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Eurizon The Globe: Inflation Is The Culprit

The latest issue of ‘The Globe’, Eurizon’s publication describing the Company’s investment view. In this issue, a focus is dedicated to “inflation is the culprit.” Scenario Government bond yields on the rise across maturities, most markedly on the short end of the curve, in a context of still high inflation, resilient growth, and aggressive Central […] The latest issue of ‘The Globe’, Eurizon’s publication describing the Company’s investment view. In this issue, a focus is dedicated to “inflation is the culprit.” Scenario Government bond yields on the rise across maturities, most markedly on the short end of the curve, in a context of still high inflation, resilient growth, and aggressive Central Bank actions. Fed funds futures now point to rates peaking in the 4.7% area next spring, from 3% at present, and subsequently dropping back. Similar course for ECB rates, now at 1.25% and forecast at over 3% by mid-2023. These expectations anticipate a drop in inflation and a contraction in growth between the end of 2022 and the opening months of 2023. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   The moderation would be welcome, although until there is clear evidence in this direction the Central Banks will not be prepared to slow their tightening process. However, on a positive note, the price of oil has been dropping stably since June, and the natural gas prices have also recently dropped. The outcome of the Italian election was in line with pre-vote expectations. The spread, that had already risen over previous months following the ECB’s change in stance, was subject to no further tensions, neither before nor after the vote, thanks to an election campaign in which euro-scepticism was reduced to a minimum. In China, the economy is reaccelerating after slowing sharply due to the lockdowns imposed in the second quarter of the year, and anticipation is mounting ahead of the Congress of the Chinese Communist Party on 16 October. Macro Economy US inflation is moderating thanks to the energy component, although core items are still rising at sharp rates. The global economy is proving more resilient to rate hikes than expected (for now). Fed fund futures are pricing in further rate hikes worth 170 basis points, with a peak at 4.7% in the spring of 2023. The ECB envisages a further 200 basis points worth of hikes, and a peak at 3.2% in mid-2023. Asset Allocation The autumn should bring signals of a downturn of inflation and/or of a macro slowdown, to the advantage of a stabilization of medium and long-term yields. Overweight position confirmed on the government bonds of the United States and Germany, exposure to stocks lowered to neutral. FixedIncome Overweight position confirmed of US and German government bonds, that could benefit both from easing inflation and the slowdown in growth. Among spread bonds, a preference goes to Investment Grades, while the picture remains uncertain for High Yield and Emerging bonds. Neutral positions on Italian government bonds. Equity Stock market valuations have dropped to historically appealing levels but could be confirmed volatile in case of a sharp macroeconomic slowdown. On the other hand, a swifter recovery could materialize in case of signals of easing inflation. Currencies The Fed’s hawkish turn has widely been priced in by the dollar, that could take a breather in the upturn observed since the beginning of 2021. However, for the euro to recover, the energy crisis will necessarily have to improve. Investment View The baseline scenario contemplates further Central Bank rate hikes, in waiting for more evident signals of an easing of inflation. As the monetary restriction continues, so will the downward revision of economic growth forecasts. In this context, medium and long-term rates should stabilize on fears of a slowdown. However, uncertainty on the resilience of the economic growth should in any case extend volatility on the stock markets. Asset Classes compared Government bond yields on the rise to new year-to date highs. Sharp inversion of the curve in the US, flat curve in Germany. Stocks back down to the lows hit in June. Spreads stable at high levels for peripheral Eurozone bonds and credits (Investment Grade, High Yield, Emerging Markets). Dollar strong against all the other currencies, at 0.98 against the euro. Theme Of The Month - Inflation Is The Culprit The (negative) trend of the markets in the course of this year may be explained by a single variable: the flare up of inflation, a true bane for investors, that have to tackle rising rates and falling stock indices. Going forward, the good news is that inflation is starting to drop. The bad news is that the decline is not enough for the time being to allow the Central Banks to declare victory against surging prices. At least two of the three components of inflation are on the decline. The supply-side bottlenecks that took shape during post-Covid reopenings are easing, as made evident by the drop of international forwarding prices, nonetheless still higher than they were before Covid. Commodity-induced inflation is declining: industrial metals prices have actually been falling since March, the price of oil has dropped below 80 dollars per barrel, after stopping just short of 115 dollars in June, and the price of natural gas, one of the main drivers of inflation in Europe, is also decreasing. However, second level effects are still in place, as price increases are being transferred downstream by the business sectors affected, fueling core inflation. This is the reason for which, at their September meetings, the Fed and ECB not only hiked rates again, by 75 basis points, but confirmed their intention to proceed in this direction in the months ahead. For the time being, near-term Fed funds futures are pricing in yields of between 4.5% and 5% by the spring of 2023 followed by a 100 basis points decline to contain the economic slowdown once inflation will have been reined. The ECB envisages a point of arrival at above 3%. Short-term yields at these levels are already being priced in on the medium and long ends of the curve. In the United States, the 2-year yield has grown to 4.3%, close to the level priced in by Fed funds as the point of arrival. The 10-year yield has risen to 3.8% and, with an inverted curve, is starting to price in the fact that the monetary tightening will not only bring inflation back under control, but also slow growth. In its present configuration, the US curve seems to have reached its maximum inversion (the 10-year yield is 50 basis points lower than the 2-year rate) since the early 1980s. At the moment, the upward movements of the 2-year rate have managed to also drag up the 10-year yield, although the release of weak macro data could result in a further inversion of the curve (as a result of the decline of the 10-year rate). On the other hand, lower than expected inflation data would stop the inversion of the curve, while shifting it downwards across maturities. Similar considerations apply to the euro curve, flat from the 2-year maturity onwards at 3%, the point of arrival envisaged for ECB rates. For what concerns the stock markets, this year’s decline has not been due to endogenous market factors. Businesses have kept achieving earnings growth, and equity return has risen in line with bond rates. The volatility of stocks has been historically low compared to the decline incurred by prices. All these elements support the view that the weakness of the stock markets has been entirely imported from the repricing of the bond markets, in turn destabilisedby inflation. Therefore, the stabilisationof bond rates is essential for stocks. If the upward path of rates is halted by a drop in inflation, the recovery of the stock markets may be immediate and swift. If on the other hand rate hikes are interrupted by a sharp drop in economic activity, the recovery of stocks could be delayed, in waiting to verify the impact on earnings. In this case as well, however, it is reassuring to note that analysts have already started reviewing their expectations, effectively anticipating the potential macro slowdown......»»

Category: blogSource: valuewalkSep 30th, 2022

The Fed Has Triggered A Stagflationary Disaster That Will Hit Hard This Year

The Fed Has Triggered A Stagflationary Disaster That Will Hit Hard This Year Authored by Brandon Smith via Alt-Market.us, I don’t think I can overstate the danger that the U.S. economy is in right now as we enter 2022. While most people are caught up in the ongoing drama of Covid-19, a REAL threat looms over the nation in the form of a stagflationary tidal wave. The mainstream media is attempting to place the blame on “supply chain disruptions,” but this is a misrepresentation of the issue. The two factors are indeed intertwined, but the reality is that inflation is the cause of supply chain disruptions, not the result of supply chain disruptions. If we look at the underlying stats for price rises in essential products we can get a clearer picture. Before I get into my argument, I really want to stress that this is a precarious time and I suggest that people prepare accordingly. In just the past few months I have seen personal expenses rise at least 20% overall, and I’m sure it’s the same or worse for most of you. Stocking necessities and safe-haven investments with intrinsic value like physical precious metals are a good choice for protecting whatever buying power your dollars have left… Higher prices everywhere The Consumer Price Index (CPI) is officially at the highest levels in 40 years. CPI measurements often diminish the scale of the problem because they do not include things like food, energy and housing which are core expenses for the public. CPI calculations have also been “adjusted” over the past few decades by the government to express a more positive view on inflation. If we look at the inflation numbers at Shadowstats, calculated according to the same methods they used in the 1980’s, we see a dramatic increase in CPI which paints a more dire (but more accurate) picture. U.S. food prices have spiked to levels not seen since 2008 at the onset of the credit and derivatives collapse that brought about tens of trillions of dollars in Federal Reserve bailouts. If we look beyond the 2008 crisis, food costs do not see a similar jump until the 1980s. Rising food prices in the US are often obscured by creative accounting and “shrinkflation” (shrinking packages and rising prices), but if we look at global food prices the average is a 30% jump in the past year. Rental and home prices have also gone into the stratosphere. Rental costs went up around 18% in 2021, and this is an extension of a trend that has been prevalent for the past decade. Prices have been rising for a while, it’s just that now the avalanche has accelerated. Home prices are currently out of the range of most new potential home buyers. Values jumped 16% in the past year alone, with the average property costing $408,000. Home sales continue to remain elevated compared to two years ago despite inflating prices for one reason and one reason only – the mass migration of Americans away from the draconian mandates and bureaucracy of blue states into more conservative states. I live in Montana, a primary destination for people relocating, and from my experience the majority of these people are conservatives seeking to escape the vaccine and lockdown mandates in places like California, New York and Illinois. They see the writing on the wall and they are trying to get ahead of the economic and social calamity that will surely befall such states. I would also note that home sales have finally begun to flatten in the past six months but prices are not dropping, which is a trend that I think needs to be explored further because it illustrates the larger issue of stagflation. When inflation becomes stagflation Understand that prices are not just rising because of increased demand (demand is starting to fall in many sectors), prices are rising because of increased money supply and dollar devaluation which is not yet being reflected in the Dollar Index. Take a look at U.S. GDP and you will see that for the past several years it has tracked in tandem with price inflation. Obviously, if prices inflate then this means people are spending more, which then leads to higher U.S. GDP; it’s like magic, right? In other words, inflation makes it seem as though U.S. GDP is always improving. However, this has not been the case in the past couple of years. Official GDP has flattened despite the fact that U.S. money supply and inflation have rocketed higher. What does this mean? I believe it is a sign of stagflation and a reckoning in 2022. If we examine inflation adjusted GDP numbers from Shadowstats we see that GDP has declined rather aggressively in the past couple of years. We can also see odd tendencies in oil and gasoline prices. While it’s true that gas prices have been higher in the past, this does not address the full context of the situation. U.S. travel spending has declined 12% since 2019 and airline travel has dropped at least 21% in the past year. Average gasoline usage dropped after 2019 and still has not recovered. Yet, gas prices continue to rise? In other words, travel demand is stagnant but prices are INCREASING – this is another signal of inflationary pressures and dollar devaluation. Oil is priced in dollars globally, and therefore any inflation in the dollar will be readily visible in oil. This would help explain why pandemic paranoia and reduced travel have not caused gas prices to drop. If the current momentum continues the majority of necessities in the U.S. will not be affordable for most people by next year. We are looking at a fast-moving decline in production along with a swift explosion in prices. In other words, a stagflationary disaster. This is the Federal Reserve’s fault I and many other alternative economists have been warning about the inevitable inflation/stagflation crisis for years, but the most important factor to understand is WHO is responsible this event? The mainstream financial media is going to protect the government and the Federal Reserve at all costs during this breakdown. They are going to blame Covid, the lockdowns here and overseas as well as the supply chain bottleneck. The Fed is the true culprit, though. While there have been many American Presidents and other politicians that have supported the Fed in its inflationary activities, the central bank itself needs to be held accountable for the downturn that is about to occur. This is a process that started back at the founding of the Fed, but spread like cancer after the crash of 2008 and the introduction of 12+ years of stimulus and bailout measures along with near-zero interest rates. The inflationary end-game The pandemic is the perfect cover for the inflationary end game. In 2008 the response to the crisis was to print and pump dollars into banks and corporations in the U.S. and around the globe. This money supply was held in corporate coffers and in central banks overseas, which slowed the effects of inflation. This set the precedent for subversive stimulus policies by giving the Fed a blank check to do whatever it wanted. In 2020, the Fed created trillions more but this time the money was injected directly into the U.S. economy through Covid stimulus checks, PPP loans and other measures. In the alternative economic field we call this “helicopter money.” These dollars triggered a massive retail buying spree in 2020, but with more dollars in the economy chasing less goods prices are now spiking much higher. The big discussion today is whether or not the Fed will taper their asset purchases, reduce their balance sheet and raise interest rates to counter inflation? The fact is it won’t matter; inflation/stagflation will continue or even accelerate as the Fed tapers. With a taper comes the threat of a flattening yield curve in Treasury bonds as well as the danger of bonds and dollars being dumped by foreign investors and central banks. If the trillions upon trillions of dollars being held overseas come flooding back into the U.S., inflation will continue at its current pace or erupt even higher. In fact, the world’s ownership of dollars reached a 26-year low recently. The global transition away from the dollar, toward inflation-resistant investments, has already begun. This is not a policy error I explained this Catch-22 threat in my recent article The Fed’s Catch-22 Taper Is a Weapon, Not a Policy Error. In that essay I outline the Fed’s documented history of creating economic disasters that conveniently end up benefiting their friends in the international banks. I also explained (with evidence) how the Federal Reserve actually takes its marching orders from the Bank for International Settlements, a globalist institution which along with the International Monetary Fund and World Economic Forum is openly seeking a one-world economic system and one-world currency system. I do not believe that the Fed’s actions are a product of ignorance or stupidity or basic greed. I do not believe the Fed is scrambling to keep the U.S. economy afloat. I believe according to the evidence that the Fed knows exactly what it is doing. The pandemic offers a perfect scapegoat for an engineered crash of the U.S. economy which the Fed is trying to facilitate. Why? Because the more desperate people are financially, the easier they are to buy off with false promises and a loaf of bread. They are easier to control. On top of that, with the U.S. economy reduced to second- or third-world status, it is easier to sell the public on the predetermined solution – total global centralization and far less freedom. As the stagflationary crash plays out, never forget who was really the cause of the public’s suffering. In the fog of national crisis it is easy for the establishment to shift blame and responsibility and to cloud the truth. The inflation calamity is about to get much worse, and as it does we need to rally newly awakened people to take action against the central bankers and globalists behind it. *  *  * With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold. Tyler Durden Fri, 01/14/2022 - 17:40.....»»

Category: blogSource: zerohedgeJan 14th, 2022

Black Friday Turns Red On "Terrible News" - Global Markets Crater On "Nu Variant" Panic

