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First Week of March 2022 Options Trading For Seagate Technology Holdings (STX)

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Category: topSource: redinewsNov 15th, 2021

Futures Rise As Usual, Approaching All Time High

Futures Rise As Usual, Approaching All Time High US equity futures resumed their upward climb (after Goldman quadrupled down on its call for a massive, year-end meltup driven by $15BN in inflows every single day) as major technology stocks advanced, and as investors awaited a slew of retail earnings and economic data this week to gauge the health of consumer spending while keeping an eye on runaway inflation. Better-than-estimated profit growth has led to a rally in markets, helping ease recent concerns over the hottest U.S. inflation in 30 years. At 730 a.m. ET, Dow e-minis were up 94 points, or 0.26%. S&P 500 e-minis were up 9 points, or 0.20% and about 20 points from their all time high around 4,711; while Nasdaq 100 e-minis were up 30.5 points, or 0.19%. The three major Wall Street indexes had fallen between 0.3% and 0.7% last week when the S&P 500 also snapped its longest winning streak since August 2020, amid concerns over high inflation and weakening consumer sentiment. Investors had begun pivoting into economically resilient sectors, mainly technology, towards the end of the week. Market-heavy GAMMA (fka FAAMG) stocks rose between 0.1% and 0.8% in premarket trade, with Meta Platforms Inc leading gains. On the other end, Tesla shares fell as much as 2.6% in U.S. premarket session after Elon Musk suggested over the weekend that he would sell even more stock after offloading almost $7 billion worth of shares over the past week. Tesla's declines follow a steep 15.4% drop last week after Musk offloaded a combined $6.9 billion worth of shares in the electric-car maker. Meanwhile, blank-check company Gores Guggenheim rose as much as 25% as the stock was touted among retail traders. Rivian shares were down about 2.7% in U.S. premarket trading after the electric-truck maker surged following its IPO last week. Dollar Tree Inc added 5.4% after activist investor Mantle Ridge LP revealed a 5.7% stake in the discount retailer. Strong corporate earnings are helping drive investors into stocks and overshadowing fears about the hottest U.S. inflation print in three decades. The sentiment found its way into calmer bond markets, where these fears had played out in the highest volatility since the onset of pandemic.   “Central banks may be becoming less accommodative, but they will be anxious not to derail the recovery or financial markets,” according to Cesar Perez Ruiz, chief investment officer at Pictet Wealth Management and head of asset alloaction Christophe Donay. “Q3 results have offered further proof of corporate strength.” Focus this week will be on earnings reports from several major retailers including Walmart Inc, Target Corp, Home Depot and Macy's. Their results will round off an upbeat third-quarter earnings season, which pushed Wall Street to new highs. Retail sales data for October is also due on Tuesday, and is expected to show the impact of inflation on consumer spending. Looking ahead not everyone is euphoria: in its 2022 forecast, Morgan Stanley strategists warn that inflationary headwinds may become a bigger force against U.S. stocks next year; they prefer peers in Europe and Japan. They forecast the S&P 500 will end 2022 at 4,400 -- some 6% below current levels. For bonds, they expect 10-year yields to rise to 2.10% by the end of next year on improving growth and higher real rates, up from 1.54% on Monday. “One reason we like equities in Europe and Japan is that we think inflationary challenges there are much less daunting than elsewhere,” strategists led by Andrew Sheets wrote Sunday. They also cited “more reasonable valuations, limited central bank tightening and less risk from higher taxes” vis-a-vis the U.S. In Europe, Stoxx 600 Index was little changed near a record high as rising earnings estimates supported the region’s stocks. Travel and leisure and retailers led the gains, while miners slumped. Here’s the latest on what analysts are saying about European equities: EasyJet cut to reduce from hold at Kepler Cheuvreux due to deteriorating traffic trends and a risk that it has to incentivize demand with fare discounts. Alfen Beheer loses its only buy rating as Berenberg downgrades to hold on limited near- term upside, even after last week’s sell-off in the shares. Direct Line cut to hold and Admiral raised to buy at Berenberg with the broker switching preferences in its U.K. non- life insurer coverage. B&M European is cut to underperform from sector perform at RBC with growth set to become harder to deliver for the discount retailer and better value seen elsewhere in the sector. Wood’s strategic review of its built environment business could unlock “meaningful value,” Citi writes in note upgrading the energy-services firm to buy. Earlier in the session, shares fluctuated in Hong Kong and dipped in China, where traders weighed stronger-than-expected retail sales and industrial output, central bank liquidity support and a drop in home prices. Beijing’s crackdown on real-estate leverage is among the headwinds for the world’s second-largest economy. That said, Asian equities rose for a third day as the strength in U.S. technology heavyweights Friday helped ease market worry over global inflation, reigniting appetite for growth stocks.  The MSCI Asia Pacific Index advanced as much as 0.6%, with TSMC, Tencent Holdings and Samsung Electronics among the largest contributors to the gauge’s rise. South Korea’s Kospi was the top performer among the region’s benchmarks, adding 1%.  Futures on the Nasdaq 100 climbed in Asia after the underlying measure added 1% on Friday. U.S. equities rose led by technology and communication services, with share prices remaining near all-time highs after a strong corporate earnings season.  Overall, the positive mood from last week is extending to today’s trading, said Naoki Fujiwara, chief fund manager at Shinkin Asset Management. “Chip-related stocks are doing pretty well following the earnings season, which is also backing gains for the market.” The regional benchmark capped its second straight week of gains on Friday, helped by positive earnings readings. Price data from the U.S. and China remain in focus as traders fear elevated inflation could lead to tighter monetary policy. U.S. consumer sentiment unexpectedly collapsed in early November as Americans grew increasingly concerned about inflation. Japanese stocks rose after the Nikkei newspaper reported on Friday that the government plans to compile an economic stimulus package of more than 40 trillion yen ($351 billion) in fiscal measures. “Economic stimulus had been expected to be about 30 trillion yen, but a new figure of 40 trillion yen is likely to be cheered by investors,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute Co.  The Topix index rose 0.4% to close at 2,048.52 in Tokyo, while the Nikkei 225 advanced 0.6% to 29,776.80. Toyota Motor contributed the most to the Topix’s gain, increasing 1.1%. Out of 2,180 shares in the index, 1,051 rose and 1,029 fell, while 100 were unchanged. India’s benchmark index ended flat after wholesale prices surged higher-than-expected in October, weighing on metal and financial stocks. The S&P BSE Sensex was little changed at 60,718.71 in Mumbai, while the NSE Nifty 50 Index was flat at 18,109.45. Both gauges gained as much as 0.6% earlier on the back of an earnings season in which a majority of Nifty 50 companies reported results that beat expectations.  Both indexes, however, failed to hold onto their initial advance after wholesale prices rose 12.5% in October, more than economists’ consensus of a 11.1% advance, led by a rise in manufactured products as well as fuel and power prices. Nine of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by gauges of metal and basic materials companies.  India will release monthly trade figures after market hours. The corporate earnings season for the three months ended September finished last week with 29 of the Nifty 50 companies beating analyst estimates. Three companies made their trading debut on Monday, with chemical maker Sigachi Industries rising 267% over its IPO price. One97 Communications Ltd., the operator of digital payments app Paytm which raised $2.5b in India’s biggest IPO, is slated for Thursday. In FX, the Bloomberg Dollar Spot Index slipped with the greenback weaker against all of its Group-of-10 peers. Commodity currencies, led by Norway’s krone, were the best performers. The Treasury curve bull flattened, with yields falling by up to 2bps. The euro hovered around $1.1450; the French presidential election next year is the scheduled event carrying the highest risk for the common currency, according to options gauges. The pound steadied as traders await clues on monetary policy from BOE Governor Andrew Bailey during parliamentary testimony later Monday. U.K. economists expect a rate increase to 0.25% next month, according to a Bloomberg survey. U.K. economists have become more hawkish over the past month and now expect the Bank of England to increase interest rates in December as concerns about inflation intensify. Sweden’s krona inched up after inflation accelerated more than forecast in October. Meanwhile, the Australian dollar rose on data that China’s economy performed better than expected in October. The nation’s sovereign bonds also extended opening gains after China home prices fell again, sapping real-estate shares. Japan’s super-long government bonds underperformed amid concerns that supply may increase to finance government spending. The yen consolidated In rates, Treasury yields broadly within a basis point of Friday’s close, the curve fractionally steeper. The front-end and belly outperform, following bigger gains for Aussie front-end, which attracted buyers during Asia session. Stocks supported, with S&P 500 futures above Friday’s high.  Treasury yields were richer from front-end out to 10-year sector, which trades around 1.55%, outperforming gilts and bunds by ~1bp; long-end cheapens slightly on the day, steepening 5s30s by ~1bp.  Euro- area bonds gained, led by the periphery, following comments on inflation by ECB Chief Economist Philip Lane over the weekend. ECB’s Lane said recent price inflation is “really part of the pandemic” and people should not panic, in an interview with RTE on Saturday. The Fed begins tapered purchase schedule released Friday; schedule departed slightly from Nov. 3 plan by leaving target size of operations in 10- to 22.5-year sector unchanged while trimming 22.5- to 30-year more, which spurred outperfomance by 20-year sector In commodities, crude futures drifted lower with focus on U.S. energy policy and commentary from OPEC speakers. WTI is down 0.6%, trading either side of $80; Brent drops through Asia’s worst levels before running into support near $81. Spot gold fades Asia’s weakness to trade flat near $1,863/oz. Most base metals are in the red with LME nickel underperforming; copper trades flat.  Looking at today's calendar, it's quiet on the news front with just the US November Empire State manufacturing survey on deck. Biden will meet virtually with Chinese President Xi Jinping on Monday. Tensions between the two countries have been building over issues including Taiwan and restrictions on sales of U.S. technology to China. Market Snapshot S&P 500 futures up 0.1% to 4,685.00 STOXX Europe 600 little changed at 487.13 MXAP up 0.4% to 200.95 MXAPJ up 0.4% to 656.76 Nikkei up 0.6% to 29,776.80 Topix up 0.4% to 2,048.52 Hang Seng Index up 0.2% to 25,390.91 Shanghai Composite down 0.2% to 3,533.30 Sensex up 0.1% to 60,771.98 Australia S&P/ASX 200 up 0.4% to 7,470.11 Kospi up 1.0% to 2,999.52 Brent Futures down 0.9% to $81.46/bbl Gold spot down 0.2% to $1,860.89 U.S. Dollar Index little changed at 95.09 German 10Y yield little changed at -0.27% Euro little changed at $1.1447 Top Overnight News from Bloomberg  Federal Reserve Bank of Minneapolis President Neel Kashkari said the U.S. central bank shouldn’t overreact to elevated inflation even as it causes pain for Americans, because it is likely to prove temporary A reduction in China’s reserve requirement ratio looks increasingly unlikely after the authorities rolled over all policy loans coming due and data surprised on the upside, suggesting that bonds will have little room to gain China’s industrial output rose 3.5% in October from a year earlier, while retail sales growth accelerated to 4.9%, beating economists’ forecasts Japan’s gross domestic product contracted at an annualized pace of 3% in the three months through September from the previous quarter, the Cabinet Office reported Monday. Economists had forecast a 0.7% decline Bank of Japan Governor Haruhiko Kuroda said financial stress from the pandemic is limited to certain sectors of the economy, potentially signaling the BOJ is planning to scale back its Covid-era funding program European Central Bank President Christine Lagarde doubled down on her assessment that euro-area inflation will ease as economies rebound, falling back below the 2% target in the medium term. Yet analysts see itfaster than previously thought this year and next A short-lived reprieve for emerging- market carry trades funded in dollars looks to be over, with an upsurge in U.S. inflation making the outlook increasingly treacherous The U.K. is expanding its Covid-19 booster program to younger people as the country seeks to head off another wave of infections this winter. A third vaccine dose will be available to people aged 40 to 49 starting six months after their second shot, the government said Monday Oman said there was no need for OPEC+ to accelerate oil-production increases, signaling at least some members of the group will continue to resist U.S. pressure for more crude   A more detailed look at global markets courtesy of Newsquawk Asian equity markets began the week with a lack of firm direction as the region digested varied tier-1 economic releases including better than expected Chinese activity data and miss on Japanese GDP, with attention also on a slew of earnings results and corporate updates. ASX 200 (+0.4%) and Nikkei 225 (+0.6%) both opened higher and took impetus from last Friday’s gains on Wall Street but with upside in Australia capped as financials and energy lagged, while Japanese participants weathered the weak GDP data which showed a wider than expected quarterly contraction during Q3, when the economy was still mired by widespread state of emergency declarations in key areas including Tokyo and its surrounding prefectures. Nonetheless, Japanese stocks have taken the disappointing economic growth within their strides as it justifies the incoming stimulus package which was said to have been increased to over JPY 40tln in fiscal spending and with Japan reportedly to resume its Go To Travel campaign in mid-January. Conversely, Hang Seng (+0.2%) and Shanghai Comp. (-0.2%) were initially moderately pressured despite stronger than forecast Industrial Production and Retail Sales data from China, as well as the PBoC’s CNY 1tln MLF announcement which matched this month’s expiring MLF loans and further dampened prospects of PBoC easing. Today also saw the launch of the Beijing Stock Exchange which aims to help SMEs raise capital and included 81 companies in the first batch of listings, while participants await the Biden-Xi virtual meeting which is set to take place Monday evening at 19:45EST or Tuesday morning in Asia and with US Treasury Secretary Yellen and Secretary of State Blinken set to join in on the call. Finally, 10yr JGBs are higher as they tracked a marginal rebound in T-notes and following the disappointing Japanese GDP release, but with gains capped as stocks in Tokyo remained afloat and amid the absence of BoJ purchases in the market today. Top Asian News Cathay Crew Who Flew From Frankfurt Doing 21-Day Quarantine Duterte Runs for Philippine Senate, Avoids Clash With Daughter Greenland Jumps in Bond Market After Classification Change Chinese Startup Meicai Is Said to Pick Banks for Hong Kong IPO European equities (+0.1%) trade with minor gains which have nudged the Stoxx 600 to a high of 487.21 in what has been a quiet start to the week. The desk will continue to monitor further lockdown restrictions across the region, however, updates from the Netherlands and Austria have done little to dent sentiment thus far. The handover from the APAC region was a mixed one as the soft GDP data from Japan was overshadowed by forthcoming stimulus efforts whilst Chinese equities were unable to garner much upside from stronger than forecast Industrial Production and Retail Sales data. Participants were also awaiting the Biden-Xi virtual meeting which is set to take place Monday evening at 19:45EST or Tuesday morning in Asia. Stateside, futures are trading with gains of a similar magnitude to their European counterparts (ES +0.1%) with not a great deal on the docket beyond the NY Fed Manufacturing print at 13:30GMT/08:30EST. Back to Europe, sectors are relatively mixed with Travel & Leisure top of the leaderboard amid gains in Deutsche Lufthansa (+1.7%) after the Co. was upgraded to neutral from sell at UBS. Oil & Gas names have been granted some reprieve following the selling pressure seen towards the latter half of last week. To the downside, Basic Resources is the standout laggard amid underlying price action in the metals space. In terms of individual movers, Ahold Delhaize (+2.4%) is one of the best performers in the Stoxx 600 after announcing a EUR 1bln buyback as of 2022, accelerated its growth/investment plan and will explore an IPO of Bol.com. Shell (+1.8%) is seen higher on the session after announcing that it is looking to implement a simplified structure and move its tax residency to the UK from the Netherlands. To the downside, Philips (-12.1%) sits at the foot of the Stoxx 600 as concerns continue to mount over its ventilator recall issues in the US. Finally, BBVA (-3.7%) is seen lower on the session after launching a tender offer to acquire the remaining 50.2% of Turkiye Garanti Bankasi. Top European News U.K. Expands Covid-19 Booster Program to People in Their 40s Austria Locks Down Unvaccinated as Europe Tightens Covid Curbs Cathay Crew Who Flew From Frankfurt Doing 21-Day Quarantine Telefonica Launches Tender Offer for Hybrid Notes In FX, the Aussie and Kiwi are outperforming their major peers, or making the most of ongoing Greenback consolidation off last week’s new y-t-d highs, with the former also gleaning encouragement from Chinese data overnight as ip and retail sales beat consensus. Aud/Usd is back above 0.7350 and Nzd/Usd has reclaimed 0.7050+ status as the Aud/Nzd cross hovers in the low 1.0400 zone and eyes an unusually large 1 bn option expiry at the round number. Similarly, the Norwegian and Swedish Krona are both firmer vs a somewhat leggy/lethargic Euro, but with assistance from macro releases in the form of trade and inflation respectively. Eur/Nok is probing 9.9200 and Eur/Sek is testing bids and support around 10.0000 compared to peaks near 9.9600 and 10.0330. CAD/DXY - No lasting support from crude prices for the Loonie as WTI retreats through Usd 80/brl from Usd 81.20 at best, but Usd/Cad has reversed from 1.2550+ ahead of Canadian manufacturing sales and wholesale trade that are out alongside the more timely Empire state survey. Meanwhile, the index is meandering either side of 95.000 within a 95.152-94.963 band having ‘topped out’ at 95.266 in wake of US CPI and a far from well received new 30 year issue. GBP/EUR/CHF/JPY - All narrowly mixed against the Buck and seemingly awaiting clearer direction from their US counterpart or independently, as Cable continues to straddle a key Fib level (1.3412) in advance of testimony from the BoE on the latest MPR and top tier UK data from tomorrow. Eur/Gbp is sitting even tighter around 0.8530 before talks intensify to try and resolve differences on NI Protocol, while Eur/Usd is pivoting 1.1450, Usd/Chf is rotating around 0.9200 and Usd/Jpy is holding mostly below 114.00. Note, the Euro has ECB speakers to digest (see Headline Feed at 10.01GMT for remarks from President Lagarde) and look forward to, while the Franc has not really responded to small rises in weekly Swiss sight deposits and the Yen has largely brushed aside much weaker than expected Japanese GDP and a draft document saying that the government and BoJ share a strong sense of urgency about supply shortages, whilst maintaining an appropriate combination of monetary and fiscal policies. In commodities, WTI and Brent are softer this morning, with losses in excess of 1.0% on the session thus far. Such pressure stems from demand-side updates in the wake of further COVID-19 measures being announced/implemented, most recently that Austria is entering a lockdown for the un-vaccinated and the Netherlands is to reimpose social distancing from Saturday. Furthermore, given the surge in cases seen in Germany in recent weeks the three-parties in coalition discussions intend to put forward proposals to Parliament on Thursday for renewed measures, which will reportedly include contact restrictions. On the other hand, the supply-side of the equation is cognisant of the looming imposition of further restrictions on Belarus by the EU, particularly as Leader Lukashenko last week said they would respond to any sanctions and suggested closing gas/goods transit through Belarus. Additional sanctions are, currently, scheduled to be announced this afternoon. Separately, and perhaps adding pressure, is commentary from various oil ministers the most pertinent of which has seen the UAE representative announce they are to increase production to over 5mln BPD from the current 4mln by 2030, alongside expecting a Q1-2022 oil surplus. Currently, the benchmarks are in proximity to the sessions trough which resides around USD 0.10/bbl below Friday’s low of USD 79.78/bbl in WTI, for instance. Moving to metals, spot gold and silver have been grinding higher throughout the European morning but are yet to retrace the downside seen overnight in-spite of the stronger Chinese data though this failed to spur regional or base-metal performance either. In terms of bank views, the Head of Energy Research at Goldman Sachs predicting the precious metal is set for a boom to the USD 2k level. US Event Calendar 8:30am: Nov. Empire Manufacturing, est. 22.0, prior 19.8 DB's Jim Reid concludes the overnight wrap This morning I’ve just put out a short note which I hope will win the catchiest research title of the year award. It’s called “If you think real yields are low, look at these charts…”. See here for the link. Regular readers will know my view that inflation will be structurally higher going forward and that for the rest of my career developed market real yields will likely stay negative even if nominal yields climb. This is because with debt so high, history suggests that heavy financial repression will be necessary to manage this. However, nothing could have prepared me for 2021 so far with US CPI at 6.2% YoY in October and 10-year US yields stuck below 1.6%. On a spot basis real yields are c.-4.6% and at around 70-year lows. If you think real yields are low, however, take a look at the 200-year graphs in the note to see that whenever debt has spiked historically, real yields have moved a lot lower than even today’s levels, albeit through inflation around or above 20%. These are extreme times but history offers even more extreme examples. Staying with inflation DB’s Francis Yared and I did a webinar on inflation last week and the recording can be viewed here. You’ll need Francis’s slides at hand on Regime Shifts in Inflation (link here) and mine (link here) on what history can tell us about inflation and what it means for asset prices in the future. I thought it was a really good webinar but I am slightly biased. Maisie and mum came back from a week in hospital at the weekend. Mum slept for 18 hours on Saturday leaving me to work out how the wheelchair folds up and reopens and delivering what I hoped was the right dose of morphine. It’s going to be tough living with a wheelchair for the next year as Maisie’s hip bone tries to regrow but after hearing many stories from my wife about children in the ward with life threatening conditions you realise that you’re actually pretty lucky. Before you think I’ve gone all zen, I did nearly throw the wheelchair across the room when it wouldn’t unfold. I’d missed a small lever under the seat. After a tiring last week at home and in the markets it’s a quieter week ahead in terms of the calendar, though market attention will continue to focus on the question of who might be appointed as the next Fed Chair, as well as the latest inflation statistics from a number of countries, including the UK (Wednesday). There is a reasonable amount of Fedspeak so it’ll be especially interesting to hear those on the transitory side to see if last week’s shocking print has impacting their thinking. Otherwise, geopolitics will be in focus, with today’s virtual meeting between US President Biden and Chinese President Xi, alongside continued speculation about whether the UK might trigger Article 16 of the Northern Ireland Protocol even if tensions have eased a touch in the last few days. Starting with today’s virtual meeting between President Biden and President Xi, it is set to take place at 7:45 PM Washington time, which will be 8:45 AM on Tuesday in Beijing. While both the presidents spoke over the phone twice this year, this is the first time it is being dubbed as a summit. There is some thought that tariff reductions could be on the agenda, especially given current US inflation levels but it might be a bit early for that in any relationship rebuild. We’ll know more in time for tomorrow’s EMR. The monthly Chinese data dump came in better than expected overnight with industrial output +3.5% yoy (vs. 3% expected), retail sales 4.9% yoy (vs 3.7% expected) but fixed-asset investment slightly missing at 6.1% (vs 6.2% expected). There is some discussion that the retail sales beat may be led by higher prices and also higher food sales as consumers prepare for the possibility of winter virus restriction. Asian stocks are trading mixed with the KOSPI (+1.04%) and the Nikkei (+0.48%) trading in the green while the Hang Seng (-0.08%), Shanghai Composite (-0.29%) and CSI (-0.29%) trading lower. In Japan GDP shrank by -0.8% from the last quarter (-0.2% consensus and +0.5% previous) augmenting expectations of a stimulus package by Prime Minister Fumio Kishida, which is expected to be announced at the end of this week. The Nikkei reported last Friday that the stimulus could top 40 trillion yen ($350 bn). Futures are pointing to a muted start in US & Europe with S&P 500 futures (-0.01%) and DAX futures (-0.08%) both fairly flat. Moving onto the rest of the week, there are a few decisions from EM central banks over the week ahead, including Turkey, South Africa and Indonesia (all Thursday). However, the main focus for investors will be the speculation about who might be the next Fed Chair, particularly in light of the news out last week that both incumbent Fed Chair Powell and Governor Brainard had been interviewed for the position. Powell’s current four-year term comes to an end in February, and whoever’s nominated would require senate confirmation for another term. At this point 4, 8 and 12 years ago, the announcement of who’d be nominated had already been made, but we still don’t have a date for when we might get the news. However, it may not be too far away, with President Biden saying in Glasgow on November 2 that it would be “fairly quickly”. On the data side, there’ll be an increasing amount of hard data out of the US for October, including retail sales, industrial production (both Tuesday) and housing starts (Wednesday). Meanwhile, there’ll also be some important UK data as the Bank of England mulls over their monetary policy settings ahead of their meeting next month. On Tuesday, there’s the latest employment report, and then on Wednesday, we’ll get the latest CPI reading for October. Turning to politics, it’s worth keeping an eye out for any developments on Brexit, with speculation rising that the UK government could trigger Article 16 of the Northern Ireland Protocol. Over the last 3 or 4 days the mood music has moved a little towards compromise so we’ll see if this gathers some momentum. Lastly on the earnings front, it’s the tail end of the season now, but there are still a few major companies left to report. Tomorrow we’ll hear from Walmart and Home Depot, before Wednesday brings reports from Nvidia, Cisco, Lowe’s and Target. Then on Thursday, we’ll hear from Intuit, Applied Materials and TJX. Recapping last week now and inflation had a strong stranglehold on the market narrative, as much higher-than-expected US CPI data drove Treasury yields higher, led by the belly of the curve. Global sovereign yields increased in sympathy. Quickly recapping the highlights from the pivotal CPI data: year-over-year headline CPI of 6.2% and core CPI of 4.6% were each the highest readings since the early 1990s and we’re generally getting to levels last seen consistently at the start of the 40yr disinflationary trend in the early 1980s. Price gains were shared across a broad range of components, which prompted some rabble rousing out of Democratic politicians, including President Biden. Five-year Treasury yields increased +13.5 bps as investors brought forward the expected timing of increases to the fed funds rate. Markets are pricing the first Fed rate hike by the July FOMC and 2.5 hikes through 2022. This compares with a September FOMC lift-off and fewer than 2 hikes in 2022 a week before. All told, 2yr, 5yr, and 10yr Treasury yields increased +11.7bps (+0.5bps Friday), +17.1bps (+1.0bps Friday), and +11.9bps (+2.1bps Friday) on the week. 10yr inflation breakevens hit their highest levels on record, finishing the week at 2.72%. Real yields were the only rates declining on the week, with 10yr real Treasury yields retreating -6.6bps (+0.8bps Friday) to end the week at -1.17%, just above all-time lows. Other developed sovereign bond yields followed Treasuries higher, with ten-year yields in Germany, UK, France, and Italy increasing +2.1bps (-2.8bps Friday), +6.9bps (-0.6bps Friday), +3.5bps (-2.8bps Friday), +7.8bps (-0.8bps Friday) on the week. The spectre of higher inflation and concomitant monetary policy tightening put an end to the recent S&P 500 win streak. After posting eight straight days of record highs by Tuesday, the S&P 500 retreated -0.31% this week, including -0.82% on Wednesday alone following the inflation data, but made a heroic effort to reclaim lost ground Friday, gaining +0.72%. Mega cap stocks were notable laggards, due to the increase in discount rates, with FANG+ stocks down -0.49% (+1.00% Friday). The index was also hit by a -15.44% collapse in Tesla stocks following news that Elon Musk would liquidate some of his holdings, which he duly did. European stocks proved more resilient, with the STOXX 600 (+0.68% on the week, +0.30% Friday), DAX (+0.25%, +0.07%), and CAC 40 (+0.72%, +0.45%), again posting new all-time highs to finish the week. On the virus front, Pfizer requested regulatory approval for all US adults to be eligible to receive the company’s Covid-19 booster shot, while climbing cases in Europe have prompted renewed lockdown measures and enhanced vaccination efforts across the continent. Federal Vice Chair for Supervision Quarles announced he would resign at the end of the year, as was widely anticipated. There was a steady leak of news on the impending nomination for Fed Chair, but neither Chair Powell nor Governor Brainard, the two favorites for the position, saw their chances much changed following the news. The Fed also released its bi-annual Financial Stability Report and concluded that asset prices remain vulnerable to deteriorating investor risk sentiment, virus progress, or economic recovery. Geopolitical tensions bubbled in Europe. Threats from Belarussian President Lukashenko to cut the transit of natural gas from Russia to Europe, and reports of potential Russian plans for further military excursions into Ukraine, drove European natural gas prices higher in the second half of the week. President Putin apparently warned the US and its allies that Moscow would not tolerate expansion of Western military influence in Ukraine. Tyler Durden Mon, 11/15/2021 - 07:59.....»»

