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Fashion boutique Bitter Grace is seeing sweet success amid pandemic recovery

Bitter Grace is a boutique and growing fashion brand — a lifestyle company “that helps women elevate their self image,” founder Anne Marie Johnson said......»»

Category: topSource: bizjournalsNov 25th, 2021

Futures Rise Ahead Of Deluge Of Big Tech Earnings

Futures Rise Ahead Of Deluge Of Big Tech Earnings One day after Goldman doubled down on its call for a market meltup into year-end, futures on the Nasdaq 100 edged higher, while contracts on the S&P 500 were modestly higher on Monday, approaching record highs again as investors braced for a flood of earnings (164 of 500 S&P companies report this week) while weighing rising inflation concerns, Covid-19 risks and China’s deteriorating outlook (Goldman slashed China's 2022 GDP to 5.2% from 5.6% overnight). The FOMC enters quiet period ahead of next week's FOMC meeting, which means no Fed speakers as attention shifts to economic data and corporate earnings. At 745 a.m. ET, Dow e-minis were up 3 points, or 0.01%, S&P 500 e-minis were up 4.25 points, or 0.1%, and Nasdaq 100 e-minis were up 36.25 points, or 0.25%. Bitcoin bounced back over $63,000 after sliding below $60,000 over the weekend, the 10-year US Treasury yield rose and the dollar also rose after Federal Reserve Chair Jerome Powell flagged that inflation could stay higher for longer, fueling investor concern that sticky price increases may force policy makers to raise borrowing costs. Global markets have remained resilient despite risks from price pressures stoked by supply-chain bottlenecks and higher energy costs. On Sunday, Janet Yellen was among those counseling the inflation situation reflects temporary pain that will ease in the second half of 2022 even as Twitter CEO Jack Dorsey warned hyperinflation is coming. Investors are wary that tighter monetary policy to keep inflation in check will stir volatility “Inflation concerns will continue to dominate markets this year as the price of crude oil remains elevated,” while “the pandemic remains a central concern,” said Siobhan Redford, an analyst at FirstRand Bank Ltd. in Johannesburg. “This will add further complexity to the already difficult decisions facing policy makers around the world.” All of FAAMG - Facebook, Microsoft, Apple, Alphabet and Amazon.com - are set to report their results later this week. The companies shares, which collectively account for over 22% of the weighting in the S&P 500, were mixed in trading before the bell. Facebook shares fell in premarket trading, extending six weeks of declines, after Bloomberg reported that the social-media company is struggling to attract younger users and that employees are concerned over the spread of misinformation and hate speech on its platform. The company is scheduled to report quarterly results after the market closes. “After Snap got an Apple caught in its throat, markets will have an itchy trigger finger over the sell button if the social network says the same,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA. “Additionally, this week, it is a FAANG-sters paradise ... that decides whether the U.S. earnings season party continues, before the FOMC (Federal Open Market Committee) reasserts its dominance next week.” PayPal jumped 6.4% as the company said it wasn’t currently pursuing an acquisition of Pinterest, ending days of speculation over a potential $45 billion deal. Shares of Pinterest plunged 12.5%. Tesla gained 2.2% in premarket trading after Morgan Stanley raised its price target for the stock by a third, citing “extraordinary” sales growth. The stock then surged to new all time highs after Bloomberg reported that Hertz placed an order for 100,000 Teslas in the first step of an ambitious plan to electrify its rental-car fleet. Oil firms including Chevron Corp and Exxon Mobil rose about 0.5% each, tracking Brent crude prices to three-year high. Cryptocurrency-exposed stocks gain in premarket trading as Bitcoin climbs back above the $63,000 per token level after slipping from its record high last week. Crypto-linked stocks that are climbing in premarket include Bakkt +6.6%, Hive Blockchain +3.9%, Hut 8 Mining +2.8%, Riot Blockchain +2.2%, MicroStrategy +2.3%, Marathon Digital +2.8%, Coinbase +1.9%, Silvergate +1.8%, Bit Digital +1.2% and Mogo +0.8% Strong earnings reports helped lift the S&P 500 and the Dow to record highs last week, with the benchmark index rising 5.5% so far in October to recoup all of the losses suffered last month.  However, market participants are looking beyond the impressive earnings numbers with a focus on how companies mitigate supply chain bottlenecks, labor shortages and inflationary pressures to sustain growth. Analysts expect S&P 500 earnings to grow 34.8% year-on-year for the third quarter, according to data from Refinitiv. On the economic data front, readings on U.S. third-quarter GDP - the Federal Reserve’s favored inflation gauge, the core PCE price index and consumer confidence data will be released later this week. In Europe, mining companies and banks gained but the telecommunications and industrial goods and services sectors declined, leaving the Stoxx 600 index little changed. Banks rose on HSBC’s bright outlook. Spain’s Banco de Sabadell SA jumped more than 5% after rejecting an offer for its U.K. unit. Telecoms and industrials were the biggest losers. Volvo Car slashed its initial public offering by a fifth, making it the latest in a string of European companies to pull back from equity markets roiled by soaring energy costs and persistent supply chain delay. Here are some of the biggest European movers today: Banca Monte dei Paschi slides as much as 9.5% after the Italian government and UniCredit ended talks over the sale of the lender. Exor shares gain as much as 5.6% in Milan trading to the highest level on record after a report that the Agnelli family’s holding co. revived talks with Covea for the sale of Exor’s reinsurance unit PartnerRe. Banco Sabadell jumps as much as 5.6% after it said it rejected an offer for its TSB Bank unit in the U.K. from Co-operative Bank. SSAB rises as much as 5.2% after the Swedish steelmaker posted 3Q earnings well above analysts expectations. Handelsbanken analyst Gustaf Schwerin said the figures were “very strong.” Weir Group rises as much as 3.7% after Exane BNP Paribas raised the stock to outperform. Analyst Bruno Gjani says the stock’s underperformance YTD provides a “compelling entry opportunity.” Darktrace drops as much as 26% after Peel Hunt initiated coverage of the cybersecurity firm with a sell rating and 473p price target that implies about 50% downside to Friday’s close. Nordic Semiconductor declines as much as 8.8% after ABG Sundal Collier downgraded to hold. German business morale deteriorated for the fourth month running in October as supply bottlenecks in manufacturing, a spike in energy prices and rising COVID-19 infections are slowing the pace of recovery in Europe’s largest economy from the pandemic. The Ifo institute said on Monday that its business climate index fell to 97.7 from an upwardly revised 98.9 in September. This was the lowest reading since April and undershot the 97.9 consensus forecast in a Reuters poll. “Supply problems are giving businesses headaches,” Ifo President Clemens Fuest said, adding that capacity utilisation in manufacturing was falling. “Sand in the wheels of the German economy is hampering recovery.” The weaker-than-expected business sentiment survey was followed by a grim outlook from Germany’s central bank, which said in its monthly report that economic growth was likely to slow sharply in the fourth quarter. The Bundesbank added that full-year growth was now likely to be “significantly” below its 3.7% prediction made in June. Earlier in Asia, stocks dipped in Japan and were mixed in China, where the central bank boosted a daily liquidity injection and officials expanded a property-tax trial. Signs that it would take at least five years before authorities impose any nationwide property tax bolstered some industrial metals.  Asia-Pac equities kicked off the week with a downside bias as the region adopted a similar lead from Friday’s Wall Street session, although sentiment marginally improved. The ASX 200 (+0.3%) was kept afloat by its energy sector as oil prices drifted higher, whilst index heavyweight Telstra was boosted after partnering with the Australian government to acquire Digicel Pacific in USD 1.6bln deal - for which Telstra contributed only USD 270mln. The Nikkei 225 (-0.7%) opened lower by around 1% with Softbank and Fast Retailing the biggest losers, although the index initially trimmed losses as the JPY remained on the backfoot. The Hang Seng (+0.1%) and Shanghai Comp (+0.8%) were mixed at the open, with the latter supported by a net PBoC injection of CNY 190bln, while the Hang Seng Mainland Properties Index (-2.9%) was pressured by reports China's State Council is to expand the property-tax reform trials to more areas. On the flip side, China Evergrande and Evergrande New Energy Vehicle opened higher after the chairman said the group is to complete its transition to the NEV industry from real estate within 10 years. Finally, 10yr JGBs trade subdued and in contrast to its US and German counterparts. In FX, the Bloomberg Dollar Spot Index was little changed after earlier inching lower to touch the weakest level since Sept. 27; the greenback was mixed against its Group-of-10 peers with commodity currencies performing best, led by the Australian dollar and Norwegian krone. The euro hovered around $1.1650 even as German business confidence took another hit in October as global supply logjams damp momentum in the manufacturing-heavy economy. Ifo business confidence fell to 97.7 in October, from 98.9 in the prior month. The pound inched up, rising alongside other risk- sensitive Group-of-10 currencies, having trailed all its peers on Friday after Brexit risks reared their head late in the London session. A quiet week for U.K. data turns focus to the upcoming government budget. The Australian dollar rose against all its Group-of-10 peers, tracking commodity gains, with market sentiment also boosted by the People’s Bank of China’s move to inject additional cash into the banking system. The yen declined after rising for three consecutive days; Economists expect the BoJ to keep its policy rate unchanged Thursday. Turkey’s lira fell to a record low as the country’s latest diplomatic spat gave traders another reason to sell the struggling currency. Day traders in Japan have started trimming their bullish wagers on the Turkish lira, with forced liquidation a growing threat as the currency tumbles. In rates, Treasuries were under pressure again, with the yield curve steeper as US trading begins Monday. They’re retracing a portion of Friday’s swift flattening, which occurred after Fed Chair Powell said rising inflation rates would draw a response from the central bank. 5s30s curve is back to ~89bp vs Friday’s low 85bp, within half a basis point of the lowest level in more than a year. Long-end yields are higher by as much as 3bp, 10-year by 2.7bp at 1.66%, widening vs most developed-market yields; yields across the curve remain inside Friday’s ranges, which included higher 2- and 5-year yields since 1Q 2020. Curve-steepening advanced after an apparent wager via futures blocks. In commodities, Brent oil rallied above $86 a barrel after Saudi Arabia urged caution in boosting supply. Gold rose for a fifth day, the longest run of gains since July, as risks around higher-for-longer inflation bolstered the metal’s appeal. Facebook will report its third quarter results after the market today, followed by Alphabet, Microsoft, Apple and Amazon later in the week.  On the economic data front, readings on U.S. third-quarter GDP - the Federal Reserve’s favored inflation gauge, the core PCE price index and consumer confidence data will be released later this week. Top Overnight News from Bloomberg S&P 500 futures up 0.1% to 4,542.25 STOXX Europe 600 little changed at 472.03 MXAP little changed at 200.13 MXAPJ up 0.1% to 661.46 Nikkei down 0.7% to 28,600.41 Topix down 0.3% to 1,995.42 Hang Seng Index little changed at 26,132.03 Shanghai Composite up 0.8% to 3,609.86 Sensex up 0.4% to 61,038.76 Australia S&P/ASX 200 up 0.3% to 7,441.00 Kospi up 0.5% to 3,020.54 Brent Futures up 0.7% to $86.14/bbl Gold spot up 0.4% to $1,800.45 U.S. Dollar Index down 0.10% to 93.55 Euro up 0.1% to $1.1655 Top Overnight News from Bloomberg U.S. Treasury Secretary Janet Yellen defended Federal Reserve Chair Jerome Powell’s record on regulating the financial system, which has been a target of criticism from progressive Democrats arguing he shouldn’t get a new term. Yellen said she expects price increases to remain high through the first half of 2022, but rejected criticism that the U.S. risks losing control of inflation. Speaker Nancy Pelosi opened the door to Democrats using a special budget tool to raise the U.S. debt ceiling without the support of Senate Republicans, whose votes would otherwise be needed to end a filibuster on the increase. President Joe Biden and fellow Democrats are racing to reach agreement on a scaled-back version of his economic agenda, with a self-imposed deadline and his departure later this week for summits in Europe intensifying pressure on negotiations. Bundesbank chief Jens Weidmann’s surprise announcement last week that he will leave on Dec. 31 has hit Berlin at a sensitive time, with Chancellor Angela Merkel currently running only a caretaker administration in the aftermath of an election whose outcome is likely to remove her CDU party from power. Some holders of an Evergrande bond on which the embattled developer had missed a coupon deadline last month received the interest before the end of a grace period Saturday, according to people familiar with the matter. A more detailed look at global markets courtesy of Newsquawk Asia-Pac equities kicked off the week with a downside bias as the region adopted a similar lead from Friday’s Wall Street session, although sentiment marginally improved with the region now mixed heading into the European open. US equity futures overnight opened trade with a mild negative tilt before drifting higher, with a broad-based performance experienced across the Stateside contracts, whilst European equity contracts are marginally firmer. Back to APAC, the ASX 200 (+0.3%) was kept afloat by its energy sector as oil prices drifted higher, whilst index heavyweight Telstra was boosted after partnering with the Australian government to acquire Digicel Pacific in USD 1.6bln deal - for which Telstra contributed only USD 270mln. The Nikkei 225 (-0.7%) opened lower by around 1% with Softbank and Fast Retailing the biggest losers, although the index initially trimmed losses as the JPY remained on the backfoot. The Hang Seng (+0.1%) and Shanghai Comp (+0.8%) were mixed at the open, with the latter supported by a net PBoC injection of CNY 190bln, whilst the Hang Seng Mainland Properties Index (-2.9%) was pressured by reports China's State Council is to expand the property-tax reform trials to more areas. On the flip side, China Evergrande and Evergrande New Energy Vehicle opened higher after the chairman said the group is to complete its transition to the NEV industry from real estate within 10 years. Finally, 10yr JGBs trade subdued and in contrast to its US and German counterparts. Top Asian News Xi Takes Veiled Swipe at U.S. as China Marks 50 Years at UN Hong Kong Convicts Second Person Under National Security Law Gold Extends Gain as Inflation Risks and Virus Concerns Persist Amnesty to Quit Hong Kong Citing Fears Under Security Law A tentative start to the week for European equities (Stoxx 600 U/C) as stocks struggle to find direction. On the macro front, the latest IFO report from Germany was mixed, with commentary from IFO downbeat, noting that Germany's economy faces an uncomfortable autumn as supply chain problems were causing trouble for companies, and production capacities were falling. The overnight session was a mixed bag with the Shanghai Composite (+0.8%) supported by a liquidity injection from the PBoC whilst the Hang Seng Mainland Properties Index (-2.9%) was pressured by reports China's State Council is to expand the property-tax reform trials to more areas. Stateside, US futures are marginally firmer with newsflow in the US in part, focused on events on Capitol Hill with CNN reporting that the goal among Democratic leaders is to have a vote Wednesday or Thursday on the infrastructure package. Note, the Fed is currently observing its blackout period ahead of the November meeting. From an earnings perspective, large-cap tech earnings dominate the slate for the week with the likes of Facebook (FB), Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN) all due to report. Back to Europe, sectors are somewhat mixed as Basic Resources is the marked outperformer amid upside in underlying commodity prices. It’s been a busy morning for the Banking sector as HSBC (+1%) reported a 74% increase in Q3 earnings, whilst Credit Suisse (+0.7%) is reportedly mulling the sale of its asset management unit. Less encouragingly for the sector, UniCredit (-0.5%) and BMPS (-3.2%) shares are lower after negations on a rescue plan for BMPS have ended without an agreement. Finally, Airbus (-1.2%) and Safran (-2.3%) sit at the foot of the CAC after reports suggesting that the CEO's of Avolon and AerCap have, in recent weeks, written to the Airbus CEO expressing their concerns that the market will not support Airbus' aggressive plans to increase the pace of production; subsequently, Airbus has rejected their proposal, according to sources. Top European News The Man Behind Erdogan’s Worst Spat With the West: QuickTake Weidmann Succession Suspense May Last for Weeks on Berlin Talks Cat Rock Capital Urges Just Eat Takeaway to Sell GrubHub European Gas Jumps Most in a Week as Russian Supplies Slump In FX, the Dollar is somewhat mixed vs major counterparts and the index is jobbing around 93.500 as a result in rather aimless fashion at the start of a typically quiet start to the new week awaiting fresh impetus or clearer direction that is highly unlikely to come from September’s national activity index or October’s Dallas Fed business survey. Instead, the Greenback appears to be reliant on overall risk sentiment, US Treasury yields on an outright and relative basis along with moves elsewhere and technical impulses as the DXY roams within a 93.775-483 range. TRY - Lira losses continue to stack up, and the latest swoon to circa 9.8545 against the Buck came on the back of Turkish President Erdogan’s decision to declare 10 ambassadors persona non grata status due to their countries’ support for a jailed activist, including diplomats from the US, France and Germany. However, Usd/Try has actually pared some gains irrespective of a deterioration in manufacturing confidence and this may be partly psychological given that 10.0000 is looming with little in the way of chart resistance ahead of the big round number. AUD/NZD - Iron ore prices are helping the Aussie overcome rather mixed news on the COVID-19 front, as the state of Victoria is on course to open up further from Friday, but new cases in NSW rose by almost 300 for the second consecutive day on Sunday. Nevertheless, Aud/Usd has had another look at offers around 0.7500 and Aud/Nzd is approaching 1.0500 even though Westpac sees near term downside prospects for the cross while maintaining its 1.0600 year end projection, as Nzd/Usd continues to encounter resistance and supply into 0.7200. GBP/CAD - Sterling has regrouped after losing some of its hawkish BoE momentum and perhaps the Pound is benefiting from the latest rebound in Brent prices towards Usd 86.50/br on top of reports that the first round of talks between the UK and EU on NI Protocol were constructive, while the Loonie is up alongside WTI that has been adobe Usd 84.50 and awaiting the BoC on Wednesday. Cable is around 1.3750 after fading into 1.3800, Eur/Gbp is hovering above 0.8450 and Usd/Cad is pivoting 1.2350. EUR/JPY/CHF - The Euro has bounced from the lower half of 1.1600-1.1700 parameters and looks enshrined by a key Fib just beyond the current high (1.1670 represents a 38.2% retracement of the reversal from September peak to October trough) and decent option expiry interest under the low (1 bn between 1.1615-00), with little fundamental direction coming from a very inconclusive German Ifo survey - see 9.00BST post on the Headline Feed for the main metrics and accompanying comments from the institute. Elsewhere, the Yen is hedging bets prior to the BoJ within a 113.83-42 band against the Dollar and the Franc seems to have taken heed of another rise in weekly Swiss sight deposits at domestic banks as Usd/Chf climbs from circa 0.9150 towards 0.9200 and Eur/Chf trades nearer the top of a 1.0692-65 corridor. SCANDI/EM/PM - Firm oil prices are also underpinning the Nok, Rub and Mxn to various extents, while the Zar looks content with Gold’s advance on Usd 1800/oz and the Cnh/Cny have derived traction via a firmer onshore PBoC midpoint fix, a net Yuan 190 bn 7 day liquidity injection and the fact that China’s Evergrande has restarted work on more than 10 projects having made more interest payments on bonds in time to meet 30 day grace period deadlines. In commodities, a modestly firmer start to the week for the crude complex though action has been contained and rangebound throughout the European session after a modest grinding bid was seen in APAC hours. Currently, the benchmarks post upside of circa USD 0.30/bbl amid relatively minimal newsflow. The most pertinent update to watch stems from China, where the National Health Commission spokesperson said China's current COVID outbreak covers 11 provinces and expects the number of new cases to keep rising; additionally, the number of affected provinces could increase. Separately, but on COVID, they are some reports that the UK Government is paving the wat for ‘plan B’ measures in England, while this are primarily ‘softer’ restrictions a return of work-from-home guidance could hamper the demand-side of the equation. Note, further reports indicate this is not on the cards for this week and there are some indications that we could see, if necessary, such an announcement after the COP26 summit in Scotland ends on November 12th. Elsewhere, and commentary to keep an eye on for alterations given the above factors, Goldman Sachs writes that the persistence of the global oil demand recovery being on course to hit pre-COVID levels would present an upside risk to its end-2021 USD 90/bbl Brent price target. Moving to metals, spot gold and silver are firmer but reside within tight ranges of just over USD 10/oz in gold, for instance. In a similar vein to crude, newsflow explicitly for metals has been minimal but it is of course attentive to the COVID-19 situation while coal futures were hampered overnight as China’s State Planner announced it is to increase credit supervision in the area. US Event Calendar 8:30am: Sept. Chicago Fed Nat Activity Index, est. 0.20, prior 0.29 10:30am: Oct. Dallas Fed Manf. Activity, est. 6.2, prior 4.6 DB's Jim Reid concludes the overnight wrap Well I saw Frozen twice this weekend. Once in the flesh up in London in the musical version and once on TV on Sunday at the heart of Manchester United’s defence which was breached 5 (five) times by Liverpool without reply. Regular readers can guess which I enjoyed the most. Anyway I’ll let it go for now and prepare myself for a bumper week ahead for markets. This week we have decisions from the ECB and the Bank of Japan (both Thursday) even if the Fed will be on mute as they hit their blackout period ahead of the likely taper decision next week. Inflation will obviously remain in the spotlight too as we get the October flash estimate for the Euro Area (Friday) with some regional numbers like German (Thursday) before. In addition, the Q3 earnings season will ramp up further, with 165 companies in the S&P 500 reporting, including Facebook (today), Microsoft, and Alphabet (both tomorrow), and Apple and Amazon (Thursday). Elsewhere, the UK government will be announcing their latest budget and spending review (Wednesday), Covid will remain in the headlines in light of the growing number of cases in many countries, and we’ll get the first look at Q3 GDP growth in the US (Thursday) and the Euro Area (Friday). Starting with those central bank meetings, we’re about to enter a couple of important weeks with the ECB and BoJ meeting this week, before the Fed and the BoE follow the week after. Market anticipation is much higher for the latter two though. So by comparison, the ECB and the BoJ are likely to be somewhat quieter, and our European economists write in their preview (link here) that this Governing Council meeting is likely to be a staging ground ahead of wide-ranging policy decisions in December, and will therefore be about tone and expectations management. One thing to keep an eye on in particular will be what is said about the recent surge in natural gas prices, as well as if ECB President Lagarde challenges the market pricing on liftoff as inconsistent with their inflation forecasts and new rates guidance. 5yr5yr Euro inflation swaps hit 2% for the first time on Friday so if the market is to be believed the ECB has achieved long-term success in hitting its mandate. With regards to the meeting, we think there’ll be more action in December where our economists’ baseline is that there’ll be confirmation that PEPP purchases will end in March 2022. See the BoJ preview here. Inflation will remain heavily in focus for markets over the week ahead, with recent days having seen investor expectations of future inflation rise to fresh multi-year highs. See the week in review at the end for more details. This week one of the main highlights will be the flash Euro Area CPI reading for October, which is out on Friday. Last month, CPI rose to 3.4%, which is the highest inflation has been since 2008, and this time around our economists are expecting a further increase in the measure to 3.8%. However, their latest forecast update (link here) expects that we’ll see the peak of 3.9% in November, before inflation starts to head back down again. The other main data highlight will come from the Q3 GDP figures, with releases for both the US and the Euro Area. For the US on Thursday the Atlanta Fed tracker has now hit a low of only +0.53%. DB is at 2.3% with consensus at 2.8%. Earnings season really ramps up this week, with the highlights including some of the megacap tech firms, and a total of 165 companies in the S&P 500 will be reporting. Among the firms to watch out for include Facebook and HSBC today. Then tomorrow, we’ll hear from Microsoft, Alphabet, Visa, Eli Lilly, Novartis, Texas Instruments, UPS, General Electric, UBS and Twitter. On Wednesday, releases will include Thermo Fisher Scientific, Coca-Cola, McDonald’s, Boeing, General Motors, Santander and Ford. Thursday then sees reports from Apple, Amazon, Mastercard, Comcast, Merck, Royal Dutch Shell, Linde, Volkswagen, Starbucks, Sanofi, Caterpillar, Lloyds Banking Group and Samsung. Finally on Friday, we’ll hear from ExxonMobil, Chevron, AbbVie, Charter Communications, Daimler, BNP Paribas, Aon and NatWest Group. Here in the UK, the main highlight next week will be the government’s Autumn Budget on Wednesday, with the Office for Budget Responsibility also set to release their latest Economic and Fiscal Outlook alongside that. In addition to the budget, the government will also be outlining the latest Spending Review, which will cover public spending priorities over the next 3 years. Our UK economists have released a preview of the event (link here), where they write that 2021-22 borrowing is expected to be revised down by £60bn, and they expect day-to-day spending will follow the path set out at the Spring Budget. They’re also expecting Chancellor Sunak will outline new fiscal rules. Finally, the pandemic is gaining increasing attention from investors again, with a number of countries having moved to toughen up restrictions in light of rising cases. This week, something to look out for will be the US FDA’s advisory committee meeting tomorrow, where they’ll be discussing Pfizer’s request for an emergency use authorization for its vaccine on 5-11 year olds. The CDC’s advisory committee is then holding a meeting on November 2 and 3 the following week, and the White House have said that if it’s authorised then the vaccine would be made available at over 25,000 paediatricians’ offices and other primary care sites, as well as in pharmacies, and school and community-based clinics. The full day by day calendar is at the end as usual. Asian markets are mixed this morning so far, as the Shanghai Composite (+0.38%), Hang Seng (+0.09%) and the KOSPI (+0.30%) are edging higher, while the Nikkei (-0.85%) is down. The rise in Chinese markets comes despite the news of 38 new COVID-19 cases as well as an announcement of a lockdown affecting around 35,700 residents of a county in Inner Mongolia. As China is one of the last countries in the world to still adhere to strict containment measures, a major outbreak can deal a fresh blow to the domestic economy and further reinforce global supply chain issues. Elsewhere the Turkish Lira hit fresh record lows, and is down around -1.5% as we type after last week’s surprise interest rate cut and Saturday’s news that ambassadors from 10 countries, including the US, Germany and France, were no longer welcome in the country. S&P 500 futures (+0.06%) are around unchanged and 10yr US Treasury yields are back up c.1bp. Looking back on an eventful week now, and there was a marked increase in inflation expectations, which manifested itself in global breakevens hitting multi-year, if not all-time, highs. Starting with the all-time highs, US 5-year breakevens increased +14.9bps (-1.0bps Friday) to 2.90%, the highest level since 5-year TIPS have started trading, while 10-year breakevens increased +7.5bps (-0.7bps Friday) to 2.64%, their highest readings since 2005. 10-year breakevens in Germany increased +9.5 bps (+3.6bps Friday) to 1.91%, their highest since 2011, while in the UK 10-year breakevens increased +17.1 bps (+4.0bps Friday) to 4.19%, the highest level since 1996. Remarkable as these levels are, 5-year 5-year inflation swaps in the US, UK, and Euro Area finished the week at 2.63%, 4.00%, and 2.00%, multi-year highs for all of these measures. If you never thought you’d see the day that long term inflation expectations in Europe would hit 2% then this is a nice/nasty surprise. Overall, this suggests investors are pricing in the potential for inflation far into the future to be higher, in addition to responding to near-term stimulus and Covid reopening impacts. Crude oil prices also climbed to their highest levels since 2014, with Brent climbing +1.07% (+1.37% Friday) and WTI gaining +2.07% (+1.79% Friday). One area where there was some reprieve was in industrial metals. Copper decreased -4.81% (-1.24% Friday), but at $449.80, remains +10.10% higher month-to-date. Bitcoin also joined the all-time high club intraweek, and finished the week +2.28% higher (-3.08% Friday). It marked a seminal week for the crypto asset, which saw ETFs and options on said ETFs begin trading in the US. The inflationary sentiment coincided with market pricing of central bank rate hikes shifting earlier. 2-year yields in the US, UK, and Germany increased +5.9 bps (+0.1bps Friday), +8.0 bps (-4.7 bps Friday), and +4.0 bps (+0.9bps Friday) respectively. In fact, money markets are now placing slightly-better-than even odds that the MPC will raise Bank Rate as early as next week. Fed and ECB officials offered some push back against the aggressive policy path repricing, but BoE speakers seemed to confirm a hike next week was a legitimate possibility. Rounding out sovereign bonds, nominal 10-year yields increased +6.2 bps (-6.9bps Friday) in the US, +4.0 bps (-5.6bps Friday) in the UK, +6.2 bps (-0.3 bps Friday) in Germany, +6.0 bps (-0.1bpFriday) in France, and +8.1 bps (+0.8bps Friday) in Italy. Inflation expectations didn’t fall with the big rally in the US and U.K. but real rates rallied hard. The S&P 500 increased +1.64% over the week, but ended its 7-day winning streak after retreating on -0.11% Friday. On earnings, 117 S&P 500 companies have now reported third quarter earnings. Roughly 85% of companies have beat earnings expectations compared to the five-year average of 76%, while 74% of reporting companies have beat sales estimates. The aggregate earnings surprise is +13.05%, topping the 5-year average of +8.4%, while the sales surprise is +2.06%. Although a seemingly strong performance on the surface, our equity team, after taking a look under the hood in this note here, points out that a large part of the beats so far is due to loan-loss reserve releases by banks. Excluding those, the aggregate S&P 500 beat is running much closer to historical average, suggesting the headline beats have not been as broad based as they look at first glance. Congressional Democrats spent the week negotiating the next fiscal package, which is set to spend more than $1 trillion on social priorities key to the Biden administration. On Sunday, House Speaker Nancy Pelosi noted that 90% of the bill is agreed to and would be voted on before October was out. One of the key sticking points has been what offsetting revenue raising measures should be included in the final bill. As those details emerge, it should give us a better picture as to the ultimate additional fiscal impulse the new bill will provide. Finally, global services PMIs out last Friday expanded while manufacturing PMIs lagged. Readings across jurisdictions were consistent with supply chain issues continuing to impact activity. Tyler Durden Mon, 10/25/2021 - 08:09.....»»

Category: blogSource: zerohedgeOct 25th, 2021

Conagra (CAG) Benefits From Foodservice Recovery & Online Sales

Conagra (CAG) is gaining from recovery in the foodservice channel, growth in online sales and efforts to boost portfolio. However, input cost inflation is a concern. From shifting demand conditions and growth in e-commerce to ups and downs in outdoor dining, food companies encountered numerous changes in the pandemic. Thanks to vaccinations, food consumption and buying habits are normalizing now that restrictions have eased. Renowned food company Conagra Brands, Inc. CAG is gaining from recovery in the foodservice channel as individuals are spending more time outdoors. It is also been riding on growth in online sales and prudent efforts to boost portfolio, including innovations and buyouts. Such upsides have kept the company afloat amid tough year-over-year comparisons, divestitures and inflationary trends for key product inputs. Let’s delve deeper.Foodservice on Recovery TrackConagra is seeing recovery in the Foodservice business, as restaurant traffic is increasing with pandemic-led restrictions being lifted and higher outdoor movement. In first-quarter fiscal 2022, Foodservice segment sales moved up 20.9% year on year to $239.8 million, owing to a rise in organic sales. Notably, organic sales increased 21.7% and volumes were up 20.1%. Price/mix inched up 1.6%. The segment saw favorable comparisons with the last year’s drab Foodservice sales — caused by the initial pandemic impact. With a persistent rise in outdoor dining trends, the Foodservice business looks well placed.E-commerce Gains SheenConsumers’ inclination toward online ordering reached a new high during the pandemic. This factor has propelled several food companies to strengthen online capabilities. Conagra’s e-commerce investments have been yielding favorable results. In first-quarter fiscal 2022, the company continued to register growth in the e-commerce business, amounting to nearly $1 billion. E-commerce sales represent about 9% of the company’s total retail sales.Pricing Gains & Efforts to Boost Product OfferingsConagra’s efficient pricing initiatives have been an upside. In the first quarter, price/mix improved 1.6% and aided organic sales growth. Favorable price/mix was mainly the result of positive net pricing and brand mix. The company’s prudent pricing actions will likely support the bottom line in the forthcoming periods.Speaking of boosting portfolio strength, Conagra’s acquisition of Pinnacle Foods helped it create a robust portfolio of leading, iconic and on-trend brands. The move is ramping up innovation and is facilitating the company to exploit the long-term benefits in the frozen foods space. Management has been boosting some of Pinnacle Foods’ business banners, especially the Gardein brand, which holds a solid position in the plant-based meat-alternatives food space. Cost synergies from Pinnacle Foods’ buyout have been supporting gross-margin performance. Conagra had stated that it expects to achieve $305 million worth of synergies (less pandemic-led costs) by the end of fiscal 2022.Conagra is committed toward undertaking innovation, which is the key to the company’s success. Despite the pandemic, the company continued to focus on innovations. Management highlighted that innovation across the portfolio was a success during first-quarter fiscal 2022. Prudent innovations have been helping the company to modernize the portfolio and meet consumers’ changing needs. Some of the company’s new products have been top-performing in most categories, including snacks, sweet treats, frozen vegetables and frozen meals. Wrapping UpConagra’s sales volume is being affected by tough comparisons with the year-ago period’s initial spike in at-home food demand. Volumes in most of the company’s segments were hurt by tough comparisons with the year-ago period’s initial demand surge. The divestitures of the H.K. Anderson business, the Peter Pan peanut butter business and the Egg Beaters businesses affected the top line. Moreover, the company has been grappling with cost inflation. Although management is focused on pricing and saving efforts to combat inflation, the timing and gains from these initiatives are likely to be more skewed toward the second half of fiscal 2022.We expect the aforementioned upsides to continue driving Conagra and help it overcome the prevailing challenges. We expect the company to continue maintaining a strong footing in the food space.Efforts Undertaken by Other Food CompaniesUnited Natural Foods, Inc. UNFI is a leading distributor of natural, organic and specialty food and non-food products. The company gaining from solid growth in e-commerce. Many of its independent channels and a great proportion of Chains channel currently provide e-commerce solutions to customers. UNFI is undertaking endeavors to improve the e-commerce platform, strengthen delivery offerings and enhance data analytics and merchandising ideas. United Natural Foods launched the Community Marketplace — a business-to-business digital e-commerce solution designed for emerging brands.United Natural Foods is on track to undertake growth initiatives like boosting brands, professional services and fresh offerings. Management is making progress with strategies like deepening penetration with existing customers, introducing owned brands to new customers as well as channels and undertaking customer-friendly innovations. UNFI is also undertaking various acquisitions over the years to expand the distribution network and customer base.The Hain Celestial Group, Inc. HAIN has been gaining from growth in the Get Bigger brands, backed by strong household penetration. The category has also been gaining from increased buying rate and velocity compared with the pre-pandemic levels. Hain Celestial’s well-chalked innovations and acquisitions along with marketing and assortment-optimization efforts have been yielding.  HAIN is also on track with boosting automation capabilities in plants to lower costs, optimize infrastructure, redesign engineered products and optimize pricing. It has also been executing its simplified pricing model.Hain Celestial is progressing well with its transformation strategy to deliver sustainable profits. The strategy is aimed at simplifying portfolio, identifying additional areas of productivity savings and enhancing margins. HAIN is also progressing with its efforts to rationalize SKU’s, thereby eliminate SKUs based on lower sales volumes or weak margins.The well-known chocolate products, candy and snacks manufacturer, Mondelez International, Inc. MDLZ, is enjoying elevated demand. The company has been witnessing robust demand in developed markets, while performance in the emerging markets continues to improve. Efficient pricing strategies and higher volumes have been favoring Mondelez’s organic revenues. MDLZ is also benefiting from the recovery in World Travel Retail and the gum and candy categories.Mondelez’s focus on brand building through innovation and lucrative acquisitions along with cost savings bodes well. MDLZ is simplifying operations by reducing the number of low-turn SKUs from the portfolio. The company is progressing with its restructuring program — the Simplify to Grow Program. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Hain Celestial Group, Inc. (HAIN): Free Stock Analysis Report Conagra Brands (CAG): Free Stock Analysis Report United Natural Foods, Inc. (UNFI): Free Stock Analysis Report Mondelez International, Inc. (MDLZ): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 25th, 2021