Black Friday Turns Red On "Terrible News" - Global Markets Crater On "Nu Variant" Panic The Friday after thanksgiving is called black Friday because that's when retailers finally turn profitable for the year. Not so much for market, however, because this morning it's red as far as the eye can see. The culprit: the same one we discussed late last night - the emergence of a new coronavirus strain detected in South Africa, known as B.1.1.529, which reportedly carries an "extremely high number" of mutations and is “clearly very different” from previous incarnations, which may drive further waves of disease by evading the body’s defenses according to South African scientists, and soon, Anthony Fauci. British authorities think it is the most significant variant to date and have hurried to impose travel restrictions on southern Africa, as did Japan, the Czech Republic and Italy on Friday. The European Union also said it aimed to halt air travel from the region. "Markets have been quite complacent about the pandemic for a while, partly because economies have been able to withstand the impact of selective lockdown measures. But we can see from the new emergency brakes on air travel that there will be ramifications for the price of oil," said Chris Scicluna, head of economic research at Daiwa. As a result, what was initially just a 1% drop in US index futures, has since escalated to a plunge of as much as 2% with eminis dropping the most since September, at one point dropping below 4,600 after closing on Wednesday above 4,700 as a post-Thanksgiving selloff spread across global markets amid mounting concerns the new B.1.1.529 coronavirus variant - which today will be officially called by the Greek lettter Nu - could derail the global economic recovery.  Russell 2000 contracts sank as much as 5.4%. Technology shares may be caught in the net too as Nasdaq 100 futures slid. The VIX increased as much as 9.4 vols to 28, it's biggest jump since January. It was last seen up 7.4 points, or the biggest increase since February. Adding to the pain, there is nothing on today's macro calendar and the US market closes early which will reduce already dismal liquidity even more, exacerbating some of the moves throughout the session. Headlines are likely to center on various nations preventing travel from South Africa whilst potentially imposing more stringent COVID measures domestically, as well as which countries "find" the Nu variant. Amid the panicked flight to safety, 10Y TSY yields tumbled as traders slashed bets on monetary tightening by the Federal Reserve (just hours after Goldman predicted that the Fed would double the pace of its taper and hike 3 times in 2022, oops) ... ... as did oil amid fears new covid lockdowns will lead to a collapse in crude demand (they will also certainly force OPEC+ to put on pause their plans to keep hiking output by 400K every month). Paradoxically, even cryptos are tumbling, which is surprising since even the dumbest algos should realize by now that a new covid outbreak means more dovish central banks, no tightening, and if nothing else, more QE and more liquidity which is precisely what cryptos need to break out to new all time highs. Cruise ship operator Carnival slumped 9.1% in premarket trading and Boeing slid 5.8% as travel companies tumbled worldwide. Stay-at-home stocks such as Zoom Video rallied.  Didi Global shares fell after Chinese regulators reportedly asked the ride-hailing giant to delist from U.S. bourses. Here are some of the other big premarket movers: Airlines and other travel stocks slumped in premarket trading on growing concern about a new Covid-19 variant identified in southern Africa. The European Union is proposing to halt air travel from several countries in the area and the U.K. will temporarily ban flights from the region. United Airlines (UAL US) fell 8.9%, Delta Air (DAL US) -7.9%, American Airlines (AAL US) -6.7%; cruiseline-operator Carnival (CCL US) -12%; hotelier Marriott (MAR US) -6.1%; lodging company Airbnb (ABNB US) -6.9%. Stay-at-home stocks that benefit from higher demand in lockdowns rose in premarket, with Zoom Video (ZM US) gaining 8.5% and fitness equipment group Peloton (PTON US) +4.7%. Vaccine stocks surged in premarket, while Pfizer and BioNTech got an added boost after their coronavirus shot won European Union backing for expanded use in children. Moderna (MRNA US) rose 8.8%, Novavax (NVAX US) +6.2%, Pfizer (PFE US) +5.1%, BioNTech (BNTX US) +6.4%. Small biotech stocks gained in premarket as investors sought havens. Ocugen (OCGN US) added 22%, Vir Biotechnology (VIR US) +7.8%, Sorrento Therapeutics (SRNE US) +5%. Cryptocurrency-exposed stocks fell as Bitcoin dropped as investors dumped risk assets. Marathon Digital (MARA US) declined 9%, Riot Blockchain (RIOT US) -8.8%, Coinbase (COIN US) -4.6%. Didi Global (DIDI US) declined 6% in premarket after Chinese regulators were said to have asked the ride-hailing giant to delist from U.S. bourses. Selecta Biosciences (SELB US) dropped 13% in Wednesday’s postmarket ahead of Thursday’s Thanksgiving closure, after saying the U.S. FDA placed a clinical hold on a trial. Quotient Technology (QUOT US) gained 3.9% in Wednesday’s postmarket on news that a board member bought $150,000 of shares. What happens next will matter and so, all eyes are on the opening bell for the U.S. markets, set to return from the holiday for a shortened trading session. Tumbling futures and a soaring VIX signaled that the rout in Asia and Europe won’t spare New York equities, while lack of liquidity will only make the pain worse. The Japanese yen emerged as the main haven currency of the day, with the dollar languishing. “Every trader in New York will be rushing to the office now,” said Salm-Salm & Partner portfolio manager Frederik Hildner, adding that news of the new variant could mean the end of the inflation and tapering debate. The worsening pandemic poses a dilemma for central banks that are preparing to tighten monetary policy to curb elevated price pressures, according to Ipek Ozkardeskaya, senior analyst at Swissquote. “It’s terrible news,” Ipek Ozkardeskaya, a senior analyst at Swissquote, said in emailed comments. “The new Covid variant could hit the economic recovery, but this time, the central banks won’t have enough margin to act. They can’t fight inflation and boost growth at the same time. They have to choose.” “We now have a new Covid variant that’s ‘very’ different from the ones we knew so far, a rising inflation, and a market bubble,” she said.  “The only encouraging news is the easing oil prices, which could tame the inflationary pressures and give more time to the central banks before pulling back support.” In the meantime, the World Health Organization and scientists in South Africa were said to be working “at lightning speed” to ascertain how quickly the B.1.1.529 variant can spread and whether it’s resistant to vaccines. The new threat adds to the wall of worry investors are already contending with in the form of elevated inflation, monetary tightening and slowing growth. In Europe, the Stoxx 600 index headed for the biggest drop in 13 months plunging 2.7%; travel and banking industries led the Stoxx Europe 600 Index down as much as 3.7%, the biggest intraday drop since June 2020. Airbus slumped 8.6% in Paris and British Airways owner IAG tumbled 12% in London, while food-delivery stocks gained.  Here are some of the biggest European movers today: Stay-at-home stocks and Covid testing firms such as TeamViewer and DiaSorin are among the biggest gainers as worries over a new Covid variant send the Stoxx 600 tumbling on lockdown fears TeamViewer and DiaSorin rise as much as 6% and 7%, respectively On the down side, travel and leisure stocks plunge, with the likes of IAG, Lufthansa and Carnival posting double- digit falls IAG drops as much as 21% Software AG shares rise as much as 9.5% after Bloomberg reported that the firm is exploring strategic options, including a potential sale, with Morgan Stanley saying the company’s biggest headwinds are behind it. Evolution gains as much as 4.6%, recouping part of Thursday’s 16% plunge, with Bank of America saying the share price’s “crazy time” amounts to a good buying opportunity. Skistar rises as much as 3.7%, bucking steep declines for travel and leisure stocks, after Handelsbanken upgraded the stock, saying bookings for the Scandinavian ski resort operator are “set to surge.” Telecom Italia climbs as much as 2.8% following a Bloomberg report that private equity firms KKR and CVC are considering teaming up on a bid for the company. ING Groep falls as much as 11% after Goldman Sachs analyst Jean-Francois Neuez cut his recommendation to neutral from buy. Getlink drops as much as 6% as French fishermen start protests aimed at stepping up pressure on the U.K. in a post-Brexit fishing dispute. Earlier in the session, MSCI's index of Asian shares outside Japan fell 2.2%, its sharpest drop since August. Casino and beverage shares were hammered in Hong Kong, while travel stocks dropped in Sydney and Tokyo. Japan's Nikkei skidded 2.5% and S&P 500 futures were last down 1.8%. Giles Coghlan, chief currency analyst at HYCM, a brokerage, said the closure of the U.S. market for the Thanksgiving holiday on Thursday had exacerbated moves. "We need to see how transmissible this variant is, is it able to evade the vaccines - this is crucial," Coghlan said. "I expect this story to drag on for a few days until scientists have a better understanding of it." Indian stocks plunged as the detection of a new coronavirus strain rattled investor sentiment globally, raising concerns over a likely setback to the nascent economic recovery.  The S&P BSE Sensex lost 2.9%, the most since mid-April, to 57,107.15 in Mumbai, taking its loss this week to 4.2%, the biggest weekly drop since January. The NSE Nifty 50 Index declined by a similar magnitude on Friday. Reliance Industries was the biggest drag on both measures and declined 3.2%.  “There is fear of this new variant spreading to other countries which might again derail the global economy,” said Hemang Jani, head of equity strategy at Motilal Oswal Financial Services Ltd.   Of the 30 shares in the Sensex index, 26 fell and 4 gained. All but one of 19 sub-indexes compiled by BSE Ltd. retreated, led by a index of realty companies. The S&P BSE Healthcare index was the only sub-index to gain, surging 1.2%. While researchers are yet to determine whether the new virus variant is more transmissible or lethal than previous ones, authorities around the world have been quick to act. The European Union, U.K., Israel, and Singapore placed emergency curbs on passengers from South Africa and the surrounding region. Travel stocks were among the hardest hit. InterGlobe Aviation Ltd. fell 8.9%, Spicejet Ltd. slipped 6.7% and Indian Hotels Co. Ltd. plunged 11.2%, the most since March 2020.  “Nervousness on the new variant of coronavirus and expectations of the U.S. Fed increasing the pace of tapering have led to recent market weakness,” Amit Gupta, fund manager for portfolio management services at ICICI Securities Ltd. said. “This trend may take some time to recover as the WHO meeting on the new mutant variant impact and hospitalization rates in US and Europe will be watched by the market very closely.” Crude oil to emerging markets completed this picture of mayhem. In rates, fixed income was firmly bid as Treasuries extended their advance led by the belly of the curve, outperforming bunds, while money markets pared rate-hike bets amid fears that a new coronavirus strain may spread globally, slowing economic growth. Cash Treasuries outperformed, richening 12-14bps across the short end, with Thursday’s closure exacerbating the optics. As shown above, 10Y Treasury yields shed as much as 10 basis points while the Japanese yen jumped the most since investors’ March 2020 rush for safety. Yields across the curve are lower by more than 8bp at long end, 13bp-15bp out to the 7-year point, moves that if sustained would be the largest since at least March 2020 and in some cases since 2009. Short-term interest rate futures downgraded the odds of Fed rate increases. Gilts richened 10-11bps across the curve, outperforming bunds by 4-5bps. Peripheral and semi-core spreads widen. In FX, JPY and CHF top the G-10 scoreboard with havens typically bid. In FX, the Bloomberg Dollar Spot Index was little changed after earlier touching a fresh cycle high, and the greenback was mixed versus its Group-of-10 peers as the yen and the Swiss franc led gains while the Canadian dollar and Norwegian krone were the worst performers as commodity prices plunged. Traders pushed back the timing of a 25-basis-point rate increase by the Federal Reserve to July from June, with only one further hike expected for the remainder of 2022. It’s a similar story in the U.K. where the Bank of England is now expected to tighten policy in February instead of next month. Wagers that the ECB will raise its deposit rate by the end of next year have also been slashed, with only a six basis-point increase priced in, half of that seen earlier this week. The European Union is proposing to follow the U.K. in halting air travel from southern Africa after the new Covid-19 variant was identified there. The yen is at the epicenter of skyrocketing currency volatility as the new virus variant shakes markets. The cost of hedging against swings in the Japanese currency over the next week, which captures the release of the next U.S. payrolls report, is the most expensive in more than a year. In commodities, crude futures are hit hard. WTI drops over 7% before finding support near $73, Brent drops over 5% before recovering near $78. Spot gold grinds higher, adding $21 to trade near $1,809/oz. Base metals are sharply offered with much of the complex off as much as 3%. Looking at the otherwise quiet day ahead, data releases include French and Italian consumer confidence for November, as well as the Euro Area M3 money supply for October. Otherwise, central bank speakers include ECB President Lagarde, Vice President de Guindos, and the ECB’s Visco, Schnabel, Centeno, Panetta and Lane, and BoE chief economist Pill. Market Snapshot S&P 500 futures down 1.9% to 4,607.50 STOXX Europe 600 down 2.8% to 468.04 MXAP down 1.8% to 193.33 MXAPJ down 2.2% to 628.97 Nikkei down 2.5% to 28,751.62 Topix down 2.0% to 1,984.98 Hang Seng Index down 2.7% to 24,080.52 Shanghai Composite down 0.6% to 3,564.09 Sensex down 2.7% to 57,234.83 Australia S&P/ASX 200 down 1.7% to 7,279.35 Kospi down 1.5% to 2,936.44 Brent Futures down 5.8% to $77.46/bbl Gold spot up 0.9% to $1,805.13 U.S. Dollar Index down 0.33% to 96.46 German 10Y yield little changed at -0.31% Euro up 0.4% to $1.1259 Top Overnight News from Bloomberg The European Union is proposing to halt air travel from southern Africa over growing concern about a new Covid-19 variant that’s spreading there, as the U.K. said it will also temporarily ban flights from the region Those close to the Kremlin say the Russian president doesn’t want to start another war in Ukraine. Still, he must show he’s ready to fight if necessary in order to stop what he sees as an existential security threat: the creeping expansion of the North Atlantic Treaty Organization in a country that for centuries had been part of Russia Bitcoin tumbled 20% from record highs notched earlier this month as a new variant of the coronavirus spurred traders to dump risk assets across the globe Germany’s Greens tapped their two co- leaders to run the foreign ministry and take charge of an influential portfolio overseeing economy and climate protection in the country’s next government under Social Democrat Olaf Scholz A more detailed breakdown of global markets courtesy of Newsquawk Asian equity markets declined and US equity futures were also on the backfoot on reopen from the prior day’s Thanksgiving lull with markets spooked by new COVID variant concerns related to the B.1.1.529 variant in South Africa that was first detected in Botswana. The new variant showed a high number of mutations and was said to be the most evolved strain ever which spurred fears it could be worse than Delta and is prompting both the UK and Israel to halt flights from several African nations. ASX 200 (-1.7%) was negative with heavy losses in energy and broad underperformance in cyclicals leading the downturn across all sectors, while the much better than expected Australian Retail Sales data was largely ignored. Nikkei 225 (-2.5%) underperformed and gave up the 29k status as selling was exacerbated by detrimental currency inflows and with SoftBank shares among the worst hit on reports that China is said to have asked Didi to delist from US exchanges on security fears, which doesn't bode well for SoftBank given that its Vision Fund is the top shareholder in the Chinese ride hailing group with a stake of more than 20%. Hang Seng (-2.5%) and Shanghai Comp. (-0.7%) conformed to the risk aversion with the mood not helped by ongoing geopolitical concerns after a Chinese Defense Ministry spokesperson noted they are ready to crush Taiwan independence bid "at any time”, while China also said it opposes US sanctions on its companies and will take all necessary measures to firmly defend the rights of Chinese companies. Beijing interference further contributed to the headwinds amid the request by China for Didi to delist from US which reports stated regulators could backtrack on and with Tencent subdued after some Chinese state-run companies restricted the use of Tencent's messaging app. Top Asian News Stocks in Asia Set for Worst Day Since March on Virus Woes Mizuho CEO Steps Down After Regulator Hit on System Issues Meituan 3Q Revenue Meets Estimates Japan’s Kishida Delivers $316 billion Extra Budget for Recovery European equities are trading markedly lower (Stoxx 600 -2.9%) with losses in the Stoxx 600 extending to 3.8% WTD. Sentiment throughout the week has been hampered by various lockdown measures imposed across the region with the latest leg lower accelerated by new COVID variant concerns related to the B.1.1.529 variant in South Africa. The new variant has shown a high number of mutations and is said to be the most evolved strain so far. This has spurred fears it could be worse than Delta and has prompted multiple nations to halt flights from several African nations.The handover from the overnight session was an equally downbeat one with the Nikkei 225 (-2.5%) dealt a hammer blow by the risk environment and unfavourable currency flows. Stateside, futures are lower across the board with the RTY the clear laggard with losses of 4.2% compared to the ES -1.8%, whilst the tech-heavy NQ is faring better than peers but ultimately still lower on the session to the tune of 1.6%. Note, early closures in the US and subsequent liquidity conditions could exacerbate some of the moves throughout the session. With the macro calendar light, focus for the session is likely to centre on various nations preventing travel from South Africa whilst potentially imposing more stringent COVID measures domestically. Any further clarity on the spread of the variant and its potential to evade vaccines will be of great interest to the market and likely be the main driving force of price action today. Sectors in Europe are lower across the board with the Stoxx 600 Banking (-5.1%) sector bottom of the pile amid the declines seen in global bond yields as markets scale back expectations of central bank tightening (e.g. pricing now assigns a 63% chance of a 15bps hike by the BoE next month vs. 93% a week ago). Oil & Gas names (-4.8%) are suffering on account of the declines in the crude space with WTI crude in freefall with losses of 6.7% given the potential impact of travel restrictions on demand. Travel restrictions on South Africa (from UK, Israel, EU et al) and the potential for further announcements has crushed the Travel & Leisure sector (-5.7%) with airline names dealt a hammer blow; IAG (-13.5%), easyJet (-11%), Deutsche Lufthansa (-12%), Air France (-9.5%). Elsewhere, there are a whole raft of other laggards which are very much in-fitting with the March 2020 playbook but there are simply too many to list for the purpose of this report. Defensives and Tech are faring better than peers but ultimately still lower on the session to the tune of 1% and 1.9% respectively. Finally, for anyone wanting some positivity from today’s session, the potential for further lockdowns has proved to be beneficial for the likes of HelloFresh (+3.2%), Ocado (+2.1%) and Delivery Hero (+1.9%). Top European News Airlines Skid on South Africa Travel Bans Tied to Variant German Coalition Proposes a Combustion-Car Ban Without Saying So Putin Pushes Confrontation With NATO as Hardliners Prevail Siemens Is Said to Kick Off Sale of Postal Logistics Business In FX, the index has been under pressure in the risk-averse environment amid a slump in yields and gains in its basket components – namely the JPY, CHF, EUR (see below) – and with liquidity also thinned by Thanksgiving. From a technical perspective, the index has declined from its 96.787 overnight high, through the 96.500 mark, to a low of 96.332 – with the weekly trough at 96.035. Ahead, the US calendar is once again light, with the US also poised for an early Thanksgiving closure; thus, impulses will likely be derived from the macro environment. JPY, CHF, EUR - Haven FX JPY and CHF are the clear outperformers as a function of risk-related inflows. USD/JPY has retreated from a 115.37 peak and fell through its 21 DMA (114.15) to a base around 113.66 - with the current weekly low around 113.64. USD/CHF retreated from 0.9360 to 0.9260 – with the 50 and 100 DMAs seen at 0.9234 and 0.9219, respectively, ahead of 0.9200. EUR/USD meanwhile gains on what is seemingly an unwind of the carry trade amid a spike in volatility. EUR/USD found support near 1.1200 before rebounding to a current 1.1288 peak. AUD, NZD, CAD, GBP - The non-US Dollar risk currencies bear the brunt of the latest market downturn, with losses across industrial commodities not helping. The Loonie has taken the spot as the biggest G10 loser as hefty COVID-induced losses in the oil complex keep the currency suppressed. USD/CAD trades towards the top of a current 1.2647-2774 range. AUD is also weighed on by softer base metal prices – AUD/USD fell from a 0.7200 overnight high to a current low at 0.7110. On that note, Westpac sees AUD/USD pushed down to 0.7000 by Jun 2022 (prev. 0.7700) amid rate differentials with the US; Westpac made significant changes to its FOMC policy forecast and now expect consecutive increases in the fed funds rate in Jun, Sept, and Dec 2022. NZD/USD is slightly more cushioned amid smaller exposure to commodities, and as the AUD/NZD cross takes aim at 1.0450 to the downside. GBP, meanwhile, was initially among the losers amid its high-beta status but thereafter nursed losses in a move that coincided with EUR/GBP rejecting an upside breach of its 21 DMA at 0.8475. EM - The ZAR is the standout laggard given the new South African COVID variant - B.1.1.529 COVID-19 variant (expected to be named Nu) – which is said to be the most evolved strain so far and thus prompted several countries to halt travel to the country of origin. USD/ZAR currently trades within a 15.9375-16.3630 intraday band. Meanwhile, the downturn oil sees USD/RUB north of 75.00 and closer to 76.00 from a 74.2690 base. The Lira also feels some contagion despite the lower oil prices (Turkey being a large net oil importer) – USD/TRY is back on a 12.00 handle and within 11.92-1226 parameters at the time of writing. In commodities, the crude complex has been hit by compounding COVID fears which in turn triggered various travel restrictions and subsequently took its toll on global crude demand prospects. The new and more evolved South African variant prompted the UK, Singapore, and Israel to expand their travel red lists to include some African nations (Israel reported its first case of the new COVID-19 variant known as B.1.1.529). Japan also imposed tighter border restrictions. China’s Shanghai city see flights impacted by its own outbreak. Europe also tackles its surge in daily cases - German Green Party's Baerbock (incoming Foreign Minister) does not rule out a German lockdown, according to Spiegel. EU Commission President von der Leyen is also to propose activation of the emergency air brake, to halt travel from southern Africa due to the B.1.1.529 COVID-19 variant. Losses in oil have exacerbated - with WTI Jan and Brent Feb now under USD 74/bbl (vs high 78.65/bbl) and USD 77/bbl (vs high 80.42/bbl), -6.0% and -5.0% respectively. This comes ahead of the OPEC+ confab next week, whereby OPEC watchers have suggested that oil prices will be a large contributor to the final decision. It is difficult to see how OPEC+ will increase output to the levels the US et al. will be content with, with the latest COVID downturn building the case for a pause in planned output hikes. Elsewhere, haven demand sees spot gold extend on gains above USD 1,800/oz after topping the 100 DMA (1,792.95/oz), 200 DMA (1,791.38/oz), 50 DMA (1,790.13/oz) overnight. Base metals are softer across the board amid the risk aversion. LME copper posts losses of around 3% at the time of writing, as prices threaten a more convincing downside breach of USD 9,500/t. US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap Things have escalated on the covid front quite rapidly over the last 12 hours. Yesterday new covid variant B.1.1.529 was slowly starting to gather increasing attention but overnight it has begun to dominate markets and has caused a notable flight to quality with 10 year USTs -8bps lower. It was originally identified in Botswana and is starting to spread rapidly in Africa. The South African Health Minister has said it is "of serious concern". Almost 100 cases have already been identified in South Africa and the UK moved to put the country back (along with 5 other African nations) on a reinstated red travel list last night with others following this morning. The variant is said to be the most heavily mutated version yet and the WHO will meet today to decide if it is a variant of interest or a variant of concern. So a lot of eyes will be on how severe it is and whether it completely evades vaccines. At this stage very little is known. Mutations are often less severe so we shouldn’t jump to conclusions but there is clearly a lot of concern about this one. Also South Africa is one of the world leaders in sequencing so we are more likely to see this sort of news originate from there than many countries. Suffice to say at this stage no one in markets will have any idea which way this will go. Overnight in Asia all benchmarks are trading lower on the news with the Shanghai Composite (-0.50%), CSI (-0.64%), KOSPI (-1.27%), Hang Seng (-2.13%) and the Nikkei (-2.90%) all lower. Airlines and other travel stocks have obviously fallen heavily. Hong Kong has detected two confirmed cases of the new variant just as Hong Kong and China were considering quarantine-free travel. S&P 500 (-0.93%) and DAX (-1.82%) futures are also much weaker. Elsewhere, in Japan, CPI rose +0.5% year-on-year (+0.4% consensus and +0.1% previously), on the back of 16-month high fuel prices. With the US out on holiday for Thanksgiving, there wasn’t much going on yesterday after a very quiet day in markets. The variant news was only slowly creeping into the news flow so it hardly impacted trading. But in keeping with the theme of recent days, both inflation and the latest covid wave in Europe remained very much in the picture as jitters continue to increase that we could see further lockdowns as we move towards Christmas. Starting with the headline moves, European equities did actually show signs of stabilising yesterday, with the STOXX 600 up +0.42% thanks to a broad-based advance across the continent. In fact that’s actually the index’s best daily performance in over three weeks, although that’s not reflecting any particular strength, but instead the fact the index inched steadily but persistently towards a record high before selling off again a week ago. Other indices moved higher across the continent too, with the FTSE 100 (+0.33%), the CAC 40 (+0.48%) and the DAX (+0.25%) all posting similar advances. These will all likely reverse this morning. One piece of news we did get came from the ECB, who released the account of their monetary policy meeting for October. Something the minutes stressed was the importance that the Governing Council maintain optionality in their policy settings, with one part acknowledging the growing upside risks to inflation, but also saying “it was deemed important for the Governing Council to avoid an overreaction as well as unwarranted inaction, and to keep sufficient optionality in calibrating its monetary policy measures to address all inflation scenarios that might unfold.” Against this backdrop, 10yr bond yields moved lower across multiple countries, with those on bunds (-2.3ps), OATs (-2.3bps) and BTPs (-1.9bps) all declining. There was also a flattening in all 3 yield curves as well, with the 2s10s slope in Germany (-3.0bps), France (-3.7bps) and Italy (-2.8bps) shifting lower. And the moves also coincided with a continued widening in peripheral spreads, with both the Spanish and the Greek spreads over 10yr bund yields widening to their biggest levels in over a year. Of course, one of the biggest concerns in Europe right now remains the pandemic, and yesterday saw a number of fresh measures announced as policymakers seek to get a grip on the latest wave. In France, health minister Veran announced various measures, including the expansion of the booster rollout to all adults, and a reduction in the length of time between the initial vaccination and the booster shot to 5 months from 6. Meanwhile in the Czech Republic, the government declared a state of emergency and approved tighter social distancing measures, including the closure of restaurants and bars at 10pm. And in Finland, the government have said that bars and restaurants not using Covid certificates will not be able to serve alcohol after 5pm. All this came as the European Medicines Agency recommended that the Pfizer vaccine be approved for children aged 5-11, which follows the decision to approve the vaccine in the US. Their recommendation will now go to the European Commission for a final decision. There wasn’t much in the way of data at all yesterday, though German GDP growth in Q3 was revised down to show a +1.7% expansion (vs. +1.8% previous estimate). Looking at the details, private consumption was the only driver of growth (+6.2%), with government consumption (-2.2%), machinery and equipment (-3.7%) and construction (-2.3%) all declining over the quarter. To the day ahead now, and data releases include French and Italian consumer confidence for November, as well as the Euro Area M3 money supply for October. Otherwise, central bank speakers include ECB President Lagarde, Vice President de Guindos, and the ECB’s Visco, Schnabel, Centeno, Panetta and Lane, and BoE chief economist Pill. Tyler Durden Fri, 11/26/2021 - 08:12.....»»