Category: blogSource: zerohedgeNov 15th, 2021

Fear And Panic As Bitcoin Crashes 50% From All Time High

Fear And Panic As Bitcoin Crashes 50% From All Time High Just two months after cryptos hit an all time high amid widespread euphoria that the newly launched bitcoin ETF would lead to even more substantial upside, the two largest tokens have lost half of their value, with the broader crypto sector suffering more than $1 trillion in losses amid an accelerating liquidation panic that the Fed's tightening cycle will lead to another crypto winter.  Such is the volatility in the sector where, as Bloomberg put it overnight, there has been just one constant recently: "decline after decline after decline." Of course, for veteran hodlers, Bloomberg hyperbole seems trivial in a world where 80% drawdowns are the norm and the current drop may have a ways to go before it hits a bottom, before a new all time high is hit. Where Bloomberg is right however, is that superlatives for the latest carnage have been easy to come by: Friday’s decline led to the liquidation of more than $1.1 billion in crypto futures positions and overall more than $1 trillion in market value has been destroyed since the last peak. In other words, "the meltdown is pouring salt on an already-deep wound." After the latest furious puke that pushed Bitcoin RSI's indicator to the most oversold level since the covid crash in March of 2020... ... Bitcoin, which lost more than 12% on Friday, saw its price drop just above $34,000 with Ethereum sliding as low as $2,400, as the two largest digital assets now trade at a 50% discount from their all time highs and are back to levels last seen in late July, early August. Other digital currencies have suffered just as much, if not more, most meme coins mired in similar drawdowns. While the selling has been relentless for the past two months, it accelerated in the past three weeks, after the latest Fed minutes - published in early January - showed its intention to not only hike rates but to accelerate the unwind of its balance sheet, which has sent all "bubble baskets" plunging, with bitcoin getting hit especially hard amid the carnage. And while there have been much larger percentage drawdowns for both Bitcoin and the aggregate market, according to Bespoke,  this marks the second-largest ever decline in dollar terms for both. “It gives an idea of the scale of value destruction that percentage declines can mask,” wrote Bespoke analysts in a note. “Crypto is, of course, vulnerable to these sorts of selloffs given its naturally higher volatility historically, but given how large market caps have gotten, the volatility is worth thinking about both in raw dollar terms as well as in percentage terms.” Another fact that Bloomberg gets right, is that over the past year, cryptos have transformed from relatively uncorrelated assets providing diversification during market turbulence, into what is effectively a high beta stock. This is easily seen in the following chart showing the 60d correlation between cryptos and stocks. One can thank institutional adoption for that, because the same institutions that are now facing margin calls on their tech holdings, are also dumping cryptos to provide much needed liquidity. “Crypto is reacting to the same kind of dynamics that are weighing on risk-assets globally,” said Stephane Ouellette, chief executive and co-founder of institutional crypto-platform FRNT Financial. “Unfortunately for some of the mature projects like BTC, there is so much cross-correlation within the crypto asset class it’s almost a certainty that it falls, at least temporarily in a broader alt-coin valuation contraction.” Antoni Trenchev,, co-founder of Nexo, cites Bitcoin’s correlation to the tech-heavy Nasdaq 100, which right now is near the highest in a decade. “Bitcoin is being battered by a wave of risk-off sentiment. For further cues, keep an eye on traditional markets,” he said. “Fear and unease among investors is palpable.” According to  Art Hogan, chief market strategist at National Securities, it’s useful to think of cryptocurrencies as living in the same space as other speculative sectors, including special-purpose acquisition companies and electric-vehicle makers. “When we’re in an environment where all of those riskier assets are selling off, crypto is going to find itself doing the same,” Hogan said. “When the Nasdaq 100 or any of the other more-speculative, rapid-growth, momentum-type asset classes start to gain some traction, so will cryptocurrencies.” Unfortunately for Bitcoin longs, one place where the token's correlation is especially high is that to such market naplam as Cathie Wood’s sinking ARK Innovation ETF, a pandemic poster-child of speculative risk-taking. That correlation stands at around 60% year-to-date, versus about 14% for the price of gold, according to Katie Stockton, founder and managing partner of Fairlead Strategies, a research firm focused on technical analysis. It’s “reminding us to categorize Bitcoin and altcoins as risk assets rather than safe havens,” she said. Perhaps unaware what "hodling" means, data from Coinglass shows that more than 342,000 traders had their positions closed over the past 24 hours, with liquidations totaling roughly $1.1 billion. “Digital-currency markets in total have been challenged this month,” said Jonathan Padilla, co-founder of Snickerdoodle Labs, a blockchain company focused on data privacy. “There’s definitely some pain there.” Though liquidations have spiked, the numbers are rather muted when compared to previous declines, according to Noelle Acheson, head of market insights at Genesis Global Trading. Acheson points out that Bitcoin’s one-week skew, which compares the cost of bearish options to bullish ones, spiked to almost 15% on Wednesday compared to an average of about 6% in the past seven days. “This flagged a jump in bearish sentiment, in line with overall market jitters given the current macro uncertainty,” she said. Amid the pain, some of bitcoin's most faithful are professing patience... HODLing #Bitcoin is painful. If you survive the journey, you will truly know what HODL means. — Dan Held (@danheld) January 21, 2022 ... while others are starting to wonder out loud at what point the battering might end. Famed crypto investor and (former?) billionaire Mike Novogratz mused on Twitter that “this will be a year where people realize being an investor is a difficult job.” 2600 $Eth would be the next support. Hoping and thinking it holds. Unfortunately Russel has like 14 percent more to go before it bottoms. Won’t be a straight line down. This will be a year where people realize being an investor is a difficult job. — Mike Novogratz (@novogratz) January 21, 2022 Unfortunately for Novogratz, 2600 did not hold and Eth is now trading below 2,400. Still, many point out that like on all previous occasions when cryptos crashed, they eventually rebounded to new all time highs. At some point, sellers will become exhausted and the market could see some capitulation soon, said Matt Maley, chief market strategist for Miller Tabak + Co. “When that happens, the institutions will come back in in a meaningful way,” he said. “Once the asset class becomes more washed-out, they’ll have a lot more confidence to come back in and buy them. They know that cryptos are not going away, so they’ll have to move back into them before long.” But it's not just central bank tightening fears and liquidation technicals that have depressed cryptos: one can also throw in a relentless news cycle, where just in recent days, regulators from Russia, the U.K., Singapore and Spain all announced interventions that could undermine crypto companies looking to grow in those regions. Meanwhile, the Biden administration is preparing to release an initial government-wide strategy for digital assets as soon as next month and task federal agencies with assessing the risks and opportunities that they pose, Bloomberg reported late on Friday. Testing the resilience and patience of the faithful, so far the sharp drop below the psychological level of $40,000 has failed to serve as an upward inflection point. Crypto proponents say heavy liquidations often serve to cut out the froth in easy-win asset speculation, helping to solidify new bottoms in the market. Ultimately, the real support will come from none other than the Fed, which will soon realize that it is hiking into a slowing economy... Tightening into a slowdown… Déjà vu? pic.twitter.com/pczXzMVSxb — Julien Bittel, CFA (@BittelJulien) January 22, 2022 ... and will be forced to be far more dovish during this week's FOMC meeting, a reversal which should serve to send risk assets sharply higher. “Fear and unease among investors is palpable,” Nexo's Trenchev,said. “If we see a bigger selloff in equities, expect the Fed to verbally intervene to calm nerves and that’s when Bitcoin and other cryptos will bounce.” In other words, the more the Fed tightens - or the more the Fed scares markets into believing it will tighten - the bigger the market selloff, and the worse the economic slowdown, until eventually Powell will be forced to ease, a key point brought up by  Bank of America CIO Michael Hartnett yesterday. Incidentally, it also means that the faster markets crash, the faster the Fed panics, and is forced to stabilize stocks because even if the new and improved Powell Put is well below previous levels, the Fed can't risk a market crash just to appease Biden's demands for an inflationary slowdown so Democrats aren't destroyed in the midterms. And incidentally, this weekend's ongoing selloff in cryptos means that while stocks are currently mercifully not trading, Monday should be another bloodbath, as Jim Bianco reminds us. The BTC/SPX correlation is "significant" Or as @jeffdorsman says, crypto is a 24/7 VIX. See the table, as of this writing, Crypto is down another 10% since Friday's NYSE Close. If this hold, no-coiners have about 36 more hours to gloat before it is their turn. pic.twitter.com/JpWeMJZbAf — Jim Bianco biancoresearch.eth (@biancoresearch) January 22, 2022 One thing is certain: several more 2% drops in the Nasdaq, and Powell - who two years ago crossed the Fed's final rubicon and bought corporate bonds to halt a catastrophic collapse - will be making emergency phone calls to put an end to the carnage. As such, a continuation of the meltdown may just be the best thing that the bitcoin faithful can hope for. Tyler Durden Sat, 01/22/2022 - 13:04.....»»

