texas Intermediate crude oil dropped 2.04% to $74.40 per barrel. Brent crude, oil's international benchmark, shed 2.14% to $79.13.Gold inched 1.42% higher to $2,067.10 per ounce.The yield on the 10-year Treasury dropped by 12.6 basis points to 4.228%.Bitcoin was up 2.60% to $38,748.Read the original article on Business Insider.....»»

The economy's resilience in the face of the Fed's extraordinary tightening campaign has been a pleasant surprise, further reflected by upwardly revised GDP growth numbers for 2023 Q3. The Q3 earnings reports showed once again that companies have largely been able to defy the doom-and-gloom predictions.We are not suggesting that the earnings picture is great, but rather that it has proved to be a lot more stable and resilient than many had been willing to give it credit. Actual Q3 results came in better than expected, with earnings growth turning positive for the first time after three consecutive quarters of declines. There wasn’t much growth to write home about, but that is hardly surprising, given where we are in the economic cycle.The economy’s resilience in the face of the Fed’s extraordinary tightening has been a pleasant surprise. At this time last year, hardly any economist was projecting that the U.S. economy would generate the type of growth momentum that we saw in the recent upwardly revised GDP growth numbers for 2023 Q3. That said, it makes sense for growth to moderate going forward to reflect the cumulative Fed tightening and the higher-for-longer interest rates outlook.All of this has direct earnings implications as estimates for the coming periods get trimmed.To get a sense of what is currently expected, take a look at the chart below. It shows the earnings and revenue growth rates achieved in the preceding four quarters and current earnings and revenue growth expectations for the S&P 500 index for 2023 Q4 and the following three quarters.Image Source: Zacks Investment ResearchAs you can see, 2022 Q4 earnings are expected to be down -0.2% on +2.4% higher revenues. This follows the modestly positive earnings growth reading we saw in the preceding period (2023 Q3) and a period of declining earnings in the three quarters before that.Take another look at this chart before we go back to the ‘earnings recession’ question we raised at the top of this note.This chart, which accurately represents current bottom-up consensus earnings expectations aggregated to the index level, does not see an earnings recession over the next three quarters. If anything, revenue growth is trending up over this period.What we do see in the above chart is the three quarters of negative earnings growth from Q4 of 2022 to Q2 of 2023. Recessions are typically seen as two periods of declining growth.Looking at it this way, the earnings recession issue is the rear-view mirror at this stage, not something on the horizon.The chart below shows the earnings picture on an annual basis.Image Source: Zacks Investment ResearchIt isn’t just the next three quarters where the long-feared recession is missing in action, but actually over the next two years, as you can see above.The earnings recession proponents have been telling us for more than a year that earnings estimates were out-of-sync with the underlying economic reality and needed to be cut in a big way.We did see a period of significant negative estimate revisions that started in April 2022 and lasted for about a year. During that period, estimates in the aggregate declined by about -15% from peak to trough, with the magnitude of negative revisions to several sectors exceeding -20%. These included Construction, Consumer Discretionary, Technology, and Retail.Estimates started stabilizing in April 2023 and actually increased for several major sectors, including the Tech sector. This favorable revisions trend remained in place until October 2023, when estimates started moving lower again.The chart below shows how earnings growth expectations for the current quarter have evolved since the quarter got underway.Image Source: Zacks Investment ResearchEstimates for full-year 2024 have also been coming down. The chart below shows how the aggregate bottom-up earnings total for 2024 has evolved lately.Image Source: Zacks Investment ResearchThe concerning aspect of this negative revisions trend is that it reverses a period of stabilizing and even improving estimate revisions.The relatively sound explanation for this trend is that management teams are trying to anchor expectations to beat them easily. The problematic explanation would be that this is finally the beginning of the negative earnings revisions trend that the market bears had been warning us of.My money is on the former explanation, but you can bet that we will be watching this trend very closely.This Week’s Reporting DocketThe reality of an earning season is that it never ends completely. In fact, every quarter has this one period when the older reporting cycle hasn’t completely ended yet, but the new one has gotten underway.This week, we will enter such an overlapping stage when AutoZone AZO on Tuesday (12/5) is scheduled to report results for its fiscal quarter ending in November.We have several other companies, including Broadcom AVGO and Campbell Soup CPB, that will be reporting results for their fiscal quarters ending in October.It doesn’t matter to you how we categorize these quarterly reports for companies with fiscal periods ending in October and November. But if you are curious, we will tell you that the Broadcom and Campbell Soup reports will get clubbed as part of the 2022 Q3 bucket, while the AutoZone report will officially kick-start the 2023 Q4 reporting cycle for us. For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>> Looking Ahead to Q4 Earnings  Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Campbell Soup Company (CPB): Free Stock Analysis Report AutoZone, Inc. (AZO): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

The ongoing weakness in order levels mars the near-term outlook for the Zacks Industrial Services industry. The likes of SIEGY, GWW, ADRZY and GIC will gain from their heightened focus on enhancing digital capabilities. The Zacks Industrial Services industry is bearing the brunt of the contraction in order levels, as customers remain cautious about spending. Supply-chain constraints and flared-up input costs have added to its woes.Despite this current setback, the rise in e-commerce activities will be a key catalyst for the industry. Companies like Siemens SIEGY, W.W. Grainger, Inc. GWW, Andritz ADRZY and Global Industrial Company GIC are poised to deliver growth, backed by their initiatives to capitalize on this demand and efforts to gain market share. The companies have also been improving their productivity and efficiency to improve margins.About the IndustryThe Zacks Industrial Services industry comprises companies that provide industrial equipment products and MRO (maintenance, repair and operations) services. It includes routine maintenance work, emergency maintenance and spare part inventory control, which keep a facility and its equipment in good operating condition. Industry participants serve various customers, ranging from commercial, government and healthcare to manufacturing. The industry's products (power tools, hand tools, cutting fluids, lubricants, personal protective equipment and consumables) are utilized in production and plant maintenance. They are not directly related to customers’ core products or services. These companies reduce MRO supply-chain costs and improve customers' plant floor productivity by offering inventory management, and process and procurement solutions.Trends Shaping the Future of the Industrial Services IndustryContraction in Manufacturing Activity a Concern: Around 70% of the industry’s revenues are derived from sales in the manufacturing sector. Customer activity trends are historically correlated to changes in the Industrial Production Index. Per the Federal Reserve’s latest update, industrial production dipped 0.6% in October 2023, with manufacturing output falling 0.7%. Overall, industrial production has slipped 0.7% over the 12 months ended October 2023. The index for durable goods manufacturing was down 1.3% in October, registering a 1.6% decline in the 12 months ended October 2023. The Institute for Supply Management’s manufacturing index was 46.7% in October, contracting for the 12th month in a row. The average for the 12 months ended October 2023 is 47.4%. Customers have been curbing their spending amid the ongoing uncertainty in the global economy and persisting inflationary trends. The New Orders Index was 45.5% in October, languishing in the contraction territory for 14 months. Companies are still managing outputs appropriately as order softness continues. The industry has also been bearing the brunt of supply-chain issues. Some industry players have recently noted that supply-chain issues are easing. However, the delivery of goods from suppliers to manufacturing organizations has improved lately.Pricing Actions to Combat High Costs: The industry has been experiencing significant inflation levels, including higher labor, freight and fuel prices. The companies are witnessing labor shortages for some positions and incurring steep labor costs to meet demand. The industry players are focusing on pricing actions, cost-cutting measures, efforts to improve productivity and efficiency, and the diversification of the supplier base to mitigate some of these headwinds.E-commerce A Key Catalyst: MRO demand is significantly impacted by the evolution of e-commerce. Customers’ demand for highly tailored solutions, with real-time access to information and rapid delivery of products, is rising. Customers want to execute their business activities in the most efficient way possible, which often means online. The pandemic provided a significant push in e-commerce activities. In 2022, global retail e-commerce sales amounted to $5.7 trillion. Per Statista, the same is expected to see a CAGR of 9.3% over 2022-2027 and reach $8.15 trillion in 2027. In 2022, e-commerce accounted for nearly 19% of retail sales worldwide and is expected to be 25% by 2027. To capitalize on this trend, industrial services companies are heavily investing in improving their digital capabilities and increasing their share in e-commerce.Zacks Industry Rank Indicates Dull ProspectsThe group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bleak prospects in the near term. The Zacks Industrial Services Industry, an 18-stock group within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #156, which places it in the bottom 38% of 250 Zacks industries.Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.Before we present a few Industrial services stocks that investors can add to their portfolio, it is worth looking at the industry’s stock-market performance and valuation picture. Industry Vs. Broader MarketThe Industrial Services industry has underperformed the Zacks S&P 500 composite but beat its sector over the past year.Over this period, the industry has risen 8.7% compared with the sector’s growth of 0.7%. The Zacks S&P 500 composite has moved up 12%.One-Year Price Performance Industrys Current ValuationBased on the forward 12-month EV/EBITDA ratio, a commonly used multiple for valuing Industrial Services companies, we see that the industry is currently trading at 21.79X compared with the S&P 500’s 10.92X and the Industrial Products sector’s forward 12-month EV/EBITDA of 15.43X. This is shown in the charts below.Enterprise Value/EBITDA (EV/EBITDA) F12M RatioEnterprise Value/EBITDA (EV/EBITDA) F12M RatioOver the last five years, the industry traded as high as 33.49X and as low as 6.04X, with the median being 13.24X. 4 Industrial Services Stocks to Keep an Eye onGlobal Industrial Company: The company reported an 18.8% year-over-year improvement in revenues in the third quarter of 2023 and resumed organic revenue growth in the quarter. The top-line performance was led by the company’s e-commerce channel, as recent investments and actions to drive digital transformation and enhance the online shopping experience are bearing fruit. The company’s results have also benefitted from the acquisition of Indoff, which was completed in May 2023. Indoff is a strategic fit for Global Industrial's business and multi-channel sales model. Indoff's network of more than 350 sales partners extends GIC’s sales reach to new customers and markets. The company also generated a strong cash flow from operations and fully paid off the outstanding balance on the credit facility in the third quarter. The company has been making investments in growth, productivity initiatives, web and direct sales channels to strengthen its competitive position. It has recently been awarded a Vizient contract for floor cleaning equipment, which significantly enhances its healthcare market presence. GIC shares have gained 3.5% in the past three months.Port Washington, NY-based Global Industrial operates as a value-added industrial distributor of industrial and MRO products in North America. The Zacks Consensus Estimate for fiscal 2023 earnings indicates growth of 8.8% from the year-ago actuals. The estimate has moved up 2% over the past 30 days. GIC has a trailing four-quarter earnings surprise of 8.6% on average. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Price: GICAndritz: The company delivered strong year-over-year growth in revenues (aided by growth in all four business areas), earnings and net income in third-quarter 2023. Order intake increased in the business areas of Hydro, Metals and Separation. After entering the green hydrogen market with its first engineering order in the second quarter of 2023, the company booked its first order for the supply of a complete green hydrogen plant in the third quarter. Given that the company offers a broad product portfolio of sustainable solutions (renewable energy, recycling, biofuels, etc.) that customers need to achieve their ESG goals, the solid and sustained demand from this sector is aiding the company’s growth. The company’s shares have appreciated 3% over the past three months.Headquartered in Graz, Austria, Andritz offers a broad portfolio of innovative plants, equipment, systems, services and digital solutions for many different industries and end markets. The Zacks Consensus Estimate for ADRZY’s fiscal 2023 earnings indicates growth of 24% from the year-ago period. The estimate has been unchanged over the past 30 days. ADRZY carries a Zacks Rank #2 (Buy) at present.Price: ADRZYSiemens: The company reported strong fiscal 2023 results (ended Sep 30, 2023), delivering multiple records. Revenues for the year rose 11% on a comparable basis, backed by order growth of 7%. The Industrial business’ profit and margin surged to the highest levels and the company’s net income also hit a historic high. The free cash flow for Siemens Group was another record. The Digital business continues to grow rapidly and rose 12% in fiscal 2023, enabling the company to outperform its average annual growth of 10%. SIEGY ended the fiscal year with a record backlog, which will support its top-line growth in fiscal 2024. All its segments are expected to witness growth in fiscal 2024. The Industrial Business is expected to continue its profitable growth. In Digital Industries, global demand in the automation businesses, particularly in China, will pick up in the second half of the fiscal year. SIEGY has been capturing market share and witnessing continued strong demand for its hardware and software. This has been instrumental in the 13% gain in its share price over the past three months.Munich, Germany-based Siemens is a technology group focused on the areas of automation and digitalization in the process and manufacturing industries, intelligent infrastructure for buildings and distributed energy systems, smart mobility solutions for rail transport, and medical technology and digital healthcare services. The Zacks Consensus Estimate for the company’s fiscal 2024 earnings has been revised 2% upward in the past 30 days. The consensus mark indicates year-over-year growth of 1%. The company currently has a long-term estimated earnings growth rate of 5.5% and a Zacks Rank #3 (Hold).Price: SIEGYGrainger: The company continues to deliver improved results, aided by margin improvement in the High-Touch Solutions North America (N.A.) and Endless Assortment segments, and a solid operating performance. GWW is well-poised to gain from efforts to increase its customer base through incremental marketing investments and effective marketing strategies. The High Touch Solutions North America (N.A.) segment will continue to benefit from pricing actions and volume growth. The Endless Assortment segment is gaining from customer acquisitions at its MonotaRO business Cost-control measures undertaken by GWW will sustain margins. The company also focuses on improving the end-to-end customer experience by investing in its e-commerce and digital capabilities and executing improvement initiatives within its supply chain. Its shares gained 10.6% in the last three months.Lake Forest, IL-based Grainger is a broad-line, business-to-business distributor of MRO supplies, and other related products and services. The Zacks Consensus Estimate for 2023 earnings has inched up 0.3% in the past 30 days. The consensus mark indicates growth of 22.6% from the year-ago quarter’s reported number. GWW currently has a trailing four-quarter earnings surprise of 6.2%, on average. GWW has an estimated long-term earnings growth rate of 13% and a Zacks Rank #3 at present.Price: GWW  Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Siemens AG (SIEGY): Free Stock Analysis Report W.W. Grainger, Inc. (GWW): Free Stock Analysis Report Global Industrial Company (GIC): Free Stock Analysis Report Andritz (ADRZY): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Inside the best and worst performing ETFs of November. Wall Street has witnessed an impressive surge in November. Specifically, the S&P 500 has surged by 8.5% past month, and the Nasdaq Composite Index has seen a substantial rise of nearly 11%. Furthermore, the Dow Jones has achieved a 7.2% increase in November, marking its best month in about a year. The Russell 2000 was also not far behind as it scored 5.6% gains past month. The gains were broad-based and well spread out across various segments.The technology sector has led the month with about 13% gains, while the energy sector has been a laggard, losing 2.3%. The bets that the Fed rates have peaked resulted in this surge in the markets. As the growth sectors like technology relies on borrowing for superior growth, these outperform in a low-rate environment.Further, better-than-expected earnings added to the strength. The overall Q3 earnings picture remains stable and largely positive. The third-quarter reporting cycle is on track to record year-over-year earnings growth after three back-to-back quarters of earnings decline.The Personal Consumption Expenditures (PCE) Index grew 3% year over year for the month of October, down from 3.4% in September and in line with expectations. "Core" PCE, which bars the volatile food and energy categories, grew 3.5%, down from 3.7% from the month prior and also in line with what economists surveyed by Bloomberg had expected. This was yet another good news for the month.Upbeat consumer confidence is another reason for the uptick in the markets. Americans have spent by a record figure this year over the five-day Thanksgiving weekend lured by significant discounts across various categories, including beauty products, toys and electronics.According to a survey by the National Retail Federation (“NRF”), more than 200 million shoppers engaged in in-store and online purchases over the Thanksgiving weekend (Thanksgiving Day through Cyber Monday). This represents about 2% growth from the previous year and an increase from the NRF's initial estimates of 182 million.Against this backdrop, below we highlight a few winning & losing ETFs of November.Winning ETFs in FocusBreakwave Dry Bulk Shipping ETF BDRY – Up 83.4%The underlying Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC Index measure rates for shipping dry bulk freight. The expense ratio of the fund is 3.50%.ARK Innovation ETF ARKK – Up 37.5%ARKK is an actively managed Exchange Traded Fund that seeks long-term growth of capital by investing under normal circumstances primarily (at least 65% of its assets) in domestic and foreign equity securities of companies that are relevant to the Fund’s investment theme of disruptive innovation. The fund charges 75 bps in fees.ARK Fintech Innovation ETF ARKF – Up 36.6%ARKF is an actively managed Exchange Traded Fund that seeks long-term growth of capital. It seeks to achieve this investment objective by investing under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of companies that are engaged in the Fund’s investment theme of financial technology (“Fintech”) innovation. It charges 75 bps in fees.Global X Blockchain ETF BKCH – Up 36.6%The underlying Solactive Blockchain Index provides exposure to companies that are positioned to benefit from further advances in the field of blockchain technology. The fund charges 50 bps in fees.Losing ETFs in FocusSimplify Tail Risk Strategy ETF (CYA) – Down 89.8%This ETF is active and does not track a benchmark. The Simplify Tail Risk Strategy ETF seeks to provide investors with a standalone solution for hedging diversified portfolios against severe equity market selloffs. The fund charges 84 bps in fees.KraneShares Global Carbon Offset Strategy ETF KSET – Down 35.3%The KraneShares Global Carbon Offset Strategy ETF provides broad coverage of the voluntary carbon market by tracking carbon offset futures contracts. The fund charges 79 bps in fees.iPath Series B S&P 500 VIX Short-Term Futures ETN VXX – Down 35.2%The underlying S&P 500 VIX Short-Term Futures Index Total Return offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects views of the future direction of the VIX index at the time of expiration of the VIX futures contracts comprising the Index. The fund charges 89 bps in fees.United States Natural Gas ETF (UNG) – Down 23.5%The Natural Gas Price Index is the futures contract on natural gas as traded on the NYMEX. The expense ratio of the fund is 1.06%. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX): ETF Research Reports ARK Innovation ETF (ARKK): ETF Research Reports United States Natural Gas ETF (UNG): ETF Research Reports Breakwave Dry Bulk Shipping ETF (BDRY): ETF Research Reports ARK Fintech Innovation ETF (ARKF): ETF Research Reports Global X Blockchain ETF (BKCH): ETF Research Reports Simplify Tail Risk Strategy ETF (CYA): ETF Research Reports KraneShares Global Carbon Offset Strategy ETF (KSET): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment Research.....»»