Futures Fall, Yields And Dollar Jump Ahead Of Highest CPI In 31 Years

Futures Fall, Yields And Dollar Jump Ahead Of Highest CPI In 31 Years For the third day in a row, early weakness in futures - in this case as a result of China's soaring, record producer price inflation - reversed and spoos rose from session lows but were still down on the session as traders awaited inflation data due later on Wednesday. Treasury yields climbed and the dollar and cryptos rose. At 7:45 a.m. ET, Dow e-minis were down 47 points, or 0.12%, S&P 500 e-minis were down 10.25 points, or 0.22%, and Nasdaq 100 e-minis were down 68 points, or 0.42%. Earlier, China's Shanghai Composite fell as much as 1.7% and the Hang Seng dropped more than 1% after China’s factory inflation soared to a 26-year high. The number came just hours before today's US CPI print is expected to rise 5.8% in October, the highest level since since December 1990, after a 5.4% increase in the previous month. The report comes a day after producer prices data showed a solid rise in October and will be scrutinized for clues on the extent to which manufacturers were passing on higher costs to consumers, whose spending accounts for 70% of the U.S. economy Elevated inflationary pressures “would be the latest test for the Fed’s ‘transitory’ view and challenge the central bank’s stance on policy tightening,” Han Tan, chief market analyst at Exinity Group, said in written comments. “The worry is that such stubborn inflationary pressures could choke the recovery in global demand or hasten policy tightening by major central banks.” On Tuesday, Wall Street's main indexes ended their long streak of record closing highs on Tuesday as Tesla tumbled and as investors booked profits from the recent run-up in gains, especially in the absence of market-moving catalysts. The declines on Wednesday came after data showed Chinese factory gate prices hit a 26-year high in October, while economic advisers to the German government said they expected the current rise in inflation to continue well into 2022. It has been a busy premarket trading session with lots of movers. We start with Coinbase which fell 11% as analysts said the crypto exchange’s quarterly results were well below expectations. DoorDash shares surged as analysts raised price targets on the food-delivery firm after expectation-beating results and purchase of Finnish food-delivery startup Wolt Enterprises Oy.  Here are some other premarket movers today: DoorDash (DASH US) shares surge 19% in U.S. premarket trading, with analysts raising their price targets on the food-delivery firm after expectation-beating results and its biggest ever acquisition Chinese technology stocks listed in the U.S. rise premarket after Tencent reported 3Q profit that exceeded expectations even as revenue missed amid China’s crackdown on the tech industry Tesla (TSLA US) shares inch higher 1.9% in premarket trading, set for a positive open after a 16% slump in two days amid several negative headlines for the stock Stran & Co. (STRN US) shares jump as much as 43% in U.S. premarket trading, recovering ground after a sharp drop following the branding solutions firm’s IPO Society Pass (SOPA US) shares drop as much as 54% in U.S. pre trading hours, after the loyalty tech platform had surged following its IPO in the prior session Upstart Holdings (UPST US) plunged 19% in U.S. premarket trading after the company released 3Q earnings and 4Q forecasts; Piper Sandler ascribes share drop to “elevated investor expectations” and lack of quantification of auto opportunity Poshmark (POSH US) shares sink 29% in U.S. premarket trading with Berenberg (buy) saying the online retail platform’s 3Q results and guidance were disappointing PubMatic (PUBM US) surges 22% in U.S. premarket trading after the company’s 4Q sales forecast topped expectations and it posted 3Q results that Jefferies called “impressive” FuboTV (FUBO US) shares drop 4.3% in U.S. premarket trading as a 3Q results beat for the “sports first” streaming-video platform was overshadowed by higher costs and some weakness on its ad revenue Purple Innovation (PRPL US) slumps 31% after it cut its net revenue forecast for the full year; the guidance missed the average analyst estimate RingCentral (RNG US) rises 22% premarket, a day after the provider of cloud-based communications services forecast 4Q revenue that beat the average analyst estimate Toast (TOST US) slides after reporting financial results that included a net loss that widened compared with the same period last year Turning back to CPI, here is a lenghtier preview courtesy of DB's Jim Reid: I may have just about found it vaguely conceivable at the start of the year that on November 10th we’d see a 5.9% YoY US CPI print and the sixth month above 5%; however, I would certainly not have thought that such a number if it had materialized would be greeted with a collective market “meh” with 10yr Treasury yields 450bps below this rate. A lot is resting on this inflation being transitory. This will be the multi-trillion dollar question for 2022, that’s for sure. Last month saw yet another upside surprise that further undermined the transitory narrative, and, in fact, if you look at the last 7 monthly readings, 5 of them have come in above the median estimate on Bloomberg, with just 1 below and the other in line. In terms of what to expect, our US economists are looking for a reacceleration in the monthly prints, with a +0.47% forecast for the headline measure (+0.6% consensus), and +0.37% for core (+0.4% consensus). Their view is that the main driver is likely to be price pressures in those categories most sensitive to supply shocks, such as new and used vehicles. But they also see some downside risk from Covid-19-sensitive sectors like lodging away and airfares, where prices fell over the late summer as the delta variant slowed the recovery in travel. Look out for rental inflation too – last month we saw owners’ equivalent rent experience its strongest monthly increase since June 2006. It’s a measure that reflects underlying trend inflation, so it is important to monitor moving forward. Many models suggest it will be over 4% for much of next year, which is large given that it makes up around a third of the headline rate and c.40% of core. Shifting back to markets, we next look at Europe, where equities also recovered off opening lows with the Euro Stoxx 50 and DAX recovering to trade flat. FTSE 100 outperformed, rising as much as 0.6%. Sector gains in oil & gas, utilities and insurance names are broadly offset by losses in luxury, tech, household & personal goods and travel. Earlier in the session, Asian equities fell for a second day after data showed China’s monthly factory-gate prices grew at the fastest pace in 26 years. The MSCI Asia Pacific Index slid as much as 0.6% before paring its loss, with materials and IT the biggest drags. The CSI 300 Index slid as much as 1.9% before sharply paring its drop, after China’s producer and consumer price inflation numbers both exceeded forecasts. Commodity prices have soared globally this year amid expectations for a rebound from the pandemic, with energy getting a further boost from a supply crunch. Traders await Wednesday’s U.S. consumer-price report for further clues on monetary policy and economic growth. “Eyes are now closely watching inflation as that is the next market catalyst,” said Justin Tang, head of Asian research at United First Partners. For some Asian companies “the candle is burning on both ends -- with the supply chain crisis as a ceiling on revenues while obligations to expenses and liabilities remain.”  The Hang Seng turned higher in late trading as real estate developers climbed on a report that China’s bond-issuance policies may be loosened, while Tencent led a surge in tech stocks ahead of its earnings report. Vietnam and Taiwan showed small gains, while benchmarks in most other markets fell. Japanese equities fell, following Asian peers lower after China reported worse than expected inflation. Electronics makers and trading houses were the biggest drags on the Topix, which fell 0.5%. SoftBank Group and Tokyo Electron were the largest contributors to a 0.6% drop in the Nikkei 225. The MSCI Asia Pacific Index slid 0.5%, while China’s CSI 300 Index tumbled 1.1% after monthly factory-gate prices in Asia’s largest economy grew at the fastest pace in 26 years. U.S. consumer price data is scheduled to be reported later Wednesday. “Asia is on inflation alert, fearing future costs of inputs from goods sourced from the mainland,” Jeffrey Halley, senior market analyst at Oanda, wrote in a note. “It seems that investors are keen to lower exposure into the U.S. CPI data tonight.” Australian stocks ended lower for a third session as miners tumbled: the S&P/ASX 200 index fell 0.1% to close at 7,423.90 after a volatile session. Miners were the worst performing industry group as iron ore prices dropped, with eight of the 11 subgauges closing lower.  Bluescope was the day’s biggest laggard after iron ore plunged to a fresh 18-month low as debt troubles in China’s real-estate market deal blow after blow to prospects for steel demand. United Malt advanced after a media report said the company could be a takeover target. Australia’s central bank Governor Philip Lowe is anchoring his bet that he won’t need to raise interest rates until 2024 on a view that unemployment needs to be lower to spur wage gains. In New Zealand, the S&P/NZX 50 index fell 0.5% to 13,022.46. In FX, the Bloomberg Dollar Spot Index rose as the greenback traded higher against all of its Group-of-10 peers apart from the Canadian dollar. The euro extended an Asia session loss and traded firmly below the $1.16 handle. The pound slipped against a broadly stronger dollar, and edged higher versus the euro before a speech by the BOE’s Tenreyro; market is focused on the outlook for rate hikes and traders are also turning attention back to Brexit risks, with the European Union preparing a package of retaliatory measures in case the U.K. decides to suspend parts of a trade accord. Australia’s dollar fell to a one-month low as a slump in iron ore prices prompted short-term leveraged funds to cut long positions. The kiwi declined after a preliminary New Zealand business confidence index weakened In rates, Treasuries traded weak in the early U.S. session, following a selloff in gilts as U.K. markets start to price a higher terminal rate, bear-steepening the curve. Treasury yields are mostly cheaper by 2bp-3bp across the curve with 10-year around 1.475%; gilts lag by additional 1bp vs Treasuries while bunds outperform. During the Asian session, China’s CPI data beat expectations, adding to downside pressure in front eurodollars. Focal points for U.S. session include October CPI expected to show steep increase in y/y rate and final quarterly refunding auction, a $25b 30-year bond sale. Reduced-size U.S. refunding auctions conclude with $25b 30-year bond vs $27b in previous four; Tuesday’s 10- year sale tailed by 1.2bp after steep gains into the bidding deadline. Wednesday's WI 30-year yield around 1.85% is below 30-year stops since January and ~19bp richer than last month’s, which stopped 1.3bp below the WI level at the bidding deadline. In commodities, Crude futures drift lower: WTI drops 0.5% to trade near $83.70. Brent dips back below $85. Base metals are mixed. LME aluminum is the strongest performer; tin and lead are in negative territory. Spot gold drifts lower, losing $5 to trade near $1,826/oz To the day ahead now, and the main highlight will be the aforementioned CPI release from the US for October. Otherwise, there’ll also be Italian industrial production for September. From central banks, we’ll hear from the ECB’s Elderson and the BoE’s Tenreyro, whilst earnings releases include Disney. Market Snapshot S&P 500 futures down 0.2% to 4,669.75 STOXX Europe 600 little changed at 482.35 MXAP down 0.1% to 198.31 MXAPJ up 0.1% to 648.70 Nikkei down 0.6% to 29,106.78 Topix down 0.5% to 2,007.96 Hang Seng Index up 0.7% to 24,996.14 Shanghai Composite down 0.4% to 3,492.46 Sensex little changed at 60,399.20 Australia S&P/ASX 200 down 0.1% to 7,423.90 Kospi down 1.1% to 2,930.17 Brent Futures little changed at $84.75/bbl Gold spot down 0.3% to $1,825.71 German 10Y yield little changed at -0.29% Euro down 0.2% to $1.1574 U.S. Dollar Index up 0.18% to 94.13 Top Overnight News from Bloomberg The European Central Bank would risk exacerbating inequality if it were to raise interest rates before ceasing asset purchases, according to Executive Board member Isabel Schnabel U.S. President Joe Biden and his Chinese counterpart Xi Jinpingare are scheduled to hold a virtual summit next week, although no specific date has been set, according to people familiar with the matter A lack of top-tier intelligence on Chinese President Xi Jinping’s inner circle is frustrating senior Biden administration officials struggling to get ahead of Beijing’s next steps, according to current and former officials who have reviewed the most sensitive U.S. intelligence reports China’s inflation risks are building as producers pass on higher costs to consumers, reigniting a debate over whether the central bank has scope to ease monetary policy to support a weakening economy and potentially adding to the pressure on global consumer prices The U.K. opposition called for a parliamentary investigation into former Conservative cabinet minister Geoffrey Cox, as the scandal over sleaze and lobbying engulfing Boris Johnson’s ruling party gains momentum A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded negatively after a lacklustre handover from Wall Street where the major indices took a break from recent advances and the S&P 500 snapped an eight-day win streak ahead of looming US inflation data. ASX 200 (-0.1%) was rangebound with early strength in financials gradually offset by losses in the commodity-related sectors and with the improvement in Westpac Consumer Sentiment data doing little to spur risk appetite. Nikkei 225 (-0.6%) was subdued with exporters pressured by unfavourable currency inflows and with the list of biggest movers in the index dominated by companies that recently announced their earnings, although Nissan and NTT Data Corp were among the success stories on improved results including a surprise return to quarterly profit for the automaker. Hang Seng (+0.7%) and Shanghai Comp. (-0.4%) initially underperformed amid ongoing developer default concerns as Evergrande has reportedly failed to pay coupon payments at the end of its 30-day grace period. Rating agencies have also downgraded a couple of developers and Fantasia Holdings shares fell as much as 50% on resumption from a one-month trading halt after it missed bond payments due early last month. Furthermore, tensions continued to brew on the Taiwan Strait after US lawmakers made a surprise visit to Taiwan and with China conducting combat readiness patrols in the area ahead of a potential Biden-Xi virtual meeting that could occur next week, which potentially lifted sentiment, while participants also reflected on the firmer than expected inflation data from China which showed consumer prices registered their fastest increase in more than a year and factory gate prices rose at a fresh record pace. Finally, 10yr JGBs traded marginally higher amid the lacklustre mood in stocks and presence of the BoJ in the market for over JPY 1.3tln of JGBs with 1yr-10yr maturities, although gains were capped by resistance ahead of the 152.00 focal point and a pull-back in T-notes. Top Asian News China SOEs Suggest Govt Ease Debt Rules in Property M&A: Cailian Iron Ore Gloom Deepens as China Property Woes Threaten Demand Chinese Developers Surge on Report Bond Rules May be Eased Tencent’s ‘Other Gains’ Unexpectedly Double, Helping Profit Beat European equities (Eurostoxx 50 -0.1%) have traded with little in the way of firm direction as a slew of earnings dictate the state of play amid a lack of fresh macro impulses. The handover from Asia was mostly a downbeat one with focus on firmer than expected CPI and PPI prints out of China and ongoing developer default concerns as Evergrande bond holders have reportedly not received coupon payments by the end of today's Asia-close grace period, in reference to missed coupon payments totalling USD 148.1mln. Stateside, futures are a touch softer (ES -0.2%) after cash markets saw the S&P 500 snap its eight-day winning streak during yesterday’s session. Ahead, the main event for the US will be the CPI release at 13:30GMT whilst the earnings docket continues to slow down with Disney the main standout after-hours. Back to Europe, sectors are mixed with Oil & Gas outperforming peers alongside price action in the crude complex. Banking names saw initial gains trimmed after earnings from Credit Agricole (-1.1%) and ABN AMRO (+1.9%) were unable to provide sustained support for the sector despite the former exceeding profit expectations. The retail sector has been provided a boost by Marks & Spencer (+11.4%) after the Co. reported stellar earnings and raised guidance. Elsewhere in the UK, ITV (+12.0%) sits at the top of the FTSE 100 after printing solid revenue metrics and a bullish revenue outlook. To the downside, Personal and Household goods lag in the wake of earnings from Adidas (-6.0%) which saw the Co.’s performance hampered by factory closures in Vietnam and product boycotts in China. Finally, Alstom (+9.6%) sits at the top of the CAC post-earnings with the Co. stating that supply chain shortages had no material impact on H1 sales. Top European News ECB May Aid Rich If Rates Rise Before QE Ends, Schnabel Says Merkel Advisers Urge ECB Exit Strategy as Price Pressures Rise King Sinks Impala Plan to Create World’s No. 1 Platinum Firm Alstom’s Cash Drain Is Less Than Forecast; Shares Jump In FX, the Greenback remains relatively firm in the run up to US inflation data having turned a corner of sorts on Tuesday, with the index extending beyond 94.000 following its rebound from 93.872 and inching closer to the current 94.380 w-t-d peak, at 94.221, thus far. Interestingly, the Buck has regained momentum irrespective of the benign Treasury (and global) yield backdrop, softer than forecast elements in the PPI release and most Fed officials maintaining a distance between the end of tapering and tightening. However, risk sentiment if wavering to the benefit of the Dollar more than others and the aforementioned CPI readings may be supportive if in line or above consensus. Note, initial claims are also scheduled due to tomorrow’s Veteran’s Day holiday and the final leg of supply comes via Usd 25 bn long bonds. NZD/JPY - Ironically perhaps, the Kiwi is struggling to keep sight of 0.7100 vs its US peer on the very day that COVID-19 restrictions were eased in Auckland, and a further deterioration in NZ business sentiment alongside a fall in the activity outlook may be the catalyst, while the Yen has run into resistance again above 113.00 and is now relying on decent option expiry interest between the round number and 113.05 (1.1 bn) to keep its bull run going. GBP/EUR/AUD/CHF - All softer against the Greenback, as Cable hovers below 1.3550, the Euro pivots 1.1575, Aussie meanders within a range just above 0.7350 amidst favourable Aud/Nzd crossflows and an improvement in Westpac consumer sentiment, and the Franc treads water inside 0.9150-00 parameters. However, Eur/Usd appears to be underpinned by heavier option expiries on the downside than upside rather than ostensibly hawkish ECB promptings from Germany’s Government advisors given 2.1 bn between 1.1575-65 and a further 1.2 bn from 1.1555-50 vs 1.5 bn at the 1.1600 strike. CAD - The Loonie is outperforming or holding up better than other majors near 1.2400 vs its US rival even though WTI has backed off from best levels just shy of Usd 85/brl, but Usd/Cad could still be drawn to expiry interest starting at 1.2450 and stretching some way over 1.2500 in the absence of anything Canadian specific, and pending US inflation data of course. WTI and Brent have been somewhat choppy this morning, but remain within reach of overnight ranges and well within yesterday’s parameters as fresh newsflow has been light; a performance that is similar to the morning’s directionless equity trade. Focus has been on last nights/yesterday's events after the EIA’s STEO release seemingly lessened the likelihood of a SPR release followed by the weekly private inventory report, which printed a headline draw of 2.485M against the expected build of 2.1mln – reaction was minimal. Later today, we get the DoE equivalent for which expectations remain at a headline build of 2.13mln, but the components are expected to post draws of around 1mln. Elsewhere, spot gold and silver are a touch softer on the session with the US Dollar and yields perhaps weighing, though the previous metals have once again not deviated too far from overnight parameters. On copper, prices were hampered by the Chinese inflation data though LME copper has staged a marginal recovery as the session has progressed. US Event Calendar 8:30am: Oct. CPI YoY, est. 5.9%, prior 5.4%; CPI MoM, est. 0.6%, prior 0.4% 8:30am: Oct. CPI Ex Food and Energy YoY, est. 4.3%, prior 4.0%; MoM, est. 0.4%, prior 0.2% 8:30am: Nov. Initial Jobless Claims, est. 260,000, prior 269,000 8:30am: Oct. Continuing Claims, est. 2.05m, prior 2.11m 8:30am: Oct. Real Avg Weekly Earnings YoY, prior -0.8% 8:30am: Oct. Real Avg Hourly Earning YoY, prior -0.8% 10am: Sept. Wholesale Trade Sales MoM, prior -1.1%; Wholesale Inventories MoM, est. 1.1%, prior 1.1% 2pm: Oct. Monthly Budget Statement, est. -$179b, prior - $61.5b DB's Jim Reid concludes the overnight wrap After three days in hospital in traction, little Maisie has a 3-hour hip operation this morning. Showing one benefit of the pandemic, she had a zoom call with her class at school yesterday on their big screen where they all got to ask her questions. The best one apparently was one boy who put his hand up and said “will your new wheelchair have an engine?”. I was reading last night about people with Maisie’s condition (perthes) ending up playing international sport as an adult after a long recovery as a kid, including a Danish striker who played in the semi-finals of the Euros this summer and a 132kg American football player. As long as she waits a polite time after her long recovery to beat me at golf then I’ll be very happy. Keeping my mind off things today will undoubtedly be US CPI. Given my inflationary bias views I may have just about found it vaguely conceivable at the start of the year that on November 10th we’d see a 5.9% YoY US CPI print and the sixth month above 5%; however, I would certainly not have thought that such a number if it had materialised would be greeted with a collective market “meh” with 10yr Treasury yields 450bps below this rate. A lot is resting on this inflation being transitory. This will be the multi-trillion dollar question for 2022, that’s for sure. Last month saw yet another upside surprise that further undermined the transitory narrative, and, in fact, if you look at the last 7 monthly readings, 5 of them have come in above the median estimate on Bloomberg, with just 1 below and the other in line. In terms of what to expect, our US economists are looking for a reacceleration in the monthly prints, with a +0.47% forecast for the headline measure (+0.6% consensus), and +0.37% for core (+0.4% consensus). Their view is that the main driver is likely to be price pressures in those categories most sensitive to supply shocks, such as new and used vehicles. But they also see some downside risk from Covid-19-sensitive sectors like lodging away and airfares, where prices fell over the late summer as the delta variant slowed the recovery in travel. Look out for rental inflation too – last month we saw owners’ equivalent rent experience its strongest monthly increase since June 2006. It’s a measure that reflects underlying trend inflation, so it is important to monitor moving forward. Many models suggest it will be over 4% for much of next year, which is large given that it makes up around a third of the headline rate and c.40% of core. Staying with inflation, China’s year-on-year numbers for October surprised on the upside overnight with CPI +1.5% (consensus +1.4%, last month +0.7%), the highest since September 2020. PPI +13.5% (consensus +12.3%) was also at a 26-year high. Asian stocks are trading lower with the KOSPI (-0.86%), Shanghai Composite (-1.20%), CSI (-1.40%), the Nikkei (-0.49%) and Hang Seng (-1.20%) all down after the China numbers. Futures are pointing to a weak start in the US & Europe too with S&P 500 futures (-0.4%) and DAX futures (-0.23%) both down. As investors look forward to today’s number, the long equity advance finally petered out yesterday as the S&P 500 (-0.35%) snapped a run of 8 successive gains. A 9th day in the green would have marked the longest winning streak since November 2004, but in the end it wasn’t to be.It also prevented an 18th up day out of the last 20 for the first time since September 1954.So reset your counters. Instead, we saw a broader risk-off move as equity indices moved lower on both sides of the Atlantic alongside a fresh rally and flattening in sovereign bond yields and curves. So the S&P 500 (-0.35%), the NASDAQ (-0.60%) and Europe’s STOXX 600 (-0.19%) all fell back from their record highs in the previous session although the equal weighted S&P 500 was almost flat (-0.03%) showing that there wasn’t huge breadth to the US weakness. Sector dispersion was tight in the US, with materials (+0.43%) among the leaders again along with the more typically defensive utilities sector (+0.44%). Financials (-0.55%) declined on the flatter curve story but it was discretionary stocks (-1.35%) that took the biggest hit, dragged down by Tesla declining a further -11.99% and now losing c.$200bn of market cap over two days or the equivalent of 8.5 times Ford’s market cap. The VIX index of volatility ticked up another +0.58pts to hit its highest level in nearly 4 weeks, but remains comfortably below the peaks reached during September’s 5% pullback in the S&P. By contrast, Bitcoin proved to be one of the few winners of yesterday as it increased to an all-time high of $67,734, although that was slightly down from its all-time intraday high of $68,513 earlier in the day. Meanwhile, the question of the various Federal Reserve appointments has been occupying increasing attention and impacting bond markets, but in spite of the gossip there’s been no fresh news over the last 24 hours we didn’t already know. Earlier this week, Politico cited two sources with knowledge of the process saying that a decision would be made by Thanksgiving. But for those with longer memories, it was reported by Bloomberg back in August that people familiar with the process were saying that President Biden was likely to make his choice around Labor Day in early September, and over two months have passed since. So we’ll have to see what the real deadline is. Nevertheless, the news from late Monday night in the US that Fed Governor Brainard had been interviewed for the Fed Chair position helped support US Treasuries, thanks to the perception that Brainard would be a more dovish pick. Regardless of whether Powell or Brainard is Chair come this time next year, the Board will likely become more dovish as President Biden replaces outgoing Governors (and fills empty seats should he choose to do so). By the close of trade, 10yr yields were down -5.4bps to 1.44%, and the 30yr yield was down -6.4bps to 1.82%, which was its lowest closing level since mid-September. Another striking thing was that the moves lower in Treasury yields were entirely driven by a fresh decline in real yields, with the 10yr real yield down -7.0bps to -1.20%, marking its lowest closing level since TIPS began trading in 1997. Meanwhile, there was another round of curve flattening yesterday, with the 5s30s slope down -2.8bps to 73.5bps, which is the flattest it’s been since the initial market panic over the pandemic back in March 2020. For Europe it was a similar story as yields fell across the continent, and those on 10yr bunds (-5.5bps), OATs (-5.5bps) and BTPs (-5.3bps) all saw decent moves lower. Ahead of today’s CPI, investors had the PPI numbers to digest yesterday, though there was little market reaction to speak of as they came in almost entirely in line with the consensus. The monthly reading was up by +0.6% in October, which in turn saw the year-on-year measure remain at +8.6%, with both of those in line with expectations. The core measure did come in a touch below, at +0.4% (vs. +0.5% expected), but again that left the yoy reading at +6.8% as expected. One factor that may help on the inflation front over the coming months was a major decline in natural gas prices yesterday, with both European (-8.16%) and US (-8.26%) futures witnessing substantial declines. This wasn’t reflected elsewhere in the energy complex though, with WTI (+2.71%) and Brent crude (+1.62%) oil prices seeing a further rise following reports that the US would not need to release strategic reserves due to the demand outlook, and gold prices (+0.42%) closed at their highest levels since June. There wasn’t a massive amount of other data yesterday, though the ZEW survey from Germany for November saw the expectations reading unexpectedly rise to 31.7 (vs. 20.0 expected), which is the first increase after 5 consecutive monthly declines. However, the current situation measure did fall to 12.5 (vs. 18.3 expected). Finally out of the US, the NFIB’s small business optimism index for October fell to a 7-month low of 98.2 (vs. 99.5 expected). To the day ahead now, and the main highlight will be the aforementioned CPI release from the US for October. Otherwise, there’ll also be Italian industrial production for September. From central banks, we’ll hear from the ECB’s Elderson and the BoE’s Tenreyro, whilst earnings releases include Disney. Tyler Durden Wed, 11/10/2021 - 07:56.....»»