Category: dealsSource: nytJan 22nd, 2022

Forget a bitcoin winter — a crypto "ice age" might be coming as the Fed ends the easy-money era

Crypto prices have tumbled as bond yields have shot higher. Some investors think they might not recover for a long time. Prices have slumped, raising fears about a crypto winter.FTiare/Getty Images A crypto "ice age" might be coming as the Fed slashes its support for markets and the economy. Crypto prices have slumped, with bitcoin tumbling to a six-month low below $38,000 on Friday. With the Fed hiking interest rates, and nagging questions about regulation and the technology, the outlook could be bleak. Things are getting cold in crypto-land. Bitcoin is down dramatically from its November peak of close to $69,000, falling to a six-month low below $38,000 Friday. Trading volumes have slumped.Some investors are concerned that the market is going into a "crypto winter" — a period when prices fall sharply and fail to recover for more than a year — as the Federal Reserve abruptly tightens monetary policy.But it could be worse than that. Crypto could in fact be heading for an "ice age," where prices stay low for years and many investors lose interest, Paul Jackson, Invesco's global head of asset allocation research, told Insider recently.It's not just Fed policy. Many potential investors have niggling doubts about the robustness of cryptocurrency technology, and regulation that could stifle industry development.The Fed could put crypto in the deep freezeEarly last year, "Bond King" Jeff Gundlach said he thought bitcoin was "the stimulus asset"  boosted the most by the "torrent" of money from the Fed and US government during the coronavirus crisis.But less than a year later, the Fed is turning off its faucet as it tackles soaring inflation. Markets are now expecting four interest rate hikes in 2022.The resultant jump in bond yields has already whacked unprofitable tech stocks and cryptocurrencies. The two speculative assets look a lot less attractive when returns on risk-free bonds are higher.But more pain is likely, as bond yields have considerably further to rise, according to Invesco's Jackson."Central banks and governments have played a role in jacking up these markets, and as those policies reverse, then I think they will have a role in depressing them," he said.Read more: A 21-year veteran trader breaks down an options trade designed to help investors 'sustain risks long enough to see the light of profitability' — and explains why bitcoin could continue to move in tandem with tech stocksEven bulls such as Galaxy Digital founder Mike Novogratz have said crypto is likely to stay under pressure."I think it could be an ice age," Jackson said. "I think if you take away those conditions that have been created by the Fed ... it does change the outlook."Nagging questions about regulation and crypto technologyOf course, many cryptocurrency supporters disagree. Dan Morehead, CEO of investment firm Pantera, said in a note last week the sector should stay strong because the uses for crypto networks have ballooned.He pointed in particular to the growth in decentralized finance, or DeFi, where financial activities such as trading can be carried out without the need for intermediaries, thanks to crypto technology.But many investors are less convinced, with regulation a particular worry. The central bank of Russia, a crypto hub, this week proposed an outright ban of mining and transactions, adding to Friday's sell-off. European regulators could be about to toughen up their rules, and Spain and the UK are cracking down on crypto adverts.James Malcolm, head of foreign-exchange strategy at UBS, told Insider he thinks problems with crypto technology could be one of several factors, alongside stricter regulation, that could drag the crypto world into another winter.Malcolm cited a blog by the founder of the Signal messaging app, which concluded that blockchain technology is clunky and far from decentralized. Meanwhile, users of the ethereum crypto network have been infuriated by congestion and high transaction fees, which are proving very hard to fix."A lot of people in the technology space seem to be questioning whether or not [crypto tech] is that effective," Malcolm said. "It begs the question if it was so blatantly next-generation technology, then why aren't a lot of big tech companies all over it? Why isn't Google massively invested?"Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 22nd, 2022

Rotate to Cyclical Sectors With These Top-Ranked ETFs

As the Federal Reserve turned more hawkish and expectations for interest rates hike rose, investors rotated out of the high-growth technology to cyclical sectors like energy, financials, materials and industrials. Rising yields have gripped Wall Street since the start of 2022, resulting in a sell-off in the tech sector. As the Federal Reserve turned more hawkish and expectations for interest rates hike rose, investors rotated out of the high-growth technology to cyclical sectors like energy, financials, materials and industrials.Investors seeking to tap the current trends could consider the ETFs form the cyclical sectors. While there are many options, Vanguard Energy ETF VDE, iShares U.S. Home Construction ETF ITB, U.S. Global Jets ETF JETS, Materials Select Sector SPDR XLB and SPDR S&P Bank ETF KBE with a Zacks Rank #1 (Strong Buy) or 2 (Buy) seem excellent choices.Why Cyclical?Prices for almost everything, from raw materials to food prices to shipping costs, soared last year at the fastest pace in nearly four decades. This is especially true as the consumer price index jumped 7% year over year in 2021, marking the largest 12-month gain since June 1982. The red-hot inflation has set the stage for the first interest rate hike as soon as in March (read: 5 ETF Plays to Make the Most of Red-Hot Inflation).The 10-year Treasury yield hit a two-year high on bets that the Federal Reserve could raise interest rates as soon as in March. The latest Fed minutes revealed policymakers’ concerns about worsening inflation and early interest rate hikes to combat rising inflation. The policymakers signaled three rate increases this year and three in the following year as inflation concerns deepened. The probabilities of a March interest rate hike of 0.25% surged to 72%, according to fed futures trading contracts.Omicron cases are also surging in the United States, with more than a million new cases in a single-day and hospitalizations hitting new highs.However, a still-improving economy backed by job growth and higher consumer confidence will likely bolster risk-on trade. Increased U.S. consumer confidence, suggests that the economy would continue to expand in 2022. Additionally, President Biden’s administration took steps to eliminate supply-chain bottlenecks, indicating that higher inflation will not last very long. Further, the wider spread of vaccinations, new vaccines as well as solid corporate earnings bode well for the economy. As the cyclical sectors are tied to economic activities, these outperform when economic growth improves.Vanguard Energy ETF (VDE)Vanguard Energy ETF is one of the popular choices in the energy space, having accumulated $6.6 billion in its asset base. It provides exposure to a basket of 104 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index (read: 5 Energy ETFs Making the Most of Oil Price Surge).Vanguard Energy ETF sees a good volume of about 1.5 million shares and charges 10 bps in annual fees. VDE has a Zacks ETF Rank #2.iShares U.S. Home Construction ETF (ITB)iShares U.S. Home Construction ETF provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With AUM of $3 billion, iShares U.S. Home Construction ETF holds a basket of 46 stocks with heavy concentration on the top two firms.iShares U.S. Home Construction ETF charges 41 bps in annual fees and trades in a heavy volume of around 3 million shares a day on average. iShares U.S. Home Construction ETF has a Zacks ETF Rank #2.U.S. Global Jets ETF (JETS)U.S. Global Jets ETF provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 51 securities and charges investors 60 bps in annual fees.U.S. Global Jets ETF has gathered $3.5 billion in its asset base while seeing solid trading volume of nearly 12.1 million shares a day. It has a Zacks ETF Rank #2.Materials Select Sector SPDR (XLB)Materials Select Sector SPDR is the most-popular material ETF that follows the Materials Select Sector Index. It manages about $8.6 billion in its asset base and trades in volumes as heavy as around 6 million shares. Materials Select Sector SPDR holds about 28 securities in its basket and charges 12 bps in fees per year from its investors (read: 5 Top-Ranked ETFs to Add to Your Portfolio for 2022).In terms of industrial exposure, chemicals dominates the portfolio with a 68.8% share, while metals & mining, and containers & packaging round off the top three positions. The product has a Zacks ETF Rank #1.SPDR S&P Bank ETF (KBE)SPDR S&P Bank ETF offers equal-weight exposure to 98 banking stocks by tracking the S&P Banks Select Industry Index. Regional banks dominate the portfolio with 74.8% share while thrifts & mortgage finance, diversified banks, other diversified financial services and asset management & custody banks take the remainder.SPDR S&P Bank ETF has amassed $8.6 billion in its asset base while trading in a heavy volume of 2.8 million shares a day, on average. The product charges 35 bps in annual fees. 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 Materials Select Sector SPDR ETF (XLB): ETF Research Reports iShares U.S. Home Construction ETF (ITB): ETF Research Reports SPDR S&P Bank ETF (KBE): ETF Research Reports Vanguard Energy ETF (VDE): ETF Research Reports U.S. Global Jets ETF (JETS): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 14th, 2022

Take Advantage Of Elevated Volatility With Covered Call Options

High volume selling since early-November has been driven up volatility premiums on options across the equity market, generating rich Theta-catching opportunities It's once again time to start thinking about covered calls as monetary uncertainty in the face of unending COVID-fueled inflation induces a market pullback. The high volume selling (specifically in high-growth equities) we've seen since before Thanksgiving has been driven up implied volatility (IV) on options across the equity market, presenting us with generous Theta-catching opportunity.Covered calls will allow you to capture returns on stocks you already own or buy new shares of enterprises you've waiting to acquire at a discount.What's A Covered Call? Implementing a covered call strategy involves selling out-of-the-money call options on a stock that you own or want to purchase and collecting the premium that each call option yields you. This means that you are effectively sell-short the options contract.Your P&L on this option play would be inverse to the call's premium because you are effectively short in the derivatives market once you enter the trade. However, the underlying shares that you own protect you from any losses (aka covered call), making these trades risk-free (if you don't account for opportunity loss if the underlying stock soars above your strike).When executing a play like this, you must remember that each option contract represents 100 shares. Meaning you should only write (or sell) call contracts for each block of 100 shares that you own or would like to own.The Greeks To Focus OnTheta represents the time-value depreciation of an option's premium each day under the assumption the underlying security does not move. Theta can be seen as the daily return on a covered call option.It represents the expected daily returns of a covered call, assuming that the strike price is not reached prior to expirations. Theta (quoted as a negative figure) and implied volatility are directly correlated on an absolute value basis (aka disregarding -/+ signs).Theta and Vega, an option's sensitivity to implied volatility, are the most meaningful metrics to focus on when implementing a covered call strategy. As an option seller, we want Theta (expected daily returns) to be high on an absolute basis, while Vega (volatility risk) remains low.When assessing opportunities for covered calls, I'm looking for options with an IV of 50% or higher in combination with a Theta to Vega ratio that exceeds 0.25. The higher the Theta Vega ratio, the better the risk/reward outlay for option sellers (no matter what your strategy).Risk Of Writing Uncovered CallSelling call options is extraordinarily dangerous if you don't own the underly security because your downside is unlimited (similar to short selling a stock except leveraged due to the nature of options nature).To help you conceptualize this, imagine you sold a 1-Year out Alphabet (GOOGL) call in September 2020 for a September 2021 monthly contract (Sept 17th Exp.) at a $2,500 strike for a quoted $20 per share premium, with zero shares held.Now, most people in their right mind would think that there is absolutely no way that GOOGL, trading at $1,450 at the time, would be able to rally over 72% in the next year. Perceptively it was a 'low-risk trade,' despite not owning the $145,000 worth of stock needed to make this trade truly risk-free (100 shares).This trade would have provided an immediate credit of $2,000 ($20 quoted per share premium x 100 shares = $2,000), but as GOOGL rallied, your position would have quickly turned against you. Since you are short the call, every dollar the premium moves up is a dollar against your position as you would have to repurchase the call at market value to flatten your trade.Let's say you held on to this until it expired, assuming you didn't have the required shares on hand, you not only would have lost the entire $2,000 premium that you were credited a year prior but would now have to pay the difference between the $2,500 strike and $2,816 spot price of the stock. This would have run you $31,600, (($2,816 – $2,500) x 100 = $31,600).This trade risked an endless amount of capital for a measly upside of $2,000. Your brokerage account would have almost certainly sent you a risk alert or a margin call before you were able to lose this much (likely requiring $50k in liquidity), but this exemplifies the outsized risks involved in selling an uncovered call option.Now let's say you did own the necessary underlying shares when you sold the 1-year call on GOOGL (covered call). The trade would have yielded you the initial $2,000 credit, and you would have been making money on the underlying shares all the way up to $2,500. The transaction would have returned you ($2,500 - $1,450) x 100 + $2,000= $107,000 or a 74% profit.Since you owned the underlying shares, you still wanted the stock to go up, and the predetermined strike price you initially sold the call at was merely your exit price.How To Take Advantage FUD-fueled (fear, uncertainty, & doubt) market selloffs like these are the best times to execute a covered call strategy because the short-term surge in volatility causes the premium of these options to spike (seen as an increase in Theta on an absolute value basis). The higher the implied volatility (IV), the more uncertain the stock's future price is, which is reflected as an increase in the option's value. This allows you to capture a larger credit on the calls you would like to write.Remember only to sell calls that are tolerably out-of-the-money (above the market price of underlying shares) to ensure that you capture both the option credit and any potential upside in the share price if the stock does end up rallying to your strike price before expiration.There are a couple of crucial judgments you need to make when trading covered calls: what price you are willing to sell your stock at and whether you believe the market's volatility?If I write longer-term covered calls (6 to 18 months till exp.), I typically choose a strike price that I have predetermined as my price target (where I am willing to let go of the stock). If I'm selling a short-term covered call (1 week to 3 months till exp.) I can take advantage of near-term volatility, with the flexibility to roll the calls over each time the prior one expires if the volatility sustains (similar to a high-yielding fixed-income security).Buy-In StrategyIf you are looking to add equities to your portfolio with a size of 100 shares or more, it may be prudent to sell a call option simultaneously. Growth-oriented tech stocks are what I am focused on because of this cohort's significant valuation compression in recent months (50%+ declines in some cases) and the volatile premium on these already naturally high IV names is creating Theta-rich environment for generous returns on cover-call options.Stocks I'm looking to add are positioned for the next generation economy like AI-power customer service automator Twilio TWLO, best-in-class cybersecurity platform CrowdStrike CRWD, and real-time machine data management powerhouse Splunk SPLK. These stocks have long-term winners but are experiencing significant short-term uncertainty in the face of an increasingly hawkish Fed and broader market pressures from the latest COVID-variant (Omicron).These nascent tech enterprises hold a leadership position in their niche operating segments and have a compelling growth narrative that shouldn't be ignored. They will undoubtedly play a vital role in the commencing 4th Industrial Revolution, which is already rapidly digitalizing our global economy.Take a look at your portfolio and examine stocks where you hold a 100+ share position (1 call per 100 share block), with the highest IVs to capture the most Theta. This call selling tactic will not make you rich quick, but it is a savvy way to capture returns in a down-trending market.Make sure you are willing to exit these covered call positions at the strike price you chose. I am looking to sell March 18th expiring calls (the most liquid short-term monthly contracts), which will allow me catch volatility in this pivotal Q4 earnings season and provide the ability to roll these calls over if FUD continues to plague the market.I remain bullish as we enter the first earnings season of 2022 and am buying this dip in public equities.Happy Trading!Dan LaboeEquity Strategist & Editor of The Headline Trader Portfolio 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 Splunk Inc. (SPLK): Free Stock Analysis Report Twilio Inc. (TWLO): Free Stock Analysis Report CrowdStrike (CRWD): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 14th, 2022