"A November To Remember": The Best And Worst Performing Assets In November And YTD With December starting off strong, largely thanks to what the market is interpreting as dovish comments from Fed Chair Powell at his fireside chat, it is November that was truly a memorable month; in fact thanks to the biggest easing in financial conditions in history... ... November was the 2nd strongest November for the S&P since the 1980s (with 2020 the only stronger exception). Courtesy of Deutsche Bank, here is an extended performance review of various assets in November, which, as DB's Jim Reid and Henry Allen write, "saw a major rally after several weak months for markets as hopes for a soft landing and a dovish central bank pivot gathered pace." In fact, it was... The best month for the S&P500 since July 2022, which reversed three months of losses and recorded its best month of 2023 so far. The best month for a global 60:40 portfolio of equities and bonds since the positive vaccine news in November 2020. The best month for the Bloomberg US Bond Ag Index (+4.53%) since May 1985. This includes all IG-rated fixed debt, including Treasuries and spread products. Brent Oil (-5.2%) bucked the global risk-on trend in November, but Gold (+2.6%) hit a 6-month high. Overall, it was an incredibly strong month across the board, with 33 out of 38 of the non-currency assets in DB's sample in the green. Below we share more details across various assets: The high-level macro overview The biggest global story in November was the renewed speculation of a dovish pivot by the Fed, as investors grew increasingly confident that central banks were at the end of their hiking cycle. The rally can be traced back to the last FOMC meeting on November 1, where it was repeated that financial conditions had tightened ‘significantly’. The rally then got further support after a downside surprise in the US CPI report for October, with headline roughly unchanged at +0.04% and core rising by just +0.23%. Fedspeak added further encouragement and was cemented by an upward revision of US GDP for Q3 that showed annualised growth of +5.2%. This meant that over the course of November, markets raised their expectations of Fed rate cuts to fully price in a cut by the May meeting, having seen that as just an 8% chance at the start of the month. The good news narrative meant that the Bloomberg US aggregate bond index achieved its best month since May 1985, with a +4.53% gain. For instance, the 10yr yield fell from 4.93% to 4.33%, breaking a streak of six months of consecutive losses for 10yr Treasuries. That was also the biggest monthly decline for the 10yr yield since July 2021. The story was similar at the ECB as well, with a cut now fully priced by April, and the good news continued right to the end of the month after Eurozone inflation for November cooled more than expected to 2.4%. This in turn supported European fixed income as bunds rose +2.6%. And that optimism was evident globally, as Bloomberg’s global bond aggregate index achieved its best month since the height of the GFC in December 2008, up +5.04%. While fixed income advanced, we also saw a boost in risk appetite as the S&P 500 broke three months of consecutive losses to rise +9.1% in total return terms. The NASDAQ outperformed relative to the S&P 500, up +10.8%, as much of the rally remained concentrated in the tech sector. Meanwhile, the VIX index dropped - 5.22pts to 12.92pts, the largest monthly drop for the volatility measure since last November. Towards the end of the month it even closed at a post- pandemic low. European equities were also strong across the board, as the STOXX 600 finished the month up +6.7%. This demand for risky assets and the rally in US Treasuries likewise supported corporate debt in November, and US IG spreads tightened - 25bps to 104bps. The commodities space was more divergent in November, with energy prices seeing a decent decline, whereas others like precious metals saw a strong advance. For instance, oil prices fell in November with Brent crude down -5.2%, although there was a recovery towards the end of the month. That came after several outlets including Bloomberg reported the OPEC+ group would be announcing production cuts at the end of the month. Cuts were eventually confirmed yesterday, but the market remained concerned compliance may be weak, sending oil lower. By contrast, gold prices hit a 6-month high in November, ending the month up +2.6% at $2,036/oz. Which assets saw the biggest gains in November? Global Sovereign Bonds: Hopes for a soft landing drove the rally in sovereign bonds, as US Treasuries rose +3.6% in November, their best performance since August 2019. EU Sovereign bonds gained +3.0%, with specific advances for bunds (+2.6%), BTPs (+3.3%), as well as gilts (+3.1%). Equities: The risk-on tone meant that the S&P 500 gained +9.1% in its best month since July 2022, and the STOXX 600 rose +6.7% in its best month since last November 2022. The Hang Seng was an outlier, which traded flat at -0.2%, marking its fourth consecutive monthly decline. Credit: Demand for risky assets and the global bond rally saw US IG non-fin credit rise +6.2%, and European IG non-fin gained +2.4%. European HY and US HY rose  +2.8% and +4.6% respectively. Which assets saw the biggest losses in November? Oil: As fears of regional escalation of the Israel-Hamas conflict abated, Brent and WTI crude fell -5.2% and -6.2% respectively. Record high US crude oil production also added to the downward price pressure Summarizing the above, here is an abridged selection of global assets from the DB universe. Next, a detailed chart of the best and worst performing assets in November (in local currency and USD)... And finally, the same for the YTD period. More in the full note available to pro subs in the usual place. Tyler Durden Fri, 12/01/2023 - 12:38.....»»

The S&P 500's 8.9% rally in November was its 18th strongest month since 1950, and a chief strategist explains why it bodes well for 2024. The next six months could bring 10% returns for the S&P 500, according to historical data.G PAUL BURNETT/ASSOCIATED PRESS The S&P 500's 8.9% rally in November was its 18th strongest month since 1950, LPL Financial said. Seasonal tailwinds, falling bond yields, solid earnings, and expectations for Fed rate cuts helped fuel the rally. LPL's chief strategist said historical trends point to a bullish six months ahead. The stock market's rip-roaring November was the strongest month of 2023, and it could signal more gains in the future.Bullish seasonal tailwinds, declining bond yields, and expectations for the Federal Reserve to ease monetary policy all helped power the S&P 500 to 8.9% gains. The flagship index also broke a streak of three consecutive down months. Those gains mark the S&P 500's 18th strongest month since 1950, according to LPL Financial, which cited historical data. November also ranks as the fourth best month in the last decade, just behind July 2022, and November and April 2020. "November certainly lived up to its reputation as being the best month for stocks," Adam Turnquist, chief technical strategist for LPL Financial, wrote in a note Friday.And that bodes well for the coming six months. Based on the best 20 months for the S&P 500, he pointed out that the average forward returns over the next six months are 8.8%. What's more, the average returns over the next year after a top-20 month stand at 13%. "Looking at all periods back to 1950, there have now been 31 occasions where the S&P 500 has gained over 8% in a month," Turnquist wrote in a separate note published Thursday. "The average return a year later, from the end of the strong month, is almost 16%. This is significantly higher than the average for 12-month periods that followed months where stocks returned less than 8%."Read the original article on Business Insider.....»»

A contrarian indicator in the stock market is now in neutral territory, Bank of America said. Timothy A. Clary/Getty Images The "buy" signal flashing in stocks is dead, according to Bank of America. The bank pointed to its Bull & Bear contrarian indicator, which is in neutral territory. That's because stocks are nearing overbought levels, with 62% of global indexes passing key thresholds. The "buy" signal flashing in the stock market is now dead, as investors climbing onto the latest rally are pushing the market closer to overbought levels, according to Bank of America.The bank pointed to its Bull & Bear Indicator, a contrarian stock market gauge that flashes a buy signal when investors are too bearish on equities, and vice versa.In October, the indicator turned bullish thanks to investors' "extreme bearish" positioning in equities. But it has since edged into neutral territory, according to BofA."Note BofA Bull & Bear contrarian 'buy' signal triggered October 19th ended last week," a team of strategists led by the bank's Michael Hartnett said in a note on Friday.Though other areas of the market, such as US Treasurys, aren't overbought, stocks are "getting there," strategists warned, given that 62% of global stock indexes are over their 50-day and 200-day moving averages. "If you caught it, no need to chase it," the note added.That change comes amid a stunning rally in the US equity market, with the S&P 500 surging 9% last month as investors took in cooling inflation news and raised their expectations for Fed rate cuts.Markets are now pricing in a 57% chance rates will be lower than their current level by the first quarter of next year.But signs are building that equities may not be able to keep up their gains. Stocks, for instance, took in $2.6 billion in inflows over the last week, down from the $40 billion recorded in the prior two weeks, Hartnett's team previously said. And according to Morgan Stanley, pockets of the economy are already showing signs of a slowdown, with pain in US companies and households being masked by strong GDP growth.In fact, more than half of US states could already be in a recession, according to Philadelphia Fed data, given that the majority of them are already seeing their economies contract. Bank of America, though, recently retracted its view that the economy could tip into a mild recession this year, given inflation's steady decline in 2023. The bank has also raised its bets on the stock market in 2024, predicting the S&P 500 could touch a fresh all-time high by the end of next year. Read the original article on Business Insider.....»»