Category: blogSource: zerohedgeNov 10th, 2021

Futures At All Time High On Evergrande Reprieve Despite Intel, Snapchat Collapse

Futures At All Time High On Evergrande Reprieve Despite Intel, Snapchat Collapse S&P 500 futures traded to within 2 points of their September all time high, rising 0.12% to 4547, just shy of their 4549.5 record after China's Evergrande unexpectedly made a last minute coupon payment, averting an imminent weekend default and boosting risk sentiment. But while spoos were up, Nasdaq futures edged -0.18% lower after Intel warned of lower profit margins, while Snap crashed 22%, leading declines among social media firms after flagging a hit to digital advertising from privacy changes by Apple. Intel plunged 10% in premarket trading as it missed third-quarter sales expectations, while its Chief Executive pointed to shortage of other chips holding back sales of the company's flagship processors. 10Y yields dropped 2bps, the dollar slumped and bitcoin traded above $63,000. Fed Chair Powell is scheduled to speak at 11am ET.  The Chinese property giant’s bond-coupon payment has boosted sentiment because it reduces risks to the broader financial system, according to Pierre Veyret, technical analyst at ActivTrades. “However, this optimistic trading mood may be short-lived as investors’ biggest concern remains inflation,” he said. “Traders will listen intently to Jerome Powell today as the Fed chairman is expected to give more clues about monetary policy.” Not everything was roses, however, and Facebook fell 3.7%, while Twitter lost 4.1% after Snap said privacy changes by Apple on iOS devices hurt the company's ability to target and measure its digital advertising Snap plunged 20.9% on the news and cast doubts over quarterly reports next week from Facebook and Twitter, social media firms that rely heavily on advertising revenue. Meanwhile supply chain worries, inflationary pressures and labor shortages have been at the center of third-quarter earnings season, with analysts expecting S&P 500 earnings to rise 33.7% year-on-year, according to Refinitiv data. Some analysts, however, said such worries will only have a temporary impact on earnings from mega-cap technology and communications companies this reporting season. "Intel also produced less than stellar results. Shorting big-tech has been a good way to lose money in the past two years, and I expect only a temporary aberration," wrote Jeffrey Halley, senior market analyst, Asia Pacific at OANDA in a client note. Elsewhere, Apple rose 0.2%. Other giga tech stocks including Tesla, Microsoft and Netflix also rose, limiting declines on Nasdaq 100 e-minis. Here are some more premarket movers: Mattel (MAT US) rose 6.7% after the firm known for its Barbie and Fisher-Price toys lifted its full-year guidance amid a sales rebound, even as it grapples with a global logistics crunch ahead of Christmas. Digital World Acquisition (DWAC US) jumped 67% after more than quadrupling on Thursday after news that the blank-check company would merge with former President Donald Trump’s media firm. Phunware (PHUN US) soared 288% as the company, which runs a mobile enterprise cloud platform, is plugged by retail traders on Reddit. Whirlpool (WHR US) fell 2% as the maker of refrigerators reported sales that fell short of Wall Street’s estimates, citing supply chain woes. Investors were more upbeat about Europe, where consumer and tech companies led a 0.6% gain for the Stoxx 600 Index which headed for a third week of gains with cosmetics maker L’Oreal SA jumping more than 6% after reporting sales that were significantly higher than analysts expected. Euro Stoxx 50 and CAC gain over 1%, FTSE 100 and IBEX lag but hold in the green. Tech, household & personal goods and auto names are the strongest sectors. On the downside, French carmaker Renault SA and London Stock Exchange Group Plc were the latest companies to report supply-chain challenges. Here are some of the biggest European movers today: L’Oreal shares rise as much as 6.8% after its 3Q sales beat impresses analysts, with Citi praising the French beauty-product maker’s capacity to re-balance growth between different geographies at a time of worry over China. The stock posted its biggest gain in almost a year. Essity shares are the biggest gainers in the OMX Stockholm 30 large cap index after 3Q EPS beat consensus by 10%, with Jefferies citing lower financing costs as among reasons for the improved earnings. Thule shares rise as much as 6.7%, most since July 21, after the company reported earnings for the third quarter. Klepierre shares gain as much as 4.8%, hitting the highest since Sept. 30, after the French mall owner boosted its net current cash flow per share view amid an ongoing recovery in its markets and stronger-than- expected rent collection. Wise shares fell as much as 5.4% after co-founder Taavet Hinrikus sold a stake worth GBP81.5m in the digital-payments provider to invest in early-stage businesses. Boliden shares declined as much as 6.1%, most since May 2020, after 3Q earnings missed estimates. London Stock Exchange declines as much as 4.2% following third-quarter earnings, with Citi (neutral) describing the revenue mix as “marginally disappointing” amid underperformance in the data and analytics division. Shares in holding company Lifco fell as much as 8% after reporting disappointing sales numbers in its dental business, missing Kepler Cheuvreux’s revenue estimates by 18%. European stocks ignored the latest warning print from the continent's PMIs, where the composite flash PMI declined by 1.9pt to 54.3 in October—well below consensus expectations—continuing the moderation from its July high. The area-wide softening was primarily led by Germany, although sequential momentum slowed elsewhere too. In the UK, on the heels of a succession of downside surprises, the composite PMI surprised significantly to the upside for the first time since May. Supply-side constraints continue to exert upward price pressures, with both input and output prices rising further and reaching new all-time highs across most of Europe. Euro Area Composite PMI (October, Flash): 54.3, GS 54.9, consensus 55.2, last 56.2. Euro Area Manufacturing PMI (October, Flash): 58.5, GS 57.1, consensus 57.1, last 58.6. Euro Area Services PMI (October, Flash): 54.7, GS 54.8, consensus 55.4, last 56.4. Germany Composite PMI (October, Flash): 52.0, GS 54.5, consensus 54.3, last 55.5. France Composite PMI (October, Flash): 54.7, GS 54.3, consensus 54.7, last 55.3. UK Composite PMI (October, Flash): 56.8, GS 53.6, consensus 54.0, last 54.9. Earlier in the session, Asian equities climbed, led by China, as signs that Beijing may be easing its property policies and a bond interest payment by Evergrande boosted sentiment. The MSCI Asia Pacific Index rose 0.2%, on track to take its weekly advance to almost 1%. Chinese real estate stocks, including Seazen Group and Sunac China, were among the top gainers Friday, after Beijing called for support for first-home purchases, adding to recent official rhetoric on property market stability. China Evergrande Group pulled back from the brink of default by paying a bond coupon before this weekend’s deadline. The payment “brings some near-term reprieve ahead of its official default deadline and presents a more positive scenario than what many will have expect,” said Jun Rong Yeap, a market strategist at IG Asia Pte. The Asian measure was also bolstered by tech shares, including Japan’s Tokyo Electron and Tencent, while the Hang Seng Tech Index capped a 6.9% rise for the week in its biggest climb since August. The gains in the sector offset declines for mining shares as coal futures in China extended a price collapse to more than 20% in three days. Unlike in the U.S., where stocks are trading at a record high, Asian shares have been mixed in recent weeks as traders try to assess the impact on earnings of inflation, supply chain constraints and China’s growth slowdown. Falling earnings growth forecasts, combined with rising inflation expectations, are continuing to cast “a stagnation shadow over markets,” Kerry Craig, a global markets strategist at JPMorgan Asset Management, said in a note. In rates, Treasuries resumed flattening with long-end yields richer by more than 2bp on the day, while 2-year yield breached 0.46% for the first time since March 2020, extending its third straight weekly increase. 2-year yields topped at 0.464% while 10-year retreated from Thursday’s five-month high 1.70% to ~1.685%, remaining higher on the week; 2s10s is flatter by 2.5bp, 5s30s by ~1bp. In 10-year sector bunds cheapen by 3.5bp vs Treasuries as German yield climbs to highest since May; EUR 5y5y inflation swap exceeds 2% for the first time since 2014. In Europe, yield curves were mixed: Germany bear-flattened with 10-year yields ~2bps cheaper near -0.07%. Meanwhile, measures of inflation expectations continue to print new highs with EUR 5y5y inflation swaps hitting 2%, the highest since 2014, and U.K. 10y breakevens printing at a 25-year high. In FX, AUD and NZD top the G-10 scoreboard. The Bloomberg dollar index Index fell and the greenback traded weaker against all its Group-of-10 peers apart from the pound; risk-sensitive Scandinavian and Antipodean currencies led gains. The pound inched lower after U.K retail sales fell unexpectedly for a fifth month as consumer confidence plunged, adding to evidence that the economic recovery is losing momentum. The cost of hedging against inflation in the U.K. over the next decade rose to the highest level in 25 years amid mounting concern over price pressures building in the economy. The Aussie dollar climbed as positive sentiment was boosted by the news about Evergrande Group’s bond payment; it had earlier fallen to a session low after the central bank announced an unscheduled bond-purchase operation to defend its yield target. The yen held steady following two days of gains as a rally in Treasuries narrows yield differentials between Japan and the U.S. In commodities, crude futures recover off Asia’s worst levels, settling around the middle of this week’s trading range. WTI is 0.5% higher near $82.90, Brent regains a $85-handle. Spot gold adds ~$10 to trade near $1,792/oz. Most base metals trade well with LME nickel and zinc outperforming. Looking at the day ahead, the main data highlight will be the aforementioned flash PMIs from around the world, on top of UK retail sales for September. From central banks, Fed Chair Powell will be speaking, in addition to the Fed’s Daly and the ECB’s Villeroy. Earnings releases will include Honeywell and American Express. Market Snapshot S&P 500 futures little changed at 4,538.75 STOXX Europe 600 up 0.4% to 471.82 MXAP up 0.2% to 200.16 MXAPJ up 0.2% to 661.40 Nikkei up 0.3% to 28,804.85 Topix little changed at 2,002.23 Hang Seng Index up 0.4% to 26,126.93 Shanghai Composite down 0.3% to 3,582.60 Sensex down 0.2% to 60,775.00 Australia S&P/ASX 200 little changed at 7,415.48 Kospi little changed at 3,006.16 Brent Futures up 0.2% to $84.81/bbl Gold spot up 0.5% to $1,792.58 U.S. Dollar Index down 0.18% to 93.60 Euro up 0.2% to $1.1645 Top Overnight News from Bloomberg The Bank of England will likely defy investors’ expectations of a sudden interest-rate increase next month because it rarely shifts policy in such dramatic fashion, according to three former senior officials. The ECB will supercharge its regular bond-buying program before pandemic purchases run out in March, according to economists surveyed by Bloomberg. Euro-area businesses are reporting a sharp slowdown in activity caused by an aggravating global supply squeeze that’s also producing record inflation. French manufacturing output declined at the steepest pace since coronavirus lockdowns were in place last year, while growth momentum deteriorated sharply in Germany, purchasing managers report. Private-sector activity in the euro area slowed to the weakest since April, though it remained above a pre-pandemic average. China continued to pull back on government spending in the third quarter even as the economy slowed, with the cautious fiscal policy reflecting the desire to deleverage and improve public finances. President Joe Biden said the U.S. was committed to defending Taiwan from a Chinese attack, in some of his strongest comments yet as the administration faces calls to clarify its stance on the democratically ruled island. A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded with a positive bias but with gains capped following the temperamental mood on Wall St amid mixed earnings results and although a late tailwind heading into the close lifted the S&P 500 to a record high and contributed to the outperformance of the NDX, futures were then pressured after hours as shares in Intel and Snap slumped post-earnings with the latter down as much as 25% on soft guidance which subsequently weighed on tech heavyweights including social media stocks such as Facebook and Twitter. ASX 200 (Unch.) was subdued amid weakness in mining names and financials but with downside cushioned after the recent reopening in Melbourne and with the RBA also conducting unscheduled purchases to defend the yield target for the first time since February. Nikkei 225 (+0.3%) recovered from opening losses with risk appetite at the whim of a choppy currency and with some encouragement heading into the easing of restrictions in Tokyo and Osaka from Monday. News headlines also provided a catalyst for individual stocks including Nissan which was subdued after it cut planned output by 30% through to November and with Toshiba pressured as merger talks between affiliate Kioxia and Western Digital stalled, while SoftBank enjoyed mild gains after a 13.5% increase in WeWork shares on its debut following a SPAC merger. Hang Seng (+0.4%) and Shanghai Comp. (-0.3%) traded, initially, with tentative gains after another respectable liquidity injection by the PBoC and news of Evergrande making the USD-bond interest payment to avert a default ahead of tomorrow’s grace period deadline. This lifted shares in Evergrande with attention now turning to another grace period deadline for next Friday, although regulatory concerns lingered after the PBoC stated that China will continue separating operations of banking, securities and insurance businesses, as well as signed an MOU with the HKMA on fintech supervision and cooperation in the Greater Bay area. Finally, 10yr JGBs were lower on spillover selling following a resumption a resumption of the curve flattening stateside where T-note futures tested the 130.00 level to the downside amid inflationary concerns and large supply from AerCap which launched the second largest IG dollar bond issuance so far this year. In addition, the gains in Japanese stocks and absence of BoJ purchases in the market today added to the lacklustre demand for JGBs, while today also saw the RBA announce unscheduled purchases valued at AUD 1bln to defend the yield target for the first time since February, although the impact on yields was only brief. Top Asian News Tencent Blames WeChat Access for Search Engines on Loophole JPM’s Yang Joins Primas Asset Management’s Credit Trading Team Gold Rises on Weaker Dollar to Head for Second Weekly Gain Interest Payment Made; Junk Bonds Rally: Evergrande Update A choppy start to the session has seen European equities extend on opening gains (Stoxx 600 +0.8%) with the Stoxx 600 on course to see the week out relatively unchanged. After a marginally positive lead from Asia, European stocks picked up after the cash open with little in the way of clear catalysts for the surge. Macro focus for the region has fallen on flash PMI readings for October which painted a mixed picture for the Eurozone economy as the EZ-wide services metric fell short of expectations whilst manufacturing exceeded forecasts. Despite printing north of the 50-mark, commentary from IHS Markit was relatively downbeat, noting that "After strong second and third quarter expansions, GDP growth is looking much weaker by comparison in the fourth quarter.” Stateside, futures are mixed with the ES relatively flat whilst the NQ (-0.3%) lags after shares in Intel and Snap slumped post-earnings with the latter down as much as 25% on soft guidance which subsequently weighed on tech heavyweights including social media stocks such as Facebook (-4% pre-market) and Twitter (-4.5% pre-market). Elsewhere in the US, traders are awaiting further updates in Capitol Hill, however, moderate Democrat Senator Manchin has already tempered expectations for a deal being reached by today’s goal set by Senate Majority Leader Schumer. Back to Europe, sectors are mostly firmer with outperformance in Personal & Household Goods following earnings from L’Oreal (+6.2%) who sit at the stop of the Stoxx 600 after Q3 earnings saw revenues exceed expectations. To the downside, Telecom names are lagging amid losses in Ericsson (-3.1%) after the DoJ stated that the Co. breached obligations under a Deferred Prosecution Agreement. Elsewhere, Vivendi (+3.1%) is another notable gainer in the region as Q3 earnings exceeded analyst estimates. LSE (-3.3%) sits at the foot of the FTSE 100 post-Q3 results, whilst IHG (-3.5%) is another laggard in the index post-earnings as the Co.’s fragile recovery continues. Top European News U.K.-France Power Cable Has Unplanned Halt: National Grid Banks Prepare to Fight Basel Over Carbon Derivatives Rule Wise Slumps After Founder Hinrikus Offloads $112 Million Stake London Stock Exchange Says Supply Chains to Delay Tech Spend In FX, the Greenback has topped out yet again, and partly in tandem with US Treasury yields following their latest ramp up, but also against the backdrop of improved risk appetite that emerged during APAC hours when reports that China’s Evergrande made an overdue interest payment helped to lift sentiment after a late tech-led downturn on Wall Street. The index may also have lost momentum on technical grounds following a minor extension to 93.792, but still not enough impetus to reach 94.000 or test a couple of resistance levels standing in the way of the nearest round number (Fib resistance at 93.884 and 21 DMA that comes in at 93.948 today compared to 93.917 on Thursday), and a fade just shy of yesterday’s best before the aforementioned drift back down to meander between a narrow 93.789-598 corridor. Ahead, Markit’s flash PMIs and a trio of Fed speakers including Williams, Daly and chair Powell feature on Friday’s agenda alongside today’s batch of earnings. AUD/NZD/CAD - Honours remain pretty even down under as the Aussie and Kiwi both take advantage of the constructive market tone that is weighing on their US counterpart, while assessing specifics such as RBA Governor Lowe reiterating no target rate for Aud/Usd, but the Bank having to intervene in defence of the 0.1% 3 year yield target for the first time in 8 months overnight in wake of upbeat preliminary PMIs. Meanwhile, NZ suffered another record number of new COVID-19 cases to justify PM Adern’s resolve to keep restrictions tight until 90% of the population have been vaccinated and keep Nzd/Usd capped under 0.7200 in mild contrast to Aud/Usd hovering just above 0.7500. Elsewhere, some traction for the Loonie in the run up to Canadian retail sales from a rebound in WTI to retest Usd 83/brl from recent sub-Usd 81 lows, as Usd/Cad retreats towards the bottom of a 1.2375-30 range. EUR/CHF/GBP/JPY - All marginally firmer or flat against the Dollar, but the Euro easing back into a lower band beneath 1.1650 and not really helped by conflicting flash PMIs or decent option expiry interest from 1.1610-00 (1.4 bn) that could exert a gravitational pull into the NY cut. The Franc is keeping afloat of 0.9300, but under 0.9250, the Pound has bounced to probe 1.3800 on the back of considerably stronger than expected UK prelim PMIs that have offset poor retail sales data and could persuade more of the BoE’s MPC to tilt hawkishly in November, especially after the new chief economist said the upcoming meeting is live and policy verdict finely balanced. Conversely, the BoJ is widely tipped to maintain accommodation next week and as forecast Japanese inflation readings will do little to change perceptions, putting greater emphasis on the Outlook Report for updated growth and core CPI projections and leaving the Yen tethered around 114.00 in the meantime. SCANDI/EM - The Sek and Nok are on a firm footing circa 9.9800 and 9.7000 against the Eur respectively, and the former may be acknowledging an upbeat Riksbank business survey, while the latter piggy-backs Brent’s recovery that is also underpinning the Rub in the run up to the CBR and anticipated 25 bp hike. The Cnh and Cny are back in the ascendency with extra PBoC liquidity and Evergrande evading a grace period deadline by one day to compensate for ongoing default risk at its main Hengda unit, but the Try is still trying in vain to stop the rot following Thursday’s shock 200 bp CBRT blanket rate cuts and has been down to almost 9.6600 vs the Usd. In commodities, WTI and Brent are marginally firmer this morning though reside within overnight ranges and have been grinding higher for the duration of the European session in-spite of the lack of newsflow generally and for the complex. Currently, the benchmarks are firmer by circa USD 0.40/bbl respectively and reside just off best levels which saw a brief recapture of the USD 83/bbl and USD 85/bbl handles. Given the lack of updates, the complex remains attentive to COVID-19 concerns where officials out of China reiterated language issues yesterday about curbing unnecessary travel around Beijing following cases being reported in the region. Elsewhere, yesterday’s remarks from Putin continue to draw focus around OPEC+ increasing output more than agreed and once again reiterating that Russia can lift gas supplies to Europe; but, as of yet, there is no update on the situation. Finally, the morning’s European earnings were devoid of energy names, but updated Renault guidance is noteworthy on the fuel-demand front as the Co. cut its market forecast to Europe and anticipates a FY21 global vehicle loss of circa 500k units due to component shortages. Moving to metals, spot gold and silver are firmer but have been fairly steady throughout the session perhaps aided by the softer dollar while elevated yields are perhaps capping any upside. Base metals remain buoyed though LME copper continues to wane off the closely watched 10k mark. US Event Calendar 9:45am: Oct. Markit US Composite PMI, prior 55.0 9:45am: Oct. Markit US Services PMI, est. 55.2, prior 54.9 9:45am: Oct. Markit US Manufacturing PMI, est. 60.5, prior 60.7 10am: Fed’s Daly Discusses the Fed and Climate Change Risk 11am: Powell Takes Part in a Policy Panel Discussion DB's Jim Reid concludes the overnight wrap Hopefully today is my last Friday ever on crutches but with two likely knee replacements to come in the next few years I suspect not! 6 days to go until the 6 weeks of no weight bearing is over. I’m counting down the hours. Tomorrow I’ll be hobbling to London to see “Frozen: The Musical”. I’ve almost had to remortgage the house for 5 tickets. There is no discount for children which is a great business model if you can get away with it. Actually given the target audience there should be a discount for adults as I can think of better ways of spending a Saturday afternoon. The weekends have recently been the place where the Bank of England shocks the market into pricing in imminent rate hikes. Well to give us all a break they’ve gone a couple of days early this week with new chief economist Huw Pill last night telling the FT that the November meeting was “live” and that with inflation was likely to rise “close to or even slightly above 5 per cent” early next year, which for a central bank with a 2% inflation target, is “a very uncomfortable place to be”. Having said that, he did add that "maybe there’s a bit too much excitement in the focus on rates right now" and also talked about how the transitory nature of inflation meant there was no need to go into a restrictive stance. So the market will probably firm up November hike probabilities today but may think 1-2 year pricing is a little aggressive for the moment. However, it’s been a volatile ride in short sterling contracts of late so we will see. Ultimately the BoE will be a hostage to events. If inflation remains stubbornly high they may have to become more hawkish as 2022 progresses. This interview capped the end of a day with another selloff in sovereign bond markets as investors continued to ratchet up their expectations of future price growth. In fact by the close of trade, the 5yr US inflation breakeven had risen +10.0bps to 2.91%, and this morning they’re up another +3.5bps to 2.95%, which takes them to their highest level in the 20 years that TIPS have traded. 10y breakevens closed up +4.7bps at 2.65%, their highest level since 2011. Bear in mind that at the depths of the initial Covid crisis back in 2020, the 5yr measure fell to an intraday low of just 0.11%, so in the space of just over 18 months investors have gone from expecting borderline deflation over the next 5 years to a rate some way above the Fed’s target. Those moves weren’t just confined to the US however, as longer-term inflation expectations moved higher in Europe too. The 10yr German breakeven rose +5.4bps to a post-2013 high of 1.87%, and its Italian counterpart hit a post-2011 high of 1.78%. And what’s noticeable as well is that these higher inflation expectations aren’t simply concentrated for the next few years of the time horizon, since the 5y5y inflation swaps that look at expectations for the five year period starting in five years’ time have also seen substantial increases. Most strikingly of all, the Euro Area 5y5y inflation swap is now at 1.95%, which puts it almost at the ECB’s 2% inflation target for the first time since 2014. The global increase in inflation compensation drove nominal yields higher, with the yield on 10yr US Treasuries up +4.4bps yesterday to a 6-month high of 1.70%, as investors are now pricing in an initial hike from the Fed by the time of their July 2022 meeting. And in Europe there was a similar selloff, with yields on 10yr bunds (+2.4bps), OATs (+2.1bps) and BTPs (+2.7bps) all moving higher too. Interestingly though, the slide in sovereign bonds thanks to higher inflation compensation came in spite of the fact that commodity prices slid across the board, with energy, metal and agricultural prices all shifting lower, albeit in many cases from multi-year highs. Both Brent Crude (-1.41%) and WTI (-1.63%) oil prices fell by more than -1% for the first time in over two weeks, whilst the industrial bellwether of copper (-3.72%) had its worst daily performance since June. Even with high inflation remaining on the agenda, US equities proved resilient with the S&P 500 (+0.30%) posting a 7th consecutive advance to hit an all-time high for the first time in 7 weeks. Consumer discretionary and retail stocks were the clear outperformer, in line with the broader reflationary sentiment. Other indices forged ahead too, with the NASDAQ (+0.62%) moving to just -1.04% beneath its own all-time record, whilst the FANG+ index (+1.11%) of megacap tech stocks climbed to a fresh record as well. In Europe the major indices were weaker with the STOXX 600 retreating ever so slightly, by -0.08%, but it still remains only -1.29% beneath its August record. Looking ahead, the main theme today will be the release of the flash PMIs from around the world, which will give us an initial indication of how various economies have fared through the start of Q4. Obviously one of the biggest themes has been supply-chain disruptions throughout the world, so it’ll be interesting to see how these surface, but the composite PMIs over recent months had already been indicating slowing growth momentum across the major economies. Our European economists are expecting there’ll be a further decline in the Euro Area composite PMI to 55.1. Overnight we've already had some of those numbers out of Asia, which have showed a recovery from their September levels. Indeed, the Japanese service PMI rose to 50.7 (vs. 47.8 in Sep), which is the first 50+ reading since January 2020 before the pandemic began, whilst the composite PMI also moved back into expansionary territory at 50.7 for the first time since April. In Australia there was also a move back into expansion, with their composite PMI rising to 52.2 (vs. 46.0 in Sep), the first 50+ reading since June. Elsewhere in Asia, equity markets have followed the US higher, with the Hang Seng (+0.92%), CSI (+0.87%), Hang Seng (+0.42%), KOSPI (+0.27%) and Shanghai Composite (+0.09%) all in the green. That also comes as Japan’s nationwide CPI reading moved up to +0.2% on a year-on-year basis, in line with expectations, which is the first time so far this year that annual price growth has been positive. In other news, we learnt from the state-backed Securities Times newspaper that Evergrande has avoided a default by making an $83.5m interest payment on a bond whose 30-day grace period was going to end this weekend. Separately, the state TV network CCTV said that 4 Covid cases had been reported in Beijing and an official said that they would be testing 34,700 people in a neighbourhood linked to those cases. Looking forward, equity futures are pointing to a somewhat slower start in the US, with those on the S&P 500 down -0.08%. Turning to the pandemic, global cases have continued to shift higher in recent days, and here in the UK we had over 50k new cases reported yesterday for the first time since mid-July. New areas are moving to toughen up restrictions, with Moscow moving beyond the nationwide measures in Russia to close most shops and businesses from October 28 to November 7. In better news however, we got confirmation from Pfizer and BioNTech that their booster shot was 95.6% effective against symptomatic Covid in a trial of over 10,000 people. Finally, there was some decent economic data on the US labour market, with the number of initial jobless claims in the week through October 16 coming in at 290k (vs. 297k expected). That’s the lowest they’ve been since the pandemic began and also sends the 4-week average down to a post-pandemic low of 319.75k. Alongside that, the continuing claims for the week through October 9 came down to 2.481m (vs. 2.548m expected). Otherwise, September’s existing home sales rose to an annualised rate of 6.29m (vs. 6.10m expected), and the Philadelphia Fed’s business outlook survey fell to 23.8 (vs. 25.0 expected). To the day ahead now, and the main data highlight will be the aforementioned flash PMIs from around the world, on top of UK retail sales for September. From central banks, Fed Chair Powell will be speaking, in addition to the Fed’s Daly and the ECB’s Villeroy. Earnings releases will include Honeywell and American Express. Tyler Durden Fri, 10/22/2021 - 08:07.....»»

Category: dealsSource: nytOct 22nd, 2021

4 Solid Microchip Stocks to Buy on Soaring Global Demand

Growing demand for microchips amid supply crunch has been helping companies like NVIDIA Corporation (NVDA), Microchip Technology (MCHP), ON Semiconductor (ON) and STMicroelectronics (STM). The semiconductor industry has been on a high, with sales soaring on surging demand. However, a supply crunch has kept several other industries worried, with carmakers suffering the most. The pandemic saw massive sales of electronic goods, leading to higher demand for microchips.According to a new report form Deloitte, the crisis may continue for months. Thus, microchip demand is only going to soar, helping chipmakers like NVIDIA Corporation NVDA, Microchip Technology MCHP, ON Semiconductor ON and STMicroelectronics STM.Microchip Shortage to ContinueAccording to Deloitte’s new Technology, Media & Telecommunications (TMT) 2022 Predictions report, the global semiconductor shortage could last till early 2023.Things will start stabilizing only around late 2022 when customers will have to wait around 10 to 20 weeks after placing orders to get the supply in hand. However, the crisis doesn’t mean that customers will continue to suffer.Given the growing demand and resultant supply crisis, massive investment will be made to boost production in the coming days. The report predicts that venture capital firms will invest over $6 billion in microchip companies next year to boost production. This is thrice more than the total investment made by venture capital firms between 2000 and 2016.The report further says that the shortage is expected to last about 24 months from when it began, much like the 2008-09 microchip crisis.The ongoing shortage is severely affecting the production of automobiles and is now biting into their profits. A number of carmakers have already cut down on their production and expect sales to be down in the fourth quarter too. This is also somewhat delaying the automobile industry’s recovery after the battering it suffered due to the pandemic.Semiconductor Industry on a HighNot only automobile manufacturers, but also production of electronic goods, including laptops and smartphones,is being hampered now due to the supply crunch. That said, surging demand has been working miracles for the chipmakers, as sales are skyrocketing.According to the Semiconductor Industry Association, global semiconductors sales totaled $144.8 billion in the third quarter of 2021, jumping 27.6% year over year and 7.4% from the second quarter.  Also, the semiconductor industry achieved a milestone of shipping the highest number of semiconductor units in the market’s history during this period.The chip industry had somewhat slowed down, but the pandemic worked miracles. As more people worked and learned from home, they invested in electronic goods, computers and accessories, giving a boost to the demand for microchips anddriving sales.The trend continueswithchip sales growing every month and hitting new record highs. Semiconductor sales totaled $48.3 billion in September, jumping 27.6% year over year and 2.2% month over month.This growth is expected to continue in the coming months too.Our ChoicesGiven the rising demand for semiconductors and continuing supply crunch, the semiconductor industry is only likely to benefit in the near term. Below are five chip stocks that investors can gain from in the current scenario.NVIDIA Corporation is the worldwide leader in visual computing technologies and inventor of the graphic processing unit, GPU. Over the years, NVDA’s focus has evolved from PC graphics to AI-based solutions that now support high-performance computing, gaming and virtual reality platforms.NVIDIA’s GPU success can be attributed to its parallel processing capabilities supported by thousands of computing cores, which are necessary to run deep learning algorithms.NVIDIA’s expected earnings growth rate for the current year is 73.1%. The Zacks Consensus Estimate for current-year earnings has improved 4.8% over the past 60 days. Shares of NVDA have gained 21.7% in the past 30 days. NVIDIA’s carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.ON Semiconductor Corporation is an original equipment manufacturer of a broad range of discrete and embedded semiconductor components.ON continues to gain traction among electric vehicle manufacturers for both silicon carbide and insulated-gate bipolar transistor-based products. ON Semiconductor has a well-diversified business generating a significant percentage of revenues from each of the computing, consumer, industrial, communications and automotive end markets.ON Semiconductor’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 12.4% over the past 60 days. Shares of ON have gained 9.5% in the past month. ON Semiconductors holds a Zacks Rank #2.STMicroelectronics N.V. designs, develops, manufactures and markets a broad range of semiconductor integrated circuits and discrete devices used in a wide variety of microelectronic applications, including telecommunications systems, computer systems, consumer products, automotive products and industrial automation and control systems. STM is currently witnessing very strong demand across most product lines and end markets. This is leading to strong pricing and allowing STMicroelectronicsto operate at full capacity.STMicroelectronics’expected earnings growth rate for the current year is 65.3%. The Zacks Consensus Estimate for current-year earnings has improved 4.7% over the past 60 days. Shares of STM have advanced 6.8% in the past 3 months. STMicroelectronics carries a Zacks Rank #2.Microchip Technology Incorporated develops and manufactures microcontrollers, memory, and analog and interface products for embedded control systems, which are small, low-power computers designed to perform specific tasks. MCHP reported second-quarter fiscal 2022 earnings of $1.07 per share, beating the Zacks Consensus Estimate of $1.06 per share. Microchip Technology Incorporated reported revenues of $1.65 billion for the quarter ended September 2021, surpassing the Zacks Consensus Estimate by 0.10%.Microchip Technology Incorporated’s expected earnings growth rate for the current year is more than 33.9%. The Zacks Consensus Estimate for current-year earnings has improved 4.5% over the past 60 days. Shares of MCHP have gained 6.9% in the past 30 days. Microchip Technology has a Zacks Rank #2. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report STMicroelectronics N.V. (STM): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Microchip Technology Incorporated (MCHP): Free Stock Analysis Report ON Semiconductor Corporation (ON): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 3rd, 2021

ETF Areas to Gain/Lose on Fear of Omicron Strain of Coronavirus

The emergence of a new coronavirus strain, namely Omicron, has caused a massacre on Wall Street on Friday. These ETFs could gain/lose in the coming days if Omicron cases continue to rise. The emergence of a new coronavirus strain, namely Omicron, is found to have a much bigger impact on Wall Street than anticipated. Europe enacted lockdown last week due to rising virus cases that started unnerving global investors. The World Health Organization called the new variant “highly transmissible.”As a result, Wall Street had a bloodbath on Nov 26,with the Dow Jones Industrial Index losing 2.53% in its worst post-Thanksgiving Day performance since 1931. The S&P 500 and the Nasdaq Composite posted their worst-ever returns post-Thanksgiving Day. The Russell 2000 lost 3.67% on Nov 26. Crude oil retreated 13% on that day, leaving investors scratching their heads to find a green corner in Wall Street on Black Friday.Cases of the new variant were found in Hong Kong, Belgium as well as in major South African cities like Johannesburg. Flights between South Africa and Europe were being subject to quarantine or shut down altogether. Airline stocks have been battered already. All these raised worries regarding the sustainability of economic recovery from the pandemic-led slump. The flight to safety brought down the U.S. treasury yield to 1.48% on Nov 26 from 1.64% the day before.Against this backdrop, below we highlight a few ETFs that will likely gain/lose on the fear of ‘Omicron’ fear of coronavirus. As such, people will again choose to stay indoors, which in turn would boost demand for cloud computing, gaming, e-sports, streaming services as well as online shopping. Additionally, investors will continue to pile up software shares, which are apparently more insulated from the impacts of the virus. On the other hand, ETFs that depend on economic reopening will likely dive.WinnersPharma/ BiotechiShares U.S. Pharmaceuticals ETF IHE has about 20% exposure to Pfizer PFE and VanEck Biotech ETF BBH has about 8.7% focus on Moderna MRNA. Both companies are known for the meaningful success of COVID-19 vaccine. With the spread of COVID-19 resuming all over again, all focus will now shift to the vaccination and booster shots. Hence, pharma and biotech ETFs will grab attention.Technology & Video GamingFears of the Omicron variant of COVID-19 may cause higher demand for the tech stocks as these are the winning ones amid the stay-at-home trend. Plus, the sector has solid long-term potential. Technology Select Sector SPDR Fund XLK is a good pick here.ETFMG Video Game Tech ETF GAMR has also been a COVID-19 winner as the stay-at-home trend boosted the demand for video gaming. For nine months, total consumer spending on gaming rose 12% year over year to $42.28 billion. It is impressive to observe that the video gaming industry is witnessing strong sales growth despite tough year-over-year comparisons, highlighting the strength in the space.Work-From-Home ETFDirexion Work From Home ETF WFH was another winner in the previous waves of COVID-19 infections. The new restrictions are likely to goad the trend of work from home all over again.LosersCrudeUnited States Oil Fund LP USO has advanced 69.3% this year, but dropped more than 11% on Nov 26. Crude ETF USO has lost 12.8% past month and retreated 9.1% last week. Notably, oil prices has made a comeback this year on widespread vaccination, the influx of more antiviral therapies and the resultant economic reopening. But rising virus cases globally has once again capped the demand for oil and punished the liquid commodity (read: Sector ETFs to Win or Lose on Oil Slump).Travel & TourismAreas that deal with economic reopening will likely get a blow. Travel stocks are likely to be wavering in the coming sessions. ETFMG Travel Tech ETF AWAY, U.S. Global Jets ETF (JETS) and ALPS Global Travel Beneficiaries ETF (JRNY) are some of the ETFs that are likely to remain stressed in the coming days. 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 Pfizer Inc. (PFE): Free Stock Analysis Report Moderna, Inc. (MRNA): Free Stock Analysis Report ETFMG Travel Tech ETF (AWAY): ETF Research Reports Technology Select Sector SPDR ETF (XLK): ETF Research Reports United States Oil ETF (USO): ETF Research Reports iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports VanEck Biotech ETF (BBH): ETF Research Reports Wedbush ETFMG Video Game Tech ETF (GAMR): ETF Research Reports Direxion Work From Home ETF (WFH): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 29th, 2021

7 productivity tips from business owners running multimillion-dollar companies

Whether they're scaling a startup, battling supply chain disruptions, or finding fame, 7 founders share how they structure their days for success. Ria Graham is a co-owner of Kokomo, a Caribbean restaurant in Brooklyn.Ria Graham There were 3.8 million new business applications so far this year. Whether you're new to entrepreneurship or a seasoned founder, managing productivity is a key task. Seven business owners shared their productivity tips and how they structure their days for success. The number of entrepreneurs in the US continues to climb. There are 3.8 million new business applications recorded so far this year. There were 4.3 million last year, a 24.3% increase from 2019, according to the US Census Bureau. Whether you're new to entrepreneurship or a seasoned founder, managing and boosting productivity can be an everlasting goal. Some founders opt for grounding morning routines while others dive right into work before they roll out of bed.Whether they're scaling a startup, battling supply chain disruptions, or finding fame on social media, seven business owners showed Insider how they structure their days for success.Establish a grounding morning routineIn 2017, Megan Roup noticed a gap in boutique dance classes, so she launched The Sculpt Society to teach dancers and non-dancers alike in studio spaces across New York City.She declined to share exact numbers with Insider, but said her company's revenue grew 700% in 2020. Meanwhile, her weekly email newsletter has 110,000 subscribers and Roup has 265,000 followers on Instagram.On days when her husband cares for their baby, Roup prioritizes her morning routine. The simple process of drinking water with lemon, ingesting multivitamins, making coffee, and having breakfast before the workday begins helps her feel grounded.Review your company's data In June of 2020, Ria Graham opened Kokomo, a Brooklyn-based restaurant offering distinctive takes on Caribbean cuisines, like sweet plantain pancakes, shrimp flatbread, braised oxtail, and jerk chicken.Kokomo had more than $1.9 million in gross sales by the end of 2020, according to documents reviewed by Insider. This year, the business has hit close to $4 million. While Graham runs the business with her husband, she reviews company data while he works on-site. She'll go through customer reviews and the point-of-sale system to glean how the business is running. For example, she'll gauge whether certain drinks aren't selling well or if a server is struggling. Schedule interruption-free blocks of timeDaniel Snow, 28, is the founder of two multimillion-dollar enterprises: the media organization RapTV and the marketing business The Snow Agency. Additionally, he runs creative studio Kindred, which produces branded photos, videos, and advertising content for clients. Between 9:30 and 11 a.m., Snow doesn't take any calls. He said the reason is to not allow interruptions. "This allows me the time needed to review in-depth materials from my various department heads that either require my final approval or edits to be made," he said.Prioritize exercise or movementAngelys Balek, the founder of her eponymous swimsuit business, netted seven figures in sales last year as customers bought her colorful and printed bathing suits, according to documents provided to Insider. Celebrities like Halle Berry and Naomi Campbell have sported her swimsuits, which range between $180 and $500. Making time for movement is a key factor in Balek's productivity, she said. She typically starts her day by walking, swimming, or meeting her personal trainer for a high-intensity workout. "It makes my mind and body feel refreshed and rejuvenated," she said.  Take breaks throughout the dayHope Dworaczyk Smith is the founder of the skincare line Mutha, which is on track to net $3 million in sales this year, she said. She balances motherhood and entrepreneurship by adhering to a schedule that includes time for herself."If I have time between meetings and the kids are in school, you can find me reading nonfiction books about leadership, business, and self-improvement," she said.Some of her favorite books include "The Code Breaker" by Walter Isaacson, "The Whiteness of Wealth" by Dorothy Brown, and "Metahuman" by Deepak Chopra. Set goals and regularly check if you're hitting themErifili Gounari has two jobs: She works full-time for Silicon Valley-based insurance company SafetyWing, and she's the founder of The Z Link, which helps companies refine their appeal toward Gen Zers. The company is on track to net six figures by next year, according to documents verified by Insider.Since she's juggling two roles, Gounari often reviews whether she achieved the goals she set for herself the week prior. For example, she is working on targeting nomads and remote workers on social media while the work-from-home trend continues. Listen to your bodyDana Hasson has about 2.4 million followers on TikTok and 116,000 on Instagram, where she's known for sharing baking tips and fashion and beauty content.This month, she's launched a line of cooking products that includes edible glitter and a baking kit. Both roles keep her busy, and while she's tempted to work through the night, she listens to her body. Hasson will close her laptop and wind down by watching TV shows from Israel, where she grew up, and calling her parents each night.Read the original article on Business Insider.....»»

Category: personnelSource: nytNov 26th, 2021

Saudis, Russians Consider Pausing Oil Production Increases In Retaliation To Biden SPR Release

Saudis, Russians Consider Pausing Oil Production Increases In Retaliation To Biden SPR Release When commenting on yesterday's SPR release announcement by the Biden admin and several assorted hanger-on nations - which has backfired spectacularly sending the price of oil soaring now that the rumor can no longer be sold so the news has to be bought in line with every single SPR release in the past... ... we said that not only was the release far to smmal, but that in retaliation for the SPR release, "OPEC could easily consider halting its production hikes to offset the detrimental SPR impact of lower oil prices on the needed recovery in global oil capex, likely justifying such action as prudent in the face of COVID demand risks." Well, fast forward just a few hours when moments ago the WSJ reported that the leaders of OPEC+ and the world's two top oil producers Saudi Arabia and Russia, are considering a pause to their recent efforts to provide the world with more crude, citing to people familiar with those discussions. The move, as expected, is in retaliation to Washington releasing tens of millions of barrels of oil in an effort to lower prices. As a reminder, OPEC+ is meeting next week to review the long-term deal they reached earlier this year to boost their collective oil output - the deal involves boosting output by 400,000 barrels a day each month through next year, until the group hits its pre-pandemic pumping level and follows a sharp cut in output in 2020 as demand evaporated amid Covid-19 lockdowns. However, it now appears that OPEC+ may change its mind and not raise output at all; and while Biden is quick to note that oil prices have hovered near multiyear highs, OPEC and other forecasting agencies have struggled to predict demand amid the on-again-off-again nature of Covid-19 restrictions. Several countries in Europe, for instance, are moving ahead with, or considering, fresh restrictions that could sap economic activity—and by extension demand for oil. Meanwhile, the elephant in the room - the Biden-led crude release of up to 70 million barrels threatens to further scramble the supply-demand balance. As a result, and to compensate for the new supply, the WSJ confirmed our prediction and writes that Riyadh and Moscow are now considering a pause of the group’s monthly collective increase, even as US lackey, UAE - an OPEC member that has clashed with Saudi Arabia over OPEC policy in the past, and Kuwait are resisting a pause. Then again, what Russia and Saudi Arabia want, they will get. Saudi Arabia sees the released crude as potentially swelling global supply and threatening to reduce prices, according to people familiar with the country’s thinking. The question then is what will Biden do after a potential escalation in the oil war, and whether the US will halt oil exports in counter-retaliation. Such a move, as Goldman explained yesterday, would lead to a historic surge in oil prices and all hell breaking loose. This is what we said yesterday: One final point: while not even the Biden admin is dumb enough to consider it, some have speculated that once the SPR release is shown to be a total disaster, Biden may implement an oil export ban. The problem: this would have catastrophic consequences. As Goldman explains, a US export ban would significantly disrupt the US and global oil markets, and potentially be a counterproductive tool to attempt to lower oil prices. The US exports 3 mb/d of crude and domestic pipelines would not be able to reroute these volumes to US refiners, which further don’t have enough capacity to process this much crude. This would leave excess US crude supply quickly reaching tank tops and forcing shut-in production, with investment and production soon to enter significant declines. At the same time, the global market would be deprived of 3 mb/d of US supply (light sweet crude that is Brent like in quality). Brent prices would therefore need to spike to push demand lower as there is simply not enough spare capacity (nor suitable crude) to replace US lost exports. Finally, with the US an importer of gasoline from Europe, US gasoline prices would spike to curtail domestic demand, creating a negative hit to US economic activity. Come to think of it, this is precisely what Biden will do next.   Tyler Durden Wed, 11/24/2021 - 10:29.....»»