Futures Slide After Disappointing JPMorgan Earnings, Tech Rout Worsens

Futures Slide After Disappointing JPMorgan Earnings, Tech Rout Worsens After trading flat for much of the overnight session, S&P futures slumped to session lows shortly after JPM reported earnings that disappointed the market (see our full write up here) and were last trading down 30 points or 0.64%, with Dow futures down 0.3% and Nasdaq futures taking on even more water as the "sell tech" trade was back with a bang. Treasury yields rose 3bps to 1.74% and the dollar reversed an overnight loss. The VIX jumped above 20 and was last seen around 21. The Nasdaq 100 fell to the lowest in almost three months yesterday as tech came under pressure after Fed Governor Lael Brainard said officials could boost rates as early as March. It looks like the selling will continue today. “Market sentiment has been shaken by concerns over the prospect of imminent Fed tightening along with record global Covid-19 infection rates, but we don’t expect either of these factors to end the equity rally,” said UBS Wealth Management CIO Mark Haefele in a note. “The fourth-quarter U.S. earnings season, which started this week, could turn investor attention back to strong fundamentals.” JPMorgan shares dropped in premarket trading after revenues and EPS beat thanks to a $1.8 billion reserve release while FICC trading revenue missed expectations even as its dealmakers posted their best quarter ever and Chief Executive Officer Jamie Dimon gave an upbeat assessment of prospects for growth. Wells Fargo advanced after reporting higher-than-estimated revenue. BlackRock Inc. became the first public asset manager to hit $10 trillion in assets, propelled by a surge in fourth-quarter flows into its exchange-traded funds. Here are some of the other notable pre-movers today: U.S.-listed casino stocks with operations in Macau rise after the announcement of much-anticipated changes to the local casino law aimed at tightening government oversight on the world’s largest gaming market. Las Vegas Sands (LVS US) +6.6%; Melco Resorts (MLCO US) +5.5%; Wynn Resorts (WYNN US) +5.6%. Apple (AAPL US) shares are up in U.S. premarket trading after Piper Sandler raises its target for the stock, saying that Apple’s set-up for 2022 is favorable. Broker adds that the tech giant’s venture into health-care and automotive markets are the next catalysts to drive the stock to a $4 trillion market cap and beyond. NextPlay Technologies (NXTP US) shares jump 19% in U.S. premarket trading after giving an update for fiscal 3Q 2022 late yesterday. Domino’s Pizza (DPZ US) is cut to equal-weight from overweight at Morgan Stanley, while Chipotle is upgraded to overweight from equal-weight amid a “mixed” view on restaurant stocks into 2022. Amicus Therapeutics (FOLD US) advanced in postmarket trading after being upgraded to outperform from market perform at SVB Leerink, which cited the potential of a treatment for Pompe disease, should it be approved. Spirit Realty dropped 4% postmarket after launching a share sale via Morgan Stanley and BofA Securities. European equities traded poorly and followed the drop in Asia, with most sectors trading lower, weighed down once again by a soft tech sector. Euro Stoxx 50 is down 0.8%, most major indexes dropped over 1% before rising off the lows. Oil & gas is the best Stoxx 600 performer with crude trading well. European technology stocks as well as pandemic winners are leading declines after a U.S. selloff in tech shares resumed Thursday as Federal Reserve officials signaled their intention to combat inflation aggressively.  European chipmakers are down in early trading Friday: ASM International -3.5% at 9.17 a.m. CET, Infineon -0.9%, ASML -2.9%, STMicroelectronics -2.3%. Meanwhile, energy and automakers outperformed. Utilities were also in focus as French nuclear energy producer Electricite de France SA (EDF) plunged by a record as the French government confirmed plans to force it to sell more power at a steep discount to protect households from surging wholesale electricity prices, a move that could cost the state-controlled utility 7.7 billion euros ($8.8 billion) at Thursday’s market prices. There was some good news: a majority of strategists still see the rally in European equities continuing this year. The Stoxx Europe 600 Index will rise about 5.2% to 511 index points by the end of 2022 from Wednesday’s close, according to the average of 19 forecasts in a Bloomberg survey. Equity funds once more led inflows among asset classes in the week through Jan. 12, as investors reduced cash holdings, according to BofA and EPFR Global data. Earlier in the session, Asian stocks slid as investors offloaded technology shares on growing speculation the Federal Reserve will raise interest rates in March.  The MSCI Asia Pacific Index fell as much as 1.3% before paring losses to 0.7% in afternoon trading. Alibaba, Keyence and Sony Group were among the largest contributors to the benchmark’s slide. The Hang Seng Tech Index, which tracks China’s biggest tech firms, closed down 0.5%. Electronics makers also dragged down indexes in Japan and South Korea, with benchmarks in both nations leading the region’s drop. China’s CSI 300 Index closed at its lowest since November 2020. Asian stocks have been whipsawed this year by remarks from Fed officials as investors try to gauge the timing and scope of the anticipated interest rate hikes. The renewed weakness on Friday was triggered by comments from Fed Governor Lael Brainard, who said officials could boost rates as early as March to ensure that price pressures are brought under control. “This kind of hawkishness and a rush for rate hikes is, of course, a minus for share prices,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank in Tokyo. If the Fed were to increase rates in March, “investors will want to make sure the economy remains strong despite the monetary tightening before making their move,” Sera added.  With Friday’s moves, Asia’s benchmark is set to pare its weekly gain to about 1.6%, which would still be its best weekly performance since October.    In Japan, sentiment worsened as Tokyo raised its Covid alert to the second-highest of four levels as virus cases surged. South Korea’s Kospi was also weighed down as the central bank increased its policy rate for the third time in just five months In rates, Treasuries pared declines with stock index futures under pressure as U.S. day begins. Yields beyond the 2-year reached session highs inside Thursday’s ranges amid a global government bond selloff. Treasury yields are cheaper by 3bp to 4bp across the curve with 10- year yields around 1.7274%, fading a bigger loss earlier and slightly underperforming bunds and gilts. Asia session featured speculation about tighter global monetary policy. IG dollar issuance slate empty so far and expected to remain light ahead of U.S. holiday weekend with markets closed Monday; four names priced $3.8b Thursday. In FX, the Bloomberg dollar spot is little changed around worst levels for the week, while NOK, JPY and CAD top the G-10 scoreboard. The yen advanced, and is set for its largest weekly advance in more than a year as speculation about a shift in the Bank of Japan’s policy spurred a further unwinding of dollar longs. The five-year Japanese government bond yield climbed to a six-year high. The volatility term structure in dollar-yen shifted higher Friday and inverted. The euro was little changed around $1.1460 and European sovereign bond yields rose, with the core underperforming the periphery. Norway’s krone and the Canadian dollar advanced as oil prices rose, with Brent trading above $85 per barrel, while the Australian and New Zealand dollars were the worst performers. The pound extended its longest winning streak in nearly two months as the U.K. economy surpassed its pre-pandemic size in November for the first time. Sweden’s krona inched down, shrugging off data showing that the nation’s inflation rate rose to the highest level in 28 years In commodities, crude futures rally with WTI recovering to Wednesday’s best levels near $83 and Brent putting in fresh highs near $85.40. Spot gold is little changed a brief retest of the week’s highs, trading near $1,823/oz. Base metals are mixed: LME nickel adds about 2% extending its recent surge; copper holds a narrow range in the red Looking at the day ahead now, data releases include US retail sales, industrial production and capacity utilisation for December, along with the University of Michigan’s preliminary consumer sentiment index for January and the UK’s GDP for November. Central bank speakers include ECB President Lagarde and New York Fed President Williams. Lastly, earnings releases include Citigroup, JPMorgan Chase, Wells Fargo and BlackRock. Market Snapshot S&P 500 futures up 0.3% to 4,667.00 STOXX Europe 600 down 0.5% to 483.71 MXAP down 0.8% to 195.28 MXAPJ down 0.5% to 639.13 Nikkei down 1.3% to 28,124.28 Topix down 1.4% to 1,977.66 Hang Seng Index down 0.2% to 24,383.32 Shanghai Composite down 1.0% to 3,521.26 Sensex up 0.1% to 61,320.31 Australia S&P/ASX 200 down 1.1% to 7,393.86 Kospi down 1.4% to 2,921.92 German 10Y yield little changed at -0.08% Euro up 0.1% to $1.1467 Brent Futures up 0.8% to $85.16/bbl Gold spot up 0.1% to $1,823.97 U.S. Dollar Index little changed at 94.73 Top Overnight News from Bloomberg Federal Reserve Governor Christopher Waller said that three interest-rate increases this year was a “good baseline” but there may be fewer or even as many as five moves, depending on inflation The U.K. and the European Union agreed to intensify post-Brexit negotiations over Northern Ireland, as Foreign Secretary Liz Truss led the British side for the first time in a meeting at her official country residence Germany’s economy contracted by as much as 1% in the final quarter of 2021 as the emergence of the coronavirus’s omicron strain added to drags on output from supply snarls and the fastest inflation in three decades Japan’s Government Pension Investment Fund, the world’s largest, may mull investing in Chinese government bonds if the market situation improves, GPIF President Masataka Miyazono says at a press conference in Tokyo Ukraine said a cyberattack brought down the websites of several government agencies for hours. Authorities didn’t immediately comment on the source of the outage, which comes as tensions with Russia surge over its troop buildup near the border Russia won’t wait “endlessly” for a security deal with NATO and progress depends on the U.S., Foreign Minister Sergei Lavrov said Friday, keeping up pressure after a week of high-level talks with the West failed to yield noticeable progress Turkey’s newly appointed finance chief said the country’s inflation will peak months earlier and at a level far lower than predicted by top Wall Street banks The global pressures driving inflation higher represent a “major change in trends” and will keep price growth high for the foreseeable future, Bank of Russia Governor Elvira Nabiullina said North Korea appears to have fired two ballistic missiles into waters off its east coast-- in what could be its third rocket-volley test in less than 10 days -- hours after issuing a fresh warning to the Biden administration A more detailed look at global markets courtesy of Newsquawk Asian equity markets weakened amid headwinds from the US where all major indices declined led by losses in tech and consumer discretionary amid a slew of hawkish Fed speak, while mixed Chinese trade data added to the cautiousness in the region. ASX 200 (-1.1%) traded lower as tech and consumer stocks mirrored the underperformance of stateside peers and with nearly all industries on the back foot aside from utilities and gold miners. Nikkei 225 (-1.3%) briefly gave up the 28k level amid a firmer currency and source reports that BoJ policy makers are said to debate how soon they can begin signalling a rate hike. In terms of the notable movers, Fast Retailing was the biggest gainer after it reported a record Q1 net, followed by Seven & I Holdings which also benefitted post-earnings, while Hitachi Construction was at the other end of the spectrum after news that parent Hitachi will offload half its majority stake. KOSPI (-1.4%) eventually underperformed after the Bank of Korea hiked rates by 25bps for a third time in the current tightening cycle to 1.25%, as expected. BoK also noted that CPI is to stay in the 3% range for a while and BoK Governor Lee made it clear that rates will continue to be adjusted which has fuelled speculation of similar action at next month’s meeting. Hang Seng (-0.2%) and Shanghai Comp. (-1.0%) were also pressured with participants digesting the latest trade figures which showed weaker than expected Imports although Exports topped estimates. Nonetheless, the downside was somewhat limited amid ongoing expectations for PBoC easing to support the economy as the Fed moves closer towards a rate lift off and with some encouragement after Evergrande averted its first onshore debt default whereby bondholders approved a six-month postponement of bond redemption and coupon payments. Finally, 10yr JGBs retreated beneath the 151.00 level following the source report that suggested debate within the BoJ on how soon a rate increase can be signalled which could occur ahead of the 2% price target, while this coincided with an increase in the 5yr yield to a 6-year high and a weaker than previous 20yr JGB auction. Top Asian News Chinese Developer R&F Downgraded to Restricted Default by Fitch Macau Cuts Casino License Tenure, Caps Float as Controls Tighten Inflation Irks Asia as Japan Yields Hit Six-Year High, BOK Hikes China Builders’ Dollar Bonds Slump Further; Logan, KWG Lead The major cash equity indices in Europe remain subdued but off worst levels (Euro Stoxx 50 -0.7%; Stoxx 600 -0.6%) as the downbeat APAC mood reverberated into the region amid a slew of hawkish Fed speak, while the mixed Chinese trade data added to the concerns of a slowdown ahead of next week’s GDP metrics. Newsflow had overall been quiet during the European session ahead of the start of US earnings season, but geopolitical tensions remain hot on the radar after North Korea fired its third missile of the year (albeit landing outside Japan’s EEZ), whilst Russia closed all communication channels with the EU and exerted some time-pressure on Washington with regards to Moscow’s security demands. Back to trade, a divergence is seen between Europe and the US as the former catches up to the late accelerated sell-off on Wall Street yesterday; US equity futures have been consolidating with mild broad-based gains seen across the ES (+0.2%), YM (+0.2%), NQ (+0.2%) whilst the RTY (Unch) narrowly lags. Delving into Europe, the UK’s FTSE 100 (-0.1%) is cushioned by gains across its Oil & Gas and Financial sectors as crude oil prices and yields clamber off intraday lows, whilst the SMI (-0.3%) sees some losses countered by its heavyweight healthcare sector. Sectors in Europe are mostly in the red with a slight defensive tilt, although Oil & Gas stands as the top gainer and the only sector in the green. The downside meanwhile sees Tech following a similar sectorial underperformance seen on Wall Street and APAC overnight. In terms of individual movers, DAX-heavyweight SAP (-0.3%) conforms to the losses across tech after initially rising as a result of upgraded guidance and the announcement of a share buyback programme of up to EUR 1bln. The most notable mover of the day has been EDF (-17.5%) as the Co. withdrew guidance after noting the impact of new French price cap measures is forecast to be around EUR 8.4bln on FY22 EBITDA. Top European News EDF Slumps by Most on Record on Hit From Price Cap U.K. Economy Surpasses Pre-Pandemic Size With November Surge German Recovery Lags Rest of Europe on Supply Snarls, Inflation HSBC Markets Chief Georges Elhedery To Take Six-Month Sabbatical In FX, another lower low off a lower high does not bode well for the index and Buck more broadly, but some technicians will be encouraged by the fact that chart supports in the form of a Fib retracement and 100 DMA have only been breached briefly. Meanwhile, Friday may provide the Greenback with a prop via pre-weekend position squaring and US data could lend a hand if upbeat or better than expected at the very least. For now, the DXY is restrained between 94.887-626 confines, with the upside capped by a major trendline that falls just below 95.000 around 94.980, and the Dollar also hampered by pressure emanating outside the basket from the likes of the Yuan, crude oil and other commodities. CAD/JPY/GBP - The Loonie has reclaimed 1.2500+ status in line with a rebound in WTI towards Usd 83/brl, but still faces stiff trendline resistance vs its US counterpart at 1.2451 and probably conscious that several multi-billion option expiries roll off either side of the 1.2500 level today. Conversely, the Yen has cleared the psychological 114.00 hurdle with some fundamental impetus coming from hawkish BoJ source reports contending that policy-setters are contemplating how soon the Bank can telegraph a rate hike that is likely to be delivered prior to inflation reaching its 2% target. Elsewhere, Sterling remains elevated above 1.3700, though unable to scale 1.3750 even with tailwinds from stronger than forecast UK GDP and IP or a narrower than feared trade gap amidst ongoing political uncertainty. CHF/EUR/NZD/AUD - All narrowly divergent and contained against their US rival, with the Franc straddling 0.9100 and Euro holding within a 1.1483-51 range and immersed in hefty option expiry interest spanning 1.1395 to 1.1485 (see 7.01GMT post on the Headline Feed for details). On the flip-side, the Aussie and Kiwi have both lost a bit more momentum after probing 0.7300 and approaching 0.6900 respectively yesterday, and Aud/Usd appears to have shrugged off robust housing finance data in the run up to China’s trade balance revealing sub-consensus imports. SCANDI/EM - Firmer than anticipated Swedish CPI and CPIF metrics have not offered the Sek much support, as the stripped down core ex-energy print was in line and bang on the Riksbank’s own projection. However, the Huf has been underpinned by hot Hungarian inflation and the Cnh/Cny in wake of the aforementioned Chinese trade data showing a record surplus for December and 2021 overall. In Turkey, the Try is flattish following the latest CBRT survey that predicts a weaker year-end Lira from current levels, but above record lows and still well above target CPI, while in Russia the Rub is benefiting from Brent’s rise above Usd 85.50/brl (in keeping with the Nok) against the backdrop of geopolitical and diplomatic strains as the country’s Foreign Minister declares that all lines of communication with the EU have ended. In commodities, WTI and Brent front-month futures have been on an upward trajectory since the Wall Street close, with the former now above USD 83/bbl (vs 81.58/bbl low) and the latter north of USD 85.50/bbl (vs 83.99/bbl low) in European hours. Overall market sentiment has been a non-committal one amid a lack of fresh macro catalysts, however, geopolitical updates have been abundant: namely with Russia’s punchy rhetoric surrounding its security demand from NATO and Washington, whilst North Korea fired what is said to be ballistic missiles which landed just outside Japan’s Exclusive Economic Zone (EEZ). On the demand side of the equation, eyes remain on China’s economic and COVID situations, with the import figures indicating China's annual crude oil imports drop for the first time in 20 years, whilst the nation grounded further flights between the US due to its zero-COVID policy. On the supply side, reports suggested that China will release oil stockpiles in the run-up to the Lunar New Year (dubbed as the largest human migration). The release is part of a coordinated plan with the US and other major consumers, according to the reports, which cited sources suggesting China will likely ramp up its releases if prices top USD 85/bbl. Turning to metals, spot gold is trading sideways and prices waned after again hitting the resistance zone around USD 1,830/oz flagged earlier this week. LME copper meanwhile remains under USD 10,000/t – subdued by the sharp slowdown in Chinese imports suggesting weaker demand, albeit annual imports of copper concentrate hit a historic high in 2021. The trade data also indicated a fall in iron ore imports as a factor of the steel production curbs imposed last year to tackle pollution and high iron ore prices. US Event Calendar 8:30am: Dec. Import Price Index YoY, est. 10.8%, prior 11.7%; MoM, est. 0.2%, prior 0.7% Export Price Index YoY, est. 16.0%, prior 18.2%; MoM, est. 0.3%, prior 1.0% 8:30am: Dec. Retail Sales Advance MoM, est. -0.1%, prior 0.3% Dec. Retail Sales Ex Auto MoM, est. 0.1%, prior 0.3% Dec. Retail Sales Ex Auto and Gas, est. -0.2%, prior 0.2% Dec. Retail Sales Control Group, est. 0%, prior -0.1% 9:15am: Dec. Industrial Production MoM, est. 0.2%, prior 0.5% Capacity Utilization, est. 77.0%, prior 76.8% Manufacturing (SIC) Production, est. 0.3%, prior 0.7% 10am: Nov. Business Inventories, est. 1.3%, prior 1.2% 10am: Jan. U. of Mich. Sentiment, est. 70.0, prior 70.6; Expectations, est. 67.0, prior 68.3; Current Conditions, est. 73.8, prior 74.2 U. of Mich. 1 Yr Inflation, est. 4.8%, prior 4.8%; 5-10 Yr Inflation, prior 2.9% DB's Jim Reid concludes the overnight wrap There was no rest for markets either yesterday as the tech sell-off resumed in earnest, which came as fed funds futures moved to price in a 93% chance of a March rate hike, the highest closing probability to date. At the same time, however, the US dollar continued to weaken and has now put in its worst 3-day performance in over a year, having shed -1.25% in that time. And all this is coming just as earnings season is about to ramp up, with a number of US financials scheduled to report today ahead of an array of companies over the next few weeks. Starting with sovereign bonds, yields on 10yr Treasuries fell a further -3.9bps yesterday, their biggest decline since mid-December, to their lowest closing level in a week, at 1.704%, with most of the price action again happening during the New York afternoon. Lower inflation breakevens helped drive the decline, with the 10yr breakeven down -3.4bps after the producer price inflation data for December came in softer than expected. Indeed, the monthly gain of +0.2% (vs. +0.4% expected) was the slowest since November 2020, and in turn that left the year-on-year measure at +9.7% (vs. +9.8% expected), which is actually a modest decline from the upwardly revised +9.8% in November. As with the previous day’s CPI reading though, there was a more inflationary interpretation for those after one, as the core PPI measure came in at a monthly +0.5% as expected, leaving the year-on-year change at an above-expected +8.3% (vs. +8.0% expected). So something for everyone but no massive surprises either way. The latest inflation data came as numerous Fed speakers continued to match the recent hawkish tone, which helped strengthen investor conviction in the odds of a March hike as mentioned at the top. Philadelphia Fed President Harker said at an event that “My forecast is that we would have a 25 basis-point increase in March, barring any changes in the data”, and that he had 3 hikes pencilled in but “could be convinced of a fourth if inflation is not getting under control.” Separately, we heard from Governor Brainard, who appeared before the Senate Banking Committee as part of her nomination hearing to become Fed Vice Chair. She signalled that she would be open to a March hike as well, saying that they would be in a position to hike “as soon as asset purchases are terminated”, which they’re currently on course to do in March. Even President Evans, one of the most dovish members of Fed leadership, said a March rate hike and multiple hikes this year were a possibility. As it happens, today is the last we’ll hear from various Fed speakers for a while, as tomorrow they’ll be entering their blackout period ahead of the next FOMC announcement later in the month. Staying on the Fed, Bloomberg reported overnight that President Biden has picked three nominees for the vacant slots. They include Sarah Bloom Raskin, previously Deputy Secretary of the Treasury, who’s reportedly going to be nominated to become the Vice Chair of supervision, as well as Lisa Cook and Philip Jefferson, who’d become governors. Cook is an economics professor at Michigan State University, and Jefferson is an economics professor at Davidson College in North Carolina. All 3 would require Senate confirmation, and bear in mind those choices haven’t been officially confirmed as of yet. Over on the equity side, the main story was a further tech sell-off that sent both the NASDAQ (-2.51%) and the FANG+ index (-3.72%) lower for the first time this week, and taking the former to a 3-month low. That weakness dragged the S&P 500 (-1.5%) lower, though despite the stark headline numbers, it was only just over half of the shares in the index that were in the red on the day. Meanwhile in Europe, the STOXX 600 (-0.03%) also saw a modest decline, though the STOXX Banks (+1.10%) hit a fresh 3-year high after advancing for the 8th time in the last 9 sessions. Sovereign bond yields echoed the declines in the US too, with those on 10yr bunds (-3.1bps), OATs (-3.3bps) and BTPs (-4.6bps) all moving lower. Following that tech-driven fall overnight on Wall Street on the back of those hawkish comments, Asian stock markets are trading lower this morning. Japan's Nikkei (-1.42%) extended the previous session’s losses while briefly falling over -2%, as the Japanese Yen found a renewed bid amid the risk-off mood. Additionally, the Kospi (-1.37%) widened its losses, after the BOK lifted borrowing costs by 25bps to 1.25% amidst rising concerns about inflationary pressure. That takes the benchmark rate back to pre-pandemic levels after the central bank's 25bps rate increase in August and November last year. Meanwhile, the Korean government unveiled a supplementary budget worth 14 trillion won in size to continue providing support to the economy. Elsewhere, the Hang Seng index (-0.86%), CSI (-0.60%) and Shanghai Composite (-0.53%) have all moved lower as well. Data released in China showed that exports went up +20.9% y/y in December (vs +20.0% market expectations) albeit imports in December rose +19.5% y/y less than +28.5% as anticipated. That meant that they posted a trade surplus of $94.46bn last month, above the consensus forecast for a $74.50bn surplus. Looking ahead, futures on both the S&P 500 (-0.19%) and DAX (-0.79%) are pointing to further losses later on. Elsewhere in markets, yesterday saw another surge in European natural gas futures (+13.71%), albeit still at levels which are less than half of the peaks seen in mid-December. The latest moves came as Russia’s deputy foreign minister Sergei Ryabkov said that talks with the US had reached a “dead end”, amidst strong tensions between the two sides with Russia rejecting any further expansion of NATO as well as calls to pull back its forces from near Ukraine’s border. In response, the Russian ruble weakened -2.31% against the US dollar yesterday, whilst the MOEX stock index (-4.05%) suffered its worst daily performance since April 2020. Turning to the Covid-19 pandemic, the decline in UK cases continued to accelerate yesterday, with the number of cases over the past week now down -24% relative to the previous 7-day period. Looking at England specifically, the total number of Covid-19 patients in hospital is now down for a 3rd day running, and in London the total number in hospital is down to its lowest level since New Year’s Eve. To the day ahead now, and data releases include US retail sales, industrial production and capacity utilisation for December, along with the University of Michigan’s preliminary consumer sentiment index for January and the UK’s GDP for November. Central bank speakers include ECB President Lagarde and New York Fed President Williams. Lastly, earnings releases include Citigroup, JPMorgan Chase, Wells Fargo and BlackRock. Tyler Durden Fri, 01/14/2022 - 08:13.....»»