Category: blogSource: zerohedgeNov 26th, 2021

CNA or RE: Which Property & Casualty Insurer Has an Edge?

Let's see how Everest Re (RE) and CNA Financial Corporation (CNA) fare in terms of some of the key metrics. The Zacks Property and Casualty Insurance industry has been gaining momentum on the back of improved pricing, increased technology advancements, exposure growth, underwriting profitability, favorable reserve development and global expansion as well as an impressive solvency level.The industry has risen 14.4% in the past year against the Zacks S&P 500 composite’s decline of 12.4% and the Finance sector’s 7.8% decline.Image Source: Zacks Investment ResearchHere we focus on two property and casualty insurers, namely Everest Re Group, Ltd. RE and CNA Financial Corporation CNA.Everest Re, with a market capitalization of $12.9 billion, provides commercial property and casualty insurance products through wholesale and retail brokers. It provides reinsurance and insurance products in the United States and internationally. CNA Financial, with a market capitalization of $11.4 billion, provides commercial property and casualty insurance products primarily in the United States. Both insurers carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Per the Global Insurance Market Index by Marsh, global commercial insurance prices increased 6% in the third quarter of 2022. This marked the 20th consecutive quarter in which composite pricing rose, continuing the longest run of increases since the inception of the index in 2012. Price hikes, operational strength, higher retention, strong renewal and the appointment of retail agents should help write higher premiums.Per Deloitte Insights, The Swiss Re Institute estimates an increase in demand for insurance coverage across the globe, in turn driving a 3.9% rise in premiums in 2022. Per Deloitte Insights, life insurance premium is estimated to increase 4%, while non-life insurance premium is expected to increase 3.7% in 2022.The P&C insurers remain exposed to catastrophe loss from natural disasters and weather-related events, which induce volatility in their underwriting results. Per Colorado State University, the 2022 above-average hurricane season may have 19 named storms, including nine hurricanes and four major hurricanes. Global estimated insured losses from natural catastrophes in the first half of 2022 were $35 billion, 22% above average of the past 10 years ($29 billion), per a report by Swiss Re Institute.Exposure growth, better pricing, prudent underwriting and favorable reserve development will help withstand the blow. Also, frequent occurrences of natural disasters should accelerate the policy renewal rate.The solid capital level continues to aid insurers in pursuing strategic mergers and acquisitions, investing in growth initiatives, engaging in share buybacks, increasing dividends or paying out special dividends. Consolidation is likely to continue as players look to diversify their operations into new business lines and geographies.With the reopening of the economy and robust capital level of the insurers, 2021 witnessed 869 deals, which increased 40% from 620 in 2020 while the total deal value surged 165% to $57.5 billion per Deloitte. However, with high inflation and a rise in interest rate (the Fed has already made five rate hikes this year), the momentum in the M&A environment is likely to slow down. Per Deloitte, so far this year, the number of deals dropped about 30% while deal value dropped by about 25% and is estimated to hit a low point.The interest rate environment has started to improve. In November 2022, Fed officials declared to raise interest rates by 75 basis points, shifting the target range to 3.75%-4%. This marked the sixth consecutive rate hike in 2022. Thus, insurers are poised to benefit as net investment income is an important component of their top line.The insurers have increased investment in emerging technologies in a bid to drive efficiency, enhance cybersecurity as well as expand automation capabilities across the organization. The adoption of technologies such as robotic process automation, Chatbot and RoboAdvisory, artificial intelligence and data analytics, insurtech solutions, telematics and cloud computing is gaining steam. Deloitte’s Global survey projects insurers’ technology budget to increase 13.7% in 2022.Now let’s take a look at how RE and CNA are poised.Price Performance    Everest Re has gained 25.9% in the past year, outperforming the industry’s increase of 15.2%. CNA Financial shares have declined 1.9% in the said time frame.Image Source: Zacks Investment ResearchReturn on Equity (ROE)   Everest Re, with a return on equity (ROE) of 10.5%, exceeds CNA Financial’s ROE of 10.1% and the industry average of 6.7%.Image Source: Zacks Investment ResearchValuation      The price-to-book value is the best multiple used for valuing insurers. Compared with Everest Re’s P/B ratio of 1.70, CNA Financial is cheaper, with a reading of 1.41. The P&C insurance industry’s P/B ratio is 1.55.Image Source: Zacks Investment ResearchDividend Yield        CNA Financial’s dividend yield of 3.8% betters Everest Re’s dividend yield of 2%. Thus, CNA Financial has an advantage over Everest Re on this front.Debt-to-Capital   Everest Re’s debt-to-capital ratio of 28.7 is higher than the industry average of 20.5 and CNA Financial’s reading of 25.6. Therefore, CNA Financial has an advantage over Everest Re on this front.Image Source: Zacks Investment ResearchCombined Ratio      Everest Re’s combined ratio was 98.8 in the first nine months of 2022, whereas that of CNA Financial was 93% in the said time frame. Thus, the combined ratio of CNA Financial betters that of Everest Re.To ConcludeOur comparative analysis shows that CNA Financial is better positioned than Everest Re with respect to dividend yield, combined ratio, leverage and valuation. Meanwhile, Everest Re scores higher in terms of price and return on equity. With the scale significantly tilted toward CNA Financial, the stock appears to be better poised. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 Everest Re Group, Ltd. (RE): Free Stock Analysis Report CNA Financial Corporation (CNA): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksDec 3rd, 2022

3 Stocks to Watch That Recently Announced Dividend Hikes

Merck & Co., Inc. (MRK), McCormick & Company, Incorporated (MKC) and Tsakos Energy Navigation Limited (TNP) recently hiked dividends. Wall Street has lately bounced back from the blow it suffered during the first three quarters of the year. On Nov 30, investors’ sentiment got a further boost after Fed Chair Jerome Powell hinted at scaling back the pace of interest rate hikes soon. This sent stocks on a rally.This might lead the S&P 500 and the Dow to somehow manage ending the year in green. However, the crisis is far from over, as inflation is still at multi-year highs and far from the Fed’s target range of 2%. Although at a slower pace, the Fed will continue to hike interest rates over the next year.Interest Rate Hikes to ContinueInflation has lately shown signs of cooling off in the United States, which has been the Fed’s biggest concern since the beginning of the year. The consumer price index (CPI) rose 0.3% month over month in October and 7.7% from a year ago, after increasing 8.2% in the prior month.Market participants have since been optimistic about the Fed going slow on its aggressive rate-hike stance in the coming months. On Wednesday, they got further assurance after Powell said that the Fed might consider scaling back its interest rate hikes as soon as December.Although stocks rallied on the news, inflation is still at a multi-year high, and Powell cautioned that the crisis is far from over. So, interest rate hikes will continue, albeit at a slower pace.Powell warned that fight against inflation is not yet over and that important questions remain unanswered, including how far and how long interest rates will need to be hiked. Market players are worried about the high borrowing costs that could harm the economy and push it into recession as the Fed’s target of 2% is still a far cry.Undoubtedly, such a situation will affect the business climate and consequently the stock market performance.Also, COVID-19 cases are again on the rise in China, compelling the government to impose strict restrictions. Businesses are once again being shut down, and citizens have come out on the streets, getting involved in frequent clashes with the regime opposing the restrictions.In addition to all of these factors, the current geopolitical conflict between Russia and Ukraine poses dangers to the global supply chain and is causing stock market volatility.Higher interest rates result in higher costs of borrowing. The likelihood of an economic downturn rises as a result of this. Both these are warnings for the markets, which have been volatile all year.Therefore, it makes sense for an astute investor to keep a watch on dividend-paying equities right now. This is because dividend stocks have a history of success and a solid business plan, which allows them to withstand market volatility.They not only provide a steady stream of revenues, but also fewer chances of frequent price movements. Moreover, dividend-paying firms have regularly outperformed non-dividend-paying stocks during periods of market turmoil. Three such companies are Merck & Co., Inc. MRK, McCormick & Company, Incorporated MKC and Tsakos Energy Navigation Limited TNP.Merck & Co., Inc. boasts more than six blockbuster drugs in its portfolio, with PD-L1 inhibitor, Keytruda, approved for several types of cancer. MRK made its biggest acquisition of Schering-Plough and sold off its Consumer Care business to Bayer.Other key acquisitions of Merck & Co. include Idenix Pharmaceuticals, Cubist Pharmaceuticals, Rigontec, ArQule and Acceleron Pharma. Merck & Co. presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.On Nov 30, 2022, Merck & Co announced that its shareholders would receive a dividend of $0.73 per share on Jan 9, 2023. MRK has a dividend yield of 2.54%. Over the past five years, Merck & Co has increased its dividend seven times, and its payout ratio is presently 36% of earnings. Check MRK’s dividend history here.Merck & Co., Inc. Dividend Yield (TTM) Merck & Co., Inc. dividend-yield-ttm | Merck & Co., Inc. QuoteMcCormick & Company, Incorporated is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors to the entire food industry across the entire globe. MKC conducts its business through two segments, namely the Consumer unit and the Flavor Solutions unit.On Nov 29, 2022, McCormick & Company declared that its shareholders would receive a dividend of $0.39 per share on Jan 9, 2023. MKC has a dividend yield of 1.77%. Over the past five years, McCormick & Company has increased its dividend six times, and its payout ratio is presently 56% of earnings. Check MKC’s dividend history here.McCormick & Company, Incorporated Dividend Yield (TTM) McCormick & Company, Incorporated dividend-yield-ttm | McCormick & Company, Incorporated QuoteTsakos Energy Navigation Limited is a leading provider of international seaborne crude oil and petroleum product transportation services. In July 2001, TNP’s name was changed to Tsakos Energy Navigation to enhance its brand recognition in the tanker industry, particularly among charterers.On Nov 22, 2022, Tsakos Energy Navigation Limited declared that its shareholders would receive a dividend of $0.15 per share on Dec 20, 2022. TNP has a dividend yield of 1.05%. Over the past five years, Tsakos Energy Navigation Limited has increased its dividend twice, and its payout ratio is presently 13% of earnings. Check TNP’s dividend history here.Tsakos Energy Navigation Ltd Dividend Yield (TTM) Tsakos Energy Navigation Ltd dividend-yield-ttm | Tsakos Energy Navigation Ltd Quote Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 Merck & Co., Inc. (MRK): Free Stock Analysis Report McCormick & Company, Incorporated (MKC): Free Stock Analysis Report Tsakos Energy Navigation Ltd (TNP): Free Stock Analysis Report Orange County Bancorp, Inc. (OBT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksDec 1st, 2022