Recessionary Indicators Update: Soft Landing Or Worse? Authored by Lance Roberts via RealInvestmentAdvice.com, I previously discussed a slate of recessionary indicators with high correlations to recessionary onsets. However, as we head into 2024, many Wall Street economists predict a “soft landing” or “no recession” outcome for the economy. Are these recessionary indicators with near-flawless track records wrong this time? Will it be a soft landing in the economy or something worse? We must start our recessionary indicator review with the “Godfather” of them all – “Yield Curve Inversions.” Bonds are essential for their predictive qualities, so analysts pay enormous attention to U.S. government bonds, specifically the difference in their interest rates. As such, there is a high correlation between the yield curve’s slope and where the economy, stock, and bond markets generally head longer term. Such is because everything from volatile oil prices, trade tensions, political uncertainty, the dollar’s strength, credit risk, earnings strength, etc., reflects in the bond market and, ultimately, the yield curve. Regarding yield curve inversions, the media always assumes this time is different because a recession didn’t occur immediately upon the inversion. There are two problems with this way of thinking. The National Bureau Of Economic Research (NBER) is the official recession dating arbiter. They wait for data revisions by the Bureau of Economic Analysis (BEA) before announcing a recession’s official start. Therefore, the NBER is always 6-12 months late, dating the recession. It is not the inversion of the yield curve that denotes the recession. The inversion is the “warning sign,” whereas the un-inversion marks the start of the recession, which the NBER will recognize later. As discussed in “BTFD Or STFR,” if you wait for the official announcement by the NBER to confirm a recession, it will be too late. To wit: “Each of those dots is the peak of the market PRIOR to the onset of a recession. In 9 of 10 instances, the S&P 500 peaked and turned lower prior to the recognition of a recession.“ Here is the analysis in table form. It is worth noting that the market’s lead to the economic recession has shrunk markedly since 1980. As such, given the rally in the market this year, it is not surprising a recession has not been recognized as of yet. Which Yield Curve Matters Which yield curve matters mostly depends on whom you ask. DoubleLine Capital’s Jeffrey Gundlach watches the 2-year vs. 5-year spreads. Michael Darda, the chief economist at MKM Partners, says it’s the 10-year and the 1-year spread. Others say the 3-month and 10-year yields matter most. The most-watched is the 10-year versus the 2-year spread. While most mainstream economists focus on a specific yield curve, we track ten different economically important spreads from short-term consumption to long-term investments. Most yield spreads we monitor, shown below, are inverted, which is historically the best recessionary indicator. However, technically, the UN-inversion of the yield curve is the recessionary indicator. Notably, when numerous yield spreads turn negative, the media will discount the risk of a recession and suggest the yield curve is wrong this time. However, the bond market is already discounting weaker economic growth, earnings risk, elevated valuations, and a reversal of monetary support. As such, a recession followed when 50% or more of the tracked yield curves became inverted. Every time. (Read this for a complete history.) But it isn’t just the yield curve as a recessionary indicator that we are watching. Are Leading Indicators Wrong? We wrote “Economic Cycles Will Recover” in July after a significant drop in many leading economic indicators. To wit: “As with market cycles, the economy cycles as well. There is little argument that the current economic data is fragile, whether you look at the Leading Economic Index (LEI) or the Institute Of Supply Management (ISM) measures. As with the market cycle, long periods of slowing economic activity will eventually bottom and turn higher. The Economic Composite Index, comprised of 100 hard and soft economic data points, clearly shows the economic cycles. I have overlaid the composite index with the 6-month rate of change of the LEI index, which has a very high correlation to economic expansions and contractions.” As shown, the data has bottomed since July and has started to improve. Notably, these economic measures are at levels that previously marked the bottoms of economic contractions outside financial crises or economic shutdown events. As noted in July, the improvement in economic activity seen in Q3 and Q4 was expected. That improvement also supports the earnings cycle we have seen as of late. While there are reasons to remain suspect of an upturn in the current economic and market cycles, it is difficult to discount the historical evidence completely. Yes, the Federal Reserve has hiked rates aggressively, which weighs on economic activity by reducing personal consumption. However, the government continues to increase spending levels sharply, i.e., the Inflation Reduction Act and the CHIPs Act, which support economic activity. We see that same support to economic activity in the monetary supply (M2) as a percentage of the economy. While those monetary and fiscal supports are reversing following the “pandemic-related” spending spree, both are reversing. Eventually, the support provided by those massive infusions into the economy will fade. The hope is that the economy will return to normal functioning by then. The only issue is that we have no historical precedent to base those hopes on. Soft Landing Or Recession? The question of a “soft landing” or an outright “recession” is difficult to answer. It is certainly possible that all of the tell-tale signs of economic recession may be wrong this time. There is another possibility. Given the massive increase in activity due to a shuttered economy and massive fiscal stimulus, the reversion may take longer than expected. Both scenarios support the rising optimism of Wall Street economists in the near term. However, such also brings to mind Bob Farrell’s Rule #9: “When all experts agree something else tends to happen.” As noted previously, we would already be in a recession if we had entered this current period at previous growth rates below 4%. The difference is the contraction began from a peak in nominal GDP of nearly 12%. As noted above, a bounce in activity is not surprising after a significant contraction in the economic data. The question is whether that bounce is sustainable. Unfortunately, we won’t know the answer for quite some time. We know that Federal Reserve actions regarding hiking rates have about a 6-quarter lead over changes to economic growth. Given the last Fed rate hike was in Q2 of this year, such would suggest a further slowing in economic activity into the end of 2024. Investor Implications As noted above, the massive surge in monetary stimulus (as a percentage of GDP) remains highly elevated, which gives the illusion the economy is more robust than it likely is. As the lag effect of monetary tightening continues to weigh on consumption, the reversion to economic strength may surprise most economists. For investors, the implications of reversing monetary stimulus on prices are not bullish. As shown, the contraction in liquidity, measured by subtracting GDP from M2, correlates to changes in asset prices. Given that there is significantly more reversion in monetary stimulus to come, this suggests that lower asset prices will likely follow. However, the markets have recently been betting that a reversal of liquidity is coming. Given the inflationary implications of providing monetary accommodation, i.e., rate cuts and quantitative easing, it seems unlikely the Federal Reserve will act before the onset of a recession. If that assumption is correct, investors may set themselves up for disappointment. As we update our recessionary indicators, there is still no clear visibility regarding the certainty of a recession. Yes, this “time could be different.” The problem is that, historically, such has not been the case. Therefore, given this uncertainty, we must continue to weigh the possibility that Wall Street economists are correct in their more optimistic predictions. However, we must remain open to the probabilities that still lie with the indicators. No one knows what the future holds with any degree of certainty. Therefore, we must remain nimble in our investment approach and trade the market for what it is rather than what we wish it to be. Tyler Durden Fri, 12/01/2023 - 12:15.....»»

Carlyle Credit Income Fund (NYSE:CCIF) Q4 2023 Earnings Call Transcript November 30, 2023 Operator: Good day, everyone, and thank you for standing by. Welcome to the Carlyle Credit Income Fund Fourth Quarter Ending September 30, 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be […] Carlyle Credit Income Fund (NYSE:CCIF) Q4 2023 Earnings Call Transcript November 30, 2023 Operator: Good day, everyone, and thank you for standing by. Welcome to the Carlyle Credit Income Fund Fourth Quarter Ending September 30, 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Jane Cai from Investor Relations. Please go ahead. Jane Cai: Good afternoon, and welcome to Carlyle Credit Income Fund fourth quarter 2023 earnings call. With me on the call today is Lauren Basmadjian, the Fund’s Chief Executive Officer; Nishil Mehta, the Fund’s Portfolio Manager; and Nelson Joseph, the Fund’s Chief Financial Officer. Last night, we filed our end CSR and issued a press release and corresponding earnings presentation discussing our results, which are available on the Investor Relations section of our website. Following our remarks today, we will hold a question-and-answer session for analysts and institutional investors. This call is being webcast and a replay will be available on our website. Any forward-looking statements made today do not guarantee future performance, and any undue reliance should not be placed on them. An executive using a tablet to sign off on a line of credit for a small business. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the Risk Factors section of our annual report on the Form NCSR. These risks and uncertainties could cause actual results to differ materially from those indicated. Carlyle Credit Income Fund assumes no obligation to update any forward-looking statements at any time. With that, I’ll turn the call over to Lauren. Lauren Basmadjian: Thanks, Jane. Good afternoon, everyone, and thank you for joining CCIF first earnings call. The fourth quarter represented a period of transition as Carlyle took over as investment advisor of the fund on July 14, 2023. In connection with this change, the Fund’s name was changed to Carlyle Credit Income Fund and the Fund’s investment mandate changed to focus primarily on investing in the equity tranches of CLOs. In the first four months since taking over as investment advisor, we have successfully transitioned the fund including completing the following. Carlyle successfully deployed the initial cash proceeds into a diverse pool of CLO equity, generating a GAAP yield of over 18.16% on a cost basis. Carlyle declared a monthly dividend of $0.094, equating to 14.2% annualized dividend based on NAV at September 30th, higher than the 12% target dividend yield previously disclosed to investors. We leveraged the fund to meet our target leverage of 0.25x to 0.4x through the issuance of 8.75% Series A Term Preferred Stock due 2028. We issued $52 million through the initial issuance of $30 million on October 18th, an incremental $2 million through underwriters partially executing the greenshoe and $20 million add-on on November 21st. Carlyle now holds 41% of the common stock of CCIF following the completion of the $25 million tender offer and $15 million investment via newly issued shares and private share purchase. Carlyle’s ownership is held via the public entity, Carlyle Group, and not through a fund managed by Carlyle. This provides significant alignment of interest between the investment advisor and the fund. Switching gears, I’d like to discuss the current market environment for both secured loans and CLO equity. Carlyle is one of the world’s largest CLO managers with $50 billion of AUM, about one-third of Carlyle Credits $150 billion of AUM, providing us with differentiated insights into the senior secured loan and CLO markets. Despite inflationary pressures in the economy and higher base rates, the loan market continues to be resilient as evidenced by increased issuance in the third quarter, continued load defaults and underlying earnings growth. In the third quarter, new loan issuance totaled $76 billion, the highest level since Federal Reserve due to tightening monetary policy in the first quarter of ’22. The LTM default rate of the loan index has decreased to 1.3% from 1.7% in the second quarter, still below the historical average of about 2.5%. During the third quarter, we have seen high single digit average EBITDA growth in the roughly 600 companies to which Carlyle’s managed CLOs lend to. However, we continue to see downgrades in the senior secured loan market outpaced upgrades at approximately 25% of the loan market has been downgraded so far in 2023. This has resulted in an increase in loans rated CCC, and the average BBB exposure in CLOs is now over 6%. We expect default rates to return to historical averages of 2% to 3%, driven by certain underperforming over levered issuers with near-term maturities along with the backdrop of elevated rates. Turning now to the current CLO market. We believe CLO opportunities remain compelling as they continue to benefit from elevated base rates and attractive pricing in the secondary market. Secondary CLO equity benefits from the rebound in quarterly payments and payments averaged over 4% based on par, which is above the historical average. We have found returns in the secondary market are currently higher than the primary market as the cash-on-cash benefits from