Category: dealsSource: nytJan 14th, 2022

Futures Flat Ahead Of Another Scorching PPI Print

Futures Flat Ahead Of Another Scorching PPI Print US futures were little changed on Thursday one day after the highest CPI print since 1982 and just minutes before another red hot PPI print is expected (9.8%, up from 9.6%), as investors tried to gauge the timing and pace of monetary tightening. S&P 500, Dow and Nasdaq 100 futures were up 0.1% as investors waited for the next trading signal. 10Y yields were flat around 1.74%, and the dollar edged lower as a growing tide of investors bet the world’s reserve currency has reached a peak with rate hikes largely priced-in to the market with Fed tightening likely to lead to an economic slowdown. “Markets in 2022 have been volatile as the reality of inflation set in, and this reaction mainly reflects relief that the print did not exceed already lofty expectations,” Geir Lode, head of global equities at the international business of Federated Hermes, said in an email. Inflation hitting 7% could force a quicker move by the Federal Reserve, with the market now pricing four rate hikes this year starting no later than March, according to technical analyst Pierre Veyret at ActivTrades in London. “Investors still struggle with one crucial question: how will the Fed manage to tackle rising price pressure without derailing the fragile post-pandemic economic recovery?” Sure enough, San Francisco Fed President Mary Daly and her Philadelphia peer Patrick Harker added their voices to the chorus in interviews published yesterday evening and this morning, calling for a rate hike as soon as March when odds of a rate hike have hit a new high of 90%. Attention today will be on the confirmation hearing of Lael Brainard in the Senate. The vice-chair nominee, who last publicly commented on the economic outlook in September, said in prepared remarks that tackling inflation is the bank’s “most important task.” In premarket trading, shares in Delta Air Lines rose more than 2% even though the carrier missed revenue and EPS expectations, after the company said the omicron variant won’t derail its expectation to remain profitable for the rest of the year, as it released fourth-quarter financial results. Here are some of the biggest U.S. movers today: U.S. chip stocks are mixed in premarket trading after sector bellwether TSMC gave a 1Q sales outlook that beat estimates and raised its projected annual capex versus last year. Equipment stock Applied Materials (AMAT US) +2% premarket, while TSMC customers are mixed with Apple (AAPL US) -0.1%, Nvidia (NVDA US) +0.7% and AMD (AMD US) +0.6%. Puma Biotechnology (PBYI US) shares surge 13% in U.S. premarket trading, after the company said that its Nerlynx treatment was included in the National Comprehensive Cancer Network’s (NCCN) clinical practice guidelines in oncology for the treatment of breast cancer. KB Home (KBH US) shares rise 6.2% in premarket trading after the homebuilder’s 4Q EPS beat estimates, with Wells Fargo calling the results and guidance “solid.” Planet Labs (PL US) shares rise 1.6% in U.S. premarket trading, after the satellite data provider said that it plans to launch 44 SuperDove satellites on Thursday on SpaceX’s Falcon 9 rocket. Adagio Therapeutics (ADGI US) said ADG20 has neutralization activity against omicron and cites recent findings from three publications on ADG20. Shares jumped 30% in post-market trading. Discussing yesterday's scorching CPI print, DB's Jim Reid writes that "if you did an MRI scan of US inflation yesterday you’d find things to support both sides of the debate which is surprising when it hit 7% YoY and the highest since 1982 when Fed Funds were more than 13% rather than close to zero as they are today. So a slightly different real rate to back then. In fact the real rate is through any level seen in the 1970s and is only comparable to WWII levels. Back to CPI and the YoY number was in line with expectations, but core and MoM figures were all a bit firmer than expected. However, the beats were small enough that the data didn’t significantly change the outlook for monetary policy, with Fed funds futures still pricing in an 89% chance of a March hike, which is roughly around where it’d been over the preceding days." In Europe, the Stoxx Europe 600 Index paused after a two-day advance, erasing early declines of as much as 0.3% to trade little changed, with technology and automotive shares offsetting losses in consumer products and health care. CAC 40 underperforms, dropping as much as 0.6%. The Stoxx Europe 600 Technology sub-index is up 1.1%, getting a boost from chip stocks which gained after sector bellwether TSMC gave a 1Q sales outlook that beat estimates and raised its projected annual capex versus last year. Geberit dropped as much as 4.5% to a seven-month low after the Swiss producer of sanitary installations reported fourth-quarter sales. Bloomberg Dollar Spot dips into the red pushing most majors to best levels of the session. NZD, AUD and GBP are the best G-10 performers. Crude futures maintain a relatively narrow range. WTI is flat near $82.70, Brent stalls near $84.84. Spot gold dips before finding support near $1,820/oz. Most base metals are in the red with LME zinc lagging peers.  Asian stocks were little changed after capping their biggest rally in a year, with health-care and software-technology names retreating while financials advanced. The MSCI Asia Pacific Index fluctuated between a drop of 0.3% and a gain of 0.2% on Thursday. Hong Kong’s Hang Seng Tech Index lost 1.8% after rising the most in three months in the previous session. Benchmarks in China and Japan were the day’s worst performers, while the Philippines and Australia outperformed.   “The market rose a bit too much yesterday,” said Mamoru Shimode, chief strategist at Resona Asset Management in Tokyo. “Investors keep shifting back and forth from value stocks to growth names and vise versa. It’s because we don’t know yet where U.S. long-term yields will end up settling around.”  The Asian stock measure jumped 1.9% Wednesday on views that the Federal Reserve’s anticipated rate hikes will help curb inflation and allow the global recovery to chug along. U.S. inflation readings overnight, at an almost four-decade high, were in line with expectations and helped investors keep previous bets Japanese stocks fell after Tokyo raised its Covid-19 alert to the second-highest level on a four-tier system. The Topix dropped 0.7% to 2,005.58 at the 3 p.m. close in Tokyo, while the Nikkei 225 declined 1% to 28,489.13. Recruit Holdings Co. contributed the most to the Topix’s decline, decreasing 4%. Out of 2,181 shares in the index, 500 rose and 1,604 fell, while 77 were unchanged. HIS, Japan Airlines and other travel shares fell. Tokyo’s daily cases jumped more than fivefold on Wednesday to 2,198 compared with 390 a week earlier. India’s benchmark equity index eeked out gains to complete its longest string of advances since mid-October, buoyed by the nation’s top two IT firms after their earnings reports. The S&P BSE Sensex rose for a fifth day, adding 0.1% to close at 61,235.30 in Mumbai, while the NSE Nifty 50 Index climbed 0.3%. Infosys and Tata Consultancy Services were among the biggest boosts to both measures. Of the 30 shares in the Sensex index, 19 rose and 11 fell. Thirteen of the 19 sector sub-indexes compiled by BSE Ltd. advanced, led by a gauge of metal companies.  Infosys’ quarterly earnings beat and bellwether Tata Consultancy Services’s better-than-expected sales offer some hope that the rally in India’s technology sector has further room to run, according to analysts. Still, Wipro sank the most in a year after its profit missed estimates Fixed income is relatively quiet, with changes across major curves limited to less than a basis point so far. The 10-year yield stalled around 1.75%, slightly cheaper on the day, and broadly in line with bunds and gilts. Eurodollar futures bear steepen a touch after a round of hawkish Fedspeak during Asian hours. Treasuries were steady with yields broadly within a basis point of Wednesday’s close.  Eurodollars are slightly lower across green- and blue-pack contracts after Fed’s Daly and Harker sounded hawkish tones during Asia hours. Across front-end, eurodollar strip steepens out to blue-pack contracts (Mar25-Dec25), which are lower by up to 4bp. 30-year bond reopening at 1pm ET concludes this week’s coupon auction cycle.$22b 30-year reopening at 1pm ET follows 0.3bp tail in Wednesday’s 10-year auction, and large tails in last two 30-year sales. The WI 30-year yield at ~2.095% is above auction stops since June and ~20bp cheaper than last month’s, which tailed the WI by 3.2bp. In FX, the pound advanced to its highest level since Oct. 29 amid calls for U.K. Prime Minister Boris Johnson to resign over a “bring your own bottle” party at the height of a lockdown meant to stem the first wave of coronavirus infections in 2020. The Bloomberg Dollar Spot Index held a two-month low as the greenback weakened against all of its Group-of-10 peers, and the euro rallied a third day as it approached the $1.15 handle. Implied volatility in the major currencies over the two- week tenor, that now captures the next Fed meeting, comes in line with the roll yet investors are choosing sides. The Australian dollar extended its overnight gain as the greenback declined following as-expected U.S. inflation. Iron ore supply concern also supported the currency. The yen hovered near a two-week high as long dollar positions were unwound. Japanese government bonds traded in narrow ranges. In commodities, cude futures maintain a relatively narrow range. WTI is flat near $82.70, Brent stalls near $84.50. Spot gold dips before finding support near $1,820/oz. Most base metals are in the red with LME zinc lagging peers. Bitcoin traded around $44,000 as the inflation numbers rekindled the debate about whether the cryptocurrency is a hedge against rising consumer prices. Expected data on Thursday include producer prices, an early indicator of inflationary trends, and unemployment claims. Market Snapshot S&P 500 futures little changed at 4,715.50 STOXX Europe 600 down 0.1% to 485.67 MXAP little changed at 196.79 MXAPJ up 0.1% to 643.93 Nikkei down 1.0% to 28,489.13 Topix down 0.7% to 2,005.58 Hang Seng Index up 0.1% to 24,429.77 Shanghai Composite down 1.2% to 3,555.26 Sensex up 0.1% to 61,220.38 Australia S&P/ASX 200 up 0.5% to 7,474.36 Kospi down 0.3% to 2,962.09 German 10Y yield little changed at -0.04% Euro up 0.2% to $1.1465 Brent Futures down 0.1% to $84.58/bbl Gold spot down 0.3% to $1,820.68 U.S. Dollar Index little changed at 94.83 Top Overnight News from Bloomberg Federal Reserve Bank of San Francisco President Mary Daly and her Philadelphia Fed peer Patrick Harker joined the ranks of officials publicly discussing an interest-rate increase as early as March as the central bank seeks to combat the hottest inflation in a generation Global central banks will diverge on the way they respond to inflation this year, creating risks to economies everywhere, Bank of England policy maker Catherine Mann said Norway’s race to appoint a new central bank governor is reaching a finale mired in controversy at the prospect of a political ally and friend of Prime Minister Jonas Gahr Store getting the job Italy’s government is working on a spending package that won’t require revising its budget to expand the deficit, people familiar with the matter said Several of China’s largest banks have become more selective about funding real estate projects by local government financing vehicles, concerned that some are taking on too much risk after they replaced private developers as key buyers of land, people familiar with the matter said A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mixed following the choppy session in the US where major indices eked mild gains as markets digested CPI data in which headline annual inflation printed at 7.0%. ASX 200 (+0.5%) was underpinned as the energy and mining related sectors continued to benefit from the recent upside in underlying commodity prices, while Crown Resorts shares outperformed after Blackstone raised its cash proposal for Crown Resorts following due diligence inquiries. Nikkei 225 (-1.0%) declined with the index hampered by unfavourable currency flows and with Tokyo raising its COVID-19 alert to the second-highest level. Hang Seng (+0.1%) and Shanghai Comp. (-1.1%) were initially subdued, but did diverge later, after the slight miss on loans and aggregate financing data, while there is a slew of upcoming key releases from China in the days ahead including trade figures tomorrow, as well as GDP and activity data on Monday. In addition, the biggest movers were headline driven including developer Sunac China which dropped by a double-digit percentage after it priced a 452mln-share sale at a 15% discount to repay loans and cruise operator Genting Hong Kong wiped out around half its value on resumption of trade after it warned of defaults due to insolvency of its German shipbuilding business. Finally, 10yr JGBs traded rangebound and were stuck near the 151.00 level following the indecisive mood in T-notes which was not helped by an uninspiring 10yr auction stateside, while the lack of BoJ purchases in the market also added to the humdrum tone. Top Asian News Asia Stocks Steady After Best Rally in a Year; Financials Gain Country Garden Selloff Shows Chinese Developer Worries Spreading China Banks Curb Property Loans to Local Government Firms China’s True Unemployment Pain Masked by Official Data Bourses in Europe now see a mixed picture with the breadth of the price action also narrow (Euro Stoxx 50 Unch; Stoxx 600 -0.10%). The region initially opened with a modest downside bias following on from a mostly negative APAC handover after Wall Street eked mild gains. US equity futures have since been choppy within a tight range and exhibit a relatively broad-based performance with no real standout performers. Back in Europe, sectors are mixed and lack an overarching theme. Tech remains the outperformer since the morning with some follow-through seen from contract-chip manufacturer TSMC (ADR +4.3% pre-market), who beat on net and revenue whilst upping its 2022 Capex to USD 40bln-44bln from around USD 30bln the prior year, whilst the CEO expects capacity to remain tight throughout 2022. Tech is closely followed by Autos and Parts and Travel & Leisure, whilst the other end of the spectrum sees Healthcare, Oil & Gas, Retail and Personal & Household goods among the straddlers – with Tesco (-1.5%) and Marks & Spencer (-5.3%) weighing on the latter two following trading updates. In terms of other individual movers, BT (+0.5%) trades in the green amid reports DAZN is nearing a deal to buy BT Sport for around USD 800mln, a could be reached as soon as this month but has not been finalized. Turning to analyst commentary: Morgan Stanley’s clients have aligned themselves to the view that European equities will likely perform better than US counterparts. 45% of respondents see Financials as the top-performing sector this year, 14% preferred Tech which would be the lowest score in over six years. Top European News Johnson Buys Time With Apology But U.K. Tory Rage Simmers U.K. Retailers Slide as Updates Show Lingering Impact of Virus Wood Group Plans Sale of Built Environment Unit Next Quarter Just Eat Advisers Pitching Grubhub Sale or Take-Private: Sources In FX, the Dollar has weakened further in wake of Wednesday’s US inflation data as ‘buy rumour sell fact’ dynamics are compounded by more position paring and increasingly bearish technical impulses to outweigh fundamental factors that seem supportive, on paper or in theory. Indeed, the index only mustered enough recovery momentum to reach 95.022 on the back of hawkish Fed commentary and some short covering before retreating through the psychological level, then yesterday’s 94.903 low and another trough from late 2021 at 94.824 (November 11 base) to 94.710, thus far and leaving little bar the 100 DMA, at 94.675 today, in terms of support ahead of 94.500. However, the flagging Greenback could get a fillip via PPI and/or IJC, if not the next round of Fed speakers and final leg of this week’s auction remit in the form of Usd 22 bn long bonds. NZD/AUD - A change in the running order down under where the Kiwi has overtaken the Aussie irrespective of bullish calls on the Aud/Nzd cross from MS, with Nzd/Usd breaching the 50 DMA around 0.6860 on the way to 0.6884 and Aud/Usd scaling the 100 DMA at 0.7288 then 0.7300 before fading at 0.7314. GBP/EUR/CHF/CAD/JPY - Also extracting more impetus at the expense of the Buck, but to varying degrees as Sterling continues to shrug aside ongoing Tory party turmoil to attain 1.3700+ status and surpass the 200 DMA that stands at 1.3737, while the Euro has overcome Fib resistance around 1.1440, plus any semi-psychological reticence at 1.1450 to reach 1.1478 and the Franc is now closer to 0.9100 than 0.9150. Elsewhere, crude is still providing the Loonie with an incentive to climb and Usd/Cad has recoiled even further from early 2022 peaks beneath 1.2500 as a result, and the Yen is around 114.50 with scope for a stronger retracement to test the 55 DMA, at 114.22. SCANDI/EM - Some signs of fatigue as the Nok stalls on the edge of 9.9000 against the Eur in tandem with Brent just a few cents over Usd 85/brl, but the Czk has recorded fresh decade-plus highs vs the single currency following remarks from CNB chief Rusnok on the need to keep tightening and acknowledging that this may culminate in Koruna appreciation. The Cnh and Cny are firmer vs the Usd pre-Chinese trade and GDP data either side of the weekend, but the Rub is lagging again as the Kremlin concludes that there was no progress in talks between Russia and the West, but the Try is underperforming again with headwinds from elevated oil prices and regardless of a marked pick up in Turkish ip. In commodities, WTI and Brent front-month contracts have conformed to the indecisive mood across the markets, although the benchmarks received a mild uplift as the Dollar receded in early European hours. As it stands, the WTI Feb and Brent Mar contract both reside within USD 0.80/bbl ranges near USD 82.50/bbl and USD 84.50/bbl respectively. News flow for the complex has been quiet and participants are on the lookout for the next catalyst, potentially in the form of US jobless claims/PPI amid multiple speakers, although the rise in APAC COVID cases remains a continuous headwind on demand for now – particularly in China. On the geopolitical front, Russian-backed troops have reportedly begun pulling out of the 1.6mln BPD Kazakh territory, but Moscow’s tensions with the West do not seem to abate. Russia's Kremlin suggested talks with the West were "unsuccessful" – which comes after NATO’s Secretary-General yesterday suggested there is a real risk of a new armed conflict in Europe. Elsewhere, spot gold has drifted off best levels as the DXY found a floor, for now – with the closest support yesterday’s USD 1,813/oz low ahead of the 50 and 21 DMAs at USD 1,807/oz and USD 1,806.50/oz respectively. LME copper has also pulled back from yesterday’s best levels to levels under USD 10,000/t as the mood remains cautious, although, copper prices in Shanghai rose to over a two-month high as it played catch-up to LME yesterday. US Event Calendar 8:30am: Dec. PPI Final Demand YoY, est. 9.8%, prior 9.6%; MoM, est. 0.4%, prior 0.8% 8:30am: Dec. PPI Ex Food and Energy YoY, est. 8.0%, prior 7.7%; MoM, est. 0.5%, prior 0.7% 8:30am: Jan. Continuing Claims, est. 1.73m, prior 1.75m 8:30am: Jan. Initial Jobless Claims, est. 200,000, prior 207,000 DB's Jim Reid concludes the overnight wrap Today I have a first. I have two MRI scans. A fresh one on my back and one on my right knee which gave way as I was rehabbing (squats and lunges) the left knee after recent surgery. In my fifth decade of playing sport averagely, but vigorously, it’s all catching up with me very quickly. I’ve exhausted all strengthening exercise routines and injections on my back and the pain gets worse. My surgeon does not want to operate but we will see if he changes his mind after today. If he says play less golf I will walk out mid-meeting even if he may be medically correct. In contrast my knee surgeon is an avid skier and he keeps on doing things to prolong my skiing career even though I’ve said to him that I just really care about golf. So I’ll soon be looking for an avid golfer who just happens to be a back surgeon. Talking of confirmation bias, if you did an MRI scan of US inflation yesterday you’d find things to support both sides of the debate which is surprising when it hit 7% YoY and the highest since 1982 when Fed Funds were more than 13% rather than close to zero as they are today. So a slightly different real rate to back then. In fact the real rate is through any level seen in the 1970s and is only comparable to WWII levels. Back to CPI and the YoY number was in line with expectations, but core and MoM figures were all a bit firmer than expected. However, the beats were small enough that the data didn’t significantly change the outlook for monetary policy, with Fed funds futures still pricing in an 89% chance of a March hike, which is roughly around where it’d been over the preceding days. Looking at the details of the release, (our US econ team’s full wrap here) headline month-on-month number came in at +0.5% in December (vs. +0.4% expected), which is the 8thtime in the last 10 months that the print has come in above the consensus expectations on Bloomberg. However, that does still mark a deceleration from the +0.9% and +0.8% monthly growth in October and November respectively. The core CPI reading was also a touch stronger than anticipated, with the monthly print at +0.6% (vs. +0.5% expected), thus sending the annual core CPI measure up to +5.5% (vs. +5.4% expected) and its highest since 1991. Diving into some of the key sub-components, Covid-era favorite used cars and trucks grew +3.5% MoM. More concerning for policymakers, is the continued growth in persistent measures such as shelter, with primary and owners’ equivalent rent both increasing +0.4% MoM. If you were expecting Omicron to slow down American holiday travel, think again, lodging away from home and airfares both posted large increases, +1.2% and +2.7%, respectively. Most forecasters think the peak for inflation is sometime soon, but the pace of the glide path is open to debate. This is a topic we covered in yesterday’s CoTD, found here. Even though Treasuries had rallied strongly in the immediate aftermath of the report, with the 10yr yield falling back to 1.709% at the intraday low, yields pared back those losses to end the session basically unchanged at 1.74% (+0.7bps). CPI was expected to be bad and therefore the ability to shock was relatively low. However this tame overall move masked a divergence between a sharp bounceback in the 10yr real yield (+7.5bps) and a decline in inflation breakevens (-7.5bps) as the worst fears from the report weren’t realised. Over in Europe however, there was a more sustained rally, with yields on 10yr bunds down -3.2bps to -0.06%, having come very close in recent days to moving back into positive territory for the first time since May 2019. Furthermore, there was a continued divergence between the two regions at the front end of the curve, with the gap between 2yr yields on Treasuries and bunds widening to 153bps yesterday, which is the biggest since the pandemic began. Staying with bonds, our US econ and Rates strategy team published a joint piece last night outlining their early expectations for QT, here. For equities, the lack of an inflation surprise meant that they got a continued reprieve following last week’s selloff, with the S&P 500 (+0.28%) advancing for a 2nd day running for the first time this year, whilst in Europe the STOXX 600 (+0.65%) posted an even stronger advance. Megacap tech stocks were a noticeable outperformer, with the FANG+ index gaining +1.25%, whilst in Europe the STOXX Banks index (+1.22%) hit a fresh 3-year high. On the topic of inflationary pressures, one asset that continued its upward march was oil yesterday, with Brent Crude (+1.13%), just missing its first close above $85/bbl since October yesterday. Bear in mind it was only 6 weeks earlier that Brent hit its post-Omicron closing low, just beneath $69/bbl, so it’s now up by more than $16/bbl over that period. WTI (+1.75%) saw a similar increase yesterday, which won’t be welcome news to those who’d hoped the recent decline in energy prices late last year would offer some relief on the inflation front. That said, WTI oil is making a great case to be the top-performing major asset for a second year running at the minute, having advanced by over +10% since the start of the year.. This morning, Asian markets are mostly trading lower. The Nikkei (-0.91%) is leading losses in the region, followed by the CSI (-0.55%), Shanghai Composite (-0.31% ) and Kospi (-0.19%). Elsewhere, Hong Kong's Hang Seng index (+0.07%) is swinging between gains and losses. In stock news, Cruise operator Genting Hong Kong Ltd nosedived by a record 56%, after it resumed trading today following last week's suspension as the company indicated the possibility of default. Looking forward, US equity futures are indicating a weak start with the S&P 500 (-0.15%), Nasdaq (-0.26%) and Dow Jones (-0.11%) contracts trading in the red. On the Covid front, there was further good news from the UK as the latest wave showed further signs of ebbing. For the UK as a whole, the total number of reported cases over the last 7 days is now down -19% compared with the previous 7 day period, whilst in England the number of Covid patients in a mechanical ventilation bed has dropped to its lowest in almost 3 months, before we’d even heard of the Omicron variant. For those following credit, our colleagues in the European Leveraged Finance Research team have just published their quarterly top trade ideas. You can find the report here. Looking at yesterday’s other data, Euro Area industrial production grew by +2.3% in November (vs. +0.3% expected), although the October reading was revised down to show a -1.3% contraction. To the day ahead now, and one of the highlights will be Fed Governor Brainard’s nomination hearing at the Senate Banking committee to become Fed Vice Chair. Other central bank speakers include the Fed’s Barkin and Evans, ECB Vice President de Guindos and the ECB’s Elderson, along with the BoE’s Mann. Separately, data releases from the US include December’s PPI and the weekly initial jobless claims, whilst there’s also Italy’s industrial production for November. Tyler Durden Thu, 01/13/2022 - 08:00.....»»

