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Eagle Bulk Shipping (EGLE) Dips More Than Broader Markets: What You Should Know

In the latest trading session, Eagle Bulk Shipping (EGLE) closed at $44.88, marking a -0.88% move from the previous day. Eagle Bulk Shipping (EGLE) closed the most recent trading day at $44.88, moving -0.88% from the previous trading session. This move lagged the S&P 500's daily loss of 0.84%. Elsewhere, the Dow lost 0.36%, while the tech-heavy Nasdaq lost 0.18%.Heading into today, shares of the shipping company had lost 6.39% over the past month, outpacing the Transportation sector's loss of 12.44% and the S&P 500's loss of 10.24% in that time.Investors will be hoping for strength from Eagle Bulk Shipping as it approaches its next earnings release. In that report, analysts expect Eagle Bulk Shipping to post earnings of $4.44 per share. This would mark a year-over-year decline of 9.76%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $127.49 million, down 16.74% from the year-ago period.Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $17.36 per share and revenue of $548.54 million. These totals would mark changes of +42.53% and +11.97%, respectively, from last year.Any recent changes to analyst estimates for Eagle Bulk Shipping should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Eagle Bulk Shipping is currently sporting a Zacks Rank of #4 (Sell).In terms of valuation, Eagle Bulk Shipping is currently trading at a Forward P/E ratio of 2.61. This represents a discount compared to its industry's average Forward P/E of 3.36.The Transportation - Shipping industry is part of the Transportation sector. This industry currently has a Zacks Industry Rank of 44, which puts it in the top 18% of all 250+ industries.The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.To follow EGLE in the coming trading sessions, be sure to utilize Zacks.com. Just Released: Free Report Reveals Little-Known Strategies to Help Profit from the  $30 Trillion Metaverse Boom It's undeniable. The metaverse is gaining steam every day. Just follow the money. Google. Microsoft. Adobe. Nike. Facebook even rebranded itself as Meta because Mark Zuckerberg believes the metaverse is the next iteration of the internet. The inevitable result? Many investors will get rich as the metaverse evolves. What do they know that you don't? They’re aware of the companies best poised to grow as the metaverse does. And in a new FREE report, Zacks is revealing those stocks to you. This week, you can download, The Metaverse - What is it? And How to Profit with These 5 Pioneering Stocks. It reveals specific stocks set to skyrocket as this emerging technology develops and expands. Don't miss your chance to access it for free with no obligation.>>Show me how I could profit from the metaverse!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 Eagle Bulk Shipping Inc. (EGLE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 22nd, 2022

Futures Bounce, Kashkari Unhappy As Post-Jackson Hole Rout Fizzles

Futures Bounce, Kashkari Unhappy As Post-Jackson Hole Rout Fizzles After revealing that he was so "happy" he danced a jig when stocks tumbled after Powell's J-Hole speech sparked a market rout on Friday, we can only imagine that Neel Kashkari's face looked like this when he saw the market update this morning... When he turned on his bbg this morning pic.twitter.com/h6QqIcfgSV — zerohedge (@zerohedge) August 30, 2022 ... because after two days of selling, risk assets are sharply higher this morning, with S&P futures rising 0.8% and Nasdaq 100 futs rising 1.1%, as investor sentiment stabilized, while 10Y Treasury yields slid 5bps, the BBG dollar index lost 0.3%, and oil tumbled, 4% reversing most of Monday's gains. In premarket trading, cryptocurrency-tied stocks climbed as Bitcoin rose: Marathon Digital and Coinbase lead cryptocurrency-exposed stocks higher in premarket trading as Bitcoin trades in a narrow band around $20,000 for the fifth consecutive session: Marathon Digital +5.7%, Coinbase +3.7%, Riot Blockchain +4.9%; Twitter slipped after Elon Musk cited recent accusations from a whistle-blower as a new reason to terminate the $44 billion takeover. Here are some other notable premarket movers: Bed Bath & Beyond (BBBY US) shares jump as much as 16% in premarket trading, putting the home products retailer on track for a third session of straight gains after Monday’s 25% surge. Baidu (BIDU US) shares rise as much as 4.5% in premarket trading, leading China stocks higher, after the internet search company’s profit beat analyst estimates. Gran TierraEnergy (GTE US) shares jump as much as 8.7% in premarket trading, after the oil & gas company said it would buy back as many as 36m shares. Nikola stocks slumped after filing for At-the-Market stock offering With markets once again very volatile, Credit Suisse recommended investors go underweight global equities (or at least short Credit Suisse bank itself) following the Jackson Hole symposium, while JPMorgan Chase strategists say that a reading on the US labor market that spells bad news for the economy is actually a bullish signal for stocks. “The markets are spooked because they are afraid that the Fed could create a hard landing -- that they’ll raise rates into a recession and that will be really painful for the economy and for corporate profits,” Terri Spath, chief investment officer at Zuma Wealth LLC, said on Bloomberg Television Minneapolis Fed President Neel Kashkari said sharp stock-market losses show investors have got the message that the US central bank is determined to contain inflation. “People now understand the seriousness of our commitment to getting inflation back down to 2%,” he said; it wasn't clear what he said this morning when he saw futures sharply higher. In Europe, the Stoxx 50 rallied 1.3%. DAX outperforms, adding 1.5%, FTSE 100 lags, adding 0.4%. Retailers, banks and tech are the strongest-performing sectors while energy companies underperformed as prices plunged on signs that the region is stepping up efforts to curb a crisis. Here are some of the biggest European movers today: Banks and lenders lead a broader rebound in European stocks as yields rise in the UK, with banks in the country resuming trade following Monday’s holiday. Adevinta shares rise as much as 16%, with analysts noting a beat on earnings from the classified advertising firm, along with a strong performance in its Mobile arm and reassuring guidance. Aker Solutions shares rise as much as 17% after the Norwegian offshore firm said it would form a joint venture with Schlumberger and Subsea 7. Pareto notes “significant” cost synergies. Bango shares jump as much as 15% after Liberum increased their price target to a Street high. The broker said the acquisition of NTT DOCOMO’s payments business helps accelerate Bango’s growth strategy. Munters shares rise as much as 8.7% after the Swedish industrial cooling and climate solutions manufacturer said it had received its “largest order ever” for a data center in the US. Technoprobe shares gain as much as 2.5% in Milan as Mediobanca increased its PT on the stock to EU9.10 from EU8.6 ahead of what the broker expects to be “another robust release” on Sep. 27. Diurnal Group shares soar as much as 136%, the most since January 2019, after Neurocrine Biosciences agreed to buy the specialty pharmaceutical company for 27.5p in cash per share. Carrefour shares fall as much as 2.7%, after JPMorgan cut its recommendation on the French grocer to neutral, noting “lackluster” operating momentum and a “lack of short-term catalysts.” Bunzl shares fall as much as 8.1%, the most intraday since March 2020, after the supplies distributor reported 1H results that disappointed, according to Interactive Investor. European mining stocks underperforms all other European industry groups as the regional equity benchmark advances, after iron ore and base metals fell amid concerns over demand in China. Warsaw stocks are worst performers globally so far in August, down 8.2%, on the way to largest monthly drop since April as a domino effect from Europe’s gas crisis hits Polish companies. Asian equities rebounded from a post-Jackson Hole slide, with investors focusing on earnings on the region’s busiest day this season. The MSCI Asia Pacific Index added as much as 1% following Monday’s 2.2% slump, lifted by technology and financial shares. Indian and Japanese shares were among the region’s best performers, while benchmarks in China and Hong Kong declined. Chinese search-engine operator Baidu Inc. and Industrial and Commercial Bank of China Ltd., the world’s biggest bank by assets, were among the 110 MSCI Asia Pacific Index members to report results Tuesday. Investors had been bracing for a poor earnings season in a quarter marred by China’s lockdowns, but an analysis by Bloomberg Intelligence shows the results have surprised to the upside so far. While Asian stocks are set for a 1.1% monthly slump in the wake of Federal Reserve Chair Jerome Powell’s hawkish comments last week, there’s a possibility that the region’s valuations could attract investors, said Christina Woon, an Asian equities investment director at Abrdn in Singapore. Asia has “more of a relative buffer in valuations” given investors are already quite cautious toward the region, Woon said in a Bloomberg TV interview. Many of Asia’s quality companies are “producing earnings that are holding up well,” which may support stock performances, she added. China tech stocks in Hong Kong slid amid lingering uncertainties over discussions to avoid the delisting of companies from New York stock exchanges. Asian emerging market ex-China equities saw a small net outflow last week after five weeks of inflows.   Japanese equities also rebounded after heavy selling on Monday, as investors digested the Federal Reserve’s continued stance to keep up its hawkish monetary policies and the yen stayed near 140 per dollar.  The Topix rose 1.2% to 1,968.38 as of the market close in Tokyo, while the Nikkei 225 advanced 1.1% to 28,195.58. Keyence Corp. contributed the most to the Topix’s gain, increasing 2.1%. Out of 2,169 stocks in the index, 1,839 rose and 257 fell, while 73 were unchanged. “There may be a slight effect from the weak yen,” said Mamoru Shimode, chief strategist at Resona Asset Management. The S&P/ASX 200 index rose 0.5% to close at 6,998.30, boosted by gains in banks and energy shares. All but one of the 11 sector gauge rallied, while mining shares edged lower as iron ore fell below $100 a ton for the first time in five weeks on signs a crisis in China’s steel industry is worsening.  Uranium shares including Paladin surged after Tesla Chief Executive Elon Musk said countries shouldn’t shut down existing nuclear power plants as Europe grapples with an energy crisis.  In FX, the Bloomberg dollar spot index falls 0.3%, its first drop in three days as the greenback weakened against all of its Group-of-10 peers apart from the Swiss franc. The euro rose above parity against the dollar. European bonds advanced as month-on-month numbers for German state CPIs showed signs of slowing. A euro-area economic confidence gauge fell to 97.6 in August, its lowest level in 1 1/2 years, and down from 99 the previous month. Analysts surveyed by Bloomberg had expected a decline to 98. The pound traded near a 2 1/2-year low versus the US dollar amid speculation the UK is headed for recession with further interest-rate hikes potentially deepening an economic downturn. Aussie eased after a sharp drop in building approvals, only to rebound in European trading. Meanwhile, China’s central bank set a stronger-than-expected yuan fixing for a fifth day, a sign it doesn’t want an excessively weak currency. The move highlights how greenback strength is a challenge for Asia as the region’s currencies slip. In rates, treasuries are near session highs as US trading gets under way Tuesday, holding most of gains that were paced by euro-zone bonds during European morning after release of German regional CPIs, with national gauge due out at 8am New York time.  US yields are lower by 2bp-5bp, 10-year TSY sliding by 5.8bp at 3.05%. Gilts curve bear-flattened with 2-year yield 12bps higher as money markets raise BOE tightening bets. Gilts slumped after yesterday’s English holiday as money markets cranked up BOE tightening bets. The UK 2-year yield briefly rose above 3% for the first time since October 2008. Peripheral spreads are mixed to Germany; Italy and Portugal widen, Spain tightens. Australian sovereign bonds extend an opening gain as iron ore slumped back under $100 for the first time this month. IG credit issuance lull expected to last through US Labor Day holiday Sept. 6. In commodities, WTI drifts 2.8% lower to trade near $94.32. Most base metals are in the red; LME copper falls 2.9%, underperforming peers. LME lead outperforms, adding 0.7%. Spot gold falls roughly $2 to trade near $1,735/oz. China was reported to provide Europe with an energy lifeline through the resale of surplus LNG, according to FT. UK PM candidate Truss is set to approve a series of oil and gas drilling licences in the North Sea in one of her first acts as PM, should she be elected, according to The Times. Canada said it is invoking the 1977 pipeline treaty with the US for the second time over Enbridge's (ENB) Line 5 (540k BPD) dispute. On the US calendar today, we get the August Conference Board consumer confidence, July JOLTS job openings, June FHFA house price index, Q2 house price purchase index; Bank of Montreal and Best Buy are among the companies expected to report results today. Market Snapshot S&P 500 futures up 0.9% to 4,066.25 STOXX Europe 600 up 0.8% to 426.16 MXAP up 0.9% to 158.61 MXAPJ up 0.6% to 518.99 Nikkei up 1.1% to 28,195.58 Topix up 1.2% to 1,968.38 Hang Seng Index down 0.4% to 19,949.03 Shanghai Composite down 0.4% to 3,227.22 Sensex up 2.1% to 59,168.51 Australia S&P/ASX 200 up 0.5% to 6,998.33 Kospi up 1.0% to 2,450.93 Gold spot down 0.0% to $1,736.80 U.S. Dollar Index down 0.36% to 108.45 German 10Y yield little changed at 1.46% Euro up 0.3% to $1.0029 Top Overnight News from Bloomberg Bonds are sliding toward the first bear market in a generation, burning investors who erred in bets that central banks would pivot away from rapid interest-rate hikes. The Bloomberg Global Aggregate Index, which tracks total returns from investment- grade government and corporate bonds, is within a percentage point of falling 20% from its peak after another bout of selling following the Federal Reserve’s Jackson Hole symposium The number of container ships headed for the California ports of Los Angeles and Long Beach -- a traffic jam that once symbolized American consumer vigor during the pandemic -- declined to the lowest level since the bottleneck started to build two years ago European energy prices plunged on signs that the region is stepping up efforts to curb a crisis that threatens to tip the region into recession with winter approaching The European Union is set to meet its gas storage filling goal two months ahead of target as the bloc braces for a tough winter with Russia limiting supplies and energy contracts trading at elevated levels throughout the continent China has rolled out “more forceful” economic policies this year than it did in 2020, Premier Li Keqiang said, as he warned the country faces an arduous task in ensuring its recovery China took the most aggressive step in its latest battle to bolster the yuan, setting its reference rate for the currency with the second strongest bias on record. The People’s Bank of China fixed the yuan at 6.8802 per dollar on Tuesday, 249 pips stronger than the average estimate in a Bloomberg survey. The bias was the second largest on the strong side since the survey of analysts and traders began in 2018 The slide in the yen back toward the key psychological 140 per-dollar level is reigniting chatter on the likelihood officials will intervene to support the Japanese currency A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were somewhat mixed as most of the regional bourses recouped some of the prior day’s losses but with gains capped amid a slew of earnings releases and as participants look towards month-end, as well as the upcoming risk events. ASX 200 was led higher by the energy sector after recent gains in oil prices which printed a fresh monthly high and with strong earnings from Woodside Energy. Nikkei 225 outperformed and reclaimed the psychologically key 28k level. Hang Seng and Shanghai Comp were negative with participants digesting earnings releases and amid further COVID-related disruptions as China's Dalian region limited movements for five days and Shenzhen ordered to close the Huaqiangbei subdistrict which is a global electronics sourcing centre. ICBC (1398 HK) - H2 2022 (CNY): net profit 171.51bln vs. Exp. 186.4bln, NII 351.4bln vs. Exp. 360.5bln. Baidu Inc (BIDU) Q2 2022 (CNY): EPS 15.79 (exp. 10.46), Revenue 29.6bln (exp. 29.31bln). Global funds invested into Evergrande's (3333 HK) bonds have determined their own debt restructuring plan, via FT sources; demands the chair repay liabilities with own funds. Top Asian News Chinese Finance Ministry said it will make good use of local government special bonds and strictly curb new local government hidden debt in H2, while it will strive to stabilise employment and prices. US President Biden's administration plans to ask Congress to approve an estimated USD 1.1bln arms sale to Taiwan, according to Politico. PBoC has issued draft rules to regulate related transactions of financial holding firms. All industrial and business power usage has resumed in Sichuan as of August 30th, according to CCTV. Pakistan to Import Onions, Tomatoes To Meet Shortage After Flood Asia Push for Winter LNG Sends Price to New Five-Month High European bourses are supported in tandem with pressure in European gas prices, Euro Stoxx 50 +1.7%, while the FTSE 100 lags somewhat after its Bank Holiday. Stateside, futures are firmer across the board, ES +0.9%, with the NQ +1.2% outperforming modestly as yields ease. Tesla (TSLA) CEO Musk has filed an SEC filing on Twitter (TWTR); on Aug 29th, sent a letter to Twitter notifying he is terminating merger agreement for additional bases separate from bases set forth in July 8th, according to a letter. Top European News Spain is to propose the EU mimics its gas price system, via El Pais. Germany said to be open to discussing an EU gas price cap at the September 9th summit, via Reuters citing an official. Britons Ditch Staycations for Cheaper All-Inclusive Trips Abroad Spanish Inflation Slows But Any Retreat Is Likely to be Gradual UK July Mortgage Approvals Rise to 63.8k vs. Est. 62k Austria Is Probing Trades Behind Wien Energie Margin Call Revolution Beauty Shares to Be Suspended One Year After Listing FX DXY dips under 108.50 after seeing a mild bid overnight to a high of 108.90. Antipodeans lead the gains whilst EUR feels a boost from receding European gas prices. Haven FX are mixed vs the USD with JPY firmer and the CHF in the red. Fixed Income EGBs are bid as the benchmarks recoup from yesterday’s pressure, fresh fundamentals limited though European gas pricing easing has likely assisted. Gilts remain subdued by over a full point, though off worst, as it catches up to the weekend's hawkish rhetoric. USTs are in-fitting with EZ peers and awaiting commentary from Fed's Williams; yields slightly flatter. Commodities WTI and Brent futures have pared back around half of the prior day's gains; relatively pronounced pressure once more in European gas benchmarks. Spot gold is modestly softer intraday and remains under its 21, 50, and 10 DMAs. LME copper has fallen back under USD 8,000/t as the exchange plays catch-up following the UK bank holiday. China was reported to provide Europe with an energy lifeline through the resale of surplus LNG, according to FT. UK PM candidate Truss is set to approve a series of oil and gas drilling licences in the North Sea in one of her first acts as PM, should she be elected, according to The Times Canada said it is invoking the 1977 pipeline treaty with the US for the second time over Enbridge's (ENB) Line 5 (540k BPD) dispute. Sadrist protesters in Iraq reportedly closed the oil production distribution company in Basra and there were explosions in Baghdad's Green Zone from mortars targeting the former PM's residential area, according to Iraqi Day. US Event Calendar 09:00: June S&P Case Shiller Composite-20 YoY, est. 19.20%, prior 20.50% 09:00: June S&P/Case-Shiller US HPI YoY, prior 19.75% 09:00: 2Q House Price Purchase Index QoQ, prior 4.6% 09:00: June S&P/CS 20 City MoM SA, est. 0.90%, prior 1.32% 09:00: June FHFA House Price Index MoM, est. 0.8%, prior 1.4% 10:00: Aug. Conf. Board Consumer Confidence, est. 98.0, prior 95.7 Present Situation, prior 141.3 Expectations, prior 65.3 10:00: July JOLTs Job Openings, est. 10.4m, prior 10.7m DB's Henry Allen concludes the overnight wrap For those also arriving back after the holiday weekend, markets have been playing a familiar tune for 2022, with risk assets losing ground as central banks underlined their determination to keep bearing down on inflation. Fed Chair Powell kicked off the latest selloff in his speech at Jackson Hole on Friday, where he said that getting back to price stability would “likely require maintaining a restrictive policy stance for some time.” He also went on to reiterate that hawkish message at multiple points, saying that “the employment costs of bringing down inflation are likely to increase with delay”, which favoured “acting with resolve now” to avoid a more costly outcome later. With Powell explicitly warning against repeating the mistakes of the 1970s, investors moved to price in a more hawkish response from the Fed over the next year. In fact over Friday and yesterday, the rate that Fed funds futures are pricing in for the December 2022 meeting went up a further +7.1bps to 3.70%. And with a more hawkish Fed being priced in, that’s having an impact on Treasury yields, with the 2yr yield reaching its highest intraday level since 2007 in trading yesterday, at 3.48%, although it’s since fallen back to 3.41% this morning. US equities have also taken a significant hit, with the S&P 500 seeing its worst daily performance in over two months on Friday, with a -3.37% decline, followed by a more modest -0.67% fall yesterday. Strikingly, Minneapolis Fed President Kashkari said that he was “happy to see how Chair Powell’s Jackson Hole speech was received” in markets, saying it reflected an understanding of their commitment to return inflation to 2%. That theme of investors adapting to more hawkish central banks has been seen on this side of the Atlantic as well, since a number of individuals at the ECB are now openly floating the idea of hiking by 75bps at a single meeting like the Fed. On Friday, Austria’s Holzmann said that a 75bps move “should be part of the debate”, and that a 50bps move was “the minimum for me”. Then in an interview on Sunday, Latvia’s Kazaks said that “at least 50 basis points would be appropriate” in September and said “at the current moment, I would say 50 or 75 basis points”. Those may be two of the most hawkish officials on the Governing Council, but the fact that a 75bps move is being openly discussed ahead of next week’s decision just shows how the direction of travel has shifted, and overnight index swaps are now pricing in a 75bps move as more likely than a 50bps one. Nevertheless, there was some pushback yesterday from Chief Economist Lane, who said that a “steady pace” was important when reaching the terminal rate. In light of these developments, our European economists have updated their ECB call (link here), where they bring forward their timing for the terminal rate to mid-2023 from mid-2024, and now see the terminal deposit rate reaching 2.5% (up from 2% previously). In terms of the specific moves to get there, they now expect 50bp hikes at the remaining 3 meetings this year, bringing the deposit rate up to 1.5% in December, before the ECB slows to a 25bp pace at the 4 meetings in H1 2023 that takes the deposit rate up to 2.5%. They are maintaining their call for a 50bp hike at the September meeting for now, but note there are still some key data and risks around energy that could change the September profile. With markets waking up to the prospect of more aggressive ECB hikes, sovereign bonds sold off significantly yesterday. Yields on 10yr bunds (+11.4bps), OATs (+10.6bps) and BTPs (+10.3bps) all moved sharply higher thanks to rises in real yields, whilst gilts were closed given the public holiday. European equities similarly lost ground as they caught up with the late US selloff from Friday, and the STOXX 600 (-0.81%) posted a decent decline, even as nearly a quarter of the index’s weighting didn’t trade given the London holiday. In the US, tech stocks bore the brunt of the decline given the higher yields, and the FANG+ index followed up its -4.26% loss on Friday with another -1.03% move lower yesterday. Overnight in Asia, equity markets have put in a mixed performance, with the Nikkei (+1.02%) and the Kospi (+0.54%) clawing back some of their heavy losses yesterday, whereas the Hang Seng (-1.32%), the Shanghai Composite (-0.68%) and the CSI 300 (-0.61%) are all trading in negative territory. That underperformance in Chinese equities follows the moves from the People’s Bank of China to push back against yuan weakness, with a fix at 6.8802 per US Dollar this morning, which is noticeably stronger than Bloomberg’s survey estimate of 6.9051. Indeed, it was the strongest fix relative to estimates since August 2019. Elsewhere overnight, there are also signs that the recent market selloff could take a breather today, with futures contracts on the S&P 500 (+0.27%) and NASDAQ 100 (+0.3%) both pointing higher. Looking forward now, this week should illuminate plenty on the near-term policy trajectory as a number of important data releases come out. For the Euro Area, the main one will be tomorrow’s flash CPI reading for August, where our economists see year-on-year CPI ticking down from the record +8.9% in July to +8.8% in August. However, we haven’t reached the peak yet in their opinion, as they see CPI rebounding again in September up to +9.3%, so the ECB would still have a long way to go to get back to their target. On the question of core inflation, they see that moving up to +4.3% in August year-on-year, which would be the highest since the formation of the single currency. So an important release for the ECB just over a week before their decision. The other big release this week will be the US jobs report for August on Friday, which could go a long way to determining whether the Fed move by 50bps or 75bps. Our US economists expect that there’ll be another +300k increase in nonfarm payrolls, which would leave the unemployment rate unchanged at 3.5%. Markets are pricing in +69.1bps worth of hikes for September right now, so much closer to 75 than 50 still. But last month we saw how a strong jobs report jolted market expectations towards 75bps, so a surprise in either direction could well see that shift once again. In the meantime, keep an eye out for the July JOLTS data later today as well, which includes measures on job openings and hires. That’ll offer some further signals on whether labour demand is moving back in line with supply. Otherwise this week, a major theme will be the ongoing turmoil in European energy markets, where yesterday saw prices come down from their record highs of last Friday. For instance, natural gas futures were down -19.63% to €273 per megawatt-hour, whist German power prices for next year fell -22.84% to €760 per megawatt-hour, having traded above €1000 for the first time earlier in the day. European Commission President Von der Leyen said yesterday that the EU was “working on an emergency intervention and a structural reform of the electricity market.” Let’s see what happens there, but one piece of better news from Germany came over the weekend after Economy Minister Habeck said in a Sunday statement that the target to see gas storage 85% full by October should be reached by early September. In the meantime oil prices have got the week off to a strong start, with Brent crude advancing +4.06% yesterday to their highest finish so far this month at $105.09/bbl. They’ve maintained the bulk of those gains overnight too, with Brent crude only down -0.69% at $104.36/bbl. Tyler Durden Tue, 08/30/2022 - 08:09.....»»