Category: blogSource: zerohedgeNov 24th, 2021

3 Stocks to Watch as Silver Demand Set to Gain 15% in 2021

With silver demand remaining strong this year and silver prices poised to gain on the impending supply demand imbalance, stocks like First Majestic (AG), Hecla Mining (HL), and MAG Silver (MAG) are poised to gain on these trends. Silver had witnessed overall weak demand last year amid the COVID-19 pandemic, which crippled the industrial sector that accounts for roughly 60% of the global silver consumption. Demand from jewelers was also muted.  Investment demand was the only saving grace with the metal gaining on its safe-haven demand. However, with the resumption of businesses and the ongoing economic recovery this year, silver demand has picked up in industrial, photography, jewelry, and silverware. Investment purposes have been contributing to the momentum as well. The Silver Institute anticipates global silver demand to increase 15% year over year to 1.029 billion ounces in 2021 — crossing the 1 billion ounces threshold for the first time since 2015.  It also expects a deficit in the silver market this year — the first time since 2015.This scenario bodes well for silver prices and consequently for the Zacks Mining - Silver industry. We suggest keeping an eye on some companies like First Majestic Silver Corp. AG, Hecla Mining Company HL and MAG Silver MAG, which are poised to benefit from these trends and their efforts to increase efficiency and cost management.US & India to Fuel Investment Demand GrowthPer the Silver Institute, investment demand is expected to attain a six-year high of 263 million ounces (Moz) this year, backed by growth in the United States and India. This indicates year-over-year growth of 32% — the highest across the board. Coin and bar demand is expected to surpass 100 million ounces in the United States for the first time since 2015. Improved sentiment toward the silver price and a recovering economy is expected to fuel demand in India. Total holdings in Exchange-traded products are projected to increase 150 Moz.Industrial Demand to Set New HighsSilver’s unrivaled characteristics make it an indispensable component for several industrial products. With the ongoing expansion in manufacturing activity, industrial demand for silver will be around 525 Moz. This suggests growth of 8% from 2020 levels.Demand for silver jewelry is expected to go up 18% year over year to 173 Moz, while the same for silverware fabrication will be up 25% to 40 Moz. This will be aided by recovery in all key countries, particularly in India with the ongoing wedding and festive season.Silver Market Headed for DeficitLast year, global silver mine production fell 7% to 780 million ounces — the most significant drop in the last decade and also the fourth consecutive annual decline. This was primarily due to temporary mine closures at several major silver producing countries in the first half of 2020 due to the pandemic. However, with most of the mines currently operating at full capacity, mined silver production is expected to improve 6% to 829 Moz this year. With this projection, the silver market is heading for a deficit of 7 Moz — the first since 2015.Meanwhile, average margins in the industry are currently at their highest since 2012. This is due to strong silver and by-product metal prices this year, which have improved profitability in the industry despite rising input costs. Last year, average silver prices had gained 27% and per Metals Focus, it is expected to rise 24% year over year to $25.40 in 2021. This will be the highest annual average since $31.15 in 2012.The Way AheadThe ongoing revolution in green technologies, aided by exponential growth of new energy vehicles and investment in solar photovoltaic energy, will act as a major catalyst for silver in the days ahead. Jewelry fabrication, which accounts for approximately one-fifth of total silver demand, is expected to be a key growth driver. India is likely to emerge as a major consumer courtesy of increasing investor interest and growth in jewelry, decorative items and silverware fabrication. Silver serves as a safe haven asset in times of uncertainty. Meanwhile, absence of development of new projects, declining ore grades and depleting reserves remain headwinds. While demand remains strong, shortage in supply will drive silver prices in the days ahead.In a year’s time, the Mining - Silver industry has declined 1.8%, against the S&P 500’s growth of 30.3%. The industry falls under the broader Basic Materials sector, which gained 10.6% in the same time frame. Amid the pandemic induced uncertainty, the mining industry has been resorting to technological innovations targeted at nearly every level of operation to increase efficiency, sustain growth and keep costs low. Image Source: Zacks Investment Research3 Silver Stocks to WatchImage Source: Zacks Investment ResearchFirst Majestic: The acquisition of the Jerritt Canyon Gold mine earlier this year enhanced its geographic operating platform while adding a producing asset in a world-class jurisdiction as Nevada is considered one of the most attractive jurisdictions for mining operations. The company achieved a new record of 7.3 million silver equivalent ounces in the third quarter of 2021, reflecting an increase 14% from the prior quarter due to having a full quarter of production from the Jerritt Canyon operation, and continued strong performance at San Dimas and La Encantada. Backed by this performance, the company’s shares have appreciated 27% in a year’s time. The company expects higher grades to drive production growth at San Dimas, Jerritt Canyon and Santa Elena in the fourth quarter and into 2022. The company has also been making investments that will aid in cost reduction starting in the fourth quarter, driven by higher production, lowered capital costs and continued improvements in operating efficiencies.The Zacks Consensus Estimate for First Majestic’s fiscal 2021 earnings suggests year-over-year growth of 5.6%, while the same for 2022 indicates an improvement of 160%. It currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Hecla Mining: Backed by its solid operational performance, the company has enhanced its silver-linked dividend for the second time this year and returned around 20% of its free cash flow to shareholders. Concurrently, the company executed the largest exploration program in its history. Hecla Mining has a diverse asset portfolio in mining friendly jurisdictions. Its mines have the highest reserve grades, long mine lives and are low risk. The company is one of the lowest-cost U.S. silver producers and produces about 43% of the silver mined in the country. This is expected to grow as Lucky Friday Mine in Idaho ramps up. Testing of a new drill and blast mining method at the Lucky Friday is exhibiting good performance in controlling seismicity and improving safety with the potential to increase productivity. The stock has surged 20% in the past year.The Zacks Consensus Estimate for Hecla Mining’s fiscal 2021 earnings suggests growth of 175% year over year. The estimate for 2022 indicates year-over-year growth of 123%. The company has a long-term estimated earnings growth rate of 1%. The Zacks Ranked #3 stock has a trailing four-quarter earnings surprise of 13%, on average.MAG Silver: The company engages in the exploration and development of silver mining properties. It explores for gold, lead, and zinc deposits. It primarily holds 44% interest in the high-grade silver Juanicipio project located in the Fresnillo District, Zacatecas State, Mexico. The company is currently constructing and developing the surface and underground infrastructure on the property to support a 4,000 tons per day mining operation, with the operational expertise of its joint venture partner. The Juanicipio Project is a robust, high-grade, high-margin underground silver project with low development risks. Juanicipio plant is expected to be commissioned by year end, subject to timely connection to the power grid. Shares of the company have gained 16% over the past year.The Zacks Consensus Estimate for MAG Silver’s earnings for fiscal 2021 is currently pegged at a loss of 1 cent per share, indicating an improvement from the loss of 8 cents in 2020. The consensus mark for the company’s earnings for 2022 is pegged at $1.22, suggesting a substantial improvement from fiscal 2022. The company has a trailing four-quarter earnings surprise of 29%, on average. It currently carries a Zacks Rank #3. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First Majestic Silver Corp. (AG): Free Stock Analysis Report Hecla Mining Company (HL): Free Stock Analysis Report MAG Silver Corporation (MAG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 23rd, 2021

Erdogan Tells Lira To Drop Dead As Currency Collapse Threatens Financial System, Bank Runs, Hyperinflation

Erdogan Tells Lira To Drop Dead As Currency Collapse Threatens Financial System, Bank Runs, Hyperinflation In what should not be confused for a masterclass in FX trading, on Monday Turkey’s President Recep Tayyip Erdogan defended his pursuit of lower interest rates to boost economic growth and job creation, sending the lira cratering to a new record low against the dollar and plummeting to an unprecedented 35% down on the year, surpassing such banana republic currencies as the Argentina, Colombia and Chili Peso. In his latest validation of the bizarre economic school known as "Erdoganomic" which confuses cause and effect as follows... ERDOGAN: INTEREST RATE IS THE REASON, INFLATION IS THE RESULT ... Erdogan said that Turkey has abandoned old policies based on high borrowing costs and a strong currency in the name of slowing inflation, and instead shifted to a new set-up that prioritizes greater investments, exports and strong job creation, while allowing the currency to collapse and no longer engaging in any lira defense. “We were either going to give up on investments, manufacturing, growth and jobs, or take on a historic challenge to meet our own priorities,” he said after a cabinet meeting in capital Ankara. While most central banks are talking of tightening policy as the global recovery fuels a surge in prices, Turkey’s decision to slash 4 percentage points off borrowing rates since September even as inflation has soared above 20%, has stunned markets and frustrated investors who complain its monetary policy is becoming increasingly erratic and unpredictable. Some, such as Swedbank AB strategist Hans Gustafson used the dreaded "H" word: “It is very hard to have a view on a fair value for the lira as long as economic policy is out of sync with fundamentals. The lira will continue to fall until economic policy tighten. Current path will lead to hyperinflation and a balance of payments crisis." As everyone knows, Erdogan is a proponent of the insane mantra that high borrowing costs cause inflation rather than curbing it, and he has demanded a so far receptive central bank cut rates even while price gains race along at near 20%. Erdogan’s pledge to double down on his most recent push for cheaper funding by the nation’s central bank sent the lira tumbling after Turkish markets closed. The currency dropped as much as 2.1% to 11.4767 per dollar and was trading 1.4% lower at 11.450 at last check. Below are some of the highlights from Erdogan’s bizarre, paranoid, at time schizophrenic speech, which reveals that Turkey truly is on the verge of a hyperinflationary collapse: There is a “game” being played against Turkey by those using interest rates, the currency’s exchange rate and inflation “We’re pleased to see that the central bank’s policy rate is being kept low” Turkey will crack down on “unfair, inexplicable price increases” by those using a weak lira as an excuse “We know quite well what we’re doing with the current policy, why we’re doing it, and the kind of risks it entails and what we’ll achieve at the end” The belief that inflation can only slow if the economy contracts has no basis Erdogan’s ruling AK Party has for decades based its electoral success on rapid levels of economic growth, often driven by reducing borrowing costs to encourage credit expansion. When the economy sank during the pandemic, support for Erdogan and his party also fell to all-time lows, prompting him to redouble efforts to propel growth though rising prices are hurting his traditional working class base the most. However, in recent months, perhaps having realized that trying to defend the collapsing lira is futile, Erodgan shifted his tone and questioned why business people did not take out loans and instead of investing in the economy, don't invest in risk assets (i.e., buy stonks) as rates were lowered in the last few months. "Then they get together (and) talk about high interest rates," he said last week. "What type of people are you? If you are a businessman you are on the side of investment, so here are you go: loans with low interest," Erdogan said. While it remains to be seen if Erdogan's pivot is accepted by the population, one thing is undpistable: Turkey’s currency crisis is driving up the cost of food, medicine and other essentials for average Turks, and poses a threat to the country’s banks and large companies if the lira’s slide isn’t arrested, economists quoted by the WSJ said. The steep drop in the lira - which as noted above has lost more than a third of its value to the dollar in eight months - is shaking a Turkish society that had long prided itself as an ascendant economy that rivaled its European neighbors. Ordinary people are now struggling with a decline in their living conditions, with rampant inflation putting pressure on wages and eating into savings. “My life is completely changed,” said Kemal Ince, an Istanbul shopkeeper who hails from Rize, the conservative Black Sea stronghold of President Recep Tayyip Erdogan. Ince says that he is ashamed to have to increase the prices of coffee, olives and cheese, and that even as he charges his customers more, he still feels squeezed. “I don’t have the luxury of spending money on anything,” he said. Turkey’s current crisis is the worst the country has faced since 2018, when the lira also dropped precipitously amid a crisis in relations with the U.S. Worries over potential loan defaults and stress on banks were so high in 2018, the country’s banking regulator allowed lenders to extend loan maturities and facilitate debt restructuring. Turkey’s major banks and companies—many crippled by big foreign-currency loans—now face longer-term risks of instability if Erdogan continues down the path of cutting interest rates further, economists and businesspeople here said. “These kind of imbalances might end up with a run on banks,” said Omer Gencal, a former executive at several Turkish and international banks and now an official with an opposition party. “The current situation isn’t sustainable.” According to the Turkish central bank, nonfinancial companies had about $160 billion in foreign-exchange assets and $280 billion in liabilities as of August. The gap has narrowed since 2018, though it is still wide. Banks’ lending in foreign currency ranged from 24% to 45% of their total loans in the first half of the year, according to Fitch Ratings. While banks have kept their nonperforming loans in check, including through the pandemic, Fitch warned in a report last month that “risks remain high given exposure to the volatile Turkish operating environment, risky segments and sectors, significant foreign-currency lending and the high lira interest-rate environment.” Jason Tuvey, senior emerging-markets economist at Capital Economics, however, told the WSJ that the greatest threat for Turkish banks is their ability to rollover their external debts if investors get increasingly spooked. Short-term external debt of banks stood at $84 billion, or close to 10% of the country’s gross domestic product. Mr. Tuvey said April next year will be a key month for banks, given some of that debt will be due then. Tuvey said that back in 2018 banks were able to draw down their foreign-exchange assets held at the central bank to meet external debt repayments. “The upshot is that banks would be able to muddle through for a short period as in 2018, but they may struggle to cope if access to international capital markets were to be restricted for a considerable amount of time,” Tuvey said. Turkey’s large companies may be able to cope with the crisis for the moment because of foreign-currency reserves that he said might be even larger than official figures show, an ability to pass costs onto consumers, and government assistance including loans, according to Hakan Kara, a former chief economist at the central bank. But as with every case of soaring inflation, the crisis has fallen hardest on ordinary Turks, many of whom are swapping their earnings into foreign currency and cryptos, or looking for ways to flee the country. “I have no confidence left in the Turkish lira because we cannot see what lies ahead for us in this country anymore,” said a woman in her 60s who walked into an exchange office in Istanbul to change 50,000 lira into dollars. The woman, who owns a pharmacy, asked to have her name withheld because of fear of government reprisal. The government imposed a new rule this week requiring customers to present identification cards any time they exchange more than $100 worth of currency. Alas, as noted above, Erdogan doesn’t appear likely to change course, despite the political risks of soaring inflation. He has intensified his calls for low interest rates and the central bank this week used language that suggested it would cut rates again in December. Having ruled Turkey for nearly two decades as both prime minister and president, winning elections in part by vastly expanding the country’s economy, Erdogan’s time in power is at risk of coming to an end as the plummeting lira erodes the standard of living for millions of Turks, driving away potential voters. “Erdogan runs everything. He doesn’t allow either the finance minister, or the central bank governor, or anyone else to do their jobs,” said the owner of an exchange office in Istanbul. Tyler Durden Mon, 11/22/2021 - 14:07.....»»

Category: blogSource: zerohedgeNov 22nd, 2021

Futures Trade Near All Time High As Traders Shrug At Inflation, Covid Concerns

Futures Trade Near All Time High As Traders Shrug At Inflation, Covid Concerns US equity futures and European markets started the Thanksgiving week on an upbeat note as investors set aside fear of surging inflation and focused on a pickup in M&A activity while China signaled possible easing measures. The euphoria which lifted S&P futures up some 0.5% overnight and just shy of all time highs ended abruptly and futures reversed after German Chancellor Angela Merkel said the Covid situation in the country is worse than anything so far and tighter curbs are needed. At 730 a.m. ET, Dow e-minis were up 95 points, or 0.26%. S&P 500 e-minis were up 12.25 points, or 0.26% and Nasdaq 100 e-minis were up 58.75 points, or 0.357%. U.S. stocks trade near record levels, outpacing the rest of the world, as investors see few alternatives amid rising inflation and a persistent pandemic that undermines global recovery. Concerns about high valuations and the potential for the economy to run too hot on the back of loose monetary and fiscal policies have interrupted, but not stopped the rally. In other words, as Bloomberg puts it "bears are winning the argument, bulls are winning in the market" while Nasdaq futures hit another record high as demand for technology stocks remained strong. “Based on historical data, the Thanksgiving week is a strong week for U.S. equities,” Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. “Black Friday sales will be closely watched. The good news is, people still have money to spend, even though they get less goods and services in exchange of what’s spent.” In premarket moves, heavyweights, including most FAANG majors, rose in premarket trade. Vonage Holdings Corp. jumped 26% in premarket trading after Ericsson agreed to buy it. Telecom Italia SpA jumped as much as 30% in Europe after KKR offered to buy it for $12 billion. Energy stocks recovered slightly from last week's losses, although anticipation of several economic readings this week kept gains in check. Bank stocks rose in premarket trading as the U.S. 10-year Treasury yield climbed for the first time in three sessions to about 1.58%. S&P 500 futures gain as much as 0.5% on Monday morning. Tesla gained 2.8% after Chief Executive Elon Musk tweeted that Model S Plaid will "probably" be coming to China around March. Activision Blizzard (ATVI.O) slipped 1.1% after a media report that the video game publisher's top boss, Bobby Kotick, would consider leaving if he cannot quickly fix culture problems. Travel and energy stocks, which were among the worst performers last week, also marked small gains before the open. Here is a list of the other notable premarket movers: Astra Space (ASTR US) shares surge 33% in premarket trading after the company said its rocket reached orbit. Aurora Innovation (AUR US) falls 8% in premarket, after soaring 71% last week amid a surge in popularity for self-driving technology companies among retail traders. Chinese electric-carmaker Xpeng (XPEV US) rises as much as 2.8% premarket after co. unveils a large sports-utility vehicle pitted more directly against Tesla’s Model Y and Nio’s ES series. Stocks of other EV makers are mixed. Monster Beverage (MNST US)., the maker of energy drinks, is exploring a combination with Corona brewer Constellation Brands (STZ US), according to people familiar with the matter. CASI Pharma (CASI US) jumped 17% in postmarket trading after CEO Wei-Wu He disclosed the purchase of 400,000 shares in a regulatory filing. Along with an eye on the Fed's plans for tightening policy, investors are also watching for an announcement from Joe Biden on his pick for the next Fed chair. Powell was supposed to make his decision by the weekend but has since delayed it repeatedly. Investors expect current chair Jerome Powell to stay on for another term, although Fed Governor Lael Brainard is also seen as a candidate for the position. “Bringing the most dovish of the doves wouldn’t guarantee a longer period of zero rates,” Ozkardeskaya wrote. “If the decisions are based on economic fundamentals, the economy is calling for a rate hike. And it’s calling for it quite soon.” The Stoxx 600 trimmed gains after German Chancellor Angela Merkel called for tighter Covid-19 restrictions. European telecom shares surged after KKR’s offer to buy Telecom Italia for about $12 billion, which boosted sentiment about M&A in the sector. The Stoxx 600 Telecommunications Index gained as much as 1.6%, the best-performing sector gauge for the region: Telefonica +4.8%, Infrastrutture Wireless Italiane +4%, KPN +2.7%. Meanwhile, telecom equipment stock Ericsson underperforms the rest of the SXKP index, falling as much as 4.9% after a deal to buy U.S. cloud communication provider Vonage; Danske Bank says the price is “quite steep”. Earlier in the session, Asian stocks fell as Covid-19 resurgences in Europe triggered risk-off sentiment across markets amid weaker oil prices, a strong U.S. dollar and higher bond yields. The MSCI Asia Pacific Index declined 0.3%, with India’s Sensex measure slumping the most since April as Paytm’s IPO weighed on sentiment. The country’s oil giant Reliance dragged down the Asian index after scrapping a deal with Saudi Aramco, and energy and financials were the biggest sector losers in the region. Asian markets have turned softer after capping their first weekly retreat this month, following lackluster moves from economically sensitive sectors in the U.S., while investors continue to monitor earnings reports of big Chinese technology firms this week. “Some impact from the regulatory risks and dull macroeconomic conditions have shown up in several Chinese big-tech earnings and that may put investors on the sidelines as earnings season continues,” Jun Rong Yeap, a market strategist at IG Asia Pte., wrote in a note. China’s equity gauge posted a second straight day of gains after the central bank’s quarterly report indicated a shift toward easing measures to bolster the economic recovery. South Korea led gains in the region, with the Kospi adding more than 1%, helped by chipmakers Samsung Electronics and SK Hynix. Asia’s chip-related shares rose after comments from Micron Technology CEO Sanjay Mehrotra added to optimism the global shortage of semiconductors is easing. Reports of Japan earmarking $6.8 billion to bolster domestic chipmaking and Samsung planning to announce the location of its new chip plant in the U.S. also aided sentiment. Japanese stocks fluctuated after U.S. shares retreated on Friday following hawkish remarks from Federal Reserve officials. The Topix index was virtually unchanged at 2,044.16 as of 2:21 p.m. Tokyo time, while the Nikkei 225 advanced 0.1% to 29,783.92. Out of 2,180 shares in the index, 1,107 rose and 948 fell, while 125 were unchanged. “There are uncertainties surrounding the direction of U.S. monetary policy,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute Co. “The latest comments from FRB members are spurring talk that steps to taper could accelerate.” Australian stocks sunk as banks tumbled to almost a 4-month low. The S&P/ASX 200 index fell 0.6% to close at 7,353.10, weighed down by banks and technology stocks as the measure for financial shares finished at the lowest level since July 30.  Nickel Mines was the top performer after agreeing to expand its strategic partnership with Shanghai Decent. Flight Centre fell for a second session, ending at its lowest close since Sept. 20, as the Covid-19 situation worsens in Europe. In New Zealand, the S&P/NZX 50 index fell 1% to 12,607.64. In FX, the Bloomberg dollar index holds Asia’s narrow range, trading little changed on the day. AUD outperforms G-10 peers, extending Asia’s modest gains. SEK and JPY are the weakest. RUB lags in EMFX, dropping as much as 1% versus the dollar with USD/RUB on a 74-handle. According to Bloomberg, hedge funds’ bullishness toward the dollar is starting to evaporate amid speculation the U.S. currency has risen too much given the Federal Reserve remains adamant it’s in no rush to raise interest rates. Meanwhile, the euro pared modest Asia session losses to trade below $1.13, while European bond yields edged higher, led by bunds and gilts. The pound dipped after comments from Bank of England policy makers raised questions about the certainty of an interest-rate increase in December. Governor Andrew Bailey said that the risks to the U.K. economy are “two-sided” in a weekend interview. Australian dollar advanced against the kiwi on position tweaking ahead of Wednesday’s RBNZ’s rate decision, and after China’s central bank removed sticking with “normal monetary policy” from its policy outlook. Yen declines as speculation China will steer toward more accommodative policy damps the currency’s haven appeal. Hungary’s forint tumbled to a record low against the euro as back-to-back interest rate increases failed to shield it during a rapidly deteriorating pandemic and a flight to safer assets. In commodities, crude futures drifted higher. WTI rises 0.3% near $76.20, Brent regains at $79-handle. Spot gold has a quiet session trading near $1,844/oz. Base metal are mixed: LME copper, tin and zinc post small losses; lead and nickel are in the green Looking at today's calendar, we get the October Chicago Fed national activity index, existing home sales data, and the Euro Area advance November consumer confidence. Zoom is among the companies reporting earnings. Market Snapshot S&P 500 futures up 0.3% to 4,710.75 STOXX Europe 600 up 0.3% to 487.45 German 10Y yield little changed at -0.34% Euro little changed at $1.1283 MXAP down 0.2% to 198.88 MXAPJ down 0.2% to 647.20 Nikkei little changed at 29,774.11 Topix little changed at 2,042.82 Hang Seng Index down 0.4% to 24,951.34 Shanghai Composite up 0.6% to 3,582.08 Sensex down 2.0% to 58,450.84 Australia S&P/ASX 200 down 0.6% to 7,353.08 Kospi up 1.4% to 3,013.25 Brent Futures up 0.4% to $79.22/bbl Gold spot little changed at $1,846.10 U.S. Dollar Index also little changed at 96.08 Top Overnight News from Bloomberg Negotiators hammering out details of a transformative new global corporate tax regime are shaping the deal to maximize its chance of winning acceptance in the U.S., whose companies face the biggest impact from the overhaul The U.S. has shared intelligence including maps with European allies that shows a buildup of Russian troops and artillery to prepare for a rapid, large-scale push into Ukraine from multiple locations if President Vladimir Putin decided to invade, according to people familiar with the conversations. The ruble slid to the weakest since August and the hryvnia fell With investors ramping up expectations for the Federal Reserve and other developed-market central banks to tighten policy, the likes of the Brazilian real and Hungarian forint have been weighed down by inflation and political concerns even as local officials pushed up borrowing costs. The Chinese yuan, Taiwanese dollar and Russian ruble have been among the few to stand their ground An organization formed by key participants in China’s currency market urged banks to limit speculative foreign-exchange trading after the yuan climbed to a six-year high versus peers The Avalanche cryptocurrency has surged in the past several days, taking it briefly into the top 10 by market value and surpassing Dogecoin and Shiba Inu, after a deal related to improvement of U.S. disaster-relief funding A more detailed breakdown of overnight news courtesy of Newsquawk Asia-Pac stocks traded mixed following last Friday's mostly negative performance stateside, where risk appetite was dampened by concerns of a fourth COVID wave in Europe and recent hawkish Fed rhetoric. Weekend newsflow was light and the mood was tentative heading into this week's risk events including FOMC minutes and US GDP data before the Thanksgiving holiday. The ASX 200 (-0.6%) was subdued with declines led by weakness in gold miners and the energy sector. The Nikkei 225 (+0.1%) was lacklustre after last week’s inflows into the JPY but with downside eventually reversed as the currency faded some of the gains and following the recent cabinet approval of the stimulus spending. The KOSPI (+1.4%) outperformed and reclaimed the 3k level with shares in index heavyweight Samsung Electronics rallying as its de facto leader tours the US which spurred hopes the Co. could deploy its USD 100bln cash pile. The Hang Seng (-0.4%) and Shanghai Comp. (+0.6%) diverged with the mainland kept afloat after the PBoC conducted a mild liquidity injection and maintained its Loan Prime Rate for a 19th consecutive month as expected, although Hong Kong was pressured by losses in energy and cautiousness among developers, as well as the recent announcement of increased constituents in the local benchmark. Finally, 10yr JGBs eked marginal gains amid the cautious risk tone in Asia and following firmer demand at the enhanced liquidity auction for 2yr-20yr JGBs, but with upside capped as T-note futures continued to fade Friday’s early gains that were fuelled by the COVID-19 concerns in Europe before the advances were later halted by hawkish Fed rhetoric calling for a discussion on speeding up the tapering at next month’s meeting. Top Asian News China Blocks Peng Shuai News as It Seeks to Reassure World China FX Panel Urges Banks to Cap Speculation as Yuan Surges Paytm Founder Compares Himself to Musk After Historic IPO Flop China Tech Stocks Are Nearing Inflection Point, UBS GWM Says European cash bourses kicked off the new trading week with mild gains (Euro Stoxx 50 +0.3%; Stoxx 600 +0.3%) following a mixed APAC handover. Some have been attributing the mild gains across Europe in the context of the different approaches of the Fed and ECB, with the latter expected to remain dovish as the former moves tighter, while COVID lockdowns will restrict economic activity. News flow in the European morning has however been sparse, as participants look ahead to FOMC Minutes, Flash PMIs and US GDP ahead of the Thanksgiving holiday (full Newsquawk Desk Schedule on the headline feed) alongside the Fed Chair update from President Biden and a speech from him on the economy. US equity futures see modestly more pronounced gains, with the more cyclically-exposed RTY (+0.6%) performing better than then NQ (+0.4%), ES (+0.4%) and YM (+0.4%). Since the European cash open, the initial mildly positive momentum has somewhat waned across European cash and futures, with the region now conforming to a more mixed picture. Spain's IBEX (+0.7%) is the clear regional outperforming, aided by index heavyweight Telefonica (+5.0%), which benefits from the sectorial boost received by a couple of major M&A updates. Firstly, Telecom Italia (+22%) gapped higher at the open after KKR presented a EUR 0.505/shr offer for Telecom Italia. The offer presents a ~45% premium on Friday's close. Second, Ericsson (-3.5%) made a bid to acquire American publicly held business cloud communications provider Vonage in a deal worth USD 6.2bln. As things stand, the Telecom sector is the clear outperformer, closely followed by banks amid a revival in yields. The other end of the spectrum sees Travel & Leisure back at the foot of the bunch as COVID fears in Europe mount. In terms of individual movers, Vestas Wind Systems (-2.0%) was hit as a cyber incident that impacted parts of its internal IT structure and data has been compromised. Looking ahead, it’s worth noting that volume will likely be more muted towards the latter half of the week on account of the Thanksgiving holiday. Top European News Scholz Closer to German Chancellery as Cabinet Takes Shape Austria Back in Lockdown Ahead of Mandatory Vaccine Policy Energy Crunch Drives Carbon to Record as Europe Burns More Coal BP Goes on Hydrogen Hiring Spree in Bid for 10% Market Share In FX, the Antipodean Dollars are outperforming at the start of the new week on specific supportive factors, like a bounce in the price of iron ore and a further re-opening from pandemic restrictions in both Australia and New Zealand, while the REINZ shadow board is ‘overwhelmingly’ behind another RBNZ rate hike this week. Aud/Usd is holding around 0.7250 and Nzd/Usd is hovering circa 0.7000 as the Aud/Nzd cross pivots 1.0350 in the run up to flash Aussie PMIs and NZ retail sales. DXY - Aussie and Kiwi strength aside, the Greenback retains a solid underlying bid on safe haven and increasingly hawkish Fed grounds after a run of recent much better than expected US data. In index terms, a base just above 96.000 provides a platform to retest last week’s peaks at 96.245 and 96.266 vs 96.223 so far, but Monday’s agenda may not give bulls much in the way of encouragement via data with only existing home sales scheduled. Instead, the Buck could derive more impetus from Treasuries given front-loaded supply ahead of Thanksgiving in the form of Usd 58 bn 2 year and Usd 59 bn 5 year notes. CHF/CAD/EUR/GBP/JPY - All narrowly mixed against their US rival, as the Franc keeps its head above 0.9300 and meanders between 1.0485-61 vs the Euro amidst some signs of official intervention from a rise in weekly Swiss sight deposits at domestic banks. Meanwhile, the Loonie has some leverage from a mild rebound in crude prices to pare declines from sub-1.2650 and should glean support into 1.2700 from 1 bn option expiries at 1.2685 on any further risk aversion or fallout in WTI. Conversely, 1 bn option expiry interest from 1.1300-05 could scupper Euro recoveries from Friday’s new y-t-d low around 1.1250 against the backdrop of ongoing COVID-19 contagion and pre-ECB speakers plus preliminary Eurozone consumer confidence. Elsewhere, the Pound is weighing up BoE tightening prospects and the impact of no breakthrough between the UK and EU on NI Protocol as Cable and Eur/Gbp straddle the 1.3435-40 zone and 0.8400 respectively, while the Yen has unwound more of its safe haven premium within a 114.27-113.91 range eyeing UST yields in relation to JGBs alongside overall risk sentiment. SCANDI/EM - The Nok is deriving some traction from Brent back over Usd 79/brl, but geopolitical concerns are preventing the Rub from benefiting and the Mxn is also on a weaker footing along with most EM currencies. However, the Try is striving to draw a line in the sand irrespective of a marked deterioration in Turkish consumer sentiment and the Cnh/Cny are holding up well regardless of a softer PBoC fix for the onshore unit as LPRs were unchanged yet again and China’s FX regulator told banks to limit Yuan spec trades. In CEE, the Pln has plunged on diplomatic strains between Poland and the EU, the Huf has depreciated to all time lows on virus fears and the Czk has been hampered by CNB’s Holub downplaying the chances of more big tightening surprises such as the aggressive hike last time. In commodities, WTI and Brent front month futures see some consolidation following Friday’s slide in prices. In terms of the fundamentals, the demand side of the equations continues to be threatened by the fourth wave of COVID, namely in the European nations that have not had a successful vaccine rollout. As a reminder, Austria is in a 20-day nationwide lockdown as of today, whilst Germany, Belgium and the Netherlands see tighter restrictions, with the latter two also experiencing COVID-related social unrest over the weekend. The European Commission will on Wednesday issue a set of new recommendations to its member states on non-essential travel, a senior EU diplomat said, which will be watched for activity and jet fuel demand. Over to the supply side, There were weekend reports that Japan and the US are planning a joint announcement regarding the SPR release, although a key Japanese official later noted there was no fixed plan yet on releasing reserves. Japanese PM Kishida confirmed that they are considering releasing oil reserves to curb prices. Meanwhile, Iranian nuclear talks are regaining focus as negotiations are poised to resume on the 29th of November – it is likely we’ll see officials telegraph their stances heading into the meeting. Eyes will be on whether the US offers an olive branch as Tehran stands firm. Elsewhere, the next OPEC+ meeting is also looming, but against the backdrop of lower prices, COVID risk and SPR releases, it is difficult to see a scenario where OPEC+ will be more hawkish than dovish. WTI and Brent Jan trade on either side of USD 76/bbl and USD 79/bbl respectively and within relatively narrow bands. Spot gold and silver meanwhile see a mild divergence, with the yellow metal constrained by resistance in the USD 1,850/oz area, whilst spot silver rebounded off support at USD 24.50/oz. Finally, base metals are relatively mixed with no standout performers to point out. LME copper is flat but holds onto USD 9,500+/t status. US Event Calendar 8:30am: Oct. Chicago Fed Nat Activity Index, est. 0.10, prior -0.13 10am: Oct. Existing Home Sales MoM, est. -1.8%, prior 7.0% 10am: Oct. Home Resales with Condos, est. 6.18m, prior 6.29m DB's Jim Reid concludes the overnight wrap This morning we’ve just published our 2022 credit strategy outlook. 2021 has been one of the lowest vol years for credit on record but we think this is unlikely to last and spreads will sell-off at some point in H1 when markets reappraise how far behind the curve the Fed is. Even with covid restrictions mounting again in Europe as we go to print, we think it’s more likely that we’ll be in a “growthflationary” environment for 2022 and think overheating risks are more acute than the stagflation risk, especially in the US. Strong growth and high liquidity should mean that full year 2022 is a reasonable year for credit overall but if we’re correct there’ll be regular pockets of inflationary/interest rate concerns in the market, which we think is more likely to happen in H1. At the H1 wides, we could see spreads widen as much as 30-40bps in IG and 120-160bps in HY which is consistent with typical mid-cycle ranges through history. We do expect this to mostly retrace in H2 as markets recover from the shock and growth remains decent and liquidity still high. However, with the potential for a shift in the narrative to potential late-cycle dynamics, we think spreads will close 2022 slightly wider than they are today. We will be watching the yield curve closely through the year for clues as to how the cycle will evolve into 2023. This has the ability to move our YE 22 forecasts in both directions as the year progresses. This week will be heavily compressed given Thanksgiving on Thursday. The highlight though will be a likely choice of Fed governor before this, assuming the timetable doesn’t slip again. Overnight it’s been announced that Biden will give a speech to the American people tomorrow on the economy and prices. It’s possible the Fed Chair gets announced here and perhaps plans to release oil from the strategic reserve. We will see. Following that, Wednesday is especially busy as a pre-holiday US data dump descends upon us. We’ll see the minutes of the November 3rd FOMC meeting and earlier that day the core PCE deflator (the Fed's preferred inflation metric), Durable Goods, the UoM sentiment index (including latest inflation expectations), new home sales and jobless claims amongst a few other releases. More internationally, covid will be focus, especially in Europe as Austria enters lockdown today after the shock announcement on Friday. Germany is probably the swing factor here for sentiment in Europe so case numbers will be watched closely. Staying with Germany, there’s anticipation that a coalition agreement could be reached in Germany between the SPD, Greens and the FDP, almost two months after their federal election. Otherwise, the flash PMIs for November will be in focus, with the ECB following the Fed and releasing the minutes from their recent meeting on Thursday. As discussed at the top the most important market event this week is likely to be on the future leadership of the Federal Reserve, as it’s been widely reported that President Biden is expected to announce his choice on who’ll be the next Fed Chair by Thanksgiving on Thursday. Previous deadlines have slipped on this announcement, but time is becoming increasingly limited given the need for Senate confirmation ahead of Chair Powell’s current four-year term expiring in early February. The two names that are quite obviously in the frame are incumbent Chair Powell and Governor Brainard, but there are also a number of other positions to fill at the Fed in the coming months, with Vice Chair Clarida’s term as an FOMC governor expiring in January, Randal Quarles set to leave the Board by the end of this year, and another vacant post still unfilled. So a significant opportunity for the Biden administration to reshape the top positions at the Fed. In spite of all the speculation over the position of the Fed Chair, our US economists write in their latest Fed update (link here), that the decision is unlikely to have a material impact on the broad policy trajectory. Inflation in 2022 is likely to remain at levels that make most Fed officials uncomfortable, whilst the regional Fed presidents rotating as voters lean more hawkish next year, so there’ll be constraints to how policy could shift in a dovish direction, even if an incoming chair wanted to move things that way. Another unconfirmed but much anticipated announcement this week could come from Germany, where there’s hope that the centre-left SPD, the Greens and the liberal FDP will finally reach a coalition agreement. The general secretaries of all three parties have recently said that they hope next week will be when a deal is reached, and a deal would pave the way for the SPD’s Olaf Scholz to become chancellor at the head of a 3-party coalition. Nevertheless, there are still some hurdles to clear before then, since an agreement would mark the start of internal party approval processes. The FDP and the SPD are set to hold a party convention, whilst the Greens have announced that their members will vote on the agreement. On the virus, there is no doubt things are getting worse in Europe but it’s worth putting some of the vaccine numbers in some context. Austria (64% of total population) has a double vaccination rate that is somewhat lower than the likes of Spain (79%), Italy (74%), France (69%), the UK (69%) and Germany (68%). The UK for all its pandemic fighting faults is probably as well placed as any due to it being more advanced on the booster campaign due to an earlier vaccine start date and also due to higher natural infections. It was also a conscious decision back in the summer in the UK to flatten the peak to take load off the winter wave. So this is an area where scientists and the government may have made a calculated decision that pays off. Europe is a bit behind on boosters versus the UK but perhaps these will accelerate as more people get 6 months from their second jab, albeit a bit too late to stop some kind of winter wave. There may also be notable divergence within Europe. Countries like Italy and Spain (and to a slightly lesser extent France) that were hit hard in the initial waves have a high vaccination rate so it seems less likely they will suffer the dramatic escalation that Austria has seen. Germany is in the balance as they have had lower infection rates which unfortunately may have encouraged slightly lower vaccination rates. The irony here is that there is some correlation between early success/lower infections and lower subsequent vaccination rates. The opposite is also true - i.e. early bad outcomes but high vaccination rates. The US is another contradiction as it’s vaccination rate of 58% is very low in the developed world but it has had high levels of natural infections and has a higher intolerance for lockdowns. So tough to model all the above. Overall given that last winter we had no vaccines and this year we have very high levels of protection it seems unfathomable that we’ll have an outcome anywhere near as bad. Yes there will be selected countries where the virus will have a more severe impact but most developed countries will likely get by without lockdowns in my opinion even if the headlines aren’t always going to be pleasant. Famous last words but those are my thoughts. In light of the rising caseloads, the November flash PMIs should provide some context for how the global economy has performed into the month. We’ve already seen a deceleration in the composite PMIs for the Euro Area since the summer, so it’ll be interesting to see if that’s maintained. If anything the US data has reaccelerated in Q4 with the Atlanta Fed GDPNow series at 8.2% for the quarter after what will likely be a revised 2.2% print on Wednesday for Q3. Time will tell if Covid temporarily dampens this again. Elsewhere datawise, we’ll also get the Ifo’s latest business climate indicator for Germany on Wednesday, which has experienced a similar deceleration to other European data since the summer. The rest of the week ahead appears as usual in the day-by-day calendar at the end. Overnight in Asia stocks are mixed with the KOSPI (+1.31%) leading the pack followed by the Shanghai Composite (+0.65%) and CSI (+0.53%), while the Nikkei (-0.18%) and Hang Seng (-0.35%) are lower. Stocks in China are being boosted by optimism that the PBOC would be easing its policy stance after its quarterly monetary policy report on Friday dropped a few hints to that effect. Futures are pointing towards a positive start in the US and Europe with S&P 500 futures (+0.31%) and DAX futures (+0.14%) both in the green. Turning to last week now, rising Covid cases prompted renewed lockdown measures to varying degrees and hit risk sentiment. Countries across Europe implemented new lockdown measures and vaccine requirements to combat the latest rise in Covid cases. The standouts included Austria and Germany. Austria will start a nationwide lockdown starting today and will implement a compulsory Covid vaccine mandate from February. Germany will restrict leisure activities and access to public transportation for unvaccinated citizens and announced a plan to improve vaccination efforts. DM ten-year yields decreased following the headline. Treasury, bund, and gilt yields declined -3.8bps, -6.7bps, and -4.6bps on Friday, respectively, bringing the weekly totals to -1.3bps, -8.3bps, and -3.5bps, respectively. The broad dollar appreciated +0.54% Friday, and +0.98% over the week. Brent and WTI futures declined -2.89% and -3.68% on Friday following global demand fears, after drifting -4.27% and -5.79% lower throughout the week as headlines circulated that the US and allies were weighing whether to release strategic reserves. European equity indices declined late in the week as the renewed lockdown measures were publicized. The Stoxx 600, DAX, and CAC 40 declined -0.33%, -0.38%, and -0.42%, respectively on Friday, bringing their weekly totals to -0.14%, +0.41%, and +0.29%. The S&P 500 index was also hit ending the week +0.32% higher after declining -0.14% Friday, though weekly gains were concentrated in big technology and consumer discretionary stocks. U.S. risk markets were likely supported by the U.S. House of Representatives passing the Biden Administration’s climate and social spending bill. The bill will proceed to the Senate, where its fate lays with a few key moderate Democrats. This follows President Biden signing a physical infrastructure bill into law on Monday. On the Fed, communications from officials took a decidedly more hawkish turn on inflation dynamics, especially from dovish members. Whether the Fed decides to accelerate its asset purchase taper at the December FOMC will likely be the key focus in markets heading into the meeting. Ending the weekly wrap up with some positive Covid news: the U.S. Food and Drug Administration cleared Pfizer and Moderna booster shots for all adults. Additionally, the US will order 10 million doses of Pfizer’s Covid pill. Tyler Durden Mon, 11/22/2021 - 07:49.....»»