Top Research Reports for Walmart, Toyota Motor & Schlumberger

Today's Research Daily features new research reports on 16 major stocks, including Walmart Inc. (WMT), Toyota Motor Corporation (TM) and Schlumberger Limited (SLB). Thursday, December 1, 2022The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Walmart Inc. (WMT), Toyota Motor Corp. (TM) and Schlumberger Ltd. (SLB). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.You can see all of today’s research reports here >>>Walmart's shares are in line with the Zacks Retail - Supermarkets industry over the past year (+12.5% vs. +12.4%). The company has been benefiting from its robust omnichannel operations due to its efforts to enhance both store and online experience. Walmart has been particularly gaining from its efforts to boost delivery services through acquisitions and partnerships.The company’s U.S. comp sales continued to benefit from an increased market share in grocery in the third quarter of fiscal 2023, wherein the top and bottom lines surpassed the Zacks Consensus Estimate and increased year over year. A robust third-quarter show encouraged management to raise its overall guidance for fiscal 2023.However, its consolidated operating income and earnings per share view still suggest a decline from the year-ago period figures. The company is encountering cost inflation, and expects it to remain elevated.(You can read the full research report on Walmart here >>>)Shares of Toyota Motors have declined -19.4% over the past year against the Zacks Automotive - Foreign industry’s decline of -40.1%. The company is facing supply-chain disruptions, logistical challenges and manufacturing inefficiencies are likely to dent profits. Operating income is projected to decline 19.8% year over year. High capex and R&D expenses are also likely to dent cash flows. Also, Toyota's rising debt pile raises concerns. As such, investors are advised to wait for a better entry point.However, the Japan-based carmaker is one of the world’s leading automakers, with an array of brands, including Toyota, Lexus and Scion, offering solid prospects. Toyota’s electrification push is a major tailwind.It is deepening its focus on manufacturing electric and fuel-cell vehicles, which will bolster the company’s product competitiveness. The company's raised sales view for fiscal 2023 sparked optimism. Investor-friendly moves also instill confidence.(You can read the full research report on Toyota Motor here >>>)Schlumberger’s shares have outperformed the Zacks Oil and Gas - Field Services industry over the past year (+75.9% vs. +20.1%). The company is the single largest oilfield services player, with a presence in every energy market across the globe. Being the leading provider of technology for complex oilfields, the company is well-poised to take up new offshore projects in international markets.The significant increase in oil prices is aiding its overall business. Increased participation in growth of drilling and completion activities across the world brightened the company’s outlook. Also, it boasts of becoming the first company in the energy service industry to add Scope 3 emissions ambition in the net-zero emission target.  However, the company’s balance sheet has massive debt exposure compared with the composite stocks in the industry. Also, the aggressive capital spending budget remains a headwind for the company. As such, the stock warrants a cautious stance.(You can read the full research report on Schlumberger here >>>)Other noteworthy reports we are featuring today include Lululemon Athletica Inc. (LULU), DexCom, Inc. (DXCM), and Enphase Energy, Inc. (ENPH).Mark VickerySenior EditorNote: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>Today's Must ReadWalmart (WMT) Benefits from Impressive E-Commerce OperationsElectrification Drive Aids Toyota Motor (TM) Amid InflationSchlumberger (SLB) to Gain on Rising Oilfield Service DemandFeatured ReportsStrong Product Portfolio Aids DexCom (DXCM) Fight CompetitionPer the Zacks analyst, DexCom strong product portfolio targeting the large and growing diabetes market is helping the company fight intensifying competition with entry new competing products.Solid Adoption of ESG Solution Aids MSCI's (MSCI) ProgressPer the Zacks analyst, MSCI is benefiting from strong demand for custom and factor index modules and the increasing adoption of the ESG solution into the investment process.Atlassian (TEAM) Gains On Rising Remote Working Tool DemandPer the Zacks analyst, Atlassian is benefiting from the COVID-19 pandemic-led work-from-home wave, which is spurring demand for offsite-working software and hardware tools.Old Dominion (ODFL) Rides on Dividends & Buyback, Expenses AilThe Zacks analyst likes the shareholder-friendly measures adopted by Old Dominion. However, rising operating expenses are concerning as they are likely to keep the bottom line under pressure.Willis Towers (WTW) Rides on Buyouts & Strong Balance SheetPer the Zacks analyst, a number of buyouts have helped Willis Towers expand its geographical footprint and ramp up product portfolio. Its healthy balance sheet enables it to fulfill debt obligations.Global Reach Buyout Benefits FLEETCOR (FLT), Liquidity LowPer the Zacks analyst, Global Reach buyout strengthens FLEETCOR's global position as a non-bank cross-border provider by increasing its scale of payments. However, low current ratio is a headwind.United Therapeutics (UTHR) Dependence on PAH Drugs A WoeUnited Therapeutics is a leader in treating pulmonary arterial hypertension (PAH) and markets four drugs. However the lack of product and pipeline diversification beyond PAH concerns the Zacks AnalystNew Upgradeslululemon (LULU) Tracks Well with E-commerce Expansion PlansPer the Zacks analyst, lululemon is heavily investing in e-commerce capabilities like developing sites, transactional omni functionality and fulfilment options to capture the growing online demand.Expanding Solar Market to Boost Enphase Energy (ENPH) GrowthPer the Zacks analyst, the expanding solar market that has set the stage for the solar microinverter market's boom tends to benefit Enphase as it remains a leading U.S. manufacturer of microinverters.RPM International (RPM) Gains From Buyouts & Strategic PlansPer the Zacks analyst, RPM benefits from the implementation of MAP 2025 operational improvement initiatives as well as various acquisitions.New DowngradesMacro Headwinds, Component Shortages Drag Down Seagate (STX)Per the Zacks analyst, Seagate's performance is likely to be affected by uncertainty prevailing over global macroeconomic conditions along with non-HDD component shortages in the near term. Strong Product Portfolio Aids DexCom (DXCM) Fight CompetitionPer the Zacks analyst, DexCom strong product portfolio targeting the large and growing diabetes market is helping the company fight intensifying competition with entry new competing products.Dismal Visitation Likely to Hurt MGM Resorts (MGM) ProspectsPer the Zacks analyst, MGM Resorts is experiencing limited visitation in Macau owing to coronavirus crisis. Also, lack of frictionless travel between Macau and Mainland China is a concern. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 Toyota Motor Corporation (TM): Free Stock Analysis Report Schlumberger Limited (SLB): Free Stock Analysis Report Walmart Inc. (WMT): Free Stock Analysis Report DexCom, Inc. (DXCM): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis Report Enphase Energy, Inc. (ENPH): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksDec 1st, 2022

IMF Chief Says US Must Keep Raising Interest Rates Because "They Owe It" To The World

IMF Chief Says US Must Keep Raising Interest Rates Because "They Owe It" To The World Authored by Katabella Roberts via The Epoch Times, The head of the International Monetary Fund (IMF), Kristalina Georgieva, has cautioned against the Federal Reserve slowing down with its interest rate hikes as it attempts to tame soaring inflation. Speaking in an interview with The Associated Press on Tuesday, the IMF Managing Director was asked for her thoughts on pausing interest amid concerns that a strengthening U.S. dollar is weakening other currencies around the world, particularly those in poorer nations, and contributing to a cost of living crisis in those countries. Georgieva said that the Central Bank “has no option but to stay the course” until the cost of living significantly declines. “They owe it to the U.S. economy, they owe it to the world economy, because what happens in the United States if inflation does not get under control can have also spillover impacts for the rest of the world,” Georgieva said. The dollar is up 18 percent this year and hit a new fresh two-decade high in September after the Federal Reserve raised interest rates by another 75 basis points. Verge of Crisis In October, the U.N. Development Programme (UNDP) warned that developing economies are on the verge of a significant crisis due to the financial and monetary policies of developed nations like the United States. “Rich countries have the resources to end the debt crisis, which has deteriorated rapidly in part as a consequence of their own domestic policies,” UNDP said. “These policies have sent interest rates in developing economies skyrocketing and investors fleeing,” UNDP said. “Market conditions are shifting rapidly as a synchronized fiscal and monetary contraction and low growth are fuelling volatility around the globe: 19 developing economies are now paying more than 10 percentage points over US Treasury bonds to borrow money on capital markets, effectively shutting them out of the market. Holders of many developing economy bonds are seeing them trade at deep discounts of between 40 to 60 cents on the dollar,” the UNDP said. “The international community should not wait until interest rates drop or a global recession kicks in to take action: The time to avert a prolonged development crisis is now.” A currency exchange vendor counts U.S. dollar notes at Tahtakale in Istanbul, Turkey. (Ozan Kose/AFP via Getty Images) Also in October, the United Nations, in its Trade and Development (UNCTAD) report, warned of a looming global recession driven by the monetary and fiscal policies of advanced economies, including that of the Federal Reserve. UNCTAD warned that developing countries would edge closer to debt default unless central banks in advanced economies revert their course of action. Despite concerns regarding the impact of domestic monetary policy on developing nations, the U.S. central bank has dismissed the possibility of easing its tight monetary policy, as inflation came in at 7.7 percent in October, way ahead of the Fed’s 2 percent goal. Jim Bullard, president of the Federal Reserve Bank of St. Louis, in an interview with MarketWatch on Nov. 28., said he believes the FOMC [Federal Open Market Committee] will likely need to be more aggressive with their rate hikes going forward, raising them to at least 5 percent in an effort to cool down red-hot inflation. The committee is scheduled to meet again on Dec. 13–14 for its final meeting of 2022. Georgieva on Tuesday noted that inflation remains high in the United States and Europe, adding that “the data at this point says: too early to step back.” Read more here... Tyler Durden Thu, 12/01/2022 - 06:30.....»»

Category: personnelSource: nytDec 1st, 2022

Stock Market News for Nov 30, 2022

U.S. stock markets closed mixed on Tuesday as market participants wait for Fed Chairman???s speech to be delivered on Wednesday. U.S. stock markets closed mixed on Tuesday as market participants wait for Fed Chairman’s speech to be delivered on Wednesday. Investors will also keenly watch several key economic data slated to release later this week. Socio-political unrest in China also remained a major concern. The Dow managed to gain marginally, while both the S&P 500 and the Nasdaq Composite posted losses for the third straight days.How Did The Benchmarks Perform?The Dow Jones Industrial Average (DJI) was up less than 0.1% to close at 33,852.53. Notably, 17 components of the 30-stock index ended in positive territory while 13 in negative zone. The major gainer of the blue-chip index was American Express Co. AXP, shares of which advanced 2.4%. American Express currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The tech-heavy Nasdaq Composite finished at 10,983.78, sliding 0.6% due to weak performance of large-cap technology stocks.The S&P 500 fell 0.2% to end at 3,957.63. Six out of  11 broad sectors of the benchmark index closed in positive territory, while five in red. The Energy Select Sector SPDR (XLE) and the Real Estate Select Sector SPDR (XLRE) gained 1.5% and 1.7%, respectively. On the other hand, the Technology Select Sector SPDR (XLK) dropped 1%.The fear-gauge CBOE Volatility Index (VIX) was down 1.4% to 21.89. A total of 9.6 billion shares were traded on Tuesday, lower than the last 20-session average of 11.2 billion. The S&P 500 posted three new 52-week highs and two new 52-week lows. The Nasdaq Composite registered 68 new 52-week highs and 183 new 52-week lows.Markets Wait for Powell’s SpeechOn Nov 30, Fed Chairman Jerome Powell will deliver lecture at the Hutchins Center of the Brookings Institution on monetary and fiscal policies. Market participants will keenly watch Powell’s speech to get an idea what the central bank is thinking about future course of the interest rate movement.Recently, Fed officials have given divided opinion regarding the magnitude of future interest rate hike. Investors are unsure whether the terminal interest rate will stay below the 5% threshold or go beyond that level. Uncertainty prevails regarding the expected time of the first interest rate cut too.Socio-Political Unrest in ChinaOngoing socio-political unrest in China likely to have a major negative impact on global economy, especially, the U.S. economy. China is the source of the global supply-chain system, which as already devastated during the pandemic-era. The destruction of the supply-chain system is the primary reason for the current inflationary pressures across the globe. This has led major central banks to adopt tighter monetary control with higher interest rate regime.In the United States, the inflation is currently at near 40-year high. The Fed has raised the benchmark interest rate by 3.75% so far this year with more rate hike to come. U.S. corporate giants, particularly, the tech behemoths, are very much dependent on Chinese supply of low-cost inputs. Moreover, China is the largest market for U.S. high-end products.Economic DataThe Conference Board reported that Consumer Confidence Index for November came in at 100.2%, marginally higher than the consensus estimate of 100%. October’s reading was lowered marginally to 100.2% from 100.5% reported earlier.The Present Situation Index—based on consumers’ assessment of current business and labor market conditions— dropped to 137.4% in November from 138.7% last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions— fell to 75.4% in November  from 77.9% in October.The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index  reported a 10.6% year over year gain in September, down from 12.9% in August. The 10-City Composite increased 9.7% year over year in September, down from 12.1% in the previous month. The 20-City Composite posted a 10.4% year over year gain in September, compared with 13.1% in August. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 American Express Company (AXP): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 30th, 2022

The latest terrible news for the stock market: The economy is booming again

A suddenly surging economy will force the Federal Reserve to keep hiking interest rates. When that happens, investors and consumers better buckle up. A suddenly surging economy may force the Federal Reserve to speed back up its interest rate hikes which will cause more pain for the stock market and the US economy.Tyler Le/InsiderThe Federal Reserve has spent the past year trying to break the US economy. In the face of scorching inflation, the Fed rapidly hiked interest rates in an attempt to slow down the wheels of the economy and get rising prices under control. Chair Jerome Powell made these intentions clear at a press conference earlier this year, telling reporters that "pain" would be required to bring inflation down. But breaking the economy has proved quite difficult. Yes, the Fed has slowed activity in certain corners — most notably the housing market — but by and large the economy is still standing. In fact, rather than slowing down, it appears ripe to get even stronger over the next several months.The Fed has hinted that it may ease up on its rate hikes as inflation starts to improve, but a suddenly surging economy may force it to put the pedal back to the metal. When that happens, investors and consumers better buckle up: There will be more pain ahead for the stock market and the US economy.The US economy is chugging alongDespite the near-constant proclamations that the US has been teetering on the precipice of a recession all year, the real surprise is just how resilient it has been. And there are even signs it'll get stronger from here.The most obvious reason is that supply-chain pressures are easing. Instead of looking at empty shelves or dealer lots, businesses have been able to get the products they need and, in turn, people have been able to spend their money on the goods they want. Cars are a great example: Total light auto sales in Octoberhit an annualized pace of 14.9 million, the best since January. The growth is so strong that if auto sales stay at their same pace, they will add a whopping 1.5 percentage points to gross domestic product just by themselves.Other industries are also digging themselves out of deep holes, and a long pipeline of demand will help them boost the economy well into 2023. Take aircraft manufacturers: Boeing had a stretch of bad years between the 737 Max problems and the coronavirus pandemic. Today, the company is seeing new orders roll in, pushing up aircraft production with plenty of runway for continued growth. Pun definitely intended.The other good news for the economy is that the bad news isn't getting any worse. Government spending dropped off in 2022 and helped drag down GDP growth, but with money set to roll out next year from the bipartisan infrastructure package and Inflation Reduction Act, this situation will reverse. The building markets, for homes and new commercial real estate, have been hammered by the Fed's rate hikes — declines in building investment have cut into US GDP growth for six consecutive quarters. But after the initial shock and a leveling off of mortgage rates, consumers' homebuying intentions have actually picked up. Looking internationally, the problems that rocked the globe in 2022 — from the war and energy crisis in Europe to China's zero-COVID policies — almost certainly can't get more painful, and have even shown signs of improving.Finally, financial market conditions have been easing of late. Bank of America's Global Financial Stress Index, a broad measure that tries to capture the health of the stock and bond markets, has improved for over a month and is now where it was at the time of the June Federal Open Market Committee meeting. A stock-market rally and improving corporate debt markets don't exactly scream "a recession is nigh."One way recessions work is through an element of surprise: Companies assume things will be OK, and when an economic shock hits they scramble to dump products, halt big investment plans, and stop hiring new workers. But this time, the opposite is true. The recession talk has been so pervasive that almost all companies are girding themselves for a downturn. So if a recession doesn't come and the economy speeds up, what happens? The process works in reverse. Firms will be caught flat-footed, and that means a period of catch-up will ensue as they order more goods, try to hire more workers, and restart investments. For a Fed that is trying to slow the economy, this is not a welcome development.If you don't succeed, try againAt the moment, the Fed, like many companies, appears to be offside on economic growth. There are rumblings that the central bank is planning to pivot toward a slower pace of interest-rate hikes — a signal it believes the economy is weakening enough to bring down inflation. But as I outlined above, the opposite is true: Real growth is picking up. This will make the Fed's job even harder and force it to dispense with the "pivot" before it really begins. At a minimum, it's tough to cut interest rates when the economy is defying expectations.For the average American, this resilient economy is a double-edged sword. On the one hand, the start of 2023 will seem great. Household finances and the labor market will be strong. But the happy New Year could result in pain down the line. Even with improving supply chains, a mad scramble by companies to catch up with higher-than-expected consumer demand would keep inflation higher than the Fed's 2% goal. This, in turn, would force the central bank's hand. Instead of a softening economy and moderating prices allowing the Fed to pivot toward a more relaxed policy, a robust economy and stickier inflation would push it to continue hiking interest rates for longer than anticipated. The Fed has explicitly said higher unemployment is a way to achieve its inflation objectives, so it could continue rate hikes until there is a meaningful deterioration of the job market — layoffs that have gripped a few sectors would start to broaden out and cause more widespread "pain" for households. Americans could be faced with a boost in the first half of the year and a swift kick from interest rates further down the line in 2023.And if American households are going to eventually face the payback of this stronger-than-expected economy, then markets are going to take it even worse. That's because investors are taking the Fed's current tone softening one step further and pricing in interest-rate cuts by the end of 2023. But given the strength of the economy and likelihood of a slower-than-expected decrease in inflation, there's little to no chance the Fed will be cutting by this time next year. At a minimum, I wouldn't expect a dovish bias. If that's right, we might be seeing yet another false dawn in the stock market.In an economy where bad news is good news, and good news is bad news, Americans' ability to power through the Fed's rate hikes and record-high inflation may paradoxically hurt them down the line. Powell's promised pain is going to come — it's just a question of when.Neil Dutta is Head of Economics at Renaissance Macro Research.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 30th, 2022