Category: blogSource: zerohedgeJan 13th, 2022

Time to Buy Value ETFs as Volatility Grips Wall Street

Amid this volatility, value investing seems the perfect choice. After a solid start to 2022, Wall Street has been witnessing huge volatility. This is especially true as Fed’s tightening policy has lifted up Treasury yields, leading to a sell-off in high-growth sectors like technology. The 10-year yield topped 1.8% to reach its highest level since January 2020 (read: Treasury Yields Jump to Start New Year: ETFs to Play).Amid this volatility, value investing seems the perfect choice. In fact, iShares Russell 1000 Value ETF IWD, which targets the value segment, has outperformed, gaining 0.6% so far this year, compared with a decline of 4.9% for its growth counterpart iShares Russell 1000 Growth ETF IWF.ETFs like Invesco S&P 500 Enhanced Value ETF SPVU, Invesco S&P 500 Value with Momentum ETF SPVM, iShares Edge MSCI USA Value Factor ETF VLUE, and Invesco Dynamic Large Cap Value ETF PWV are leading the way higher to start the year and are likely to continue doing so at least in the near term. These funds have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).Current Market TrendsWall Street wrapped up the first week of the New Year on a sour note. The S&P 500 posted the worst start to a year since 2016 while the Nasdaq logged the worst week since February, knocked down by Fed’s hawkish view and a rapid surge in the Omicron COVID-19 cases.The latest Fed minutes signaled three rate increases this year and three in the following year as inflation concerns deepened. The probabilities of a March interest rate hike of 0.25% surged to 72%, according to fed futures trading contracts. Additionally, the central bank is expected to increase the pace of scaling back monthly bond purchases this month, a move that has pushed the yields higher.Omicron cases are surging in the United States with more than a million new cases in a single day and hospitalizations hitting new highs (read: 5 Top-Ranked ETFs to Add to Your Portfolio for 2022).Higher yields indicate investors’ optimism in the economy backed by increased consumer confidence, rising wages and higher spending. This combination of factors will result in increased industrial activity and a pickup in consumer demand, thereby lifting value stocks. Additionally, the wider spread of vaccinations, new vaccines as well as solid corporate earnings bode well for the value stocks.Why Value?Value stocks have strong fundamentals — earnings, dividends, book value, and cash flow — that trade below their intrinsic value and are undervalued by the market. These seek to capitalize on the inefficiencies in the market and have the potential to deliver higher returns with lower volatility compared with their growth and blend counterparts. Additionally, value stocks are less susceptible to trending markets and their dividend payouts offer safety in times of market turbulence.Notably, these stocks outperform the growth ones across all asset classes when considered on a long-term investment horizon.Let’s discuss the above-mentioned ETFs in detail below:Invesco S&P 500 Enhanced Value ETF (SPVU) – Up 4.5%Invesco S&P 500 Enhanced Value ETF follows the S&P 500 Enhanced Value Index, which measures the performance of stocks in the S&P 500 Index that have the highest "value score." The product holds 102 stocks in its basket with key holdings in financials, healthcare and consumer discretionary (read: 5 Top-Ranked ETFs to Buy At Bargain Prices).Invesco S&P 500 Enhanced Value ETF has accumulated $150.2 million in AUM while trades in a light average daily volume of 20,000 shares. The product charges 13 bps in annual fees and has a Zacks ETF Rank #1.Invesco S&P 500 Value with Momentum ETF (SPVM) – Up 4.1%Invesco S&P 500 Value with Momentum ETF offers exposure to 102 securities in the S&P 500 Index, having the highest “value scores” and “momentum scores” by tracking the S&P 500 High Momentum Value Index. It has key holdings in financials, consumer discretionary and energy with a double-digit allocation each.  Invesco S&P 500 Value with Momentum ETF has accumulated $39.4 million in its asset base and trades in volume of 4,000 shares a day on average. SPVM charges 39 bps in annual fees and has a Zacks ETF Rank #2.iShares Edge MSCI USA Value Factor ETF (VLUE) – Up 3.2%iShares Edge MSCI USA Value Factor ETF offers exposure to large- and mid-cap U.S. stocks with lower valuations based on fundamentals and tracks the MSCI USA Enhanced Value Index. It holds 149 stocks in its basket with each accounting for less than 7.5% of assets.  Information technology takes the largest share at 30.7% while healthcare, consumer discretionary and communication round off the next three.iShares Edge MSCI USA Value Factor ETF has amassed $16.9 billion in its asset base and charges 15 bps in annual fees. It trades in an average daily volume of 1.4 million shares and has a Zacks Rank #2.Invesco Dynamic Large Cap Value ETF (PWV) – Up 3.1%Invesco Dynamic Large Cap Value ETF tracks the Dynamic Large Cap Value Intellidex Index and holds 52 stocks in its basket. It has key holdings in financials, healthcare, consumer staples and information technology.Invesco Dynamic Large Cap Value ETF has amassed $840.6 million in its asset base and charges 58 bps in annual fees. The product trades in an average daily volume of 25,000 shares and has a Zacks ETF Rank #2. 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 Invesco Dynamic Large Cap Value ETF (PWV): ETF Research Reports iShares Russell 1000 Growth ETF (IWF): ETF Research Reports iShares Russell 1000 Value ETF (IWD): ETF Research Reports iShares MSCI USA Value Factor ETF (VLUE): ETF Research Reports Invesco S&P 500 Value with Momentum ETF (SPVM): ETF Research Reports Invesco S&P 500 Enhanced Value ETF (SPVU): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 13th, 2022

5 ETFs Making the Most of the Tech Rebound

The Nasdaq Composite Index staged a nice comeback after last week's sell-off that wiped out about $1.1 trillion from the value of the index. The Nasdaq Composite Index staged a nice comeback after last week’s sell-off that wiped out about $1.1 trillion from the value of the index. Most of the rally was driven by tech stocks that gained momentum on Federal Reserve Chair Jerome Powell's testimony.As such, some ETFs have gained more than 5% on the tech rally. These include Global X Blockchain ETF BKCH, VanEck Vectors Digital Transformation ETF DAPP, Simplify Volt Fintech Disruption ETF VFIN, Bitwise Crypto Industry Innovators ETF BITQ and Blockchain & Bitcoin Strategy ETF BITS. These funds seem excellent choices to play the rebound in the tech sector.The testimony revealed no surprises and pointed to Jerome Powell’s likely confirmation for a second term in the job. Powell sounded less hawkish than expected and painted a soft-landing picture for the economy. He assured investors that the central bank’s tightening plans, which include higher interest rates and a reduction in its asset holdings, were necessary to maintain the economic expansion.Further, the tech sector outlook remains upbeat given the global digital shift that has accelerated e-commerce for everything, ranging from remote working to entertainment and shopping. The rapid adoption of cloud computing, big data, the Internet of Things, wearables, VR headsets, drones, virtual reality, artificial intelligence, machine learning, digital communication and 5G technology should continue to drive the sector higher (read: 5 Most-Loved ETFs to Start 2022).In a tight policy era, technology seems one of the safest sectors as most companies are sitting on a huge cash pile. The cash reserves will ensure that these companies are not plagued by any financial trouble, even in a rising interest rate environment.Global X Blockchain ETF (BKCH)Global X Blockchain ETF seeks to invest in companies positioned to benefit from the increased adoption of blockchain technology, including companies in digital asset mining, blockchain & digital asset transactions, blockchain applications, blockchain & digital asset hardware, and blockchain & digital asset integration. Global X Blockchain ETF holds 25 stocks in its basket with double-digit allocation to the top three firms.Global X Blockchain ETF has gathered $103.8 million in its asset base and trades in an average daily volume of 195,000 shares. It charges 50 bps in annual fees.VanEck Vectors Digital Transformation ETF (DAPP)VanEck Vectors Digital Transformation ETF aims to offer exposure to the companies that are at the forefront of the digital asset transformation, such as digital asset exchanges, payment gateways, digital asset mining operations, software services, equipment and technology or services to the digital asset operations, digital asset infrastructure businesses or companies facilitating commerce with the use of digital assets. VanEck Vectors Digital Transformation ETF tracks the MVIS Global Digital Assets Equity Index and holds 25 securities in its basket.VanEck Vectors Digital Transformation ETF charges 50 bps in annual fees and trades in an average daily volume of 80,000. DAPP has accumulated $44.6 million in its asset base (read: Why These Tech ETFs Are Bargain Buys).Simplify Volt Fintech Disruption ETF (VFIN)Simplify Volt Fintech Disruption ETF seeks to offer exposure to the most disruptive fintech companies that are on the forefront of cashless payments. It aims to invest heavily across Square (SQ) stock and Square call options and also Upstart stock and Upstart call options. A modest put option overlay is designed to help mitigate sharp market crashes.Simplify Volt Fintech Disruption ETF has accumulated $1.9 million and charges 0.95% in annual fees.Bitwise Crypto Industry Innovators ETF (BITQ)Bitwise Crypto Industry Innovators ETF offers exposure to the companies leading the new crypto economy. It tracks the Bitwise Crypto Innovators 30 Index, which measures the performance of the companies involved in servicing the cryptocurrency markets, including crypto mining firms, crypto mining equipment suppliers, crypto financial services companies, or other financial institutions servicing primarily crypto-related clientele.Holding 30 stocks in its basket, Bitwise Crypto Industry Innovators ETF is concentrated on the top three firms with nearly double-digit exposure each. It charges 85 bps in annual fees from investors and trades in an average daily volume of 185,000 shares. Bitwise Crypto Industry Innovators ETF has attracted $112.7 million in its asset base.Blockchain & Bitcoin Strategy ETF (BITS)Blockchain & Bitcoin Strategy ETF is an actively managed fund that seeks to capture the long-term growth potential of the blockchain and digital assets theme. It takes long positions in U.S. listed bitcoin futures contracts and invests, directly and indirectly, in companies positioned to benefit from the increased adoption of blockchain technology. Blockchain & Bitcoin Strategy ETF will not invest directly in bitcoin, and it currently delivers exposure to blockchain companies through other ETFs, including the affiliated Global X Blockchain ETF (read: Top ETF Stories of 2021 & 2022 Outlook).  Blockchain & Bitcoin Strategy ETF has newly debuted in the space and attracted $7.8 million in its asset base in just two months. It charges 65 bps in annual fees and trades in an average daily volume of 13,000 shares. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Global X Blockchain ETF (BKCH): ETF Research Reports Simplify Volt Fintech Disruption ETF (VFIN): ETF Research Reports VanEck Digital Transformation ETF (DAPP): ETF Research Reports Bitwise Crypto Industry Innovators ETF (BITQ): ETF Research Reports Global X Blockchain & Bitcoin Strategy ETF (BITS): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 13th, 2022