Category: blogSource: zerohedgeAug 30th, 2022

Global Markets Slump With Terrified Traders Tracking Pelosi"s Next Move

Global Markets Slump With Terrified Traders Tracking Pelosi's Next Move Forget inflation, stagflation, recession, depression, earnings, Biden locked up in the basement with covid, and everything else: today's it all about whether Nancy Pelosi will start World War 3 when she lands in Taiwan in 3 hours. US stocks were set for a second day of declines as investors hunkered down over the imminent (military) response by China to Pelosi's Taiwan planned visit to Taiwan, along with the risks from weakening economic growth amid hawkish central bank policy. Nasdaq 100 contracts were down 0.7% by 7:30a.m. in New York, while S&P 500 futures fell 0.6% having fallen as much as 1% earlier. 10Y yields are down to 2.55% after hitting 2.51% earlier, while both the dollar and gold are higher. Elsewhere around the world, Europe's Stoxx 600 fell 0.6%, with energy among the few industries bucking the trend after BP hiked its dividend and accelerated share buybacks to the fastest pace yet after profits surged. Asian stocks slid the most in three weeks, with some of the steepest falls in Hong Kong, China and Taiwan. Among notable movers in premarket trading, Pinterest shares jumped 19% after the social-media company reported second-quarter sales and user figures that beat analysts’ estimates, and activist investor Elliott Investment Management confirmed a major stake in the company. US-listed Chinese stocks were on track to fall for a fourth day, which would mark the group’s longest streak of losses since late-June, amid the rising geopolitical tensions. In premarket trading, bank stocks are lower amid rising tensions between the US and China. S&P 500 futures are also lower, falling as much as 0.9%, while the 10-year Treasury yield falls to 2.56%. Cowen Inc. shares gained as much as 7.5% after Toronto-Dominion Bank agreed to buy the US brokerage for $1.3 billion in cash. Meanwhile, KKR’s distributable earnings fell 9% during the second quarter as the alternative-asset manager saw fewer deal exits amid tough market conditions. Here are some other notable premarket movers: Activision Blizzard (ATVI US Equity) falls 0.6% though analysts are positive on the company’s plans to roll out new video game titles after it reported adjusted second-quarter revenue that beat expectations. While the $68.7 billion Microsoft takeover deal remains a focus point, the company is building out a “robust” pipeline, Jefferies said. Arista Networks (ANET US) analysts said that the cloud networking company’s results were “impressive,” especially given supply-chain constraints, with a couple of brokers nudging their targets higher. Arista’s shares rose more than 5% in US after-hours trading on Monday after the company’s revenue guidance for the third quarter beat the average analyst estimate. Avis Budget (CAR US) saw a “big beat” on low Americas fleet costs and strong performance for its international segment, Morgan Stanley says. The rental-car firm’s shares rose 5.5% in US after-hours trading on Monday, after second-quarter profit and revenue beat the average analyst estimate. Snowflake (SNOW US) falls 5.3% after being cut at BTIG to neutral from buy, citing field checks that show a potential slowdown in product revenue growth in the coming quarters. Clarus Corp. (CLAR US) should continue to see “outsized demand” from the “mega-trend” of people seeking the great outdoors, Jefferies says, after the sports gear manufacturer reported second-quarter sales that beat estimates. Clarus’s shares climbed 9% in US postmarket trading on Monday. Cryptocurrency-exposed stocks are lower in US premarket trading as Bitcoin falls for the third consecutive session as global markets and cryptocurrencies remain pressured over deepening US-China tension. Coinbase (COIN US) falls 2.3% while Marathon Digital (MARA US) drops 3.3%. Transocean (RIG US) rises 18% in US premarket trading after 2Q Ebitda beat estimates, with other positives including a new contract and a 2-year extension of a revolver. US-listed Chinese stocks are on track to fall for a fourth day, which would mark the group’s longest streak of losses since end-of-June, amid geopolitical tensions related to House Speaker Nancy Pelosi’s expected visit to Taiwan. Alibaba (BABA) falls 2.5% and Baidu (BIDU US) dips 2.7% ZoomInfo Technologies analysts were positive on the software firm’s raised guidance and improved margins, with Piper Sandler saying the firm is “in a class of its own.” The shares rose more than 11% in US after-hours trading, after closing at $37.73. Pelosi is expected to land in Taiwan on Tuesday, the highest-ranking American politician to visit the island in 25 years, a little after 10pm local time evening in defiance of Chinese threats. China, which regards Taiwan as part of its territory, has vowed an unspecified military response to a visit that risks sparking a crisis between the world’s biggest economies. “There is no way people will want to put on risk right now with this potential boiling point,” said Neil Campling, head of tech, media and telecom research at Mirabaud Securities. The potential ramifications of Pelosi’s planned visit “are huge.” The growing tensions are the latest addition to a myriad of challenges facing equity investors going into the second half of the year. Fears of a US recession as the Federal Reserve tightens policy to tame soaring inflation have weighed on risk assets. US manufacturing activity continued to cool in July, with the data highlighting softer demand for merchandise as the economy struggles for momentum. In the off chance we avoid world war, there will be a shallow recession that could start by the end of the year, according to Rupert Thompson, chief investment officer at Kingswood Holdings. Meanwhile, the market is too optimistic about the path of monetary policy and “the risk is the Fed goes further than the markets are building in in terms of hiking,” Thompson said in an interview with Bloomberg Television. Goldman Sachs strategists also said it was too soon for stock markets to fade the risks of a recession on expectations of a pivot in the Fed’s hawkish policy. On the other hand, JPMorgan strategists said the outlook for US equities is improving for the second half of the year on attractive valuations and as the peak in investor hawkishness has likely passed. “Although the activity outlook remains challenging, we believe that the risk-reward for equities is looking more attractive as we move through the second half,” JPMorgan’s Marko Kolanovic wrote in a note dated Aug. 1. “The phase of bad data being interpreted as good is gaining traction, while the call of peak Federal Reserve hawkishness, peak yields and peak inflation is playing out.” Markets are also bracing for commentary on the US interest-rate outlook from Chicago Fed President Charles Evans and St. Louis Fed President James Bullard. In Europe, tech, financial services and travel are the worst-performing sectors. Euro Stoxx 50 falls 0.8%. FTSE 100 is flat but outperforms peers. Here are some of the biggest European movers today: BP shares rise as much as 4.8% on earnings. The oil major’s quarterly results look strong with an earnings beat, dividend hike and increased buyback all positives, analysts say. OCI rises as much as 8.6%, the most since March, on its latest earnings. Analysts say the results are ahead of expectations and the fertilizer firm’s short-term outlook remains robust. Maersk shares rise as much as 3.7% after the Danish shipping giant boosted its underlying Ebit forecast for the full year. Analysts note the boosted guidance is significantly above consensus estimates. Greggs shares rise as much as 4% after the UK bakery chain reported an increase in 1H sales. The 1H results are “solid,” while the start to 2H is “robust,” according to Goodbody. Delivery Hero shares gain as much as 3.8%. The stock is upgraded to overweight from neutral at JPMorgan, which said many of the negatives that have weighed on the firm are starting to turn. Rotork gains as much as 4%, the most since June 24, after beating analyst expectations for 1H 2022. Shore Capital says the company shows “good momentum” in the report. Credit Suisse shares decline as much as 6.4% after its senior debt was downgraded by Moody’s, and its credit outlook cut by S&P, while Vontobel lowered the PT following “disappointing” 2Q earnings. Travis Perkins shares drop as much as 11%, the most since March 2020. Citi says the builders’ merchant’s results are “slightly weaker than expected,” with RBC noting shortfalls in sales and Ebita. DSM shares drop by as much as 4.9% as Citi notes weak free cash flow after company reported adjusted Ebitda for the second quarter up 5.3% with FY22 guidance unchanged. UK homebuilders fall after house prices in the country posted their smallest increase in at least a year, indicating that the property market is starting to cool, with Crest Nichols dropping as much as 5.2%. Wind-turbine stocks fall in Europe after Spain’s Siemens Gamesa cut sales and margin guidance, with Siemens Energy dropping as much as 6.1%, with Vestas Wind Systems down as much as 4.7%. Earlier in the session, Asian stocks fell as traders braced for a potential escalation of US-China tensions given a possible visit by US House Speaker Nancy Pelosi to Taiwan. The MSCI Asia Pacific Index dropped as much as 1.4%, poised for its worst day in five weeks. All sectors, barring real estate, were lower with chipmaker TSMC and China’s tech stocks among the biggest drags on the regional measure. Pelosi is expected to arrive in Taipei late on Tuesday. Beijing regards Taiwan as part of its territory and has promised “grave consequences” for her trip. Benchmarks in Hong Kong, China and Taiwan were among the laggards in Asia, slipping at least 1.4% each. Japan’s Topix declined as the yen received a boost from safe-haven demand.  还没打就见血了。4400个股票受伤。 Chinese stocks collapsed in the shadow of a looming conflict. 4400 of 4800 stocks hurt. pic.twitter.com/zo66di9W7I — Hao HONG 洪灝, CFA (@HAOHONG_CFA) August 2, 2022 “I do expect a negative feedback loop into China-related equities especially those related to the semiconductor and technology sectors as Pelosi’s potential visit to Taiwan is likely to harden the current frosty US-China tech war,” said Kelvin Wong, analyst at CMC Markets (Singapore). Pelosi’s controversial trip is souring a nascent revival in risk appetite in the region that saw the MSCI Asia gauge rise in July to cap its best month this year. China’s economic slowdown continues to weigh on sentiment, as authorities said this year’s economic growth target of “around 5.5%” should serve as a guidance rather than a hard target.  Japanese equities fell as the yen soared to a two month high over concerns of US-China tensions escalating with US House Speaker Nancy Pelosi expected to visit Taiwan on Tuesday.  The Topix fell 1.8% to 1,925.49 as of the market close, while the Nikkei declined 1.4% to 27,594.73. Toyota Motor Corp. contributed the most to the Topix Index decline, decreasing 2.6%. Out of 2,170 shares in the index, 227 rose and 1,903 fell, while 40 were unchanged. Pelosi would become the highest-ranking American politician to visit Taiwan in 25 years. China views the island as its territory and has warned of consequences if the trip takes place. “The relationship between the US and China was just about to enter into a period of review, with a move from the US to reduce China tariffs,” said Ikuo Mitsui a fund manager at Aizawa Securities. That could change now as a result of Pelosi’s visit, he added Meanwhile, Australia’s S&P/ASX 200 index erased an earlier loss of as much as 0.7% to close 0.1% higher after the Reserve Bank’s widely-expected half-percentage point lift of the cash rate to 1.85%. The index wiped out a loss of as much as 0.7% in early trade. The RBA’s statement was “not as hawkish as anticipated and the lower growth forecast suggests the RBA is aware of both the domestic and international drags on the economy,” said Kerry Craig, global market strategist at JPMorgan.  “We expect the RBA will continue to push interest rates back to a neutral level this year given the successive upgrades to the inflation outlook, but 2023 looks to be a much less eventful year for the RBA,” Craig said.  Banks and consumer discretionary advanced to boost the index, while miners and energy shares declined.   In New Zealand, the S&P/NZX 50 index rose less than 0.1% to 11,532.46. Indian stock indexes are on course to claw back this year’s losses on steady buying by foreigners. The S&P BSE Sensex closed little changed at 58,136.36 in Mumbai, after falling as much as 0.6% earlier in the day. The measure is now just 0.2% away from turning positive for the year. The NSE Nifty Index too is a few ticks away from moving into the green. Nine of the BSE Ltd.’s 19 sector sub-indexes advanced on Tuesday, led by power and utilities companies.  Foreigners bought local shares worth $836.2 million in July, after pulling out a record $33 billion from the Indian equity market since October. July was the first month of net equity purchases by foreign institutional investors, after nine months of outflows. Still, “choppiness would remain high due to the upcoming RBI policy meet outcome and prevailing earnings season,” Ajit Mishra, vice-president for research at Religare Broking Ltd. wrote in a note. “Participants should continue with the buy-on-dips approach.” The Reserve Bank of India is widely expected to raise interest rates for a third straight time on Friday. Of the 33 Nifty companies that have reported results so far, 18 have beaten the consensus view while 15 have trailed. Of the 30 shares in the Sensex index, 16 rose, while 14 fell. IndusInd Bank and Asian Paints were among the key gainers on the Sensex, while Tech Mahindra Ltd. and mortgage lender Housing Development Finance Corp were prominent decliners.  In FX, the Bloomberg dollar spot index rises 0.1%. JPY and CAD are the strongest performers in G-10 FX, NOK and AUD underperforms, after Australia’s central bank hiked rates by 50 basis-points for a third straight month and signaled policy flexibility. USD/JPY dropped as much as 0.9% to 130.41, the lowest since June 3, in the longest streak of daily losses since April 2021. Leveraged accounts are adding to short positions on the pair ahead of Pelosi’s visit, Asia-based FX traders said. In rates, treasuries extended Monday’s rally in early Asia session as 10-year yields dropped as low as 2.514% amid escalating US-China tension over Taiwan. Treasury yields were richer by up to 5bp across long-end of the curve, where 20-year sector continues to outperform ahead of Wednesday’s quarterly refunding announcement, expected to make extra cutbacks to the tenor. US 10-year yields off lows of the day around 2.55%, lagging bunds by 4bp and gilts by 4.5bp. US stock futures slumped given risk adverse backdrop, adding support into Treasuries while bunds outperform as traders scale back ECB rate hike expectations. The yield on the two-year German note, among the most sensitive to rate hikes, fell as low as 0.17%, its lowest since May 16. Gilts also gained across the curve. Bund curve bull-steepens with 2s10s widening ~2 bps. Gilt and Treasury curves mostly bull-flatten. Australian bonds soared after RBA delivered a third- straight 50bp rate hike as expected, but gave itself wriggle room to slow the pace of tightening in the coming months. In commodities, WTI trades within Monday’s range, falling 0.6% to trade around $93, while Brent falls below $100. Spot gold is little changed at $1,779/oz. Base metals are mixed; LME nickel falls 2% while LME zinc gains 0.6%. Bitcoin remains under modest pressure and has incrementally lost the USD 23k mark, but remains comfortably above last-week's USD 20.6k trough. Looking to the day ahead now and there is a relatively short list of economic indicators to watch, including June JOLTS report and total vehicle sales (July) for the US, UK’s July Nationwide house price index and July PMI for Canada. Given the apparent uncertainty about the direction of the Fed in markets, many will be awaiting Fed’s Bullard, Mester and Evans, who will speak throughout the day. And in corporate earnings, it will be a busy day featuring results from BP, Caterpillar, Ferrari, Marriott, KKR, Uber, S&P Global, Occidental Petroleum, Electronic Arts, Gilead Sciences, Advanced Micro Devices, Starbucks, Airbnb, PayPal, Marathon Petroleum. Market Snapshot S&P 500 futures down 0.6% to 4,096.50 STOXX Europe 600 down 0.5% to 435.13 MXAP down 1.3% to 159.73 MXAPJ down 1.3% to 516.82 Nikkei down 1.4% to 27,594.73 Topix down 1.8% to 1,925.49 Hang Seng Index down 2.4% to 19,689.21 Shanghai Composite down 2.3% to 3,186.27 Sensex little changed at 58,120.97 Australia S&P/ASX 200 little changed at 6,998.05 Kospi down 0.5% to 2,439.62 German 10Y yield little changed at 0.74% Euro down 0.3% to $1.0231 Brent Futures down 0.6% to $99.44/bbl Gold spot down 0.1% to $1,770.93 U.S. Dollar Index up 0.15% to 105.61 Top Overnight News from Bloomberg Oil Steadies Before OPEC+ as Traders Weigh Up Market Tightness China Slaps Export Ban on 100 Taiwan Brands Before Pelosi Visit Pozsar Says L-Shaped Recession Is Needed to Conquer Inflation Pelosi’s Taiwan Trip Raises Angst in Global Financial Markets Taiwan Risk Joins Long List of Reasons to Shun China Stocks Biden Says Strike in Kabul Killed a Planner of 9/11 Attacks Biden Team Tries to Blunt China Rage as Pelosi Heads for Taiwan The Best and Worst Airlines for Flight Cancellations GOP Plans to Deploy Obscure Rule as Weapon Against Spending Bill US to Stop TSMC, Intel From Adding Advanced Chip Fabs in China US Anti-Terrorism Operation in Afghanistan Kills Al-Qaeda Leader They Quit Goldman’s Star Trading Team, Then It Raised Alarms Sinema’s Silence on Manchin’s Deal Keeps Everyone Guessing Manchin Side-Deal Seeks to Advance Mountain Valley Pipeline A more detailed look at global markets courtesy of Newsquawk APAC stocks followed suit to the weak performance across global counterparts as tensions simmered amid Pelosi's potential visit to Taiwan. ASX 200 was initially pressured ahead of the RBA rate decision where the central bank hiked by 50bp, as expected, although most of the losses in the index were pared amid a lack of any hawkish surprises in the statement and after the central bank noted it was not on a pre-set path. Nikkei 225 declined amid a slew of earnings and continued unwinding of the JPY depreciation. Hang Seng and Shanghai Comp underperformed due to the ongoing US-China tensions after reports that House Speaker Pelosi will arrive in Taiwan late on Tuesday despite the military threats by China, while losses in Hong Kong were exacerbated by weakness in tech and it was also reported that Chinese leaders said the GDP goal is guidance and not a hard target which doesn't provide much confidence in China's economy. Top Asian News Tourism Jump to Power Thai GDP Growth to Five-Year High in 2023 China in Longest Streak of Liquidity Withdrawals Since February Singapore Says Can Tame Wild Power Market Without State Control India’s Zomato Appoints Four CEOs, to Change Name to Eternal Taiwan Tensions Raise Risks in One of Busiest Shipping Lanes Japan Trading Giants Book $1.7 Billion Russian LNG Impairment     Japan Proposes Record Minimum Wage Hike as Inflation Hits European bourses are pressured as the general tone remains tentative ahead of Pelosi's visit to Taiwan, Euro Stoxx 50 -0.9%; note, FTSE 100 -0.1% notably outperforms following earnings from BP +3.0%. As such, the Energy sector bucks the trend which has the majority in the red and a defensive bias in-play. Stateside, futures are similarly downbeat and have been drifting lower amid the incremental updates to Pelosi and her possible Taiwan arrival time of circa. 14:30BST/09:30ET; ES -1.0%. Apple (AAPL) files final pricing term sheet for four-part notes offering of up to USD 5.5bln, according to a filing. Top European News Ukraine Sees Slow Return of Grain Exports as World Watches Ruble Boosts Raiffeisen’s Russian Unit Despite Credit Halt DSM 2Q Adj. Ebitda Up; Jefferies Sees ‘Muted’ Reaction Credit Suisse Hit by More Rating Downgrades After CEO Reboot Man Group Sees Assets Decline for First Time in Two Years Exodus of Young Germans From Family Nest Is Getting Ever Bigger FX Yen extends winning streak through yet more key levels vs Buck and irrespective of general Greenback recovery on heightened US-China tensions over Taiwan USD/JPY breaches support around 131.35 and probes 130.50 before stalling, but remains sub-131.00 even though the DXY hovers above 105.500 within a 105.030-710 range. Aussie undermined by risk aversion and no hawkish shift by RBA after latest 50bp hike; AUD/USD nearer 0.6900 having climbed to within a few pips of 0.7050 on Monday. Kiwi holds up better with AUD/NZD tailwind awaiting NZ jobs data, NZD/USD hovering just under 0.6300 and cross closer to 1.1000 than 1.1100. Euro and Pound wane after falling fractionally short of round number levels vs Dollar, EUR/USD back under 1.0250 vs 1.0294 at best, Cable pivoting 1.2200 from 1.2293 yesterday. Loonie and Franc rangy after return from Canadian and Swiss market holidays, USD/CAD straddling 1.2850 and USD/CHF rotating around 0.9500. Yuan off lows after slightly firmer PBoC midpoint fix, but awaiting repercussions of Pelosi trip given Chinese warnings about strong reprisals, USD/CNH circa 6.7700 and USD/CNY just below 6.7600 vs 6.7950+ and 6.7800+ respectively. South Africa's Eskom says due to a shortage of generation capacity, Stage Two loadshedding could be implemented at short notice between 16:00-00:00 over the next three days. Fixed Income Taiwan-related risk aversion keeps bonds afloat ahead of relatively light pm agenda before a trio of Fed speakers. Bunds hold above 159.00 within 159.70-158.57 range, Gilts around 119.50 between 119.70-20 parameters and T-note nearer 122-02 peak than 121-17+ trough. UK 2032 supply comfortably twice oversubscribed irrespective of little concession. Commodities WTI Sept and Brent Oct futures trade with both contracts under the USD 100/bbl mark as the participants juggle a myriad of major factors, incl. the JTC commencing shortly. Spot gold is stable and just below the 50-DMA at USD 1793/oz while base metals succumb to the broader tone. A source with knowledge of last month's meeting between President Biden and Saudi King Salman said the Saudis will push OPEC+ to increase oil production at their meeting on Wednesday and that the Saudi King made the assurance to President Biden during their face-to-face meeting July 16th, according to Fox Business's Lawrence. US Senator Manchin "secured a commitment" from President Biden, Senate Majority Leader Schumer and House Speaker Pelosi for completion of the Mountain Valley Pipeline, according to 13NEWS. US Event Calendar July Wards Total Vehicle Sales, est. 13.4m, prior 13m 10:00: June JOLTs Job Openings, est. 11m, prior 11.3m 10:00: Fed’s Evans Hosts Media Breakfast 11:00: NY Fed Releases 2Q Household Debt and Credit Report 13:00: Fed’s Mester Takes Part in Washington Post Live Event 18:45: Fed’s Bullard Speaks to the Money Marketeers DB's Jim Reid concludes the overnight wrap In thin markets, US House Speaker Nancy Pelosi's visit to Taiwan today for meetings tomorrow (as part of her tour of Asia) could be the main event. She's scheduled to land tonight local time which will be mid-morning US time. She'll be the highest ranking US politician to visit in 25 years. Expect some reaction from the Chinese and markets to be nervous. Meanwhile to dial back rising tensions, the White House has urged China to refrain from an aggressive response as speaker Pelosi’s visit does not change the US position toward the island. As the headline confirming her visit was going ahead broke, 10 year US Treasuries immediately fell a handful of basis point from 2.69% (opened at 2.665%) and continued falling to around 2.58% as Europe retired for the day, roughly where it closed (-6.8bps). Breakevens led most of the move. 2 year notes actually held in which inverted the curve a further -6.12bps and to the lowest this cycle at -30.84bps. Remember that August is the best month of the year for fixed income (see my CoTD last week here for more on this) so the month has started off in line with the textbook. This morning 10yr USTs yields have dipped another -3bps to 2.55%, some 14bps lower than when Pelosi stopover was first confirmed 18 hours ago. 2yr yields have slightly out-performed with the curve just back below -30bps again. Lower yields initially helped to lift equities yesterday, with the Nasdaq being up more than a percent at one point before falling with the rest of the market and closing -0.18%. The S&P 500 was -0.28% and dragged lower by energy (-2.17%). The latter came as crude prices moved substantially lower, with WTI losing -4.91% and Brent (-3.97%) dipping below $100 per barrel as well. Growth concerns, partly due to the weekend and yesterday’s data from China, and partly due to the US risk off yesterday, were mainly to blame. These worries filtered through other commodities as well, including industrial metals and agriculture. For the latter, Ukraine’s first grain shipment since the war began was a contributing factor. European gas was a standout, notching a +5.2% gain as the relentless march continues. In an overall risk-off market, staples (+1.21%) were the only sector meaningfully advancing on the day, followed by discretionary (+0.51%) stocks. Meanwhile, real estate (-0.90%), financials (-0.89%) and materials (-0.82%) dragged the index lower. Although yesterday’s earnings stack was light, today’s line up includes BP, Starbucks, Airbnb and PayPal. Asian equity markets opened sharply lower this morning on the fresh geopolitical tensions between the US and China over Taiwan. Across the region, the Hang Seng (-2.96%) is leading losses after yesterday’s data showed that Hong Kong slipped into a technical recession as Q2 GDP shrank by -1.4%, contracting for the second consecutive quarter as global headwinds mount. Mainland China stocks are also sliding with the Shanghai Composite (-2.90%) and CSI (-2.33%) trading deep in the red whilst the Nikkei (-1.59%) is also in negative territory. Elsewhere, the Kospi (-0.77%) is also weak in early trade. Outside of Asia, DMs stock futures point to a lower restart with contracts on the S&P 500 (-0.38%), NASDAQ 100 (-0.40%) and DAX (-0.50%) all turning lower. As we go to print, the RBA board has raised rates by another 50 basis points to 1.85%. Their economic forecasts seem to have been lowered and they have now said monetary policy is "not on a pre-set path" which some are already interpreting as possibly meaning 25bps instead of 50bps at the next meeting. Aussie 10yr yields dropped 7-8bps on the announcement and 10bps on the day. Back to yesterday, and the important US ISM index, on balance, painted a slightly more comforting picture than it could have been – although the index slowed to the lowest since June 2020. The headline came in above the median estimate on Bloomberg (52.8 vs 52.0). We did see a second month in a row of below-50 score for new orders, but a fall in prices paid from 78.5 to 60.0, the lowest since August 2020, offered some respite to fears about price pressures. Similarly, a rise in the employment gauge from 47.3 to 49.9, beating estimates, was also a positive. The manufacturing PMI was revised down a tenth from the preliminary reading which didn't move the needle. JOLTS today will be on my radar given it's been the best measure of US labour market tightness over the past year or so. Also Fed hawks Mester (lunchtime US) and Bullard (after the closing bell) will be speaking today. Turning to Europe, price action across sovereign bond markets was driven by dovish repricing of ECB’s monetary policy, in contrast to the US where the front end held up. A cloudier growth outlook from yesterday’s European data releases helped drive yields lower – retail sales in Germany unexpectedly contracted in June (-1.6% vs estimates of +0.3%) and Italy’s manufacturing PMI slipped below 50 (48.5 vs 49.0 expected). So Bund yields fell -3.8bps, similar to OATs (-3.1bps). The decline was more pronounced in peripheral yields and spreads, with BTPs (-12.9bps) in particular dropping below 3% for the first time since May of this year, perhaps on further follow through from last week's story that the far right party leading the polls aren't planning to break EU budget rules. Spreads have recovered the lost ground from Draghi's resignation announcement now. Weaker economic data overpowered the effect of lower yields and sent European stocks faded into the close after being higher most of the day with the STOXX 600 eventually declining -0.19%. The Italian market outperformed (+0.11%) for the reasons discussed above. Early this morning, data showed that South Korea’s July CPI inflation rate rose to +6.3% y/y, hitting its highest level since November 1998 (v/s +6.0% in June), in line with the market consensus. The strong inflation data comes as the Bank of Korea (BOK) mulls further interest rate hikes at its next policy meeting on August 25. To the day ahead now and there is a relatively short list of economic indicators to watch, including June JOLTS report and total vehicle sales (July) for the US, UK’s July Nationwide house price index and July PMI for Canada. Given the apparent uncertainty about the direction of the Fed in markets, many will be awaiting Fed’s Bullard, Mester and Evans, who will speak throughout the day. And in corporate earnings, it will be a busy day featuring results from BP, Caterpillar, Ferrari, Marriott, KKR, Uber, S&P Global, Occidental Petroleum, Electronic Arts, Gilead Sciences, Advanced Micro Devices, Starbucks, Airbnb, PayPal, Marathon Petroleum. Tyler Durden Tue, 08/02/2022 - 08:05.....»»

Category: personnelSource: nytAug 2nd, 2022

DEFCON 2... Or Cutting Off The Nose To Spite The Face

DEFCON 2... Or Cutting Off The Nose To Spite The Face By Peter Tchir of Academy Securities I had difficulty choosing a title for today. DEFCON 2 made a lot of sense as I’m increasingly worried about the economy and the market – for this summer. On the one hand I’m so perplexed by the messaging that the Fed is prepared to trigger a recession in its fight with inflation that I can’t help but think about cutting off your nose to spite the face. I could almost see Powell starting the press conference with “this is going to hurt me more than it is going to hurt you,” which based on my experience, is rarely true. Inflation - Food To expect monetary policy to reduce food prices seems like a stretch. We all must consume some basic level of food regardless of our income level. Sure, maybe the rich eat more Kraft dinners with fancy ketchup [apologies to the Barenaked Ladies], but food consumption seems relatively inelastic. Maybe lowering the cost of fuel will help reduce the cost of food [shipping, the farmer's use of diesel, etc.], but I'm not sure that will happen quickly enough [or be impactful enough] to help the average consumer in the meantime. Many of those consumers are now facing higher costs of funding - anything from credit cards to ARMs, or any new loan that they are looking at. The supply chain disruption in primarily wheat [and other basic groins due to the Russian invasion of Ukraine] is real and is likely to lost into next year. The longer that lasts, the more stockpiles will be eroded. That is a problem not impacted much one way or the other by interest rates. The shortage of fertilizer [a topic of conversation] will admittedly be helped by reduced energy prices [if the Fed achieves that], but again, I'm not sure this provides much near-term relief, Food, which may or may not be accurately reflected in official inflation measures [when I write may or may not I mean definitely not, but don't want to sound too aggressive] is unlikely to see price declines to the point where the consumer is helped materially. While the official data may or may not be accurate, the consumers know the "real world'' costs and that is affecting their behavior, their sentiment, their outlook, and ultimately their spending, I remain extremely worried about food inflation. Inflation - Energy I'm not sure that even the "after school" specials that used to air on broadcast TV [that always had a morality message] could come up with a plot where the "hero" beats up on the "villain" for most of the show, only to realize that the "villain" has something they need, Then the "hero" reaches out to the "villain" to strike a "mutually" beneficial deal and the "villain," which is so overjoyed to become part of the "good team," immediately acquiesces to that and ignores all the previous messaging, Weirdly, it is a plot too unbelievable for a children's special, but one that "we" (collectively] seem to think will work with Iron, Venezuela, and the Saudis. I won't even touch on the "side plot" of the long-overlooked friend, eagerly waiting for o word of encouragement from the "hero" and ready to step up and deliver, finding itself being treated worse than the "villain" at a time of need. If you missed the Academv Podcast that was "dropped" (I think that's the cool term for it] on Friday, I highly recommend listening to it, General Kearney [ret,] leads the conversation, along with Rachel Washburn, Michael Rodriguez [from an ESG perspective], and me, on nuclear proliferation, the nuclear geopolitical landscape, and also, crucially important, thoughts on the future of nuclear energy, But I've digressed, as those energy issues are really more issues related to D.C. and policy rather than anything controlled by interest rates and Fed policy, But maybe after all I didn't digress that much because I don't see how Fed policy helps reduce energy prices, other than if they are "successful” in derailing the economy. Again, much like food, individuals can only tinker with their need for energy. All of this has a limited impact on overall consumption: keeping the house warmer in the summer, colder in the carpooling a winter, carpooling a bit more, being more organized on errands, convincing the bosses that WFH is good for the environment, etc. Higher energy costs are already causing the demand shrinkage from consumers and I don't see any direct way that higher rates will help reduce gas demand or prices, unless, again, the Fed is "successful" in making the economy worse by a significant margin. On the other side of the coin, higher interest rates seem likely to increase the cost of new production and storage. Any company tying up working capital or expanding production is now experiencing higher interest costs and logic dictates that they will try and pass some of those costs on or not embark on some projects due to the higher cost of funds, So, the rate hikes’ direct impact on energy prices is to probably push them higher as the production and distribution systems face higher costs. Reducing Energy Prices, aka, Hitting the Economy Hard If interest rates are going to reduce energy prices it is going to come from cratering demand for anything and everything that uses energy that can be affected by interest rates! Housing/Real Estate/Construction. I have no idea how much energy goes into building a new home, but I assume a non-trivial amount, The materials that go into constructing a building can be energy intensive [copper piping, etc,], The transportation of these materials to the building site is also expensive, We are already seeing negative data in the housing sector [new home permits are down, expectations for new home sales are declining, the Fannie Mae Home Purchase Sentiment Index is at its lowest level in a decade [except very briefly in March 2020 during the Covid lockdowns], I'm sure I could find more dato pointing to housing slowing, but maybe highlighting that the Bankrate.com 5/1 ARM national average is at 4.1% versus 2.75% at the start of the year, is sufficient, We could look at 30-year mortgages and really shock you, but I think that the 5/1 is as interesting as the rate environment because it demonstrates that there is little relief anywhere along the curve for those needing new mortgages. Autos. Annualized total U.S, auto sales [published by WARD'S automotive] have fallen recently. This measure has been "choppy" to say the least as auto sales have clearly been hit by supply issues. For many makes and models, I'm hearing the wait time is 6 months for a car where you pick the features and it is built to your specifications [which had become the "normal" way of buying cars]. So, maybe, just maybe, the sales here are still being impacted by that, but I’d have to guess that rising auto loan costs are playing a role as well. The Manheim used vehicle value index is still very high, but has stabilized of late. If that stabilization is related to higher loan costs, then it is bad for the auto industry. If it is related to new cars and trucks being more readily available, it isn't a great sign, since that means the new auto sales indications cannot be entirely explained away by supply constraints. My understanding, given the steel and other components, is a lot of energy goes into producing a new automobile. So, I guess it is "good" news that slowing auto sales [and presumably production] will curb energy demand? Consumer Purchases and Delivery, Everywhere you turn there are stories and anecdotes about consumer purchasing slowing down, CONsumer CONfidence [as discussed last weekend] is atrocious! Not only does energy go into the production of the goods that the consumer was purchasing, but with home delivery being such a feature of today's purchasing behavior, energy consumption should go down as delivery services slow down [and as they continue to become more efficient - a process spurred on by higher gas prices]. I’m not sure whether to laugh or cry. Higher interest rates will "help" reduce demand for autos, housing, and general consumer consumption, Apparently, that is good, because it reduces demand for energy and energy inflation [as well as inflation for those products]. I can see that, but I cannot help but think that we need to Be Careful What You Wish For! A Special Place in Hell for Inventories I fear that inventories were a big part of the rise in inflation and would contribute to stabilizing prices [all else being equal] and that recent rate hikes are going to turn a "normal" normalization into something far more dangerous, Manufacturing and Trade Inventories grew from 2014 until COVID at a steady pace, This seemed to correlate nicely with the growing U.S. and global economy. They dropped with supply chain issues, but were back to pre-COVID levels by last summer. Then, from late last summer until the end of April [most recent data point for this series], these inventories grew rapidly! Companies worried about supply chain issues overstocked. This could lead to much lower future orders. Companies shifting to "just in case" from "just in time" need higher inventories, so that part would be stable, but costs of carrying inventory have increased, Maybe companies used straight line extrapolation to accumulate inventory to meet expected consumer demand. That is bad for inventories if the demand isn't materializing! It is extra bad if consumers pulled forward demand in response to their supply chain concerns, meaning that any simplistic estimate of future demand [always problematic, though easy] is even further off the mark as the extrapolation was based on a faulty premise [which is not thinking consumers responded to supply chain issues]. We may have an inventory overhang in the economy. While inventories are significantly higher than pre-COVID levels, the number of people working has still not returned to pre-COVID levels, Yeah, I get that it is far easier to "spend now, pay later" than it used to be through a variety of fintech solutions [ignoring rising interest costs] and that the "wealth effect" and "gambling" culture allows for more spending per job [or maybe it did a few months ago, but not now?] Maybe I'm just a stick in the mud, but... When I look at this chart, I see the correlation between total number of people working and inventory has been completely dislocated! [It also makes me question some of the supply chain issues we allegedly have]. Again, this potential inventory overhang is "amazing" if you want to slow orders and "fix" inflation by having to work off excess inventory rather than adding more. Apologies, if you're tired of reading my snarky comments about things being "good" for inflation fighting. I'm tired of writing them, but cannot think of what else to do. But the Economy is So Resilient? More on this later,,. The "Disruptive Portfolio" Wealth Destruction We have examined the concept of Disruptive Portfolio Construction and continue to think that this is playing a major role in how markets are trading, but increasingly this creates a potential shock to the economy, Let's start with crypto, Bitcoin briefly dropped below $19,000 Saturday morning. I have no idea where it will be by the time you are reading this, but I am targeting $10,000 or less for bitcoin within a month or so. First the "altcoins" [some of which are derisively referred to as "sh*t-coins"] are a complete mess. Solana is down 88% from its November 2021 highs and is roughly back to where it "debuted" in June 2012. Dogecoin, which I think was originally created as a joke, but rose to 70 cents [I think the weekend of Elon Musk's Saturday Night Live appearance] is back to 5 cents, which I guess is still good for something that was originally created as a joke. Ethereum, a "smart contract" that has some use cases very different than bitcoin and was often talked about as a superior product, is down 80% from its November 2021 highs. Under the Bloomberg CRYP page there are 25 things listed as "Crypto Assets". Maybe if I looked at each one I'd find some with a different story, but somehow, I doubt it. Okay, I lied, I couldn't resist, I had never heard of Polkadot, but it looks like it was launched in April 2021 at $40, declined to $11, rallied to $54 in November 2021, and is now down to $7 [at least the name is still cute]. But bitcoin is the story I’m looking at because it is the biggest and the one that seems to have the most direct ties to the broader market. Crypto, to me, is often about adoption. It was why I got bullish a couple of years ago and caught at least part of the wave. Back then, every day some new, easier, better way to own crypto was being announced. Companies and famous billionaires were putting it on their corporate balance sheets. FOMO was everywhere with people racing to put ever higher targets on its future price and those who didn't have anyone to jump on to the bandwagon with were hiring people who could put on an ever-higher price target with a straight face. That ended a while ago and we are in the "disadoption" phase [spellcheck says disadoption isn't a word, but I'm sticking with it]. Or as I wrote the other day, which the FT picked up on, we have moved from FOMO [Fear Of Missing Out] to FOHO [Fear of Holding On]. Even more concerning is a world where HODLING [originally either a mistype of HOLDING that gained traction or short for Holding On for Dear Life] is more prevalent and many people are now unable to exit their positions even if they wanted to. There are some serious "plumbing" issues right now in the crypto space. Maybe the decentralized nature of crypto will work and be extremely resilient [I cannot fully discount that possibility] but maybe, just maybe, there is a reason banks and exchanges have regulators who enforce rules to protect everyone [yes, I can already see the flame mail accusing me of FUD and not understanding how self-regulating is better, etc, but then all I do is spend about 10 minutes looking at some of the shills out there and fall back to thinking "adult supervision" might be wise]. Stablecoins. Stablecoins are what I would call a "thunk" layer in programming language, It is an intermediate layer between two things, in this case, cryptocurrencies and fiat, Terra/LUNA got wiped out, but it was an "algo" based stablecoin which many, in hindsight, say was a flawed design [clearly it was], but that didn't stop it from growing to $20 billion with some big-name investors engaged. Tether is the one garnering a lot of attention now. It is still the largest stablecoin and it did survive on "attack" of sorts after the Terra/LUNA fiasco. The issue with Tether is that it purports to be fully backed by "safe" assets, yet will not produce audited financials. The disarray in stablecoins should at the very least slow adoption. Freezing Accounts. Celsius blocked withdrawals 5 days ago and as of the time I'm typing this, it was still frozen. Babel Finance announced Friday that it would stop withdrawals. I found this one particularly interesting, as in May, according to news reports, it raised $80 million in a Series B financing, valuing it at $2 billion. Maybe needing to suspend withdrawals isn't a big issue, or maybe it is a sign of how rapidly things can change in the space? Right now, I’d be more worried about extracting value from the system rather than adding to the system. Yes, these are isolated cases [so far] and there are some big players in the space which presumably are not at risk of such an event, but having lived through WorldCom and Enron, and then the mortgage fiasco of 2008, I'm heavily skewed to believing that the piping issues will spread and get worse before they get better. Industry Layoffs. In a rapidly evolving industry, one with so much potential, it makes me nervous how quickly we are seeing layoffs announced publicly or finding out about them privately. Maybe I'm cynical, but to me that signals that the insiders aren't seeing adoption increase, which for anything as momentum dependent as crypto has been, seems like a signal for more pain. The big question is how many of the "whales" and big "hodlers" will buy here to stabilize their existing holdings or whether some level of risk management is deemed prudent. You cannot go more than two minutes talking to a true believer without "generational wealth" being mentioned [trust me, I've tried]. At what point does wanting to stay really rich become the goal rather than trying for generational wealth, even if it means converting back ("cringe") to something as miserable as fiat? I expect more wealth destruction in crypto and that will hurt the economy! The wealth itself is gone, curbing spending [I'm already noticing how much I miss the Lambo photos all over social media]. The jobs are now disappearing, curbing spending. The advertising will likely slow down [though not having to watch Matt Damon or LeBron wax on about crypto might be a good thing for our sanity]. But seriously, ad dollars from this lucrative source [I'm assuming it's lucrative given how often ads appear in my social stream, during major sporting events, and even in an arena [or two] could be drying up just as retailers are also struggling. It seems that every week there is a conference somewhere dedicated to crypto [with Miami and Austin seemingly becoming a non-stop crypto conference/party]. This could turn out to hurt many companies and even some cities, Semiconductor purchases could decline. Mining rigs have been a big user of semiconductors, All you have to do is pull up a chart of bitcoin versus some select semi-conductor manufacturers and the correlation is obvious, Energy usage could decline. If mining slows [as a function of lower prices and less activity] then we might see less energy used by the crypto mining industry [the public miners are in some cases down almost 90% from their November 2021 highs, presumably because the industry is less profitable]. Ultimately this could reduce energy prices and semiconductor prices/backlogs, which would generally be good for the broader economy and would help the Fed on their inflation fight, but could hurt some individual firms that rely on this industry. My outlook for crypto is that we have more downside in sight and that will hurt broader markets and might do far more damage to the economy than many of the crypto haters realize. It is fine to dislike crypto, but it is naïve not to realize how much wealth was there helping spending and how impactful a slowdown on this industry could be! Which brings me briefly to "disruptive" stocks. The wealth created by these companies was simply astounding, Whether remaining in the hands of private equity or coming public through IPOs or via a SPAC, there was incredible wealth generated, Investors were rewarded, but so were the founders, sponsors, and employees! There was great wealth created as these innovators and disruptors [along with a mix of more traditional companies] were rewarded. I am extremely concerned about the employee wealth lost. I cannot imagine the personal wealth destruction that has occurred for many, especially mid-level to mildly senior employees. Just enough of a taste of the equity exposure to do well.  Many have restrictions so have not exited and many had options, not all of which were struck at zero, so they may be back to zero, That wealth lost has to translate into lower economic activity, especially as the losses seem more persistent than they might have been a few months ago! But investors have also been hit hard, and possibly harder than most people factor in. I will use ARKK here to illustrate an important point and why a subset of investors is in far more financial difficulty than might be apparent [assuming "traditional" portfolio construction]. ARKK, not accounting for dividends, is back to where it traded in the aftermath of the COVID shutdowns in March 2020. The number of shares outstanding have almost tripled since then. Yes, the number of shares traded daily is large and they frequently change hands, but on average, this shows that some large number of shares were issued as the fund price rallied. Many of those investors [on average] were originally reworded, but now, on average, those shares are somewhere between small losses and serious carnage. ARKK is down to $7.7 billion in AUM as of Friday from a peak of $28 billion in March 2021. The bulk of that change in market cap can be attributed to performance as shares outstanding are still near their peak. I highlight ARKK because I don't feel like talking about individual companies, the portfolio has changed so much, the performance is more generic than company specific, and ETFs are often just the observable "tip of the iceberg" of major trends that are more difficult to observe, but are still happening, TQQQ, the triple leveraged QQQ, exhibits a similar pattern and all the gambling stocks are doing poorly, which I attribute to incredible wealth destruction for a subset of investors, The three groups that I believe were most hurt are: Relatively young people, who took a very aggressive approach to trading/gambling [with relatively small amounts of money] that they can make back via their job earnings over time [or they might now need a job if they were living off of the trading/gambling money]. I don't see a material economic impact from this group, It may even encourage workforce participation, Aggressive disruptive investors. Many people went all-in on some version of a disruptive portfolio [I didn't even bring up those who treated mega-tech stocks as a bank account with dividends and upside], There could be some serious wealth lost here that will affect the economy [and is likely already affecting the economy], Employees, some of whom also adopted disruptive portfolios. As the likelihood of a near-term rebound recedes, there will be wealth preservation as a focus. The number of IPOs and SPACs that are not just below their all-time highs, but below their launch prices, is scary, and that really hurts the employees, or at least those who couldn't sell, didn't sell, or sold, but diversified into a disruptive portfolio. This is all deflationary (which I’m told is a good thing] but I cannot see how this is a good thing for the economy or broader markets! But the Economy is So Resilient? I challenge this. If we have an inventory overhang, the economy may grind to a halt far quicker than many are expecting. If banks start tightening lending practices [clear evidence this is occurring and will likely get worse than better] we will see credit contraction and that will feed into the economy, rapidly. We have NEVER gone from low rates and QE to higher rates and QT successfully [we haven't had many attempts, but I remain convinced that QE is very different than rate cuts and that it affects asset prices quite directly - see Stop Trying to Translate Balance Sheet to BPS. The wealth effect must be bad overall and devastating to some segments. My view is that: Things definitely hit faster than people realized. Often the inflection point has already occurred while many are still applying straight line extrapolation to what they perceive to be the still “existing" trend. "Gumming" up the piping often leads to more problems, rather than a quick solution [and I completely believe the current high levels of volatility in markets and lack of depth in liquidity is a form of gumming up the pipes]. If the problem hits the financial sector it is too late (unless immediate/strong support from central banks is provided). So far, the banking sector is looking good, though Europe is lagging the U.S, in that respect. The ECB came up with half-hearted efforts to reduce Italian bond yields relative to others. The JGB stuck to their yield curve targeting, but markets will soon just expect that to get reversed at their next meeting. Finally, the Fed, unlike in March 2020, will have difficulty reversing course and helping. The good news is so far this isn’t hitting the banking system, but I am watching this sector closely, especially in Europe. Risk happens fast! It's a phrase often said, but often ignored. I'm not ignoring it right now. Commodity Wars? This is a bigger question, and one that is coming up more frequently, but have we entered into a global "war" to secure natural resources? I think that, increasingly, this is the reality we live in and that will be inflationary, just like reshoring, onshoring, securing supply chains, and “transforming“ energy production/ distribution, etc., will all be inflationary longer-term as well, But I've taken up too much space already today and that isn’t a question that needs to be answered to drive my current thinking, Bottom Line I am including what I wrote last week because it largely worked and my views haven't materially changed, I added some color and exactness on the views while definitely shifting from DEFCON 3 to DEFC0N2. I want to own Treasuries here at the wide end of the range, but for the first time, I'm scared that we could break out of this range (big problem]. The 10-year finished almost unchanged on the week, going from 3.16% last Friday to close at 3.23% (it did gap to 3.48% on Tuesday]. The swings in the 2-year were even more "insane" given the level and maturity. So, as recession talk heats up, yields should go down, but I’d spend a bit of option premium protecting against a rapid gap to higher yields. Credit spreads should outperform equities here, though both may be weak, (Verbatim from last week]. Equities could be hit by the double whammy of earnings concerns and multiple reduction. I am told there is a lot of support, but I think that we see new lows this week unless central banks change their tune, which seems incredibly unlikely). I still find it mind boggling that we prefer recession to inflation. Crypto should remain under pressure. I think bitcoin will be sub $20k< before it reaches $35k. Now I think it will be $12,000 before $24,000. Have a great Father's Day and enjoy the Juneteenth long weekend! (Though, I have to admit, I kind of wish markets were open on Monday because this is the trading environment that deep down, I have to admit, I enjoy!] Tyler Durden Tue, 06/21/2022 - 07:20.....»»