Category: blogSource: zerohedgeNov 22nd, 2021

NAR Touts ‘Resounding Progress’ on Several Federal Policy Issues

To say it’s been a busy year for the National Association of REALTORS® (NAR) would be an understatement. From juggling the impacts of the pandemic to vying for investment in housing in Washington D.C., the association has had its hands full throughout 2021. Hundreds of real estate professionals gathered to hear the latest updates on […] The post NAR Touts ‘Resounding Progress’ on Several Federal Policy Issues appeared first on RISMedia. To say it’s been a busy year for the National Association of REALTORS® (NAR) would be an understatement. From juggling the impacts of the pandemic to vying for investment in housing in Washington D.C., the association has had its hands full throughout 2021. Hundreds of real estate professionals gathered to hear the latest updates on federal issues impacting the industry during NAR’s annual REALTOR® Conference & Expo at the San Diego Convention Center in California. Co-presenters at the session included Shannon McGahn, NAR’s Chief Advocacy Officer, and Bryan Greene, Vice President of Policy Advocacy at NAR. Kenneth Fears, NAR’s Senior Policy Representative for Banks, Lending and Housing Finance; Sarah Young, Director of Real Estate Services and Policy Oversight at NAR; and Evan Liddiard, Director for Federal Taxation at the NAR were panelists at the meeting as well. McGhan kicked off the session with a comprehensive look at the organization’s advocacy progress toward improving access to homeownership, building resilient communities and pandemic recovery. “I’m pleased to report that despite a pretty challenging environment, we have made resounding progress and success on all fronts, and we’re expecting even more by year’s end,” McGahn said. Part of that progress came in the form of the recent approval of the bipartisan infrastructure bill that president Joe Biden signed into law on Monday, November 15. Regarding the coronavirus pandemic, the NAR has continued to support the allocation and distribution of nearly $50 billion in emergency rental assistance to help financially distressed tenants and housing providers to make ends meet. McGahn also noted that the association had made substantial strides in fighting discrimination in the industry by pushing essential fair housing bills forward, including the Equality Act, the Mapping Housing Discrimination act and the Fair Lending Act. “Our advocate agenda has been quite a tall order, but our modernized advocacy operation has proven to be able to take on any challenge, even a once in a lifetime crisis,” McGahn said. “We always have our eyes on the issues of tomorrow. Our strength is in the 1.5 million members.” Greene echoed similar sentiments before leading a panel discussion with NAR’s policy advocacy team. “The year has really been some year, and it began as sort of a tidal wave amid a perfect storm when you consider that we had a pandemic at its peak,” he said. “It has been surprising when we look back at what we accomplished this year and how remarkable a year it was amidst all of the challenges.” Dodging a tax bullet Liddiard suggested that the industry “dodged a bullet” with a series of tax increase proposals that threatened real estate professionals. “We were looking at a very ugly situation as far as the tax increase proposal to pay for the trillions of dollars in new spending that was proposed,” Liddiard said, pointing to proposed limits or elimination of 1031 exchanges at the start of 2021. While he assured the audience that he was “confident that 1031 is off the table,” Liddiard claimed that was only the tip of the iceberg of potential tax increases. “We’ve never seen a year like this as far as threats of tax increases that would affect real estate,” he said. Liddiard highlighted a list of proposals—which he called “the ugly 11″— that were introduced between spring and summer as a means to pay for trillions of dollars in spending. The list included sizable increases in the capital gain tax rate for those making over $1 million, proposed taxation of unrealized gains, and a net investment income tax change. “I’m the first to caution that the process is not over with,” Liddiard said. Despite the potential threat, Liddiard said he was confident that most of the proposals were dead. The one exception is expanding the net investment income tax for those making $400,000 to $500,000. “I think there is only about a 40% to 60% chance that we’ll even see the Build Back Better bill enacted into law,” Liddiard opined. “It still could fall apart, and we could see nothing on this.” Build Back Better Act The discussion shifted to focus on infrastructure spending again as Young dove into aspects of each bill that would benefit the real estate industry. While Young indicated that NAR had supported both spending bills, the Build Back Better Act has garnered the most attention, especially from the real estate industry over the last few months. As Congress debated making significant cuts to the legislation, NAR CEO, Bob Goldberg, also joined a broad coalition of housing advocates to stress the importance of keeping housing provisions in the bill. “The bill is not done yet, so it is possible that they could start jettisoning some of these provisions off,” Young said. The $1.9 trillion spending bill cleared a major hurdle on Friday after the House approved the legislation in a 220-213 vote. The social spending package contains nearly $150 billion proposed housing-related provisions. Among the proposals in the bill that (NAR supports) would be a boon for housing, Young pointed to down payment assistance for first-generation homebuyers, grants to state and local governments to create affordable housing solutions. Considering that the Senate passed the infrastructure bill at the time of the session, Young was hopeful that the “social infrastructure package” could pass as well. “We made the point to them that housing is bipartisan,” she said. “It’s an important issue that both sides of the aisle can agree on. It’s critical as we’ve seen especially during the pandemic to stimulate our economy.” Regulatory Changes With a new administration in Washington, NAR has also been bullish about advocating for real estate professionals’ regulatory interest, mainly regarding lending and fair lending issues. While Congress and the framework of both infrastructure bills have captured headlines, Fears noted that regulator activity over the past eight months has also been noteworthy. “There have been a lot of changes since the administration chain came in, and these come in three flavors,” Fears said, noting that the first accounted for the easing of pandemic-related support for distressed homeowners like the foreclosure moratoriums. During debates and legal battles over moratoriums implemented by the Center for Disease Control and Preventions (CDC), Fears noted that regulators “quietly pulled back” on the moratoriums to slowly start allowing the flow of REO’s that are already in the system or foreclosed homes back to the market. “This is really important for our members because if we have a hard landing on this, we could see a significant amount of inventory come back to market quickly, which could undermine price stability and confidence,” Fears said. The FHFA has also taken action to make sure that these homes come back to owner-occupants. Fears highlighted a January 2021 decision by the Federal Housing Finance Agency (FHFA) to limit the number of second and investor homes and loans to borrowers with multiple risk factors, like first-time homebuyers. “These limitations immediately had an impact, and they also run counter to the whole reason that congress chartered Fannie Mae and Freddie Mac in the first place,” Fears said. He indicated that NAR worked with the FHFA to eliminate the caps, which he claimed helped the flow of finance to the housing market and restored that flow and access. The last set of changes focused on fair lending and fair access by expanding opportunities in financing to groups that haven’t gotten to it for varying reasons. Shortly after its shift in leadership, the FHFA announced that it would partner with the U.S. Department of Housing and Urban Development (HUD) to focus on enhancing its enforcement of the Fair Housing Act. “This isn’t new regulation,” Fears said. “It’s just enforcing transparency in the market and making sure that people who are creditworthy get that financing. This is about enforcing the people that are credit worthy getting the financing that they are due.” “Equality is about making sure that the door is open,” Fears continued. “Equity is understanding what differences in people’s experiences hinder them from walking through that door, and likewise, once they’re in a home might hamper their ability to stay in it.” For more information, please visit www.nar.realtor. Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com. The post NAR Touts ‘Resounding Progress’ on Several Federal Policy Issues appeared first on RISMedia......»»

Category: realestateSource: rismediaNov 20th, 2021

Prime rents in Hong Kong"s top shopping districts are down as much as 80% from their peak 8 years ago as luxury brands head to mainland China

Luxury brands have embraced setting up shopfronts in China as big-spending Chinese shoppers are stuck at home. A shop in Hong Kong. Budrul Chukrut/SOPA Images/LightRocket/Getty Images Retail rents in Hong Kong's three prime shopping areas have fallen to their lowest in more than 10 years. Pro-democracy protests in 2019 and the pandemic have hit tourism hard as Chinese tourists stay away. Instead, luxury labels are embracing setting up shopfronts in China. Hong Kong is known for exorbitant real estate prices, but prime retail rent has fallen sharply as money from free-spending tourists from China dries up amid the pandemic.Along Hong Kong's Russell Street in Causeway Bay district, owners of shopfronts are slashing rents by close to 80% from their peak eight years ago, Bloomberg reported, citing data from Cushman and Wakefield, a real-estate services firm. It now costs about HK$826 ($106) per square foot to rent a space on Russell Street, down from HK$4,000 ($514) in at the end of 2013.Russell Street was one of the most expensive shopping streets in the world for shop rentals until 2019, when pro-democracy protests hit business. The COVID-19 pandemic in 2020 hit the market even more as tourism came to a virtual halt.Luxury labels that have since moved out of Russell Street include fashion label Prada, watch brands Rolex and Omega, and high-end lingerie label La Perla. The spaces formerly occupied by these high-end brands are being filled up by shops selling items ranging from phone gadgets to affordable women's wear, reported Bloomberg.Tents in Hong Kong's Causeway Bay fell 43% from 2019 to 2020, according to a Cushman and Wakefield report published in April. The shopping districts of Tsim Sha Tsui and Centra also saw steep declines in rental prices. Rents for the three areas are near their lowest in more than a decade, per Bloomberg, citing Cushman and Wakefield data.Luxury brands have embraced setting up shopfronts in mainland China. From January to end-November, there was close to a 65% on-year surge in luxury shops opening in China, according to Savills, a global property agent. Many of of the major luxury brands were already present in China's top tier cities, but they have been expanding to lower tier cities to capture more shoppers, the SCMP reported earlier this year.Hong Kong is now in discussions with China about reopening their shared border, but the pace of development in China is so fast that some are not so optimistic about the recovery of Hong Kong's retail rents."Hong Kong is just one of their options now," said Robert Ma, a landlord on Russell Street, per Bloomberg.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 5th, 2021

Futures Meltup To New All Time High As November Begins With A Bang

Futures Meltup To New All Time High As November Begins With A Bang US futures and European stocks rose to a new record high to start the historically stellar month of November... ... and Asian markets jumped amid positive earnings surprises and as concerns of a global stagflation and central bank policy error faded for a few hours (they will return shortly). TSLA melted up by another $35BN in market cap "because gamma." S&P 500 futures climbed 0.4% after the cash index posted the biggest monthly gain since last November. Treasury Secretary Janet Yellen expressed confidence in the continuing recovery from the pandemic, helping spur gains in equity markets. Health-care shares rallied in Europe. The dollar and Treasury yields advanced as investors awaited this week’s Federal Reserve meeting to announce the start of tapering (which will then lead to rate hikes next July according to Goldman). Oil rebounded on fresh supply concerns. In addition to the now absolutely batshit insane meltup in Tesla, which won't end until the SEC cracks down on gamma squeeze manipulation, other mega-cap technology stocks such as Google, Meta, Microsoft, Amazon.and Apple, aka oddly enough GAMMA, traded mixed. Exxon and Chevron added about 0.7% each as JP Morgan raised its price target on the oil majors following their strong quarterly results last week. Major Wall Street banks gained between 0.2% and 0.8%. The broader S&P 500 financials sector slipped last week, breaking a three-week winning streak. Lucid Group Inc. rose 4.8% in premarket, extending its advance from last week, after the new U.S. tax plan included a proposal to make EV tax credits more widely available. Harley-Davidson Inc jumped 8.2% after the European Union removed retaliatory tariffs on U.S. products including whiskey, power boats and company’s motorcycles. Here are the most notable pre-market movers: Tesla shares rise 2.3% in U.S. premarket trading after their biggest monthly gain in almost a year in October ABVC BioPharma jumps more than 700% as thelittle known biotechnology company garners attention from retail traders on social media Ocugen and Zosano (ZSAN US) are some other top gainers among retail trader stocks in premarket A largely upbeat earnings season has helped investors look past a mixed-macro economic picture, with the benchmark S&P 500 and the tech-heavy Nasdaq recording their best monthly performance since November 2020 in October. Of the 279 S&P 500 companies that have reported quarterly results, 87% have met or exceeded estimates. Among members of Europe’s Stoxx 600 index, 68% surpassed expectations. On the economic data front, readings on October factory activity data from IHS Markit and ISM are due after market open, followed by non-farm payrolls on Friday. Focus is now on the Fed’s two-day policy meeting which concludes at 2pm on Nov 3, where the central bank will announce the tapering of its $120 billion monthly bond buying program by $15 billion. With recent U.S. data showing inflation pressures building, the market has also started pricing in rate hikes next year. November and December tend to be among the strongest months for stocks and any hawkish tilt in the Fed’s message could catch equities by surprise.  Meanwhile, Biden’s economic agenda seemed to be on track as Democratic lawmakers worked to overcome their differences on a $1.75 trillion social-spending plan. “Depending on where you are looking, you are getting very different stories on the outlook for global markets,” Kerry Craig, global market strategist at JPMorgan Asset Management, said on Bloomberg Television. “If you look at equities and the rally you are seeing, you think everything is OK. If you look at the bond market and how yields are moving, there’s obviously a lot more concern around inflation and policy normalization.” European stocks hit the afterburner out of the gate with the Euro Stoxx 50 adding as much as 1% before drifting off best levels. FTSE MIB and IBEX outperform, FTSE 100 lags slightly. Banks, construction and travel are the strongest sectors; tech the sole Stoxx 600 sector in the red. Barclays Plc fell 1.5%. Chief Executive Officer Jes Staley stepped down amid a U.K. regulatory probe into how he characterized his ties to the financier and sex offender Jeffrey Epstein. Asian stocks were poised to snap a three-day decline thanks to a rally in Japanese equities, which got a boost from an election victory for the country’s ruling party and Prime Minister Fumio Kishida.  The MSCI Asia Pacific Index advanced as much as 0.6%, while Japan’s benchmark Topix and the blue-chip Nikkei 225 Stock Average each added more than 2%. Sony Group, Toyota Motor and Tokyo Electron were among the single-largest contributors to the regional measure’s rise. By sector, industrials and information-technology companies provided the biggest boosts.  Japan’s ruling Liberal Democratic Party defied worst-case scenarios to secure a majority by itself in a closely-watched election Sunday. Analysts said the outcome signals political stability, paving the way for economic stimulus to be executed as anticipated (see Street Wrap).  “Indicators of market activity show that there will be a positive market impact to the election, as although it was not greatly different than expectations, the LDP clearly surpassed some of the more dire polls of last week and there will not likely be any party shake-up in the intermediate-term,” John Vail, Tokyo-based chief global strategist at Nikko Asset Management wrote in a note.  The market is also “reacting positively” to Friday’s share-price gains in the U.S., Vail said. Futures on the S&P 500 rose during Asian trading hours after the underlying gauge added 0.2%.  Asia’s regional benchmark capped a weekly drop of 1.5%, its worst such performance since early October, as disappointing results weighed on big technology stocks. More than half of the companies on the MSCI Asia Pacific Index have reported results for the latest quarter with about 37% posting a positive surprise, according to data compiled by Bloomberg. Australia's S&P/ASX 200 index rose 0.6% to 7,370.80, recouping some losses after Friday’s 1.4% plunge. Health and consumer discretionary stocks contributed the most to the benchmark’s gain. WiseTech was among the top performers, snapping a four-day losing streak. Westpac was the worst performer after the bank delivered a smaller share buyback than some had expected. In New Zealand, the S&P/NZX 50 index fell 0.5% to 13,030.31. In rates, fixed income trades heavy with gilts leading the long end weakness. Treasuries were slightly cheaper on the long-end of the curve as S&P 500 futures exceed last week’s record highs. Yields are cheaper by 2bp to 2.5bp from belly out to long-end, with front-end slightly outperforming and steepening 2s10s spread by 1.7bp; 10-year yields around 1.58% with gilts underperforming by 1.1bp, Italian bonds by 3.5bp. Gilts and Italian bonds lag, with Bank of England rate decision due Thursday. In the U.S., weekly highlights include refunding announcement and FOMC Wednesday and Friday’s October jobs report. Bund and gilt curves bear steepen with gilts ~1bps cheaper to bunds. Peripheral spreads swing an early tightening to a broad widening to core with Italy the weakest performer. Overnight futures and options flows included block seller in 5-year note futures (3,900 at 3:09am ET) and a buyer of TY Week 1 129.00 puts at 3 on 10,000, says London trader. In FX, the Bloomberg dollar index held a narrow range. SEK and CHF top the G-10 score board, GBP lags with cable snapping below 1.3650. TRY outperforms EMFX peers. The BBDXY inched up and the greenback traded mixed against its Group-of-10 peers, with many of the risk-sensitive currencies leading gains The pound retraced some losses against the dollar, after dipping earlier in the European session. The yield on 2-year gilts hit the highest since May 2019. Financial markets are almost fully pricing in a 15-basis point increase in the Bank of England’s benchmark lending rate on Nov. 4, while economists increasingly share that view, even as they see the decision as a far closer call. A record share of U.K. businesses are expecting to increase prices, adding to the inflationary pressures confronting Bank of England policy makers ahead of their meeting on Thursday Australian bonds extended opening gains as traders positioned for the Reserve Bank’s policy decision Tuesday. The Aussie fell, tracking losses in iron ore prices following a weak China PMI, which showed signs of further weakness in October The yen fell for a second day after the ruling Liberal Democratic Party retained its outright majority in a lower-house election, reinforcing bets for fiscal stimulus and reforms. Hedge funds boosted net short positions on the yen to the most since January 2019, raising the risk of a squeeze should risk appetite deteriorate suddenly and demand for havens rise The Turkish lira edged higher after Turkish President Recep Tayyip Erdogan said he had “positive” talks with U.S. President Joe Biden In commodities, crude futures drift higher. WTI adds 40c to trade near $84; Brent rises ~1% near $84.50. Spot gold is quiet near $1,786/oz. Base metals are mixed: LME nickel and tin outperform, zinc lags. Looking at today's calendar, earnings continue on Monday with PG&E and ON Semiconductor reporting pre-market, and NXP Semiconductors post-market. We also get the latest Mfg PMI print and the October Mfg ISM print. Market Snapshot S&P 500 futures up 0.3% to 4,612.25 STOXX Europe 600 up 0.8% to 479.40 MXAP up 0.4% to 198.04 MXAPJ down 0.3% to 645.49 Nikkei up 2.6% to 29,647.08 Topix up 2.2% to 2,044.72 Hang Seng Index down 0.9% to 25,154.32 Shanghai Composite little changed at 3,544.48 Sensex up 1.3% to 60,079.40 Australia S&P/ASX 200 up 0.6% to 7,370.78 Kospi up 0.3% to 2,978.94 Brent Futures up 0.3% to $83.95/bbl Gold spot down 0.0% to $1,783.20 U.S. Dollar Index little changed at 94.14 German 10Y yield little changed at -0.091% Euro up 0.1% to $1.1571 Top Overnight News from Bloomberg House Democratic leaders are pushing hard to get Biden’s package finalized, with votes on both that bill and a smaller infrastructure plan this week -- the latest in a string of self- imposed deadlines. The Senate, which already approved the public-works bill, is likely to vote on the larger package later in the month Leaders of the Group of 20 countries agreed on a climate deal that fell well short of what some nations were pushing for, leaving it to negotiators at the COP26 summit in Glasgow this week to try to achieve a breakthrough The U.K. said it will trigger legal action against France within 48 hours unless a dispute over post-Brexit fishing rights is resolved, as the growing spat threatens to overshadow the United Nations’ climate summit Treasury Secretary Janet Yellen said she believes Federal Reserve Chair Jerome Powell has taken “significant action” in the wake of revelations over the personal investments of U.S. central-bank policy makers; Yellen dismissed recent moves in the bond market that have signaled concern about monetary policy makers squelching economic growth, and expressed confidence in the continuing recovery from the Covid-19 pandemic The U.S. and the European Union have reached a trade truce on steel and aluminum that will allow the allies to remove tariffs on more than $10 billion of their exports each year Asia-Pac bourses traded mostly higher amid tailwinds from last Friday's fresh record highs in the US where Wall St. topped off its best monthly performance YTD, but with some of the advances in the region capped as participants digested mixed Chinese PMI data and ahead of this week’s slew of key risk events including crucial central bank policy announcements from the RBA, BOE and FOMC, as well as the latest NFP jobs data. ASX 200 (+0.8%) was led higher by the consumer-related sectors amid a reopening play after Australia permitted fully vaccinated citizens to travel internationally again and with several M&A related headlines adding to the optimism including the Brookfield-led consortium acquisition of AusNet Services and Seven West Media’s takeover of Prime Media. Conversely, the largest weighted financials sector failed to join in on the spoils with Westpac shares heavily pressured following its FY results which fell short of analyst estimates despite more than doubling on its cash earnings. Nikkei 225 (+2.5%) was the biggest gainer with the index underpinned by favourable currency flows and following the general election in which the ruling LDP maintained a majority in the lower house although won fewer seats than previously for its slimmest majority since 2012, while the KOSPI (+0.4%) was kept afloat but with upside limited by slightly softer than expected trade data. Hang Seng (-1.5%) and Shanghai Comp. (+0.1%) were subdued amid a slew of earnings releases and following mixed Chinese PMI data in which the official Manufacturing and Non-Manufacturing PMIs disappointed analysts’ forecasts with the former at a second consecutive contraction, although Caixin Manufacturing PMI was more encouraging and topped market consensus. Finally, 10yr JGBs initially declined amid gains in stocks and recent pressure in T-notes due to rate hike bets with analysts at Goldman Sachs bringing forward their Fed rate hike calls to July 2022 from summer 2023 citing inflation concerns, although 10yr JGBS then recovered despite the mixed results from the 10yr JGB auction which showed a higher b/c amid lower accepted prices and wider tail in price. Top Asian News Japan’s Kishida Mulls Motegi for LDP Secretary General: Kyodo Home Sales Slump; Another Bond Deadline Looms: Evergrande Update Two Thirds of China’s Top Developers Breach a ‘Red Line’ on Debt Hedge Fund Quad Sells Memory Stocks Citing Demand Uncertainty European equities (Stoxx 600 +0.6%) have kicked the week off on the front-foot with the Stoxx 600 printing a fresh all-time-high. The handover from the APAC session was a largely constructive one with the Nikkei 225 (+2.6%) the best in class for the region amid favourable currency flows and the fallout from the Japanese general election which saw the ruling LDP party maintain a majority in the lower house. Elsewhere, performance for the Shanghai Composite (-0.1%) and Hang Seng (-0.9%) was less impressive amid a slew of earnings releases and mixed Chinese PMI data in which the official Manufacturing and Non-Manufacturing PMIs disappointed analysts’ forecasts. US equity index futures are trading on a firmer footing (ES +0.5%) ahead of Wednesday’s FOMC announcement and Friday’s NFP data. The latest reports from Washington suggest that House Democrats are hoping to pass the social spending and bipartisan infrastructure bills as soon as Tuesday. Back to Europe, a recent note from JPM stated that Q3 European earnings “are coming in well ahead of expectations in aggregate”, adding that results are healthy when considering the “trickier operating backdrop”. Sectors in the region are higher across the board with Auto names top of the leaderboard. Renault (+3.3%) sits at the top of the CAC 40 with the name potentially gaining some reprieve from agreement to resolve the US-EU steel and aluminium trade dispute (something which the Co. has previously noted as a negative). Also following the resolution, Thyssenkrupp (+2.8%) and Salzgitter (+4.5%) are both trading notably higher. Barclays (-2.0%) shares are seen lower after news that CEO Staley is to step down with immediate effect following the investigation into his relationship with sex offender Jeffrey Epstein; Barclays' Global Head of Markets, Venkatakrishnan is to take over. UK homebuilders (Persimmon -2.1%, Taylor Wimpey -1.9%, Barratt Developments -1.9%, Berkeley Group -1.7%) are softer on the session amid concerns that the sector could fall victim to higher mortgage rates given the shape of the UK yield curve. Ryanair (+1%) shares are higher post-earnings which saw the Co. continue its recovery from the pandemic, albeit still expects a loss for the year. Furthermore, the board is considering the merits of retaining its standard listing on the LSE. Finally, BT (+4.2%) is the best performer in the Stoxx 600 ahead of earnings on Thursday with press reports suggesting that the Co. could announce that its GBP 1bln cost savings target will be met a year earlier than the guided March 2023. Top European News SIG Proposed Offering for EU300m Senior Secured Notes Due 2026 Delivery Hero’s Turkey Unit CEO Nevzat Aydin to Step Down Goldman Sachs Says ‘Lost Decade’ Is Looming for 60/40 Portfolios URW Sells Stake in Paris Triangle Tower Project to AXA IM Alts In FX, the Greenback is holding above 94.000 in index terms and gradually ground higher after pausing for breath and taking some time out following its rapid resurgence last Friday to eclipse the 94.302 month end best at 94.313 before waning again. Hawkish vibes going into the FOMC are underpinning the Dollar and helping to offset external factors that are less supportive, including ongoing strength in global stock markets on solid if not stellar Q3 earnings and economic recovery from COVID-19 lockdown or restricted levels. Hence, the DXY is keeping its head above the round number and outperforming most major peers within and beyond the basket, awaiting Markit’s final manufacturing PMI, the equivalent ISM and construction spending ahead of the Fed on Wednesday and NFP on Friday. JPY/AUD - Little sign of relief for the Yen from victory by Japan’s ruling LDP part at the weekend elections as the 261 seat majority secured is down from the previous 276 and the tightest winning margin since 2012. Moreover, Security General Amari lost his constituency and new PM Kishida concedes that this reflects the public’s adverse feelings towards the Government over the last 4 years. Usd/Jpy is eyeing 114.50 as a result and the Aussie is looking precarious around 0.7500 against the backdrop of weakness in commodity prices even though perceptions for the upcoming RBA have turned markedly towards the potential for YCT to be withdrawn following firm core inflation readings and no defence of the 0.1% April 2024 bond target. NZD/EUR/CHF/CAD/GBP - All narrowly mixed vs their US counterpart, and with the Kiwi also taking advantage of the aforementioned apprehension in the Aud via the cross, while the Euro has pared declines from just under 1.1550, but still looks top-heavy into 1.1600. Elsewhere, the Franc is pivoting 0.9160 and 1.0600 against the Euro with more attention on a rise in Swiss sight deposits at domestic banks as evidence of intervention than a fractionally softer than expected manufacturing PMI, the Loonie is keeping afloat of 1.2400 ahead of Markit’s Canadian manufacturing PMI and Sterling is striving to stay above 1.3600, but underperforming vs the Euro circa 0.8470 amidst the ongoing tiff between the UK and France over fishing rights. SCANDI/EM - Robust Swedish and Norwegian manufacturing PMIs plus broad risk appetite is underpinning the Sek and Nok, in contrast to the Cnh and Cny following disappointing official Chinese PMIs vs a more respectable Caixin print, but the EM laggard is the Zar in knock-on reaction to Gold’s fall from grace on Friday, increasingly bearish technical impulses and SA energy supply issues compounded by Eskom’s load-shedding. Conversely, the Try has pared some declines irrespective of a slowdown in Turkey’s manufacturing PMI as the CBRT conducted a second repo op for Lira 27 bn funds maturing on November 11 at 16%. In commodities, WTI and Brent are firmer this morning with gains of between USD 0.50-1.00/bbl, this upside is in-spite of a lack of fundamental newsflow explicitly for the complex and is seemingly derived from broader risk sentiment, as mentioned above. Nonetheless, Energy Ministers are beginning to give commentary ahead of Thursday’s OPEC+ event and so far Angola, Kuwait and Iraq officials have voiced their support for the planned 400k BPD hike to production in December. This reiteration of existing plans is in opposition from calls from non-OPEC members such as the US and Japan that the group should look to increase production quicker than planned, in a bid to quell rising prices. Separately, Saudi Aramco reported Q3 earnings over the weekend in which its net profit doubled given strong crude prices and sales volumes improving by 12% QQ; subsequently, some analysts have highlighted the possibility for a end-2021 special dividend. Elsewhere, base metals are mixed and fairly contained in-spite of the EU and US announcing an agreement to resolve the ongoing aluminium and steel trade dispute. While spot gold and silver are modestly firmer this morning as the yellow metal remains contained after its slip from the USD 1800/oz mark in the tail-end of last week. Currently, spot gold is pivoting its 100-DMA at USD 1786 with the 50- and 200-DMAs residing either side at USD 1780/oz and USD 1791/oz respectively. US Event Calendar 9:45am: Oct. Markit US Manufacturing PMI, est. 59.2, prior 59.2 10am: Oct. ISM Manufacturing, est. 60.5, prior 61.1 10am: Sept. Construction Spending MoM, est. 0.4%, prior 0% DB's Jim Reid concludes the overnight wrap Welcome to November. I had three halloween parties over the weekend which is probably more than the entire number I went to before I had kids. I still have some spooky make up on this morning that I just couldn’t get off from last night. So there’s a reason alone to zoom into the call at 3pm today. As it’s the 1st of November Henry is about to publish our monthly performance review. It was a hectic month of higher inflation expectations and commodities, and also the best S&P 500 month of the year. Bonds underperformed across the board but these small negatives masked great volatility and stress under the surface, especially in the last week. See the report that should be out in the next 30-60mins. With all due respect to our readers in Australia, I’m going to open the market section this morning with a line I don’t think I’ve written in 27 years of market commentary and probably won’t again. And it’s not about England thrashing Australia at cricket on Saturday. Yes the most important event of the week could be the RBA meeting tomorrow. 2 year yields last week rose from 0.15% on Wednesday morning to 0.775% at the close on Friday as the RBA were conspicuous by their absence in defending the 0.1% target on the April 24 bond. I’ve absolutely zero idea what they are going to do tomorrow which should help you all tremendously but their absence again this morning gives a decent indication. I was taught economics in an era where central banks liked to keep an element of mystery and surprise. As such I’ve always disliked the forward guidance era as it encourages markets to pile on to much riskier, one way positions that a normally functioning market should naturally allow. But to go from forward guidance to silence (that rhymes) is a recipe for huge market turmoil if the facts change. It's unclear if the full implications of last week’s carnage at the global front end has yet been cleared out. There is lots of speculation about large unwinds, big stop losses etc. Liquidity was also awful last week. Much might depend on central banks this week. Make no mistake though there is considerable pain out there. The latest this morning in Aussie rates is that the 2y yield is down around -7bps while the 10y yield is down -19.0bps. So we wait with baited breath for tomorrow. Elsewhere in Asia, the Nikkei 225 (+2.42%) is charging ahead this morning as Japan’s Liberal Democratic Party kept its majority after lower house elections, thus boosting optimism about a potential fiscal stimulus. Elsewhere, the KOSPI (+0.43%) and the Shanghai composite (+0.07%) are outperforming the Hang Seng (-1.10%). In terms of data, China’s official manufacturing PMI fell from 49.6 to 49.2 (49.7 expected), not helped by commodities price rises and electricity shortages. The non-manufacturing PMI also fell to 52.4 from 53.2 (consensus 53). The Caixin manufacturing PMI did beat at 50.6 this morning (consensus 50). In terms of virus developments in the region, Shanghai Disneyland is closed amid recent COVID outbreaks, while Singapore is adding ICU beds in response to high levels of serious cases. The S&P 500 mini futures is up +0.23% this morning, the US 10y Treasury is at 1.56% (+1.2bps). It’s strange to have a likely Fed taper announcement on Wednesday be third billing for the week but the BoE on Thursday might be the next most important meeting as it’s still a finely judged call as to whether they hike this week or not. DB (preview here) think they will raise rates by 15bps with two 25bps hikes in February and May. They’ll also end QE a month earlier than planned. So over to the third billing, namely the Fed. They will announce a well flagged taper on Wednesday. In line with recent guidance, DB expect that the Fed will announce monthly reductions of $10bn and $5bn of Treasury and MBS purchases, respectively. With the first cut to purchases coming mid-November, this will bring the latest round of QE to a conclusion in June 2022. The Fed has some flexibility with this timetable but it will be interesting to hear how much Powell pushes back on markets that price in two hikes in 2022, including one almost fully priced for before the taper ends. If markets attacked the Fed in the same way they have the RBA the global financial system would have a lot of issues so it’s a fine balance for the Fed. They won’t want to push back too aggressively on market pricing given the uncertainty but they won’t want an outright attack on forward guidance. Moving on, a lowly fourth billing will be reserved for US payrolls on Friday. DB expect the headline gain (+400k forecast, consensus +425k vs. +194k previously) to modestly outperform that of private payrolls (+350k vs. +317k) and for the unemployment rate to fall by a tenth to 4.7% and average hourly earnings to post another strong gain (+0.4% vs. +0.6%) amidst still-elevated hours worked (34.8hrs vs. 34.8hrs). Outside of all this excitement, we have the COP26 which will dominate all your news outlets. The other main data highlight are the global PMIs (today and Wednesday mostly) which will give insight into how the economic recovery has progressed in the first month of Q4 with the surveys shedding light onto how inflation is affecting suppliers. There is lots more in store for us this week but see the day by day calendar at the end for the full run down The market also enters the second half of the 3Q earnings season. There are 168 S&P 500 and 85 Stoxx 600 companies reporting this week with 52% of the S&P 500 and 48% of the STOXX 600 having already reported. DB’s Binky Chadha published an update on earnings season over the weekend (link here). In the US, the size of the earnings beat has declined over the course of the season and is on track to hit 7%, well below the record 14-20% range post pandemic. Excluding the lumpy loan-loss reserve releases by banks, the beat is even lower at 5%, bringing it back in line with the historical norm. Quarterly earnings are on track to be down sequentially from Q2 to Q3 by -1.1% (qoq seasonally adjusted), the first drop since Q2 2020. The flat to down read of earnings is broad based across sector groups. Forward consensus estimates have fallen outside of the Energy sector. The S&P 500 nevertheless has seen one of the strongest earning season rallies on record. See much more in Binky’s piece. This week’s highlights include NXP Semiconductors, Zoom, and Tata Motors today before Pfizer, T-Mobile, Estee Lauder, BP, Mondelez, Activision Blizzard, and AP Moller-Maersk tomorrow. Then on Wednesday we’ll hear from Novo Nordisk, Qualcomm, CVS, Marriott, Albemarle, and MGM resorts. Thursday sees reports from Toyota, Moderna, Square, Airbnb, Uber, and Deutsche Post and then a busy Friday with Alibaba Group, Dominion Energy, Honda, and Mitsubishi. Looking back now and reviewing last week in numbers, it was a week of heightened intraday volatility within rates, as markets brought forward the expected timing of central bank policy actions across advanced economies while revising down growth expectations. Position stop outs almost certainly played a role as the magnitude of the moves were out of sync with macro developments while FX and equity markets were not nearly as volatile. Global front end rates started moving in earnest on Wednesday, following the Bank of Canada’s surprise decision to end net asset purchases, while bringing forward the timing of liftoff, which sent 2yr Canadian bonds more than +20bps higher. In the following days, the RBA opted not to defend their yield curve control target, and ECB President Lagarde did not use her press conference to provide much of a forceful pushback on recent repricing. All told, almost every DM economy saw their 2 yr bond selloff, including the US (+4.4 bps, +0.8 bps Friday), UK (+4.9 bps, +5.9 bps Friday), Germany (+5.2 bps, +3.2 bps Friday), Canada (+23bps) and Australia (+65bps). The long end went the other direction in the core countries, with many curves twist flattening over the week as negative growth sentiment weighed on the back end. Nominal 10yr yields declined -6.2 bps (-2.8 bps Friday) in the US, -11.1 bps (+2.5 bps Friday) in the UK, and were flat in Germany (+3.0 bps Friday). Unlike the rest of October, the decline in nominal yields coincided with declining inflation breakevens (albeit from historically high levels), with 10yr breakevens declining -5.2 bps (-0.6 bps Friday) in the US, -25.4 bps (-8.5 bps Friday) in the UK, and -16.3 bps (-11.5 bps Friday) in Germany. Note that outside the core there were some bond markets that moved higher in yield with 10yr bonds in Canada (+7bps), Australia (+30bps) and Italy (+19bps) all higher for different reasons. Some of the bond moves above don’t do the intra-day volatility any justice though. Elsewhere Crude oil prices dipped to close out what was otherwise another very good month, with Brent and WTI -1.34% (+0.07% Friday) and -0.23% (+0.92% Friday) lower. Meanwhile, equity markets marched to the beat of a different drum. The S&P 500 (+1.33%, +0.19% Friday), Nasdaq (+2.71%, +0.33% Friday), and DJIA (+0.40%, +.25% Friday) all set new all-time highs, while the STOXX 600 increased +0.77% (+0.07% Friday), cents below the all-time high set in August. Generally strong earnings relative to a worried market prior to the season again supported equity markets. Calls were replete with mentions of supply chain woes and labour shortages though, but companies sounded an optimistic note on end-user demand. Many big tech stocks reported, to more mixed results than the broader index. Alphabet and Microsoft beat on both revenue and earnings, Facebook and Apple missed analyst revenue estimates, while Amazon and Twitter missed revenue and earnings estimates. Ford and Caterpillar, two bellwethers particularly exposed to current supply chain and labour maladies, fared especially well. So far this season 279 companies have reported, with 206 beating on revenue and 237 beating on earnings Out of D.C., after prolonged negotiations within the Democratic Party, US President Biden unveiled a new social and climate spending framework, containing $1.75 trillion in spending measures as well as revenue-raising offsets. Once the text is finalized, it should enable a vote on the social spending package as well as the separately-negotiated bi-partisan infrastructure bill. More is likely to come this week. Tyler Durden Mon, 11/01/2021 - 07:59.....»»