The Culprits Responsible For The Slowdown In Social Media Ad Spending

The once red-hot social media ad boom has come to an abrupt halt after enjoying more than a decade of explosive growth and performance fueled by tech-hungry investors and Silicon Valley venture capitalists. As the global economy teeters on the brink of a looming recession, tech giants and social media conglomerates are pointing fingers at […] The once red-hot social media ad boom has come to an abrupt halt after enjoying more than a decade of explosive growth and performance fueled by tech-hungry investors and Silicon Valley venture capitalists. As the global economy teeters on the brink of a looming recession, tech giants and social media conglomerates are pointing fingers at one another as they try and decipher who’s really to blame for the sudden slowdown in ad spending and performance. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Greater macroeconomic problems, from stubbornly high inflation, aggressive monetary tightening leading to the soaring cost of borrowing, supply chain bottlenecks, and geopolitical tension have all eaten their way into companies’ profits this year. On the foundation, consumers are pulling back aggressively as it looks to keep up with the cost of living crisis which has so far taken a massive plunge into their disposable income. Second to this is corporate advertisers who have been making swift changes to their advertising budgets, as bigger economic problems weigh themselves into their profits. In recent months, tech and social media giants have been slashing jobs at a phenomenal rate, as it tries to lower their full-year guidance on the back of slowing growth. By looking at how many jobs companies in tech and social media have cut this year alone, it’s already a clear indication that conditions are far worse than what many expected after the industry enjoyed a decade-long escapade of frothy investments and job growth. A grim sight of tech layoffs continue This year has been earmarked with job cuts and aggressive layoffs as companies try to ride out the macroeconomic problems. From the beginning of the year, conditions in Silicon Valley started deteriorating, only to snowball as we stretched later into the year. Companies including Microsoft, Netflix, Robinhood, Carvana, and Klarna, among others, led the trend in layoffs, terminating hundreds of jobs as early as April this year. A wave of job cuts soon followed, with Snap slashing 20% of its more than 6,400 workforces back in August. Snap’s stock prices are down more than 80% this year alone. After two consecutive months of declining revenue, Facebook parent company Meta announced that it will eliminate 13% of its staff, amounting to more than 11,0000 employees. Musk-owned Twitter has also been shaken by thousands of layoffs, as roughly 3,700 employees were cut from the company. Other tech companies including Amazon also announced that it will be laying off 3% of its workforce, which represents 10,000 jobs. While Apple and Shopify have also been making some changes to their employee structure in recent months as it looks to cut back on costs. As of mid-November 2022, more than 73,000 tech workers in the U.S. have been laid off according to a Crunchbase News tally. Persisting job cuts represent only the tip of the iceberg of ongoing financial problems that have plagued the tech sector for much of the year. Who’s To Blame? With much of the tech sector currently hanging on by a thread, companies are fraught with questions over the sudden slowdown in ad spending coming from private and public companies. Apple’s Changing Ad Tracking Policies Back in 2020, iPhone giant Apple announced it was changing how advertisers and social media platforms can track users across their devices. The idea behind Apple’s ad tracking changes meant that it will minimize intrusive advertising, allowing users better privacy, and single-handedly cutting off advertisers from tracking users on the internet and their behavior. This in itself didn’t do much to tarnish Apple’s ad business, as it didn’t have much of an ad business to start with. The change in Apple’s privacy policies meant that companies such as Meta, Twitter, and other similar companies will find it increasingly difficult to gather a detailed digital footprint of users. TikTok’s Growing Dominance Some pointed out that TikTok’s explosive growth in recent years has also contributed to several other platforms, including Facebook, Instagram and Snap seeing a sudden decline in ad spending revenue. Back in April this year, the company projected its ad revenue to increase to $12 billion, an increase of $4 billion from last year. In the first quarter of the year, the platform had more than 1.6 billion global monthly users, slightly below the 2.9 billion of Facebook, but this marked a 45% growth from the year before. The video-sharing app has given Instagram, Facebook, and YouTube a run for their money this year, leading companies to innovate at a rapid pace as it seeks to compete against its surging global dominance. On top of this, TikTok’s influence and growth left Facebook and YouTube frightened, with both companies now looking to introduce similar features to their platforms as their greatest competitor. Even with these efforts, the cost of YouTube ads, and that of Facebook are still not delivering a substantial return for advertisers. Turning Economic Conditions Another culprit and perhaps the biggest and most noticeable of all of them is the changing economic cycle, which has now led to expert economists believing the global economy is fast approaching a breaking point. As a recessionary measure, consumers, corporate advertisers, and investors are all pulling their cash from the market in the hopes of shielding themselves against the sudden economic slowdown. To counter red-hot inflation, which hit 7.7% in October, - the smallest 12-month increase since January - the Federal Reserve has been boosting the cost of borrowing with its aggressive monetary tightening. In less than a year, prime interest rates have more than doubled, going from near zero at the start of 2022, to a range of 3.75% to 4%. But rates are expected to remain elevated, as the Federal Open Market Committee is set to continue hiking up rates, where it is expected to peak at 4.5% to 4.75% in 2023. Soaring prices and a cost of living crisis sent consumers and corporate advertisers into survival mode. With consumers spending less than usual and plumping up their savings, companies soon felt the shockwave of slowing economic activity, sending companies into overdrive, cutting their advertising dollars and making adjustments to their marketing expenses. Changing eCommerce Landscape eCommerce and online retail giant enjoyed a banner year at the height of the pandemic in 2020. Throughout much of the COVID era, corporate retailers such as Amazon, Target, and Walmart, to name a few, started growing their digital marketing businesses. As consumers swiftly transitioned to online shopping, major retailers sought out an opportunity to disrupt the competitive playing field. As of late 2022, retail media represented 11% of total ad spending globally. The successful growth and development of these businesses have meant that fewer ad dollars are being spent on social media, and more are being directed to in-house digital marketing efforts. For these companies, search and banner ads remain a vital source of consumer marketing and point of purchase. Additionally, retail advertisers have also been less affected by Apple’s privacy policy changes, as much of their marketing efforts and tactics do not currently rely on third-party data and information. Bearish VC Deals Over the last decade or so, tech-heavy venture capital deals meant that media and tech companies grew at an exponential rate, as billions of dollars freely flowed across the industry. During the pandemic, investors were even more aggressive with their spending, dishing out record-shattering amounts, hoping to see positive returns in the coming years. Though this may have been the case for several years, tightening economic conditions and sinking market sentiment have led to a shift in venture capital deals over the last couple of months. Data suggest that VC investments totaled roughly $43 billion across more than 4,074 deals in Q3 2022 - this represented a nine-quarter low for total deal value. The same data suggests that the total number of deals has also fallen by more than 20%, marking the lowest deal count since Q4 2022. The once capital-backed free-flowing venture capital has now started to dry up, leaving companies in tech and media to scramble and market their way across the industry as they look for ways to survive the financial and economic crunch hitting them from all sides. The Not-So-Good-Looking Potential Of The Metaverse Last year, the metaverse captivated the global marketplace, seeing companies investing millions, if not billions into the further development of what then looked like a promising virtual world of opportunity. At the turn of the year, companies and investors started having growing doubts about the potential of the metaverse. As investors started putting a pause on ongoing deals, and companies slowed down spending on their metaverse side of the business, the idea started to fizzle out and the metaverse is something many will only look to pursue in the coming years. These conditions have however not stopped the CEO of Meta, Mark Zuckerberg from continuously plaguing billions into the further development of the metaverse. An idea that many have dubbed a cause for disaster. At an earnings call in October, Zuckerberg and Meta's executives were positive that the company had managed to make significant changes to its ads policies in recent months, and that it’s still looking to curtail Apple’s privacy policies with innovative measures. Zuckerberg told shareholders that “those who are patient and invest with us will end up being rewarded,” citing that the company’s investment in the metaverse will create bigger opportunities in the coming years. The Final Verdict Having to pick one or two, and simply claiming it as the reason why corporate advertisers are spending less on social media ads can seem a bit far-fetched to say the least. Slowing economic performance and changing investor sentiment have battered companies for much of the year. Apart from this, consumer spending behavior, coupled with surging inflation and interest rate hikes has also not made it any easier for companies to properly predict what they can expect going forward. While it’s not possible to directly name or pull a culprit from the hat, it’s best understood that a combination of changing economic conditions on the macro landscape has resulted in the sudden deflation of social media ads spending. Though the market is projected to see positive growth in the upcoming year, there’s still too much uncertainty that’s currently looming, leading to bigger cause for concern and unpredictable volatile conditions......»»

Category: blogSource: valuewalkNov 29th, 2022

Stock Market News for Nov 29, 2022

Wall Street closed sharply lower following political unrest in China against the nation???s COVID-19 related restrictions. Wall Street closed sharply lower following political unrest in China against the nation’s COVID-19 related restrictions. Moreover, hawkish statement of an important Fed official also dampened market participants’ sentiment. All the three major stock indexes recorded their biggest daily decline in nearly three weeks.How Did The Benchmarks Perform?The Dow Jones Industrial Average (DJI) tumbled 1.5% or 497.57 points to close at 33,849.46. Notably, 25 components of the 30-stock index ended in negative territory while 5 in positive zone. The tech-heavy Nasdaq Composite finished at 11,049.50, sliding 1.6% or 176.86 due to weak performance of large-cap technology stocks.The S&P 500 tanked 1.5% to end at 3,963.94. All 11 broad sectors of the benchmark index closed in negative territory. The Energy Select Sector SPDR (XLE), the Real Estate Select Sector SPDR (XLRE), the Technology Select Sector SPDR (XLK), the Materials Select Sector SPDR (XLB), the Industrials Select Sector SPDR (XLI) and the Financials Select Sector SPDR (XLF) plummeted 2.7%, 2.8%, 2.1%, 2.2%, 1.8% and 1.7%, respectively.  The fear-gauge CBOE Volatility Index (VIX) was up 8.3% to 22.21. A total of 9.3 billion shares were traded on Monday, lower than the last 20-session average of 11.3 billion. The S&P 500 posted 12 new 52-week highs and two new 52-week lows. The Nasdaq Composite registered 93 new 52-week highs and 174 new 52-week lows.Socio-Political Unrest in ChinaProtest has broken out in several major cities in China including Shanghai and capital Beijing against the prolonged zero-Covid policy maintained by the Chinese authority. Earlier this month, Wall Street was rumored with the news that China may reopen soon after a long lockdown to prevent the spread of the COVID-19 restrictions.However, recent surge in COVID-19 related infections and deaths has forced the government to implement restrictions for a loner period. Per a CNBC News, citing a viral; video in social media, over the last three days, students staged protests at many universities, while people took to the streets in parts of Beijing, Shanghai, Wuhan and Lanzhou, among other cities.Ongoing socio-political unrest in China likely to have a major negative impact on global economy, especially, the U.S. economy. China is the source of the global supply-chain system, which as already devastated during the pandemic-era. The destruction of the supply-chain system is the primary reason for the current inflationary pressures across the globe. This has led major central banks to adopt tighter monetary control with higher interest rate regime.In the United States, the inflation is currently at near 40-year high. The Fed has raised the benchmark interest rate by 3.75% so far this year with more rate hike to come. U.S. corporate giants, particularly, the tech behemoths, are very much dependent on Chinese supply of low-cost inputs. Moreover, China is the largest market for U.S. high-end products.Crude-Oil Prices Drop   Socio-political unrest in China will have significant negative impact on global economy. This may lead to the reduced demand for crude oil.Fearing that, the price of the U.S. benchmark – the WTI crude futures – for January delivery was settled at $77.24 per share, after declining to $73.60 per barrel, its lowest since December 2021. The price of the global benchmark – the Brent crude futures - was settled at $83.19 per share, after declining to $80.61 per barrel, its lowest since January 2022.Consequently, prices of oil behemoths like Exxon Mobil Corp. XOM and Chevron Corp. CVX tumbled 3% and 2.9%, respectively. Exxon Mobil currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Hawkish Comment by Fed OfficialSt. Louis Fed President James Bullard said that the fed should continue to raise the benchmark interest rate in coming months in order to contain inflation. Per Bullard, the market has been underestimating the probability that the central bank will go more aggressive in near future. Bullard said that the Fed should stay away from interest rate cut next year even if the inflation declines consistently. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 Chevron Corporation (CVX): Free Stock Analysis Report Exxon Mobil Corporation (XOM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 29th, 2022

Merit Medical (MMSI) Launches New Inflation Device basixALPHA

Merit Medical (MMSI) launches basixALPHA inflation device in the United States for one-handed preparation and fast inflation with minimal exertion to streamline angioplasty procedures. Merit Medical Systems, Inc. MMSI announced the commercial release of its new ergonomic inflation device — basixALPHA — in the United States. The device is designed to streamline angioplasty procedures.With the launch of basixALPHA, Merit Medical further strengthens its inflation device portfolio, which includes analog and digital devices like BasixCompak, basixTOUCH, Blue Diamond and DiamondTouch. These devices are primarily used for angioplasty procedures, which have low- and high-pressure capacity for inflation, deflation and measurement of pressure in angioplasty balloons.Merit Medical is one of the leading companies in the inflation device market whose devices have already been used in more than 10 million procedures worldwide.Significance of basixALPHA ReleaseMerit Medical’s basixALPHA inflation device is designed for one-handed preparation and fast inflation with minimal exertion that will streamline angioplasty procedures. The device is likely to improve the physician experience and patient outcomes around the globe.Per the press release, more than 1.2 million coronary angioplasty procedures are performed every year in the United States. Faster inflation and the streamlining of angioplasty procedures with the use of basixALPHA inflation device are likely to drive demand for the device, thereby driving revenue growth for the company.Price PerformanceMerit Medical stock has gained 12.6% so far this year against the industry’s 13.8% decline and the S&P 500's 16.8% fall.Image Source: Zacks Investment ResearchIndustry ProspectsPer a report by Allied Market Research, the global inflation devices market was valued at $517 million in 2018 and is anticipated to reach $770 million by 2026 at a CAGR of approximately 5.1%. Factors like the rise in the adoption of minimally invasive procedures, the surge in healthcare expenditure globally and the rise in the geriatric population are likely to drive the market.Given the market potential, the latest launch is expected to provide a significant boost to Merit Medical’s business in the niche space.Notable DevelopmentsEarlier this month, Merit Medical announced the U.S. commercial release of its PreludeSYNC EZ Radial Compression Device. It complements the company’s radial portfolio of products that includes the Prelude IDeal, Merit Medical’s thin-walled hydrophilic sheath introducer with improved kink and compression resistance.Last month, Merit Medical announced its third-quarter 2022 results, where it registered better-than-expected performance and saw a year-over-year uptick in the top and bottom lines. Merit Medical also recorded revenue growth in the Cardiovascular segment and across the majority of its product categories within its Cardiovascular unit. Its product sales were also promising. Robust performances in the United States and outside were impressive.In September, Merit Medical announced the U.S. commercial release of the TEMNO Elite Soft Tissue Biopsy System, the latest addition to its comprehensive portfolio of biopsy devices.The same month, Merit Medical announced the U.S. commercial release of the Prelude Roadster Guide Sheath. Prelude Roadster is the latest addition to the Merit Vascular-Peripheral Access portfolio, which includes introducers and other products like access kits, vessel dilators and accessories.Merit Medical Systems, Inc. Price Merit Medical Systems, Inc. price | Merit Medical Systems, Inc. QuoteZacks Rank & Other Key PicksCurrently, Merit Medical carries a Zacks Rank #2 (Buy).Some other stocks to consider from the broader medical space are AMN Healthcare Services, Inc. AMN, ShockWave Medical, Inc. SWAV and McKesson Corporation MCK.AMN Healthcare, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.AMN Healthcarehas gained 0.6% against the industry’s 31% decline so far this year.ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 23.6% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 146.1%.ShockWave Medical has gained 44.7% against the industry’s 27.7% decline so far this year.McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 4.8%.McKesson has gained 53% against the industry’s 13.8% decline so far this year. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 McKesson Corporation (MCK): Free Stock Analysis Report Merit Medical Systems, Inc. (MMSI): Free Stock Analysis Report AMN Healthcare Services Inc (AMN): Free Stock Analysis Report ShockWave Medical, Inc. (SWAV): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 29th, 2022

KBR Wins Place in DoD IAC to Build/Upgrade US Navy Aircraft

KBR boosts backlog with its recent contract win from the U.S. Air Force to modify and develop the NSWC Crane and NAVAIR. KBR, Inc. KBR won a $69.2-million task order from the U.S. Air Force's 774th Enterprise Sourcing Squadron within the Department of Defense Information Analysis Center's (DoD IAC) multiple-award contract (MAC) vehicle.Per this task order, KBR will provide total life cycle management of critical airborne manned reconnaissance aircraft systems for the Naval Surface Warfare Center Crane (NSWC Crane) and the Naval Air Systems Command (NAVAIR) E-2/C-2 Airborne Command and Control Program Office (PMA 231).While developing and integrating new technology, KBR will modify and upgrade legacy technology for aircraft intelligence, surveillance, reconnaissance and targeting (ISR&T) systems.KBR’s Government Solutions (GS) U.S. president, Byron Bright, stated, "With this win, our advanced R&D, modeling and simulation, and logistics and engineering experts will support the development of the next generation of advanced ISR&T systems for the Navy, while ensuring the sustainment of legacy systems until they reach sundown."The E-2 is the foremost carrier-born aircraft capable of early detection of enemy threats and responses to carrier operations conducted in accordance with America's declared defense strategy. The work will primarily focus on the E-2D Advanced Hawkeye, with additional support for the E-2C Hawkeye and C-2A Greyhound aircraft.Image Source: Zacks Investment ResearchThe stock fell 1.77% post news release on Nov 28, but outperformed the Zacks Engineering - R and D Services industry in the past six months. KBR’s shares have gained 3.4% in the said period against the industry’s 1.9% fall. KBR has supported the E-2 program through multiple E-2C upgrade projects and programs and the development and fielding of the E-2D Advanced Hawkeye platform for more than 30 years.Solid Technology Solutions Aid BacklogFor more than 50 years, KBR has been leading the process technology development, commercialization and plant design solutions industries. KBR’s best-in-class technologies have been designing and building end-to-end, sophisticated digitization solutions and services for clients worldwide. KBR is a leader in energy transition and has extensive experience supporting sustainable energy projects across the globe.These digitized technologies and solutions help companies increase efficiency and productivity, reduce costs and create opportunities to generate higher revenues and profitability. It has been driving growth by focusing on lowering carbon emissions, product diversification, energy efficiency and more sustainable technologies and solutions.KBR’s solid backlog level of $15.77 billion (as of Sep 30, 2022) reflects its underlying strength. The company’s impressive 2021 and the first nine months of 2022 performances reflected its unwavering focus and superb business execution. Solid double-digit top-line growth, strong organic growth in the Government Solutions unit and robust adjusted EBITDA growth are commendable. The impressive performance was backed by a solid contract-winning spree, strong project execution, backlog level and potential government and technology businesses.Upbeat ViewsBacked by favorable market tailwinds, good booking momentum and a strong first nine months of 2022, KBR lifted strong 2022 guidance. For 2022, the company expects total revenues in the range of $6.5-$6.7 billion (versus $6.4-$6.8 billion expected earlier) and an adjusted EBITDA margin of 10%. It expects an effective tax rate between 23% and 24% (versus the earlier projections of 24% and 25%) and adjusted earnings per share in the band of $2.60-$2.65 (compared with $2.53-$2.65 expected before). Adjusted operating cash flow is projected to be $375-$400 million (versus an earlier projection of $360-$400 million).In 2021, the company generated total revenues of $7.34 billion, an adjusted EBITDA margin of 8.5% and adjusted earnings of $2.42 per share. It had an adjusted operating cash flow of $319 million.Zacks Rank & Key PicksCurrently, KBR carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Some better-ranked stocks that warrant a look in the same industry include CI&T Inc. CINT, Sterling Infrastructure, Inc. STRL and Altair Engineering Inc. ALTR, each carrying a Zacks Rank #2 (Buy).CI&T is a global digital specialist, which has been benefiting from a solid acquisition strategy, an improving client base, and an expansion into new markets and verticals. Also, robust organic growth in its four operating regions — North America, Latin America, Europe, and Asia Pacific — bode well. CI&T’s focus on speed and digital efficiency resonates extremely well with large and innovative companies in today’s world.CINT’s expected earnings growth rate for 2022 is 29.2% and 41.9% for 2023.Sterling Infrastructure specializes in E-Infrastructure, Building and Transportation Solutions principally in the United States. The company has been navigating the ongoing supply chain and inflation challenges with growth in its E-Infrastructure Solutions (its largest segment), E-Infrastructure and Building Solutions. With continued demand for complex site development, STRL has been broadening its customer base with industrial and manufacturing opportunities in E-Infrastructure Solutions, thereby helping it to generate higher profits. Focus on the execution of strategic objectives also bodes well.STRL’s expected earnings growth rate for 2022 and 2023 is 47.4% and 6.3%, respectively.Altair Engineering provides software and cloud solutions in simulation, high-performance computing, data analytics and AI worldwide.ALTR’s expected earnings growth rate for 2022 and 2023 is pegged at 10.6% and 21.5%, respectively. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 Altair Engineering Inc. (ALTR): Free Stock Analysis Report KBR, Inc. (KBR): Free Stock Analysis Report Sterling Infrastructure, Inc. (STRL): Free Stock Analysis Report CI&T Inc. (CINT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 29th, 2022