tighter liabilities. However, primary CLO equity, and specifically print and sprint opportunities can be attractive at certain points in time. Elevated base rates have helped to offset tighter arbitrage and we continue to see a good pace of CLO issuance as the U.S. CLO market saw $28 billion of new issuance in the third quarter and now has exceeded $100 billion year-to-date. Reset and refinancing activity remains limited due to historically wide debt costs. As a result, approximately 40% of the CLO market is expected to be out of the reinvestment period by the end of this year. I’ll now hand the call over to Nishil Mehta, our portfolio manager, to discuss our deployment and the current portfolio. Nishil Mehta: Thank you, Lauren. In connection with Carlyle becoming the advisor of the Fund in July. The prior advisor liquidated 97% of the real estate portfolio at closing. As a result, almost 100% of the Fund’s assets, it was cash on a closing date. We leveraged Carlyle’s longstanding presence in the CLO market as one of the world’s largest CLO managers and 15-year track record of investing in third-party CLOs to deploy the cash and CCIF into a diversified portfolio and approximately two months ahead of schedule. As of September 30th, our portfolio consisted of 24 unique CLO equity investments managed by 19 different Carlyle managers sourced entirely in the secondary market. We targeted recent vintages Tier 1 and Tier 2 managers with ample time remaining in the reinvestment period. Most of these portfolios have attractive cost of capital and with active management and time left in the reinvestment periods, managers can look to take advantage of periods of volatility to improve portfolios or reposition them. We utilize our in-house credit expertise, including over 20 credit analysts and portfolio managers to complete bottom-up fundamental analysis on the underlying portfolios of the CEOs. The following are some key stats on the portfolio as of September 30th. The portfolio generates a GAAP yield of 18.16% on a cost basis, supported by cash-on-cash yields of 26% on the October quarterly payments based on CCIF’s purchase price. We expect cash yields to remain strong due to elevated base rates and continued increase in the weighted average spread of the portfolios as limited and new issued volume is at higher spreads. The weighted average years less than reinvestment period is three years, the weighted average junior over collateralization cushion of 4.98%, a healthy cushion to offset the expected increase in the defaulted loans. Weighted average spread of the underlying portfolio was 3.7%. The percentage of loans rated CCC by S&P was 5.7%, providing a fair amount of cushion below the 7.5% CCC limit in CLOs. As a reminder, once the CLO has more than 7.5% of its portfolio rated CCC, the excess over 7.5% is marked at the lower fair market value and radiancy recovery rates and reduces over collateralization of cushions. The percentage of loans trading below 80 was limited at 3.7%. Now, I’ll turn it over to Nelson, our CFO, to discuss the financial results. Nelson Joseph: Thank you, Nishil. Today, I will begin with a review of our fourth quarter earnings. Total investment income for the fourth quarter was $2.2 million or $0.20 per share. Total expenses for the quarter was $3.6 million. Total net investment loss for the fourth quarter was $1.4 million or $0.14 per share. Net asset value as of September 30th was $8.42 share, a 1.8% increase from the $8.27 when Carlyle took over as the investment advisor. Our net asset value based on the bid side mark we received from a third-party on the CLO portfolio. We currently have one legacy real estate asset remaining in the portfolio. The fair market value of the loan is $2 million. We are currently in discussions with several parties to exit this position while maximizing proceeds. Subsequent to fiscal year-end, we put into place an aftermarket offering program that will allow us to efficiently and accretively issue common stock once the stock trades above the net asset value. Fourth quarter earnings do not represent the expected earnings for CCIF on a go forward basis due to the following. First, we ramped the initial portfolio throughout the fourth quarter therefore all of our investments have not earned a full quarter’s worth of income. We did not achieve our leverage target of 0.25 times and 0.4 times debt plus preferred to total assets until late November. The issuance of the Series A Term Preferred Stock is very accretive as the coupon is 8.75% while our portfolio GAAP yield is 18.16%. The preferred is also flexible capital with a five-year maturity and no financial covenants. CCIF incurred significant non-recurring expenses in the conjunction with the transaction totaling $1.9 million. Such non-recurring expenses included legal, accounting and advisory fees. We estimate operating expenses, excluding management fees, incentive fees, and cost of preferred will be in the $0.5 million to $0.6 million range per quarter going forward. We expect that the current dividend policy of $0.0994 per month will be covered by our GAAP net investment income on a go forward basis. The monthly dividend is further supported by cash on cash yield of 26% received on the October quarterly payments based on CCIF’s purchase price. The quarterly October cash payments totaled $5.81 million compared to $1.17 million payment for the October 2023 dividend. With that, I will turn it back to Lauren. Lauren Basmadjian: Thanks, Nelson. We believe the fund is now positioned to provide CCIF investors with an attractive dividend yield that is expected to be fully covered by GAAP net investment income through exposure to a diversified portfolio of CLO equity positions. Our approach allows us to remain focused on disciplined underwriting, prudent portfolio construction, and conservative risk management. I’d now like to hand the call over to the operator to take your questions. Thank you. See also 30 Worst Governed Countries in the World and 12 European Countries with the Best Economy Right Now. Q&A Session Follow Carlyle Credit Income Fund Follow Carlyle Credit Income Fund We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: [Operator Instructions] Our first question comes from the line of Mickey Schleien with Ladenburg Thalmann. Mickey Schleien: First question relates to the outlook for the fund in terms of, well, more specifically your outlook for the CLO equity market and loan markets for 2024. You did mention that you expect default rates to regress towards historical averages, but what other trends are you expecting for next year? Lauren Basmadjian: Sure. So we do expect default rates to increase to historical averages, so closer to the 2% to 3% and we’re also expecting continued downgrade in the market. That said, where loan prices are trading today, if you look at where they were before Ukraine, we’re still at a significant discount. So, there’s probably room for price appreciation during 20%, 24% in the loan market. Nishil Mehta: Yes, and Mickey, good to hear from you. On the CLO side given our expectations that we’re going to see defaults increase to historical averages, at least in the first half of the year. We expect CLO spreads to stay relatively flat. That’s what most of the industry analysts — excuse me, research analysts are predicting. So based on that, we think the current arbitrage on primary equity is going to continue to be on the tighter end of the historical range. But we still think that there will be periods of volatility, which will allow for more print and sprints on the primary side. On the secondary side, we think it’s a very attractive environment given cash on cash yields are elevated on a historical basis, and we think the periods of volatility will create opportunities to make investments at discounted prices. Mickey Schleien: Nishil, in terms of the primary market, the bulk of the activity this year has been in, what some folks refer to as captive funds. Besides tighter spreads amongst CLO liabilities, which may or may not happen. Are there other factors that you’re watching that could unlock a more normalized primary market? Nishil Mehta: Yes. So to think about that there’s two ways to really generate the return for CLO equity. One is just the spread between the underlying loans and the CLO debt. So, you could either have CLO debt tighten or conversely you could have loan spreads increase. We’re already at seeing elevated levels on the primary market, on the loan side but its limited issuance. We don’t think that part of the equation is really going to materially change from here. The other thing that could happen and what we saw a fair amount of in 2022 and pockets in ’23 is when you have periods of volatility where loan prices decline, and you’re able — the CLO manager is able to rent portfolios at discounted prices, which can create attractive opportunities for CLO equity. Mickey Schleien: Nishil, in terms of the outlook for the fund, I realize the advantages or the attractiveness of investing in positions that still have a long reinvestment period. But what sort of cash yields are you seeing in positions for post reinvestment CLOs? And is that something you’re considering adding to the portfolio? Nishil Mehta: That’s a really good question. So, one, I want to mention that our cash on cash yields based on the October payments that we received. As a reminder, CLO equity typically pays two to three weeks after quarter end, so most of our existing positions received payments in October. Cash on cash yield was around 26%. Now the deals that we invested in were primarily longer dated CLOs, typically have two plus years left in reinvestment. I believe the average in our portfolio is three years. On shorter dated deals or deals that are out of reinvestment period, the cash and cash yield can be somewhat volatile depending on where in the life cycle that the deal is out of reinvestment. Has it already amortized down significantly, or is it just exiting reinvestment? But you can see even more elevated cash on cash yields for deals out of our reinvestment. But those typically last for a short period because over time, repayments and prepayments that do come in the underlying portfolios will start paying down the debt and will start suppressing your cash on cash payment? So, we do think it’s a market, part of the market that’s typically not focused on by many investors. It’s something that we’re taking a closer look at because we think the relative risk adjusted returns can be attractive versus longer dated. And the fact that Carlyle is one of the largest deal managers, so we have significant credit expertise in-house. We can do the bottoms up analysis on that type of profile, which we do for longer dated as well. But for shorter dated deals, the portfolios start tending to become a little more static, so that’s even more important to do a fundamental analysis on the portfolio. Mickey Schleien: My last question relates to the dividend, your portfolio is generating yields sort of in line with your peers. Your operating expenses will ultimately be similar to theirs as well. I do understand that your cost of debt capital is higher than there is given that they issued when the markets were more borrower friendly. But do you see a path for your dividend yield to climb towards what they’re offering since your fund is currently the lowest yielding but your stock is a lowest yielding investment in the CLO closed end space? Nishil Mehta: Well, Mickey, right now we have a dividend yield. I think it’s around 15.5%, 16% depending on where the stock price is. You’re correct that Eagle Point, Australia and our two peers are trading at wider levels. We looked at it on a historical basis over the past two years. I think the average for both those funds was probably more in the 15%, 16% range on a dividend standpoint. So we’ve, based our current dividend policy based on where they’ve historically traded, just looking at two years data, right now, I think the sub industry is trading at historically higher dividend yields. So can we achieve dividend yields of where our peers are? I don’t think we can comment on that, but I don’t think we need to be there because we think the markets do normalize......»»