Category: dealsSource: nytJun 21st, 2022

Union Pacific"s (UNP) 2022 Margins to be Hit Hard by Cost Woes

UNP expects overall volumes for 2022 to surpass the industrial output. At the UBS Global Industrials & Transportation Conference, Union Pacific UNP stated that overall volumes for the June quarter were down 2% (data as of Jun 2, 2022) year over year. The downside was mainly due to the 6% decline in volumes for the premium segment. The sorry picture for the premium segment is mainly due to the 10% reduction in intermodal volumes.Weakness in the international markets (international intermodal volumes are down 22%) induced the decline in overall intermodal volumes.Volumes at the bulk division slid 1% due to weakness in grain and grain products. Segmental volumes at the industrial segment were up 4% year over year owing to overall growth in the industrial market.UNP also warned that higher fuel prices and other escalated costs will dent its operating margin for 2022 as inflation is at a four-decade high. Per UNP CFO Jennifer Hamann, “inflationary pressures beyond fuel have increased since the beginning of the year, and we now expect our all-in inflation to be around 4% for the full-year”. Due to the cost pressure, UNP now anticipates its current-year incremental operating margin to be below the original expectation of mid-60%.Again, due to high operating expenses, Union Pacific is unlikely to meet its 2022 operating ratio (operating expenses as a % of revenues) guidance of beginning with 55. The ratio is likely to be higher. We note that lower the reading of this key metric, the better. However, growth is still expected for the current-year operating ratio from the prior-year reported figure.  Despite the cost headwinds, overall volumes for 2022 are still expected to exceed the industrial production.High costs apart, labor crunch and unfavorable weather are hurting UNP. Notably, shipping volumes are bouncing back from the pandemic pits but staff shortage is a bane as railroads like UNP try to meet the buoyant shipping demand scenario.However, on a brighter note, UNP’s current-year guidance with respect to capital allocation remains unchanged. Management still anticipates share repurchases for 2022 to be in line with the 2021 levels. Additionally, UNP repeats a dividend payout view of approximately 45% (of earnings) in the ongoing year. Capital spending outlook of $3.3 billion is also intact.Zacks Rank & Key PicksUnion Pacific currently carries a Zacks Rank #3 (Hold).  Some better-ranked stocks in the broader Zacks Transportation  sector are Ryder System R and Southwest Airlines LUV, presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Ryder has a trailing-four quarter surprise of 48.2%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. R is benefiting from improving economic and freight conditions in the United States. Revenues in all segments grew (on higher rental revenues, new business and favorable pricing) in first-quarter 2022.Recently, Ryder’s management lifted the earnings per share guidance for the second quarter as well as the full year. Favorable pricing in addition to strong rental and used vehicle sales promped management to hike guidance.Continued recovery in air-travel demand bodes well for Southwest Airlines. Anticipating a steady improvement in bookings, the carrier expects to reap profits in the remaining three quarters of 2022 as well as during the full year. LUV's management predicts operating revenues to increase 12-15% in the second quarter of 2022 from the comparable period’s level in 2019. LUV is seeing strong bookings for the spring and summer trips. The positivity surrounding the Southwest Airlines stock is evident from the Zacks Consensus Estimate for current-year earnings being revised in excess of 100% upward over the past 60 days. LUV has a Growth Style Score of B. Zacks' Top Picks to Cash in on Electric Vehicles Big money has already been made in the Electric Vehicle (EV) industry. But, the EV revolution has not hit full throttle yet. There is a lot of money to be made as the next push for future technologies ramps up. Zacks’ Special Report reveals 5 picks investorsSee 5 EV Stocks With Extreme Upside Potential >>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 Union Pacific Corporation (UNP): Free Stock Analysis Report Southwest Airlines Co. (LUV): Free Stock Analysis Report Ryder System, Inc. (R): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 8th, 2022

Futures Rise As Dip Buyers Emerge To Cap Best Week Since Mid-March

Futures Rise As Dip Buyers Emerge To Cap Best Week Since Mid-March Unless stocks crater today, and the S&P tumbles by 4.3%, the streak of seven consecutive weekly declines in the S&P is about to end... ... as US stock futures rose again on Friday, their third consecutive gain, setting up the underlying indexes for the first strong weekly finish since late March on signs consumers remain resilient despite inflationary pressures, as upbeat earnings from Alibaba and Baidu eased some fears on the economic impact of China’s Covid lockdowns, and as investors (mostly retail) have staged a cautious return to the market hoping that the selloff earlier this month left valuations at bargain levels. Nasdaq 100 contracts rose 0.5% by 7:15 a.m. in New York, while S&P 500 futures were up 0.4%. Still, even after the recent rout, upside may be limited as the S&P 500’s 12-month fwd P/E ratio is now near its 10-year average. Among notable moves in premarket trading, Gap Inc. shares sank as much as 17% as analysts after analysts said that the retailer’s guidance cut was worse than expected, prompting brokers to lower their targets and downgrade the stock given a worsening macroeconomic environment could trigger further bad news. China's Uber, Didi Chuxing, jumped after a Bloomberg News report that state-owned automaker China FAW Group is considering acquiring a significant stake in the ride-hailing company. Zscaler Inc. rose after the security software company reported results above expectations.  Here are some other notable premarket movers: Gap (GPS US) shares dropped as much as 17% in US premarket trading with analysts saying that the retailer’s guidance cut was more than expected, prompting brokers to lower their targets and downgrade the stock given a worsening macroeconomic environment could trigger further bad news. Costco (COST US) shares dropped 2.1% in US after-hours trading on Thursday. While Costco’s margins disappointed analysts, brokers were generally positive on how the wholesale retailer is navigating an environment with rising inflation by controlling expenses. Zscaler (ZS US) shares rose 2% in extended trading on Thursday, after the security software company reported third- quarter results that beat expectations and raised its full-year forecast. Analysts lauded strength in multi-product deals. Marvell Technology (MRVL US) shares climbed 3.4% in US postmarket trading after results. Analysts highlighted that the semiconductor maker is seeing strength across key markets, in particular across data center and carrier infrastructure. 23andMe Holding Co. (ME US) dropped 8.3% in postmarket trading Thursday. It is in a “tough spot,” Citi says in note after the consumer genetics firm gave a fiscal 2023 revenue forecast that missed expectations. Workday (WDAY US) shares fell 9% in extended trading on Thursday, after the software company reported adjusted first-quarter earnings that missed expectations. Analysts noted that software deals were pushed out of the quarter and cut their price targets as they factored in the increased global uncertainty. The latest round of retail earnings have restored some confidence in consumer demand, lifting appetite for risk assets, while speculation is growing that the Federal Reserve will pause its rate hikes later this year as inflation shows signs of peaking. Still, Citigroup strategists on Friday cut their recommendation on US stocks to neutral on the risk of a recession, joining an increasing number of banks in warning of a growth slowdown. The path for the Federal Reserve to successfully bring inflation down while keeping the rate of economic growth above zero is narrow, according to Mark Haefele, chief investment officer at UBS Global Wealth Management. “If Fed policymakers underestimate the strength of the US economy, we face an extended period of above-target inflation. If they overestimate it, we face a recession. And we can’t know with great conviction which path we’re on,” he wrote in a note. Global stock funds saw their biggest inflows in 10 weeks, led by US stocks, according to EPFR data, as cheaper valuations lured buyers after a steep selloff on recession fears. The selloff made valuations attractive and enticed investors back into a market still shadowed by worries about inflation and higher interest rates, China’s downbeat economic outlook and the war in Ukraine. “We may see a little bit more stability here because we have repriced the stocks so much already,” Anastasia Amoroso, iCapital chief investment strategist, said on Bloomberg Television. “In the next three to six months it’s still going to be a constrained market environment.” Meanwhile, China-US tensions are once again being played out after direct comments from Secretary of State Antony Blinken aimed at Chinese President Xi Jinping. And in a fresh challenge to Beijing, the US and Taiwan are planning to announce negotiations to deepen economic ties. And elseshwere, as the Russins war in Ukraine approaches 100 days, the US may announce a new package of aid for Kyiv as soon as next week that would include long-range rocket systems and other advanced weapons. Boris Johnson urged further military support for Ukraine, including sending it more offensive weapons such as Multiple Launch Rocket Systems that can strike targets from much further away. Russia’s efforts to avoid its first foreign default in a century are back in focus on Friday, when investors are supposed to receive about $100 million in interest on Russian debt. Turning back to markets, consumer and technology sectors led gains in Europe’s Stoxx 600 which rose 0.9%, and was headed for its best weekly advance since mid-March, while utilities and energy shared lagged after the UK government announced windfall tax plans on oil and gas companies on Thursday. BP Plc said it will look again at its plans in the country. Here are some of the more notable movers in Europe: Cantargia gains as much as 23%, the largest intraday rise since December, after releasing three research updates late Thursday. The interim readout for the company’s nadunolimab (CAN04), used in combination with gemcitabine and nab-paclitaxel as a first line treatment of PDAC, a type of pancreatic cancer, was the most interesting of the data releases, according Kempen. FirstGroup shares jump as much as 9.8%, extending the gains from yesterday’s confirmation that the public transport operator received an unsolicited takeover approach from I Squared. Richemont shares rise as much as 8.3%, heading for their best weekly advance since November, pushing the Swiss Market Index higher as dip buyers returned more broadly this week. European miners advance for a third day, outperforming all other sectors on the Stoxx 600 on Friday as iron ore futures climb and metals posted broad gains. Hapag-Lloyd falls as much as 7.1% after Citi cut the recommendation to neutral from buy due to valuation versus peers. In note on European shipping, broker says it expects the supply and demand dynamics to remain favorable in the near term. Rieter Holding falls as much as 5.4% as Baader Helvea downgrades its recommendation to reduce from add after the manufacturer of chemical fiber systems said that it’s seeing a challenging first half. Earlier in the session, Asian stocks also advanced as upbeat earnings from Alibaba and Baidu eased some fears on the economic impact of China’s Covid lockdowns and fueled risk-on sentiment. The MSCI Asia Pacific Index rose 1.6%, poised for its first gain in four sessions, led by consumer discretionary and technology shares. Most markets in the region were up, led by Hong Kong.  Alibaba and Baidu both delivered better-than-expected quarterly sales growth, providing investors with some relief after Tencent’s recent lackluster report and amid concerns over China’s virus measure and regulatory crackdowns. The Hang Seng Tech Index, which tracks the nation’s tech giants listed in Hong Kong, surged 3.8%. Asian equities have gained about 0.7% this week, set for a back-to-back weekly advance as dip buyers emerged. The regional MSCI benchmark is still down about 14% this year amid ongoing market concerns over global inflation and higher US interest rates, China’s economic outlook and the war in Ukraine. “The risk of a bull trap cannot be dismissed,” Vishnu Varathan, the head of economics and strategy at Mizuho Bank, wrote in a note. “Bear markets are famous for the pockets of relief rallies,” and increasing strains on liquidity in the coming quarters “may not pass without pain.” Japan’s stocks likewise advanced as the nation prepared to reopen to foreign tourists and China’s tech shares jumped.    The Topix rose 0.5% to 1,887.30 as of the 3pm close in Tokyo, while the Nikkei 225 advanced 0.7% to 26,781.68. Tokyo Electron Ltd. contributed the most to the Topix’s gain, increasing 3.2%. Out of 2,171 shares in the index, 1,480 rose and 615 fell, while 76 were unchanged In Australia, the S&P/ASX 200 index rose 1.1% to close at 7,182.70, the highest level since May 6, led by energy and consumer discretionary shares. Woodside Energy Group was among the biggest gainers as US crude and gasoline stockpiles showed signs of continuing decline ahead of the summer driving season. Appen was the top decliner after saying that Telus revoked its indicative proposal for a takeover. In New Zealand, the S&P/NZX 50 index fell 0.3% to 11,065.15 In FX, the Bloomberg Dollar Spot Index slumped as the dollar was steady to weaker against all of its Group-of-10 peers. Treasuries were steady across the curve. The euro inched up to touch a fresh one- month high of 1.0765 before paring. The bund yield curve bull- flattened slightly, drawing the 10-year yield away from 1%. Risk- sensitive Antipodean and Scandinavian currencies led gains. The Australian dollar climbed as a decent retail sales print brightened the outlook and a drop in the greenback triggered buy-stops. Benchmark bonds slipped. Australian retail sales rose 0.9% m/m in April vs estimate +1% and prior +1.6%. The pound ticked higher, touching its highest level in a month against the dollar, while gilts advanced. Chancellor of the Exchequer Rishi Sunak said that his package of support for the UK economy will have a “minimal” impact on inflation. The yen advanced for a second day as lower Treasury yields weighed on the dollar. Japanese bonds rise after being sold off on Thursday In rates, Treasuries were steady, following gains in European markets where bull-flattening was observed across bunds and gilts. Yields were richer by 1bp-3bp across the curve, the 10-year yield dropped by ~2bp to 2.72%, underperforming bunds by 1.5bp, gilts by ~3bp. IG dollar issuance slate still blank in what has so far been the slowest week of the year for new deals; next week’s calendar is expected to total $25b- $30b. Focal points for US session include several economic data releases including April personal income/spending with PCE deflator. Sifma recommended 2pm close of trading for dollar-denominated fixed income ahead of US holiday weekend.    In commodities, WTI drifts 0.7% higher to trade below $115. Spot gold rises roughly $7 to trade at $1,858/oz. Most base metals are in the green; LME nickel rises 6.6%, outperforming peers. Looking to the day ahead, and data releases include US personal income and personal spending for April, as well as the preliminary wholesale inventories for that month, and the final University of Michigan consumer sentiment index for May. In the Euro Area, there’s also the M3 money supply for April. Otherwise, central bank speakers include ECB Chief Economist Lane. Market Snapshot S&P 500 futures up 0.3% to 4,068.25 STOXX Europe 600 up 0.7% to 440.64 MXAP up 1.6% to 165.89 MXAPJ up 2.1% to 542.44 Nikkei up 0.7% to 26,781.68 Topix up 0.5% to 1,887.30 Hang Seng Index up 2.9% to 20,697.36 Shanghai Composite up 0.2% to 3,130.24 Sensex up 1.2% to 54,919.92 Australia S&P/ASX 200 up 1.1% to 7,182.71 Kospi up 1.0% to 2,638.05 German 10Y yield little changed at 0.99% Euro up 0.1% to $1.0737 Brent Futures up 0.4% to $117.91/bbl Gold spot up 0.5% to $1,859.48 U.S. Dollar Index down 0.16% to 101.67 Top Overnight News from Bloomberg The path for Russia to keep sidestepping its first foreign default in a century is turning more onerous as another coupon comes due on the warring nation’s debt. Investors are supposed to receive about $100 million of interest on Russian foreign debt in their accounts by Friday, payments President Vladimir Putin’s government says it has already made China’s oil trading giant Unipec has significantly increased the number of hired tankers to ship a key crude from eastern Russia A central bank legal proposal envisages Russian eurobond issuers placing “substitute” bonds in order to ensure debt payments come through to local investors, Interfax reported The US and Taiwan are planning to announce negotiations to deepen economic ties, people familiar with the matter said, in a fresh challenge to Beijing, which has cautioned Washington on its relationship with the island. Profits at Chinese industrial firms shrank last month for the first time in two years as Covid outbreaks and lockdowns disrupted factory production, transport logistics and sales “The process of increasing interest rates should be gradual,” ECB Governing Council member Pablo Hernandez de Cos comments in op- ed in Expansion. “The aim is to avoid abrupt movements, which could be particularly damaging in a context of high uncertainty such as the current one” The RBA is poised for its first review in a generation as new Treasurer Jim Chalmers makes good on a pledge to ensure the nation’s monetary and fiscal regimes are fit for purpose The UK signed its first trade agreement with a US state, amid warnings that Prime Minister Boris Johnson’s stance on Brexit is hindering progress on a broader deal with Joe Biden’s administration A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks took impetus from the risk-on mood on Wall St where all major indices were lifted amid month-end flows and encouraging retailer earnings.  ASX 200 was led higher by outperformance in the commodity and resources industries, while consumer stocks were mixed after Retail Sales printed in line with expectations, albeit at a slowdown from the prior month. Nikkei 225 traded positively but with upside capped by a mixed currency and weakness in energy and power names after increases in international prices and with the government looking to address the tight energy market. Hang Seng and Shanghai Comp were firmer with notable outperformance in Hong Kong amid a euphoric tech sector after earnings from Alibaba and Baidu topped estimates which also inspired the NASDAQ Golden Dragon China Index during the prior US session, while advances in the mainland were moderated by the contraction in April Industrial Profits and after Premier Li’s unpublished comments from Wednesday’s emergency meeting came to light in which he warned of dire consequences for the economy. Top Asian News China’s State Council will seek specific implementation rules by May 31st regarding necessary measures at all levels of government and will dispatch inspection teams to all 31 provinces, municipalities and autonomous regions to oversee the rollout amid an urgent need for national economic mobilisation, according to SGH Macro Advisors. US is seeking to hold economic discussions with Taiwan in the latest test with China, while supply chains and agriculture are said to be among the topics, according to Bloomberg. Furthermore, reports noted that bilateral economic talks will be announced in the upcoming weeks. Evergrande (3333 HK) is reportedly considering repaying offshore bondholders in instalments, according to Reuters sources; discussing giving the option of converting part of debt into equity of property management and EV units. China's Health Official says some areas along the Jilin border report local infections without a clear source, close attention should be paid to the risk of importing the virus; COVID infections show a trend of gradual spread from border to inland areas, via Reuters European bourses are firmer, Euro Stoxx 50 +0.9%, drawing impetus from APAC strength into month-end with catalysts thin thus far. Stateside, futures are supported across the board with familiar themes in play pre-PCE Price Index for insight into the 'peak' inflation narrative; ES +0.3%. Note, the FTSE 100 Unch. is the mornings underperformer amid pressure in energy names after Chancellor Sunak's windfall tax announcement on Thursday. DiDi (DIDI) has reportedly drawn interest from FAW Group, regarding a stake purchase, according to Bloomberg. +7.5% in the pre-market Top European News UK Oil Windfall Tax Prompts BP to Review Investment Plans; UK Energy Stocks Extend Windfall Declines as Retailers Gain Richemont Leads Swiss Stocks Higher as Dip Buyers Return Hapag-Lloyd Drops; Cut to Neutral at Citi on Valuation Big Dividend Payers May Be Next After UK Windfall Tax on Energy FX Greenback grinds higher ahead of PCE inflation metrics with month end rebalancing flows providing impetus, DXY bounces from fresh WTD base just under 101.500 to 101.800. Kiwi and Aussie propped by bounce in commodities and Loonie protected by further gains in crude; NZD/USD tests Fib retracement at 0.7129, AUD/USD eyes 0.7150 and USD/CAD probes 1.2750. Big option expiries in the mix and potentially supportive for the Dollar into long US holiday weekend, +1bln rolling off at NY cut not far from spot in EUR/USD, USD/JPY, AUD/USD and USD/CAD. Rand firmer as Gold touches Usd 1860/oz after 200 DMA breach, USD/ZAR below 15.7000. Fixed Income Debt futures on a firmer footing ahead of US PCE price metrics, but some way below weekly peaks. Bunds sub-154.00, Gilts under 119.00 and 10 year T-note below 121-00. Curves a tad flatter following hot reception for 7 year US issuance. Commodities Crude benchmarks are underpinned, but off best levels, by broader sentiment and initial USD weakness going into a long US weekend with Memorial Day touted as the driving seasons commencement. WTI July and Brent August, at best, were in proximity to USD 115/bbl vs troughs of USD 113.61/bbl and USD 113.77/bbl respectively. US Treasury is reportedly expected to renew Chevron’s (CVX) license to operate in Venezuela as soon as Friday, according to Reuters citing sources. China's State Planner has approved a coal mine in the Shanxi area to bolster annual output to 12mln tonnes per annum from 8mln; investment of CNY 5.35bln, via Reuters. Spot gold is steady and holding onto the bulk of overnight upside after breaching the 21-DMA at USD 1850.80/oz; USD 1860.19/oz peak, thus far. US Event Calendar 08:30: April Advance Goods Trade Balance, est. -$114.8b, prior -$125.3b, revised -$127.1b 08:30: April Retail Inventories MoM, est. 2.0%, prior 2.0% April Wholesale Inventories MoM, est. 2.0%, prior 2.3% 08:30: April Personal Income, est. 0.5%, prior 0.5%; April Personal Spending, est. 0.8%, prior 1.1% 08:30: April PCE Deflator MoM, est. 0.2%, prior 0.9%; PCE Deflator YoY, est. 6.2%, prior 6.6% April PCE Core Deflator MoM, est. 0.3%, prior 0.3%; PCE Core Deflator YoY, est. 4.9%, prior 5.2% April Real Personal Spending, est. 0.7%, prior 0.2% 10:00: May U. of Mich. Current Conditions, est. 63.6, prior 63.6; Expectations, est. 56.3, prior 56.3; Sentiment, est. 59.1, prior 59.1 10:00: May U. of Mich. 1 Yr Inflation, est. 5.4%, prior 5.4%; 5-10 Yr Inflation, prior 3.0% DB's Jim Reid concludes the overnight wrap A reminder that it’s your last chance to answer our latest monthly survey, where we try to ask questions that aren’t easy to derive from market pricing. This time we ask if you think the Fed would be willing to push the economy into recession in order to get inflation back to target. We also ask whether you think there are still bubbles in markets and whether equities have bottomed out yet. And there’s another on which is the best asset class to hedge against inflation. The more people that fill it in the more useful so all help from readers is very welcome. The link is here. I did have tickets available for tomorrow night's Champions League final but there is a big 36 hole golf tournament at my club so I decided that at my age you never know when your body will fail next so playing sport now pips watching it live. So I'll be playing golf all day, trying to rescue my marriage for an hour when I get home, and then blaring out the final on the TV at home with a couple of glasses of wine for good measure. I can't honestly think of a better day. However I may come last and Liverpool may lose so let's see what happens! The market comeback this week is on a par with some of Madrid's remarkable ones this year and indeed it’s been another strong performance over the last 24 hours, with better-than-expected outlooks from US retailers helping to bolster sentiment, coupled with growing hopes that the Fed won’t take policy much into restrictive territory, if at all. Those developments helped the S&P 500 to post a +1.99% advance yesterday, bringing its gains for the week to +4.01%, and means we should finally be on the verge of ending a run of 7 consecutive weekly losses. Obviously it’s not impossible things could end up in negative territory given recent volatility, and it was only last week the index posted a one-day decline of more than -4%, but it would still take a massive slump today to get an 8th consecutive week in the red for only the third time since the Great Depression. That advance grew stronger as the day went on, with S&P futures having actually been negative when we went to press yesterday. But sentiment was aided by a number of positive earnings developments, with Macy’s (+19.31%) boosting its adjusted EPS guidance before the US open, whilst the discount retailers Dollar Tree (+21.87%) and Dollar General (+13.72%) both surged as well thanks to decent reports of their own. That helped consumer discretionary (+4.78%) to be the top performing sector in the S&P, and in fact Dollar Tree was the top performing company in the entire index. Cyclicals were the outperformers, but defensives also shared in the advance that saw around 90% of the index’s members move higher on the day. As well as that news on the retail side, risk appetite has been further supported by growing speculation that the Fed won’t be as aggressive in hiking rates as had been speculated just a few weeks ago. I'm not sure I agree with that conclusion but if you look at the futures-implied rate by the December 2022 meeting of 2.64%, that is some way down from its peak of 2.88% back on May 3rd, and in fact means that markets have now taken out just shy of one 25bp hike from the rate implied by year end, which makes a change from that pretty consistent move higher we’ve seen over recent months. Yesterday also brought fresh signs that this re-pricing is beginning to filter its way through to the real economy, with data from Freddie Mac showing that the average rate for a 30-year mortgage fell to 5.10% last week, down from 5.25% the week before. For reference that’s the biggest weekly decline since April 2020, and comes on the back of recent housing data that’s underwhelmed against the backdrop of higher rates. There was another report fitting that pattern yesterday too, with pending home sales for April dropping by a larger than expected -3.9% (vs. -2.1% expected). But as with the retail outlooks, the more timely data was much more positive, with the weekly initial jobless claims falling to 210k (vs. 215k expected) in the week ending May 21, whilst the Kansas City Fed’s manufacturing index for May came in at 23 (vs. 15 expected). Treasuries swung back and forth against this backdrop, but ultimately the more bullish outlook led to a small steepening in the curve, with the 2yr yield down -1.6bps as 10yr yields were essentially flat at 2.75%. In a change from recent weeks, breakevens marched higher despite the little changed headline, with the 10yr breakeven up +7.0bps to come off its two-month low the previous day. But to be fair, that came amidst a big surge in oil prices after US data showed gasoline stockpiles fell to their lowest seasonal level since 2014, with Brent Crude (+2.96%) up to a 2-month high of $117.40/bbl, whilst WTI (+3.41%) rose to $114.09/bbl. European markets followed a pretty similar pattern to the US, with the STOXX 600 advancing +0.78% on the day. However, utilities (-1.12%) were the worst-performing after the UK government moved to impose a temporary windfall tax on oil and gas firms’ profits at a rate of 25%. That came as part of a wider package of measures to help with the cost of living, adding up to £15bn in total. They included a one-off payment of £650 to 8mn households in receipt of state benefits, with separate payments of £300 to pensioner households and £150 to those receiving disability benefits. There was also a doubling in the energy bills discount from £200 to £400, whilst the requirement to pay it back over five years has been removed as well. See Sanjay Raja’s blog on it here and where he also compares the measures to similar ones seen in the big 4 EuroArea economies. With more fiscal spending in the pipeline, UK gilts underperformed their counterparts elsewhere in Europe, with 10yr yields ending the day up +5.9bps. Those on bunds (+4.6bps) and OATs (+3.2bps) also rose too, but the broader risk-on tone led to a tightening in peripheral spreads, with the gap between 10yr BTPs over bunds falling -10.4bps yesterday to 189bps. There was a similar pattern on the credit side, with iTraxx crossover coming down -23.9bps to 439bps, which was its biggest daily decline in nearly 2 months. Asian equity markets are joining in the rally this morning with the Hang Seng rising +2.93% as Chinese listed tech stocks are witnessing big gains after Alibaba (+12.21%) posted better than expected Q4 earnings yesterday. Mainland Chinese stocks are also trading higher with the Shanghai Composite (+0.52%) and CSI (+0.63%) up. Elsewhere, the Nikkei (+0.63%) and Kospi (+0.89%) are also in the green. Outside of Asia, futures contracts on the S&P 500 (-0.11%) and NASDAQ 100 (-0.14%) are seeing mild losses. Data released earlier showed that Tokyo’s core CPI rose +1.9% y/y in May versus +2.0% expected. Core core was +0.9% y/y as expected with nothing here at the moment to change the BoJ's stance. Elsewhere, China’s industrial profits (-8.5% y/y) shrank at the fastest pace in two years in April, swinging from a +12.2% gain in March. On the geopolitical front, we heard from US Secretary of State Blinken yesterday, who gave a significant speech on the Biden Administration’s China policy. Blinken zoomed out to give a view of the forest from the trees, noting that the Russia-Ukraine conflict was not as strategically important as America’s relationship with China over the long-run. He offered a three pillar strategy for managing the relationship with China that involved investing in US competitiveness, aligning strategy with allies to enhance effectiveness, and to compete with China across economic, military, and technological frontiers. He noted the countries’ two different political systems need not impair connection between its peoples, or inhibit dialogue. Staying on the US-China front but switching gears, a bi-partisan group of US senators sent a letter to President Biden urging him to keep tariffs on China, to improve the US’s negotiating position in future deals, pouring cold water on the prospects for tariff relief to provide a temporary salve to raging price pressures. To the day ahead, and data releases include US personal income and personal spending for April, as well as the preliminary wholesale inventories for that month, and the final University of Michigan consumer sentiment index for May. In the Euro Area, there’s also the M3 money supply for April. Otherwise, central bank speakers include ECB Chief Economist Lane.   Tyler Durden Fri, 05/27/2022 - 07:54.....»»