Why The Definition Of Inflation Matters

Why The Definition Of Inflation Matters Authored by Michael Maharrey via SchiffGold.com, When people talk about “inflation” today, they generally mean rising prices as measured by the Consumer Price Index (CPI). But historically, “inflation” was more precisely defined as an increase in the amount of money and credit causing advances in the price level. Inflation used to be understood as an increase in the money supply. Rising prices were a symptom of inflation. I find this change in definition problematic. But many disagree with me. They argue that I’m being pedantic and the definition doesn’t really matter all that much. In a social media exchange, I argued that rising oil prices due to the invasion of Ukraine weren’t technically “inflation” but are better described as price shocks. Price shocks do, in fact, raise prices. And those price increases can cascade through the economy. But unlike price increases due to an increase in the money supply, decreases in other areas of the economy will ultimately balance out price shocks (absent inflation) as people shift spending patterns. For example, if people are paying more for gasoline, they may cancel vacation plans. This drop in travel demand will cause hotel prices to fall. In contrast, a rise in the money supply (inflation) will cause a general rise in prices with no corresponding price decreases. “Joe,” a commenter on Facebook, disagreed. You’re wrong. What you call ‘price shock’ is in fact inflation. The BULK of inflation is in fact Fed debasing the currency as you note. The inflation of prices is also a function of market forces that have nothing to do with the Fed. These pale in comparison to adding mega-trillions of dollars to the currency supply.” If you read carefully, you’ll see that Joe simply substituted the current definition of inflation for the historical definition. He lumped price increases caused by Federal Reserve monetary expansion and price shocks together under one banner — inflation. So, what’s the problem? I can understand why people might think that this is nothing more than semantical nit-picking. After all, word meanings evolve over time. When I insisted on the classical definition of inflation, Joe argued that there was no reason to hold fast to archaic terms. That you believe modern vernacular of the term includes things you think did not used to be in the term is meaningless. Why should I care about anachronistic uses of terms? I speak in the modern vernacular. I, for example, don’t speak in Elizabethan English so I’m not a KJV kind of guy. Likewise, I won’t insist on something from the 70s, because economic policy 50 years ago doesn’t mean a whole lot to me right now.” The problem is that this change in definition creates confusion. And I believe that is precisely why government officials and the academics who support them have worked to change the common meaning of inflation. Economist Ludwig von Mises warned about this shifting definition decades ago.  In his essay “Inflation: An Unworkable Fiscal Policy, Mises reiterated the precise definition of inflation. Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check.” Over the years, the government, along with its apologists in the corporate media and academia, altered the definition. Why? To suit government purposes. The standard definition of inflation bandied about today is nothing more than government propaganda. Mises explains the problem with this change in definitions. People today use the term `inflation’ to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this terminological confusion is not entirely wiped out, there cannot be any question of stopping inflation.” In other words, the modern definition allows policymakers to shift the blame to other things while continuing their expansionary monetary policy. Keep in mind, the Federal Reserve (and all global central banks) constantly inflate the money supply as a matter of policy. After all, the inflation “target” is 2%! In fact, inflation is a stealth tax. The inflation tax is the primary way the US government finances its deficit spending. The federal government spends billions of dollars every month, but it doesn’t collect enough taxes to cover its costs. That means it has to run deficits. The Federal Reserve monetizes those deficits. In effect, it prints money. They call it quantitative easing, but when you boil it all down, they’re just inflating the currency. As the money supply grows, prices rise and you feel the pain every time you go to the grocery store or the gas station. The government is getting bigger and bigger, and families across America are bearing that burden through higher prices. The government loves the inflation tax because it never has to accept responsibility for levying that tax. It can blame it on all kinds of other factors like corporate greed, the pandemic, or “Putin’s price hikes” (i.e. oil price shocks). This is especially true if you redefine inflation as simply “rising prices.” You lose the ability to parse out the impact of monetary policy. If we use the traditional definition of inflation as an “expansion of the supply of money,” the culprit becomes clear. Who expands the supply of money? It’s the Fed and the federal government. So, if you accurately define inflation, you know exactly who’s to blame. But if the government can fool people into believing that one effect of inflation is inflation, they can blame it on everybody but themselves. This is not to say price shocks and other factors don’t cause prices to rise. This is not to minimize the impacts of those price increases on our lives. The point is it’s important to distinguish inflation – an increase in the money supply causing a general rise in prices – from other factors driving prices higher. Without a precise definition, we lose our ability to talk about the phenomenon of rising prices and monetary expansion with any precision. And the government gets away with harmful policies. Tyler Durden Tue, 11/29/2022 - 14:20.....»»

Category: smallbizSource: nytNov 29th, 2022

4 Investment Management Stocks to Watch in a Prospering Industry

Higher interest rates and assets inflows will likely aid Zacks Investment Management stocks like BlackRock (BLK), Ameriprise (AMP), Affiliated Managers (AMG) and Prospect Capital (PSEC). Higher interest rates will benefit the Zacks Investment Management industry stocks, which bore the brunt of low rates during the pandemic. While elevated technology costs might hurt profitability, investment managers’ margins will no longer be under pressure given the rate hikes. This should aid revenue growth.Moreover, investment managers have benefited from higher volatility and client activity amid the pandemic. Although markets normalized in second-half 2021, client activity has gained momentum once again. Hence, BlackRock, Inc. BLK, Ameriprise Financial, Inc. AMP, Affiliated Managers Group, Inc. AMG and Prospect Capital Corporation PSEC should benefit from growth in assets under management (AUM).About the IndustryThe Zacks Investment Management industry consists of companies that manage securities and funds for clients to meet specified investment goals. They earn by charging service fees or commissions. Investment managers are also called asset managers, as they manage hedge funds, mutual funds, private equity, venture capital and other financial investments for third parties. By appointing an investment manager for one’s assets, investors get more diversification options than they would have if they managed their assets by themselves. Investment managers invest their clients’ assets in different asset classes, depending on their needs and risk-taking abilities. Hence, the diversification, which investors get by appointing asset managers to manage their assets, helps reduce the impact of volatility and ensures steady returns over time.3 Investment Management Industry Trends to ConsiderInterest Rate Hikes to Aid Margin Growth Despite Shift in Preferences: Similar to the past few years, demand for passive investing has been on the rise on the continued need for low-cost investment strategies. Thus, rising demand for passive investments is expected to negatively impact investment managers’ margin growth to some extent. Nevertheless, the interest rate hikes since the beginning of this year to tame the raging inflation will likely result in an improvement in margins in the near term. Also, the rise in industry consolidation witnessed since the beginning of 2020 is likely to support bottom-line growth.Growth in AUM Likely to Continue Despite a Volatile Trend in Asset Flows: In 2020 and the first half of 2021, there was a significant rise in equity market volatility and solid client activity, owing to the coronavirus-induced uncertainty, which aided total AUM growth. In the second half of 2021, markets began to normalize, with client activity remaining decent. Nevertheless, the first nine months of 2022 again witnessed an unexpected rise in volatility and relatively higher client activity, resulting in asset inflows for the majority of the industry players. Thus, despite a volatile trend in flows (seen recently), growth in AUM is expected to continue in the near term. Asset managers’ top lines are, therefore, expected to improve, supported by higher performance fees and investment advisory fees, which constitute the majority of their revenues.Elevated Costs Remain Concerning: The tightening of regulations to increase transparency has led to a rise in compliance costs for investment managers. Also, as wealth managers are constantly trying to upgrade technology to keep up with evolving customer needs, technology costs are expected to keep rising. These will likely lead to an increase in overall expenses, thus, hurting investment managers’ bottom line.Zacks Industry Rank Indicates Bright ProspectsThe Zacks Investment Management industry is a 44-stock group within the broader Zacks Finance sector. The industry currently carries a Zacks Industry Rank #89, which places it at the top 35% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of bright earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have just started gaining confidence in this group’s bottom-line growth potential. The industry’s current-year earnings estimates have been revised 1.3% higher since the end of October 2022.Thus, we present a few stocks from the prospering industry that you may want to keep an eye on. But before that, let’s check out the industry’s recent stock market performance and valuation picture.Industry Lags S&P 500 & SectorThe Zacks Investment Management industry has underperformed both the S&P 500 and its sector in the past two years.Stocks in the industry have collectively lost 2.4%. The S&P 500 composite has rallied 9.6% and the Zacks Finance Sector has appreciated 12.2%.Two-Year Price PerformanceIndustry's Current ValuationOne might get a good sense of the industry’s relative valuation by looking at its price-to-tangible book ratio (P/TB), which is commonly used for valuing finance companies because of large variations in their earnings results from one quarter to the next.The industry currently has a trailing 12-month P/TB of 3.90X. This compares with the highest level of 5.27X, the lowest level of 2.04X and the median of 3.59X over the past five years. Additionally, the industry is trading at a significant discount compared with the market at large, as the trailing 12-month P/TB for the S&P 500 composite is 10.30X, which the chart below shows.Price-to-Tangible Book Ratio (TTM)As finance stocks typically have a low P/TB ratio, comparing investment managers with the S&P 500 may not make sense to many investors. But a comparison of the group’s P/TB ratio with that of its broader sector seems more meaningful. When we compare the group’s P/TB ratio with the broader Finance sector, it seems that the group is trading at a decent discount. The Zacks Finance sector’s trailing 12-month P/TB of 4.69X for the same period is above the Zacks Investment Management industry’s ratio, which the chart below shows.Price-to-Tangible Book Ratio (TTM)4 Investment Management Stocks to Keep an Eye OnBlackRock: The New York, NY-based Zacks Ranked #3 (Hold) company is the largest asset manager by assets in the United States, with a market capitalization of $110.6 billion. The company’s diversified products, revenue mix and inorganic expansion efforts have been aiding AUM growth. As of Sep 30, 2022, BlackRock had total AUM worth $7.96 trillion.The company’s AUM has witnessed a seven-year (2015-2021) compound annual growth rate (CAGR) of 13.6%. While its AUM balance declined in the first nine months of 2022 due to the tough operating backdrop amid the macroeconomic concerns, the trend will likely reverse in the future.The company has been continuously strengthening its iShares and exchange-traded funds (ETF) operations. Its efforts to gain market share in the active equity business will likely keep aiding profitability.Supported by a solid balance sheet and liquidity position, BlackRock has expanded via acquisitions, both domestic and overseas. In June 2021, it acquired the Climate Change Scenario Model of Baringa Partners. In February 2021, it completed the acquisition of investment management services provider, Aperio Group. Apart from these, over the years, the company has acquired several firms across the globe, thus, expanding its footprint and market share.Moreover, in August 2022, BlackRock partnered with cryptocurrency exchange, Coinbase Global, to provide its institutional clients with access to digital currencies. Through the partnership, BlackRock’s institutional clients will have access to crypto trading, custody, prime brokerage, and reporting via Coinbase Prime, which is the exchange’s institutional platform, providing a wide range of features and tools.In the past three months, shares of BlackRock have gained 8.8%. Over the past 30 days, the Zacks Consensus Estimate for the company’s 2022 earnings has been revised marginally upward to $33.88 per share, whereas its 2023 earnings estimates have witnessed a downward revision of 1% to $34.08.Price and Consensus: BLKAmeriprise: Headquartered in Minneapolis, MN, Ameriprise has a market cap of $35.4 billion. Since 2005-end, the company has been operating independently of American Express Company. As of Sep 30, 2022, it owned, managed and administered assets worth $1.1 trillion.Ameriprise operates a well-diversified portfolio compared with its industry peers. It constantly modifies its product and service-offering capacity to keep pace with dynamic market needs. This strategy, along with asset growth, has helped the company witness a rise in total net revenues.Moreover, AMP has grown inorganically and restructured its business from time to time to remain profitable by focusing on its core operations. In November 2021, the company acquired BMO Financial Group’s EMEA asset management operations, which will bolster its wealth and asset management businesses and global diversification efforts. In July 2021, it closed a deal for RiverSource Life Insurance Company (its insurance subsidiary) with Global Atlantic’s subsidiary, Commonwealth Annuity and Life Insurance Company, to reinsure $7 billion of fixed deferred and immediate annuity policies.In 2019, it divested the Ameriprise Auto & Home business. These initiatives, along with a few others, are expected to continue supporting revenue growth. Notably, AMP maintains long-term issuer ratings of A- from S&P Global and Fitch, and A3 from Moody’s Investors Service, with a rating outlook of stable from all three agencies. The company currently carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.AMP’s shares have gained 21% over the past three months. Over the past 30 days, the Zacks Consensus Estimate for its 2022 earnings has been revised upward by 3% to $24.56 per share. Likewise, earnings estimates for 2023 have been revised upward by 2.1% to $29.09.Price and Consensus: AMPAffiliated Managers: Headquartered in Massachusetts, Affiliated Managers has equity investments in a large group of investment management firms or affiliates. The affiliates manage more than 500 investment products across each major product category — global, international and emerging markets equities, domestic equities, and alternative and fixed-income products. The company has a market cap of $5.9 billion.As of Sep 30, 2022, this Zacks Ranked #3 company had total AUM of $644.6 billion. AMG is expected to continue generating meaningful growth through new investments. Its successful partnerships and focus on strengthening the retail market operations will likely keep aiding profits.Affiliated Managers has been targeting investments in alternatives and global strategies, given the strong investor preference for the same. The acquisitions of the majority stakes in Parnassus Investments and Abacus Capital Group, along with the buyouts of minority stakes in OCP Asia, Boston Common Asset Management and Systematica, are steps in this direction.While Affiliated Managers’ affiliates have been witnessing overall net outflows over the past few years, the company’s differentiated product categories are likely to support cash flows across channels.AMG has appreciated 20.1% over the past three months. The Zacks Consensus Estimate for its 2022 earnings has been revised upward by 7.5% to $19.53 per share over the past 30 days. Likewise, earnings estimates for 2023 have been revised upward by 5.2% to $19.48.Price and Consensus: AMGProspect Capital: Headquartered in New York, NY, PSEC has a market cap of $3.1 billion. The company is a leading provider of private debt and private equity to middle-market companies in the United States, with a focus on sponsor-backed transactions and direct lending to established owner-operated companies. It currently sports a Zacks Rank #1.PSEC invests primarily in first-lien and second-lien senior loans and mezzanine debt, which in some cases include an equity component. Since its inception in 2004, Prospect Capital has invested $19.6 billion across 403 investments, exiting 274 of these investments.As of Sep 30, 2022, the company had investments in 128 long-term portfolio investments and CLOs, which had a fair value of $7.58 million.Over the last three fiscal years (ended June 2022), the company’s total investment income witnessed a CAGR of 6.8%. The upward trend continued in the Sep-end quarter.Given a solid balance sheet and liquidity position, the company is expected to enhance shareholder value through efficient capital deployment activities. On Aug 24, 2011, its board of directors approved a share repurchase plan to buy back shares worth up to $0.1 million. As of Sep 30, 2022, $65,860 worth of shares were available for repurchase under the authorization.PSEC’s shares have lost 0.2% over the past three months. Over the past 30 days, the Zacks Consensus Estimate for its current fiscal year earnings has been revised 5.2% upward to $1.01 per share. Likewise, earnings estimates for the next fiscal year have been revised 8.3% upward to $1.04.Price and Consensus: PSEC Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 BlackRock, Inc. (BLK): Free Stock Analysis Report Ameriprise Financial, Inc. (AMP): Free Stock Analysis Report Affiliated Managers Group, Inc. (AMG): Free Stock Analysis Report Prospect Capital Corporation (PSEC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 25th, 2022

Why Halliburton (HAL) Is an Attractive Oilfield Service Stock

For investors looking for an energy stock with a strong outlook, Halliburton (HAL) is one to keep on the shortlist. Even as fears revolving around high inflation and slowing growth somewhat cloud the outlook for Oil/Energy, it has remained the best S&P 500 sector this year. The space has generated a total return of some 68% in 2022 against the S&P 500’s loss of 16%.Apart from a positive fundamental picture, the sector is enjoying support from geopolitical uncertainty amid Russia’s military operations in Ukraine. In March, crude prices surged to multi-year highs of $130 on concerns about supplies from Russia, which is one of the world's largest producers of the commodity.While oil has pulled back from those lofty levels, with the conflict showing no sign of a quick resolution, the risk of dwindling inventory and the influential oil exporters’ group OPEC agreeing on a production curtailment mean that the commodity has got enough reasons to stay elevated in the near-to-medium term.Naturally, some stocks have been impressive since the start of the year. These also have strong earnings trends to back their moves.One such company is Halliburton Company HAL. It is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors. The company operates in over 80 countries. Founded in 1919, Halliburton employs more than 40,000 people and operates under two main segments: Completion and Production, and Drilling and Evaluation.Let’s discuss the reasons that make Halliburton an attractive pick:Solid Rank and VGM ScoreHalliburton is a Zacks Rank #1 (Strong Buy) stock in the Oil and Gas - Field Services industry, which carries a Zacks Industry Rank #25 — placing it in the top 10% of more than 250 Zacks industries. In addition to the favorable rank, HAL enjoys a Zacks Growth Style Score of B, Momentum of B, and an overall VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.Earnings Beat Estimtes in Q3HAL posted excellent Q3 results on Oct 25, with EPS of 60 cents coming in ahead of the Zacks Consensus Estimate of 56 cents and more than doubling from the year-earlier bottom line of 28 cents. The firm’s outperformance reflected stronger-than-expected profit from both its divisions and came in spite of the company’s exit from Russia. Total revenues came in at $5.4 billion, going past the Zacks Consensus Estimate of $5.3 billion and 38.8% above the year-ago level.Current Levels Are a Buying OpportunityAfter HAL shares bottomed out (around $4.25) during the start of the pandemic, they have turned around in style. Halliburton peaked in June at nearly $44 but has fallen to under $37.50 since then. Despite this drop, the stock is still up 63.8% this year, while the markets have gone lower. This powerful uptrend during a bear market indicates that investors should take advantage of the discounted levels and start looking at the name to see if it’s right for their portfolio. With the company experiencing the best market conditions in years, we believe that the HAL stock has enough firepower left to keep chugging along. Image Source: Zacks Investment Research Analyst Estimates RaisedHAL’s earnings revisions have also trended in the right direction over the last 60 days, as analysts have consistently taken up their numbers. As a matter of fact, the Zacks Consensus Estimate for Halliburton’s 2022 bottom line has increased from a profit of $2.01 to a profit of $2.09 during this timeframe, while next year’s estimate has seen a rise from a profit of $2.77 per share to $2.94.Fundamental StrengthWhile Halliburton has operations in more than 70 countries, it generates 45% of its revenues in North America. This outsized exposure to the region, especially through its market-leading pressure pumping operations, nicely positions the company to take advantage of the rising U.S. land drilling activity, tightening supply/demand fundamentals and pricing momentum.The successful and expanded use of digital technologies has helped Halliburton enhance performance and lower operational risk. Simply put, it has allowed the company to remove equipment and/or crew from the site, substituting with software solutions. With fewer personnel on location, jobs being monitored offsite using remote data center management tools, and the replacement of expensive hardware with software solutions, the operator is able to reduce costs and capital investment. In other words, the increasing cloud-based data flow between the site and the back office translates into expanded margins for oilfield service providers like Halliburton.Bottom LineThe current scenario makes this a solid time to consider buying Halliburton. Yes, there are some apprehensions that the company may feel the reverberating impacts of the inflation-triggered cost increases. But with international activity set to gain momentum throughout the globe, HAL’s state-of-the-art portfolio, selective contract wins and balanced geographic mix will help it maximize profits from this upcycle.The Houston-based company’s cash flow generation capabilities and balance sheet strength should also ensure increased shareholder returns. All these should support higher price points for its shares.Other Energy Stocks to BuyAlong with Halliburton, investors interested in the energy sector might look at Helmerich & Payne HP, HF Sinclair DINO and Nine Energy Service NINE, each currently sporting a Zacks Rank #1.You can see the complete list of today’s Zacks #1 Rank stocks here.Helmerich & Payne: HP beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 124.2%, on average.Helmerich & Payne is valued at around $5.7 billion. HP has seen its shares gain 100.3% in a year.HF Sinclair: HF Sinclair is valued at some $12.8 billion. The Zacks Consensus Estimate for DINO’s 2022 earnings has been revised 14.3% upward over the past 60 days.HF Sinclair, headquartered in Dallas, TX, delivered a 9.1% beat in Q3. DINO shares have surged 90.2% in a year.Nine Energy Service: Nine Energy Service is valued at some $280.1 million. The 2022 Zacks Consensus Estimate for NINE indicates 121.4% year-over-year earnings per share growth.Nine Energy Service, headquartered in Houston, TX, delivered a 137.5% beat in Q3. NINE shares have surged 500.7% in a year. 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 Halliburton Company (HAL): Free Stock Analysis Report Helmerich & Payne, Inc. (HP): Free Stock Analysis Report Nine Energy Service, Inc. (NINE): Free Stock Analysis Report HF Sinclair Corporation (DINO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 24th, 2022