Fluence Energy, Inc. (NASDAQ:FLNC) Q4 2023 Earnings Call Transcript November 29, 2023 Operator: Good day, and thank you for standing by. Welcome to Fluence Energy Inc. Fourth Quarter 2023 Earnings Conference Call. [Operator instructions]. Please be advised that today’s call is being recorded. I would now like to turn the call over to you Lexington […] Fluence Energy, Inc. (NASDAQ:FLNC) Q4 2023 Earnings Call Transcript November 29, 2023 Operator: Good day, and thank you for standing by. Welcome to Fluence Energy Inc. Fourth Quarter 2023 Earnings Conference Call. [Operator instructions]. Please be advised that today’s call is being recorded. I would now like to turn the call over to you Lexington May, Vice President, Investor Relations. Please go ahead. Lexington May: Thank you. Good morning, and welcome to Fluence Energy’s fourth quarter 2023 earnings conference call. A copy of our earnings presentation, press release, and supplementary metric sheet covering financial results, along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures, are posted on the Investor Relations section of our website at Fluenceenergy.com. Joining me on this morning’s call are Julian Nebreda, our President and Chief Executive Officer; Manu Sial, our Chief Financial Officer; Rebecca Boll, our Chief Products Officer; and Ahmed Pasha, our incoming Chief Financial Officer. During the course of this call, Fluence’s management may make certain forward-looking statements regarding various matters relating to our business and company that are not historical facts. Such statements are based upon the current expectations and certain assumptions, and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our SEC filings for our forward-looking statements and for more information regarding certain risks and uncertainties that could impact our future results. You are cautioned to not place undue reliance on these forward-looking statements, which speak only as of today. Also, please note that the company undertakes no duty to update or revise forward-looking statements for new information. This call will also reference non-GAAP measures that we view as important in assessing the performance of our business. A reconciliation of these non-GAAP measures to the most comparable GAAP measure is available in our earnings materials on the company’s Investor Relations website. Following our prepared comments, we will conduct a question-and-answer session with our team. During this time, to give more participants an opportunity to speak on this call, please limit yourself to one initial question and one follow-up. Also note that while Amed is participating on today’s call, he is not going to be participating in the Q&A session. And thus, please direct your questions to the other members of the team. Thank you very much. I’ll now turn the call over to Julian. Julian Nebreda: Thank you, Lex. I would like to start my warm welcome to our investors, analysts, and employees who are participating on today’s call. This morning, I’ll provide a brief update on our business, and then review our progress and our strategic objective. Following my remarks, Manu will discuss our financial performance for the fourth quarter, and then I will discuss our outlook for fiscal 2024. Before we begin our discussion on the fourth quarter results, I’d like to spend a few moments addressing the announcement we made a few weeks ago. Manu has decided to step down as CFO of Fluence. He has done a remarkable turnaround job here, and as a result, he caught the attention of others. He received an offer he could not refuse, and more importantly, one that we could not match. As such, he will be leaving effective December 31st to become CFO of another company in a different industry. On behalf of the board, I would like to send a sincere thank you to Manu for the value he helped create at Fluence the past 15 months. Additionally, I would like to extend my warm welcome to Ahmed Pasha, our incoming CFO. Ahmed will officially assume this role on January 1, thus ensuring a sufficient transition period. Amed comes to us from AES, where he had a 30-year career, most recently serving as the CFO of the Utility Business Unit. I personally have worked with Ahmed for many years and I’m excited to continue that at Fluence. Now, I would like to turn the call over to Ahmed to make a few remarks. Ahmed Pasha: Thank you, Julian, and good morning, everyone. I am excited to be joining Fluence at a time when energy transition is achieving critical momentum, which presents so much opportunity for the company and for energy storage in general. As some of you may know, I have had some experience working with Fluence during my tenure at AES, including during the IPO process and more currently as CFO of the US Utilities Business, where Fluence is playing a critical role in helping to transform our energy mix. Since the announcement about two weeks ago, I have had the opportunity to meet with some members of Fluence’s team, and I’m very impressed with their experience and commitment to enabling the global energy transition. I look forward to working with them and help Fluence to achieve its ambitious growth and profitability goals, increase shareholders’ value, and deliver on its mission to transform the way we power the world. I would like to express my appreciation to Manu for his invaluable contributions to Fluence, particularly the strong foundation he has established to position us for continued success in the future. In the near-term, I will be getting up to speed on things, but I expect to meet with many of our investors and analysts in the coming months. I look forward to hearing their views and sharing how we plan to achieve our key financial and strategic objectives. With that, I will turn the call back to Julian. Julian Nebreda: Thank you, Ahmed. Beginning on Slide 4 with the key highlights. I’m pleased to report that in the quarter, we recognized $673 million of revenue. We continued to experience strong demand for our products and services, with new orders totaling approximately $737 million, highlighted by our solutions business contracting 2.1 gigawatt hours, our services business adding 1.6 gigawatt hours, and our digital business adding 1.8 gigawatts of new contract. Furthermore, our signed contract backlogs as of September 30, remain at $2.9 billion due to acceleration of select projects ahead of schedule. Turning to adjusted EBITDA, we delivered approximately $20 million for the quarter. This is a tremendous milestone, as we achieve this level ahead of schedule. As you recall, we expected to be close to adjusted breakeven for the fourth quarter. However, we were able to accelerate select projects that resulted in high revenue and margins for the quarter. One of the areas we’re concentrated on is our organizational speed, especially reducing our project cycle times. We see a lot of value in reducing our cycle times from the roughly 18 months to closer to 12 months. We believe it will take us at least two years to reduce our cycle times down to 12 months. This quarter’s results are a perfect example of what speed can do to bring increased value to both our customers and our shareholders. Lastly, our services and digital businesses, which together represent our recurrent revenue stream, continued to see traction. Our deployed service attachment rate, which is based on our cumulative active service contracts relative to our deployed storage, remains about 90%. As we have noted previously, we typically see a lag between signing solutions contracts and entering into a service contract, which is why we believe that cumulative attachment rate is important to monitor. Turning to our digital business, we had a very strong quarter as we were able to contract 1.8 gigawatts. More importantly, our digital assets under management increased by more than a gigawatt and the total number reached 15.5 gigawatts as of September 30. Turning to Slide 5, I’d like to highlight some of our accomplishments of the past fiscal year. As you may recall, a year ago we embarked on the transformation of our business. I’m pleased to report that we delivered on our commitments to the market. We grew our annual revenue by 85% and achieved our first profitable quarter. Importantly, we exceeded our original annual revenue guidance by more than $600 million, thanks to improved execution, ease in supply chains, and project timeline acceleration. We burned through almost all our legacy lower margin backlog, and we diversified our supply chain, including securing US-made battery cells with AESC. With the rollout of Fluence OS7, we have integrated Nispera into our hardware solutions on a go forward basis so that now every new store solution cell has Nispera bundle input. We built out our India technology center, and we published our inaugural sustainability report, a successful year that sets the tone for the years to come. Turning to Slide 6, I would like to discuss progress on our five strategic objectives. As you recall, at this time last year, we laid out five strategic objectives that will guide our actions, and markets that our investors who monitor and measure the company performance against. As we generated our first profitable quarter, I’m pleased to say the first phase of our transformation is complete. The second phase is just getting started, which will continue the theme of profitable growth, now measured through the growth of our nominal adjusted EBITDA and annual recurring revenue, or ARR, alongside the other strategic objectives that will continue to guide us on the second phase of our journey. First, on delivering profitable growth, I’m pleased to report that we exceeded our fiscal year 2023 guidance for both revenue and adjusted gross profit. Today, we’re initiating guidance for fiscal 2024. We expect total revenue for fiscal 2024 to be between $2.7 billion and $3.3 billion. In line with our commitment from our last call, we’re initiating guidance for adjusted EBITDA for fiscal 2024 to be between $50 million and $80 million. Second, we’ll continue to develop products and solutions that our customers need. As such, I’m pleased to report that in October, we launched Gridstack Pro, our larger enclosure providing higher density, faster installation, enhanced performance, and industry-leading safety. In conjunction with the launch Gridstack Pro, we also launched Fluence OS7, the latest Fluence operating system designed with enhanced capabilities and fully integrated with the new Fluence Battery Management System, which I will touch on more in a few minutes. Third, I’m pleased to report that we have secured all our battery needs for fiscal 2024 and 2025. Fourth, we’ll use Fluence Digital as a competitive differentiator and a margin driver. I’m pleased to report that we’re initiating guidance for our annual recurring revenue from our combined service and digital businesses. We expect to generate around $80 million of ARR by the end of fiscal 2024. And finally, our fifth objective, which is to work better. I’m proud to say that just recently, we have launched a new $400 million asset-backed lending facility or ABL. This credit facility is secured by our US inventory, and we expect it will provide us increased flexibility. More importantly, we believe that the ABL facility provides us additional tools to manage our working capital as we continue to grow. Turning to Slide 7, demand for energy storage continues to accelerate. In fact, our pipeline now sits at $13 billion, which is an increase of approximately $600 million from the third quarter, and a 50% increase compared to this time last year. Additionally, as I mentioned, with our backlog remained consistent at $2.9 billion, even after recognizing almost $675 million during the quarter. Importantly, we had several contracts that were signed just subsequent to quarter end, amounting to approximately $400 million, which provides us with strong visibility to achieving our 2024 revenue guidance. This is the eighth consecutive quarter we added more backlog than revenue recognized, further illustrating the growing demand for energy storage. Based on the conversations we are having with our customers and potential customers, we’re expecting to see topline year-over-year revenue growth from fiscal 2024 to fiscal 2025 of approximately 35% to 40%, showcasing the robust market for utility and energy storage. Turning to Slide 8, as I mentioned earlier, we launched our Gridstack Pro and OS7 in fiscal year 2024. These product launches are something our stakeholders expect periodically from us, as we continue to innovate and identify new ways to serve our customers’ needs. When you look specifically at our Gridstack Pro solution, this is a much larger product that integrates six battery racks and is designed for the largest and most complex utility scale projects globally. Gridstack Pro will offer our customers an (advanced) product with leading safety measures, faster deployments, first class reliability, and the flexible model of design that defines our product offerings. More importantly, for the US market, the Fluence battery pack will be available with US manufacturer battery sales and modules. This positions Gridstack Pro as one of the first energy store solutions to qualify for the 10% investment tax credit domestic content bonus under the Inflation Reduction Act. In conjunction with Gridstack Pro, we launched OS7, the next generation of our operating system. This iteration is meant to handle bigger and more complex projects, and can reliably control more than one gigawatt hour system, and it’s fully integrated with the Fluence Battery Management System. The software also provides a foundation for future enhancements to the architecture and enables component commoditization just as DC-DC converters. It provides new tools targeted to reduce our commissioning times, which as I mentioned earlier, is a key area for the company. And importantly, OS7 comes standard with our Nispera platform already preloaded. This an important feature as we expect to provide all our product deployments with basic Nispera access for a certain amount of time, after which customers will be required to sign a longer term contract if they wish to continue using the APM platform for the best facility or which to upgrade to additional features. Turning to Slide 9, I’m pleased to say that earlier this week, we secured a new $400 million ABL facility. This provides us with an additional tool to help manage our working capital. The new ABL facility features a lower cost of capital relative to our legacy revolving credit facility by approximately 50 basis points, and is secured by a US inventory balance, and is expected to provide us with more flexibility. As our US inventory balance increases, so does our borrowing capacity. This ABL facility replaces our smaller $200 million revolving credit facility that require cash collateralization. As we enter fiscal year 2024, we believe we have a very strong balance and an ample working capital facility necessary to scale our platform and achieve our 2024 guidance. Shifting to Slide 10, we’re introducing guidance for our annual recurring revenue, ARR. For our combined digital and business enterprises, our objective is to reach