Category: blogSource: zerohedgeMay 27th, 2022

From burgers to breakfast cereal, some key ingredients are being hit by food export bans &mdash; industry experts tell us what might be next

Countries are increasingly imposing food export bans and its amping up prices worldwide. Experts say these prices won't die down any time soon. Getty Images Food prices are soaring from export bans and it's affecting everything from burgers to cereal.  Commodities including wheat, sugar, and cooking oils have become fewer to find.  "Prices are real high and they don't seem to be going down any soon," an industry expert said.  Heatwaves, poor harvests, supply-chain bottlenecks and disruption from war in Ukraine have sent food prices soaring this year. In response, a number of countries around the world have imposed export bans in order to protect their own national food supply, which has only added to the problem.Export bans have affected food products from wheat and beef to palm oil, as countries scramble to protect domestic prices and maintain food security. And the scenario has been even more complicated by COVID-19-induced supply chain disruptions and environmental factors such as droughts last year. "There is a myriad of problems, none of which would resolve themselves in any great hurry," Marc Ostwald, chief economist at ADM Investor Services International, a UK-based multi-asset brokerage firm, told Insider. It's not the first time the world has suffered from an agricultural commodity price shock. Food inflation was a problem from 2007 to 2008 in the aftermath of the global financial crisis, where countries like Ukraine and other major grain exporters banned supplies to defend domestic prices. India and Vietnam, the biggest exporters of rice, also restricted imports to fight soaring food prices. A similar situation is playing out now, where Ukraine again has halted wheat exports, in part because war will almost certainly disrupt the planting of the new crop this year. Indonesia has placed a blanket ban on the export of palm oil, and Argentina has blocked certain beef cuts. These bans only stand to worsen a cost-of-living crisis, where people face surging food price inflation and rising utility bills, after a series of sanctions on Russian energy exports. "We're at a point where prices are real high, and they don't seem to be going down any soon. As long as prices are high, there's going to be a temptation for some countries to try to help their consumers by keeping prices low," Joseph Glauber, a researcher at the International Food Policy Research Institute told Insider. Experts also at IFPRI point out that more food export bans "tend to be contagious, as other exporting countries follow suit and implement their own bans," suggesting further measures may be on the horizon.Here are the key agricultural exports that have been restricted in the last year and what it's meant for food prices. Industry experts also tell Insider what commodities could be banned next. Bloomberg/Business InsiderWheatAndy Sacks/Getty ImagesProblems are piling up in the wheat market as major producers including Russia, Ukraine, India, and Kazakhstan have banned exports. Russia, which is the world's largest exporter, had already introduced quotas and new taxes on exports in 2021 prior to its war with Ukraine, in an effort to cool down domestic food inflation. After invading Ukraine however, the Kremlin placed additional wheat export bans on ex-Soviet countries. The measures were put in place "to protect the domestic food market in the face of external constraints," the government said, per Reuters. The world's second-largest producer, India, is the latest country to make the same move. Earlier this month, India said it would stop wheat exports to protect its food security as a result of the war and high inflation. The announcement caused wheat prices to soar by 4.36% in a day to $12.28 a bushel, topping their highest since mid-March. "India's actions set a precedent: the world's largest democracy has instituted a ban, a practice much more associated with more authoritarian governments," Cullen Hendrix of the Peterson Institute for International Economics told Insider.He added: "The demonstration effect on other democracies may be large, especially if markets are buffeted by more bad news like lower-than-anticipated harvests in other major exporting countries." Palm OilWorkers harvesting oil palm fruits in Malaysia.Giles Clarke/Getty ImagesIndonesia, the world's biggest exporter of edible-oils, banned the shipping of palm oil as the country grapples with a shortage of cooking oil.The ban was also enacted as a way to tame domestic prices of its staple cooking oil down.After Indonesia imposed the ban, prices initially shot by 7% but later eased after it was reported Indonesia was only banning bulk and packaged RBD palm olein - a more processed type of oil. Palm oil prices have risen by more than 50% so far in 2022, far outstripping gains in other major ingredients.In a most recent development, however, Bloomberg among other outlets reported that Indonesia lifted its ban on palm oil exports in light of improvements in domestic supply and prices. Sunflower oilA supermarket shelf in Spain is seen half stocked with sunflower oil.Paco Freire/SOPA Images/LightRocket/Getty Images)Alongside wheat, Russia also capped the export of sunflower seeds between April and August. It also imposed an export quota on sunflower oil to calm prices at home, per Reuters. Ukraine and Russia are the world's largest producers of sunflower oil, with Ukraine accounting for about 50% of the sunflower oil trade in the world, according to Glauber. "This set of measures will eliminate the possibility of shortages, as well as sharp increases in the cost of raw materials and socially important products in Russia," the ministry on March 31, per the outlet. Sunflower oil has risen by nearly 68% in 2022, and has risen 50% since the end of March alone. Soybean oilPhoto by STR/AFP via Getty ImageThe oil crop industry has had no break, with Argentina also suspending export sales of soybean meal and soybean oil. The step from the world's top exporter of soy oil and meal came after weeks of drought in the country. "The ghost of the productive disaster of 2018 is surrounding 2021/22 soy," the Rosario grains exchange said in February, per Reuters."There's new bad news for Argentina concerning the weather. 'La Nina' has gained ground and it's impact will not be diminished, like we thought up to just some days ago," the exchange added. During a "La Niña" weather pattern, temperatures in the southern third of the US usually rise, meaning the region is vulnerable to droughts. With the onset of soy oil and meal export bans, Reuters reported that US soy meal futures rose by more than 2.2% while soy oil futures fell by 1.26%. Soybean oil, which is used in cooking and even some industrial applications, is the second-most used vegetable oil after palm oil. Soybean oil futures have gained nearly 60% so far this year.  BeefPhoto by AAron Ontiveroz/MediaNews Group/The Denver Post via Getty ImagesAway from oils, Argentina imposed a ban on the export of seven beef cuts until 2023, per Bloomberg. The country is the fifth-largest beef exporter, tallying about 6% of the world's beef exports, according to the USDA.The restrictive measures came with the intent to cool down local prices for local consumers after inflation hit 50.9% in 2021.While live cattle futures have risen 12% in the last year, the price consumers pay for their burger patties has risen more quickly. According to the USDA, the retail price of ground beef has risen by 20% in the last 12 months.SugarPhoto by Melissa Erichsen/picture alliance via Getty ImagesA number of countries have also frozen exports of sugar in recent months. This includes Russia, Algeria, Kosovo, and Ukraine. "People are suddenly becoming aware that their food security is not what they thought it was," ADM's Ostwald said.The price of sugar has gained around 30% in the last 12 months, adding to pressure on food manufacturers and consumers.Maize...Corn could be a commodity hit by export bans in the future.Photo credit should read CFOTO/Future Publishing via Getty ImagesSpeaking to Glauber, there may be more commodities that could be restricted in the future, including corn. "The maize market certainly has been disrupted by the fact that right now, Ukraine can't export any maize," Glauber said, as a result of military operations in the country from its war with Russia. Hendrix echoed similar sentiments. He said: "If additional products were to become a concern, it would likely be substitutes for those basic staples being caught by the current bans or restrictions, including wheat, sunflower and palm oils, and the like. These would be things like corn and other vegetable oils." The broader picture, according to ADM's Ostwald, is focusing on improving aging infrastructure in the agricultural industry. "We've had a technology boom and we've used it in the wrong places," he said. He added: "We've got ageing infrastructure everywhere, we've been complacent about supply-chains, and if we'd actually be thinking ahead above all, at government levels, we wouldn't have a lot of these problems." Corn prices have risen by just 10% in the last year, a far cry from the 41% rise in the cost of wheat or the near-75% gain in palm oil. But they're still at their highest in a decade. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 21st, 2022

The Evolution Of Credit & The Growing Fiat Money Crisis

The Evolution Of Credit & The Growing Fiat Money Crisis Authored by Alasdair Macleod via GoldMoney.com, After fifty-one years from the end of the Bretton Woods Agreement, the system of fiat currencies appears to be moving towards a crisis point for the US dollar as the international currency. The battle over global energy, commodity, and grain supplies is the continuation of an intensifying financial war between the dollar and the renminbi and rouble. It is becoming clear that the scale of an emerging industrial revolution in Asia is in stark contrast with Western decline, a population ratio of 87 to 13. The dollar’s role as the sole reserve currency is not suited for this reality. Commentators speculate that the current system’s failings require a global reset. They think in terms of it being organised by governments, when the governments’ global currency system is failing. Beholden to Keynesian macroeconomics, the common understanding of money and credit is lacking as well. This article puts money, currency, and credit, and their relationships in context. It points out that the credit in an economy is far greater than officially recorded by money supply figures and it explains how relatively small amounts of gold coin can stabilise an entire credit system. It is the only lasting solution to the growing fiat money crisis, and it is within the power of at least some central banks to implement gold coin standards by mobilising their reserves. Evolution or revolution? There are big changes afoot in the world’s financial and currency system. Fiat currencies have been completely detached from gold for fifty-one years from the ending of the Bretton Woods Agreement and since then they have been loosely tied to the King Rat of currencies, the dollar. Measured by money, which is and always has been only gold, King Rat has lost over 98% of its relative purchasing power in that time. From the Nixon Shock, when the Bretton Woods agreement was suspended temporarily, US Government debt has increased from $413 bn to about $30 trillion — that’s a multiple of 73 times. And given the US Government’s mandated and other commitments, it shows no signs of stabilising. This extraordinary debasement has so far been relatively orderly because the rest of the world has accepted the dollar’s hegemonic status. Triffin’s dilemma has allowed the US to run economically destructive policies without undermining the currency catastrophically. Naturally, that has led to the US Government’s complacent belief that not only will the dollar endure, but it can continue to be used for America’s own strategic benefits. But the emergence of rival superpowers in Asia has begun to challenge this status, and the consequence has been a financial cold war, a geopolitical jostling for position, particularly between the dollar and China’s renminbi, which has increased its influence in global financial affairs since the Lehman crisis in 2008. Wars are only understood by the public when they are physical in form. The financial and credit machinations between currency-issuing power blocs passes it by. But as with all wars, there ends up a winner and a loser. And since the global commodity powerhouse that is Russia got involved in recent weeks, America has continued its policy of using its currency status to penalise the Russians as if it was punishing a minor state for questioning its hegemonic status. The consequence is the financial cold war has become very hot and is now a commodity battle as well. Bringing commodities into the conflict is ripe with unintended consequences. Depending how the Russians respond to US-led sanctions, which they have yet to do, matters could escalate. In the West we have comforted ourselves with the belief that the Russian economy is on its uppers and Putin will have to either quickly yield to sanctions pressures, or face ejection by his own people in a coup. But that is a one-sided view. Even if it has a grain of truth, it ignores the consequences of Putin’s military failures on the ground in Ukraine so far, and his likely desperation to hit back with the one non-nuclear weapon at his disposal: Russia’s commodity exports. He may take the view that the West is damaging itself and little or no further action is required. And surely, the fact that China has stockpiled most of the world’s grain resources gives Russia added power as a marginal supplier. Putin can afford to not restrict food and fertiliser exports, blaming on American policy the starvation that will almost certainly be suffered by all non-combatant nations. He could cripple the West’s technology industries by banning or restricting exports of rare metals which are of little concern to headline writers in the popular press. He might exploit the one big loophole left in the sanctions regime by supplying China with whatever raw materials and energy it needs at discounted prices. And China could compound the problem for the West by restricting its exports of strategic commodities claiming they are needed for its own manufacturing requirements. While everyone focuses on what is seen, it is what is not seen that is ignored. Commodities are the visible manifestation of a trade war, while payments for them are not. Yet it is the flow of credit on the payment side where the battle for hegemonic status is fought. The Americans and their epigones in Europe have tried to shut down payments for Russian trade through the supposedly independent SWIFT system. And even the Bank for International Settlements, which by dealing with both Nazi Germany and the Allies retained its neutrality in the Second World War, is siding with the West today. But step back for a moment to look at how broadly based the West’s position is in a global context, because that will be a factor in whether the dollar’s hegemony will survive this conflict. We see America, the EU, Japan, the UK, Canada, Australia, and New Zealand on one side. In population terms that’s roughly 335, 447, 120, 65, 38, 26 and 5 million people respectively, totalling 1,036 million, only 13% of the world population. This point was made meaningfully by the Saudis who now want to talk with Putin rather than Biden. As long ago as 2014, this writer was informed by a director of a major Swiss refinery that Arab customers were sending LBMA 400-ounce bars for recasting into Chinese four-nine one kilo bars. The real money saw this coming at least eight years ago. Even if the US’s external policies do not end up undermining the dollar’s global status, it is becoming clear that the King Rat of currencies is under an existential threat. And the Fed, which is responsible for domestic monetary policies, in conjunction with the Biden administration is undermining it from the inside as well by trying to manage a failing US economy by accelerating its debasement. A betting man would therefore be unlikely to put money on a favourable dollar outcome. Whether the dollar suffers a crisis or merely an accelerated decline, just as Nixon changed the world’s monetary order in 1971 it will change again. That the current situation is unsatisfactory is widely recognised by multiple commentators, even in America, calling for a financial and currency reset. And it is assumpted that the US Government and its central bank should come up with a plan. There are two major problems with the notion that somehow the deck chair attendant can save the ship from sinking by rearranging the sun loungers. The first error is insisting that money is the preserve of only the state and is not to be decided by those who use it. It was the underlying fallacy of Georg Knapp’s State Theory of Money published in 1905. That ended with Germany printing money to arm itself in the hope that it would win: it didn’t and Germany ended up destroying its papiermark. The second error is that almost no one understands money itself, as evidenced by the whole financial establishment, from the governments down to junior fund managers, thinking that their currencies are money. Commentators calling for a reset are themselves in the dark. Events will deal with the fallacies behind the State Theory of Money and whether it will turn out to be an evolution or revolution. But at least we can have a stab at explaining what money is for a modern audience, so that the requirements and conditions of a new currency system to succeed can be better understood. What is money for? The pre-Keynesian classical economic explanation of money’s role was set out in Say’s Law, otherwise known as the law of markets. Jean-Baptiste Say was a French economist, who in his Treatise on Political Economy published in 1803 wrote that, “A product is no sooner created than it, from that instant, affords a market for other products to the full extent of its own value.” And “Each of us can only purchase the productions of others with his own productions — and so the value we can buy is equal to the value we can produce. The more men can produce the more they will purchase.” Money or credit is the post-barter link between production and consumption facilitating the exchange between the two. What to produce and what is needed in exchange is a matter for those involved in individual transactions. And the medium of exchange used is a decision for each of the parties. They will tend to use a medium which is convenient and widely accepted by others. Say’s Law was incorrectly redefined and trashed by Keynes to “…that the aggregate demand price of output as a whole is equal to the aggregate supply price for all volumes of output is equivalent to the proposition that there is no obstacle to full employment.” This has subsequently been shortened to “supply creates its own demand”. Keynes’s elision of the truth was leading to (or was it to justify?) his erroneous invention of mathematical macroeconomics. It is simply untrue. All Say was pointing out is we divide our labour as the most efficient means of production for driving improvements in the human condition. That cannot be argued with, even by blinkered Keynesians. Money, or more correctly credit has two roles in this division of labour. The first is as the medium for investment in production, because things must be made before they can be sold and there are expenses in the form of presale payments that must be made. And the second is to act as the commonly accepted intermediary between the sale of products to their buyers. Instead of opining that supply creates its own demand, if we say instead that people make things so they can buy the products and services they don’t make for themselves, it is so obviously true that Keynes and his self-serving theories don’t have a leg to stand on. And importantly, full employment has nothing to do with it. The money involved is always credit. Even the act of lending gold coins to an entrepreneur to make something is credit because it is to be repaid. If gold coins are the payment medium between production and consumption, they are the temporary storage of production before it is spent. In this very narrow sense, they represent the credit of production which will be spent. The principal quality of gold, which when it is at rest is undeniably money, is that it has no counterparty risk and is to be parted with last. The point is that money in circulation is a subsection of wider credit and is the very narrowest of definitions of circulating media. But even under a gold standard, it is hardly ever used in transactions and rarely circulates. This is partly due to a Gresham’s Law effect, where it is only exchanged for inferior forms of credit as a last resort, and partly because it is less convenient than transferring banknotes or making book entries across bank ledgers. By far the most common forms of circulating media are credit in the form of banknotes issued by a central bank, and transferable credit owed by banks to depositors. But in our estimate of a practical replacement of the current fiat currency-based system, we must also acknowledge that credit is far broader than that recorded as circulating by means of the banking system. We are increasingly aware of the term, “shadow banks” most of which are pass-through channels of credit rather than credit creators. But doubtless, there is expanded credit in circulation originating from shadow banks, the equivalent of officially recorded bank credit, which is not captured in the money supply statistics. But there are also wider forms of credit in any economy. Defining credit To further our understanding of credit, we must define the fundamental concept of credit: Credit is anything which is of no direct use, but which is taken in exchange for something else, in the belief or confidence that we have the right to exchange it away again. It is the right to a future payment, not necessarily in money or currency. It is not the transfer of something, but it is a right to a future payment. Consequently, the most common form of credit is an agreement between two parties which has nothing to do with bank credit per se. Bank credit is merely the most obvious and recorded subset of the entire quantity of credit in an economy. And the whole world of derivatives, futures, forwards, and options, are also credit for an action in time, additional to bank credit. Global M3 money supply is said to be $40 trillion equivalent, about 3% of investments, derivatives, and cryptocurrencies, all of which are forms of credit: rights and promises to future payments in credit or currency. And this is in addition to private credit agreements between individuals and other individuals, and between businesses and individuals, which are extremely common. The commonly stated position among sound money advocates of the Austrian school is that bank credit should be replaced by custodial deposit-taking banks and separate arrangers of finance. But given the broad definition of credit in the real world, eliminating bank credit appears untenable when individuals are free to offer multiple amounts of credit and the vast bulk of credit creation is outside the banking system. Consider the case of a bookie accepting wagers for a horse race. Ahead of the event, he takes on obligations many times the capital in his business, in return for which he is paid in banknotes or drawings on bank credit by his betting customers. When the race is over, he keeps the losers’ stakes and is liable for payments to holders of the winning bets. He has debts to the winners which are only extinguished when the winners collect. While there are differences in procedures and of the risks involved, in principal there is little difference between a bookie’s business and that of a commercial bank; they are both dealers in credit. Arguably, the bookie has the sounder business model. The restriction imposed on an individual providing credit to others is his potential liability if it is called upon. The unfairness in the current system is not that bank credit is permitted, but that is permitted with limited liability. Surely, the solution is to ensure that all providers of credit are responsible for the risks involved. Licenced banks and their shareholders should face unlimited liability. It is even conceivable that listed capital in an overleveraged bank might trade at negative values if shareholders face a risk of unlimited calls on their wealth. That should promote responsibility in bank lending. It will not eliminate the cycle of bank credit expansion and contraction, but it will certainly lessen its disruptive impact. Variations in the purchasing power of a medium of exchange A proper consideration of credit, the all-embracing term for mediums of exchange to include future promises, shows that government statistics for money supply are a diminishingly small part of overall credit in an economy. We must take this fact into account when considering changes in the official quantity of money on the purchasing power of units of the medium of exchange (that is credit in the form of circulating banknotes and commercial bank credit — M1, M2, M3 etc.). A downturn in economic activity must be considered in the broader sense. If, for example, I say to my neighbour that if he arranges it, I will cover half the cost of fencing the boundary between our properties, I have offered him credit upon which he can proceed to contract a fencing supplier and installer. However, if in the interim my circumstances have changed and I cannot deliver on my promise, the credit agreement with my neighbour is withdrawn and the fence might not be installed. A father might promise his son an allowance while he attends university. That is a credit agreement with periodic drawdowns lasting the course. Later, the father might promise help in buying a property for his son to live in. These are promises, whose values are particular and precarious. And they will be valid only so long as they can be afforded. If there is a general change in economic conditions for the worse, it is almost certainly driven more by the withdrawal of unrecorded credit agreements between individuals and small businesses such as corner shops, and not directly due to bank credit contraction. An appreciation of these facts and of changes in human behaviour which cannot be recorded statistically explains much about the lack of correlation between measures of credit (i.e., broad money supply) and prices. The equation of exchange (MV=PQ) does not even capture a decent fraction of the relationship between the quantity of credit in an economy and prices. Our understanding of the wider credit scene goes some way to resolving a mystery that has bedevilled monetary economists ever since David Ricardo first proposed the relationship over two centuries ago. In theory, an increase in the quantity of measurable credit (that is currency in the banking system) leads to a proportionate increase in prices. Even allowing for statistical legerdemain, that is patently not true, as Figure 1 illustrates. Figure 1 shows that over the last sixty years, the broadest measure of US dollar money supply has increased by nearly seventy times, while prices have increased about nine. The equation of exchange explains it by persuading us that each unit of currency circulates less so that the increase in the money quantity somehow leads to less of an effect on prices. This interpretation is consistent with Keynes’s denial of Say’s Law. The Law tells us that we all make profits and/or earn salaries, which in the time-space of a year means we can only spend and save once. That is an unvarying velocity of unity. Instead, the mathematical economists have introduced a variable, V, which simply balances an equation which should not exist. That is not to say that credit expansion does not affect the purchasing power of a currency. Logic corroborates it. But an understanding of the true extent of credit in an economy confirms that the sum of currency and recorded bank credit is just a small part of the story – only one eighth as indicated by the divergence between M3 and consumer prices — all else being equal. It brings us to the other driving force in the credit/price relationship, which is the public acceptability of the currency. Ludwig von Mises, the Austrian economist, who lived through the Austrian inflation in the post-WW1 years and whose advice the Austrian government was reluctant to accept, observed that variations in public confidence in the currency can have a profound effect on its purchasing power. Famously, Mises described a crack-up boom as evidence that the public had finally abandoned all faith in the government’s currency and disposed of all of it in return for goods, needed or not. It leads to the sensible conclusion that irrespective of changes in the circulating quantity, the purchasing power is fully dependent on the public’s faith in the currency. Destroy that, and the currency becomes valueless as a medium of exchange. If confidence is maintained, it follows that the price effects of a currency debasement may be minimised. This brings us to gold coin. If the state backs its currency with sufficient gold which the public is free to obtain on demand from the issuer of the currency, then the currency takes on the characteristics of gold as money. We should not need to justify this established and ancient role for gold, or silver for that matter, to the current generations of Keynesians brainwashed into thinking it’s just old hat. Though they rarely admit it, central bankers fully committed to their fiat currencies still retain gold reserves in the knowledge that they are no one’s liability; that is to say, true money while their currencies are simply credit. Given what we now know about the extent of credit beyond the banking system and the role of public confidence in the currency when it is a credible gold substitute, we can see why a moderate expansion of the currency need not undermine its purchasing power proportionately. While the cycle of bank credit expansion and contraction leads to the boom-and-bust conditions described by Von Mises and Hayek in their Austrian business cycle theory, the effects on prices under a gold standard do not appear to have been enough to destabilise a currency’s purchasing power. Figure 2 illustrates the point. Admittedly there are several factors at work. While the increase in the quantity of currency in circulation was generally restricted by the gold coin standard, the bank credit cycle of expansion and contraction led to periodic bank failures. Then as now, the quantity of bank credit relative to bank notes was eight or ten times, and so long as the note-issuing bank remained at arm’s length from the tribulations of commercial bank credit the overall price effects were contained. Britain abandoned the gold standard in 1914, and just as the abandonment of the silver standard in the 1790s led to an increase in the general price level, a dramatic increase occurred during the First World War. This was due to deficit spending by the state driving up material costs at a time when imported factors of supply were limited by the destruction of merchant shipping. The end of the war restored the supply/demand balance and saw a reduction in military spending. Prices fell and then stabilised. A gold bullion standard at the pre-war rate of exchange was re-established in 1925, only to be abandoned in 1931. The Second World War and subsequent lack of any anchor to the currency led to an inexorable rise in prices before America abandoned the Bretton Woods Agreement in 1971. And since then, the sterling price of gold has risen even further from £14.58 when the Agreement ceased to £1,470 today. Measured in true money the currency has lost over 99% of its purchasing power over the last fifty-one years. Both logic and the empirical evidence point to the same conclusion: price stability can only be achieved under a working gold coin standard, whereby ordinary people can, should they so wish, exchange banknotes for coin on demand. Despite making up most of the circulating medium, fluctuations in bank credit then have less of an effect on prices, for the reasons stated above. Can cryptocurrencies replace gold? The reason gold is relatively stable in purchasing power terms is that through history, above ground stocks have expanded at similar rates to population growth. A very gradual increase in gold’s purchasing power comes from manufacturing, technological, and competitive production factors. In other words, the price stability clearly demonstrated in Figure 2 above between 1820—1914 is evolutionary. Whether cryptocurrencies or central bank digital currencies might have a stabilising role for prices in future is highly contentious. We can readily dismiss yet another version of state-issued currencies as being a worse form of credit than failing fiat currencies. The aim behind them is communistic, to enable the state to allocate credit resources wherever and to whomsoever its political class may desire. It is with the intention of reducing the vagaries of human action on the state’s intended outcome. Just as every replacement currency for failing fiat in the past has failed, if CBDCs are introduced they will fail as well. It is unnecessary to comment further. Cryptocurrencies, particularly bitcoin, are seen by a small minority of enthusiasts as the money of the future, being outside the state’s printing presses. But as observed above, in reality, sound money is augmented by fluctuating quantities of credit in far larger quantities. So long as sound money provides price stability, circulating credit inherits those characteristics. Bitcoin, the leading claimant to being future money, lacks both world-wide acceptance and the flexibility required for long-term stability and therefore economic calculation. Imagine an entrepreneur planning to invest in production, a project which from the drawing-board to final sales takes several years. His nineteenth century forebears had a reasonable idea of final prices, so could calculate costs, sales values, and therefore the interest cost of the capital deployed over the whole project to leave him with a profit. No such certainty exists with bitcoin because final prices cannot be assumed. Furthermore, central banks do not have bitcoin as part of their reserves, and by embarking on plans for their own CBDCs have signalled that they will not have anything to do with it. But in most cases central banks or their government treasury ministries possess gold bullion, which as a last resort they can deploy to stabilise a failing currency. While there will undoubtedly be future benefits from their underlying technologies, it is impossible to see how cryptocurrencies can have a practical role in backing wider credit. Conclusion The evolution of fiat dollars which dates from the abandonment of the Bretton Woods Agreement is coming to an inevitable conclusion: fiat currencies come and go and only gold goes on forever. Whoever wins the financial battle now raging with increasing intensity over commodity prices, the US dollar as the King Rat of fiat currencies is losing its assumed superiority over the renminbi, and possibly the rouble if the Russians can stabilise it. The old-world population backing the dollar is heavily outnumbered by the newly industrialising Eurasia as well as its commodity and raw material suppliers in Africa and South America. Not mentioned in this article is the Federal Reserve Board’s commitment to sacrifice the dollar to support financial values — that ground has been well covered in earlier Goldmoney articles. But it is a repetition of John Law’s policies in 1720 France, now underway to stop the global financial bubble from imploding. And just as the Mississippi Company continued after 1720 when the French livre collapsed entirely that year, we see the same dynamics in play for the entire fiat currency system today. John Law’s policies of credit stimulation for the French economy were remarkably like those of modern Keynesians. This time, the expansion of money supply on a global basis has been on an unprecedented scale, encouraged by the subdued effect on prices measured by government-compiled consumer price indices. Undoubtedly, much of the lack of price inflation is down to statistical method, but from Figure 1 we have seen that over the last sixty years the quantity of currency and credit captured by US dollar M3 has grown about seven and a half times more rapidly than prices. We have concluded that this disparity is partly due to not all credit in the economy being captured in the monetary statistics. Understanding the relationship between money which is only physical gold coin, currency which is bank notes and credit which includes bank credit, shadow bank credit, derivatives, and personal guarantees, is vital to understanding what is required to replace the fiat-currency system. It also explains why a relatively small base of exchangeable gold coin in relation to the overall credit in an economy is sufficient to guarantee price stability. Tyler Durden Sat, 03/19/2022 - 18:30.....»»