Most Crucial Industrial Fuel Faces Global Shortage

Most Crucial Industrial Fuel Faces Global Shortage A perfect storm in global diesel markets is unfolding. Refining capacities are tight, and stockpiles are being depleted as the Northern Hemisphere cold season begins. Supply crunches could jeopardize critical transportation networks since the industrial fuel powers ships, trucks, and trains. The fuel is also used for heating homes and businesses, as well as a power generation source for utilities.  "Within months, almost every region on the planet will face a danger of a diesel shortage just as supply crunches in nearly all the world's markets have worsened inflation and hurt growth," Bloomberg warned.  The economic impact of soaring diesel prices and shortages worldwide could have devastating effects, such as an inflation accelerant that would burden households and businesses.  Both gasoline and diesel prices are linked to crude prices set on the global market. Due to supply constraints, diesel prices in many markets currently demand a hefty premium.  Mark Finley, an energy fellow at Rice University's Baker Institute of Public Policy, explained to Bloomberg that elevated diesel prices could cost the US economy $100 billion: "Anything and everything that gets moved in our economy, diesel is there. "Moving stuff around is one thing. People potentially freezing to death is another."  Diesel inventories in the US had plunged to the lowest level since 1982 when the government began reporting data on the fuel. Supplies for this time of year are at the lowest levels ever.  According to the Energy Information Administration, the US now has just 25 days of diesel supply, the lowest since 2008; and while inventories are record low, the four-week rolling average of distillates supplied - a proxy for demand - increased to its highest seasonal level since 2007.  Reuters' senior market analyst John Kemp noted that diesel shortages will persist until a downturn in the economy.   Prices for US diesel in the spot market of New York harbor have risen more than 265% since President Biden took the oath of office in 2021. Prices reached $5.37 a gallon in the spring of 2022 and have since slumped to $3.51.  US Northeast markets are the tightest in the US, where oil refineries have been shuttered in the last several years. This has also complicated the picture of winter heating oil and jet fuel supplies in the region.   Last month, a major fuel supply logistics company initiated emergency protocols across the Northeast and Southeast about the dangers of supplies running low that might cause delivery delays for some customers.  "While Russia's war in Ukraine sent diesel prices soaring, the current situation is partly the result of an interconnected, slow-building series of events that extends across the globe. Some analysts trace the roots of the US diesel shortage to a fire at Philadelphia Energy Solutions in 2019, which forced the refinery to shut down, taking out one of the Northeast's important diesel producers," according to the NYTimes.   Besides the US, Northwest Europe is facing low diesel supplies. Inventories in Europe are expected to plunge further after Russian crude and crude products sanctions come into play in the coming months. Global export markets are so tight right now that emerging market countries are being squeezed out of purchasing industrial fuel, such as Pakistan.  "It's certainly the biggest diesel crisis that I have ever seen," Dario Scaffardi, a former chief executive officer of the Italian oil refiner Saras SpA who spent four decades in the industry, told Bloomberg. The cause of the global diesel shortage is very clear:  That's partly a function of the pandemic, after lockdowns destroyed demand and forced refiners to close some of their least profitable plants. But the looming transition away from fossil fuels has also dented investments in the sector. Since 2020, US refining capacity has shrunk by more than 1 million barrels per day. Meanwhile in Europe, shipping disruptions and worker strikes have also eaten into refinery production. -Bloomberg  The ban on Russian crude to Europe in December could worsen the situation. Then a ban on Russian diesel in February could unleash even more chaos for the continent. Reuters said traders are panic-hoarding Russian oil products before the bans come into effect. Earlier this year, the US halted Russian diesel shipments, which last year, it was a major supplier to the East Coast.  "If Russia is not a supplier anymore, that puts a big, big dent into the system, which is going to be really difficult to fix," said Scaffardi, the former Saras CEO.  Speculation mounts that the Biden administration could halt diesel exports to boost domestic supplies, but that may not have the desired effects because diesel is a globally traded commodity. Any export ban from the US would cause unwanted market gyrations.  Labor strikes have also exacerbated diesel shortages across Europe at major refineries. French refineries experienced several labor actions this fall, and a large BP refinery in Rotterdam on Tuesday.  The diesel crunch has been "damaging to the global economy," said Amrita Sen, the head of research at Energy Aspects Ltd. She said the only way to "resolve diesel tightness ultimately needs new refining capacity." And the bad news is that Chevron CEO Mike Wirth told Bloomberg TV this past summer that no new refineries will ever be built in the US.  Winter could exacerbate problems for the Northern Hemisphere as the worst diesel squeeze in a generation could wreak havoc on the already faltering global economy.  Tyler Durden Thu, 11/24/2022 - 05:45.....»»

Category: blogSource: zerohedgeNov 24th, 2022

Be Thankful to These ETF Areas in 2022

The year 2022 has been awful to Wall Street. But these ETF areas -- energy, commodities, dividends, defensive ETFs and rate hedge ETFs -- emerged winners. The year 2022 has been all about surging global inflation due to supply-chain issues, the Russia-Ukraine war, high energy prices, a commodity super-cycle, a super-hawkish Fed, rising rates across the globe, risk-off trade sentiments and a global market crash.The S&P 500 is off about 17%, the Dow Jones has retreated 7.1%, the Nasdaq has lost 28.8%, the Russell 2000 has fallen 17.6% this year (as of Nov 18, 2022).Against this backdrop, below we highlight a few ETF areas that bucked the losing trend and emerged winners.EnergyCredit Suisse S&P MLP Index ETN MLPO – Up 118.2%Invesco Dynamic Energy Exploration & Production ETF PXE – Up 79.2%Oil prices have been in decent shape lately with WTI crude ETF United States Oil Fund LP (USO) gaining 25% this year mainly on geopolitical tension in East Europe, OPEC+ output cuts and demand recovery due to economic reopening. Prices increased considerably as OPEC+ producers agreed on Oct 5 deep output cuts, seeking to spur a recovery in crude prices despite repeated calls from U.S. President Joe Biden’s administration for the group to pump more to lower fuel prices and contain global inflation.Rate Hedge ETFSimplify Interest Rate Hedge ETF PFIX – Up 83.8%Advocate Rising Rate Hedge ETF RRH – Up 39.1%The interest rate hedge corner of the fixed-income market has been an area to watch lately due to rising interest rates. Investors are flocking to PFIX and RRH to combat rising rate worries. The Fed has hiked rates massively this year. Federal Reserve Bank of Atlanta President Raphael Bostic recently said that he was comfortable to retreat from 75-basis-point increases at the next meeting but declared that rates may reach 4.75%-5% before the Fed is done with its current tightening cycle.Defensive ETFKFA Mount Lucas Managed Futures Index Strategy ETF KMLM – Up 32.3%AGFiQ US Market Neutral Anti-Beta Fund BTAL – Up 15.2%As risk-off trade sentiments prevailed this year, defensive investments gained momentum. Rising rate concerns are rife globally. And this concern is not likely to go away soon. Hence, equity market volatility is here to stay for some time. As a result, investors are likely to consider alternative assets to protect their portfolios against volatility.CommoditiesiPath Series B Bloomberg Nickel Subindex Total Return ETN JJN – Up 24.7%iShares U.S. ETF Trust iShares GSCI Commodity Dynamic Roll Strategy ETF COMT – Up 21.2%After a decade of underperformance, commodities are experiencing a huge rally due to the Russia-Ukraine war, sky-high inflation, pent-up demand after the COVID-19 pandemic and widespread vaccination. From crude to metals to crops, commodities performed great in 2022 as investors betted big on inflationary expectations and eyeing everything that provide hedges for inflation. Especially, the agricultural commodity market has been an area to watch lately, given worries over the growing global food crisis and rising prices.DividendsInvesco S&P Ultra Dividend Revenue ETF RDIV – Up 9.2%WisdomTree US High Dividend Fund DHS – Up 8.6%Dividend-paying companies are usually good for value investing and are in demand when volatility flares up. Investors have two options in this field – one with steady dividend growth (or dividend aristocrats) and the other with high yield. Companies that raise dividend regularly appear steadier than those that offer higher yields. But then high-yielding ones also make up for the capital losses to a large-extent, if there is any. Several dividend ETFs offered better returns than the S&P 500 this year.    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 iShares GSCI Commodity Dynamic Roll Strategy ETF (COMT): ETF Research Reports WisdomTree U.S. High Dividend ETF (DHS): ETF Research Reports AGFiQ US Market Neutral AntiBeta ETF (BTAL): ETF Research Reports Invesco S&P Ultra Dividend Revenue ETF (RDIV): ETF Research Reports iPath Series B Bloomberg Nickel Subindex Total Return ETN (JJN): ETF Research Reports Invesco Dynamic Energy Exploration & Production ETF (PXE): ETF Research Reports Credit Suisse S&P MLP Index ETN (MLPO): ETF Research Reports KFA Mount Lucas Managed Futures Index Strategy ETF (KMLM): ETF Research Reports Simplify Interest Rate Hedge ETF (PFIX): 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: zacksNov 22nd, 2022

The softening of real estate prices in the hottest pandemic markets only confirms that the surge in remote work created the illusion of a housing shortage

Remote work has led to more Americans moving to popular home buying hotspots — it's creating volatility in the real estate market. A young couple moves into a new home.Getty Images Thousands of remote workers moved to popular hotspots like Austin and Nashville in the last couple of years. Their presence led to a run-up in housing costs and real estate investor activity. But elevated home prices are "being misinterpreted as a shortage" says Erin Sykes, economist for Nest Seekers. While some housing experts have maintained that a dearth of inventory and record-low mortgage rates were to blame for the intense competition and runaway home price growth seen during the pandemic, Erin Sykes, chief economist for luxury brokerage firm Nest Seekers International, says there is another culprit afoot: remote work. "I'm not convinced there is a housing shortage, more so a mismatch of housing types and locations," she told Insider."The housing 'shortage' will correct itself as it is not based on population growth and real demand, but in low interest rates, a shift in desirable locations and the work from home combined with outsized salaries in mid-tier markets," she added.According to Sykes, an irregular distribution of home buying activity "is being misinterpreted as a shortage." That's because she believes that remote work increased "the demand for trendy locations," leading more homebuyers and large institutional investors — typically deep-pocketed businesses and real estate funds —  to saturate home buying hotspots."Everyone wanted to move to the same hot markets at the same time," she said. "Places like Palm Beach, Miami, Austin, Nashville and the Hamptons. It felt like an 'all or nothing' scenario for a couple years."As transplants moved into these hot markets, data from the Federal Reserve Bank of San Francisco shows their presence led to higher home prices. By tracking migration and its effect on home demand, the San Francisco Fed found that from November 2019 to November 2021, the surge in remote work alone lifted home prices 15% and accounted for more than 60% of the overall increase in home values nationwide.Changing tides in the hottest pandemic marketsIn Austin, which was the nation's most popular home buying migration destination in early 2021, the influx of new buyers led to heavy investor activity in the market. By year's end, the median home price in the city grew by 31%, leading to more residents either becoming renters or homeless. But now Austin is now also witnessing one of the nation's most dramatic drop in prices. "Institutional and individual investors were aggressive in the purchase of property over the last couple years, and as prices held steady while rates increased, many would-be buyers were forced to rent," Sykes said. "Thus, it's not that there is a shortage of inventory, it's that the bulk of the inventory is held by just a few players."However, this could all soon change as the Federal Reserve's aggressive fight against surging inflation results in far lower buyer demand, slower sales and home price growth — all of which are dampening investor activity.  According to an October housing report from ATTOM, institutional investors nationwide accounted for only 6.7% of housing inventory in the third-quarter of 2022 — down from the 8.4% seen in Q3 of 2021."Gross profits, and overall ROI are still relatively healthy for investors who don't overpay for homes, and who are good at managing repair costs, but if demand weakens further and prices begin to decline, returns for investors could definitely be impacted,"  Rick Sharga, the executive vice president of market intelligence at ATTOM, told Insider in June. As homebuyer and investor activity fades, and more employers call workers back into the office, Sykes says the so-called housing shortage could be on its last leg."Buyers have begun to expand their search beyond the red hot geographies into sub markets where affordability is better," she said. "This reshuffling of demand will solve the 'shortage.'"Read the original article on Business Insider.....»»