Futures Tread Water With Traders Spooked By Spike In Yields

Futures Tread Water With Traders Spooked By Spike In Yields After futures rose to a new all time high during the Tuesday overnight session, the mood has been decided more muted after yesterday's sharp rates-driven tech selloff, and on Wednesday U.S. futures were mixed and Nasdaq contracts slumped as investors once again contemplated the effect of expected rate hikes on tech stocks with lofty valuations while waiting for the release of Federal Reserve minutes at 2pm today. At 730am, Nasdaq 100 futures traded 0.3% lower amid caution over the impact of higher yields on equity valuations, S&P 500 Index futures were down 0.1%, while Europe’s Stoxx 600 gauge traded near a record high. The dollar weakened, as did bitcoin, while Brent crude rose back over $80. “The sharp rise in U.S. yields this week has sparked a move from growth to value,” said Jeffrey Halley, senior market analyst at Oanda Asia Pacific. “Wall Street went looking for the winners in an inflationary environment and as a result, loaded up on the Dow Jones at the expense of the Nasdaq.” Concerns related to the pandemic deepened as Hong Kong restricted dining-in, closed bars and gyms and banned flights from eight countries including the U.S. and the U.K. to slow the spread of the omicron variant. Meanwhile, a selloff in technology stocks extended to Asia, where the Hang Seng Tech Index tumbled as much as 4.2%, sending the gauge toward a six-year low. Traders are now caught in a quandary over deepening fears on global growth combined with a faster tightening by the Federal Reserve. “Earlier we thought that rate hikes wouldn’t be on the table until mid-2022 but the Fed seems to have worked up a consensus to taper faster and hike sooner rather than later,” Steve Englander, head of global G-10 FX research at Standard Chartered, said in a note. “But we don’t think inflation dynamics will support continued hiking. We suspect the biggest driver of asset markets will be when inflation and Covid fears begin to ebb.” Data on Tuesday showed mixed signs on U.S. inflation. Prices paid by manufacturers in December came in sharply lower than expected. However, figures showing a faster U.S. job quit rate added to concerns over wage inflation. With 4.5 million Americans leaving their jobs in November, compared with 10.6 million available positions, the odds increased the Fed will struggle to influence the employment numbers increasingly dictated by social reasons. The data came before Friday’s monthly report from the Labor Department, currently forecast to show 420,000 job additions in December. In premarket trading, tech giants Tesla, Nvidia and Advanced Micro Devices were among the worst performers. Pfizer advanced in New York premarket trading after BofA Global Research recommended the stock. Shares of Chinese companies listed in the U.S. extended their decline after Tencent cut its stake in gaming and e-commerce company Sea, triggering concerns of similar actions at other firms amid Beijing’s regulatory crackdown on the technology sector. Alibaba (BABA US) falls 1.2%, Didi (DIDI US) -1.8%. Here are the other notable premarket movers: Shares in electric vehicle makers fall in U.S. premarket trading, set to extend Tuesday’s losses, amid signs of deepening competition in the sector. Tesla (TSLA US) slips 1.1%, Rivian (RIVN US) -0.6%. Beyond Meat (BYND US) shares jump 8.9% premarket following a CNBC report that Yum! Brands’ KFC will launch fried chicken made with the company’s meat substitute. Recent selloff in Pinterest (PINS US) shares presents an attractive risk/reward, with opportunities for the social media company largely unchanged, Piper Sandler writes in note as it upgrades to overweight. Stock gains 2.3% in premarket trading. Senseonics Holdings (SENS US) shares rise 15% premarket after the medical technology company said it expects a U.S. Food and Drug Administration decision in weeks on an updated diabetes- monitoring system. MillerKnoll (MLKN US) shares were down 3.1% in postmarket trading Tuesday after reporting fiscal 2Q top and bottom line results that missed analysts’ estimates. Annexon (ANNX US) was down 23% postmarket Tuesday after results were released from an experimental therapy for a fatal movement disorder called Huntington’s disease. Three patients in the 28- person trial discontinued treatment due to drug-related side- effects. Wejo Group (WEJO US) shares are up 34% premarket after the company said it’s developing the Wejo Neural Edge platform to enable intelligent handling of data from vehicles at scale. Smart Global (SGH US) falls 6% postmarket Tuesday after the computing memory maker forecast earnings per share for the second quarter. The low end of that forecast missed the average analyst estimate. Beyond Meat (BYND) shares surge premarket after CNBC KFC launch report UBS cut the recommendation on Adobe Inc. (ADBE US) to neutral from buy, citing concerns over the software company’s 2022 growth prospects. Shares down 2% in premarket trading. Oncternal Therapeutics (ONCT US) shares climb 5.1% premarket after saying it reached consensus with the FDA on the design and major details of the phase 3 superiority study ZILO-301 to treat mantle cell lymphoma. In Europe, the energy, chemicals and car industries led the Stoxx Europe 600 Index up 0.2% to near an all-time high set on Tuesday. The Euro Stoxx 50 rises as much as 0.6%, DAX outperforms. FTSE 100 lags but rises off the lows to trade up 0.2%. Nestle dropped 2.4%, slipping from a record, after Jefferies cut the Swiss food giant to underperform. Utilities were the worst-performing sector in Europe on Wednesday as cyclical areas of the market are favored over defensives, while Uniper and Fortum fall following news of a loan agreement.  Other decliners include RWE (-2.4%), Endesa (2.1%), Verbund (-1.3%), NatGrid (-1.2%), Centrica (-1.2%). Earlier in the session, technology shares led a decline in Asian equity markets, with investors concerned about the prospects of higher interest rates and Tencent’s continued sale of assets. The MSCI Asia Pacific Index fell as much as 0.6%, the most in two weeks, dragged down by Tencent and Meituan. The rout in U.S. tech spilled over to Asia, where the Hang Seng Tech Index plunged 4.6%, the most since July, following Tencent’s stake cut in Singapore’s Sea. Declines in tech and other sectors in Hong Kong widened after the city tightened rules to curb the spread of the omicron variant. Most Asian indexes fell on Wednesday, with Japan an exception among major markets as automakers offered support. The outlook for tighter monetary policy in the U.S. and higher Treasury yields weighed on the region’s technology shares, prompting a rotation from growth to value stocks.   Read: China Tech Selloff Deepens as Tencent Sale Spooks Traders Asian equities have underperformed U.S. and European peers amid slower recoveries and vaccination rates in the past year. With omicron rapidly gaining a foothold in Asia, there is a risk of “any further restriction measures, which could cloud the services sector outlook, along with disruption to supply chains,” said Jun Rong Yeap, a strategist at IG Asia Pte.  Philippine stocks gained as trading resumed following a one-day halt due to a systems glitch. North Korea appeared to have launched its first ballistic missile in about two months, just days after leader Kim Jong Un indicated that returning to stalled nuclear talks with the U.S. was a low priority for him in the coming year. India’s key equity gauges posted their longest run of advances in more than two moths, driven by a rally in financial stocks on hopes of revival in lending on the back of capex spending in the country. The S&P BSE Sensex rose 0.6% to 60,223.15 in Mumbai, its highest since Nov. 16, while the NSE Nifty 50 Index advanced 0.7%. Both benchmarks stretched their winning run to a fourth day, the longest since Oct. 18. All but six of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a gauge of banking firms. “I believe from an uncertain, volatile environment, the Nifty is now headed for a directional move,” Sahaj Agrawal, a head of derivative research at Kotak Securities, writes in a note. The Nifty 50 crossed a significant barrier of the 17,800 level and is now expected to trade at 19,000-19,500 level in the medium term, Agrawal added. HDFC Bank contributed the most to the Sensex’s gain, increasing 2.4%. Out of 30 shares in the Sensex, 18 rose, while 12 fell In FX, Bloomberg Dollar Spot index slpped 0.2% back toward Tuesday’s lows, falling as the greenback was weaker against most of its Group-of-10 peers, SEK and JPY are the best performers in G-10, CAD underperforms. Scandinavian currencies and the yen led gains, though most G-10 currencies were trading in narrow ranges. Australia’s dollar reversed an Asia-session loss in European trading. The yen rebounded from a five-year low as investors trimmed short positions on the haven currency and amid a decline in Asian stock markets. Treasuries were generally flat in overnight trading, with the curve flatter into early U.S. session as long-end outperforms, partially unwinding a two-day selloff to start the year with Tuesday witnessing a late block sale in ultra-bond futures. 10-year yields traded as high as 1.650% ahead of the US open after being mostly flat around 1.645%; yields were richer by up to 2bp across long-end of the curve while little change from front-end out to belly, flattening 2s10s, 5s30s spreads by 0.5bp and 1.8bp; gilts outperformed in the sector by half basis point. Focus expected to continue on IG issuance, which has impacted the market in the past couple of days, and in U.S. afternoon session FOMC minutes will be released. IG dollar issuance slate includes EIB $5B 5-year SOFR and Reliance Ind. 10Y/30Y/40Y; thirteen borrowers priced $23.1b across 30 tranches Tuesday, making it the largest single day volume for U.S. high-grade corporate bonds since first week of September. European peripheral spreads widen to core. 30y Italy lags peers, widening ~2bps to Germany with order books above EU43b at the long 30y syndication. Ten-year yields shot up 8bps in New Zealand as its markets reopened following the New Year holiday. Aussie yields advanced 4bps. A 10-year sale in Japan drew a bid-cover ratio of 3.46. In commodities, crude futures were range-bound with WTI near just below $77, Brent nearer $80 after OPEC+ agreed to revive more halted production as the outlook for global oil markets improved, with demand largely withstanding the new coronavirus variant. Spot gold puts in a small upside move out of Asia’s tight range to trade near $1,820/oz. Base metals are mixed. LME nickel lags, dropping over 2%; LME aluminum and lead are up ~0.8%.  Looking at the day ahead, data releases include the December services and composite PMIs from the Euro Area, Italy, France, Germany and the US. On top of that, there’s the ADP’s December report of private payrolls from the US, the preliminary December CPI report from Italy, and December’s consumer confidence reading from France. Separately from the Federal Reserve, we’ll get the minutes of the December FOMC meeting. Market Snapshot S&P 500 futures little changed at 4,783.25 MXAP down 0.4% to 193.71 MXAPJ down 0.9% to 626.67 Nikkei up 0.1% to 29,332.16 Topix up 0.4% to 2,039.27 Hang Seng Index down 1.6% to 22,907.25 Shanghai Composite down 1.0% to 3,595.18 Sensex up 0.7% to 60,300.47 Australia S&P/ASX 200 down 0.3% to 7,565.85 Kospi down 1.2% to 2,953.97 STOXX Europe 600 up 0.1% to 494.52 German 10Y yield little changed at -0.09% Euro up 0.2% to $1.1304 Brent Futures down 0.4% to $79.72/bbl Gold spot up 0.3% to $1,819.73 U.S. Dollar Index down 0.13% to 96.13 Top Overnight News from Bloomberg The U.S. yield curve’s most dramatic steepening in more than three months has little to do with traders turning more optimistic on the economy or betting on a more aggressive timetable for raising interest rates The surge in euro-area inflation that surprised policy makers in recent months is close to its peak, according to European Central Bank Governing Council member Francois Villeroy de Galhau Some Bank of Japan officials say it’s likely the central bank will discuss the possible ditching of a long-held view that price risks are mainly on the downward side at a policy meeting this month, according to people familiar with the matter Turkish authorities are keeping tabs on investors who are buying large amounts of foreign currency and asked banks to deter their clients from using the spot market for hedging-related trades as they struggle to contain the lira’s slide Italy is trying to lock in historically low financing costs at the start of a year where inflationary and political pressures could spell an end to super easy borrowing conditions North Korea appears to have launched its first ballistic missile in about two months, after leader Kim Jong Un indicated he was more interested in bolstering his arsenal than returning to stalled nuclear talks with the U.S. A More detailed breakdown of overnight news from Newsquawk Asia-Pac equities traded mostly in the red following the mixed handover from Wall Street, where the US majors maintained a cyclical bias and the NDX bore the brunt of another sizeable Treasury curve bear-steepener. Overnight, US equity futures resumed trade with mild losses and have since been subdued, with participants now gearing up for the FOMC minutes (full Newsquawk preview available in the Research Suite) ahead of Friday’s US jobs report and several scheduled Fed speakers. In APAC, the ASX 200 (-0.3%) was pressured by its tech sector, although the upside in financials cushioned some losses. The Nikkei 225 (+0.1%) was kept afloat by the recent JPY weakness, whilst Sony Group rose some 4% after its chairman announced EV ambitions. The KOSPI (-1.2%) was dealt a blow as North Korea fired a projectile that appeared to be a ballistic missile, but this landed outside of Japan’s Exclusive Economic Zone (EEZ). The Hang Seng (-1.6%) saw its losses accelerate with the Hang Seng Tech Index tumbling over 4% as the sector tackled headwinds from Wall Street alongside domestic crackdowns. China Huarong Asset Management slumped over 50% as it resumed trade following a nine-month halt after its financial failure. The Shanghai Comp. (-1.0%) conformed to the mostly negative tone after again seeing a hefty liquidity drain by the PBoC. In the debt complex, the US T-note futures held a mild upside bias since the resumption of trade, and the US curve was somewhat steady. Participants also highlighted large short-covering heading into yesterday’s US close ahead of the FOMC minutes. Top Asian News Asian Stocks Slide as Surging Yields Squeeze Technology Sector China’s Growth Forecast Cut by CICC Amid Covid Outbreaks BOJ Is Said to Discuss Changing Long-Held View on Price Risks Gold Holds Gain With Fed Rate Hikes and Treasury Yields in Focus European equities (Stoxx 600 +0.1%) trade mixed in what has been a relatively quiet session thus far with the final readings of Eurozone services and composite PMIs providing little in the way of fresh impetus for prices. The handover from the APAC region was predominantly a soft one with Chinese bourses lagging once again with the Hang Seng Tech Index tumbling over 4% as the sector tackled headwinds from Wall Street alongside domestic crackdowns. Meanwhile, the Shanghai Comp. (-1%) conformed to the mostly negative tone after again seeing a hefty liquidity drain by the PBoC. Stateside, the ES and RTY are flat whilst the NQ lags once again after yesterday bearing the brunt of another sizeable treasury curve bear-steepener. In terms of house views, analysts at Barclays expect “2022 to be a more normal yet positive year for equities, looking for high single-digit upside and a broader leadership”. Barclays adds that it remains “pro-cyclical (Industrials, Autos, Leisure, reopening plays and Energy OW), and prefer Value to Growth”. Elsewhere, analysts at Citi stated that “monetary tightening may push up longer-dated nominal/real bond yields, threatening highly rated sectors such as IT or Luxury Goods. Alternatively, higher yields could help traditional value trades such as UK equities and Pan-European Financials”. Sectors in Europe are mostly higher, with auto names leading as Renault (+3.4%) sits at the top of the CAC, whilst Stellantis (+0.6%) has seen some support following the announcement that it is planning for a full battery-electric portfolio by 2028. Elsewhere, support has also been seen for Chemicals, Oil & Gas and Banking names with the latter continuing to be supported by the current favourable yield environment. To the downside, Food and Beverage is the clear laggard amid losses in Nestle (-2.6%) following a broker downgrade at Jefferies. Ocado (+5.5%) sits at the top of the Stoxx 600 after being upgraded to buy at Berenberg with analysts expecting the Co. to sign further deals with new and existing grocery e-commerce partners this year. Finally, Uniper (-2.4%) sits near the bottom of the Stoxx 600 after securing credit facilities totalling EUR 10bln from Fortum and KfW. Top European News U.K. Weighs Dropping Covid Test Mandate for Arriving Travelers German Energy Giant Uniper Gets $11 Billion for Margin Calls European Gas Extends Rally as Russian Shipments Remain Curbed Italian Inflation Hits Highest in More Than a Decade on Energy In FX, notwithstanding Tuesday’s somewhat mixed US manufacturing ISM survey and relatively hawkish remarks from Fed’s Kashkari, the week (and year) in terms of data and events really begins today with the release of ADP as a guide for NFP and minutes of the December FOMC that confirmed a faster pace of tapering and more hawkish dot plots. As such, it may not be surprising to see the Buck meandering broadly and index settling into a range inside yesterday’s parameters with less impetus from Treasuries that have flipped from a severe if not extreme bear-steepening incline. Looking at DXY price action in more detail, 96.337 marks the top and 96.053 the bottom at present, and from a purely technical perspective, 96.098 remains significant as a key Fib retracement level. JPY/EUR/AUD/GBP/NZD - All taking advantage of the aforementioned Greenback fade, and with the Yen more eager than others to claw back lost ground given recent underperformance. Hence, Usd/Jpy has retreated further from multi-year highs and through 116.00 to expose more downside potential irrespective of latest reports via newswire sources suggesting the BoJ is expected to slightly revise higher its inflation forecast for the next fiscal year and downgrade the GDP outlook for the year ending in March. Similarly, the Euro is having another look above 1.1300 even though EZ services and composite PMIs were mostly below consensus or preliminary readings and German new car registrations fell sharply, while the Aussie is retesting resistance around 0.7250 and its 50 DMA with some assistance from firm copper prices, Cable remains underpinned near 1.3550 and the 100 DMA and the Kiwi is holding mainly above 0.6800 in the face of stronger Aud/Nzd headwinds. Indeed, the cross is approaching 1.0650 in contrast to Eur/Gbp that is showing signs of changing course following several bounces off circa 0.8333 that equates to 1.2000 as a reciprocal. CHF/CAD - The Franc and Loonie appear a bit less eager to pounce on their US peer’s retrenchment, as the former pivots 0.9150 and latter straddles 1.2700 amidst a downturn in crude pre-Canadian building permits and new house prices. SCANDI/EM - Little sign of any fallout from a slowdown in Sweden’s services PMI as overall risk sentiment remains supportive for the Sek either side of 10.2600 vs the Eur, but the Nok is veering back down towards 10.0000 in line with slippage in Brent from Usd 80+/brl peaks reached on Tuesday. Elsewhere, the Zar is shrugging off a sub-50 SA PMI as Gold strengthens its grip on the Usd 1800/oz handle and the Cnh/Cny are still underpinned after another PBoC liquidity drain and firmer than previous midpoint fix on hopes that cash injections might be forthcoming through open market operations into the banking system from the second half of January to meet rising demand for cash, according to China's Securities Journal. Conversely, the Try has not derived any real comfort from comments by Turkey’s Finance Minister underscoring its shift away from orthodox policies, or insistence that budget discipline will not be compromised. In commodities, crude benchmarks are currently little changed but have been somewhat choppy within a range shy of USD 1/bbl in European hours, in-spite of limited fresh newsflow occurring. For reference, WTI and Brent reside within USD 77.26-76.53/bbl and USD 80.25-79.56/bbl parameters respectively. Updates for the complex so far include Cascade data reporting that gas flows via the Russian Yamal-Europe pipeline in an eastward direction have reduced. As a reminder, the pipeline drew scrutiny in the run up to the holiday period given reverse mode action, an undertaking the Kremlin described as ‘operational’ and due to a lack of requests being placed. Separately, last nights private inventories were a larger than expected draw, however, the internals all printed builds which surpassed expectations. Today’s EIA release is similar expected to show a headline draw and builds amongst the internals. Elsewhere, and more broadly, geopolitics remain in focus with Reuters sources reporting that a rocket attack has hit a military base in proximity to the Baghdad airport which hosts US forces. Moving to metals, spot gold and silver are once again fairly contained though the yellow metal retains the upside it derived around this point yesterday, hovering just below the USD 1820/oz mark. US Event Calendar 7am: Dec. MBA Mortgage Applications -5.6%, prior -0.6% 8:15am: Dec. ADP Employment Change, est. 410,000, prior 534,000 9:45am: Dec. Markit US Composite PMI, prior 56.9 9:45am: Dec. Markit US Services PMI, est. 57.5, prior 57.5 2pm: Dec. FOMC Meeting Minutes DB's Jim Reid concludes the overnight wrap As you may have seen from my CoTD yesterday all I got for Xmas this year was Omicron, alongside my wife and two of our three kids (we didn’t test Bronte). On Xmas Day I was cooking a late Xmas dinner and I suddenly started to have a slightly lumpy throat and felt a bit tired. Given I’d had a couple of glasses of red wine I thought it might be a case of Bordeaux-2015. However a LFT and PCR test the next day confirmed Covid-19. I had a couple of days of being a bit tired, sneezing and being sniffly. After that I was 100% physically (outside a of bad back, knee and shoulder but I can’t blame that on covid) but am still sniffly today. I’m also still testing positive on a LFT even if I’m out of isolation which tells me testing to get out of isolation early only likely works if you’re completely asymptomatic. My wife was similar to me symptom wise. Maybe slightly worse but she gets flu badly when it arrives and this was nothing like that. The two kids had no real symptoms unless being extremely annoying is one. Indeed spending 10 days cooped up with them in very wet conditions (ie garden activity limited) was very challenging. Although I came out of isolation straight to my home office that was still a very welcome change of scenery yesterday. The covid numbers are absolutely incredible and beyond my wildest imagination a month ago. Yesterday the UK reported c.219k new cases, France c.272k and the US 1.08 million. While these are alarming numbers it’s equally impressive that where the data is available, patients on mechanical ventilation have hardly budged and hospitalisations, while rising, are so far a decent level below precious peaks. Omicron has seen big enough case numbers now for long enough that even though we’ve had another big boost in cases these past few days, there’s nothing to suggest that the central thesis shouldn’t be anything other than a major decoupling between cases and fatalities. See the chart immediately below of global cases for the exponential recent rise but the still subdued levels of deaths. Clearly there is a lag but enough time has passed that suggests the decoupling will continue to be sizeable. It seems the main problem over the next few weeks is the huge number of people self isolating as the variant rips through populations. This will massively burden health services and likely various other industries. However hopefully this latest wave can accelerate the end game for the pandemic and move us towards endemicity faster. Famous last words perhaps but this variant is likely milder, is outcompeting all the others, and our defences are much, much better than they have been (vaccines, immunity, boosters, other therapeutic treatments). Indeed, President Biden directed his team to double the amount of Pfizer’s anti-covid pill Paxlovid they order; he called the pill a game changer. So a difficult few weeks ahead undoubtedly but hopefully light at the end of the tunnel for many countries. Prime Minister Boris Johnson noted yesterday that Britain can ride out the current Omicron wave without implementing any stricter measures, suggesting that learning to live with the virus is becoming the official policy stance in the UK. The head scratcher is what countries with zero-covid strategies will do faced with the current set up. If we’ve learnt anything from the last two years of covid it is that there is almost no way of avoiding it. Will a milder variant change such a stance? Markets seem to have started the year with covid concerns on the back burner as day 2 of 2022 was a lighter version of the buoyant day 1 even if US equities dipped a little led by a big under-performance from the NASDAQ (-1.33%), as tech stocks got hit by higher discount rates with the long end continuing to sell off to start the year. Elsewhere the Dow Jones (+0.59%) and Europe’s STOXX 600 (+0.82%) both climbed to new records, with cyclical sectors generally outperforming once again. Interestingly the STOXX Travel & Leisure index rose a further +3.11% yesterday, having already surpassed its pre-Omicron level. As discussed the notable exception to yesterday’s rally were tech stocks, with a number of megacap tech stocks significantly underperforming amidst a continued rise in Treasury yields, and the rotation towards cyclical stocks as investors take the message we’ll be living with rather than attempting to defeat Covid. The weakness among that group meant that the FANG+ index fell -1.68% yesterday, with every one of the 10 companies in the index moving lower, and that weakness in turn meant that the S&P 500 (-0.06%) came slightly off its record high from the previous session. Showing the tech imbalance though was the fact that the equal weight S&P 500 was +0.82% and 335 of the index rose on the day. So it was a reflation day overall. Staying with the theme, the significant rise in treasury yields we saw on Monday extended further yesterday, with the 10yr yield up another +1.9bps to 1.65%. That means the 10yr yield is up by +13.7bps over the last 2 sessions, marking its biggest increase over 2 consecutive sessions since last September. Those moves have also coincided with a notable steepening in the yield curve, which is good news if you value it as a recessionary indicator, with the 2s10s curve +11.3bps to +88.7bps over the last 2 sessions, again marking its biggest 2-day steepening since last September Those moves higher for Treasury yields were entirely driven by a rise in real yields, with the 10yr real yield moving back above the -1% mark. Conversely, inflation breakevens fell back across the board, with the 10yr breakeven declining more than -7.0bps from an intraday peak of 2.67%, the highest level in more than six weeks, which tempered some of the increase in nominal yields. The decline in breakevens was aided by the release of the ISM manufacturing reading for December, since the prices paid reading fell to 68.2, some way beneath the 79.3 reading that the consensus had been expecting. In fact, that’s the biggest monthly drop in the prices paid measure in over a decade, and leaves it at its lowest level since November 2020. Otherwise, the headline reading did disappoint relative to the consensus at 58.7 (vs. 60.0 expected), but the employment component was above expectations at 54.2 (vs. 53.6 expected), which is its highest level in 8 months and some promising news ahead of this Friday’s jobs report. Staying with US employment, the number of US job openings fell to 10.562m in November (vs. 11.079m expected), but the number of people quitting their job hit a record high of 4.5m. That pushed the quits rate back to its record of 3.0% and just shows that the labour market continues to remain very tight with employees struggling to hire the staff needed. This has been our favourite indicator of the labour market over the last few quarters and it continues to keep to the same trend. Back to bonds and Europe saw a much more subdued movement in sovereign bond yields, although gilts were the exception as the 10yr yield surged +11.7bps as it caught up following the previous day’s public holiday in the UK. Elsewhere however, yields on bunds (-0.2bps), OATs (-1.1bps) and BTPs (+0.9bps) all saw fairly modest moves. Also of interest ahead of tonight’s Fed minutes, there was a story from the Wall Street Journal late yesterday that said Fed officials are considering whether to reduce their bond holdings, and thus beginning QT, in short order. Last cycle, the Fed kept the size of its balance sheet flat for three years after the end of QE by reinvesting maturing proceeds before starting QT. This iteration of QE is set to end in March, so any move towards balance sheet rolloff would be a much quicker tightening than last cycle, which the article suggested was a real possibility. As this cycle has taught us time and again, it is moving much faster than historical precedent, so don’t rely on prior timelines. Balance sheet policy and the timing of any QT will be a major focus in tonight’s minutes, along with any signals for the timing of liftoff and path of subsequent rate hikes. Overnight in Asia markets are trading mostly lower with the KOSPI (-1.45%), Hang Seng (-0.85%), Shanghai Composite (-0.81%) and CSI (-0.67%) dragged down largely by IT stocks while the Nikkei (+0.07%) is holding up better. In China, Tencent cut its stake in a Singapore based company yesterday by selling $ 4 billion worth shares amidst China's regulatory crackdown with investors concerned they will do more. This has helped push the Hang Seng Tech Index towards its lowest close since its inception in July 2020 with Tencent and companies it invested in losing heavily. Moving on, Japan is bringing forward booster doses for the elderly while maintaining border controls in an effort to contain Omicron. Futures are indicating a weaker start in DM markets with the S&P 500 (-0.25%) and DAX (-0.11%) both tracking their Asian peers. Oil prices continued their ascent yesterday, with Brent Crude (+1.20%) hitting its highest level since the Omicron variant first emerged on the scene. Those moves came as the OPEC+ group agreed that they would go ahead with the increase in output in February of 400k barrels per day. And the strength we saw in commodities more broadly last year has also continued to persist into 2022, with copper prices (+1.12%) hitting a 2-month high, whilst soybean prices (+2.49%) hit a 4-month high. Looking at yesterday’s other data, German unemployment fell by -23k in December (vs. -15k expected), leaving the level of unemployment at a post-pandemic low of 2.405m in December. Finally, the preliminary French CPI reading for December came in slightly beneath expectations on the EU-harmomised measure, at 3.4% (vs. 3.5% expected). To the day ahead now, and data releases include the December services and composite PMIs from the Euro Area, Italy, France, Germany and the US. On top of that, there’s the ADP’s December report of private payrolls from the US, the preliminary December CPI report from Italy, and December’s consumer confidence reading from France. Separately from the Federal Reserve, we’ll get the minutes of the December FOMC meeting. Tyler Durden Wed, 01/05/2022 - 08:07.....»»