Category: dealsSource: nytMar 19th, 2022

Power Crisis Deepens In Asia And Europe: What It Means To Shipping

Power Crisis Deepens In Asia And Europe: What It Means To Shipping By Greg Miller of American Shipper, There’s panic-buying of gasoline in the U.K. Natural gas prices in Europe and Asia are skyrocketing. Protests are breaking out across Europe due to spiking electricity bills. India and China are short of coal for utilities. Power is being rationed to factories in multiple Chinese provinces — and winter is coming. First came the COVID-induced global supply chain crisis for container shipping. Now comes a power crunch across Asia and Europe. Energy commodity stockpiles - just like U.S. retail inventories - did not build back up fast enough to contend with post-lockdown demand. How could the power crunch affect ocean shipping? For U.S. importers of Asian containerized goods, it’s a negative: another crimp in the supply chain. For commodity shipping - dry bulk, liquefied natural gas (LNG) and possibly oil tankers - it’s a recipe for higher rates. Container shipping According to Bloomberg, power use is now being curbed by tight supply and emissions restrictions in the Chinese provinces of Jiangsu, Zhejiang and Guangdong. Bloomberg quoted Nomura analyst Ting Lu as stating, “The power curbs will ripple through and impact global markets. Very soon the global markets will feel the pinch of a shortage of supply from textiles and toys to machine parts.” Nikkei reported that an affiliate of Foxconn, the world’s biggest iPhone assembler and a key supplier of Apple and Tesla, halted production at its facility in Kunshan in Jiangsu Province on Sunday due to lack of electricity supply. Another Apple supplier, Unimicron Technologies, also halted production in Kunshan on Sunday, said Nikkei, citing regulatory filings. The New York Times reported on power outages in the heart of China’s southern manufacturing belt, in Guandong. Factories in the city of Dongguan have not had electricity since last Wednesday. The Times interviewed a general manager of a Dongguan factory that produces leather shoes for the U.S. market who has kept his operation running with a diesel generator and who said that power outages began this summer. Stoppages of Chinese factories would further delay deliveries of U.S. imports, which have already been waylaid by extreme congestion at ports in Southern California and, more recently, ports in China. Dry bulk shipping “Whether it was coal or natural gas or oil, there was very low capital available for companies to continue to reinvest [in production] for several years heading into the pandemic,” explained Clarksons Platou Securities analyst Omar Nokta in an interview with American Shipper on Monday. “We built up a big stockpile in the first few months of the pandemic and we went right through it as soon as lockdowns abated, but capital hasn’t been redeployed. There has really been a true lack of investment.” In particular, thermal coal — coal used for power generation — faces steep restrictions in access to capital for environmental reasons.  Thermal coal supplies in China and India have dwindled as post-lockdown electricity consumption has eaten into inventories; India’s stockpiles are at a four-year low. China’s supplies are further limited by environmental restrictions on domestic mines and a ban on Australian imports. The Newcastle benchmark thermal coal price was up to $205 per ton on Monday. This is good news for dry bulk vessels in the Capesize and Panamax classes, said Nokta. (Capesizes have a capacity of around 180,000 deadweight tons, or DWT, and Panamaxes 65,000-90,000 DWT.) Capesizes spot rose to $69,000 per day on Tuesday, with Panamax spot rates rising to $36,200 per day, according to Clarksons. “People expected some bounce back in demand for thermal coal in 2021, but the surge in demand was not at all anticipated,” said Nokta. “That resurgence is keeping Panamaxes and Capes very busy when they can’t count on the cargoes they normally would — grain for Panamaxes and iron ore for Capes. Grain has been consistent throughout the year and now the Panamaxes have this added thermal coal element. Capes have faced a somewhat inconsistent Chinese steel market [production plunged in August], but it hasn’t mattered because of all of these thermal coal cargoes they’ve been able to carry.” Capesize rates have risen over the past week despite escalating concern over the fate of Chinese property developer Evergrande and the Chinese property market in general. “The real-estate story is still a question, and the regulators are tempering steel production to limit pollution,” said Nokta. “But we could have a situation where iron ore demand dips and there’s a handoff to thermal coal, and when thermal coal demand diminishes after the winter season, the iron-ore market comes back to life. So, you may not even feel it.” LNG shipping The shortfall of natural gas in Europe and Asia is clearly evident in historically high natural gas spot prices. The Asia benchmark, the Japan-Korea Marker (JKM), had risen to $27.50 per million British Thermal Units (MMBtu) on Friday, nearly double the August price. The two European benchmarks, TTF Netherlands and the National Balancing Point (NBP), have risen in lockstep with the JKM, to $26.51 and $26.23 per MMBtu, respectively. TTF and NBP are at all-time highs. The U.S. Henry Hub price has risen, but to far below these levels, at $5.51. Last winter, amid a huge spread between natural gas prices, LNG shipping spot prices spiked to $200,000 or more per day (one spot voyage reached $350,000 per day). But currently, rates for tri-fuel diesel engine LNG carriers are $51,000 per day, just below the five-year average for this time of year, according to Clarksons. Asked why LNG spot shipping rates are not surging given extremely high commodity prices in Asia and Europe and a large spread with U.S. pricing, Nokta cited two reasons. First, he said that the big spikes in spot shipping rates happen when there is a big spread between the European and Asian commodity prices, and there are aggressive re-exports from Europe to Asia by traders. “Right now, the JKM is at parity with Europe, so there isn’t as much cross-hemispheric trade.” Second, when spot rates spiked last winter, cargo interests took LNG ships on long-term charter to protect against future high spot rates. “Most of the charterers covered their requirements and spot activity has really dwindled in the past three months. So, when you look at spot rates, they may tell you things aren’t on fire, but there’s actually a lot of [cargo] movement.” Even so, spot LNG shipping rates could see a jump this winter if the spread between European prices and the JKM widens and more companies with chartered ships “relet” them into the spot market to profit from higher rates. Tanker shipping Product and crude tanker rates remain below breakeven, but some analysts and brokers believe power shortage in Asia and Europe could help jumpstart these beleaguered shipping markets as well. As with other commodities, oil stockpiles are low. Evercore ISI analyst Jon Chappell said Monday that “OECD refined product inventories are now lower than pre-COVID levels and are well below five-year averages, [however] at a certain point, inventories approach a level where there is no longer much slack in the system.” Nokta noted that in past commodity cycles “crude oil led the charge and this time it seems all the other commodities rose and crude is bringing up the rear. But all the same fundamental factors and drivers are there [for crude as with other commodities].” In light of extremely high natural gas prices, Goldman Sachs recently estimated that Asia and Europe could use up to 900,000 barrels per day more oil for power generation, as a substitute for natural gas. According to Gibson Brokers, “This would depend on a ‘cold winter’ and would also likely be focused east of Suez where oil-based fuels have greater potential to form part of the power-generation market.” Gibson said, “High-sulfur fuel oil [HSFO] is expected to be the primary beneficiary … and countries including Pakistan and Bangladesh, as well as some Middle Eastern players, have already been more active in the spot HSFO market as LNG prices began to rise. “Higher HSFO prices could potentially increase refining run rates, supporting crude demand,” added Gibson. Nokta pointed to this upside as well. “When we think about oil consumption, that’s been improving purely on mobility. Gasoline refining margins have strengthened as more people have gotten vaccinated,” he said. “But you could have this other element with fuel oil. Refiners could ratchet up production, which would mean you’re bringing higher amounts of crude into the refining system and producing more distillates and fuel oil. “It’s a nice setup for tankers,” affirmed Notka. “You’ve got improving oil consumption, shrinking inventories, OPEC promising to boost output — and now throw in an energy crisis as we go into winter.” Tyler Durden Wed, 09/29/2021 - 07:59.....»»

Category: blogSource: zerohedgeSep 29th, 2021

Why Greif (GEF) is a Top Value Stock for the Long-Term

Whether you're a value, growth, or momentum investor, finding strong stocks becomes easier with the Zacks Style Scores, a top feature of the Zacks Premium research service. Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.Zacks Premium includes access to the Zacks Style Scores as well.What are the Zacks Style Scores?The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.The Style Scores are broken down into four categories:Value ScoreValue investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.How Style Scores Work with the Zacks RankThe Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.#1 (Strong Buy) stocks have produced an unmatched +25.41% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.That's where the Style Scores come in.You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only as a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.Stock to Watch: Greif (GEF)Delaware, OH-based Greif is a leading global producer of industrial packaging products and services with manufacturing facilities located in over 40 countries. It offers a comprehensive line of rigid industrial packaging products and containerboard and corrugated products for niche markets in North America. It is also a leading global producer of flexible intermediate bulk containers.GEF is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 7.43; value investors should take notice.Two analysts revised their earnings estimate upwards in the last 60 days for fiscal 2022. The Zacks Consensus Estimate has increased $0.35 to $8.01 per share. GEF boasts an average earnings surprise of 22.4%.With a solid Zacks Rank and top-tier Value and VGM Style Scores, GEF should be on investors' short list. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.8% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>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 Greif, Inc. (GEF): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks22 hr. 37 min. ago

RPM International (RPM) to Post High Q1 Earnings on Solid Pricing

RPM International's (RPM) fiscal first-quarter earnings to reflect strong pricing actions amid inflationary woes. RPM International Inc. RPM is slated to report first-quarter fiscal 2023 results (ended Aug 31) on Oct 5, before the opening bell.In the last reported quarter, the company’s earnings lagged the Zacks Consensus Estimate by 1.4%, but net sales marginally topped the same. On a year-over-year basis, earnings and net sales increased 10.9% and 13.7%, respectively.The Trend in Estimate RevisionThe Zacks Consensus Estimate for the to-be-reported quarter’s earnings has been unchanged at $1.33 per share over the past 60 days. The estimated value indicates a 23.2% increase from the year-ago earnings of $1.08 per share. The consensus mark for revenues is $1.89 billion, suggesting a 14.5% year-over-year improvement.RPM International Inc. Price and EPS Surprise RPM International Inc. price-eps-surprise | RPM International Inc. Quote Factors to ConsiderRPM’s fiscal first-quarter earnings and revenues are likely to have increased from the prior year’s levels on prudent cost management and solid pricing. Also, improvement in the construction and industrial maintenance activity, a rebound in energy markets and its focus on investments in the fastest-growing areas of its business are likely to have added to the positives.RPM International expects net sales to increase in the mid-teens. It also expects sales growth in the mid-teens across the operating segments. Particularly, the Consumer Group is likely to generate the highest growth of the four segments backed by selling price increases, improved alkyd resin supply and investments in operations.The Zacks Consensus Estimate for Construction Products Group or CPG net sales of $688 million suggests a 6.8% increase from a year ago. The same for Performance Coatings Group or PCG sales are likely to rise 6.8% to $305 million from the previous year’s levels.The consensus estimate for Consumer Group or CG net sales of $579 million suggests a 7.5% increase from a year ago. The same for Specialty Products Group or SPG sales are likely to increase 5.4% to $192 million from a year ago.RPM intends to increase prices for certain raw materials, labor and packaging to forgo unprecedented supply-chain and inflationary woes. Higher costs from unreliable bulk transportation (which creates production inefficiencies) and fuel surcharges (driven by high energy prices) are expected to have affected the CG segment. Also, it anticipates a strengthening U.S. dollar to remain a headwind for the fiscal first quarter.RPM anticipates the fiscal first quarter’s adjusted EBIT to increase 20-25% versus a fall of 23.2% reported in first-quarter fiscal 2022.The consensus mark for CPG’s adjusted EBIT is likely to increase 4.9% year over year. The same for PCG’s adjusted EBIT is likely to improve 8.9% from the prior year’s levels. The consensus estimate for CG’s adjusted EBIT is likely to rise 30.1% and that of SPG is likely to increase 21% from the prior year’s tally.What Our Model IndicatesOur proven model does not conclusively predict an earnings beat for RPM International this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.Earnings ESP: Its earnings ESP is -1.26%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Zacks Rank: The company currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.Stocks With Favorable CombinationAccording to our model, here are some companies in the broader construction sector that have the right combination of elements to post an earnings beat in their respective quarters to be reported.Primoris Services Corporation PRIM has an Earnings ESP of +13.85% and a Zacks Rank #2.PRIM’s earnings topped the consensus mark in two of the last four quarters and missed the other two occasions, with the average being negative 19.6%. Earnings for the to-be-reported quarter are expected to grow 10.1% year over year.Dycom Industries, Inc. DY has an Earnings ESP of +2.34% and a Zacks Rank #1.DY’s earnings topped the consensus mark in all of the trailing four quarters, with the average surprise being 140%. Earnings for the to-be-reported quarter are expected to grow 34.7% year over year.Boise Cascade Company BCC has an Earnings ESP of +3.29% and a Zacks Rank #2.BCC’s earnings topped the consensus mark in all the last four quarters, with the average being 27.1%. Earnings for the to-be-reported quarter are expected to grow 92.6% year over year.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. This Little-Known Semiconductor Stock Could Be Your Portfolio’s Hedge Against Inflation Everyone uses semiconductors. But only a small number of people know what they are and what they do. If you use a smartphone, computer, microwave, digital camera or refrigerator (and that’s just the tip of the iceberg), you have a need for semiconductors. That’s why their importance can’t be overstated and their disruption in the supply chain has such a global effect. But every cloud has a silver lining. Shockwaves to the international supply chain from the global pandemic have unearthed a tremendous opportunity for investors. And today, Zacks' leading stock strategist is revealing the one semiconductor stock that stands to gain the most in a new FREE report. It's yours at no cost and with no obligation.>>Yes, I Want to Help Protect My Portfolio During the RecessionWant 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 Dycom Industries, Inc. (DY): Free Stock Analysis Report Primoris Services Corporation (PRIM): Free Stock Analysis Report RPM International Inc. (RPM): Free Stock Analysis Report Boise Cascade, L.L.C. (BCC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 30th, 2022

Top and Flop ETFs of Nine Months of 2022

We have highlighted the three ETFs each from the best and worst-performing zones of the nine months of 2022. The stock markets across the globe are struggling this year as consumer prices are showing no signs of easing, compelling the central banks to fight against inflation by raising interest rates once again. In fact, the Federal Reserve has been on an aggressive tightening policy to bring down inflation, which is near its highest levels since the early 1980s.In its fight, Fed Chair Jerome Powell raised interest rates by 75 bps for the fourth consecutive time that pushed the benchmark rate to 3.0-3.25%, the highest level since 2008. The rapid tightening has sparked worries over recession, leading to a sell-off in the stock markets. Additionally, Russia’s invasion of Ukraine has resulted in supply-chain issues while most of the developed and developing economies are witnessing a slowdown.Meanwhile, the hot commodity market started to cool off in recent months and the yields are hovering around their multi-year highs (read: Higher Yields to Fuel Rally in These ETFs).Given this, we have highlighted the three ETFs each from the best and worst-performing zones of the nine months of 2022:Best ZonesEnergyEnergy prices have been soaring this year, with natural gas on a tear buoyed by supply disruptions, adverse weather conditions and declining inventories. United States Natural Gas Fund UNG is the biggest winner, gaining 89.7% so far this year. United States Natural Gas Fund provides direct exposure to the price of natural gas on a daily basis through futures contracts. If the near-month contract is within two weeks of expiration, the benchmark will be the next month's contract to expire.United States Natural Gas Fund has AUM of $467.1 million and trades in a volume of around 6.3 million shares per day. The fund has 1.11% in expense ratio.Hedge FundInvestors flocked to Simplify Interest Rate Hedge ETF PFIX to combat rising rate worries. Simplify Interest Rate Hedge ETF seeks to provide a hedge against a sharp increase in long-term interest rates and benefit from market stress when fixed-income volatility increases, while providing the potential for income. It buys put options on longer-term Treasury bonds to offer “the most liquid and the most cost-efficient way of getting interest rate protection.” Simplify Interest Rate Hedge ETF is the first ETF providing a simple, direct and transparent interest rate hedge (read: 5 ETFs Up 20% or More in the First Nine Months of 2022).PFIX has accumulated $361.2 million in its asset base and trades in an average daily volume of 160,000 shares. It charges 50 bps in annual fees and has gained 78.3% so far this year.Long/ShortLong/short ETFs are less volatile, less risky and relatively stable when compared to the market-cap counterparts. These products provide hedging facilities that protect the portfolio from huge losses in turbulent times. The long/short strategy takes the best of both bull and bear prediction by involving buying and short selling of equities at the same time.KFA Mount Lucas Index Strategy ETF KMLM is leading in this space, gaining 45%. It is benchmarked to the KFA MLM Index, which consists of a portfolio of 22 liquid futures contracts traded on U.S. and foreign exchanges. The index includes futures contracts on 11 commodities, six currencies, and five global bond markets. These three baskets are weighted by their relative historical volatility, and within each basket, the constituent markets are equal-dollar weighted.KFA Mount Lucas Index Strategy ETF has amassed $275.8 million in its asset base and trades in an average daily volume of 81,000 shares. It charges 92 bps in annual fees.Worst ZonesTechnologyThe technology sector has been badly caught in a selling spree triggered by rate hikes. This is because it relies on easy borrowing for superior growth, and its value depends heavily on future earnings. A rise in long-term yields lowers the present value of companies’ future earnings, sparking fears of overvaluation. VanEck Vectors Digital Transformation ETF DAPP has tumbled 73.3% this year.VanEck Vectors Digital Transformation ETF aims to offer exposure to companies that are at the forefront of the digital asset transformation, such as digital asset exchanges, payment gateways, digital asset mining operations, software services, equipment and technology or services to the digital asset operations, digital asset infrastructure businesses or companies facilitating commerce with the use of digital assets. VanEck Vectors Digital Transformation ETF tracks the MVIS Global Digital Assets Equity Index and holds 25 securities in its basket.VanEck Vectors Digital Transformation ETF charges 50 bps in annual fees and trades in an average daily volume of 93,000 shares. DAPP has accumulated $28.9 million in its asset base.ShippingThough the shipping ETF performed well in September, it is among the worst performers due to declining freight rates amid waning dry bulk demand. Breakwave Dry Bulk Shipping ETF BDRY has plunged 69.6% so far this year. It is the only freight futures ETF exclusively focused on the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices.Breakwave Dry Bulk Shipping ETF holds freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures based on the prevailing calendar schedule (read: 5 ETFs That Survived September Slump With Double-Digit Gains).Breakwave Dry Bulk Shipping ETF has accumulated about $44.2 million in AUM and trades in a good volume of about 334,000 shares per day on average. It charges a higher annual fee of 2.85%.CannabisBeing a high-growth sector, cannabis has been a victim of a round of broad market sell-off. AdvisorShares Pure Cannabis ETF YOLO has tumbled 67.6% so far this year. It is an actively managed fund with a dedicated cannabis investment mandate domiciled in the United States. YOLO seeks long-term capital appreciation by investing in both domestic and foreign cannabis equity securities.AdvisorShares Pure Cannabis ETF holds a basket of 24 stocks with a double-digit exposure to the top two firms. American firms make up 61.4% of the portfolio, followed by a 28.7% share of the Canadian firms.AdvisorShares Pure Cannabis ETF has gathered $57.4 million in its asset base and charges 76 bps in annual fees. YOLO trades in an average daily volume of 53,000 shares. 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 United States Natural Gas ETF (UNG): ETF Research Reports Breakwave Dry Bulk Shipping ETF (BDRY): ETF Research Reports AdvisorShares Pure Cannabis ETF (YOLO): ETF Research Reports KFA Mount Lucas Index Strategy ETF (KMLM): ETF Research Reports VanEck Digital Transformation ETF (DAPP): ETF Research Reports Simplify Interest Rate Hedge ETF (PFIX): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 30th, 2022

Bounce In Futures Fizzles As Dollar Surge Returns

Bounce In Futures Fizzles As Dollar Surge Returns If yesterday markets made little sense, when the dollar and yields slumped yet stocks and other risk assets tumbled alongside them in a puzzling reversal of traditional risk relationships (a move which was likely precipitated by the plunge in AAPL and KMX), today things are a bit more logical with the dollar initially extending its slide helping futures rise to session highs just below 3,700, before the dollar surged just after 5am as sterling tumbled after Bloomberg reported that Prime Minister Liz Truss’s government signaled it was sticking with its plan for tax cuts after a meeting with the UK’s fiscal watchdog, dashing market expectations that a policy U-turn might be imminent which has pushed cable briefly above 1.12 overnight, wiping out a week's worth of losses. As a result, after rising as much as 0.8%, S&P futures were flat, up just 0.1%, the same as Nasdaq futures. Government bonds rallied across Europe and the US, as the dollar strengthened after reversing its earlier loss. In premarket trading, Nike shares fall 10% after the sportswear giant cut its margin outlook for the year while reporting surging inventory, fueling worries over consumers’ ability to spend as inflation takes a toll. Micron shares rose 3% in premarket trading, after analysts said the ongoing inventory correction was only a short-term hurdle and that the bottom is near, a potential relief for semiconductor stocks that have taken a beating this year. Amylyx Pharmaceuticals’s (AMLX US) shares soared as much as 13% in US premarket trading after winning FDA approval for its Relyvrio drug, for the treatment of amyotrophic lateral sclerosis (ALS) in adults. Analysts said they expected the drug to see a strong launch given demand from patients. Xos jumped 6.3% in extended trading after delivering 13 battery-electric vehicles to FedEx. Thursday's bruising session took the S&P 500 down 2% to the lowest in almost two years and the Nasdaq 100 tumbling almost 4%. The S&P 500 Index has dropped on seven of the past 8 days, and is headed for its third straight quarter of losses for the first time since 2008-2009 and the Nasdaq 100 Stock Index for the first time in 20 years. Fears of global recession are growing by the day as the threat of higher rates saps growth and as the Fed confirms with every speech that not even a recession will stop it. The case of the UK shows how faultlines between government and central bank policy on tackling inflation can erupt into a crisis. Hopes evaporated that the British government would succumb to pressure to back down from tax cuts that brought the pound to the edge of dollar parity. “Today, everything is just oversold so you are seeing a rebound,” said Esty Dwek, chief investment officer at Flowbank SA. “We are closer to bottoms and sentiment is so negative the downside is becoming more limited.” Elsewhere, Global equity funds garnered inflows of $7.6 billion in the week to Sept. 28, according to data compiled by EPFR Global. Bonds had $13.7 billion of outflows in the week, while $8.9 billion flowed into US stocks, the data showed. In Europe, the Stoxx 50 rose 0.9%. Real estate, energy and retailers are the strongest-performing sectors.  Here are some of the biggest European movers today: Krones shares rose as much as 2.7% to their highest intra-day level since Feb. 2022, after HSBC increased the German machinery and equipment company’s price target to EU102 Clariant shares rally by the most intraday since mid-May after Credit Suisse raises to outperform, partly as it expects Clariant’s new management team to boost performance ABN Amro jumped as much as 6.3% after Goldman Sachs raised the stock to buy from neutral, citing its gearing toward higher interest rates, increasing estimates on net interest income Zealand Pharma rise as much as 35%, the most on record, after the company announced positive data from its phase 3 trial of glepaglutide to treat patients with short bowel syndrome Sinch shares rise as much as 24% after SoftBank sold its entire stake in Sinch AB following a share price collapse of more than 90% in the Swedish cloud-based platform provider Adidas and Puma drop as their US peer Nike slumped in late trading Thursday after it said inventory buildup forced it to push through margin-busting discounts Hurricane Energy shares drop as much as 5.6% after 1H earnings; Canaccord Genuity notes the results did not surprise, and flags lack of regulatory reassurance on gas-management approvals Fingerprint Cards shares drop as much as 17% after saying it is raising fresh capital in order to strengthen the balance sheet and to address a forecasted covenant breach Earlier in the session, Asian stocks fell again, putting the regional benchmark on course for its worst monthly performance since 2008, as a selloff spurred by concerns over higher interest rates and a global recession deepened. The MSCI Asia Pacific Index slid 0.5% after earlier falling as much as 1% on Friday. Still down over 12% this month, the gauge has trailed global peers and is set to cap a seventh straight week of declines. That matches its losing streak from September 2015, which was the longest since 2011. Equities in Japan, which has the highest weight in the Asia index, were among the biggest losers on Friday, with the Topix falling 1.8%. Consumer discretionary and industrials were the worst sectors, while Chinese tech shares listed in Hong Kong also fell. READ: China Shares Plunge to Lowest Valuation on Record in Hong Kong Global funds have pulled almost $10 billion from Asian emerging-market stocks excluding China this month, as the dollar and Treasury yields climbed after Federal Reserve officials ramped up their rate-hike rhetoric. Taiwan’s tech-heavy market has suffered the bulk of the outflow from Asia. Its regulators tightened short selling rules as shares extended their slide.  “I think emerging markets as a whole are still going to have a pretty difficult six months until the Fed rate peaks,” Louis Lau, a fund manager at Brandes Investment Partners, said in an interview with Bloomberg TV. How much damage is a strong dollar causing? That’s the theme of this week’s MLIV Pulse survey. It’s brief and we don’t collect your name or any contact information. Please click here to share your views. The turmoil in the UK has been another source of market volatility for Asia investors, who continue to grapple with the fallout from strict lockdowns in China, the region’s biggest economy. “There’s been some correlation (between risk assets and sterling) recently,” said Takeo Kamai, head of execution services at CLSA. Overall, “the theme hasn’t changed. The scenario that the Fed will cut rates next year is breaking down. I think we could see further downside in stock prices towards November,” he said. Stocks in India gained after the central bank raised the benchmark rate by an expected 50 basis points. The MSCI Asia Pacific Index is down 4% this week and on course for its lowest close since April 2020 Japanese equities extended declines on Friday as a global market rout deepened, capping its worst month since the onset of the pandemic in 2020.    The Topix Index fell 1.8% to 1,835.94 as of market close Tokyo time, taking declines in September to 6.5%. The Nikkei declined 1.8% to 25,937.21. Toyota Motor Corp. contributed the most to the Topix Index decline, decreasing 4.2%. Out of 2,169 stocks in the index, 299 rose and 1,823 fell, while 47 were unchanged.  Federal Reserve officials reiterated Thursday that they will keep raising interest rates to rein in high inflation.  “There are concerns that the economy will slow from further rate hikes while inflation doesn’t stop,” said Kenji Ueno, a portfolio manager at Sompo Asset Management. In Australia, the S&P/ASX 200 index fell 1.2% to close at 6,474.20, dragged by banks and industrials, after another plunge on Wall Street as the prospect of higher interest rates and turmoil in Europe stoked fears of global recession. The benchmark notched its third-straight week of losses. In New Zealand, the S&P/NZX 50 index fell 1.2% to 11,065.71 Stocks in India outperformed Asian peers after the Reserve Bank of India raised borrowing costs and exuded confidence to tackle inflation without any major impact to its growth projections. The S&P BSE Sensex added 1.8% to 57,426.92, while the NSE Nifty 50 Index rose by 1.6% as the indexes posted their biggest single-day jump since Aug. 30. Despite the rally, the key gauges fell more than 1% each for the week and over 3% for the month, their biggest decline since June. India’s central bank raised its repurchase rate by 50 basis points to 5.90%, matching the expectations of most economists. The RBI trimmed the economic growth outlook for the financial year ending March to 7% while retaining it 6.7% forecast for inflation.  The increase in the benchmark interest rate “mainly supports stocks of financial companies, which have been seeing strong credit growth,” said Prashanth Tapse, an analyst at Mehta Securities.  In FX, the Bloomberg Dollar Spot Index rebounded after sliding initially, as cable tumbled when it emerged that Liz Truss is not backtracking on its massive fiscal easing. Iniitlally, the pound advanced a fourth day, to briefly trade above $1.12, fully reversing the moves since last Friday, however it then tumbled, wiping out all gains after Prime Minister Liz Truss’s government signaled it’s sticking with its plan for tax cuts after a meeting with the UK’s fiscal watchdog, dashing market expectations that a policy U-turn might be imminent. Notable data: U.K. 2Q final GDP rises 0.2% q/q versus preliminary -0.1%. The Aussie and kiwi crept higher, but are still set for their biggest monthly declines since April as rising Fed interest rates and fears of a global economic slowdown sap demand for risk assets In rates, Treasuries advanced, 10-year yield dropping 8bps while bunds 10-year yield drops 6bps to 2.11%. Treasury 10-year yields around 3.685%, richer by 10bp on the day -- largest moves seen in UK front-end where 2-year yields are richer by 25bp on the day as BOE tightening premium fades out of interest-rate swaps. Short-end UK bonds surged amid political pressure on the government to water down some of its budget proposals, while the pound regained its budget-shock losses. US session focus is on PCE data and host of Federal Reserve speakers while month end may add some support into long end of the curve.  Long end of the Treasuries curve may find additional month-end related buying support over the session; Bloomberg index projects 0.07yr Treasury extension for October. Gilts rallied, with short-end bonds leading gains as traders trimmed BOE tightening bets amid political pressure on the government to water down some of its budget proposals. Meanwhile in Japan, JGBs gained after the BOJ boosted purchases for maturities covering the benchmark 10-year zone. The Bank of Japan will buy more bonds with maturities of at least five years in the October-December period, according to a statement from the central bank In commodities, WTI trades within Thursday’s range, adding 1.3% to near $82.26. Spot gold rises roughly $10 to trade near $1,671/oz.  Bitcoin is essentially unchanged and in very tight ranges of circa. USD 400 and as such well within the week's existing parameters Looking to the day ahead now, and data releases include the flash Euro Area CPI release for September, as well as the Euro Area unemployment rate for August and German unemployment for September. In the US, we’ll also get August data on personal income and personal spending, the MNI Chicago PMI for September, and the University of Michigan’s final consumer sentiment index for September. Finally, central bank speakers include Fed Vice Chair Brainard, the Fed’s Barkin, Bowman and Williams, as well as the ECB’s Schnabel, Elderson and Visco. Market Snapshot S&P 500 futures up 0.9% to 3,686.00 STOXX Europe 600 up 1.3% to 387.83 MXAP down 0.5% to 139.25 MXAPJ little changed at 453.72 Nikkei down 1.8% to 25,937.21 Topix down 1.8% to 1,835.94 Hang Seng Index up 0.3% to 17,222.83 Shanghai Composite down 0.6% to 3,024.39 Sensex up 2.0% to 57,539.66 Australia S&P/ASX 200 down 1.2% to 6,474.20 Kospi down 0.7% to 2,155.49 Brent Futures up 1.2% to $89.55/bbl Gold spot up 0.7% to $1,671.56 U.S. Dollar Index down 0.52% to 111.67 German 10Y yield little changed at 2.10% Euro up 0.3% to $0.9840 Top Overnight News from Bloomberg Prime Minister Liz Truss is under pressure to cut spending on the same scale as George Osborne’s infamous austerity drive of 2010 in order to stabilize the UK public finances and win back the confidence of investors Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng are holding talks Friday with the UK government’s fiscal watchdog, amid intense criticism over their unfunded tax cuts that roiled markets A dash for cash among sterling investors after market turmoil sparked by pension fund margin calls is coming at a bad time, according to an M&G Investments executive The ECB shouldn’t let concerns about its profitability obstruct decision-making over monetary policy, according to Governing Council member Gediminas Simkus The SNB trimmed its foreign-exchange portfolio in the second quarter as the franc gyrated against the euro before rising above parity for the first time since 2015. The central bank sold 5 million francs ($5.1 million) worth of foreign currencies in the three months through June Norway’s central bank will increase its purchases of foreign currency to 4.3 billion kroner ($400 million) a day in October from 3.5 billion in September as it deposits energy revenues into the $1.1 trillion sovereign wealth fund. Japan’s factory output expanded by 2.7% in August from July, according to the economy ministry Friday, beating analysts’ 0.2% forecast. The output of semiconductor and flat-panel making equipment hit its highest level in data going back to 2003, as the effect of lockdowns in China abated Japanese Prime Minister Fumio Kishida instructed the government Friday to come up with an economic stimulus package by the end of October to help mitigate the impact of inflation, as economists warned against over-sized spending China’s factory activity continued to struggle in September, while services slowed, as the country’s economic recovery was challenged by lockdowns in major cities and an ongoing property market downturn. The official manufacturing purchasing managers index rose to 50.1 from 49.4 in August An organization formed by China’s biggest foreign- exchange traders asked banks to trade the currency at levels closer to the central bank’s fixing at the market open, according to people familiar with the matter A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were mostly lower after the negative performance across global peers amid inflationary headwinds and with risk appetite subdued heading quarter-end, while the region also digested mixed Chinese PMI data. ASX 200 declined amid weakness across most sectors and with tech the notable underperformer after the recent upside in yields and with Meta the latest major industry player to announce a hiring freeze. Nikkei 225 was pressured and fell below the 26,000 level with better-than-expected Industrial Production and Retail Sales data releases overshadowed by the broad risk aversion. Hang Seng and Shanghai Comp were indecisive after the PBoC conducted its largest weekly cash injection in more than 32 months ahead of the week-long closure in the mainland, while participants also digested mixed PMI data in which Official Manufacturing PMI topped forecasts with a surprise return to expansion, but Non-Manufacturing and Composite PMIs slowed and Caixin Manufacturing PMI printed at a wider contraction. NIFTY eventually notched mild gains in the aftermath of the RBI rate decision in which it hiked the Repurchase Rate by 50bps to 5.90% as expected via 5-1 split and with the central bank refraining from any major hawkish surprises. Top Asian News Japan's Chief Cabinet Secretary Matsuno said they want to compile an extra budget swiftly after the economic package in late October, while they will consider further support for hard-hit consumers and businesses in view of higher energy and food prices, as well as consider steps to promote wage hikes, according to Reuters. Chinese Finance Ministry is to offer a tax refund for people who sell their homes and repurchases new ones by the end of 2023; additionally, China has told banks to provide USD 85bln in property funding by the end of the year, according to Bloomberg. Chinese NBS Manufacturing PMI (Sep) 50.1 vs. Exp. 49.6 (Prev. 49.4); Non-Manufacturing PMI (Sep) 50.6 vs Exp. 52.4 (Prev. 52.6) Chinese Composite PMI (Sep) 50.9 (Prev. 51.7) Chinese Caixin Manufacturing PMI Final (Sep) 48.1 vs. Exp. 49.5 (Prev. 49.5) Japanese Industrial Production MM SA (Aug P) 2.7% vs. Exp. 0.2% (Prev. 0.8%); Retail Sales YY (Aug) 4.1% vs. Exp. 2.8% (Prev. 2.4%) European equities are attempting to claw back some of yesterday’s downside on quarter and month end. Sectors are firmer across the board with Real Estate outperforming peers in what has been a tough week for the UK property market. Stateside, futures are also attempting to recover from yesterday’s losses which saw a tough session for the tech sector after Apple shed the best part of 5%. Top European News UK OBR Chair Hughes says a statement will be released today after the meeting with UK PM Truss and Chancellor Kwarteng. On this, the UK Treasury has not sought to accelerate watchdog's economic forecast, according to Bloomberg. Reminder, UK PM Truss to conduct emergency talks with the OBR on Friday after failing to calm markets, according to the Guardian. UK cross-party MPs in the Treasury Select Committee called for Chancellor Kwarteng to release a full economic forecast from the OBR by end of October, according to Sky News. UK PM Truss has confirmed she will attend next week's European Political Community summit, via BBC. Reports that technical level discussions between the UK and EU could resume as soon as next week, via BBC's Parker; writing, that there has been a 'warmer' tone in recent weeks, some believe pressure from the US on the UK has had influence. German VDMA, survey of members: majority expect nominal sales growth in 2022 and 2023. FX GBP's revival has continued ahead of a meeting between PM Truss and the OBR, with a statement expected, a move that has taken Cable above 1.12 but shy of mini-Budget levels. USD is firmer overall but continues to retreat from YTD peaks, though the DXY is seemingly drawn to the 112.00 area. Yuan derived further, fleeting, support from reports the FX body has asked banks to trade closer to the onshore fixing. Elsewhere, FX peers are under modest pressure but more contained vs USD; EUR unfased by a record EZ flash CPI print of 10.0%. Fixed Income Benchmarks bid but modestly off best levels with Bunds leading the charge, but well within recent ranges, amid potential month/quarter-end influence. Gilts lifted, but the 10yr yield remains above 4.0% ahead of the OBR statement. Stateside, USTs are equally buoyed ahead of a packed PM agenda include PCE Price Index and Fed speak. Commodities The broader commodity market is benefitting from a pullback in the USD coupled with a broader risk appetite. Metals are buoyed by the recent pullback in the Dollar with spot gold edging above its 10 DMA (USD 1,656.72/oz) and towards the USD 1,680/oz mark which coincides with the yellow metal’s 21DMA (USD 1,680.56/oz) and 200WMA (USD 1,680.20/oz). Base metals are also firmer across the board with 3M LME copper back above the USD 7,500/t mark, whilst nickel and aluminium outperform on the exchange. Central Banks China loosened FX restrictions in response to the Fed rate hike and the yuan's fall over the past week, according to people familiar with the matter cited by FT. China's FX body is reportedly asking banks to trade the Yuan closer to the PBoC fixing, according to Bloomberg. PBoC injected CNY 128bln via 7-day reverse repos with the rate kept at 2.00% and injected CNY 58bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 184bln net daily injection and a net CNY 868bln weekly injection. RBI hiked Repurchase Rate by 50bps to 5.90%, as expected, via 5-1 vote and the Standing Deposit Facility was adjusted to 5.65%. RBI Governor Das said MPC is to remain focused on the withdrawal of accommodation and that the persistence of high inflation necessitates further calibrated withdrawal of monetary accommodation. However, Das noted that the Indian economy continues to be resilient with economic activity stable and overall monetary and liquidity conditions still remain accommodative, while Real GDP growth forecast for 2022/23 was revised lower to 7.0% from 7.2% and 2022/23 CPI was seen at 6.7%. RBI is reportedly encouraging state-run refiners to reduce USD buying in the spot market; asking to lean on USD 9bln credit line instead, according to Reuters sources. BoE was reportedly warned about a looming catastrophe in the pensions sector within the next 5 years before it was forced to intervene to prevent a market collapse, according to The Telegraph. Fed's Daly (2024 voter) said a downshift in economic activity and labour is needed to bring down inflation and additional rate increases are necessary and appropriate. Daly also stated that a myriad of risks narrows the path to a smooth landing but does not close it, while she added they have gotten rates to neutral and expect to raise rates further in coming meetings and early next year. Norges Bank will purchase FX equivalent to NOK 4.3bln/day in October (3.5bln in September); reflecting an increase in projected NOK revenues from petroleum activity. Geopolitics Russian President Putin signed decrees recognising occupied Ukrainian regions of Kherson and Zaporizhzhia as independent territories which is an intermediate step before the regions are formally incorporated into Russia, according to Reuters. ** Russia's Kremlin says strikes against the new territories incorporated into Russia will be considered an act of aggression against Russia**; says Ukraine has shown no willingness to negotiate, via Reuters. Russia's Spy Chief says they have material which show a Western role in Nord Stream incidents, via Ifx. Armenia's Foreign Ministry says their Ministers and Azerbaijani counterparts will meet in Geneva on October 2nd, via AJA Breaking. US Event Calendar 08:30: Aug. Personal Spending, est. 0.2%, prior 0.1% Aug. Real Personal Spending, est. 0.1%, prior 0.2% Aug. Personal Income, est. 0.3%, prior 0.2% Aug. PCE Deflator MoM, est. 0.1%, prior -0.1% Aug. PCE Core Deflator MoM, est. 0.5%, prior 0.1% Aug. PCE Core Deflator YoY, est. 4.7%, prior 4.6% Aug. PCE Deflator YoY, est. 6.0%, prior 6.3% 09:45: Sept. MNI Chicago PMI, est. 51.8, prior 52.2 10:00: Sept. U. of Mich. Current Conditions, est. 58.9, prior 58.9 U. of Mich. Sentiment, est. 59.5, prior 59.5 U. of Mich. Expectations, est. 59.9, prior 59.9 U. of Mich. 1 Yr Inflation, est. 4.6%, prior 4.6%; 5-10 Yr Inflation, est. 2.8%, prior 2.8% Central Bank Speakers 08:30: Fed’s Barkin Speaks at Chamber of Commerce Event 09:00: Fed’s Brainard Speaks at Fed Conference on Financial Stability 11:00: Fed’s Bowman Discusses Large Bank Supervision 12:30: Fed’s Barkin Discusses the Drivers of Inflation 16:15: Williams Speaks at Fed Conference on Financial Stability DB's Jim Reid concludes the overnight wrap As we arrive at the end of a tumultuous month in financial markets, there’s been little sign of respite for investors over the last 24 hours, with the S&P 500 (-2.11%) reversing the previous day’s gains to close at a 21-month low. There were a number of factors behind the latest selloff, but fears of further rate hikes were prominent after the US weekly initial jobless claims showed that the labour market was still in decent shape, whilst the PCE inflation readings for Q2 were revised higher as well. That came alongside fresh signals of inflationary pressures in Europe, where German inflation in September moved into double-digits for the first time in over 70 years. Thanks to some hawkish rhetoric from central bank officials on top of that, the result was that the synchronised selloff for equities and bonds continued. In fact, barring a massive turnaround today, both the S&P 500 and the STOXX 600 are on course for their third consecutive quarterly decline, which is the first time that’s happened to either index since the financial crisis. We’ll come to some of that below, but here in the UK there were signs that the market turmoil was beginning to stabilise slightly relative to earlier in the week. For instance, sterling (+2.09%) strengthened against the US Dollar for a third consecutive session, moving back above $1.10 for the first time since last Friday when the mini-budget was announced, and at a couple of points overnight was very briefly trading above $1.12. Indeed, it was the strongest-performing G10 currency on the day, so this wasn’t simply a case of dollar weakness. In the meantime, investors moved again to lower the chances of an emergency inter-meeting hike from the Bank of England, instead looking ahead to the next scheduled MPC meeting on November 3. That followed a speech from BoE Chief Economist Pill, in which he said “it is hard to avoid the conclusion that the fiscal easing announced last week will prompt a significant and necessary monetary policy response in November.” However, gilts continued to struggle yesterday following the massive Wednesday rally after the BoE’s intervention. Yields on 10yr gilts were up by +13.0bps by the close, a larger increase than for German bunds (+6.4bps) or French OATs (+8.0bps). Furthermore, the spread on the UK’s 5yr credit default swaps closed at its highest level since 2013, so there are still plenty of signs of investor jitters. That came as the government showed no signs of U-turning on their programme of tax cuts, with Prime Minister Truss saying “I’m very clear the government has done the right thing”. It’s also worth noting that one factor seen as supporting sterling overnight was growing speculation that Truss might come under political pressure to reverse course on the fiscal announcements, particularly after a YouGov poll gave the opposition Labour Party a 33-point lead, which is its largest in any poll since the late-1990s. We also heard from the Conservative chair of the Treasury Select Committee, who tweeted that Chancellor Kwarteng should bring forward the November 23 statement on his medium-term fiscal plan and publish the independent OBR forecast as soon as possible. Away from the UK, the broader selloff in financial markets resumed yesterday as investors priced in a more hawkish response from central banks over the months ahead. In the US, that followed a fresh round of data that was collectively seen as offering the Fed more space to keep hiking rates. First, the weekly initial jobless claims fell to a 5-month low of 193k over the week ending September 24. That was beneath the 215k reading expected, and the previous week was also revised down by -4k. Nor was this just a blip either, as the 4-week moving average is now at its lowest level since late May as well. In the meantime, we had an upward revision to core PCE in Q2, taking the rate up by three-tenths to an annualised +4.7%. Those data releases came alongside some pretty hawkish Fed rhetoric, with Cleveland Fed President Mester saying that a recession wouldn’t stop the Fed from raising rates. And in turn, that led markets to price in a more aggressive Fed reaction, with the terminal rate expected in March 2023 up by +3.0bps on the day. Incidentally, we saw yet further signs that the Fed’s tightening was having an effect on the real economy, with Freddie Mac’s mortgage market survey showing that the average 30-year fixed rate had risen to 6.70%, which is their highest level since 2007. The more hawkish developments were reflected in US Treasury yields too, particularly at the front end, with yields on 2yr Treasuries up +5.8bps to 4.19%, and those on 10yr Treasuries up +5.4bps to 3.79%. Overnight in Asia, yields on the 10yr USTs are fairly stable as we go press, seeing a small +0.3bps rise, whilst those on 2yr Treasuries are up +1.8bps to 4.21%. Europe got a fresh reminder about inflation as well yesterday, after the German CPI release for September came in well above expectations. Using the EU-harmonised measure, inflation rose to +10.9% (vs. +10.2% expected), which marks the first time since 1951 that German inflation has been running in double-digits. Earlier in the day, the German government separately announced that they’d be borrowing another €200bn to cap gas prices, with the previously planned consumer levy not going ahead. Looking forward, it’ll be worth looking out for the flash CPI release for the entire Euro Area today at 10am London time, where the consensus is expecting we’ll see the highest inflation since the formation of the single currency. That would keep the pressure on the ECB, and markets are continuing to price in another 75bps hike as the most likely outcome at the October meeting. With investors digesting the prospect of continued hawkishness from central banks, equities lost further ground over yesterday’s session. The S&P 500 fell -2.11%, meaning the index is now down by nearly a quarter (-24.10%) since its closing peak in early January. The declines were incredibly broad-based across sectors, but interest-sensitive tech stocks struggled in particular, with the NASDAQ (-2.84%) and the FANG+ index (-3.38%) seeing even larger losses. Those heightened levels of volatility were also reflected in the VIX index (+1.7pts), which closed at 31.8pts. For European equities it was much the same story, with the STOXX 600 (-1.67%) closing at a 22-month low. Adding to the tech woes, Meta (-3.67%) joined the growing list of firms announcing a hiring freeze, with the tech giant also issuing a warning of potential restructuring, so it’ll be important to see if this is echoed more broadly and what this means for the labour market. In overnight trading, equity futures are pointing to further losses today, with those on the S&P 500 (-0.25%) and NASDAQ 100 (-0.27%) both moving lower. As we arrive at the final day of the month, Asian equities are similarly retreating this morning, putting a number of indices on course for their worst monthly performance in years. For instance, the Nikkei is currently on track for its worst month since March 2020, and the Hang Seng is on track for its worst month since September 2011. In terms of today, the Nikkei (-1.67%) is leading losses in the region with the Shanghai Composite (-0.21%), the CSI (-0.14%), the Kospi (-0.11%) and the Hang Seng (-0.07%) following after that overnight sell-off on Wall Street. One source of better news came from the Chinese PMIs, with the official manufacturing PMI unexpectedly in positive territory in September with a 50.1 reading (vs. 49.7 expected), which is up from a contractionary 49.4 in August. The composite PMI was also in positive territory with a 50.9 reading. However, the Caixin manufacturing PMI unexpectedly deteriorated further to 48.1 in September, so not every indicator was positive. In the meantime, Japanese data showed that industrial production growth came in above expectations with a +2.7% reading (vs. +0.2% expected), as did retail sales with growth of +1.4% (vs. +0.2% expected). There wasn’t much in the way of other data yesterday. However, the European Commission’s economic sentiment indicator for the Euro Area fell for a 7th consecutive month to 93.7 in September (vs. 95.0 expected). To the day ahead now, and data releases include the flash Euro Area CPI release for September, as well as the Euro Area unemployment rate for August and German unemployment for September. In the US, we’ll also get August data on personal income and personal spending, the MNI Chicago PMI for September, and the University of Michigan’s final consumer sentiment index for September. Finally, central bank speakers include Fed Vice Chair Brainard, the Fed’s Barkin, Bowman and Williams, as well as the ECB’s Schnabel, Elderson and Visco. Tyler Durden Fri, 09/30/2022 - 08:10.....»»