Category: dealsSource: nytNov 22nd, 2022

Jacobs Reports Fiscal Fourth Quarter and Fiscal Year 2022 Earnings

Double-Digit Fourth Quarter Operating Profit and EPS Year-Over-Year Growth  Robust Q4 Cash Flow From Operations Generation With Over 100% Cash Conversion PA Consulting-led Team Selected by UK Ministry of Defence to Deliver Software Defined Defense Solutions Robust Backlog and Pipeline Driven by Global Climate Response, Infrastructure, Supply Chain Modernization and National Security DALLAS, Nov. 21, 2022 /PRNewswire/ -- Jacobs Solutions Inc. (NYSE:J) today announced its financial results for the fiscal fourth quarter and fiscal year ended September 30, 2022. Q4 2022 Financial Highlights: Revenue of $3.9 billion grew 8.2% year-over-year; net revenue1 up 11% in constant currency1 Net earnings of $225 million and EPS from continuing operations of $1.75 Adjusted EPS1 from continuing operations of $1.80, up 14% year-over-year and 18% in constant currency Adjusted EBITDA1 of $350 million, up 13% year-over-year and up 17% in constant currency Cash flow from operations of $278 million and free cash flow1 of $230 million, driven by strong DSO performance Backlog1 increased $1.2 billion to $27.9 billion, up 5% year-over-year and 8% in constant currency Fiscal Year 2022 Highlights: Revenue growth of 5.9% and net revenue up 10% year-over-year in constant currency Net earnings from continuing operations of $644 million, up 38%, and FY22 EPS of $4.98 up 60% Adjusted EPS of $6.93, up 10% year-over-year; $7.12 on a constant currency basis up 13% Adjusted EBITDA year-over-year growth of 10% to $1.4 billion and up 12% in constant currency Cash flow from operations of $475 million and free cash flow of $347 million, includes previously announced Legacy CH2M Matter settlement outflow of $475 million2 during Q3, $55 million tax repayment and $63 million of other items. Jacobs' Chair and CEO Steve Demetriou commented, "We finished fiscal 2022 with strong top and bottom line performance positioning the company for continued growth in fiscal 2023. Within Jacobs and PA Consulting, our scientists, engineers and thought leaders address many of the world's most complex challenges, like partnering with NASA to launch humans into deep space, driving energy transition solutions across the globe, and delivering software defined solutions to protect the next-generation digitally enabled UK soldier. Our focus on strong values and a brand promise to continue 'Challenging today. Reinventing tomorrow' is the intangible competitive differentiator that truly makes Jacobs a company like no other." Jacobs' President and CFO Kevin Berryman added, "We achieved strong revenue growth and operating margin expansion during the fourth quarter, and full fiscal year 2022, driven by our determination on delivering higher value, higher margin solutions with a disciplined focus on operational excellence. We are excited about the results and building momentum of our infrastructure and advanced facilities People & Places Solutions business. Our fourth quarter cash flow was robust and full year cash flow was in-line with our expectations. Looking into fiscal 2023 and beyond, we are aligned to multiple large, growing and well-funded priorities including global infrastructure modernization, climate response, investments in critical supply chains and national security." Financial Outlook3 Given the volatility of FX rates we are providing our outlook under two FX scenarios 1) an outlook based on constant currency which provides greater insight of underlying business performance, and 2) an outlook based on recent FX rates. Based on fiscal 2022 average FX rates, the Company's outlook for fiscal 2023 adj. EBITDA is $1,465M to $1,545M, and adj. EPS of $7.60 to $7.90, up 10% and 12% respectively at the midpoints. Based on FX rates in early November, the Company's outlook for fiscal 2023 adj. EBITDA is $1,400M to $1,480M and adjusted EPS of $7.20 to $7.50, both up 6% at the midpoints. On a net revenue basis the difference between these two scenarios is approximately $430 million. Our constant currency fiscal 2023 outlook is based off of our estimate of year-over-year FX impact to operating profit. The constant currency impact excludes the impact of year-over-year FX translation on other income from items such as pension costs, unrealized exchange gains and losses and income taxes. 1See Non-GAAP Financial Measures and Operating Metrics, and GAAP Reconciliations, beginning on page 13, for additional detail. 2On April 12, 2022, the Company paid cash of AUD640 million, or approximately $475 million using mid-April 2022 exchange rates, which represents the final pre-tax settlement of Legacy CH2M Matter. 3Reconciliation of fiscal 2023 adjusted EBITDA and adjusted EPS, based on either FX rate scenario, to the most directly comparable GAAP measure is not available without unreasonable efforts because the Company cannot predict with sufficient certainty all the components required to provide such reconciliation, including with respect to the costs and charges relating to transaction expenses, restructuring and integration to be incurred in fiscal 2023.   Fourth Quarter Review Fiscal Q4 2022 Fiscal Q4 2021 Change Revenue $3.9 billion $3.6 billion $0.3 billion Net Revenue $3.2 billion $3.0 billion $0.2 billion GAAP Net Earnings from Continuing Operations $225 million $45 million $180 million GAAP Earnings Per Diluted Share (EPS) from Continuing Operations $1.75 $0.34 $1.41 Adjusted Net Earnings from Continuing Operations $231 million $207 million $24 million Adjusted EPS from Continuing Operations $1.80 $1.58 $0.22   The Company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for the fourth quarter of fiscal 2022 and fiscal 2021 exclude the adjustments set forth in the table below. For additional information regarding these adjustments and a reconciliation of adjusted net earnings and adjusted EPS to net earnings and EPS, respectively, as well as a reconciliation of net revenue to revenue, refer to the section entitled "Non-GAAP Financial Measures" at the end of this release.   Fiscal Q4 2022 Fiscal Q4 2021 GAAP Net Earnings from Continuing Operations and Diluted Earnings Per Share (EPS) $225 million ($1.75 per share) $45 million ($0.34 per share) Adjustments for Restructuring, transaction costs and other (recoveries) charges on an after-tax basis ($(14.9) million and $4.3 million for the fiscal 2022 and 2021 periods, respectively, before income taxes). $(42) million ($(0.33) per diluted share) $49 million ($0.37 per diluted share) Other adjustments include: (a) add-back of amortization of intangible assets of $51.7 million and $46.5 million in the 2022 and 2021 periods, respectively, (b) the removal of $67.5 million in fair value gains and (losses) related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to ECR sale in the 2021 period, (c) the exclusion of impacts on the Company's effective tax rates associated with revised estimates on U.S. taxation of certain foreign earnings and certain tax return filing adjustments, (d) the removal of $(1.7) million in additional income tax expense attributable to tax rate increases in the UK during in 2021, (e) applicable redeemable noncontrolling interests impacts for the above adjustment items and (f) income tax expense adjustments for the above pre-tax adjustment items. $49 million ($0.38 per diluted share) $114 million ($0.86 per diluted share) Adjusted Net Earnings from Continuing Operations and Adjusted EPS from Continuing Operations $231 million ($1.80 per diluted share) $207 million ($1.58 per diluted share) (note: earnings per share amounts may not add due to rounding)   The Company's U.S. GAAP effective tax rate for continuing operations is 14% for the fiscal fourth quarter 2022 and fiscal fourth quarter 2022 adjusted earnings per share from continuing operations reflects a 20% adjusted effective tax rate.   Fiscal 2022 Review Fiscal 2022 Fiscal 2021 Change Revenue $14.9 billion $14.1 billion $0.8 billion Net Revenue $12.6 billion $11.7 billion $0.9 billion GAAP Net Earnings from Continuing Operations $644 million $467 million $177 million GAAP Earnings Per Diluted Share (EPS) from Continuing Operations $4.98 $3.12 $1.86 Adjusted Net Earnings from Continuing Operations $897 million $826 million $71 million Adjusted EPS from Continuing Operations $6.93 $6.29 $0.64   The Company's adjusted net earnings and adjusted EPS for fiscal 2022 and fiscal 2021 exclude the charges and costs set forth in the table below. For additional information regarding these adjustments and a reconciliation of adjusted net earnings and adjusted EPS to net earnings and EPS, respectively, as well as a reconciliation of net revenue to revenue, refer to the section entitled "Non-GAAP Financial Measures" at the end of this release.   Fiscal 2022 Fiscal 2021 GAAP Net Earnings from Continuing Operations and Diluted Earnings Per Share (EPS) $644 million ($4.98 per share) $467 million ($3.12 per share) Adjustments for after-tax Restructuring, transaction costs and other charges ($185.4 million and $392.9 million for the fiscal 2022 and 2021 periods, respectively, before income taxes), comprised mainly of (i) a pre-tax $91.3 million charge related to the final settlement related to the Legacy CH2M Matter, net of previously recorded reserves and approximately $27 million in third party recoveries was recorded as receivables reducing SG&A, (ii) $78.3 for the Company's real estate impairment in the fiscal 2022 period and (iii) PA Consulting one time deal related charges, including $261 million in pre-tax compensation costs associated with the transaction and $(57.3) million, or $(0.44) per share, in EPS numerator adjustments relating to PA preference shares redemption value, which does not affect net earnings in the fiscal 2021 period. $118 million ($0.91 per diluted share) $304 million ($2.76 per diluted share) Other adjustments include:   (a) add-back of amortization of intangible assets of $198.6 million and $149.8 million in the 2022 and 2021 periods, respectively, (b) the removal of $34.7 million in fair value gains and (losses) related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to ECR sale in the 2021 period, (c) the removal of the fair value gains and (losses) for the Company's investment in C3.ai, Inc. ("C3") of $49.6 million in the 2021 period, (d) the removal of $29.1 million in additional income tax expense attributable to tax rate increases in the UK during in 2021, (e) applicable noncontrolling interests impacts for the above adjustment items and (f) associated income tax expense adjustments for the above pre-tax adjustment items. $135 million ($1.04 per diluted share) $54 million ($0.41 per diluted share) Adjusted Net Earnings from Continuing Operations and Adjusted EPS from Continuing Operations $897 million ($6.93 per diluted share) $826 million ($6.29 per diluted share) (note: earnings per share amounts may not add due to rounding)   The Company's U.S. GAAP effective tax rate for continuing operations is 18% for the fiscal year 2022 and fiscal year 2022 adjusted earnings per share from continuing operations reflects a 21% adjusted effective tax rate. Jacobs is hosting a conference call at 10:00 A.M. ET on Monday November 21, 2022, which will be webcast live at www.jacobs.com. About Jacobs At Jacobs, we're challenging today to reinvent tomorrow by solving the world's most critical problems for thriving cities, resilient environments, mission-critical outcomes, operational advancement, scientific discovery and cutting-edge manufacturing, turning abstract ideas into realities that transform the world for good. With approximately $15 billion in annual revenue and a talent force of approximately 60,000, Jacobs provides a full spectrum of professional services including consulting, technical, scientific and project delivery for the government and private sectors. Visit jacobs.com and connect with Jacobs on LinkedIn, Twitter,  Facebook and Instagram. Forward-Looking Statements Certain statements contained in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that do not directly relate to any historical or current fact. When used herein, words such as "expects," "anticipates," "believes," "seeks," "estimates," "plans," "intends," "future," "will," "would," "could," "can," "may," and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding our expectations as to our future growth, prospects, financial outlook and business strategy for future fiscal years, including our expectations for our fiscal 2023 adjusted EBITDA and adjusted EPS, under different FX rate scenarios, as well as our expectations for the foreign currency translation impact on net revenue. You should not place undue reliance on these forward-looking statements. Although such statements are based on management's current estimates and expectations, and/or currently available competitive, financial, and economic data, forward-looking statements are inherently uncertain, and you should not place undue reliance on such statements as actual results may differ materially. We caution the reader that there are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements. Such factors include our ability to execute on our three-year corporate strategy, including our ability to invest in the tools needed to implement our strategy, competition from existing and future competitors in our target markets, our ability to achieve the cost-savings and synergies contemplated by our recent acquisitions within the expected time frames or to achieve them fully and to successfully integrate acquired businesses while retaining key personnel, the impact of the COVID-19 pandemic, and any resulting economic downturn on our results, prospects and opportunities, measures or restrictions imposed by governments and health officials in response to the pandemic, the timing of the award of projects and funding under the Infrastructure Investment and Jobs Act, financial market risks that may affect the Company's funding obligations under defined benefit pension and postretirement plans, as well as general economic conditions, including inflation and the actions taken by monetary authorities in response to inflation, changes in interest rates, and foreign currency exchange rates, changes in capital markets, the possibility of a recession, and geopolitical events and conflicts among others. The impact of such matters includes, but is not limited to, the possible reduction in demand for certain of our product solutions and services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints or changes to governmental budgetary priorities; the inability of our clients to meet their payment obligations in a timely manner or at all; potential issues and risks related to a significant portion of our employees working remotely; illness, travel restrictions and other workforce disruptions that have and could continue to negatively affect our supply chain and our ability to timely and satisfactorily complete our clients' projects; difficulties associated with retaining and hiring additional employees; and the inability of governments in certain of the countries in which we operate to effectively mitigate the financial or other impacts of the COVID-19 pandemic on their economies and workforces and our operations therein. The foregoing factors and potential future developments are inherently uncertain, unpredictable and, in many cases, beyond our control. For a description of these and additional factors that may occur that could cause actual results to differ from our forward-looking statements see our Annual Report on Form 10-K for the year ended September 30, 2022, and in particular the discussions contained therein under Item 1 - Business; Item 1A - Risk Factors; Item 3 - Legal Proceedings; and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, as well as the Company's other filings with the Securities and Exchange Commission. The Company is not under any duty to update any of the forward-looking statements after the date of this press release to conform to actual results, except as required by applicable law.    Financial Highlights: Results of Operations (in thousands, except per-share data) (Quarterly data unaudited):   For the Three Months Ended For the Years Ended September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021 Revenues $   3,881,048 $   3,586,487 $ 14,922,825 $ 14,092,632 Direct cost of contracts (3,045,367) (2,758,723) (11,595,785) (11,048,860) Gross profit 835,681 827,764 3,327,040 3,043,772 Selling, general and administrative expenses (527,141) (576,248) (2,409,190) (2,355,683) Operating Profit 308,540 251,516 917,850 688,089 Other (Expense) Income: Interest income 1,565 770 4,489 3,503 Interest expense (32,695) (19,926) (100,246) (72,714) Miscellaneous income (expense), net 2,452 (61,981) 54,254 76,724 Total other (expense) income, net (28,678) (81,137) (41,503) 7,513 Earnings From Continuing Operations Before Taxes 279,862 170,379 876,347 695,602 Income Tax Expense from Continuing Operations (39,358) (99,344) (160,903) (274,781) Net Earnings of the Group from Continuing Operations 240,504 71,035 715,444 420,821 Net Earnings (Loss) of the Group from Discontinued Operations 544 (1,682) (32) 10,008 Net Earnings of the Group 241,048 69,353 715,412 430,829 Net Earnings Attributable to Noncontrolling Interests from Continuing Operations (8,502) (9,847) (36,788) (39,213) Net (Earnings) Loss Attributable to Redeemable Noncontrolling interests (7,339) (16,362) (34,585) 85,414 Net Earnings Attributable to Jacobs from Continuing Operations 224,663 44,826 644,071 467,022 Net Earnings Attributable to Jacobs $     225,207 $       43,144 $     644,039 $     477,030 Net Earnings Per Share: Basic Net Earnings from Continuing Operations Per Share $          1.76 $          0.34 $          5.01 $          3.15 Basic Net (Loss) Earnings from Discontinued Operations Per Share $             — $         (0.01) $             — $          0.08 Basic Earnings Per Share $          1.76 $          0.33 $          5.01 $          3.22 Diluted Net Earnings from Continuing Operations Per Share $          1.75 $          0.34 $          4.98 $          3.12 Diluted Net (Loss) Earnings from Discontinued Operations Per Share $             — $         (0.01) $             — $          0.08 Diluted Earnings Per Share $          1.75 $          0.33 $          4.98 $          3.20   Segment Information (in thousands) (Quarterly data and Non-GAAP unaudited):   For the Three Months Ended For the Years Ended September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021 Revenues from External Customers: Critical Mission Solutions $    1,387,702 $    1,264,102 $    5,233,629 $    5,087,052 People & Places Solutions 2,238,994 2,049,091 8,569,900 8,378,179 Pass Through Revenue (647,265) (544,435) (2,318,732) (2,381,785) People & Places Solutions Net Revenue $    1,591,729 $    1,504,656 $    6,251,168 $    5,996,394 PA Consulting $      254,352 $      273,294 $    1,119,296 $      627,401               Total Revenue $    3,881,048 $    3,586,487 $  14,922,825 $   14,092,632  Net Revenue $    3,233,783 $    3,042,052 $  12,604,093 $   11,710,847   For the Three Months Ended For the Years Ended September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021 Segment Operating Profit: Critical Mission Solutions $       95,343 $      115,028 $      424,385 $      447,161 People & Places Solutions (1) 230,681 176,726 823,564 780,380 PA Consulting 49,375 66,363 232,225 151,071 Total Segment Operating Profit 375,399 358,117 1,480,174 1,378,612 Other Corporate Expenses (2) (79,961) (101,932) (364,440) (340,129) Restructuring, Other and Recoveries (Charges) (3) 13,102 (4,669) (197,884) (350,394) Total U.S. GAAP Operating Profit 308,540 251,516 917,850 688,089 Total Other (Expense) Income, Net (4) (28,678) (81,137) (41,503) 7,513 Earnings from Continuing Operations Before Taxes $     279,862 $     170,379 $     876,347 $      695,602   (1) Includes $19.5 million, net, in charges related to a legal settlement for the three-month period and year ended October 1, 2021. (2) Other corporate expenses includes intangibles amortization of $51.7 million and $46.5 million for the three-month periods ended September 30, 2022 and October 1, 2021, respectively, and $198.6 million and $149.8 million for the years ended September 30, 2022 and October 1, 2021, respectively. (3) Included in the year ended September 30, 2022 is $91.3 million pre-tax related to the final settlement of the Legacy CH2M Matter, net of previously recorded reserves, approximately $27 million in third party recoveries was recorded as receivables reducing SG&A, and $78.3 million of real estate impairment charges. Included in the year ended October 1, 2021 is $297.8 million of costs incurred in connection with the investment in PA Consulting, in part classified as compensation costs. (4) The year ended September 30, 2022 included a $13.9 million gain related to a cost method investment sold during the period and a gain of $8.7 million related to lease terminations. The three-month period and year ended October 1, 2021 included $(67.5) million and $34.7 million, respectively, in fair value adjustments related to our investment in Worley stock (net of Worley stock dividends) and certain foreign currency revaluations relating to the ECR sale. The year ended October 1, 2021 included $49.6 million in fair value adjustments related to our investment in C3 stock, both of these investments sold in fiscal 2021. The year ended October 1, 2021 also included $38.6 million related to impairment of our AWE ML investment. Additionally, the increase in net interest expense year over year is primarily due to the higher levels of debt outstanding due to the funding of the StreetLight and BlackLynx acquisitions and increased borrowings associated with the payment of the Legacy CH2M Matter settlement in the current year, in addition to higher interest rates.   Balance Sheet (in thousands): September 30, 2022 October 1, 2021 ASSETS Current Assets: Cash and cash equivalents $         1,140,479 $      1,014,249 Receivables and contract assets.....»»

Category: earningsSource: benzingaNov 21st, 2022

Can Synchrony (SYF) CareCredit Enrich Medofficedirect Clients?

Synchrony Financial's (SYF) partnership with Medofficedirect comes at a time when the online medical supplies market is rapidly growing. Synchrony Financial SYF recently announced that the company partnered with HealthLynked Corp. subsidiary, Medofficedirect, to offer individual and medical practice customers different financing options. The move is expected to enable consumers to utilize SYF's CareCredit healthcare credit card to purchase medical supplies.Given the current high inflation environment, patients are avoiding big medical purchases, which can put a dent in their pockets. The latest deal is expected to enable patients and medical practitioners purchase home medical equipment and medical supplies at a discounted rate. Different flexible financing solutions will likely help their healthcare journey.The partnership comes at a time when the online medical supplies market is rapidly growing. Synchrony Financial’s CareCredit platform also holds ample growth potential. The company is focused on expanding this business with attention to the health systems. CareCredit is accepted at variety of locations across the globe.SYF takes different steps to expand its CareCredit platform capabilities, like the acquisition of Pets Best insurance. To boost the CareCredit network, it made the CareCredit patient financing app available in the Epic App Orchard. CareCredit also joined forces with Thrive Pet Healthcare, thereby broadening its network. It also expanded its partnership with AdventHealth to provide CareCredit as a primary patient financing solution. The latest deal with Medofficedirect is another feather in SYF’s cap.Moves like this are expected to boost Synchrony Financial’s Health & Wellness Sales Platform’s performance. Third-quarter purchase volume in the platform advanced 16.2% year over year to $3,514 million, highlighting broad-based growth across active accounts and increased spending in its dental and pet categories. Interest and fees on loans increased 20.3% year over year to $706 million.Price PerformancesShares of Synchrony Financial have declined 25.9% in the past year compared with the industry’s 24% fall.Image Source: Zacks Investment ResearchZacks Rank & Key PicksSynchrony Financial currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader finance space are American Financial Group, Inc. AFG, StoneX Group Inc. SNEX and NerdWallet, Inc. NRDS, all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Headquartered in Cincinnati, OH, American Financial is a major insurance holding company. The Zacks Consensus Estimate for AFG’s 2022 bottom line is pegged at $11.66 per share, which witnessed one upward estimate revision in the past 30 days against none in the opposite direction.New York-based StoneX Group works as a global financial services network. The Zacks Consensus Estimate for SNEX’s current year bottom line is pegged at $9.52 per share, indicating 54.8% year-over-year growth.Based in San Francisco, NerdWallet is a digital platform operator connecting individuals and businesses with financial products suppliers. The Zacks Consensus Estimate for NRDS’ 2022 earnings signals a 74.4% improvement from a year ago. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock And 4 Runners UpWant 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 American Financial Group, Inc. (AFG): Free Stock Analysis Report Synchrony Financial (SYF): Free Stock Analysis Report StoneX Group Inc. (SNEX): Free Stock Analysis Report NerdWallet, Inc. (NRDS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 21st, 2022