Category: smallbizSource: nytNov 1st, 2021

Futures Slide Dragged Lower By Amazon And Apple

Futures Slide Dragged Lower By Amazon And Apple US equity futures fell along with European and Asian stocks on Friday after tech giants Amazon and Apple and Starbucks sank in premarket trading after their earnings missed expectations, signaling a possible drop of around $180 billion in combined market value when the U.S. reopens, while dizzying bond-market gyrations sparked by surprise central bank announcements amid concerns over inflation and monetary tightening left investors scrambling to guess what happens next. A failure by Biden and the Democrats to pass their massive Build Back Better stimulus package added to the bearish sentiment. At 7:15 a.m. ET, Dow e-minis were down 45 points, or 0.12%, S&P 500 e-minis were down 22 points, or 0.5%, and Nasdaq 100 e-minis were down 138 points, or 0.88%. 10Y yields rose 3bps to 1.61%; the dollar rose while bitcoin was flat at $61,000. “Disappointment on Apple and Amazon results will likely weigh on the market sentiment,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “And there is little to improve the mood, as Joe Biden is still struggling to pass his mega spending bill, the Covid delta-plus cases are surging and the U.S. growth fell short of expectations in the latest read.” There was some relief out of China, where some Evergrande Group bondholders were said to receive an overdue interest payment shortly before the expiry of a grace period, buying more time for the debt-stricken property developer as it tries to raise cash through asset sales. Separately, Joe Biden was dealt a setback on Thursday as the House of Representatives abandoned plans for a vote on an infrastructure bill with progressives seeking more time to consider his call for a separate $1.75 trillion plan for social initiatives. Here are some of the biggest U.S. movers today: Apple slides 3.6% in U.S. premarket trading after the iPhone maker reported disappointing fourth-quarter results and warned about the impact of chip shortages, rekindling worries about the key holiday quarter Amazon slumps 5% in premarket trading after its forecast for holiday sales fell short of analysts’ estimates, signaling the pandemic’s boost to online shopping continues to fade Meta Materials up 2.9% in premarket trading after soaring as much as 32% Thursday postmarket as investors mistook it for Facebook Inc. following the Internet giant’s rebrand Western Digital shares drop 10% in premarket trading after its earnings forecast missed estimates U.S. Steel surges 8% in premarket trading as investors cheer a stock buyback and a hike in dividends Starbucks shares decline as much as 4.9% in U.S. premarket trading as the $20b in new payouts to shareholders failed to offset quarterly results that fell short of expectations B. Riley Financial gained in Thursday late trading after announcing a $4 dividend, composed of a $3 special one-time payout and a doubling of its regular quarterly dividend to $1 DaVita Inc.fell 6.7% in after-hours trading after cutting the top end of its forecast for 2021 adjusted earnings per share from continuing operations Plantronics tumbled 12% postmarket after the headset maker reported second- quarter revenue that missed its own guidance, as well as analyst estimates A10 Networks shares rose 7.5% in extended trading on Thursday after the computer networking products company said it is confident in accelerating growth beyond the previous targets of 6-8% Tailwind Two shares rose 4.9% Thursday postmarket after Terran Orbital Corp., a builder of small satellites, said it is merging with the SPAC and plans to go public in the first quarter of 2022 Focus now turns to the latest readings on U.S. consumer spending and the Federal Reserve’s preferred inflation gauge, the core PCE price index, due at 8:30 a.m. ET, for clues on the health of the economy ahead of the central bank’s policy meeting next week. “(The data) will carry rather more weight with markets. High prints may see the Fed taper trade priced into the end of the week, with stocks lower, especially above the one-two punch from Apple and Amazon,” said Jeffrey Halley, senior market analyst, Asia Pacific, OANDA. “Some actual concrete progress on the U.S. spending bills instead of empty rhetoric could give a pleasant boost to markets in the end of the week as well.” In Europe, the Stoxx 600 index extends losses to hit session low, with most sectors declining, as data showing accelerating euro-area inflation stoked concern of faster rate hikes. The Index was -0.8% as of 11:28 am in London, trims best monthly gain since March Real estate, technology sectors are worst performers, while insurance and energy outperform. BBVA jumped 6.1% in Madrid after it announced the start of a planned stock buyback and reported earnings that beat estimates. Asian equities headed for their third day of declines as disappointing results weighed on big technology stocks, and financials fell as bond-yield curves continued to flatten. The MSCI Asia Pacific Index slid as much as 0.6%, with TSMC, Tencent, AIA and Ping An among the biggest drags. The regional benchmark was set for a weekly loss of 1.1%, its worst in four weeks. The U.S. Treasury yield curve inverted between 20 and 30 years on Thursday, a sign that investors expect central-bank policy tightening to lead to slower economic growth and inflation. Meanwhile, Apple and Amazon.com slid in late trading after reporting weak sales, hurt by the global supply-chain crisis.  “U.S. stock futures and South Korean stocks fell following the drop in Apple,” said Hiroshi Namioka, chief strategist at T&D Asset Management Co. “Investor sentiment deteriorated on concerns about the impact of supply constraints on stocks beyond firms related to Apple.” Benchmarks in Hong Kong, the Philippines, India and Australia were also among the worst performers. The biggest gains were in Indonesia, China and New Zealand In rates, the 10-year US Treasury yield climbed to 1.61% before easing 1 basis point. The curve between 20- and 30-years has inverted for the first time since the U.S. government reintroduced a two-decade maturity in 2020 as inflation pressures and the prospect of interest-rate hikes are whipsawing bond markets. Treasury futures remain near lows of the day into early U.S. session, after trading heavy during Asia session, when Australian bond yields surged as the central bank’s decision not to defend its yield target on Friday fueled bets that policy makers may soon scrap the program. In Treasury futures, multiple block trades shortly after 6am ET were consistent with a curve-steepening wager. Yields were cheaper by 2bp-3bp across the curve, keeping spreads broadly within 1bp of Thursday’s close; 10-year yields around 1.605% are around 1bp richer vs bunds and gilts. Aussie 10-year yields closed 21.8bp cheaper vs U.S. amid speculation that policy makers may soon scrap the yield-curve control program. In the US, 2s10s and 5s30s curves remain flatter on week after reaching most compressed levels in months on Thursday; month-end flows may support long-end Friday, with Bloomberg Treasury index set to extend by an estimated 0.08yr in 4pm rebalancing European bonds extended Thursday’s retreat as data on Eurozone economic growth and inflation topped analysts’ estimates, reinforcing conviction that interest-rate increases are on the horizon after European Central Bank President Christine Lagarde offered only mild pushback against traders’ bets on a hike as soon as October next year. The euro slipped after jumping 0.7% on Thursday, but remains on track for a third week of gains. “In the very near term, because many global central banks are just dipping their feet into taper, not even into quantitative tightening, the aggregate liquidity could remain very supportive,” Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore, said on Bloomberg Television. “Although I think you get very much more discriminatory moves and much more selective moves in the equity markets.” In FX, the U.S. dollar ticked up from a one-month low and crude oil fluctuated and the Bloomberg Dollar Spot Index advanced as much as 0.2% as the greenback rose versus all its Group-of-10 peers apart from the Swiss franc; the Kiwi and Scandinavian currencies were the worst performers. The euro pared about half of Thursday’s advance against the dollar and European bond yields rose. Italian bonds led peripheral underperformance vs. euro-area peers and ECB policy-tightening bets gained momentum as markets continued to digest Lagarde’s lack of reassurance in her comments on Thursday. The pound inched lower in the European session. Gilts’ aggressive flattening moves in previous sessions paused as yield increases were most pronounced in the long end. Australian bond yields surged as the central bank’s decision not to defend its yield target on Friday fueled bets that policy makers may soon scrap the program. The currency hovered under its 200-day moving average. In commodities, Brent and WTI both rose about 0.3%. Spot gold flat on the day, trades just below $1,800/oz. Base metals fall on the LME, with zinc, nickel and aluminum declining the most. Ethereum finally hit a new all-time-high, rising briefly above $4400. Chinese coal futures extended a dramatic decline as China’s government said there’s further room for prices to fall, ratcheting up interventions in the market aimed at easing an energy crisis. Looking at today's data we get preliminary September industrial production, preliminary Q3 GDP from Euro Area, Germany, France and Italy, preliminary October CPI from Euro Area, France and Italy, UK September mortgage approvals, Canada August GDP, US September personal spending, personal income, October MNI Chicago PMI and final October University of Michigan consumer sentiment index are due. In corporate earnings, ExxonMobil, Chevron, AbbVie, Charter Communications, Daimler, BNP Paribas, Aon and NatWest Group are among companies reporting. Market Snapshot S&P 500 futures down 0.4% to 4,567.00 STOXX Europe 600 down 0.5% to 472.83 German 10Y yield up 3.3 bps to -0.103% Euro down 0.2% to $1.1663 Brent Futures up 0.2% to $84.49/bbl Gold spot down 0.3% to $1,793.54 U.S. Dollar Index up 0.14% to 93.48 MXAP down 0.5% to 197.77 MXAPJ down 0.7% to 649.27 Nikkei up 0.3% to 28,892.69 Topix little changed at 2,001.18 Hang Seng Index down 0.7% to 25,377.24 Shanghai Composite up 0.8% to 3,547.34 Sensex down 0.9% to 59,417.39 Australia S&P/ASX 200 down 1.4% to 7,323.74 Kospi down 1.3% to 2,970.68 Top Overnight News from Bloomberg The returns on carry trades are roaring back in the currency markets of the world’s major developed countries, thanks to surging commodity prices, low volatility and the growing ranks of central banks that are tightening monetary policy U.K. households are under increasing financial stress just as the Bank of England contemplates weaning the nation off near-zero interest rates, according to debt-collection firm Lowell China’s junk dollar bonds had their steepest two-month decline in a decade as stress builds in the battered real estate sector and defaults mount to a record France and Italy drove economic growth in the 19-nation euro area in the third quarter following the suspension of most Covid-19 curbs. A surge in consumer spending propelled French output to 3% in the three months through September, exceeding all but one estimate in a Bloomberg survey. Italy reported an expansion of 2.6% that was bolstered by industry and services As the prospect of interest-rate hikes whipsaws bond markets, bears can be forgiven for betting the recent 10-year Treasury selloff will resume in earnest given the inflationary pressures building everywhere. But with a key section of the U.S. yield curve inverting on growth fears, the likes of AXA Investment Managers to HSBC Holdings Plc can find a receptive audience to make a case that the 40-year bull market is alive and well A more detailed look at global markets courtesy of Newsquawk Asia-Pac equities initially traded lower but later painted a mixed picture as the tailwinds from Wall Street dissipated. The S&P 500 and Nasdaq closed at record highs, whilst the DJIA and R2K posted solid gains. Aftermarket earnings saw reports from Apple (-3.5% AM) and Amazon (-4.7% AM), who both fell over 5% at one point, in turn hitting the NQ, with both firms citing supply chain issues. US equity futures overnight resumed trade modestly firmer but then drifted lower as APAC sentiment seeped into the Western futures. The ASX 200 (-1.5%) was dragged lower by its Telecoms and Financials sectors, whilst the KOSPI (-1.3%) conformed to the risk tone. The Nikkei 225 (+0.3%) was initially hampered with some of the export-heavy sectors towards the bottom of the bunch, although later recovered as the JPY eased, and with Japan also looking ahead to the lower house election on Sunday. The Shanghai Comp (+0.8%) saw its opening losses cushioned after another daily net CNY 100bln injection by the PBoC, for a net weekly injection of CNY 680bln – the largest in 21 months. Hang Seng (-0.7%) failed to recover amid post-earnings losses from BYD, Ping An Insurance, and Petrochina, whilst Alibaba and Tencent are also in the red. Finally, the RBA once again refrained from defending the April 2024 yield, with the bond extending its rise to 0.77% vs the RBA's 0.10% target range. Top Asian News Taiwan Growth Slows in Third Quarter Despite Record Exports Asia Stocks Set for Third Day of Losses as Tech, Financials Fall Taiwan 3Q GDP Expands 3.80% Y/Y; Survey Est. 4.3% Malaysia Unveils Biggest Budget to Spur Post-Lockdown Recovery European bourses commenced the session on the back foot, Euro Stoxx 50 -0.9%, though performance throughout the morning has been choppy with indices having been unchanged and lower by as much as 1.0% on the session thus far. The morning’s busy docket hasn’t changed the dial too much, with the action perhaps more a factor of participant’s digesting the US/APAC leads and earnings updates. APAC was subdued with pressure Stateside most pronounced in the NQ (-0.8%) after earnings from Apple (AMZN) and Amazon (AAPL), which both fell around 5.0% in after hours trading, with attention being placed on supply chain issues impacting performance. In Europe, all sectors started in the red, though banking names have picked up given the ongoing drive higher in yields offsetting poorly received updates from the likes of NatWest (-4.5%); attention is on the company’s money laundering provisions of some GBP 300mln. Elsewhere, real estate names are hampered amid reports that UK banks/building societies are to begin increasing mortgage rate given inflation. Auto’s are towards the top of the pile driven by updates from Daimler (+1.7%) and the CFO remarking that market demand is high, could expect an increase in 2022 passenger car sales. Finally, the energy sector is in-focus amid OPEC+ JTC sourced reports (see commodities) and as we have a number of key names due to report stateside, including Exxon (XOM) following Chevron beating on top and bottom lines, +2.1% pre-market. Top European News NatWest Shares Fall as Margin Pressures Overshadow Profit Surge Agnellis Agree to Sell PartnerRe to Covea for $9 Billion Euro-Area Economy Bolstered by France, Italy Growth: GDP Update Telenet Falls as HSBC Cuts to Hold on ‘Drastic’ Strategy In FX, the Dollar has regained some poise following yesterday’s sell-off, largely on the back of a post-ECB rebound in the Euro that knocked the index down to a new w-t-d base and gave other Greenback rivals a lift indirectly. However, the index remains toppy towards the bottom of 94.024-93.277 extremes within a narrow 93.592-320 range, wary about residual or final rebalancing flows that a German bank model suggests is more prominent vs the Pound and Yen. From a tech perspective, the 50 DMA could be pivotal and comes in at 93.415 today after the DXY tested, but respected the 100 DMA circa 94.000 on several occasions, while fundamental drivers may come via a raft of data and survey releases, including PCE price metrics and the Chicago PMI. Aside from all this, yields remain elevated and curves are re-steepening irrespective of a downturn in broad risk sentiment, or perhaps in response to the ongoing bond rout, with safe-haven benefits for the Buck. NZD/AUD - Yet another change in fortunes for the Kiwi and Aussie, as the Antipodean cross rebounds amidst several positive factors for the latter, like much stronger than forecast final retail sales and a pick-up in ppi, while ramp higher in 3 year cash continues unchecked. Hence, Aud/Nzd is eyeing 1.0500 again and Aud/Usd is consolidating near 0.7550, but Nzd/Usd has slipped back below 0.7200. EUR - Some consolidation and a partial loss of the aforementioned ECB-inspired recovery momentum has pushed the Euro back down, with Eur/Usd now testing support and underlying bids around 1.1650 even though flash Eurozone inflation came in well above expectations and most preliminary Q3 GDP prints beat consensus (Germany the exception). Nevertheless, the headline pair looks less inclined to be drawn to the latest option expiries close to 1.1600 (1.5 bn in a band ending at 1.1590) and adjacent to similar size between the half round number and 1.1660 (1.4 bn to be precise). CHF/CAD/GBP/JPY - The Franc is marginally outpacing the Buck and extending its outperformance against the Euro to the brink of 0.9100 and not much further away from 1.0600 respectively in wake of an upbeat Swiss KOF leading indicator, but the SNB could be on edge amidst a sharp ratchet up in implied interest rates via the 3 month strip. Elsewhere, the Loonie is idling either side of 1.2350 vs its US peer in line with crude prices ahead of Canadian monthly GDP and ppi that might provide tangible justification for the BoC’s hawkish shift on QE and rate guidance, Sterling continues encounter resistance circa 1.3800 and 0.8450 against the Euro awaiting developments on the UK-French fishing row front rather than reacting to stronger than forecast BoE mortgage lending and approvals. Similarly, the Yen has taken a raft of Japanese data in stride as it straddles 113.50 in lock-step with its US counterpart and UST/JGB yield differentials In commodities, WTI and Brent are essentially unchanged on the session, and reside towards the mid-point of the week’s range thus far. Newsflow has been limited and we look to energy giant earnings later for further impetus; though, the benchmarks did come under modest pressure on JTC source reports ahead of next week’s OPEC+ gathering. Namely, sources said that the JTC had trimmed its 2021 oil demand forecast to 5.7mln BPD (prev. 5.8mln BPD), though explained that the downward revision was ‘nothing to worry about’ and was due to updated data and rounding effects. Elsewhere, spot gold and silver have been contained within narrow ranges in the European morning with spot gold not experiencing a meaningful move away from the USD 1800/oz handle. Base metals are a touch softer from the contained performance seen in APAC hours where attention was more on thermal coal, following China’s State Planner said there is room for continued adjustments of coal prices; initial investigation results show coal production costs are significantly below current coal spot prices. In wake of this, thermal coal futures once again hit 10% limit down. US Event Calendar 8:30am: Sept. Personal Income, est. -0.3%, prior 0.2%; Personal Spending, est. 0.6%, prior 0.8% 8:30am: Sept. PCE Deflator YoY, est. 4.4%, prior 4.3%; PCE Deflator MoM, est. 0.3%, prior 0.4% 8:30am: Sept. PCE Core Deflator YoY, est. 3.7%, prior 3.6%; Core Deflator MoM, est. 0.2%, prior 0.3% 9:45am: Oct. MNI Chicago PMI, est. 63.5, prior 64.7 10am: Oct. U. of Mich. Sentiment, est. 71.4, prior 71.4; Current Conditions, est. 77.9, prior 77.9; Expectations, est. 67.2, prior 67.2 10am: Oct. U. of Mich. 5-10 Yr Inflation, prior 2.8% 10am: Oct. U. of Mich. 1 Yr Inflation, est. 4.8%, prior 4.8% DB's Jim Reid concludes the overnight wrap The last 36-48 hours has seen a silent rate tantrum that has caused some remarkable volatility at the front end. Silent as equities don’t care for now as US bourses again hit fresh record highs again last night before weak results from Amazon after the bell slightly dented the mood. Although there wasn’t much new in the ECB meeting, the event seemed to calm markets down (even if purely coincidental timing wise) after a pretty stressful Asian and London morning session. To give you a flavour of this 2yr Canadian yields opened (lunchtime London) another +12 bps higher (around +38bps in less than 24 hours) before rallying 25bps over the next 3 hours and then steadying to close -6.5bps on the session, ‘only’ +13.5bps above where they were before Wednesday’s shock BoC news. As another gauge, US 2s10s which on Wednesday morning was at +120bps, rallied another 6bps in Asia and London morning to a low of under +98bps. We closed back at +108.7bps though after a big re-steepening. As we highlighted in yesterday’s CoTD (link here) there was seemingly a big positioning shock that the Canadian and then Aussie news from 24 hours ago encouraged. The latest from the Australian market is that after a +29.7bps move yesterday, 2yr yields have climbed by another +27bps this morning and now sit at 0.8% having been at 0.15% on Wednesday. Remarkable moves and this could set the stage for another frantic London session. The yield on 10yr (+26bps) also jumped as the RBA once again didn’t defend its yield target this morning, contrary to market expectations, leading to speculation that it may be abandoned altogether as early as at the meeting next Tuesday. So this is setting the stage for a seismic event for global markets as there is a huge gap between the 0.1% target and 0.8% where the April 24 note is now trading. Overall government bonds have been all over the place over the last couple of days and the resteepening in the US meant that 10yr yields rose +3.9bps yesterday after rallying early in the session. We’re up another +2.3bps this morning. 20yrs inverted versus 30yrs yesterday for the first time since the issue was re-introduced last year, and this curve finished the session at -2.4bps. On the inflation compensation front, 10yr breakevens narrowed for the second day on the bounce, declining -8.4bps to 2.59% which means that real yields actually rose +12.0bps - their biggest climb since immediately after the June FOMC. European yields rose as 10yr bunds (+4.3bps), OATs (+4.6bps) and BTPs (+10.7bps) and Gilts (+2.3bps) all marched higher, while 2yr yields were +2.5bps, +0.8bps, +9.4bps, and +8.9bps higher respectively. So a mixed bag of curve moves after the BoC/Australia/ECB developments. As in the US, 10yr breakevens narrowed across Europe as well; German, French, Italian, and UK breakevens declined -6.8bps, -4.9bps, -6.0bps, and -1.9bps, respectively. The ECB meeting was the main macro event of the day. Our Europe team offers a more thorough breakdown here, but the three main takeaways are: 1) the ECB recognised that inflation is going to be higher for longer, dropping that it is ‘largely temporary’ from its statement; 2) President Lagarde offered some (but not total) pushback on market pricing, remarking liftoff in 2022 or anytime soon thereafter was inconsistent with the ECB’s forecast and forward guidance; and 3) President Lagarde gave the firmest guidance yet that PEPP would finish in March. Her press conference came hours after Spain reported a +2.0% jump in October inflation versus +1.2% expected, while the German CPI (+0.5%), released just shortly before the press conference, also beat forecasts (+0.5% vs +0.4%). US data was mixed, with a miss in advance Q3 GDP, which came at +2.0% versus +2.6% expected as well as surprising a slowdown in pending home sales (-2.3% vs +0.5% expected), boosted the narrative of slower growth. Meanwhile initial jobless claims (281k versus 288k expected) saw a fresh post pandemic low and personal consumption decelerated slower than expected (+0.9%), coming in at +1.6%. In terms of equities, another string of positive earnings surprises lifted stocks, with the Nasdaq and S&P 500 reaching their record highs by the close. Every sector in the two indices, plus the DJIA finished in the green, with the Nasdaq up +1.39%, the S&P 500 +0.98% higher and the DJIA closing up +0.68%. Strong results from Ford and Caterpillar also added to the bullish outlook. Ford reported that demand was strong and that the semiconductor shortages were easing, prompting them to revise higher profit estimates for the year. Caterpillar also noted end-user demand was strong, and expects it to be strong through next year, but supply chain difficulties will limit their ability to fill orders. After the close, earnings from Amazon and Apple weighed on sentiment. Amazon missed on revenue and earnings, and noted the near-term outlook wasn’t great, due to labour shortages and supply chain woes. Apple was also hit by supply chain issues, which caused them to miss revenue estimates. S&P futures are trading lower by -0.3% ahead of the open this morning. In total, of the 52 S&P companies that reported yesterday, 44 beat on earnings while 34 beat revenue estimates. The dynamic was less optimistic on the other side of the Atlantic, where the STOXX 600 (+0.24%) rose moderately, as it was pulled down by a steep drop in energy (-1.85%) after Royal Dutch Shell missed on earnings as well as faced calls to break up its business from an activist hedge fund. Country-wise, we saw the CAC 40 (+0.75%) and the IBEX 35 (+0.60%) outperforming the DAX (-0.06%) and the FTSE 100 (-0.05%). In Asia, equities are mixed after the late earnings misses in the US and disappointing regional economic data. The Nikkei 225 (+0.29%) and the Shanghai composite (+0.16%) are higher, while the KOSPI (-0.62%) and the Hang Seng (-0.47%) is down. In data releases, industrial production in Japan (-5.4% vs -2.7% expected) and South Korea (-1.8% vs +2.0% expected) declined, heavily missing consensus. Tokyo CPI (+0.1%) was also below projections (+0.4%). Meanwhile, China’s National Development and Reform Commission communicated that coal prices can continue to decrease further, extending the decline in coal futures (-8.68%), as the country faces an acute energy crisis. Elsewhere the dollar is trading higher this morning (+0.05%), while gold (-0.15%) retreated from its gains during yesterday’s European session. In energy markets, oil futures are mixed, as WTI (-0.08%) is marginally lower and Brent (+0.23%) is advancing. Natural gas prices, however, continued to decline yesterday, falling in the US (-1.71%) and Europe (-11.75%). President Biden addressed the nation to sell the public (and, ostensibly, his own party) on a $1.75 trillion social and climate spending framework after prolonged negotiations. Along with the big outlays, the proposal includes revenue raising measures via higher tax surcharges on those making more than $10 million, a 15% minimum corporate tax rate, a 1% excise tax on stock buybacks, and funding to improve IRS enforcement of the current tax code. If Congressional Democrats can agree on the new social bill, it should also enable a vote on the separate $550 billion bi-partisan infrastructure plan. Nothing was tabled for a vote yesterday as progressive Democrats were waiting to see the detailed proposal of the social spending bill before giving the bi-partisan infrastructure bill their imprimatur. Nevertheless, it appears that out of the flurry of headlines, yesterday saw some progress in DC negotiations. In today’s data releases, Japan September jobless rate, preliminary September industrial production, preliminary Q3 GDP from Euro Area, Germany, France and Italy, preliminary October CPI from Euro Area, France and Italy, UK September mortgage approvals, Canada August GDP, US September personal spending, personal income, October MNI Chicago PMI and final October University of Michigan consumer sentiment index are due. In corporate earnings, ExxonMobil, Chevron, AbbVie, Charter Communications, Daimler, BNP Paribas, Aon and NatWest Group are among companies reporting. Tyler Durden Fri, 10/29/2021 - 07:47.....»»