Category: blogSource: zerohedgeSep 30th, 2022

3 Top-Ranked Shipping Stocks Exporting Hefty Dividend Payouts

The strong Zacks Rank paired with the companies' dividend payouts is a beautiful combination. The Zacks Transportation Sector came under the spotlight a few weeks back when FedEx FDX withdrew its FY23 earnings forecast, citing a volatile operating environment.The news spooked many investors, with FDX shares losing more than 20% in value the following trading period.Obviously, the announcement has potentially enormous ramifications, as FedEx's operations span worldwide, providing us with a decent feel of consumer sentiment.However, many of the issues FedEx speaks on seem company-specific, not necessarily a reflection of the Transportation Sector as a whole.For example, a shakeup within management following long-time CEO Fred Smith’s departure and lingering issues from a worse-than-expected integration of TNT Express have been thorns on the company’s side.Further, the slashed guidance was given just in June, the same month Fred Smith stepped down.On the contrary, in its most recent earnings report, United Parcel Service UPS reported a notably strong quarter and even reaffirmed its 2022 guidance in the face of challenging business conditions.While there are, no doubt, macroeconomic forces at play negatively impacting the Transportation Sector, it’s vital to know that operating issues have been haunting FedEx for some time now.In fact, a part of the Zacks Transportation Sector, the Zacks Transportation – Shipping Industry, is chugging along just fine in 2022, up more than 20% vs. the S&P 500’s nearly 22% decline. This is illustrated in the chart below.Image Source: Zacks Investment ResearchFor those looking to tap into the industry, three highly-ranked stocks in the realm – International Seaways INSW, SFL Corp. SFL, and Euroseas Ltd. ESEA – would all provide precisely that.Below is a chart illustrating the share performance of all three companies YTD with the S&P 500 blended in as a benchmark.Image Source: Zacks Investment ResearchLet’s take a deeper dive into each one.Euroseas Ltd. Euroseas operates in the dry cargo, dry bulk, and container shipping markets. Analysts have been bullish across several timeframes over the last 60 days, helping land the stock into a favorable Zacks Rank #1 (Strong Buy).Image Source: Zacks Investment ResearchEuroseas’ growth prospects are stellar; earnings are forecasted to climb a triple-digit 150% Y/Y in FY22 and a further double-digit 31% in FY23.Top-line growth is also very apparent; the FY22 revenue estimate of $196 million is double what it raked in during FY21 ($98 million).ESEA rewards its shareholders handsomely – the company’s annual dividend yield was raised to 9.5% in 2022, paired with a sustainable 17% payout ratio.Image Source: Zacks Investment ResearchAnd for the cherry on top, shares are cheap; the company’s 0.8X forward price-to-sales ratio reflects a steep 47% discount relative to its Transportation Sector.Image Source: Zacks Investment ResearchSFL Corp. SFL Corp. owns and operates vessels and offshore-related assets primarily in Bermuda, Cyprus, Malta, Liberia, Norway, the United Kingdom, and the Marshall Islands. The company’s near-term earnings outlook has turned visibly bright over the last several months.Image Source: Zacks Investment ResearchLike ESEA, SFL Corp. sports a mighty strong dividend; SFL's annual dividend yields 9.7% but with a payout ratio sitting higher at 73% of earnings.Image Source: Zacks Investment ResearchFurther, SFL has a strong earnings track record, exceeding revenue and earnings estimates in its last four quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.Image Source: Zacks Investment ResearchInternational Seaways International Seaways, Inc. is a tanker company providing energy transportation services for crude oil and petroleum products. Analysts have had a bullish stance on the company’s near-term earnings outlook as of late.Image Source: Zacks Investment ResearchINSW’s annual dividend yield comes in at 1.4%, notably lower than its Zacks Sector. Still, the company has upped its payout twice over the last five years.Image Source: Zacks Investment ResearchIn addition, INSW’s growth prospects are inspiring; earnings are forecasted to skyrocket a triple-digit 300% in FY22 and a further 34% in FY23. That’s paired with projections of 150% top-line growth in FY22 and 2% in FY23.Bottom LineWhile FedEx’s FDX announcement surely spooked the world, the issues appear to be more company-specific than representative of the entire Transportation Sector.As mentioned, United Parcel Service UPS had a notably strong quarter, reaffirming its FY22 guidance.For those looking to tap into the relative strength the Zacks Transportation – Shipping Industry has been displaying, all three stocks above - International Seaways INSW, SFL Corp. SFL, and Euroseas Ltd. ESEA – would all provide precisely that.Further, all three sport a Zacks Rank #2 (Buy) or Zacks Rank #1 (Strong Buy), telling us that their near-term earnings outlook is fruitful.The strong Zacks Rank paired with the companies’ substantial payouts is a beautiful combination. FREE Report: The Metaverse is Exploding! Don’t You Want to Cash In? Rising gas prices. The war in Ukraine. America's recession. Inflation. It's no wonder why the metaverse is so popular and growing every day. Becoming Spider Man and fighting Darth Vader is infinitely more appealing than spending over $5 per gallon at the pump. And that appeal is why the metaverse can provide such massive gains for investors. But do you know where to look? Do you know which metaverse stocks to buy and which to avoid? In a new FREE report from Zacks' leading stock specialist, we reveal how you could profit from the internet’s next evolution. Even though the popularity of the metaverse is spreading like wildfire, investors like you can still get in on the ground floor and cash in. Don't miss your chance to get your piece of this innovative $30 trillion opportunity - FREE.>>Yes, I want to know the top metaverse stocks for 2022>>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 United Parcel Service, Inc. (UPS): Free Stock Analysis Report FedEx Corporation (FDX): Free Stock Analysis Report Euroseas Ltd. (ESEA): Free Stock Analysis Report SFL Corporation Ltd. (SFL): Free Stock Analysis Report International Seaways Inc. (INSW): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 29th, 2022

5 ETFs That Survived September Slump With Double-Digit Gains

With just a few days left in September, Wall Street is heading toward the worst month, with the major indices in the bear market. With just a few days left in September, Wall Street is heading toward the worst month, with the major indices in the bear market. Worries that super-aggressive Federal Reserve policy tightening to fight inflation would push the economy into recession are weighing on investors’ sentiment badly.While most segments of the market are suffering from huge losses, a few have performed really well. Breakwave Dry Bulk Shipping ETF BDRY, Simplify Tail Risk Strategy ETF CYA, Simplify Interest Rate Hedge ETF PFIX, Advocate Rising Rate Hedge ETF RRH, and ProShares VIX Short-Term Futures ETF VIXY have gained in double digits.The S&P 500 hit lows last seen in late November 2020, while the Dow Jones Industrial Index also fell into bear territory early this week. The renewed selling pressure came after Fed Chair Jerome Powell raised interest rates by another 75 bps. This marks the third consecutive rate hike of 0.75% and pushed the benchmark interest rate to 3.0-3.25%, the highest level since 2008.With inflation nearly at a 40-year high, the central bank also signaled that additional large rate hikes were likely at upcoming meetings as it combats inflation. Fed officials now expect the federal funds rate at a range of 4.25% to 4.5%, a full percentage point above 3.25% to 3.5% to end 2022 that was projected in June. This means that the central bank could approve another three-quarter point hike at its November meeting and then a half-point rate rise in December. Economists warned that the rapid tightening would hurt the labor and housing markets, thereby pushing the economy into recession and impacting the stock market (read: 5 Defensive ETFs to Play as Recession Fears Grow).Breakwave Dry Bulk Shipping ETF (BDRY) – Up 31.2%Breakwave Dry Bulk Shipping ETF is the only freight futures ETF exclusively focused on dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. It holds freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures based on the prevailing calendar schedule.Breakwave Dry Bulk Shipping ETF has accumulated about $49.6 million in AUM and trades in a good volume of about 334,000 shares per day on average. It charges a higher annual fee of 2.85%.Simplify Tail Risk Strategy ETF (CYA) – Up 29.7%Simplify Tail Risk Strategy ETF seeks to provide income and capital appreciation while protecting against significant downside risk to investors by hedging diversified portfolios against severe equity market selloffs. The fund deploys advanced options strategies that are designed to handle multiple types of market dislocations.Simplify Tail Risk Strategy ETF has amassed $86.9 million in its asset base and charges 50 bps in annual fees from investors. It trades in a volume of 93,000 shares a day on average.Simplify Interest Rate Hedge ETF (PFIX) – Up 27.1%Simplify Interest Rate Hedge ETF seeks to provide a hedge against a sharp increase in long-term interest rates and benefit from market stress when fixed-income volatility increases, while providing the potential for income. It buys put options on longer-term Treasury bonds to offer “the most liquid and the most cost-efficient way of getting interest rate protection.” Simplify Interest Rate Hedge ETF is the first ETF providing a simple, direct and transparent interest rate hedge (read: 5 ETFs Up 20% or More in the First Nine Months of 2022).PFIX has accumulated $335.3 million in its asset base and trades in an average daily volume of 153,000 shares. It charges 50 bps in annual fees.Advocate Rising Rate Hedge ETF (RRH) – Up 20.5%Advocate Rising Rate Hedge ETF is a multi-asset ETF that seeks to generate capital appreciation during periods of rising long-term interest rates, specifically interest rates, with maturities of five years or longer. It is an actively managed fund and seeks to achieve its investment objective primarily by investing in a combination of U.S. Treasury securities; forwards, futures or options on various currencies; long and short positions on the short and long-end of the Treasury or swap yield curve via futures, swaps, forwards and other over-the-counter derivatives; long and short positions on equity indexes and investment companies, including ETFs; and commodity futures and options.Advocate Rising Rate Hedge ETF has accumulated $39.4 million in its asset base and charges 85 bps in annual fees. It trades in an average daily volume of 8,000 shares (read: Guide to Interest Rates Hike and ETFs).ProShares VIX Short-Term Futures ETF (VIXY) – Up 14.8%ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration.ProShares VIX Short-Term Futures ETF has amassed $437.7 million in AUM and charges 85 bps in fees per year. The fund trades in an average daily volume of around 10.5 million shares. 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 ProShares VIX ShortTerm Futures ETF (VIXY): ETF Research Reports Breakwave Dry Bulk Shipping ETF (BDRY): ETF Research Reports Simplify Interest Rate Hedge ETF (PFIX): ETF Research Reports Simplify Tail Risk Strategy ETF (CYA): ETF Research Reports Advocate Rising Rate Hedge ETF (RRH): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 28th, 2022

Best ETFs of Last Week

Wall Street was downbeat last week as recessionary fears mounted on steeper Fed rate hikes. Rate hikes have been rampant globally. Wall Street was downbeat last week. Each of the key equity gadgets — the S&P 500 (down 4.7%), the Dow Jones (down 4%), the Nasdaq Composite (down 5.1%) and the Russell 2000 (down 6.6%) — lost last week. Rising rate worries and recessionary fears were the key concerns.The benchmark S&P 500 dropped 1.7% on Friday, hitting a fresh 2022 low. The Dow Jones Industrial Average retreated 1.6% on Sep 23, briefly falling into the bear market territory at one point during the session and closing at a 2022 low. The technology-heavy Nasdaq Composite fell 1.8%, while Russell 2000 was off 2.5%.Meanwhile, the 2-year U.S. Treasury note notched past a 15-year high of 4.2% and the 10-year U.S. Treasury held near 3.7%, marking the highest level since 2010, per a Yahoo Finance article. In commodity markets, crude oil fell sharply, with United States Oil Fund, LP USO falling 5.3% on Sep 23 and losing 6.6% for the week. Recessionary fears weighed on the demand for oil and gas.Last week, Federal Reserve officials raised interest rates by 75 basis points three times in a row and Chair Jerome Powell indicated that policymakers were ready to digest the economic recession in order to tame inflation. Central banks around the world have recently been on this path.The Bank of England hiked its key interest rate to 2.25% from 1.75% on Thursday and said it would continue to "respond forcefully, as necessary" to tame inflation, despite the economic concerns. The BoE estimates Britain's economy will shrink 0.1% in the third quarter.The Central Bank of Sweden announced a 100 basis points hike in interest rates last week, saying that the inflation was too stubborn. Despite the 100-bps hike, the Riksbank is still behind its inflation target by 0.25%, which indicates further rate hikes. The Swiss central bank also hiked rates by 75 basis points to 0.5% Thursday. The move brought an end to an era of negative rates in Europe.Rising yields globally particularly hurt valuations of companies in the growth sector (e.g. technology, biotech and Internet), which have high expected future earnings. Against this backdrop, below we highlight a few top-performing ETFs of last week. ETFs in FocusSimplify Tail Risk Strategy ETF CYA – Up 20.3%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 Short De-Spac ETF SOGU – Up 14.3%This ETF is active and does not track a benchmark. The AXS Short De-SPAC Daily ETF seeks daily inverse investment results, before fees and expenses, that correspond to the inverse of the return of the De-SPAC Index for a single day by entering into swap agreements and by purchasing put options on securities in the Index.Breakwave Dry Bulk Shipping ETF BDRY – Up 13.2%The Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC Index measure rates for shipping dry bulk freight. The Breakwave Dry Bulk Shipping ETF seeks to provide investors with exposure to the daily change in the price of dry bulk freight futures, before expenses and liabilities.Tuttle Capital Short Innovation ETF SARK – Up 12.3%This ETF is active and does not track a benchmark. The AXS Short Innovation Daily ETF seeks the daily inverse investment results and is intended to be used as a short-term trading vehicle.Advisorshares D.W. Short ETF DWSH – Up 8.7%This ETF is active and does not track a benchmark. The AdvisorShares Dorsey Wright Short ETF is actively-managed with an investment focus that involves buying securities that have appreciated in price more than the other securities in the investment universe and holding those securities until they underperform.  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 United States Oil ETF (USO): ETF Research Reports Breakwave Dry Bulk Shipping ETF (BDRY): ETF Research Reports AdvisorShares Dorsey Wright Short ETF (DWSH): ETF Research Reports AXS Short DeSPAC Daily ETF (SOGU): ETF Research Reports Simplify Tail Risk Strategy ETF (CYA): ETF Research Reports AXS Short Innovation Daily ETF (SARK): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 26th, 2022

"Global Gloom": World Markets Plunge To Start The Week As Global Currency Crash Hits Max Pain And Beyond