approximately $80 million in ARR by the conclusion of fiscal year 2024, implying a notable increase of 40% from the preceding year. This target is well supported by a robust service attachment rate exceeding 90% and a full 100% attachment rate for Nispera moving forward. Additionally, our strategic efforts are concentrated on advancing our Mosaic offering currently operational in three markets, Australia, CAISO and ERCOT. It’s essential to note that we’re in the process of refining this platform, with substantial contributions not anticipated before 2025, as previously communicated. In conclusion, I’m pleased with the achievements of the fourth quarter, although we’re mindful there’s still work to be done. We’ll look to continue this momentum as we progress into a new fiscal year. I will now turn the call over to Manu. Manu Sial: Thank you, Julian. I will begin by reviewing our financial performance for the fourth quarter, and then I will pass it back to Julian to discuss our guidance for fiscal year 2024. Please turn to Slide 12. Our fourth quarter revenue was $673 million, an increase of 52% from the prior year same period, and 25% above the third quarter. We continued to execute well as we were able to accelerate some of our legacy backlog previously anticipated for fiscal year 2024, resulting in higher-than-expected revenue for the fourth quarter. We continue to expect a small portion of our legacy contracts will be recognized in the first quarter of 2024. Looking at our adjusted gross profit for the quarter, we generated approximately $78 million, or approximately 11.6%, in line with the commitment discussed on our third quarter call, and reflects an increase from our third quarter margins of approximately 4.4%. More importantly, this is an increase from the previous fiscal year of 2.8%. I’m pleased to say we have demonstrated cost discipline as our operating expenses, excluding stock cost, as a percentage of revenue, continue to decline and ended up around 9% for the quarter. From a year-over-year comparison, our 2023 OpEx percentage of revenue, excluding stock compensation, came in around 10%, which is below our 2022 results of around 15%, further illustrating our cost discipline. As a result of our strong execution in the fourth quarter, we were able to generate $20 million of adjusted EBITDA, and as Julian mentioned, this signals the first phase of our transformation is complete. As we have now become profitable, our focus will shift to growing our nominal adjusted EBITDA and ARR, which we will discuss further. Turning to our cash balance, I’m pleased to report we ended the fourth quarter with $463 million of total cash, including short-term investments and restricted cash. This represents an increase of more than $45 million from the third quarter. As Julian mentioned, we secured a new $400 million ABL facility. This facility replaces our existing revolving credit facility and upsizes the amount of available borrow, and should enable us to better manage the peak to trough elements of our working capital. When you look at our total cash balance combined with our new ABL facility and supply chain financing, we have ample liquidity, putting us in an excellent shape to capitalize on the massive time in front of us. Please turn to Slide 13. From a cash standpoint, we increased our total cash position by 11% relative to the third quarter. For 2024, we’ll continue to invest in technology, resulting in an expected use of cash of approximately $85 million. From a recurring CapEx assumption, a good run rate is between $20 million and $25 million, as this is the level we expect in a steady state environment without large non-recurring investment items such as the technology, IT and systems investments we expect to make in fiscal 2024. As Julian will expand, we expect to generate around $65 million of adjusted EBITDA in fiscal 2024, and we expect to see approximately $65 million to $70 million change in operating cash due to increase in working capital requirements, and includes our deposits for a US manufactured battery cell from AESC. As we mentioned on our last call, our US battery cell supply agreement with AESC called for a downpayment of $150 million to reserve this capacity, which will be paid in installments over fiscal year 2024 and fiscal year 2025, and will be funded by liquidity and customer deposits for these batteries. The first $35 million will be paid in Q1 of fiscal year 2024, and another $35 million will be paid in the second quarter of fiscal year 2024. As Julian and I mentioned earlier, we have a strong balance sheet entering 2024 and have ample cash and facilities to support our 2024 guide and investments that will support multi-year industry growth. We also expect to generate free cash flow in fiscal year 2025. Before I turn the call back to Julian, I would like to express my appreciation to the Fluence board, management team, employees, and shareholders, for their trust. Serving as the CFO of Fluence has been one of the highlights of my career. If I were to participate in the energy transition space today, this would be my preferred spot. I take comfort in knowing Fluence is in an excellent position from a balance sheet perspective as I pass the baton to Ahmed, who will take Fluence into the next chapter. With that, I will turn the call back to Julian. Julian Nebreda: Thank you, Manu. Turning to Slide 14. As we previously discussed, we’re initiating guidance for fiscal 2024 of revenue between $2.7 billion and $3.3 billion. We expect our fiscal 2024 adjusted EBITDA to be between $50 million and $80 million, and we’re targeting our ARR to be around $80 million by the end of the fiscal 2024. I’d like to point out that our revenue guidance represents an increase of $300 million when compared to our prior fiscal year 2023 guidance midpoint plus our implied revenue growth of 35% to 40%. We now expect a fiscal 2024 revenue split of 30% in the first half, and 70% in the second half, which is an improvement to what we previously communicated to the market. As a result of this, we do expect our first quarter to produce negative adjusted EBITDA due to lower revenue on the execution of the remaining legacy contracts. From a margin perspective, we expect fiscal 2024 adjusted gross margins to be between 10% and 12%, which is an improvement from the fiscal 2023 adjusted gross margin of nearly 7%. From a cash standpoint, we currently expect to use approximately $85 million of cash in fiscal 2024, mostly funding non-recurring incremental investments in systems and IT infrastructure necessary to support our continuous growth. When looking out to 2025, we expect 35% to 40% year-over-year topline revenue growth. Additionally, we expect to begin generating free cash flow in fiscal 2025. Turning to Slide 15, we established ourselves as the preferred choice for utility scale storage solutions. Our competitive advantage is fortified by being able to offer our customers a full breadth of features, including bankability scale and supply chain management, power electronic engineering, and innovation digital software services, safety and cybersecurity. While some of our competitors may focus on only a couple of these elements, we often win because we aim to excel in all and provide them universally to our customers. This is corroborated by the 2023 S&P Global Battery and Storage Systems Integrator Report, which ranked the top 10 integrators globally based on install and contracted capacity. I’m pleased to say that Fluence was ranked number one both globally and in the US. In conclusion, I want to emphasize the key takeaways from this quarter’s results. Firstly, we had a robust financial performance contributing to a record-breaking annual revenue. Attaining profitability for the first time is a significant milestone, and we aim to capitalize on this achievement in fiscal 2024. Second, we proactively secured our future by solidifying our battery supply for fiscal years 2024 and 2025, thus ensuring our ability to meet our growing demand. Finally, the introduction of our new $400 million ABL facility provides us an additional tool to continue capturing the robust growth of the utility scale. As a reminder, while Ahmed is participating on today’s call, he will not be answering any question. This concludes my prepared remarks. Operator, we’re now ready to take questions. See also 18 Hardest Countries to Get Citizenship in 2023 and 25 Best Cities Where You Can Retire On $5000 A Month. Q&A Session Follow Fluence Energy Inc. Follow Fluence Energy Inc. We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. [Operator Instructions] Our first question comes from the line of George Gianarikas with Canaccord Genuity. Your line is now open. George Gianarikas: Good morning. Thanks for taking my question. So, maybe just to start, a lot has been made of the interest rate environment having an impact on project timing in the general renewable space and economics. Your results sort of speak of themselves for themselves, but what impact, if any, are you seeing on your business from the change in interest rates? Thank you. Julian Nebreda: Right. Thanks, George. I mean, as we have talked in the past, we work with the top tier developers in the US where this happens. And when you looked at them, they don’t really see any problems raising capital, accessing capital, or putting their projects together. So, we have not seen any delays due to cost of capital or access to capital in general. And I’ll tell you even more, in our case, because as you all know, our product costs have come down, with battery prices coming down significantly this year. In a way, when you do the math between what our costs, our lower costs compared with the higher, the 100 basis points generally that prices have gone – the cost of money has gone up during the year, essentially it’s a wash or maybe actually, you actually can do even better returns than what you do in the past. So, we haven’t seen any real effect of today in our customers’ segment. We do get the same information you get from other parties who we tend not to work with, where they had some problems raising money or raising money at competitive rates, well, but we haven’t seen it in our group. We’re segmented with a top tier group and that top tier group essentially had no problem of accessing capital. No George Gianarikas: Thanks. Maybe if I can ask one follow-up. Recently, one of your competitors, Wärtsilä, announced that they’re exploring strategic alternatives for their energy storage business. Any thoughts on that and any impact that it could have on your strategy going forward? Thank you. Julian Nebreda: I was surprised by it because the prior quarter, they say that this was going to be the growth engine. In this quarter, they say that – it’s difficult to know. We’ve been trying to understand where they come from. I prefer not to speculate, no, or at this stage, but I was surprised by this is a market that has offering tremendous growth. It’s a tremendous opportunity to create value for shareholders to play in the new energy space. So, why are they revising their view on the market? I have no idea, but I’ve been reading the investors they call and the rationale, at least it wasn’t clear to me, but we’ll continue looking at it. We’re on the other side of that spectrum and doubling down on this. This is a once in a life opportunity. It doesn’t get any better than what this market offers today. George Gianarikas: Thank you. Operator: One moment for our next question, please. Our next question comes from the line of Brian Lee with Goldman Sachs. Your line is now open. Brian Lee: Good morning. Thanks for taking the questions. First off, Manu, congrats and best of luck on your new role, and Ahmed, looking forward to working with you more closely going forward. A couple of questions I had was, I guess, appreciate the ARR breakout, $80 million end of this year or end of the fiscal year, 40% growth it seems like versus last year’s number. If I look at your bookings, though, in services and digital, it’s growing a lot faster. So, can you give us a sense of – I know there’s a little bit of a delay, but as we think about your initial 2025 revenue guidance consolidated, like how fast can you grow that ARR balance off of the $80 million, when I kind of look at your bookings volume growing at a much faster rate across services and digital. And then also what’s sort of the margins implied in that ARR balance? I suppose it’s – I would presume it’s pretty high, but can you give us a sense of what the range is? Julian Nebreda: I mean, on the growth rate, I do think that our view is that our ARR should grow at a higher rate than our solutions business. No, just the way it works, and the concept is very simple. We will = we have Nispera and Mosaic and our services business. Our services business, 90% of our growth rate of our sale base, Nispera roughly around 100%, and then Mosaic is on top of that. So – not on top of that, but we can add to it. So, I do think that we will see that growth being ahead of it. So, that’s conceptually where we are, and you can – we are growing 40% compared to what the 35 to 40 that we have set from last year. In terms of margins, the margins differ. No, I think that for their digital business, they’re more on the around 70%, while our service business is between 20% and 30%, depending on the type of service deal that we agree. So, the combined – there’s not a combined service = there’s not a combined margin, but you just think about it this way. And then in terms of the – today, I think that the grade or the majority of it is services, but I’ll see the – our view is that digital will grow at a higher rate than our services business, that you’ll see digital becoming a much more relevant part of our ARR as we move forward. So, that’s kind of the – that you should think about all of this. Brian Lee: That’s great. Yes, no, appreciate that color. That’s super helpful. Second question for me, and I’ll pass it on is, looking at that kind of preliminary fiscal 2025 revenue guidance, 35% to 40%, that’s quite robust. It puts you in kind of the $4 billion topline range, assuming you kind of get to the midpoint. Can you – it sounded, Julian, like you were mostly growing off of customer conversations and feedback, but can you give us a sense of beyond that, are there some background? Julian Nebreda: Brian, I lost you – we’re losing you a little bit. I don’t know. You mentioned the – you were talking about 2025 robust growth and then somehow you got – can you repeat that? Brian Lee: Yes, hopefully – maybe that’s clear. Sorry, I turned off the Bluetooth. I’m just wondering, what, beyond customer conversations, do you have any MSAs, contracted backlog? Like what else are you able to sort of key off on to get comfortable with the 35% to 40% additional growth into fiscal 2025? And then when you talk about batteries being secured for 2025, I mean, I would assume that is matching up to that revenue growth potential you’re looking at. Is it fixed pricing or is it indexed? Are you subject to any kind of cost volatility on the battery side, just having locked in the volume? Maybe, could you remind us where you are on the pricing side of things as well? Thank you......»»