Category: blogSource: zerohedgeOct 29th, 2021

Factors to Consider Before Mondelez"s (MDLZ) Q3 Earnings

Mondelez's (MDLZ) third-quarter results are likely to reflect gains from buyouts and recovery in World Travel Retail though cost woes are a concern. Mondelez International, Inc. MDLZ is likely to display year-over-year growth in the top and bottom lines, when it reports third-quarter 2021 earnings on Nov 2. The Zacks Consensus Estimate for revenues is pegged at $7,031 million, suggesting a rise of 5.6% from the prior-year quarter’s reported figure.The Zacks Consensus Estimate for earnings has moved south by a cent over the past seven days to 70 cents per share, which indicates an increase of 11.1% from the figure reported in the prior-year period. In the last reported quarter, the company’s earnings came in line with the Zacks Consensus Estimate. The company has a trailing four-quarter earnings surprise of 2.9%, on average.Mondelez International, Inc. Price, Consensus and EPS Surprise Mondelez International, Inc. price-consensus-eps-surprise-chart | Mondelez International, Inc. QuoteKey Factors to NoteApart from witnessing continued demand spike for the categories that have been benefiting amid the pandemic, Mondelez is gaining on recovery in World Travel Retail, and in the gum and candy categories. Apart from this, the company has been gaining on buyouts and alliances.Recently, the company teamed up with MissFresh to introduce Oreo Zero on the latter’s popular online retail platform. Earlier, it announced a deal to buy Chipita S.A., which is a major producer of sweet and salty snacks in Central and Eastern Europe. Prior to this, in 2021, Mondelez took over a renowned sports performance and active nutrition brand — Grenade. Further, the company acquired Australia-based food company — Gourmet Food Holdings — which operates in the premium biscuit and cracker category. Mondelez completed the acquisition of Hu Master Holdings, the parent company of Hu Products on Jan 4, 2021. Contributions from these buyouts are likely to have aided its performance during the quarter under review.That said, management on its last earnings call stated that it envisions commodity, logistics and labor costs to further flare up in the second half of 2021. While Mondelez is focused on managing these costs through pricing and saving initiatives, it does anticipate some pressure points during the second half.What the Zacks Model UnveilsOur proven model doesn’t conclusively predict an earnings beat for Mondelez this time around. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Mondelez currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of -2.08%.Stocks With Favorable CombinationsHere are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.Tyson Foods TSN has an Earnings ESP of +19.13% and carries a Zacks Rank #3, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Coca-Cola Company KO has an Earnings ESP of +0.75% and carries a Zacks Rank of 3, currently.The Estee Lauder Companies EL has an Earnings ESP of +0.24% and currently holds a Zacks Rank #3. Bitcoin, Like the Internet Itself, Could Change Everything Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities. Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. See 3 crypto-related stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CocaCola Company The (KO): Free Stock Analysis Report The Estee Lauder Companies Inc. (EL): Free Stock Analysis Report Tyson Foods, Inc. (TSN): Free Stock Analysis Report Mondelez International, Inc. (MDLZ): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksOct 28th, 2021

Tesla And Hertz – Whatever Next...

Tesla And Hertz – Whatever Next... Authored by Bill Blain via MorningPorridge.com, “Democracy is absolutely the worst form of government, except for anything else…” Tesla’s rise into the $1 trillion club is extraordinary – proving that listening to what the momentum crowd is buying, while suspending disbelief and fundamental analysis is one road to success. Hertz is a lesson in seizing the moment – its stock gains and free publicity from its new EV fleet will likely exceed the cost of the cars! As I write this morning’s Porridge I am going to try and not sound like a bitter and twisted old man…. I suppose today’s lesson today might be: “Don’t over think it.” Every morning I wake up and try to make sense of the market noise to discern the big forces acting on markets, the underlying rationales, what the numbers really mean, the potential arbitrages, and the direction of trade flow. But I wonder if I’m doing it wrong. It’s not what I think that matters. The only thing that’s important is what the market thinks. The market is simply a voting machine where suffrage is simply the price of a stock. If the market believes Donald Trump’s sight-unseen social media empire is worth billions, so be it. If the market believes Meme Stocks are worth trillions, so be it. Whatever the market believes.. so be it. As so many clever economists and traders have spotted before me.. it’s the madness of crowds that matters. Over the last few years understanding Behaviours has proved far more useful than forensic accounting skills when it comes to stock picking. I make the mistake of calling out the inconsistencies of the “drivers” like Adam Neumann, Cathie Wood, Elon Musk and the Eminence Noirs driving SPACs and funds – rather than understanding what makes them look so attractive, clever, clearsighted and intuitive to so many market participants. Promise most people you are going to make them unfeasibly rich – and they will listen. I make the schoolboy error of asking.. how? Life is full of regrets. If we let them define us – we truly would be miserable. Do I regret dumping Tesla in the wake of the cave-diving comments scandal? I reckoned it was massively overpriced around $70. Ever since I have pontificated why it’s not worth a fraction of even that valuation. I don’t regret selling, but I acknowledge I’ve been wrong about the price. But not because I got the fundamentals wrong – I misread the crowd. Failing to understand the momentum was my failure. I am less wealthy than I could have been. Tesla is worth a Trillion dollars plus. Elon Musk is the richest guy on the planet. These are facts. Tesla, remarkably, has become a great auto-company. It makes good cars. It understands the logistics of super-charging networks. It has front-run the switch from ICE to EVs, making them mainstream, leading a massive industrial shift, and forced the rest of the sector to play catch up. It changed the perception of EVs from milk-carts to desirable luxury status symbols. It will successfully open new plants and sell more cars. It’s the number one selling car in Europe this quarter – possibly because no one else can get hold of chips! Perversely, Tesla’s success demonstrates momentum can take a company to fundamental strength. For much of Tesla’s life, sceptics like myself predicted it would stumble and fall, brought down most-likely by apparently insurmountable production problems, its debt load, or regulation. It didn’t happen. Instead it survived, thrived and has been able to reap the momentum and build a strong balance sheet on the back of its extraordinary stock price gains. It could potentially acquire whole swathes of its rivals and supply chain. It’s been an extraordinary climb from likely disaster to undeniable success – and the one constant has been the support of dedicated Tesla fans. Frankly, it flabbergasts me just how Elon got away with it… but he did. At this point you are expecting a But… But…. What would be the point? In the mind of the crowd facts like how 10-year old Telsa only just started making profits on selling cars don’t matter. Its consistently made profits for the last 2.25 years – largely from selling regulatory credits. Prior to that… Tesla racked up losses. It has consistently failed to deliver so many promises on deliveries, automation and new models. None of these facts matter. It’s what the market believes that matters. So, there is no point looking at Tesla this morning and trying to explain how it’s worth a trillion – a multiple of the much larger and more profitable Toyota. Let’s not wonder  why many analysts reckon its going higher. There is no point trying to fathom why a $4.2bn order from newly out-of-bankruptcy Hertz caused the stock price to ratchet up $110 bln yesterday. This morning analysts are predicting Tesla stock will go higher, building from the “breakthrough psychological level of $900, right through the key $1200 milestone level, and then the next level is $1500.” There was nary a mention of its PE, fundamentals, margins or such irrelevancies… just that its going higher. Meanwhile… The Hertz trade is fascinating – Hertz has generated tremendous publicity for its re-launch, and enough stock upside to pay for the cars! It steals a march on any other hire firm wanting to build a fleet of EVs. Hertz went bust early in the pandemic and sold its whole fleet. But, as signs of economic recovery first appeared it became the perfect recovery play. After a bidding war, it was bought out from bankruptcy and restarted with a clean sheet. It now has its very own army of meme stock proponents. Its stock price has more than doubled to $12 on the OTC market. The fact car hire firms are vulnerable businesses in a highly competitive market, or there are now literally hundreds of new EV makers, in addition to the incumbent ICE auto-manufacturers – all now competing in the EV space for Tesla’s lunch – doesn’t matter. For now. Always bear in mind Blain’s Market Mantra no 1: The Market has but one objective: to inflict the maximum amount of pain on the maximum number of participants. Tyler Durden Tue, 10/26/2021 - 08:00.....»»

Category: blogSource: zerohedgeOct 26th, 2021

3 bonding exercises to help strengthen your team dynamics amid the Great Resignation

Game nights, trivia contests, welcome lunches, and 'anything but work' check-ins can give coworkers the chance to connect on a more personal level. Scheduling game nights is one way to improve team bonds at work. Luis Alvarez/Getty Images At a time when workers are quitting in record numbers, bonding activities are important to strengthen company culture. Some companies schedule regular 'anything but work' check-ins to connect on a more personal level. Game nights, trivia contests, and welcome lunches can also help improve team dynamics. It's cheesy, but it works. So says Frank B. Mengert, founder and CEO of ebm, a North Haven, Connecticut-based benefits and HR tech company, about his company's weekly video call, known as "Friday Vibes." The one rule: You can talk about anything but work. These unconventional meetings - ebm's sometimes involve games like Two Truths and a Lie - have helped reduce turnover in the company since they started them in May 2020. At a time when employees are quitting in record numbers and rotating through workplaces without ever meeting coworkers in-person, such bonding activities can potentially improve team dynamics, says Timothy Golden, professor at Rensselaer Polytechnic Institute's Lally School of Management and a longtime researcher of remote work. From Inc. 5000 CEOs, here are three ways to forge bonds between team members in your still-virtual workplace.1. "Anything but work" check-insConsistency is crucial to Friday Vibes, Mengert says. Every Friday at 4 p.m., anywhere from half to all of ebm's 47 employees hang out on one Zoom call and chat about non-work topics or play games, especially with new hires. Most Friday Vibes go over the allotted time, he adds. Serious topics like mental health come up sometimes, or the team might spend the whole hour discussing types of cars they've driven before.A couple of months into the pandemic, the team at Burlingame, California-based gaming and strategy research firm IDG Consulting started to look a little haggard, says CEO and president Yoshio Osaki. The 11-person company went remote in 2018 but over time, IDG employees lost an element of interpersonal connection. "We were our own little islands," he said. When the pandemic hit and people started going through lockdowns and additional childcare stress, Osaki finally realized that since the company went remote he had been checking in on what people were doing, not how they were doing. And morale seemed to be taking a hit as a result.That's actually pretty common in a remote environment, Golden says. People tend to be more task-oriented than relationship-oriented, so managers have to find ways to rebuild interpersonal trust and rapport virtually. Osaki's solution was to implement a 30-minute mandatory non-work chat every other week (it's since expanded to 60 minutes).The calls provided fun bonding time, but some turned less lighthearted. Osaki realized that some employees needed additional help and added an annual $1,000 self-care stipend to make it easier to pay for things like therapy. He learned an employee had back pain and bought them an ergonomic chair. Another had gotten into building computers, so they bought him some tools, and he ended up building one for their data scientist. And beyond the insight on employees' needs, Osaki said, "We saw an increase in productivity as well as creativity." In sum, starting the chat has been an important factor in making 2021 a record year for IDG's revenue. 2. Gratitude sharing Telling your employees you appreciate them seems like obvious advice - but helping them do it in structured ways helps you keep from losing them, according to Keegan Caldwell, founder and managing partner of Boston-based Caldwell Intellectual Property Law. Every Friday at noon, employees share whom they've been grateful for over the last week."What we found was this was the most important meeting for us to have," Caldwell said. He started it three years ago, inspired by his 12-step recovery process and his ability to make it through the associated challenges. Since then, he estimates, it has improved retention by 10%. For Boston-based Winthrop Wealth and CEO Max Winthrop, it's about the "small wins." On their morning call, the team has the option to share their tiny victories, like putting in extra effort to help a client's family after their spouse died. The company started it after doing a workshop in the fall of 2020 with self-actualization and sharing activities - and Winthrop hasn't lost an employee since. It also helps him keep perspective as a leader, he said: "The small contributions add up to the greater success." 3. Games and experiences Every month or so, employees at government IT contractor Kech play bingo and Pictionary, compete for who has the cutest pet photo, or speculate about how they would survive a zombie apocalypse. Chris Carpenter, the Williamsburg, Kentucky-based company's CEO, and cofounder, likes to mix it up. Her company, which operates call centers for government services, had high turnover before the pandemic. But she says she's managed to keep a core group of employees by adding fun and human connection into their workdays.Most events come with prizes, and Carpenter estimates she spends $2,000 on gift cards a year for the winners. She organizes them herself and regularly gets messages from employees asking when the next game will be.When it comes to games, pick something that is collaborative rather than competitive to boost organizational cohesion, says Sean Newman, a visiting professor at Rollins College and senior vice president of operations at London-based financial services firm Aon. And try to use bonding activities or games to build up relationships between specific employees. "To the extent that your games can show the manager really cares and establish that relationship... it can be a real positive outcome for retention," he said. Games and more elaborate, planned events can help avoid the dreaded Zoom happy hour, says Jonathan Conelias, CEO of Boston-based ReElivate, which provides virtual experiences for clients, including Amazon and Google. His advice: Try to plan something special and interesting that gives employees a shared experience to refer to, like an escape room.Lauren Greenwood's company, YouCopia, which is based in Chicago and provides organizational home goods for consumers, simply does welcome lunches on the first day for new hires with three weird questions for everyone else to answer. (The meals were virtual for part of the pandemic but are now in-person for smaller groups.) If you're too busy to organize creative bonding activities - or it's just not your thing - hire someone to handle it, she advises.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 21st, 2021

Futures Slide On Renewed China Slowdown, Rate Hike Fears

Futures Slide On Renewed China Slowdown, Rate Hike Fears US equity futures and world shares drifted lower following poor Chinese macro data which saw the country's GDP slide to a weaker than expected 4.9%, and as surging energy prices and inflation reinforced bets that central banks will be forced to react to rising inflation and hike rates faster than expected. Calls by China’s President Xi Jinping on Friday to make progress on a long-awaited property tax to help reduce wealth gaps also soured the mood. With WTI crude rising to a seven-year high, and Brent back over $85, investors remain concerned that living costs will be driven higher. The economic recovery also remains uneven with China’s gross domestic product slowing more than expected in the third quarter, increasing aversion to riskier assets. The dollar rose against all of its Group-of-10 peers as concerns about an acceleration in inflation damped risk appetite, while bircoin traded above $61K and just shy of an all time high ahead of the launch of the Proshares Bitcoin ETF on Tuesday. An MSCI gauge of global stocks was down 0.1% by 0808 GMT as losses in Asia and a weak open in Europe erased part of the gains seen last week on a strong start to the earnings season. U.S. stock futures were also lower with S&P 500 e-minis last down 0.2%, while Dow and Nasdaq e-minis were both down 0.3%. China’s gross domestic product grew 4.9% in the July-September quarter from a year earlier, its weakest pace since the third quarter of 2020. The world’s second-largest economy is grappling with power shortages, supply bottlenecks, sporadic COVID-19 outbreaks and debt problems in its property sector. Additionally, industrial output and fixed investment also missed expectations, while retail sales beat modestly (more here). Not even the latest attempt by China to ease Evergrande contagion fears was enough to offset worries about China's economy: on Sunday, PBOC Governor Yi Gang said authorities can contain risks posed to the Chinese economy and financial system from the struggles of China Evergrande Group. Because of course he will say that. Oil prices extended a recent rally amid a global energy shortage with U.S. crude touching a seven-year high while Brent was set to surpass its 2018 highs just above $86, as Russia kept a tight grip on Europe’s energy market, opting against sending more natural gas to the continent even after President Vladimir Putin said he was prepared to boost supplies. “The lingering energy crisis, while benefiting miners and other oil & gas related stocks, is otherwise weighing on the overall sentiment,” said ActivTrades’ Pierre Veyret. Investors will stay focused on macro news this week with major Chinese and U.S. releases as well as new monetary policy talks from Jerome Powell, he said. Investors continue to grapple with worries that energy shortages and supply-chain disruptions will drive up living costs in most economies. At the same time, the recovery remains patchy and central bankers are inching closer to paring back stimulus. U.S. consumer sentiment fell unexpectedly in early October, but retail sales advanced. “We are starting to see some cracks in the transitory narrative that we’ve been hearing for quite some time,” Meera Pandit, global market strategist at J.P. Morgan Asset Management, said on Bloomberg Radio. “Rates will continue to ground higher from where we are. But I don’t think from a Fed perspective, when you think about the short end of the curve, that they are going to move much earlier than 2023. They are going to be a little bit more patient than the market expects right now.” And then there were rates: the global bond selloff gathered pace, with U.K. yields surging after Bank of England Governor Andrew Bailey warned on the need to respond to price pressures. Rate-hike bets have also picked up in the U.S., Australia and New Zealand, where inflation accelerated to the fastest pace in 10 years. Ten-year Treasury yields extended a climb , rising as high as 1.62%. Mohammed El-Erian, the chief economic adviser at Allianz SE and a Bloomberg columnist, said investors should prepare for increased market volatility if the Federal Reserve pulls back on stimulus measures set in motion by the Covid-19 pandemic. On the other side of the argument, Goldman's flow trading desk said odds of a November meltup are rising as a result of a relentless appetite for stocks and an upcoming surge in stock buybacks. In any case, Virgin Galactic Holdings Inc. shares fell 3% in U.S. premarket, extending losses from Friday that came after the firm pushed back the start of commercial flights further into next year after rescheduling a test flight. Here are some of the other notable U.S. pre-movers today: Baidu (BIDU US) shares erased earlier losses and climbed as much as 4.3% in Hong Kong, as China debates rules to make hundreds of millions of articles on Tencent’s WeChat messaging app available via search engines like Baidu’s. Crypto-related stocks in action as Bitcoin leaps as much as 5.3% and is just shy of a fresh six- month high. Riot Blockchain (RIOT US), Marathon Digital (MARA US) and Coinbase (COIN US) are all up Tesla (TSLA US) shares rise 0.2% in premarket trading Monday, poised for 50% rally from a March 8 low, ahead of its third-quarter results on Wednesday Dynavax (DVAX US) shares rise as much as 10% in U.S. pretrading hours after the biopharmaceutical company announced that Valneva reported the trial of inactivated, adjuvanted Covid-19 vaccine candidate VLA2001 met its co-primary endpoints Disney (DIS US) drops in premarket trading after Barclays downgrades to equal-weight as the company faces a “tough” task to get to its long-term streaming subscription guidance NetApp (NTAP US) slips 2.2% in premarket trading after Goldman Sachs analyst Rod Hall cut the recommendation on NetApp Inc. to sell from neutral European stocks traded on the back foot from the open, with the benchmark Stoxx 600 Index down 0.4%, led by losses in retail stocks. The Euro Stoxx 50 dropped as much as 0.9%, FTSE 100 outperforms slightly. Mining stocks were among Europe's only gainers thanks to the ongoing metals rally: the Stoxx Europe 600 basic resources sub-index climbs for a third day for the first time since early September as the record rally of base metals is extended. The gauge rose 0.6%, outperforming main benchmark which trades 0.4% lower. Notable movers: Glencore +1.2%; BHP +1%; Norsk Hydro +2.5%; ArcelorMittal +0.9% Rio Tinto +0.3%. Offsetting these gains, European luxury stocks slipped after a Chinese Communist Party journal published a speech of President Xi Jinping that includes advancing legislation on property taxes. Here are some of the biggest European movers today: Playtech shares rise as much as 59% in London after the British gambling software developer agreed to be bought by Australia’s Aristocrat for $3.7 billion. Valneva SE shares rise as much as 42% as its experimental Covid-19 vaccine elicited better immunity than AstraZeneca Plc’s shot in a clinical trial that will pave the way for regulatory submissions. Shares of hydraulics manufacturer Concentric rise as much as 14%, the most since April 2020, after Danske Bank upgraded the stock to buy from hold, calling the company a strong performer in a difficult market. THG shares jump as much 12%, most since May 11, after founder and CEO Matthew Moulding confirmed his intention to cancel his special share rights. The removal of the special share points to the e-commerce company’s “willingness to engage on shareholder concerns,” according to Jefferies. Rational AG shares rise as much as 6.1%, the most since Aug. 5, after the German kitchen machinery maker is upgraded to buy from hold at Berenberg, which considers the shares “inexpensive” despite stretched multiples. Atrium European Real Estate share rises as much as 7.6% to the highest since March 2020 after controlling shareholder Gazit Globe raises the offer price to EU3.63 per Atrium share from EU3.35. Earlier in the session, Asian equities fell, putting them on track to snap a three-day rally, as China’s economic growth slowed and prospects of higher bond yields weighed on some tech shares. The MSCI Asia Pacific Index fell as much as 0.4%, with tech and consumer staples shares setting the pace for declines. TSMC and Sony Group were among the biggest drags. Official data showed that China’s economy weakened in the third quarter amid tighter restrictions on the property market and China Evergrande Group’s debt crisis. For Asia stock traders, the concerns about China are adding to persistent inflation worries and energy shortages, which are sending bond yields higher. While inflation worries are “alive and well,” Asian markets will be predominantly focused on China data today, Jeffrey Halley, senior market analyst at Oanda Asia Pacific, wrote in a note. The weak data print “will lift expectations of an imminent PBOC RRR rate cut,” he added. China’s benchmark underperformed as the country explored property- and consumption tax-related changes and international funds sold shares of Kweichow Moutai Co., the country’s largest stock by market value. Tencent, Meituan and Alibaba pared losses prompted by the Chinese government saying it will introduce more regulations on the tech sector. China is considering asking media companies from Tencent Holdings Ltd. to ByteDance Ltd. to let rivals access and display their content in search results, according to people familiar with the matter. India’s Sensex index bucked the regional trend and is on track to rise for the seventh day, the longest such streak since January, helped by easy money. Japanese equities declined, paring last week’s rally, weighed down by losses in electronics makers. The Topix dipped 0.2%, following a 3.2% gain last week. The Nikkei 225 fell 0.2%, with M3 Inc. and KDDI the biggest drags. Almost 30% of respondents to a Kyodo weekend poll said they plan to vote for the ruling Liberal Democratic Party in the proportional representation section of Japan’s Oct. 31 election. U.K. rates steal the limelight amid a violent selloff that saw 2y gilt yields rise as much as 17bps to trade close to 0.75%. Weekend comments from BOE’s Bailey triggered a snap lower in short-sterling futures and bear-flattening across the gilt curve. MPC-dated OIS rates price in ~20bps of hiking by the November meeting. Bunds and Treasuries follow gitls lower, peripheral spreads widen to core with Italy underperforming. Australian stocks closed higher as miners and banks advanced. The S&P/ASX 200 index rose 0.3% to close at 7,381.10, led by miners and banks. Nickel Mines surged after a subsidiary signed a limonite ore supply agreement with PT Huayue Nickel Cobalt. Domino’s was among the worst performers, closing at its lowest since Aug. 17. In New Zealand, the S&P/NZX 50 index fell 0.1% to 12,998.51. In FX, the Bloomberg Dollar Spot Index advanced as the dollar traded higher versus all of its Group-of-10 peers Traders pulled forward rate- hike bets after BoE governor Bailey said the central bank “will have to act” on inflation. U.K. money markets now see 36 basis points of BoE rate increases in December and are pricing 15 basis points of tightening next month. Traders are also now betting the BoE’s key rate will rise to 1% by August, from 0.1% currently. The euro struggled to recover after falling below the $1.16 handle in the Asian session; money markets are betting the ECB will hike the deposit rate to -0.4% in September as expectations for global central-bank policy tightening gather pace. Resilience in the spot market and a divergence with rate differentials in the past sessions has resulted in a flatter volatility skew for the euro. Commodity-linked currencies such as the Australian dollar and the Norwegian krone underperformed after Chinese data including third-quarter growth and September factory output trailed economists’ estimates. The kiwi rose to a one-month high versus the dollar, before giving up gains, and New Zealand’s bond yields rose across the curve after 3Q annual inflation rate surged, beating estimates. The yen steadied around a three-year low as U.S. yields extended their rise in Asian trading; the Japanese currency still held up best against the dollar among G-10 currencies, after performing worst last week. In rates, treasuries were under pressure led by belly of the curve as rate-hike premium continues to increase in global interest rates. Yields, though off session highs, remain cheaper by nearly 5bp in 5-year sector; 2s5s30s fly topped at -12.5bp, cheapest since 2018; 10-year is up 2.8bp around 1.60% vs 3.4bp increase for U.K. 10-year. Belly-led losses flattened U.S. 5s30s by as much as 5.4bp to tightest since April 2020 at around 86.1bp; U.K. 5s30s curve is flatter by ~8bp after its 5-year yield rose as much as 14bp. Gilts led the move, with U.K. 2-year yield climbing as much as 16.8bp to highest since May 2019 as money markets priced in more policy tightening after Governor Andrew Bailey said the Bank of England “will have to act” on inflation. With latest moves, U.S. swaps market prices in two Fed hikes by the end of 2022. In commodities, WTI rose 1%, trading just off session highs near $83.20; Brent holds above $85. Spot gold drifts lower near $1,762/oz. Most base metals are in the green with LME lead and tin outperforming. Looking at today's calendar, we have industrial production, US September industrial production, capacity utilisation, October NAHB housing market index. Fed speakers include Quarles, Kashkari. Market Snapshot S&P 500 futures down 0.2% to 4,451.75 STOXX Europe 600 down -1.6% to 467.76 MXAP down 0.2% to 198.11 MXAPJ little changed at 650.02 Nikkei down 0.1% to 29,025.46 Topix down 0.2% to 2,019.23 Hang Seng Index up 0.3% to 25,409.75 Shanghai Composite down 0.1% to 3,568.14 Sensex up 1.0% to 61,918.22 Australia S&P/ASX 200 up 0.3% to 7,381.07 Kospi down 0.3% to 3,006.68 Brent Futures up 0.9% to $85.65/bbl Gold spot down 0.3% to $1,762.70 U.S. Dollar Index up 0.17% to 94.10 German 10Y yield rose 3.5 bps to -0.132% Euro down 0.1% to $1.1586 Brent Futures up 0.9% to $85.65/bbl Top Overnight News from Bloomberg Germany’s prospective ruling coalition is targeting about 500 billion euros ($580 billion) in spending over the coming decade to address climate change and will seek loopholes in constitutional debt rules to raise the financing The ECB is exploring raising its limit on purchases of debt issued by international bodies such as the European Union from the current cap of 10%, the Financial Times reported, citing four ECB governing council members The ECB should keep some of the flexibility embedded in its pandemic bond-buying program for post-crisis stimulus measures, Governing Council member Ignazio Visco said People’s Bank of China Governor Yi Gang said authorities can contain risks posed to the Chinese economy and financial system from the struggles of China Evergrande Group A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded cautiously after disappointing Chinese GDP and Industrial Production data, while inflationary concerns lingered after the recent firmer than expected US Retail Sales data, a continued rally in oil prices and with New Zealand CPI at a decade high. Nonetheless, the ASX 200 (+0.1%) bucked the trend on reopening optimism with curbs in New South Wales to be further eased after having fully vaccinated 80% of the adult population and with the Victoria state capital of Melbourne set to lift its stay-at-home orders this week. Furthermore, the gains in the index were led by outperformance in the top-weighted financials sector, as well as strength in most mining names aside from gold miners after the precious metal’s retreat from the USD 1800/oz level. Nikkei 225 (-0.3%) was subdued after a pause in the recent advances for USD/JPY and with criticism of Japan after PM Kishida sent an offering to the controversial war shrine which sparked anger from both China and South Korea. Hang Seng (-0.5%) and Shanghai Comp. (-0.4%) were subdued after Chinese Q3 GDP data missed expectations with Y/Y growth at 4.9% vs exp. 5.2% and Industrial Production for September fell short of estimates at 3.1% vs exp. 4.5%, while the beat on Retail Sales at 4.4% vs exp. 3.3% provided little consolation. There was plenty of focus on China’s property sector with PBoC Governor Yi noting authorities can contain risks posed to the Chinese economy and financial system from the struggles of Evergrande, and with its unit is said to make onshore debt payments due tomorrow. However, attention remains on October 23rd which is the end of the grace period for its first payment miss that would officially place the Co. in default and it was also reported on Friday that China Properties Group defaulted on notes worth USD 226mln. Finally, 10yr JGBs were lower amid spillover selling from T-notes which were pressured after the recent stronger than expected Retail Sales data and higher oil prices boosted the inflation outlook, with demand for JGBs is also hampered amid the absence of BoJ purchases in the market today. Top Asian News Tesla Shares Roaring Back, Set for 50% Gain From March Lows Kishida’s Offering to Japan War Shrine Angers Neighbors Baidu Jumps as China Said to Weigh More Access to WeChat Content AirAsia X Proposes Paying Creditors 0.5% of $8 Billion Owed European equities (Eurostoxx 50 -0.7%; Stoxx 600 -0.4%) have kicked the week off on the backfoot as market participants digest disappointing Chinese GDP metrics, a continued rally in energy prices and subsequent inflationary concerns which has seen markets price in more aggressive tightening paths for major global central banks. Overnight, Chinese Q3 GDP data missed expectations with Y/Y growth at 4.9% vs exp. 5.2% and Industrial Production for September fell short of estimates at 3.1% vs exp. 4.5%, while the beat on Retail Sales at 4.4% vs exp. 3.3% provided little consolation. Stateside, index futures have conformed to the downbeat tone with the ES softer to the tune of -0.3%, whilst the RTY narrowly lags with losses of 0.4%. In a note this morning, JP Morgan has flagged that investor sentiment remains that “the upcoming reporting season will be challenging, given the combination of the activity slowdown, significant supply distortions impacting volumes, and the energy price acceleration that is seen to be hurting profit margins and consumer disposable incomes”. That said, the Bank is of the view that investors are likely braced for such disappointments. In Europe, sectors are mostly lower with Retail names lagging post-Chinese GDP as Kering (accounts for 28.7% of the Stoxx 600 Retail sector) sits at the foot of the CAC with losses of 3.2%; other laggards include LVMH (-2.7%) and Hermes (-2.3%). To the upside, Banking names are firmer and benefitting from the more favourable yield environment, whilst Basic Resources and Oil & Gas names are being supported by price action in their respective underlying commodities. In terms of individual movers, THG (+7.6%) sits at the top of the Stoxx 600 after confirming that it intends to move its listing to the 'premium segment' of the LSE in 2022; as part of this, CEO & Executive Chairman Moulding will surrender his 'founders share' next year. Finally, Umicore (-4.5%) sits at the foot of the Stoxx 600 after cutting its FY21 adj. EBIT outlook. Top European News Traders Ramp Up U.K. Rate-Hike Bets on Bailey Inflation Warning Nordea Equity Research Hires Pareto Analyst for Tech Team ECB’s Visco Says Flexible Policy Should Remain Part of Toolkit Scholz Coalition Eyes $580 Billion in Spending on German Reboot In FX, the broader Dollar and index has waned off its 94.174 pre-European cash open high but remains underpinned above 94.000 by risk aversion and firmer yields, with the US 10yr cash now hovering around 1.60%. Stateside, US President Biden confirmed that the reconciliation package will likely be less than USD 3.5trln, although this was widely expected in recent weeks. Aside from that, the Greenback awaits further catalysts but until then will likely derive its impetus from the yield and risk environment. From a tech standpoint, a breach of 94.000 to the downside could see a test of the 21 DMA (93.865) – which has proven to provide some support over the last two trading sessions, with Friday and Thursday’s lows at 93.847 and 93.759 respectively. The upside meanwhile sees the YTD high at 94.563, printed on the 12th of Oct. CNH - The offshore is relatively flat on the day in a contained 6.4265-4387 range following a set of overall downbeat Chinese activity metrics. GDP growth momentum waned more than expected whilst industrial production was lower than expected, largely impacted by the electricity crisis and local COVID outbreaks during Q3. Retail sales meanwhile rebounded more than expected – albeit due to reopening effects, with inflation a concern heading forward. The Chinese National Bureau of Stats later hit the wires suggesting that major economic data are seen in reasonable ranges from Q1-Q3. The PBoC governor meanwhile downplayed the current risks of spillover from default fears. AUD, NZD, CAD - The overall cautiousness across the market has pressured high-betas. The AUD fails to glean support from the firmer base metal prices and the surge in coal prices overnight, with overall downbeat Chinese data proving to be headwinds for the antipodean. The NZD is more cushioned as inflation topped forecasts and reinforced the RBNZ’s hawkishness, whilst AUD/NZD remains capped at around 1.0500. AUD/USD fell back under its 100 DMA (0.7409) from a 0.7437 peak, whilst NZD/USD hovers around 0.7050 (vs high 0.7100), with the 100 DMA at 0.7021. The Loonie narrowly lags as a pullback in oil adds further headwinds. USD/CAD aims for a firmer footing above 1.2400 from a 1.2348 base. EUR, GBP- The single currency and Sterling are relatively flat on the day and within tight ranges of 1.1572-1.1605 and 1.3720-65 respectively. The latter was unreactive to weekend commentary from the BoE governor, sounding cautious over rising inflation but ultimately labelling it temporary, although suggesting that monetary policy may have to step in if risks materialise. From a Brexit standpoint, nothing major to report in the runup to negotiations on the Northern Ireland protocol. Across the Channel, FT sources suggested that four ECB GC members would support upping the PSPP share of APP from the current 10% - with the plan to be discussed across two meetings next month and requiring a majority from the 25 members. All-in-all, the EUR was unswayed ahead of a plethora of ECB speakers during the week and as the clock ticks down to flash PMIs on Friday. JPY, CHF - The traditional safe-havens have fallen victim to the firmer Buck, with USD/JPY extending on gains north of 114.00 as it inches closer towards 114.50 – which also matches some highs dating back to 2017. The Swiss Franc is among the laggards after USD/CHF rebounded from its 50 DMA (0.9214) as it heads back towards 0.9300, with the weekly Sight deposits also seeing W/W increases. In commodities, WTI and Brent front-month futures have drifted from best levels as the cautious risk tone weighs on prices, but nonetheless, the complex remains overall firmer with the former within a USD 82.55-83.06 range and the latter in a 84.93-85.31 intraday parameter. Fresh catalysts remain quiet for the complex, while there were some comments over the weekend from Iraq's Oil Ministry which noted that prices above USD 80/bbl are a positive indicator. Elsewhere on the supply-side, Iran is to resume nuclear negotiations on October 21, an Iranian lawmaker said Sunday, although it is unclear how far talks will go as the US and Iran affirm their stances. It is also worth noting that a fire was reported at Kuwait's Mina al-Ahmadi (346k BPD) refinery, but refining and export operations are unaffected. UK nat gas futures meanwhile are relatively flat in a tight range, although prices remain elevated on either side of GBP 2.5/Thm. Elsewhere, spot gold and silver trade sideways amid a lack of catalysts, although the firmer found some support at 1,760/oz - matching its 21 DMA. Over to base metals, LME copper remains supported around USD 10,250/t. Overnight, Shanghai zinc and Zhengzhou coal hit a record high and limit up respectively, with some citing supply constraints. US Event Calendar 9:15am: Sept. Industrial Production MoM, est. 0.2%, prior 0.4%; Capacity Utilization, est. 76.5%, prior 76.4% Manufacturing (SIC) Production, est. 0.1%, prior 0.2% 10am: Oct. NAHB Housing Market Index, est. 75, prior 76 2:15pm: Fed’s Kashkari Discusses Improving Financial Inclusion 4pm: Aug. Total Net TIC Flows, prior $126b DB's Jim Reid concludes the overnight wrap Straight to China this morning where the monthly data dump has just landed. GDP expanded in Q3 by +4.9% on a year-on-year basis, which is a touch below the +5.0% consensus expectation and a shift down from the +7.9% expansion back in Q2. That’s come as their economy has faced multiple headwinds, ranging from the property market crisis with the issues surrounding Evergrande group and other developers, an energy crisis that’s forced factories to curb output, alongside a number of Covid-19 outbreaks that have led to tight restrictions as they seek to eliminate the virus from circulating domestically. Industrial production for September also came in beneath expectations with a +3.1% year-on-year expansion (vs. +3.8% expected), though retail sales outperformed in the same month with +4.4% year-on-year growth (vs. +3.5% expected), and the jobless rate also fell back to 4.9% (vs. 5.1% expected). That data release alongside continued concerns over inflation has sent Asian markets lower this morning, with the Shanghai Composite (-0.35%), Hang Seng (-0.36%), CSI (-1.40%) KOSPI (-0.01%), and the Nikkei (-0.16%) all trading lower. Speaking of inflation, there’ve also been fresh upward moves in commodity prices overnight, with WTI up a further +1.58% this morning to follow up a run of 8 successive weekly moves higher, which takes it to another post-2014 high, whilst Brent crude is also up +1.14%. Furthermore, data overnight has shown that New Zealand’s CPI surged to a 10-year high of +4.9% in Q3, which was some way above the +4.2% expected. Looking forward, equity futures in the US are pointing lower, with those on the S&P 500 down -0.11%. Another interesting weekend story comes again from the Bank of England, which seems to be using the weekends of late to prime the markets for imminent rate hikes. Governor Bailey yesterday said inflation “will last longer and it will of course get into the annual numbers for longer as a consequence… That raises for central banks the fear and concern of embedded expectations. That’s why we, at the Bank of England have signalled, and this is another signal, that we will have to act. But of course that action comes in our monetary policy meetings.” It’s difficult to get much more explicit than this and it’ll be interesting to see if we get even more priced into the very immediate front end this morning. For now, sterling has seen little change, weakening -0.13% against the US dollar, but markets were already pricing in an initial +15bps move up to 0.25% by the end of the year before the speech. Now the big China data is out of the way we’ll have to wait until Friday for the main releases of the week, namely the global flash PMIs. Outside of that, there’s plenty of Fedspeak as they approach the blackout period at the weekend ahead of their November 3rd meeting where they’re expected to announce the much discussed taper. On top of this, earnings season will ramp up further, with 78 companies in the S&P 500 reporting. Early season positive earnings across the board have definitely helped sentiment over the last few days. 18 out of 19 that reported last week beat expectations across varying sectors. As examples, freight firm JB Hunt climbed around 9% after beating, Alcoa over 15% and Goldman Sachs nearly 4%. So much for inflation squeezing margins. My view remains that we’re still seeing “growthflation” and not “stagflation”, particularly in the US even if there are obvious risks to growth. For now, there is still a buffer before we should get really worried. On the back of the decent earnings, the S&P 500 had its best week since July last week and is now only less than -1.5% off its record high from early September. Given that earnings season has made a difference the 78 companies in the S&P 500 and 58 from the Stoxx 600 will be important for sentiment this week. In terms of the highlights, tomorrow we’ll get reports from Johnson & Johnson, Procter & Gamble, Netflix, Philip Morris International and BNY Mellon. Then on Wednesday, releases include Tesla, ASML, Verizon Communications, Abbott Laboratories, NextEra Energy and IBM. On Thursday, there’s Intel, Danaher, AT&T, Union Pacific and Barclays. Lastly on Friday, well hear from Honeywell and American Express. It’ll also be worth watching out for the latest inflation data, with CPI releases for September from the UK, Canada (both Wednesday) and Japan (Friday). The UK is by far and away the most interesting given the recent pressures and likely imminent rate hike. This month is likely to be a bit of calm before the future storm though as expectations are broadly similar to last month. Given the recent rise in energy prices, this won’t last though. In terms of the main US data, today’s industrial production (consensus +0.2% vs. +0.4% previously) will be a window into supply-chain disruptions, particularly in the auto sector. Outside of that, you’ll see in the day-by-day week ahead guide at the end that there’s a bit of US housing data to be unveiled (NAHB today, housing starts and permits tomorrow). Housing was actually the most interesting part of the US CPI last week as rental inflation came in very strong, with primary rents and owners’ equivalent rent growing at the fastest pace since 2001 and 2006, respectively. The strength was regionalised (mainly in the South) but this push from recent housing market buoyancy into CPI, via rents, has been a big theme of ours in recent months. The models that my colleague Francis Yared has suggest that we could be at comfortably above 4% inflation on this measure by next year given the lags in the model. Rents and owners’ equivalent rent makes up around a third of US CPI. So will a third of US inflation be above 4% consistently next year before we even get to all the other things? Moving to Germany, formal coalition negotiations are set to commence soon between the SPD, the Greens and the FDP. They reached an agreement on Friday with some preliminary policies that will form the basis for talks, including the maintenance of the constitutional debt brake, a pledge not to raise taxes or impose new ones, along with an increase in the minimum wage to €12 per hour. There are also a number of environmental measures, including a faster shift away from coal that will be complete by 2030. The Green Party voted in favour of entering the formal negotiations over the weekend, with the SPD agreeing on Friday, and the FDP is expected to approve the talks today. Reviewing last week now and strong earnings, along with the rather precipitous decline in long-end real yields drove the S&P 500 +1.82% higher over the week (+0.75% Friday), while the STOXX 600 gained +2.65% (+0.74% Friday). No major sector ended the week lower in Europe, while only communications (-0.52%) were down in the U.S. Interest rate sensitive sectors were among the outperformers in each jurisdiction. The 2s10s yield curve twist flattened -11.7bps over the week, as investors brought forward the timing of an increase to the Fed’s policy rate, driving the 2-year +7.8bps higher (+3.5 bps Friday), whilst the 10-year declined -4.2 bps (+6.0bps Friday). This is consistent with our US econ team bringing forward their call for the Fed lift-off to late 2022. Markets are actually pricing in a 50/50 likelihood of a hike by June. Particularly notable was the decline in long-end real yields, with 10yr real yields finishing the week -9.5bps lower, and at one point closed beneath the -1.00% mark for the first time in a month. Hence breakevens were up +5.4bps to 2.565%, leaving them right around their year-to-date highs last reached in May. The curve flattening trend was a global one last week, with 2-year gilts yields up +3.7bps whilst the 10-year fell -5.2bps. The bund curve flattened mildly as well, with 2-year bunds increasing +2.6 bps and the 10-year -1.6 bps. 10-year breakevens increased +7.9 bps in the UK, and +7.3 bps in Germany, which marks the highest reading since 2008 in the UK and the highest in Germany since 2013. The increases in inflation compensation were matched by commodities. WTI and Brent futures increased +3.69% and +3.00%, respectively last week, whilst metals also posted strong gains, with copper up +10.62% and aluminium +6.93% higher on the week. On the data front, September retail sales were much stronger than expectations, with the prior month’s components being revised higher across the board as well. The University of Michigan consumer survey saw sentiment and 5yr inflation expectations dip, while year ahead inflation expectations inched up to 4.8%. Friday’s strong data brought a brief reprieve from the curve flattening exhibited the rest of the week. Tyler Durden Mon, 10/18/2021 - 07:41.....»»