"Global Gloom": World Markets Plunge To Start The Week As Global Currency Crash Hits Max Pain And Beyond The rout which hammered stocks on Friday, nearly pushing them to close at a new 2022 low, resumed overnight when the global FX crisis returned with a bang, and a flash crash in the British pound which as noted late last night, plummeted 500pips in thin trading, to fresh record lows following Friday's shocking mini-budget announcement which confirmed the UK has no idea what it is doing and will cut rates and issue more debt just as the BOE is desperately trying to tighten financial conditions. The plunge in cable was however just one symptom of a bigger malaise, namely the relentless surge in the dollar which overnight hit fresh record highs as the BBDXY rose as high as 1,355 before briefly fading the surge... ... as every dollar-denominated debt issuer in the world is suffering crippling pain and begging Powell to do something to ease the unprecedented shock of the strongest dollar in history just as the world slumps into a global depression. Alas, so far there is nothing but silence from the Fed - which will likely have to make some announcement on central bank currency swaps at some point before the open today to avoid an even more epic FX rout - and as traders await something to break big time across global markets... This is the week of the barbell trade: deep OTM calls and puts as things either break or CBs panic. — zerohedge (@zerohedge) September 26, 2022 ... this morning futures have tumbled another 0.7%, as eminis drop to 3,683 while Nasdaq futures are down 0.8% to 11,290 on fears that Federal Reserve rate hikes to combat persistently elevated inflation will crush the economy into a full-blown recession, or depression, and the VIX soared above 32. It wasn't just FX and stocks crashing: British bonds also cratered as yields surged to the highest in more than a decade, sparking talk of emergency action by the Bank of England. For one example of the total chaos look no further than 5Y UK Gilts which have exploded 51bps higher and last traded around 4.58% as the market now prices in Similar implosions were observed in US TSYs, where the 10Y traded just shy of Friday's mini blowout, and was last seen at 3.7828% as bond traders are hit by VaR shocks at the same time in every possible market. Turning back to stocks, the rout wasn't isolated to just one market and an index of global stocks traded to the lowest since 2020. European equities extended declines after sliding into a bear market on Friday, with mining and energy stocks underperforming as metals and oil fell. “We’re in a period of global gloom, with pessimism blanketing different countries for different reasons,” said Ed Yardeni, president of his eponymous research firm, who warned of growing storm clouds for the US economy. “The latest data jibe with our growth recession scenario, but the risks of a full-blown recession are obviously increasing,” he wrote in a note Monday. In premarket trading, major US tech and internet stocks including Apple, Amazon and Microsoft tumbled. Here are some other notable premarket movers: Farfetch (FTCH US) shares fall as much as 4.43% in US premarket trading, after Citi begins coverage of the luxury online retailer with a sell rating, with broker flagging “weak” underlying profitability. Shares of US-listed Macau casinos jump in premarket trading, after Macau government said tour groups from mainland China could resume as early as November. Wynn Resorts (WYNN US) jumps 5.4%; Las Vegas Sands (LVS US) +6.9%, Melco (MLCO US) +9.6% and MGM resorts (MGM US) +1.6% Cryptocurrency-exposed stocks edged higher in premarket trading on Monday as Bitcoin rose above $19,000. Marathon Digital (MARA US) +1.9%, Coinbase (COIN US) +0.4% Keep an eye on Diana Shipping (DSX US) and Safe Bulkers (SB US) as Jefferies downgraded them to hold from buy and lowered dry bulk estimates to reflect the decline in dry bulk charter rates. European shares extended their fall to Dec. 2020 lows; sliding 1% and extending losses as investors priced a major economic shock and recession. The Stoxx 600 Index was down 1% by 10:50am in London, touching its lowest since December 2020, with real estate and banks among the worst performing sectors, while technology shares outperformed. Italy’s FTSE MIB bucked broader European declines to trade little changed, after Giorgia Meloni won a clear majority in Sunday’s election, in line with expectations. Banks and real estate stocks were the worst-performing sectors in Europe on Monday, with declines led by UK stocks as the pound and UK bonds slump. The Stoxx 600 Banks Index and the Stoxx 600 Real Estate are both down at least 2.5% while the benchmark gauge is 1.1% lower. The bank index decline is led by UK names including Virgin Money (-10%), Lloyds (-4.6%) and NatWest (-4.5%). Virgin Money was today resumed with a hold rating at Berenberg; broker said that the lender is expected to see revenue declines and a sector- lagging return on tangible equity which will affect ability to re-rate. Among real estate stocks, the UK’s Safestore Holdings (-4.2%), Assura (-3.9%) and Derwent London (-3.8%) are among the worst performers; non-index member housebuilders, including Persimmon, Bellway and Taylor Wimpey, are also plunging as the pound’s slump prompts talk of emergency action by the Bank of England. Here are the most notable movers today: The Stoxx 600 Tech Index rises as much as 2.4%, set for its biggest one-day outperformance against the broader Stoxx 600 since early-August, with semiconductor stocks leading gains. Among chip stocks, ASML rose as much as +3.7% after Santander upgraded the stock to neutral from underperform Italy’s FTSE MIB index gains, bucking weaker markets in Europe, after Giorgia Meloni won a clear majority in Sunday’s election. While the outcome was in line with expectations, the fact that the coalition didn’t obtain a super majority needed to change the constitution reassures investors. Telecom Italia rose as much +7.4%, FinecoBank +5.1%, Moncler +4.4% Unilever shares rise as much as 3.7% after it announced that CEO Alan Jope will retire from the company at the end of 2023, in a move that Jefferies analyst Martin Deboo (buy) sees as a positive development. RPS Group shares rise as much as 13% after Tetra Tech’s agreed deal to buy the company at 222p/share in cash, representing a 7.8% premium to an offer WSP made in August. Liberum does not rule out a counterbid. Belimo shares rise as much as 8.5% since the market isn’t fully pricing in its growth outlook, Berenberg says in a note, moving to buy and establishing a Street-high CHF440 target. The stock gains as much as 8.1%, the most since March 2021. Zalando shares rise as much as 4.8% after Citi analyst says they like the long-term investment story, short-term earnings risks are still high. UK Domestics: the most remarkable reaction to Friday’s not-so-mini budget, however, might be in lenders’ shares. The decline in banking stocks reflects investors’ pessimistic view on Britain’s economy. HSBC fell as much as 2.9%; Lloyds -4.3%, NatWest -4.7% and Barclays -3.0%. Virgin Money UK shares drop as much as 10% after Berenberg resumed a hold rating in note, stating that in many ways the UK small banks are “more different than they are alike.” Utilities are the day’s worst-performing European sector. Citi analyst Piotr Dzieciolowski says the EU’s funding for its policy response has so far been insufficient and also expects uncertainty to persist for UK names. United Utilities fell as much as -3.4%, Drax -3.8% Geopolitical risks from the war in Ukraine to escalating tensions over Taiwan and unrest in Iran also weighed on sentiment. Meanwhile, the OECD cut almost all growth forecasts for the Group of 20 next year while anticipating further interest-rate hikes, and a gauge of German business confidence deteriorated. Earlier in the session, a rout in Asian stocks extended into Monday as rising concerns about a global recession and weak demand hit the region’s exporters and materials producers. The MSCI Asia Pacific Index declined as much as 2.3% to the lowest since April 2020, dragged lower by TSMC, BHP and Toyota Motor. All but one sector traded lower with materials leading the slump.  South Korean stocks fell the most in the region, with the benchmark tumbling 3% to more than a two-year low. The Korean market’s heavy tech exposure has proven costly amid rising rates and a stronger dollar, with fears that a looming recession may wreak havoc on global demand. Gauges in Hong Kong and China reversed earlier gains as the region’s selloff intensified.   Korea Assets Are Asia’s Biggest Losers on Global Recession Angst “Investor sentiment is again at the stage of extreme fear,” said Lee Kyoung-Min, an analyst at Daishin Investment. “It is becoming solid and clear that Kospi and other global stock markets are on a mid-to-long term downward trend.” Asian stock benchmarks are being buffeted by global headwinds as well as risks of their own. The Federal Reserve’s relentless rate hike campaign is pushing Asian currencies lower and raising the risk of capital outflows, while China’s adherence to Covid Zero is hurting growth in the region’s economic giant.  If Monday’s losses are extended through the week, the MSCI Asia Pacific Index will see its longest run of declines since 2015. Japan stocks declined more than 2% as the nation resumed trading after a holiday on Friday. The Philippine stock market was closed Monday as Super Typhoon Noru barreled into the main Luzon island.  Among the key issues investors are watching this week are speeches by central bank officials in US and Europe, including Fed Chair Jerome Powell on Tuesday. Japanese equities tumbled as the market reopened following a three-day weekend, tracking US peers lower after the Fed’s hawkish comments last week deepened fears of a global downturn. The Topix fell 2.7% to close at 1,864.28, while the Nikkei declined 2.7% to 26,431.55. Toyota Motor contributed the most to the Topix decline, decreasing 3.2% after its monthly production update lagged expectations. Out of 2,169 stocks in the index, 145 rose and 1,985 fell, while 39 were unchanged. “There is a possibility that inflation will not subside and interest rates will rise further, which the markets will not like,” said Shoji Hirakawa, a chief global strategist at Tokai Tokyo Research. In Australia, the S&P/ASX 200 index fell 1.6% to close at 6,469.40, as energy and mining shares plummeted. An energy gauge including oil and coal linked securities declined by the most since March 2020.  The New Zealand market was closed for a holiday In India, key stocks gauges plunged to their lowest closing levels in almost two months as the global equity rout continues. The S&P BSE Sensex dropped 1.6% to 57,145.22 in Mumbai to its lowest since July 28. The NSE Nifty 50 Index fell 1.8%, its biggest single-day plunge since Sept. 16. Both the indexes, down in four of the past five weeks, have lost almost 6% since this month’s peak. Volatility in domestic equities is likely to remain elevated this week, pending monthly derivatives expiry on Thursday. Of 30 shares in the Sensex index, 24 fell and 6 advanced. All but one of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by utilities and power companies.  The Indian rupee weakened to a new record against the dollar amid surging US Treasury yields. The Reserve Bank of India’s rate-setting panel will announce monetary policy later this week. As noted above, while stocks are ugly, rates are a horrorshow as Treasuries extended their worst bond slide in decades as a dollar gauge rose to yet another record. Treasuries extended losses in a bear flattening move with yields cheaper by up to 10bp across the belly of the curve. US 10-year yields around 3.78%, cheaper by 6bp on the day with 5s30s spread flatter by 5bp, dropping as low as -45.4bp in European session; UK yields cheaper by 60bp to 25bp from front- end out to long-end of the curve. The Move comes as market participants brace for accelerated policy tightening from global central banks and headlines such as this: *TRADERS PRICE IN UP TO 200BPS OF BOE RATE HIKES BY NOVEMBER Yields on 2-year gilts are 60bp cheaper heading into early US session, while the pound recovers slightly after reaching a fresh all-time low. US session focus on 2-year auction, while a barrage of Fed speakers are expected for the week. Peripheral spreads widen to Germany with 10y BTP/Bund widening 7bps to 238bps. FX, of course, is a disaster, with the Bloomberg Dollar Spot Index rising a fifth consecutive day as the greenback advanced versus most of its Group-of-10 peers. The pound plunged almost 5% to $1.0350 in Asian trading, the lowest recorded in Bloomberg data going back to 1971, while gilts crashed after the UK government vowed to press ahead with more tax cuts, stoking fears that new fiscal policies will send inflation and debt soaring, triggering emergency rate hikes. The options market signals no respite even as the pound rebounded from a record low hit during the Asia session. The yield on two- year bonds surged more than 55 basis points to 4.51%, while the 10-year yield rose 37 basis points to 4.19%. Money markets price in more than 150 basis points of rate increases by the BoE’s next policy meeting in November The euro steadied after earlier dropping to $0.9554; European bond yields rose; Italian bonds underperformed German peers. Giorgia Meloni won a clear majority in Sunday’s Italian election, setting herself up to become the country’s first female prime minister at the head of the most right-wing government since World War II. Germany’s IFO business expectations slid to 75.2 in September from 80.3 in August. That’s the lowest since April 2020. Analysts had predicted a drop to 79. An index of current conditions also fell. The Australian and New Zealand dollars pared some losses after earlier touching fresh 2-year lows. Aussie bond yields rose by up to 13bps, led by the front end The yen weakened amid a broadly stronger dollar. Bank of Japan Governor Haruhiko Kuroda said the government’s intervention in the foreign exchange market last week was appropriate given the recent volatility in the yen The currency’s rally is “untenable” for risk assets, according to a note by Morgan Stanley strategists led by Michael Wilson, while Sian Fenner, senior Asia economist for Oxford Economics, said that “It’s a king US dollar...“It’s adding to inflationary pressures and more central banks raising rates more than we have historically seen.” In commodities, WTI slides almost 1% to trade near $78/bbl. Spot gold mostly unchanged near $1,643/oz. Bitcoin climbs above $19,000. Trading this week will be punctuated by a number of economic reports including US initial jobless claims and gross-domestic-product data, along with PMI figures from China. Choppiness in price moves is likely with a steady stream of Federal Reserve officials speaking through the week. Looking at today's calendar, we get the September Dallas Fed manufacturing activity index, and the August Chicago Fed national activity index. Central bank speakers include the Fed's Bostic, Collins, Logan and Mester; ECB's Lagarde also speaks as does Nagel, Guindos, Centeno and Panetta speak, BoE's Tenreyro speaks. Market Snapshot S&P 500 futures little changed at 3,706.25 MXAP down 2.0% to 142.24 MXAPJ down 1.4% to 463.08 Nikkei down 2.7% to 26,431.55 Topix down 2.7% to 1,864.28 Hang Seng Index down 0.4% to 17,855.14 Shanghai Composite down 1.2% to 3,051.23 Sensex down 1.2% to 57,378.30 Australia S&P/ASX 200 down 1.6% to 6,469.41 Kospi down 3.0% to 2,220.94 STOXX Europe 600 down 0.2% to 389.70 German 10Y yield little changed at 2.08% Euro little changed at $0.9683 Brent Futures down 0.7% to $85.59/bbl Brent Futures down 0.7% to $85.59/bbl Gold spot up 0.1% to $1,645.98 U.S. Dollar Index little changed at 113.22 Top Overnight News from Bloomberg Chancellor of the Exchequer Kwasi Kwarteng must do more to reassure the markets about his plans for the economy after a selloff sent the pound crashing to an all-time low against the dollar, said Gerard Lyons, an external adviser to Prime Minister Liz Truss The UK’s foreign currency holdings are a fraction of the huge stockpiles built up by some of its peers, making unilateral intervention in the market to prop up the plunging pound a tall order for UK policymakers. The UK had $108 billion in foreign currency reserves at the end of August, according to data from the IMF Hedge funds ramped up bullish bets on the pound just days before the UK government’s unexpectedly large tax cuts sent the currency tumbling The ECB’s newest policy maker, Boris Vujcic, says “it’s clear that this is the right way to go,” backing this month’s 75-basis point interest-rate hike ECB Vice President Luis de Guindos said the biggest problem facing the continent’s economy is record inflation, which is becoming more broad-based, threatening investment and consumer spending ECB Governing Council member Yannis Stournaras says the central bank must maintain the main principles of gradualism and flexibility, since the problem it faces is different from the one that the US Fed faces China made it more expensive to bet against the yuan in the derivatives market, ramping up support for the currency as it slides toward the weakest level since the 2008 financial crisis A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mostly negative in a resumption of last week's global stock rout amid the continued surge in the dollar and higher yields, while there was also FX volatility which saw a flash crash in GBP/USD to a record low. ASX 200 was dragged lower amid losses in the commodity-related sectors and with sentiment dampened by the collapse of potential M&A deals involving Ramsay Health-KKR and Link Administration-Dye & Durham. Nikkei 225 underperformed with Mazda Motors among the worst hit as it considers exiting Russian operations. Hang Seng and Shanghai Comp retraced most of their initial losses with Hong Kong underpinned following the scrapping of hotel quarantine policy and with casinos boosted as Macau is to resume tour groups from China, while the property industry benefits after China Construction Bank formed a CNY 30bln housing rental fund and some Twitter sources also circulated that some China state banks were reportedly ordered to buy stocks to contain selling. Top Asian News PBoC injected CNY 42bln via 7-day reverse repos with the rate kept at 2.00% and CNY 93bln via 14-day reverse repos with the rate kept at 2.15% for a net CNY 133bln injection. There were rumours circulating on social media of a coup against Chinese President Xi, although experts and journalists in Beijing dismissed the rumours and said there was no evidence to support them, according to The Print. Philippines Stock Exchange announced a trading suspension for Monday amid a typhoon in the capital, according to Reuters. European bourses are softer after a mixed cash open and despite a brief foray higher, Euro Stoxx 50 -0.5%, as sentiment remains subdued amid recession/inflation concerns. The breakdown features modest outperformance in the FTSE MIB as Italian election results are in-line with expectations. Stateside, futures are lower across the board in-fitting with peers going into a week of Fed speak and inflation data. Top European News UK PM Truss said she is determined to make the special relationship with the US even more special and said she agreed with US President Biden that it is vital to protect the Northern Ireland Good Friday Agreement, while she wants to find a way forward with a negotiated solution with the EU, according to Reuters and a CNN interview. UK PM Truss is to review visa schemes in an attempt to ease UK labour shortages, according to FT. UK Chancellor Kwarteng hinted that more tax cuts are on the way and claimed his tax cuts “favour people right across the income scale” amid accusations they mainly help the rich, according to Evening Standard. UK Chancellor Kwarteng said he is focused on growing the economy and the longer term when asked about the market reaction to his statement on Friday. Kwarteng added that he shares ideas with BoE Governor Bailey but added that Bailey is completely independent and Kwarteng is confident the BoE is dealing with inflation, according to Reuters. UK opposition Labour Party leader Starmer said they would reintroduce the top rate of income tax at 45% which the government announced to scrap last week, while he added that they will support the government plan to lower the basic rate of income tax to 19%, according to Reuters. Italy's right-wing bloc is seen winning the national election with 43.3% and centre-left bloc is seen winning 25.4%, according to the first projection by LA7 TV based on the actual vote count.. Click here for newsquawk snap analysis. Italy's Meloni said Italians gave clear backing to a centre-right government led by the Brothers of Italy and said the situation is difficult and needs contribution from everyone. It was separately reported that Italy's Democratic Party conceded in the election and said it will be the main opposition force, while Italy's Meloni claimed leadership of the next Italian government, according to Reuters and AFP. FX DXY climbed to a fresh YTD high of 114.58 before paring modestly, but remaining firmer, as GBP in particular lifts off worst levels. Cable succumbed to a flash crash overnight, with GBP/USD hitting an all-time-low around 1.0350 as participants confidence in the economy slips. EUR suffers amid the mentioned USD move but derives relative benefit from GBP, while ECB speakers thus far have added little. Antipodeans and CAD weighed on by broader risk and commodity pressure. Japanese Finance Minister Suzuki said the government and BoJ share views on concerns about a weak JPY, while he added that FX intervention had a certain effect and there is no change to the stance that they will respond to market moves as needed, according to Reuters. PBoC set USD/CNY mid-point at 7.0298 vs exp. 7.0019 (prev. 6.9920) PBoC imposed a 20% risk reserve requirement for FX forward sales from September 28th to rein in yuan weakness. Fixed Income Gilts have retained some composure after slumping over 200ticks at the commencement of trade and have settled around halfway between intraday extremes. EGBs downbeat in sympathy while BTPs marginally lag core-EGB peers as Italian as-expected election results are digested with BTP-Bund only modestly wider as such. Stateside, USTs are pressured in-fitting with peers and also conscious of the week's supply docket getting underway via a 43bln 2yr. Central Banks Fed’s Bostic (2024 voter) said inflation is too high and that they need to do all they can to bring it down and said demand is beginning to shrink which will ultimately pay dividends in inflation levels. Bostic also stated that there are scenarios where they can avoid deep pain but there will likely be some job losses, according to Reuters. BoJ's Kuroda says the BoJ will maintain accommodative monetary conditions to support companies, hopes to support a positive economic cycle, long-term inflation expectations have begun to heighten, via Reuters. Intervention from the MoF is an "appropriate" move, does not think gov't intervention and BoJ policy are contradictory. Amamiya says the domestic economy is picking up, must carefully watch how FX moves affect the economy and prices. BoJ Governor Kuroda says when he stated that BoJ forward guidance will not change for 2-3yrs, did not refer to guidance on keeping short and long-term rates at present of lower levels via Reuters. ECB's de Guindos says Q3 and Q4 point towards growth rates being close to zero within the EZ, the scenario is market by high uncertainty, lower growth and higher inflation. ECB's Panetta says ECB is assessing the potential of distributed ledger technology (DLT) and "the extent to which it could improve our services.". Capital Economics calls for the BoE to "get on the front foot with a big rate hike". Allianz's El-Erian says, on GBP, the fall is about extra tax cuts and Chancellor Kwarteng could recalibrate this. Alternative, would be for the BoE to hike at an emergency meeting. Adding, he would hike by 100bp. BoE publishes key elements of the 2022 annual cyclical scenario stress test; includes a scenario where the Bank Rate is assumed to rise rapidly to a peak of 6% in early 2023 before gradually reduced to sub-3.5%. Commodities WTI and Brent November futures remain subdued in early European trade following last week’s recession-induced losses. Spot gold trades in tandem with the Buck and sees resistance at around USD 1,650/oz after falling to USD 1,627/oz as a casualty of the Sterling flash crash overnight. LME metals are softer across the board with 3M copper futures having a hard time reclaiming USD +7,500/t status with upside capped by the Buck. Iraq began trial operations at the Karabala oil refinery which has a production capacity of 140k bpd, according to a statement from the Oil Ministry. German Chancellor Scholz signed a strategic agreement with UAE’s President on accelerating energy security and industrial growth, while UAE’s ADNOC signed an agreement with Germany’s RWE which includes ADNOC exporting its first LNG cargo to RWE and will conduct trial shipments of low-carbon ammonia to Germany. Furthermore, Chancellor Scholz said while visiting Doha that he talked with the Emir about LNG deliveries and that they want to achieve further progress, according to Reuters. Germany is preparing a national electricity price cap to be implemented this fall in the scenario the EU falls to agree on a similar move for the entirety of the bloc, via WSJ citing officials. Vitol's CEO said at the Asia Pacific Petroleum Conference that Russian gas supply cuts put enormous strain on supply-demand in Europe and that high gas prices are to impact 60%-80% of demand, while Ecopetrol's CEO said they are increasing crude exports to Europe this year to replace Russian supplies and are drilling 600 oil wells this year. Anglo American (AAL LN) tightens copper production guidance for Chile to 560k-580k tonnes of copper (prev. 560k-600k tonnes) due to lower throughput at Los Bronces caused by a combination of water restrictions and a change in ore characteristics, via Reuters. US Event Calendar 08:30: Aug. Chicago Fed Nat Activity Index, est. 0.23, prior 0.27 10:30: Sept. Dallas Fed Manf. Activity, est. -10.0, prior -12.9 Central Banks 10:00: Boston Fed’s Susan Collins Speaks to Boston Chamber of... 12:00: Fed’s Bostic Discusses Income Inequality 12:30: Fed’s Logan Speaks at Banking Conference 16:00: Fed’s Mester Discusses Economic Outlook DB's Jim Reid concludes the overnight wrap I wonder whether any research report has ever been written whilst watching synchronised swimming? Well if not, then you’re reading the first ever as I’m getting a head start on the early morning news by starting this on Sunday evening watching my daughter Maisie do her second session after getting into the local club. Watching this sport is going to take some getting used to after years of watching football, cricket, golf, F1, athletics, rugby... actually.... virtually every sport bar synchronised swimming. I think everyone felt they were swimming in a tsunami of newsflow last week after one of the most incredible macro weeks in recent memory in terms of breadth of events. Yes there have been more extreme weeks in crises but last week had a bit more variety and was outside of a crisis period. If over 500bps of global rate hikes wasn’t enough, you also had 2yr US yields moving higher for the 12th successive day on Friday (the longest steak since data begins in 1976), the BoJ intervening in FX markets for the first time since 1998, and what can only be termed as one of the darker days for sterling assets on record on Friday after a mammoth tax giveaway in what was a mini-budget in name and not by nature. Henry and I put a note out on Friday night (link here) showing that it was the third worst day for Sterling (-3.57%) since Black Wednesday in 1992, with the worst two since being the day after the Brexit vote (-8.1%) and after the initial covid shock in 2020 (-3.71%) when there was a global flight to dollars. We also show a graph of daily Sterling moves back to 1862 and on that it was the 41st worst day in history spanning 47,000 trading days. Obviously in the long era of fixed FX rates there were the occasional big devaluations which were much bigger than Friday. This morning is Asia it fell around -4.5% at one point (1.0392) which was a record low against the Dollar. It's around -2.78% as I type. This follows a weekend interview where Chancellor Kwarteng suggested that more tax cuts were to come so that certainly was a red rag to markets. Will we hear from the upper echelons of the BoE today? Watch out for any comments, especially at the market open. DB's George Saravelos suggested on Friday that the Bank of England need to do an inter meeting hike to restore policy credibility. There’s also a graph in our note mentioned above showing that Friday was the worst day for 5yr gilts (+50.3bps) since a +200bps hike in 1985 when sterling was also slumping. So maybe omens here. I suppose the only slight mystery is the timing of the sell-off as the mini-budget in magnitude was broadly in-line with the recent elevated fiscal expectations that had been building. However perhaps it was the unabashed revival of trickle-down economics that had markets a little aghast. It goes against the current economic orthodoxy and the overall zeitgeist of our immediate times. As such there is likely to be concerns of a credibility issue. We are publishing our long-term study today with the title “How we got here, and where we’re going?”. In it we try to put the current macro woes into historical context in an attempt to work out where we’re going. There are quite a few people who have proof-read it on my team and they were all thoroughly depressed at the end. I didn't feel that way writing it but maybe it's a case of starting point perceptions. Anyway, look out for it around the European lunchtime. Overnight in Italy, the right-wing alliance led by Giorgia Meloni's Brothers of Italy party was on course to become the nation’s first woman prime minister after exit polls gave it a clear majority. With the full results due later today, she is predicted to win up to 26% of the vote ahead of her closest rival Enrico Letta from the centre left. The right wing alliance is slated to be on course for around 43% of the vote, enough for a majority if correct. As I type, the euro is extending its losses against the dollar for the fifth day, its longest streak since April 28, falling as much as -0.5% to 0.9638, albeit being overshadowed by Sterling. For this week we have an array of consumer-driven economic data in the US and some important European inflation prints. We will also get a number of consumer sentiment indicators across the key economies and PMIs from Asia. Away from the data, there are more than 30 central banker appearances across the Fed and the ECB to keep markets busy. Tomorrow also sees referendums in the Russia-annexed Ukrainian territories as the conflict goes into its eight month. Going through the data in more details now. Starting with the US, the PCE and personal income and spending data will be front and centre for markets next week as they gauge the extent of inflationary pressures and the strength of the consumer. The Fed’s preferred inflation gauge, the PCE, due Friday, will be watched for signs of price pressures we saw in last week's CPI report. Our US economists expect core PCE to edge higher by +0.5% MoM (vs +0.1% in July) which won’t allow the Fed to take the foot off the tightening pedal. For the other two data points, our team forecasts a +0.1% MoM increase for both income and consumption. Final US Q2 GDP will also be released on Thursday and although DB expect no change to the -0.6% second reading, watch out for the annual benchmark revisions back to Q1 2017. History could be re-written that could have some implications for how we all think about the economy. In other US data, we will also get the consumer confidence index on Tuesday, along with durable goods orders, and inventories data on Wednesday, with the Chicago PMI on Friday. Over in Europe, all eyes will be on September's inflation data, including the Euro Area flash CPI release on Friday. Our economists are expecting the measure to hit a record +9.5%, up from the previous record of +9.1% in August. Other data in the region will include consumer and economic sentiment from Germany, France, Italy and the Eurozone throughout the week. Meanwhile, EU energy ministers will meet again on Friday regarding the emergency intervention amid elevated energy prices. Finally, next week's earnings line up will feature a number of retail bellwethers on Thursday. Among them will be Nike, H&M and Next. Micron will report that day as well. See our usual day by day guide to the week at the end which contains many of the key Fed and ECB speakers including Powell and Lagarde. Stock markets across Asia are mostly lower this morning. The Kospi (-2.40%), Nikkei (-2.30%) and the S&P/ASX 200 (-1.40%) are leading the declines. Meanwhile, the Hang Seng (+0.11%) is swinging between gains and losses after rising by +2.45% initially with Chinese shares mixed as the Shanghai Composite (-0.10%) is trading lower while the CSI (+0.46%) is up as we go to press. Stock futures in DMs are pointing to further losses with contracts on the S&P 500 (-0.49%), NASDAQ 100 (-0.46%) and DAX (-0.33%) all moving lower. Early morning data showed that Japan’s manufacturing sector continued to expand albeit at a slower pace as the latest au Jibun Bank manufacturing PMI slipped to a 20-month low of 51.0 in September from 51.5 in August, pulled lower by high energy and raw material prices that was exacerbated by a weak yen. At the same time, the au Jibun Bank services PMI returned to expansion, recording a level of 51.9 in September from August's 49.5 final reading. Moving on to China, in order to stabilise expectations in the FX market, the People’s Bank of China (PBOC) today raised the risk reserve requirement on foreign exchange forward sales to 20% from 0% beginning September 28 as the yuan faces increasing depreciation pressure, in line with most major currencies amid broad dollar strength. Looking back now on a week that will not be forgotten anytime soon. While there were historic central bank hikes all week, the biggest news came from the fiscal authorities, following the UK’s budget Friday, which had the largest tax cut package since the 1970s. Gilt yields had their largest one-day increase in decades with 2yrs +44.7bps, 5yrs +50.3bps, and 10yrs +33.3bps. As we mentioned at the top, 5yrs yields saw their largest move since 1985 after a +200bps hike aimed at helping a plunging currency. The pound fell -3.57% against the US dollar to within a percentage point of the weakest in the post-Bretton Woods 51yr free float era. It was already a busy macro week before the blockbuster budget, where we got more than 500bps of global central bank hikes and a currency intervention from Japan. In terms of the biggest players, the Fed delivered its third consecutive 75bp hike while the BoE delivered its second 50bp hike in a row, with both banks guiding toward yet more tightening, while the BoJ remained the outlier by keeping its accommodative policy in place, which isn’t going to help the yen turnaround even with intervention. When all was said and done, sovereign bonds and equities sold off in size, while yield curves flattened. 2yr Treasuries (+33.4bps, +7.9bps Friday), 2yr Bunds (+38.5bps, +7.2bps Friday), 2yr Gilts (+82.1bps, +44.7bps Friday) reached their highest levels since 2007, 2008, and 2008, respectively, as markets priced in more tightening to overcome inflationary pressures (and in the case of the UK, fiscal expansion). 10yr Treasuries (+23.5bps, -2.9bps Friday) ended the week a touch lower on the day but hit their highest levels since 2011 during the week, while 10yr Bunds (+26.8bps, +5.9bps Friday), and 10yr Gilts (+69.1bps, +33.3bps Friday) hit their highest levels since 2013 and 2011, respectively. The mixture unsurprisingly proved unpalatable to risk assets, driving the STOXX 600 and S&P 500 back to their lows for the year. The STOXX 600 retreated -4.37% on the week and -2.34% on Friday, the worst weekly and daily return since mid-June. The S&P 500 fell -4.65% (-1.75% Friday), returning to bear market territory. The FTSE managed to stay above its YTD lows, but still fell -3.01% on the week, its worst weekly return since mid-June as well, and retreated -1.97% on Friday, the worst daily return since early July. Tyler Durden Mon, 09/26/2022 - 08:08.....»»

Category: blogSource: zerohedgeSep 26th, 2022

“Global Gloom": World Markets Plunge To Start The Week As Global Currency Crash Hits Max Pain And Beyond