Stocks like DoubleDown Interactive Co., Ltd. (DDI), Grand Canyon Education, Inc. (LOPE), Royal Caribbean Cruises Ltd. (RCL), Live Nation Entertainment, Inc. (LYV) and Comcast Corporation (CMCSA) are expected to benefit from cooling inflation. November turned out to be the best month of the year for Wall Street as stocks rallied on investor optimism that the Federal Reserve may be done with its interest rate hikes. The Dow and the S&P 500 rose 8.9% each for November while the Nasdaq gained 10.7% for the month. Experts believe that the rally will continue through the year-end given the high chances that the Fed may not go for another rate hike in its December policy meeting.The renewed vigor comes as the U.S. economy grew 5.2% in the third quarter at a seasonally adjusted annual rate, up from the earlier reported 4.9% and well above the consensus estimate of 5%.Also, inflation continued to ease in October. The Commerce Department reported on Nov 30 that personal consumption expenditure (PCE) was unchanged in October, while the core PCE index rose a meager 0.2%.Year over year, core PCE, which excludes the volatile food and energy prices, rose 3.5% in October compared to a rise of 3.7% in September.Easing inflation has raised hopes that the Fed may be done with its monetary tightening campaign after having raised interest rates by 525 basis points since March 2022.Dovish comments from several Fed officials that the economy may have a softer landing as inflation may steadily ease to 2% over time also led to optimism among investors.Market participants are now expecting a 76% chance that the central bank will go for a 25-basis point rate cut in May 2023, according to the CME FedWatch tool.The fresh optimism is also boosting consumer confidence, which rose to 102 in November, beating estimates of 101 and coming in well above October’s downwardly revised reading of 99.1. This was the first jump in consumer confidence in the past three months.Our ChoicesGiven this scenario, investors should invest in consumer discretionary stocks like DoubleDown Interactive Co., Ltd. DDI, Grand Canyon Education, Inc. LOPE, Royal Caribbean Cruises Ltd. RCL, Live Nation Entertainment, Inc. LYV and Comcast Corporation CMCSA.DoubleDown Interactive Co., Ltd. is a developer and publisher of digital social casino games. DDI is based in Seattle.DoubleDown Interactive’s expected earnings growth rate for the current year is 334.8%. The Zacks Consensus Estimate for current-year earnings has improved 9.3% over the past 60 days. DDI currently sports a Zacks Rank #1 (Strong Buy).Grand Canyon Education, Inc. is a regionally accredited provider of online postsecondary education services focused on offering graduate and undergraduate degree programs in its core disciplines of education, business and healthcare. In addition to its online programs, LOPE offers programs at its traditional campus in Phoenix, AZ and onsite at the facilities of employers.Grand Canyon Education’sexpected earnings growth rate for the current year is 17.1%. The Zacks Consensus Estimate for current-year earnings has improved 4.5% over the past 60 days. LOPE presently carries a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank  stocks here.   Royal Caribbean Cruises Ltd. owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. Additionally, RCL has a 50% investment in a joint venture with TUI AG, which operates the brand TUI Cruises. Royal Caribbean Cruises' brands primarily serve the contemporary, premium and deluxe segments of the cruise vacation industry, which also includes the budget and luxury segments.Royal Caribbean Cruises' expected earnings growth rate for the current year is 187.9%. The Zacks Consensus Estimate for current-year earnings has improved 7.3% over the past 90 days. RCL currently has a Zacks Rank #2.Live Nation Entertainment, Inc. operates as a live entertainment company. LYV operates through the Concerts, Ticketing, and Sponsorship and Advertising segments. Live Nation Entertainment has more than 580 million fans across all of its concerts and ticketing platforms in 46 countries.Live Nation Entertainment’s expected earnings growth rate for the current year is 132.8%. The Zacks Consensus Estimate for current-year earnings has improved 47.5% over the past 60 days. LYV presently has a Zacks Rank #2.Comcast Corporationi s a global media and technology company with three primary businesses: Comcast Cable, NBCUniversal and Sky. Beginning first-quarter 2023, CMCSA changed its presentation of segment operating results around its two primary businesses, Connectivity & Platforms, and Content & Experiences.Comcast Corporation’s expected earnings growth rate for the current year is 8%. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the past 60 days. CMCSA presently carries a Zacks Rank #2. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Comcast Corporation (CMCSA): Free Stock Analysis Report Royal Caribbean Cruises Ltd. (RCL): Free Stock Analysis Report Live Nation Entertainment, Inc. (LYV): Free Stock Analysis Report Grand Canyon Education, Inc. (LOPE): Free Stock Analysis Report DoubleDown Interactive Co., Ltd. Sponsored ADR (DDI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Wall Street wrapped up its best month of 2023, with all three major indices logging in blockbuster gains. Wall Street wrapped up its best month of 2023, with all three major indices logging in blockbuster gains. The Nasdaq Composite Index was the outperformer, rising 10.7% — the best monthly gain since July 2022. Meanwhile, the S&P 500 and Dow Jones Industrial advanced 8.9% and 8.8%, respectively. The former registered the best monthly gain since July 2022, whereas the latter marks its best monthly performance since October 2022.This has resulted in increased demand for leveraged ETFs as investors seek to register big gains in a short span. We highlight a bunch of the best-performing leveraged equity ETFs from different corners of the market that are leaders in their segments.These include Direxion Daily Homebuilders & Supplies Bull 3X Shares NAIL, MicroSectors U.S. Big Banks Index 3X Leveraged ETN BNKU, AdvisorShares MSOS 2x Daily ETF MSOX, MicroSectors Travel 3x Leveraged ETN FLYU and MicroSectors Solactive FANG & Innovation 3X Leveraged ETN BULZ. These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.The monster rally was driven by optimism that the Fed is done with interest rate hikes, which has pushed the Treasury yields down and rekindled investors’ risk-on trade. Yields on U.S. Treasuries saw the biggest monthly drop since 2008 (read: Treasury ETFs on Track for Best Month Since March).Better-than-expected earnings added to the strength. The overall Q3 earnings picture is stable and largely positive. The third-quarter reporting cycle recorded year-over-year earnings growth after three back-to-back quarters of earnings declines. However, there has been a notable acceleration in negative estimate revisions for the fourth quarter over the last few weeks, a development that reverses the largely favorable revision trend of the preceding six months (read: 5 Best ETF Charts of This Earnings Season).Leveraged ETFsLeveraged ETFs provide multiple exposures (2X or 3X) to the daily performance of the underlying index. These funds employ various investment strategies, such as the use of swaps, futures contracts and other derivative instruments to accomplish their objectives. Due to their compounding effect, investors can enjoy higher returns in a short period, provided the trend remains a friend.Since most of these ETFs seek to attain their goals on a daily basis, their performances could vary significantly from the performance of their underlying index or benchmark over a longer period compared with a shorter period (such as weeks, months or years) due to their compounding effect (see: all Leveraged Equity ETFs here).Investors should also note that leveraged ETFs involve a great deal of risk than traditional funds. They are often more costly and can be less tax-efficient, as they can see capital gains through the use of swaps and other derivative instruments.Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL) - Up 72%Direxion Daily Homebuilders & Supplies Bull 3X Shares provides leveraged exposure to homebuilders. It creates a three-times-long position in the Dow Jones U.S. Select Home Construction Index, charging an annual fee of 93 bps. Direxion Daily Homebuilders & Supplies Bull 3X Shares trades in a good average daily volume of about 325,000 shares and has accumulated $217.8 million in its asset base.MicroSectors U.S. Big Banks Index 3X Leveraged ETN (BNKU) – Up 64.6%MicroSectors U.S. Big Banks Index 3X Leveraged ETN seeks to offer three times exposure to the Solactive MicroSectors U.S. Big Banks Index. The ETN has accumulated $156.4 million in its asset base. MicroSectors U.S. Big Banks Index 3X Leveraged ETN charges 95 bps in annual fees and trades in an average daily volume of 1 million shares.AdvisorShares MSOS 2x Daily ETF (MSOX) – Up 62.4%AdvisorShares MSOS 2x Daily ETF is actively managed and designed for sophisticated investors looking to gain magnified exposure to the U.S. cannabis sector. It offers daily investment results that correspond to two times the daily performance of the AdvisorShares Pure US Cannabis ETF. AdvisorShares MSOS 2x Daily ETF has accumulated $26 million in its asset base. It charges 1.13% in annual fees and trades in a volume of 463,000 shares a day on average.MicroSectors Travel 3x Leveraged ETN (FLYU) – Up 58.8%MicroSectors Travel 3x Leveraged ETN offers three times exposure to the performance of the MerQube MicroSectors U.S. Travel Index. It has accumulated $5.2 million in its asset base and charges 95 bps in annual fees. MicroSectors Travel 3x Leveraged ETN trades in a paltry volume of 6,000 shares per day, on average (read: 5 ETFs to Make the Most of Solid Thanksgiving Travel Trend).MicroSectors Solactive FANG & Innovation 3X Leveraged ETN (BULZ) – Up 57.1%MicroSectors Solactive FANG & Innovation 3X Leveraged ETN seeks three times leverage exposure to the performance of the Solactive FANG Innovation Index, which includes 15 highly liquid stocks focused on building tomorrow’s technology today. It has an AUM of $755.2 million and charges 95 bps in annual fees. MicroSectors Solactive FANG & Innovation 3X Leveraged ETN trades in a volume of 159,000 shares a day on average. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL): ETF Research Reports MicroSectors U.S. Big Banks Index 3X Leveraged ETN (BNKU): ETF Research Reports MicroSectors FANG & Innovation 3X Leveraged ETN (BULZ): ETF Research Reports MicroSectors Travel 3X Leveraged ETNs (FLYU): ETF Research Reports AdvisorShares MSOS 2x Daily ETF (MSOX): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment Research.....»»