Category: worldSource: nytOct 18th, 2021

Futures Jump On Profit Optimism As Oil Tops $85; Bitcoin Nears $60,000

Futures Jump On Profit Optimism As Oil Tops $85; Bitcoin Nears $60,000 One day after the S&P posted its biggest one-day surge since March, index futures extended this week’s gains, helped by a stellar bank earnings, while the latest labor market data and inflation eased stagflation fears for the time being. . The 10-year Treasury yield rose and the dollar was steady. Goldman Sachs reports on Friday. At 715 a.m. ET, Dow e-minis were up 147 points, or 0.42%, S&P 500 e-minis were up 16.5 points, or 0.37%, and Nasdaq 100 e-minis were up 42.75 points, or 0.28%. Oil futures topped $85/bbl, jumping to their highest in three years amid an energy crunch that’s stoking inflationary pressures and prices for raw materials. A gauge of six industrial metals hit a record high on the London Metal Exchange.  Energy firms including Chevron and Exxon gained about half a percent each, tracking Brent crude prices that scaled the 3 year high. Solid earnings in the reporting season are tempering fears that rising costs and supply-chain snarls will hit corporate balance sheets and growth. At the same time, the wider debate about whether a stagflation-like backdrop looms remains unresolved. “We don’t sign up to the stagflation narrative that is doing the rounds,” said Hugh Gimber, global strategist at the perpetually optimistic J.P. Morgan Asset Management. “The economy is being supported by robust consumer balance sheets, rebounding business investment and a healthy labor market.” “After a choppy start to the week, equity markets appear to be leaning towards a narrative that companies can continue to grow profits, despite the combined pressures of higher energy prices and supply chain disruptions,” said Michael Hewson, chief market analyst at CMC Markets in London. Bitcoin and the crypto sector jumped after Bloomberg reported late on Thursday that the Securities and Exchange Commission is poised to allow the first U.S. Bitcoin futures exchange-traded fund to begin trading in a watershed moment for the cryptocurrency industry. Bitcoin traded off session highs having tested $60k during Asian hours, but will likely rise to new all time highs shortly. Also overnight, Joe Biden signed a bill providing a short-term increase in the debt limit, averting the imminent threat of a financial calamity. But it only allows the Treasury Department to meets its financial obligations until roughly Dec. 3, so the can has been kicked for less than two months - brace for more bitter partisan battles in the coming weeks. This week’s move into rate-sensitive FAAMG growth names looked set to continue, with their shares inching up. Moderna rose 3.0% after a U.S. FDA panel voted to recommend booster shots of its COVID-19 vaccine for Americans aged 65 and older and high-risk people. Western Digital slipped 2.5% as Goldman Sachs downgraded the storage hardware maker’s stock to “neutral” from “buy”. Here are some of the key premarket movers on Friday morning: Virgin Galactic (SPCE US) shares slump as much as 23% in U.S. premarket trading as the firm is pushing the start of commercial flights further into next year after rescheduling a test flight, disappointing investors with the unexpected delay to its space tourism business plans Cryptocurrency-exposed stocks rise in U.S. premarket trading after a report that the Securities and Exchange Commission is poised to allow the first U.S. Bitcoin futures exchange-traded fund to begin trading.  Bit Digital (BTBT US) +6.7%, Riot Blockchain (RIOT US) +4.6%, Marathon Digital (MARA US) +3.6% Alcoa (AA US) shares jump 5.6% in thin volumes after co. reported profits that beat the average analyst estimate and said it will be paying a dividend to its shareholders Moderna (MRNA US) extends Thursday’s gains; Piper Sandler recommendation on Moderna Inc. to overweight from neutral, a day after co.’s Covid-19 booster got FDA nod for use in older, high-risk people Duck Creek Technologies (DCT US) shares fell 12% in Thursday postmarket trading after the software company projected 2022 revenue that fell short of the average analyst estimate 23andMe Holdings (ME US) soared 14% in Thursday postmarket trading after EMJ Capital founder Eric Jackson called the genetics testing company “the next Roku” on CNBC Corsair Gaming (CRSR US) shares fell 3.7% in post-market trading after it cut its net revenue forecast for the full year Early on Friday, China's PBOC broke its silence on Evergrande, saying risks to the financial system are controllable and unlikely to spread. Authorities and local governments are resolving the situation, central bank official Zou Lan said. The bank has asked lenders to keep credit to the real estate sector stable and orderly. In Europe, gains for banks, travel companies and carmakers outweighed losses for utilities and telecommunications industries, pushing the Stoxx Europe 600 Index up 0.3%. Telefonica fell 3.3%, the most in more than four months, after Barclays cut the Spanish company to underweight. Temenos and Pearson both slumped more than 10% after their business updates disappointed investors. Here are some of the biggest European movers today: Devoteam shares rise as much as 25% after its controlling shareholder, Castillon, increased its stake in the IT consulting group to 85% and launched an offer for the remaining capital. QinetiQ rises as much as 5.4% following a plunge in the defense tech company’s stock on Thursday. Investec upgraded its recommendation to buy and Berenberg said the shares now look oversold. Hugo Boss climbs as much as 4.4% to the highest level since September 2019 after the German apparel maker reported 3Q results that exceeded expectations. Jefferies (hold) noted the FY guidance hike also was bigger than expected. Mediclinic rises as much as 7.7% to highest since May 26 after 1H results, which Morgan Stanley says showed strong underlying operating performance with “solid metrics.” Temenos sinks as much as 14% after the company delivered a “mixed bag” with its 3Q results, according to Baader (sell). Weakness in Europe raises questions about the firm’s outlook for a recovery in the region, the broker said. Pearson declines as much as 12%, with analysts flagging weaker trading in its U.S. higher education courseware business in its in-line results. Earlier in the session, Asian stocks headed for their best week in more than a month amid a list of positive factors including robust U.S. earnings, strong results at Taiwan Semiconductor Manufacturing Co. and easing home-loan restrictions in China.  The MSCI Asia Pacific Index gained as much as 1.3%, pushing its advance this week to more than 1.5%, the most since the period ended Sept. 3. Technology shares provided much of the boost after chip giant TSMC announced fourth-quarter guidance that beat analysts’ expectations and said it will build a fabrication facility for specialty chips in Japan. Shares in China rose as people familiar with the matter said the nation loosened restrictions on home loans at some of its largest banks.  Conditions are good for tech and growth shares now long-term U.S. yields have fallen following inflation data this week, Shogo Maekawa, a strategist at JPMorgan Asset Management in Tokyo. “If data going forward are able to provide an impression that demand is strong too -- on top of a sense of relief from easing supply chain worries -- it’ll be a reason for share prices to take another leap higher.”  Asia’s benchmark equity gauge is still 10% below its record-high set in February, as analysts stay on the lookout for higher bond yields and the impact of supply-chain issues on profit margins.  Japanese stocks rose, with the Topix halting a three-week losing streak, after Wall Street rallied on robust corporate earnings. The Topix rose 1.9% to close at 2,023.93, while the Nikkei 225 advanced 1.8% to 29,068.63. Keyence Corp. contributed the most to the Topix’s gain, increasing 3.7%. Out of 2,180 shares in the index, 1,986 rose and 155 fell, while 39 were unchanged. For the week, the Topix climbed 3.2% and the Nikkei added 3.6%. Semiconductor equipment and material makers rose after TSMC said it will build a fabrication facility for specialty chips in Japan and plans to begin production there in late 2024.  U.S. index futures held gains during Asia trading hours. The contracts climbed overnight after a report showed applications for state unemployment benefits fell last week to the lowest since March 2020.  “U.S. initial jobless claims fell sharply, and have returned to levels seen before the spread of the coronavirus,” said Nobuhiko Kuramochi, a market strategist at Mizuho Securities in Tokyo. “The fact that more people are returning to their jobs will help ease supply chain problems caused by the lack of workers.” Australian stocks also advanced, posting a second week of gains. The S&P/ASX 200 index rose 0.7% to close at 7,362.00, with most sectors ending higher.  The benchmark added 0.6% since Monday, climbing for a second week. Miners capped their best week since July 16 with a 3% advance. Hub24 jumped on Friday after Evans & Partners upgraded the stock to positive from neutral. Pendal Group tumbled after it reported net outflows for the fourth quarter of A$2.3 billion. In New Zealand, the S&P/NZX 50 index fell 0.3% to 13,012.19 In rates, the U.S. 10-year Treasury yield rose over 3bps to 1.54%. Treasuries traded heavy across long-end of the curve into early U.S. session amid earning-driven gains for U.S. stock futures. Yields are higher by more than 3bp across long-end of the curve, 10- year by 2.8bp at about 1.54%, paring its first weekly decline since August; weekly move has been led by gilts and euro-zone bonds, also under pressure Friday, with U.K. 10-year yields higher by 3.3bp. Today's bear-steepening move pares the weekly bull-flattening trend. U.S. session features a packed economic data slate and speeches by Fed’s Bullard and Williams.   In FX, the Bloomberg Dollar Spot Index was little changed even as the greenback weakened against most of its Group-of-10 peers; the euro hovered around $1.16 while European and U.S. yields rose, led by the long end. Norway’s krone led G-10 gains as oil jumped to $85 a barrel for the first time since late 2018 amid the global energy crunch; the currency rallied by as much as 0.6% to 8.4015 per dollar, the strongest level since June. New Zealand’s dollar advanced to a three-week high as bets on RBNZ’s tightening momentum build ahead of Monday’s inflation data; the currency is outperforming all G-10 peers this week. The yen dropped to a three-year low as rising equities in Asia damped demand for low-yielding haven assets. China’s offshore yuan advanced to its highest in four months while short-term borrowing costs eased after the central bank added enough medium-term funds into the financial system to maintain liquidity at existing levels. In commodities, crude futures trade off best levels. WTI slips back below $82, Brent fades after testing $85. Spot gold slips back through Thursday’s lows near $1,786/oz. Base metals extend the week’s rally with LME nickel and zinc gaining over 2%. Today's retail sales report, due at 08:30 a.m. ET, is expected to show retail sales fell in September amid continued shortages of motor vehicles and other goods. The data will come against the backdrop of climbing oil prices, labor shortages and supply chain disruptions, factors that have rattled investors and have led to recent choppiness in the market. Looking at the day ahead now, and US data releases include September retail sales, the University of Michigan’s preliminary consumer sentiment index for October, and the Empire State manufacturing survey for October. Central bank speakers include the Fed’s Bullard and Williams, and earnings releases include Charles Schwab and Goldman Sachs. Market Snapshot S&P 500 futures up 0.3% to 4,443.75 STOXX Europe 600 up 0.4% to 467.66 German 10Y yield up 2.4 bps to -0.166% Euro little changed at $1.1608 MXAP up 1.3% to 198.33 MXAPJ up 1.2% to 650.02 Nikkei up 1.8% to 29,068.63 Topix up 1.9% to 2,023.93 Hang Seng Index up 1.5% to 25,330.96 Shanghai Composite up 0.4% to 3,572.37 Sensex up 0.9% to 61,305.95 Australia S&P/ASX 200 up 0.7% to 7,361.98 Kospi up 0.9% to 3,015.06 Brent Futures up 1.0% to $84.83/bbl Gold spot down 0.5% to $1,787.54 U.S. Dollar Index little changed at 93.92 Top Overnight News from Bloomberg China’s central bank broke its silence on the crisis at China Evergrande Group, saying risks to the financial system stemming from the developer’s struggles are “controllable” and unlikely to spread The ECB has a good track record when it comes to flexibly deploying its monetary instruments and will continue that approach even after the pandemic crisis, according to policy maker Pierre Wunsch Italian Ministry of Economy and Finance says fourth issuance of BTP Futura to start on Nov. 8 until Nov. 12, according to a statement The world’s largest digital currency rose about 3% to more than $59,000 on Friday -- taking this month’s rally to over 35% -- after Bloomberg News reported the U.S. Securities and Exchange Commission looks poised to allow the country’s first futures-based cryptocurrency ETF Copper inventories available on the London Metal Exchange hit the lowest level since 1974, in a dramatic escalation of a squeeze on global supplies that’s sent spreads spiking and helped drive prices back above $10,000 a ton A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded higher amid tailwinds from the upbeat mood across global peers including the best day for the S&P 500 since March after strong US bank earnings, encouraging data and a decline in yields spurred risk appetite. The ASX 200 (+0.7%) was positive as the tech and mining sectors continued to spearhead the advances in the index in which the former took impetus from Wall St where the softer yield environment was conducive to the outperformance in tech, although mining giant Rio Tinto was among the laggards following weaker quarterly production results. The Nikkei 225 (+1.8%) was buoyed as exporters benefitted from the JPY-risk dynamic but with Fast Retailing failing to join in on the spoils despite an 88% jump in full-year net as its profit guidance underwhelmed with just 3% growth seen for the year ahead, while Taiwan's TAIEX (+2.2%) surged with the spotlight on TSMC earnings which reached a record high amid the chip crunch and with the Co. to also build a factory in Japan that could receive JPY 500bln of support from the Japanese government. The Hang Seng (+1.5%) and Shanghai Comp. (+0.4%) were initially indecisive amid the overhang from lingering developer default concerns although found some mild support from reports that China is to relax banks' mortgage limits through the rest of 2021. Focus was also on the PBoC which announced a CNY 500bln MLF operation, although this just matched the amount maturing this month and there are mixed views regarding prospects of a looming RRR cut with ANZ Bank's senior China strategist recently suggesting the potential for a 50bps cut in RRR or targeted MLF as early as today, although a recent poll showed analysts had pushed back their calls for a RRR cut from Q4 2021 to Q1 2022. Finally, 10yr JGBs marginally pulled back from this week’s advances after hitting resistance at the 151.50 level, with demand hampered amid the firm gains in Japanese stocks and the lack of BoJ purchases in the market today. Top Asian News Hong Kong Probes Going Concern Reporting of Evergrande U.S. Futures Hold Gains as Oil Hits 3-Year High: Markets Wrap Toyota Cuts November Outlook by 15% on Parts Shortage, Covid Yango Group Wires Repayment Fund for Onshore Bond Due Oct. 22 Bourses in Europe have held onto the modest gains seen at the cash open (Euro Stoxx 50 +0.4%; Stoxx 600 +0.3%), but the region is off its best levels with the upside momentum somewhat faded heading into the US open, and amidst a lack of fresh newsflow. US equity futures have remained in positive territory, although the latest leg lower in bonds has further capped the tech-laden NQ (+0.2%), which underperforms vs the ES (+0.3%), YM (+0.3%) and RTY (+0.7%), with traders on the lookout for another set of earnings, headlined by Goldman Sachs at 12:25BST/07:25EDT. Back to Europe, bourses see broad-based gains, whilst sectors are mostly in the green with clear underperformance experienced in defensives, with Telecoms, Utilities, Healthcare and Staples at the foot of the bunch. On the flipside, Banks reap rewards from the uptick in yields, closely followed by Travel & Leisure, Autos & Parts and Retail. Renault (+4%) drives the gains in Autos after unveiling a prototype version of the Renault Master van that will go on sale next year. Travel & Leisure is bolstered by the ongoing reopening trade with potential tailwinds heading into the Christmas period. Retail meanwhile is boosted by Hugo Boss (+1.8%) topping forecasts and upgrading its guidance. Top European News Autumn Heat May Curb European Gas Demand, Prices Next Week Bollore Looking for Buyers for Africa Logistics Ops: Le Monde U.K. Offers Foreign Butchers Visas After 6,000 Pigs Culled Europe’s Car-Sales Crash Points to Worse Year Than Poor 2020 In FX, the Greenback was already losing momentum after a relatively tame bounce on the back of Thursday’s upbeat US initial claims data, and the index failed to sustain its recovery to retest intraday highs or remain above 94.000 on a closing basis. However, the Buck did reclaim some significant and psychological levels against G10, EM currencies and Gold that was relishing the benign yield environment and the last DXY price was marginally better than the 21 DMA from an encouraging technical standpoint. Nevertheless, the Dollar remains weaker vs most majors and in need of further impetus that may come via retail sales, NY Fed manufacturing and/or preliminary Michigan Sentiment before the spotlight switches to today’s Fed speakers featuring arch hawk Bullard and the more neutral Williams. GBP/NZD/NOK - Sterling has refuelled and recharged regardless of the ongoing UK-EU rift over NI Protocol, though perhaps in part due to the fact that concessions from Brussels are believed to have been greeted with welcome surprise by some UK Ministers. Cable has reclaimed 1.3700+ status, breached the 50 DMA (at 1.3716 today) and yesterday’s best to set a marginal new w-t-d peak around 1.3739, while Eur/Gbp is edging closer to 0.8450 having clearly overcome resistance at 1.1800 in the reciprocal cross. Similarly, the Kiwi continues to derive impetus from the softer Greenback and Aud/Nzd flows as Nzd/Usd extends beyond 0.7050 and the Antipodean cross inches nearer 1.0500 from 1.0600+ highs. Elsewhere, the Norwegian Crown is aiming to add 9.7500 to its list of achievements relative to the Euro with a boost from Brent topping Usd 85/brl at one stage and a wider trade surplus. CAD - The Loonie is also profiting from oil as WTI crude rebounds through Usd 82 and pulling further away from 1.5 bn option expiry interest between 1.2415-00 in the process, with Usd/Cad towards the base of 1.2337-82 parameters. EUR/AUD/CHF/SEK - All narrowly mixed and rangy vs the Greenback, or Euro in the case of the latter, as Eur/Usd continues to straddle 1.1600, Aud/Usd churn on the 0.7400 handle, the Franc meander from 0.9219 to 0.9246 and Eur/Sek skirt 10.0000 having dipped below the round number briefly on Thursday. In commodities, WTI and Brent front month futures remain on a firmer footing, aided up the overall constructive risk appetite coupled with some bullish technical developments, as WTI Nov surpassed USD 82/bbl (vs 81.39/bbl low) and Brent Dec briefly topped USD 85/bbl (vs 84.16/bbl low). There has been little in terms of fresh fundamental catalysts to drive the price action, although Russia's Gazprom Neft CEO hit the wires earlier and suggested that reserve production capacity could meet the increase in oil demand, whilst a seasonal decline in oil consumption is possible and the oil market will stabilise in the nearest future. On the Iranian JCPOA front, Iran said it is finalising steps to completing its negotiating team but they are absolutely decided to go back to Vienna discussions and conclude the negotiations, WSJ's Norman. The crude complex seems to have (for now) overlooked reports that the White House is engaged in diplomacy" with OPEC+ members regarding output. UK nat gas prices were higher as European players entered the fray, but prices have since waned off best levels after Russian Deputy PM Novak suggested that gas production in Russia is running at maximum capacity. Elsewhere, spot gold has been trundling amid yield-play despite lower despite the Buck being on the softer side of today’s range. Spot gold failed to hold onto USD 1,800/oz status yesterday and has subsequently retreated below its 200 DMA (1,794/oz) and makes its way towards the 50 DMA (1,776/oz). LME copper prices are on a firmer footing with prices back above USD 10,000/t – supported by technicals and the overall risk tone, although participants are cognizant of potential Chinese state reserves releases. Conversely, Dalian iron ore futures fell for a third straight session, with Rio Tinto also cutting its 2021 iron ore shipment forecasts due to dampened Chinese demand. US Event Calendar 8:30am: Sept. Retail Sales Advance MoM, est. -0.2%, prior 0.7% 8:30am: Sept. Retail Sales Ex Auto MoM, est. 0.5%, prior 1.8% 8:30am: Sept. Retail Sales Control Group, est. 0.5%, prior 2.5% 8:30am: Sept. Retail Sales Ex Auto and Gas, est. 0.3%, prior 2.0% 8:30am: Oct. Empire Manufacturing, est. 25.0, prior 34.3 8:30am: Sept. Import Price Index MoM, est. 0.6%, prior -0.3%; YoY, est. 9.4%, prior 9.0% 8:30am: Sept. Export Price Index MoM, est. 0.7%, prior 0.4%; YoY, prior 16.8% 10am: Aug. Business Inventories, est. 0.6%, prior 0.5% 10am: Oct. U. of Mich. 1 Yr Inflation, est. 4.7%, prior 4.6%; 5-10 Yr Inflation, prior 3.0% 10am: Oct. U. of Mich. Sentiment, est. 73.1, prior 72.8 10am: Oct. U. of Mich. Current Conditions, est. 81.2, prior 80.1 10am: Oct. U. of Mich. Expectations, est. 69.1, prior 68.1 DB's Jim Ried concludes the overnight wrap A few people asked me what I thought of James Bond. I can’t say without spoilers so if anyone wants my two sentence review I will cut and paste it to all who care and reply! At my age I was just impressed I sat for over three hours (including trailers) without needing a comfort break. By the time you email I will have also listened to the new Adele single which dropped at midnight so happy to include that review as well for free. While we’re on the subject of music, risk assets feel a bit like the most famous Chumbawamba song at the moment. They get knocked down and they get up again. Come to think about it that’s like James Bond too. Yesterday was a strong day with the S&P 500 (+1.71%) moving back to within 2.2% of its all-time closing high from last month. If they can survive all that has been thrown at them of late then one wonders where they’d have been without any of it. The strong session came about thanks to decent corporate earnings releases, a mini-collapse in real yields, positive data on US jobless claims, as well as a further fall in global Covid-19 cases that leaves them on track for an 8th consecutive weekly decline. However, inflation remained very much on investors’ radars, with a range of key commodities taking another leg higher, even as US data on producer prices was weaker than expected. Starting with the good news, the equity strength was across the board with the S&P 500 experiencing its best daily performance since March, whilst Europe’s STOXX 600 (+1.20%) also put in solid gains. It was an incredibly broad-based move higher, with every sector group in both indices rising on the day, with a remarkable 479 gainers in the S&P 500, which is the second-highest number we’ve seen over the last 18 months. Every one of the 24 S&P 500 industry groups rose, led by cyclicals such as semiconductors (+3.12%), transportation (+2.51%) and materials (+2.43%). A positive start to the Q3 earnings season buoyed sentiment, as a number of US banks (+1.45%) reported yesterday, all of whom beat analyst estimates. In fact, of the nine S&P 500 firms to report yesterday, eight outperformed analyst expectations. Weighing in on recent macro themes, Bank of America Chief, Brian Moynihan, noted that the current bout of inflation is “clearly not temporary”, but also that he expects consumer demand to remain robust and that supply chains will have to adjust. I’m sure we’ll hear more from executives as earnings season continues today. Alongside those earnings releases, yesterday saw much better than expected data on the US labour market, which makes a change from last week’s underwhelming jobs report that showed the slowest growth in nonfarm payrolls so far this year. In terms of the details, the weekly initial jobless claims for the week through October 9, which is one of the most timely indicators we get, fell to a post-pandemic low of 293k (vs. 320k expected). That also saw the 4-week moving average hit a post-pandemic low of 334.25k, just as the continuing claims number for the week through October 2 hit a post-pandemic low of 2.593m (vs. 2.670m expected). We should get some more data on the state of the US recovery today, including September retail sales, alongside the University of Michigan’s consumer sentiment index for October. That optimism has fed through into Asian markets overnight, with the Nikkei (+1.43%), the Hang Seng (+0.86%), the Shanghai Comp (+0.29%) and the KOSPI (+0.93%) all moving higher. That came as Bloomberg reported that China would loosen restrictions on home loans amidst the concerns about Evergrande. And we also got formal confirmation that President Biden had signed the debt-limit increase that the House had passed on Tuesday, which extends the ceiling until around December 3. Equity futures are pointing to further advances in the US and Europe later on, with those on the S&P 500 (+0.30%) and the STOXX 50 (+0.35%) both moving higher. Even with the brighter news, inflation concerns are still very much with us however, and yesterday in fact saw Bloomberg’s Commodity Spot Index (+1.16%) advance to yet another record high, exceeding the previous peak from early last week. That was partly down to the continued rise in oil prices, with WTI (+1.08%) closing at $81.31/bbl, its highest level since 2014, just as Brent Crude (+0.99%) hit a post-2018 high of $84.00/bbl. Both have posted further gains this morning of +0.58% and +0.61% respectively. Those moves went alongside further rises in natural gas prices, which rose for a 3rd consecutive session, albeit they’re still beneath their peak from earlier in the month, as futures in Europe (+9.14%), the US (+1.74%) and the UK (+9.26%) all moved higher. And that rise in Chinese coal futures we’ve been mentioning also continued, with their rise today currently standing at +13.86%, which brings their gains over the week as a whole to +39.02% so far. As well as energy, industrial metals were another segment where the recent rally showed no sign of abating yesterday. On the London metal exchange, a number of multi-year milestones were achieved, with aluminum prices (+1.60%) up to their highest levels since 2008, just as zinc prices (+3.73%) closed at their highest level since 2018. Separately, copper prices (+2.56%) hit a 4-month high, and other winners yesterday included iron ore futures in Singapore (+1.16%), as well as nickel (+1.99%) and lead (+2.43%) prices in London. With all this momentum behind commodities, inflation expectations posted further advances yesterday. Indeed, the 10yr US Breakeven closed +1.0bps higher at 2.536%, which is just 3bps shy of its closing peak back in May that marked its highest level since 2013. And those moves came in spite of US producer price data that came in weaker than expected, with the monthly increase in September at +0.5% (vs. +0.6% expected). That was the smallest rise so far this year, though that still sent the year-on-year number up to +8.6% (vs. +8.7% expected). That rise in inflation expectations was echoed in Europe too, with the 10yr UK breakeven (+5.6bps) closing at its highest level since 2008, whilst its German counterpart also posted a modest +0.7bps rise. In spite of the rise in inflation expectations, sovereign bonds posted gains across the board as the moves were outweighed by the impact of lower real rates. By the end of yesterday’s session, yields on 10yr Treasuries were down -2.6bps to 1.527%, which came as the 10yr real yield moved back beneath -1% for the first time in almost a month. Likewise in Europe, yields pushed lower throughout the session, with those on 10yr bunds (-6.3bps), OATs (-6.2bps) and BTPs (-7.1bps) all moving aggressively lower. To the day ahead now, and US data releases include September retail sales, the University of Michigan’s preliminary consumer sentiment index for October, and the Empire State manufacturing survey for October. Central bank speakers include the Fed’s Bullard and Williams, and earnings releases include Charles Schwab and Goldman Sachs. Tyler Durden Fri, 10/15/2021 - 07:50.....»»

Category: personnelSource: nytOct 15th, 2021