“Global Gloom": World Markets Plunge To Start The Week As Global Currency Crash Hits Max Pain And Beyond The rout which hammered stocks on Friday, nearly pushing them to close at a new 2022 low, resumed overnight when the global FX crisis returned with a bang, and a flash crash in the British pound which as noted late last night, plummeted 500pips in thin trading, to fresh record lows following Friday's shocking mini-budget announcement which confirmed the UK has no idea what it is doing and will cut rates and issue more debt just as the BOE is desperately trying to tighten financial conditions. The plunge in cable was however just one symptom of a bigger malaise, namely the relentless surge in the dollar which overnight hit fresh record highs as the BBDXY rose as high as 1,355 before briefly fading the surge... ... as every dollar-denominated debt issuer in the world is suffering crippling pain and begging Powell to do something to ease the unprecedented shock of the strongest dollar in history just as the world slumps into a global depression. Alas, so far there is nothing but silence from the Fed - which will likely have to make some announcement on central bank currency swaps at some point before the open today to avoid an even more epic FX rout - and as traders await something to break big time across global markets... This is the week of the barbell trade: deep OTM calls and puts as things either break or CBs panic. — zerohedge (@zerohedge) September 26, 2022 ... this morning futures have tumbled another 0.7%, as eminis drop to 3,683 while Nasdaq futures are down 0.8% to 11,290 on fears that Federal Reserve rate hikes to combat persistently elevated inflation will crush the economy into a full-blown recession, or depression, and the VIX soared above 32. It wasn't just FX and stocks crashing: British bonds also cratered as yields surged to the highest in more than a decade, sparking talk of emergency action by the Bank of England. For one example of the total chaos look no further than 5Y UK Gilts which have exploded 51bps higher and last traded around 4.58% as the market now prices in Similar implosions were observed in US TSYs, where the 10Y traded just shy of Friday's mini blowout, and was last seen at 3.7828% as bond traders are hit by VaR shocks at the same time in every possible market. Turning back to stocks, the rout wasn't isolated to just one market and an index of global stocks traded to the lowest since 2020. European equities extended declines after sliding into a bear market on Friday, with mining and energy stocks underperforming as metals and oil fell. “We’re in a period of global gloom, with pessimism blanketing different countries for different reasons,” said Ed Yardeni, president of his eponymous research firm, who warned of growing storm clouds for the US economy. “The latest data jibe with our growth recession scenario, but the risks of a full-blown recession are obviously increasing,” he wrote in a note Monday. In premarket trading, major US tech and internet stocks including Apple, Amazon and Microsoft tumbled. Here are some other notable premarket movers: Farfetch (FTCH US) shares fall as much as 4.43% in US premarket trading, after Citi begins coverage of the luxury online retailer with a sell rating, with broker flagging “weak” underlying profitability. Shares of US-listed Macau casinos jump in premarket trading, after Macau government said tour groups from mainland China could resume as early as November. Wynn Resorts (WYNN US) jumps 5.4%; Las Vegas Sands (LVS US) +6.9%, Melco (MLCO US) +9.6% and MGM resorts (MGM US) +1.6% Cryptocurrency-exposed stocks edged higher in premarket trading on Monday as Bitcoin rose above $19,000. Marathon Digital (MARA US) +1.9%, Coinbase (COIN US) +0.4% Keep an eye on Diana Shipping (DSX US) and Safe Bulkers (SB US) as Jefferies downgraded them to hold from buy and lowered dry bulk estimates to reflect the decline in dry bulk charter rates. European shares extended their fall to Dec. 2020 lows; sliding 1% and extending losses as investors priced a major economic shock and recession. The Stoxx 600 Index was down 1% by 10:50am in London, touching its lowest since December 2020, with real estate and banks among the worst performing sectors, while technology shares outperformed. Italy’s FTSE MIB bucked broader European declines to trade little changed, after Giorgia Meloni won a clear majority in Sunday’s election, in line with expectations. Banks and real estate stocks were the worst-performing sectors in Europe on Monday, with declines led by UK stocks as the pound and UK bonds slump. The Stoxx 600 Banks Index and the Stoxx 600 Real Estate are both down at least 2.5% while the benchmark gauge is 1.1% lower. The bank index decline is led by UK names including Virgin Money (-10%), Lloyds (-4.6%) and NatWest (-4.5%). Virgin Money was today resumed with a hold rating at Berenberg; broker said that the lender is expected to see revenue declines and a sector- lagging return on tangible equity which will affect ability to re-rate. Among real estate stocks, the UK’s Safestore Holdings (-4.2%), Assura (-3.9%) and Derwent London (-3.8%) are among the worst performers; non-index member housebuilders, including Persimmon, Bellway and Taylor Wimpey, are also plunging as the pound’s slump prompts talk of emergency action by the Bank of England. Here are the most notable movers today: The Stoxx 600 Tech Index rises as much as 2.4%, set for its biggest one-day outperformance against the broader Stoxx 600 since early-August, with semiconductor stocks leading gains. Among chip stocks, ASML rose as much as +3.7% after Santander upgraded the stock to neutral from underperform Italy’s FTSE MIB index gains, bucking weaker markets in Europe, after Giorgia Meloni won a clear majority in Sunday’s election. While the outcome was in line with expectations, the fact that the coalition didn’t obtain a super majority needed to change the constitution reassures investors. Telecom Italia rose as much +7.4%, FinecoBank +5.1%, Moncler +4.4% Unilever shares rise as much as 3.7% after it announced that CEO Alan Jope will retire from the company at the end of 2023, in a move that Jefferies analyst Martin Deboo (buy) sees as a positive development. RPS Group shares rise as much as 13% after Tetra Tech’s agreed deal to buy the company at 222p/share in cash, representing a 7.8% premium to an offer WSP made in August. Liberum does not rule out a counterbid. Belimo shares rise as much as 8.5% since the market isn’t fully pricing in its growth outlook, Berenberg says in a note, moving to buy and establishing a Street-high CHF440 target. The stock gains as much as 8.1%, the most since March 2021. Zalando shares rise as much as 4.8% after Citi analyst says they like the long-term investment story, short-term earnings risks are still high. UK Domestics: the most remarkable reaction to Friday’s not-so-mini budget, however, might be in lenders’ shares. The decline in banking stocks reflects investors’ pessimistic view on Britain’s economy. HSBC fell as much as 2.9%; Lloyds -4.3%, NatWest -4.7% and Barclays -3.0%. Virgin Money UK shares drop as much as 10% after Berenberg resumed a hold rating in note, stating that in many ways the UK small banks are “more different than they are alike.” Utilities are the day’s worst-performing European sector. Citi analyst Piotr Dzieciolowski says the EU’s funding for its policy response has so far been insufficient and also expects uncertainty to persist for UK names. United Utilities fell as much as -3.4%, Drax -3.8% Geopolitical risks from the war in Ukraine to escalating tensions over Taiwan and unrest in Iran also weighed on sentiment. Meanwhile, the OECD cut almost all growth forecasts for the Group of 20 next year while anticipating further interest-rate hikes, and a gauge of German business confidence deteriorated. Earlier in the session, a rout in Asian stocks extended into Monday as rising concerns about a global recession and weak demand hit the region’s exporters and materials producers. The MSCI Asia Pacific Index declined as much as 2.3% to the lowest since April 2020, dragged lower by TSMC, BHP and Toyota Motor. All but one sector traded lower with materials leading the slump.  South Korean stocks fell the most in the region, with the benchmark tumbling 3% to more than a two-year low. The Korean market’s heavy tech exposure has proven costly amid rising rates and a stronger dollar, with fears that a looming recession may wreak havoc on global demand. Gauges in Hong Kong and China reversed earlier gains as the region’s selloff intensified.   Korea Assets Are Asia’s Biggest Losers on Global Recession Angst “Investor sentiment is again at the stage of extreme fear,” said Lee Kyoung-Min, an analyst at Daishin Investment. “It is becoming solid and clear that Kospi and other global stock markets are on a mid-to-long term downward trend.” Asian stock benchmarks are being buffeted by global headwinds as well as risks of their own. The Federal Reserve’s relentless rate hike campaign is pushing Asian currencies lower and raising the risk of capital outflows, while China’s adherence to Covid Zero is hurting growth in the region’s economic giant.  If Monday’s losses are extended through the week, the MSCI Asia Pacific Index will see its longest run of declines since 2015. Japan stocks declined more than 2% as the nation resumed trading after a holiday on Friday. The Philippine stock market was closed Monday as Super Typhoon Noru barreled into the main Luzon island.  Among the key issues investors are watching this week are speeches by central bank officials in US and Europe, including Fed Chair Jerome Powell on Tuesday. Japanese equities tumbled as the market reopened following a three-day weekend, tracking US peers lower after the Fed’s hawkish comments last week deepened fears of a global downturn. The Topix fell 2.7% to close at 1,864.28, while the Nikkei declined 2.7% to 26,431.55. Toyota Motor contributed the most to the Topix decline, decreasing 3.2% after its monthly production update lagged expectations. Out of 2,169 stocks in the index, 145 rose and 1,985 fell, while 39 were unchanged. “There is a possibility that inflation will not subside and interest rates will rise further, which the markets will not like,” said Shoji Hirakawa, a chief global strategist at Tokai Tokyo Research. In Australia, the S&P/ASX 200 index fell 1.6% to close at 6,469.40, as energy and mining shares plummeted. An energy gauge including oil and coal linked securities declined by the most since March 2020.  The New Zealand market was closed for a holiday In India, key stocks gauges plunged to their lowest closing levels in almost two months as the global equity rout continues. The S&P BSE Sensex dropped 1.6% to 57,145.22 in Mumbai to its lowest since July 28. The NSE Nifty 50 Index fell 1.8%, its biggest single-day plunge since Sept. 16. Both the indexes, down in four of the past five weeks, have lost almost 6% since this month’s peak. Volatility in domestic equities is likely to remain elevated this week, pending monthly derivatives expiry on Thursday. Of 30 shares in the Sensex index, 24 fell and 6 advanced. All but one of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by utilities and power companies.  The Indian rupee weakened to a new record against the dollar amid surging US Treasury yields. The Reserve Bank of India’s rate-setting panel will announce monetary policy later this week. As noted above, while stocks are ugly, rates are a horrorshow as Treasuries extended their worst bond slide in decades as a dollar gauge rose to yet another record. Treasuries extended losses in a bear flattening move with yields cheaper by up to 10bp across the belly of the curve. US 10-year yields around 3.78%, cheaper by 6bp on the day with 5s30s spread flatter by 5bp, dropping as low as -45.4bp in European session; UK yields cheaper by 60bp to 25bp from front- end out to long-end of the curve. The Move comes as market participants brace for accelerated policy tightening from global central banks and headlines such as this: *TRADERS PRICE IN UP TO 200BPS OF BOE RATE HIKES BY NOVEMBER Yields on 2-year gilts are 60bp cheaper heading into early US session, while the pound recovers slightly after reaching a fresh all-time low. US session focus on 2-year auction, while a barrage of Fed speakers are expected for the week. Peripheral spreads widen to Germany with 10y BTP/Bund widening 7bps to 238bps. FX, of course, is a disaster, with the Bloomberg Dollar Spot Index rising a fifth consecutive day as the greenback advanced versus most of its Group-of-10 peers. The pound plunged almost 5% to $1.0350 in Asian trading, the lowest recorded in Bloomberg data going back to 1971, while gilts crashed after the UK government vowed to press ahead with more tax cuts, stoking fears that new fiscal policies will send inflation and debt soaring, triggering emergency rate hikes. The options market signals no respite even as the pound rebounded from a record low hit during the Asia session. The yield on two- year bonds surged more than 55 basis points to 4.51%, while the 10-year yield rose 37 basis points to 4.19%. Money markets price in more than 150 basis points of rate increases by the BoE’s next policy meeting in November The euro steadied after earlier dropping to $0.9554; European bond yields rose; Italian bonds underperformed German peers. Giorgia Meloni won a clear majority in Sunday’s Italian election, setting herself up to become the country’s first female prime minister at the head of the most right-wing government since World War II. Germany’s IFO business expectations slid to 75.2 in September from 80.3 in August. That’s the lowest since April 2020. Analysts had predicted a drop to 79. An index of current conditions also fell. The Australian and New Zealand dollars pared some losses after earlier touching fresh 2-year lows. Aussie bond yields rose by up to 13bps, led by the front end The yen weakened amid a broadly stronger dollar. Bank of Japan Governor Haruhiko Kuroda said the government’s intervention in the foreign exchange market last week was appropriate given the recent volatility in the yen The currency’s rally is “untenable” for risk assets, according to a note by Morgan Stanley strategists led by Michael Wilson, while Sian Fenner, senior Asia economist for Oxford Economics, said that “It’s a king US dollar...“It’s adding to inflationary pressures and more central banks raising rates more than we have historically seen.” In commodities, WTI slides almost 1% to trade near $78/bbl. Spot gold mostly unchanged near $1,643/oz. Bitcoin climbs above $19,000. Trading this week will be punctuated by a number of economic reports including US initial jobless claims and gross-domestic-product data, along with PMI figures from China. Choppiness in price moves is likely with a steady stream of Federal Reserve officials speaking through the week. Looking at today's calendar, we get the September Dallas Fed manufacturing activity index, and the August Chicago Fed national activity index. Central bank speakers include the Fed's Bostic, Collins, Logan and Mester; ECB's Lagarde also speaks as does Nagel, Guindos, Centeno and Panetta speak, BoE's Tenreyro speaks. Market Snapshot S&P 500 futures little changed at 3,706.25 MXAP down 2.0% to 142.24 MXAPJ down 1.4% to 463.08 Nikkei down 2.7% to 26,431.55 Topix down 2.7% to 1,864.28 Hang Seng Index down 0.4% to 17,855.14 Shanghai Composite down 1.2% to 3,051.23 Sensex down 1.2% to 57,378.30 Australia S&P/ASX 200 down 1.6% to 6,469.41 Kospi down 3.0% to 2,220.94 STOXX Europe 600 down 0.2% to 389.70 German 10Y yield little changed at 2.08% Euro little changed at $0.9683 Brent Futures down 0.7% to $85.59/bbl Brent Futures down 0.7% to $85.59/bbl Gold spot up 0.1% to $1,645.98 U.S. Dollar Index little changed at 113.22 Top Overnight News from Bloomberg Chancellor of the Exchequer Kwasi Kwarteng must do more to reassure the markets about his plans for the economy after a selloff sent the pound crashing to an all-time low against the dollar, said Gerard Lyons, an external adviser to Prime Minister Liz Truss The UK’s foreign currency holdings are a fraction of the huge stockpiles built up by some of its peers, making unilateral intervention in the market to prop up the plunging pound a tall order for UK policymakers. The UK had $108 billion in foreign currency reserves at the end of August, according to data from the IMF Hedge funds ramped up bullish bets on the pound just days before the UK government’s unexpectedly large tax cuts sent the currency tumbling The ECB’s newest policy maker, Boris Vujcic, says “it’s clear that this is the right way to go,” backing this month’s 75-basis point interest-rate hike ECB Vice President Luis de Guindos said the biggest problem facing the continent’s economy is record inflation, which is becoming more broad-based, threatening investment and consumer spending ECB Governing Council member Yannis Stournaras says the central bank must maintain the main principles of gradualism and flexibility, since the problem it faces is different from the one that the US Fed faces China made it more expensive to bet against the yuan in the derivatives market, ramping up support for the currency as it slides toward the weakest level since the 2008 financial crisis A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mostly negative in a resumption of last week's global stock rout amid the continued surge in the dollar and higher yields, while there was also FX volatility which saw a flash crash in GBP/USD to a record low. ASX 200 was dragged lower amid losses in the commodity-related sectors and with sentiment dampened by the collapse of potential M&A deals involving Ramsay Health-KKR and Link Administration-Dye & Durham. Nikkei 225 underperformed with Mazda Motors among the worst hit as it considers exiting Russian operations. Hang Seng and Shanghai Comp retraced most of their initial losses with Hong Kong underpinned following the scrapping of hotel quarantine policy and with casinos boosted as Macau is to resume tour groups from China, while the property industry benefits after China Construction Bank formed a CNY 30bln housing rental fund and some Twitter sources also circulated that some China state banks were reportedly ordered to buy stocks to contain selling. Top Asian News PBoC injected CNY 42bln via 7-day reverse repos with the rate kept at 2.00% and CNY 93bln via 14-day reverse repos with the rate kept at 2.15% for a net CNY 133bln injection. There were rumours circulating on social media of a coup against Chinese President Xi, although experts and journalists in Beijing dismissed the rumours and said there was no evidence to support them, according to The Print. Philippines Stock Exchange announced a trading suspension for Monday amid a typhoon in the capital, according to Reuters. European bourses are softer after a mixed cash open and despite a brief foray higher, Euro Stoxx 50 -0.5%, as sentiment remains subdued amid recession/inflation concerns. The breakdown features modest outperformance in the FTSE MIB as Italian election results are in-line with expectations. Stateside, futures are lower across the board in-fitting with peers going into a week of Fed speak and inflation data. Top European News UK PM Truss said she is determined to make the special relationship with the US even more special and said she agreed with US President Biden that it is vital to protect the Northern Ireland Good Friday Agreement, while she wants to find a way forward with a negotiated solution with the EU, according to Reuters and a CNN interview. UK PM Truss is to review visa schemes in an attempt to ease UK labour shortages, according to FT. UK Chancellor Kwarteng hinted that more tax cuts are on the way and claimed his tax cuts “favour people right across the income scale” amid accusations they mainly help the rich, according to Evening Standard. UK Chancellor Kwarteng said he is focused on growing the economy and the longer term when asked about the market reaction to his statement on Friday. Kwarteng added that he shares ideas with BoE Governor Bailey but added that Bailey is completely independent and Kwarteng is confident the BoE is dealing with inflation, according to Reuters. UK opposition Labour Party leader Starmer said they would reintroduce the top rate of income tax at 45% which the government announced to scrap last week, while he added that they will support the government plan to lower the basic rate of income tax to 19%, according to Reuters. Italy's right-wing bloc is seen winning the national election with 43.3% and centre-left bloc is seen winning 25.4%, according to the first projection by LA7 TV based on the actual vote count.. Click here for newsquawk snap analysis. Italy's Meloni said Italians gave clear backing to a centre-right government led by the Brothers of Italy and said the situation is difficult and needs contribution from everyone. It was separately reported that Italy's Democratic Party conceded in the election and said it will be the main opposition force, while Italy's Meloni claimed leadership of the next Italian government, according to Reuters and AFP. FX DXY climbed to a fresh YTD high of 114.58 before paring modestly, but remaining firmer, as GBP in particular lifts off worst levels. Cable succumbed to a flash crash overnight, with GBP/USD hitting an all-time-low around 1.0350 as participants confidence in the economy slips. EUR suffers amid the mentioned USD move but derives relative benefit from GBP, while ECB speakers thus far have added little. Antipodeans and CAD weighed on by broader risk and commodity pressure. Japanese Finance Minister Suzuki said the government and BoJ share views on concerns about a weak JPY, while he added that FX intervention had a certain effect and there is no change to the stance that they will respond to market moves as needed, according to Reuters. PBoC set USD/CNY mid-point at 7.0298 vs exp. 7.0019 (prev. 6.9920) PBoC imposed a 20% risk reserve requirement for FX forward sales from September 28th to rein in yuan weakness. Fixed Income Gilts have retained some composure after slumping over 200ticks at the commencement of trade and have settled around halfway between intraday extremes. EGBs downbeat in sympathy while BTPs marginally lag core-EGB peers as Italian as-expected election results are digested with BTP-Bund only modestly wider as such. Stateside, USTs are pressured in-fitting with peers and also conscious of the week's supply docket getting underway via a 43bln 2yr. Central Banks Fed’s Bostic (2024 voter) said inflation is too high and that they need to do all they can to bring it down and said demand is beginning to shrink which will ultimately pay dividends in inflation levels. Bostic also stated that there are scenarios where they can avoid deep pain but there will likely be some job losses, according to Reuters. BoJ's Kuroda says the BoJ will maintain accommodative monetary conditions to support companies, hopes to support a positive economic cycle, long-term inflation expectations have begun to heighten, via Reuters. Intervention from the MoF is an "appropriate" move, does not think gov't intervention and BoJ policy are contradictory. Amamiya says the domestic economy is picking up, must carefully watch how FX moves affect the economy and prices. BoJ Governor Kuroda says when he stated that BoJ forward guidance will not change for 2-3yrs, did not refer to guidance on keeping short and long-term rates at present of lower levels via Reuters. ECB's de Guindos says Q3 and Q4 point towards growth rates being close to zero within the EZ, the scenario is market by high uncertainty, lower growth and higher inflation. ECB's Panetta says ECB is assessing the potential of distributed ledger technology (DLT) and "the extent to which it could improve our services.". Capital Economics calls for the BoE to "get on the front foot with a big rate hike". Allianz's El-Erian says, on GBP, the fall is about extra tax cuts and Chancellor Kwarteng could recalibrate this. Alternative, would be for the BoE to hike at an emergency meeting. Adding, he would hike by 100bp. BoE publishes key elements of the 2022 annual cyclical scenario stress test; includes a scenario where the Bank Rate is assumed to rise rapidly to a peak of 6% in early 2023 before gradually reduced to sub-3.5%. Commodities WTI and Brent November futures remain subdued in early European trade following last week’s recession-induced losses. Spot gold trades in tandem with the Buck and sees resistance at around USD 1,650/oz after falling to USD 1,627/oz as a casualty of the Sterling flash crash overnight. LME metals are softer across the board with 3M copper futures having a hard time reclaiming USD +7,500/t status with upside capped by the Buck. Iraq began trial operations at the Karabala oil refinery which has a production capacity of 140k bpd, according to a statement from the Oil Ministry. German Chancellor Scholz signed a strategic agreement with UAE’s President on accelerating energy security and industrial growth, while UAE’s ADNOC signed an agreement with Germany’s RWE which includes ADNOC exporting its first LNG cargo to RWE and will conduct trial shipments of low-carbon ammonia to Germany. Furthermore, Chancellor Scholz said while visiting Doha that he talked with the Emir about LNG deliveries and that they want to achieve further progress, according to Reuters. Germany is preparing a national electricity price cap to be implemented this fall in the scenario the EU falls to agree on a similar move for the entirety of the bloc, via WSJ citing officials. Vitol's CEO said at the Asia Pacific Petroleum Conference that Russian gas supply cuts put enormous strain on supply-demand in Europe and that high gas prices are to impact 60%-80% of demand, while Ecopetrol's CEO said they are increasing crude exports to Europe this year to replace Russian supplies and are drilling 600 oil wells this year. Anglo American (AAL LN) tightens copper production guidance for Chile to 560k-580k tonnes of copper (prev. 560k-600k tonnes) due to lower throughput at Los Bronces caused by a combination of water restrictions and a change in ore characteristics, via Reuters. US Event Calendar 08:30: Aug. Chicago Fed Nat Activity Index, est. 0.23, prior 0.27 10:30: Sept. Dallas Fed Manf. Activity, est. -10.0, prior -12.9 Central Banks 10:00: Boston Fed’s Susan Collins Speaks to Boston Chamber of... 12:00: Fed’s Bostic Discusses Income Inequality 12:30: Fed’s Logan Speaks at Banking Conference 16:00: Fed’s Mester Discusses Economic Outlook DB's Jim Reid concludes the overnight wrap I wonder whether any research report has ever been written whilst watching synchronised swimming? Well if not, then you’re reading the first ever as I’m getting a head start on the early morning news by starting this on Sunday evening watching my daughter Maisie do her second session after getting into the local club. Watching this sport is going to take some getting used to after years of watching football, cricket, golf, F1, athletics, rugby... actually.... virtually every sport bar synchronised swimming. I think everyone felt they were swimming in a tsunami of newsflow last week after one of the most incredible macro weeks in recent memory in terms of breadth of events. Yes there have been more extreme weeks in crises but last week had a bit more variety and was outside of a crisis period. If over 500bps of global rate hikes wasn’t enough, you also had 2yr US yields moving higher for the 12th successive day on Friday (the longest steak since data begins in 1976), the BoJ intervening in FX markets for the first time since 1998, and what can only be termed as one of the darker days for sterling assets on record on Friday after a mammoth tax giveaway in what was a mini-budget in name and not by nature. Henry and I put a note out on Friday night (link here) showing that it was the third worst day for Sterling (-3.57%) since Black Wednesday in 1992, with the worst two since being the day after the Brexit vote (-8.1%) and after the initial covid shock in 2020 (-3.71%) when there was a global flight to dollars. We also show a graph of daily Sterling moves back to 1862 and on that it was the 41st worst day in history spanning 47,000 trading days. Obviously in the long era of fixed FX rates there were the occasional big devaluations which were much bigger than Friday. This morning is Asia it fell around -4.5% at one point (1.0392) which was a record low against the Dollar. It's around -2.78% as I type. This follows a weekend interview where Chancellor Kwarteng suggested that more tax cuts were to come so that certainly was a red rag to markets. Will we hear from the upper echelons of the BoE today? Watch out for any comments, especially at the market open. DB's George Saravelos suggested on Friday that the Bank of England need to do an inter meeting hike to restore policy credibility. There’s also a graph in our note mentioned above showing that Friday was the worst day for 5yr gilts (+50.3bps) since a +200bps hike in 1985 when sterling was also slumping. So maybe omens here. I suppose the only slight mystery is the timing of the sell-off as the mini-budget in magnitude was broadly in-line with the recent elevated fiscal expectations that had been building. However perhaps it was the unabashed revival of trickle-down economics that had markets a little aghast. It goes against the current economic orthodoxy and the overall zeitgeist of our immediate times. As such there is likely to be concerns of a credibility issue. We are publishing our long-term study today with the title “How we got here, and where we’re going?”. In it we try to put the current macro woes into historical context in an attempt to work out where we’re going. There are quite a few people who have proof-read it on my team and they were all thoroughly depressed at the end. I didn't feel that way writing it but maybe it's a case of starting point perceptions. Anyway, look out for it around the European lunchtime. Overnight in Italy, the right-wing alliance led by Giorgia Meloni's Brothers of Italy party was on course to become the nation’s first woman prime minister after exit polls gave it a clear majority. With the full results due later today, she is predicted to win up to 26% of the vote ahead of her closest rival Enrico Letta from the centre left. The right wing alliance is slated to be on course for around 43% of the vote, enough for a majority if correct. As I type, the euro is extending its losses against the dollar for the fifth day, its longest streak since April 28, falling as much as -0.5% to 0.9638, albeit being overshadowed by Sterling. For this week we have an array of consumer-driven economic data in the US and some important European inflation prints. We will also get a number of consumer sentiment indicators across the key economies and PMIs from Asia. Away from the data, there are more than 30 central banker appearances across the Fed and the ECB to keep markets busy. Tomorrow also sees referendums in the Russia-annexed Ukrainian territories as the conflict goes into its eight month. Going through the data in more details now. Starting with the US, the PCE and personal income and spending data will be front and centre for markets next week as they gauge the extent of inflationary pressures and the strength of the consumer. The Fed’s preferred inflation gauge, the PCE, due Friday, will be watched for signs of price pressures we saw in last week's CPI report. Our US economists expect core PCE to edge higher by +0.5% MoM (vs +0.1% in July) which won’t allow the Fed to take the foot off the tightening pedal. For the other two data points, our team forecasts a +0.1% MoM increase for both income and consumption. Final US Q2 GDP will also be released on Thursday and although DB expect no change to the -0.6% second reading, watch out for the annual benchmark revisions back to Q1 2017. History could be re-written that could have some implications for how we all think about the economy. In other US data, we will also get the consumer confidence index on Tuesday, along with durable goods orders, and inventories data on Wednesday, with the Chicago PMI on Friday. Over in Europe, all eyes will be on September's inflation data, including the Euro Area flash CPI release on Friday. Our economists are expecting the measure to hit a record +9.5%, up from the previous record of +9.1% in August. Other data in the region will include consumer and economic sentiment from Germany, France, Italy and the Eurozone throughout the week. Meanwhile, EU energy ministers will meet again on Friday regarding the emergency intervention amid elevated energy prices. Finally, next week's earnings line up will feature a number of retail bellwethers on Thursday. Among them will be Nike, H&M and Next. Micron will report that day as well. See our usual day by day guide to the week at the end which contains many of the key Fed and ECB speakers including Powell and Lagarde. Stock markets across Asia are mostly lower this morning. The Kospi (-2.40%), Nikkei (-2.30%) and the S&P/ASX 200 (-1.40%) are leading the declines. Meanwhile, the Hang Seng (+0.11%) is swinging between gains and losses after rising by +2.45% initially with Chinese shares mixed as the Shanghai Composite (-0.10%) is trading lower while the CSI (+0.46%) is up as we go to press. Stock futures in DMs are pointing to further losses with contracts on the S&P 500 (-0.49%), NASDAQ 100 (-0.46%) and DAX (-0.33%) all moving lower. Early morning data showed that Japan’s manufacturing sector continued to expand albeit at a slower pace as the latest au Jibun Bank manufacturing PMI slipped to a 20-month low of 51.0 in September from 51.5 in August, pulled lower by high energy and raw material prices that was exacerbated by a weak yen. At the same time, the au Jibun Bank services PMI returned to expansion, recording a level of 51.9 in September from August's 49.5 final reading. Moving on to China, in order to stabilise expectations in the FX market, the People’s Bank of China (PBOC) today raised the risk reserve requirement on foreign exchange forward sales to 20% from 0% beginning September 28 as the yuan faces increasing depreciation pressure, in line with most major currencies amid broad dollar strength. Looking back now on a week that will not be forgotten anytime soon. While there were historic central bank hikes all week, the biggest news came from the fiscal authorities, following the UK’s budget Friday, which had the largest tax cut package since the 1970s. Gilt yields had their largest one-day increase in decades with 2yrs +44.7bps, 5yrs +50.3bps, and 10yrs +33.3bps. As we mentioned at the top, 5yrs yields saw their largest move since 1985 after a +200bps hike aimed at helping a plunging currency. The pound fell -3.57% against the US dollar to within a percentage point of the weakest in the post-Bretton Woods 51yr free float era. It was already a busy macro week before the blockbuster budget, where we got more than 500bps of global central bank hikes and a currency intervention from Japan. In terms of the biggest players, the Fed delivered its third consecutive 75bp hike while the BoE delivered its second 50bp hike in a row, with both banks guiding toward yet more tightening, while the BoJ remained the outlier by keeping its accommodative policy in place, which isn’t going to help the yen turnaround even with intervention. When all was said and done, sovereign bonds and equities sold off in size, while yield curves flattened. 2yr Treasuries (+33.4bps, +7.9bps Friday), 2yr Bunds (+38.5bps, +7.2bps Friday), 2yr Gilts (+82.1bps, +44.7bps Friday) reached their highest levels since 2007, 2008, and 2008, respectively, as markets priced in more tightening to overcome inflationary pressures (and in the case of the UK, fiscal expansion). 10yr Treasuries (+23.5bps, -2.9bps Friday) ended the week a touch lower on the day but hit their highest levels since 2011 during the week, while 10yr Bunds (+26.8bps, +5.9bps Friday), and 10yr Gilts (+69.1bps, +33.3bps Friday) hit their highest levels since 2013 and 2011, respectively. The mixture unsurprisingly proved unpalatable to risk assets, driving the STOXX 600 and S&P 500 back to their lows for the year. The STOXX 600 retreated -4.37% on the week and -2.34% on Friday, the worst weekly and daily return since mid-June. The S&P 500 fell -4.65% (-1.75% Friday), returning to bear market territory. The FTSE managed to stay above its YTD lows, but still fell -3.01% on the week, its worst weekly return since mid-June as well, and retreated -1.97% on Friday, the worst daily return since early July. Tyler Durden Mon, 09/26/2022 - 08:08.....»»

Category: blogSource: zerohedgeSep 26th, 2022

New Strong Buy Stocks for September 19th

ASB, RYI, ESEA, ASMIY, and BDC have been added to the Zacks Rank #1 (Strong Buy) List on September 19, 2022. Here are five stocks added to the Zacks Rank #1 (Strong Buy) List today:               Associated BancCorp ASB: This bank holding company which provides an array of banking and non-banking products and services, has seen the Zacks Consensus Estimate for its current year earnings increasing 12.3% over the last 60 days.Associated BancCorp Price and Consensus Associated BancCorp price-consensus-chart | Associated BancCorp QuoteRyerson RYI: This services company that processes and distributes various metals like stainless steel, aluminum, carbon, alloy steel, nickel, and red metals, has seen the Zacks Consensus Estimate for its current year earnings increasing 10.5% over the last 60 days.Ryerson Holding Corporation Price and Consensus Ryerson Holding Corporation price-consensus-chart | Ryerson Holding Corporation QuoteEuroseas ESEA: This company which operates in the dry cargo, dry bulk and container shipping markets, has seen the Zacks Consensus Estimate for its current year earnings increasing 6.6% over the last 60 days.Euroseas Ltd. Price and Consensus Euroseas Ltd. price-consensus-chart | Euroseas Ltd. QuoteASM International ASMIY: This company which is a leading supplier of equipment and solutions used to produce semiconductor devices, or integrated circuits, for both the front-end and back-end segments of the semiconductor market, has seen the Zacks Consensus Estimate for its current year earnings increasing 6.0% over the last 60 days.ASM International NV Price and Consensus ASM International NV price-consensus-chart | ASM International NV QuoteBelden BDC: This company which is engaged in the design, manufacture and retail of cable, connectivity, and networking products in markets including industrial automation, enterprise, transportation, infrastructure, and consumer electronics,has seen the Zacks Consensus Estimate for its current year earnings increasing 5.0% over the last 60 days.Belden Inc Price and Consensus Belden Inc price-consensus-chart | Belden Inc Quote You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.            FREE Report: The Metaverse is Exploding! Don’t You Want to Cash In? Rising gas prices. The war in Ukraine. America's recession. Inflation. It's no wonder why the metaverse is so popular and growing every day. Becoming Spider Man and fighting Darth Vader is infinitely more appealing than spending over $5 per gallon at the pump. And that appeal is why the metaverse can provide such massive gains for investors. But do you know where to look? Do you know which metaverse stocks to buy and which to avoid? In a new FREE report from Zacks' leading stock specialist, we reveal how you could profit from the internet’s next evolution. Even though the popularity of the metaverse is spreading like wildfire, investors like you can still get in on the ground floor and cash in. Don't miss your chance to get your piece of this innovative $30 trillion opportunity - FREE.>>Yes, I want to know the top metaverse stocks for 2022>>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 Belden Inc (BDC): Free Stock Analysis Report Euroseas Ltd. (ESEA): Free Stock Analysis Report Associated BancCorp (ASB): Free Stock Analysis Report Ryerson Holding Corporation (RYI): Free Stock Analysis Report ASM International NV (ASMIY): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 20th, 2022

Best Value Stocks to Buy for September 19th

ESEA, BEN and WOR made it to the Zacks Rank #1 (Strong Buy) value stocks list on September 19, 2022. Here are three stocks with buy rank and strong value characteristics for investors to consider today, September 19th:  Euroseas ESEA: This company which operates in the dry cargo, dry bulk and container shipping markets, carries a Zacks Rank #1(Strong Buy) and has witnessed the Zacks Consensus Estimate for its current-year earnings increasing 6.6% over the last 60 days.Euroseas Ltd. Price and Consensus Euroseas Ltd. price-consensus-chart | Euroseas Ltd. QuoteEuroseas has a price-to-earnings ratio (P/E) of 1.39 compared with 11.10 for the industry. The company possesses a Value Score of A.Euroseas Ltd. PE Ratio (TTM) Euroseas Ltd. pe-ratio-ttm | Euroseas Ltd. QuoteFranklin Resources BEN: This San Mateo- based global investment management company which offers investment management and related services to retail mutual funds, institutional and private accounts, and other investment products, carries a Zacks Rank #1 and has witnessed the Zacks Consensus Estimate for its current-year earnings increasing 4.9 % over the last 60 days.Franklin Resources, Inc. Price and Consensus Franklin Resources, Inc. price-consensus-chart | Franklin Resources, Inc. QuoteFranklin Resources has a price-to-earnings ratio (P/E) of 6.68 compared with 10.20 for the industry. The company possesses a Value Score of B.Franklin Resources, Inc. PE Ratio (TTM) Franklin Resources, Inc. pe-ratio-ttm | Franklin Resources, Inc. QuoteWorthington Industries WOR: This company which has been North American's premier, value-added steel processor, providing customers with wide ranging capabilities, products and services for a variety of markets including automotive, construction and agriculture. Worthington is also the leading global supplier of pressure tanks and cylinders, carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 12.2% over the last 60 days.Worthington Industries, Inc. Price and Consensus Worthington Industries, Inc. price-consensus-chart | Worthington Industries, Inc. QuoteWorthington Industries has a price-to-earnings ratio (P/E) of 9.60 compared with 12.0 for the industry. The company possesses a Value Score of B.Worthington Industries, Inc. PE Ratio (TTM) Worthington Industries, Inc. pe-ratio-ttm | Worthington Industries, Inc. Quote See the full list of top ranked stocks here. Learn more about the Value score and how it is calculated here. FREE Report: The Metaverse is Exploding! Don’t You Want to Cash In? Rising gas prices. The war in Ukraine. America's recession. Inflation. It's no wonder why the metaverse is so popular and growing every day. Becoming Spider Man and fighting Darth Vader is infinitely more appealing than spending over $5 per gallon at the pump. And that appeal is why the metaverse can provide such massive gains for investors. But do you know where to look? Do you know which metaverse stocks to buy and which to avoid? In a new FREE report from Zacks' leading stock specialist, we reveal how you could profit from the internet’s next evolution. Even though the popularity of the metaverse is spreading like wildfire, investors like you can still get in on the ground floor and cash in. Don't miss your chance to get your piece of this innovative $30 trillion opportunity - FREE.>>Yes, I want to know the top metaverse stocks for 2022>>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 Worthington Industries, Inc. (WOR): Free Stock Analysis Report Franklin Resources, Inc. (BEN): Free Stock Analysis Report Euroseas Ltd. (ESEA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 20th, 2022

Best Income Stocks to Buy for September 19th

ARR, FSK and ESEA made it to the Zacks Rank #1 (Strong Buy) income stocks list on September 19, 2022. Here are three stocks with buy rank and strong income characteristics for investors to consider today, September 19th:ARMOUR Residential REIT ARR: This company which invests primarily in residential mortgage-backed securities issued or guaranteed by a United States Government-chartered entity, has witnessed the Zacks Consensus Estimate for its current year earnings increasing 8.3% over the last 60 days.ARMOUR Residential REIT, Inc. Price and Consensus ARMOUR Residential REIT, Inc. price-consensus-chart | ARMOUR Residential REIT, Inc. QuoteThis Zacks Rank #1 (Strong Buy) company has a dividend yield of 18.32%, compared with the industry average of 10.03%.ARMOUR Residential REIT, Inc. Dividend Yield (TTM) ARMOUR Residential REIT, Inc. dividend-yield-ttm | ARMOUR Residential REIT, Inc. QuoteFS KKR Capital Corp. FSK: This business development company which invests primarily in the senior secured debt and subordinated debt of private middle market U.S. companies, has witnessed the Zacks Consensus Estimate for its current year earnings increasing nearly 5.9% over the last 60 days.FS KKR Capital Corp. Price and Consensus FS KKR Capital Corp. price-consensus-chart | FS KKR Capital Corp. QuoteThis Zacks Rank #1 company has a dividend yield of 12.18%, compared with the industry average of 8.94%.FS KKR Capital Corp. Dividend Yield (TTM) FS KKR Capital Corp. dividend-yield-ttm | FS KKR Capital Corp. QuoteEuroseas ESEA: This company which operates in the dry cargo, dry bulk and container shipping markets, has witnessed the Zacks Consensus Estimate for its current year earnings increasing 6.6% over the last 60 days.Euroseas Ltd. Price and Consensus Euroseas Ltd. price-consensus-chart | Euroseas Ltd. QuoteThis Zacks Rank #1 company has a dividend yield of 9.31%, compared with the industry average of 1.48%.Euroseas Ltd. Dividend Yield (TTM) Euroseas Ltd. dividend-yield-ttm | Euroseas Ltd. Quote See the full list of top ranked stocks here. Find more top income stocks with some of our great premium screens FREE Report: The Metaverse is Exploding! Don’t You Want to Cash In? Rising gas prices. The war in Ukraine. America's recession. Inflation. It's no wonder why the metaverse is so popular and growing every day. Becoming Spider Man and fighting Darth Vader is infinitely more appealing than spending over $5 per gallon at the pump. And that appeal is why the metaverse can provide such massive gains for investors. But do you know where to look? Do you know which metaverse stocks to buy and which to avoid? In a new FREE report from Zacks' leading stock specialist, we reveal how you could profit from the internet’s next evolution. Even though the popularity of the metaverse is spreading like wildfire, investors like you can still get in on the ground floor and cash in. Don't miss your chance to get your piece of this innovative $30 trillion opportunity - FREE.>>Yes, I want to know the top metaverse stocks for 2022>>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 ARMOUR Residential REIT, Inc. (ARR): Free Stock Analysis Report Euroseas Ltd. (ESEA): Free Stock Analysis Report FS KKR Capital Corp. (FSK): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 20th, 2022