Category: blogSource: zerohedgeJan 5th, 2022

Apple Hits $3T Market Cap for The First Time: ETFs to Buy

Tech giant Apple (AAPL) became the world's first $3 trillion publicly-traded company. Tech giant Apple Inc. AAPL became the world’s first $3 trillion publicly-traded company. The stock hit an intraday record high of $182.88 on the first trading day of 2022, putting Apple's market value just above $3 trillion but closed a little lower on the day.In order to tap Apple’s huge success, investors could consider the ETFs with the largest allocation to the tech titan. Funds such as MSCI Information Technology Index ETF FTEC, Technology Select Sector SPDR Fund XLK, Vanguard Information Technology ETF VGT, iShares US Technology ETF IYW and iShares Russell Top 200 Growth ETF IWY have Apple as the top firm with a double-digit allocation and sport a Zacks Rank #1 (Strong Buy) or 2 (Buy).The major milestone came on the back of expectations that Apple continues to explore in new markets such as automated cars and virtual reality. Apple has many projects in the pipeline. It plans to release computerized glasses featuring augmented reality technology in 2022, and is developing a virtual reality headset as well. Apple is also working on a self-driving electric vehicle that could be on the market as soon as 2025.One analyst Wedbush forecast a strong 2022 early this week for Apple, in part driven by the potential launch of a new AR headset product later in the year. In December, Morgan Stanley MS raised the target price on Apple from $164 to $200, citing that new products like virtual reality and augmented reality headsets aren’t yet factored into the share price (read: Take a Look at Top-Performing ETF Sectors of 2021).JP Morgan JPM also raised the target price for the stock to $210 from $180, citing improved iPhone 13 demand and the navigation of disruptions in chip and smartphone supply chains. The upcoming iPhone SE with 5G capabilities, expected in early 2022, has the potential to attract nearly 1.4 billion low- to mid-end Android phone and about 300 million older iPhone model users, per the analyst.   Additionally, Apple continued to benefit from booming demand for its new iPhone 13 and other older models as well as subscription services such as Apple Music, Apple TV+, iCloud and its popular App Store. At a market value of $3 trillion, Apple tripled its valuation in less than four years. According to Howard Silverblatt, an analyst who tracks valuations at S&P Dow Jones Indices, Apple now accounts for nearly 7% of the total value of the S&P 500, breaking IBM’s record of 6.4% in 1984.The iPhone maker hit $1 trillion in 2018 and topped $2 trillion in August 2020, powered by its steady expansion into a range of services. Apple’s services revenues, comprising iTunes, Apple Music, iCloud, Apple Pay and Apple Care, climbed to a record $18.3 billion in fourth-quarter fiscal 2021 from $14.5 billion in the year-ago quarter.The stock returned 35% in 2021, outpacing the S&P 500's return of about 27%. Apple is benefiting from the booming demand for its new iPhone 13 and other older models as well as subscription services such as Apple Music, Apple TV+, iCloud and its popular App Store.Solid Apple FundamentalsApple’s earnings estimates have been raised by 5 cents for the fiscal year (ending September 2022) over the past 30 days. This indicates year-over-year growth of 3.7%. Revenues are expected to grow 5.3% for the current fiscal. The Apple stock is cheap, trading at a P/E ratio of 30.50 compared with other few tech names — Amazon’s AMZN 81.74 times, Netflix’s NFLX 56.08 times and Microsoft’s MSFT 36.83 times.Further, Apple currently carries a Zacks Rank #2 (Buy) (see: all the Technology ETFs here).ETFs to BuyMSCI Information Technology Index ETF (FTEC)MSCI Information Technology Index ETF is home to 346 technology stocks with AUM of $7.3 billion. It follows the MSCI USA IMI Information Technology Index. Apple accounts for 20.7% allocation.MSCI Information Technology Index ETF has an expense ratio of 0.08% while volume is solid at 261,000 shares a day.Technology Select Sector SPDR Fund (XLK)Technology Select Sector SPDR Fund targets the broad technology sector and follows the Technology Select Sector Index. It holds about 76 securities in its basket, with Apple making up for 23.8% share. Technology Select Sector SPDR Fund has key holdings in software, technology hardware, storage & peripherals, semiconductors & semiconductor equipment and IT services.Technology Select Sector SPDR Fund is the most popular and heavily traded ETF with AUM of $52.4 billion in AUM and an average daily volume of 11.4 million shares. The fund charges 12 bps in fees per year.Vanguard Information Technology ETF (VGT)Vanguard Information Technology ETF manages about $57 billion in its asset base and provides exposure to 362 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, Apple accounts for a 20.5% share.Vanguard Information Technology ETF has an expense ratio of 0.10% while volume is solid at nearly 499,000 shares (read: Why These Tech ETFs Are Bargain Buys).iShares US Technology ETF (IYW)iShares Dow Jones US Technology ETF tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, giving investors exposure to 154 U.S. electronics, computer software and hardware, and informational technology companies. Apple makes up 18.1% of the assets.iShares Dow Jones US Technology ETF has AUM of $10.2 billion and charges 41 bps in fees and expenses. Volume is good as it exchanges nearly 496,000 shares a day.iShares Russell Top 200 Growth ETF (IWY)iShares Russell Top 200 Growth ETF offers exposure to large U.S. companies that are expected to record earnings growth at an above-average rate relative to the market. It tracks the Russell Top 200 Growth Index, holding 110 stocks in its basket. Apple accounts for 14.2% of total assets. iShares Russell Top 200 Growth ETF has key holdings in information technology, consumer discretionary and communication with double-digit exposure each.iShares Russell Top 200 Growth ETF has amassed $5 billion in its asset base and trades in an average daily volume of 145,000 shares. It has an expense ratio of 0.20%. 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 Amazon.com, Inc. (AMZN): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Morgan Stanley (MS): Free Stock Analysis Report Apple Inc. (AAPL): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Netflix, Inc. (NFLX): Free Stock Analysis Report Technology Select Sector SPDR ETF (XLK): ETF Research Reports Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports iShares U.S. Technology ETF (IYW): ETF Research Reports Vanguard Information Technology ETF (VGT): ETF Research Reports iShares Russell Top 200 Growth ETF (IWY): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 4th, 2022

The Elon Musk Elevator Down

The Elon Musk Elevator Down Submitted by QTR's Fringe Finance “Stocks take the stairs up, and the elevator down.” Bear with me today. I know tomorrow is New Year's Eve, 2021 and I know I’ve written extensively over the last two months about the fact that Tesla (TSLA) is the only string that Cathie Wood’s flagship ARK Innovation Fund (ARKK) is hanging on by. And while I definitely don’t want to spend every day harping about the unmatched investing prowess of Ms. Wood, I do think today marks a great time to reiterate and examine this sentiment, and I’ll explain why. First, I think it’s worth noting: for all of the CNBC appearances, all of the ass-kissing by podcasters and financial media hosts, all of the touting of Cathie Wood as a “visionary”, all the magazine covers and writeups (Forbes called her “Wall Street’s Wizard” on their 50 over 50 cover), all of the conference appearances and the rest of the endless bluster we have had to endure for the last 3 years, ARKK has now officially given up all of its historical outperformance versus its benchmark as a result of the absolutely atrocious year it had in 2021. (Note: All figures used in this article were accurate to the best of my ability as of December 30, 2021 and do not include market performance for ARKK for the last trading day of the year.) This is seven or eight years worth of “work” (or at least making it look like you’re doing some work) down the drain as a result of underperforming the NASDAQ by more than 46% this year, as of 12/29/2021’s close. All of the comparisons and arguments over the last 2 years about how ARKK is such a better vehicle than the NASDAQ due to Wood’s investing acumen are officially moot and heading into 2022, Cathie Wood is going to have to put up or shut up. She may get a fresh YTD P/L figure to cling to, but “Wall Street’s Wizard” won’t just be fighting to outperform her benchmark this year, she’ll be fighting for ARKK’s performance versus its benchmark since inception and a lot of the firepower Wood needs is going to have to come from this guy: If I were an ARKK investor, this would frighten me. Meanwhile, almost every headline on Wednesday this week was about how the S&P made its 70th new all-time high day and how the year stood out as such a blockbuster one for the stock market. ARKK finished Wednesday down 1%. In fact, over the last 5 trading days, Tesla has been up 15%, the NASDAQ has been up 2.77% and ARKK is lower by -5.27%. Are you starting to understand why, exactly, it’s going to be a problem for Cathie Wood if Tesla starts to pull back? Over the last month, all of the Top 10 holdings in ARKK are lower between -2.8% and -20.9%, including Tesla. The NASDAQ is only down -0.11% over the same period. While the NASDAQ is only 1.8% off its 1 year high, ARKK’s well known/top components have fallen between 11.6% and 69.4% from their 1 year highs (Full disclosure: using % off highs is an ugly way to make a chart, no matter what you’re looking at). And for those thinking the pain could be over and there’s nowhere to go but up, here’s a gentle reminder that out of ARKK’s well known/top holdings, the lowest price to sales ratio is 4.1x and the highest is still 39.6x sales. The exercise becomes even funnier when you attempt to use a price to earnings ratio. According to YCharts, six of these 11 companies turn up a null response when asked for a forward PE, while the forward PE’s of the remaining five names, Zoom, Roku, Tesla, Twitter and Twilio, return figures of 37x, 144x, 175x, 189x and (drumroll please) 2,802x. But hey, maybe ARKK has bottomed, right? I know I’ve mentioned this before, but the portfolio of companies Wood continues to keep in her “flagship” fund are all still wildly overvalued and, in my opinion, have plenty of room to fall in a situation where high flying stocks re-rate lower. Via CathieWoodStocks.com2022 is going to be such a crucial year to watch ARKK, not only to track its performance against its benchmarks, but to see if Wood’s narrative about her “innovation” stocks (whatever that means) being in “deep value” territory (read: routinely over 100x sales) still holds water with the financial media (it will) and investors (it may not). My guess is the narrative will not hold up, and that we won’t even need a market crash to prove it - we’ll just need either a slight rotation from growth to value or a 30% drawdown in Tesla at some point. Ergo, Wood has two options as I see it at this point: Rebalance her portfolio to remove Tesla as a top weighting, which would contradict all the claims she’s made about the company over the last two years and would subject her portfolio to more exposure to the names that dragged her down in 2021 to begin with. Cling even tighter to Tesla and simply pray to god that despite volatility in the company’s most crucial market (China), the constant recalls, the amped up valuation, the psychotic CEO who has been charged with securities fraud and routinely taunts regulators in between selling $15 billion whacks of stock and massive emerging competition both domestically and abroad, shit just doesn’t go wrong. Tesla is what made Cathie Wood - but it could also be what breaks her. Things get tricky for ARKK’s balancing act heading into 2022. Look, many people have different explanations for Tesla’s historic run over the last two years. Personally, as my readers know, I still believe it was fueled by the options market. Regardless, it’s no longer about how it got here, it’s about where it is going. The stock simply can’t continue to go parabolic forever. Tesla was up 53.9% this year and ARKK plunged -24.63%. What kind of outperformance from Tesla will Wood need for ARKK to break even next year? At some point, either the options market hysteria will end, Tesla will miss operational milestones, or the reality of its valuation will simply set in. I’ll go further and say that even if Tesla winds up higher in the future, it’s may not get there fast enough to counterbalance the hand-selected portfolio of high flying names that Wood has stuffed ARKK with. For me, it’s not a question of if ARKK will bear the consequences of what I see to be poor management, it’s a question of when. A friend of mine said it best yesterday about Wood: “A market that takes Tesla down 30% will wreck the rest of her holdings even more.” And he’s right. After 6 or 7 tough years of taking the stairs up, Cathie Wood could be getting ready to take the Elon Musk elevator down. Photo graciously custom made and provided by @Keubiko-- As always, Zerohedge readers get a 20% discount to my blog at any time, that lasts forever, by clicking here: Get 20% off forever Disclaimer: Now or at the time of publishing I owned/own ARKK, QQQ, IWM, TSLA puts and am routinely short all of these names and sometimes other names that Cathie Wood has exposure to. Readers should assume I am short Cathie Wood at any given time. I may add any name mentioned in this article and sell any name mentioned in this piece at any time. None of this is a solicitation to buy or sell securities. These positions can change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot.  Tyler Durden Mon, 01/03/2022 - 06:30.....»»

Category: blogSource: zerohedgeJan 3rd, 2022

3 Crypto Mining Stocks to Watch for 2022

Here is a sneak peek of the crypto mining stocks, such as NVDA, MARA and HUT, which are well positioned to capitalize on the crypto buzz in 2022. The buzz around the cryptocurrency market is likely to continue in 2022 and beyond. Higher uptake of digital and contactless trading and payments via blockchain-backed cryptocurrencies in this coronavirus-hit world is expected to sustain the momentum in this particular market.Per a Fortune Business Insights report, the said market is expected to reach $1.9 billion by 2028, seeing a CAGR of 11.1% from 2021 to 2028.Solid adoption of bitcoin, the most popular and widely used digital currency despite being highly volatile, has been acting as a key catalyst for the crypto miners so far.The bitcoin space has been on a roller coaster ride throughout 2021. Currently trading at $46,904.30, the bitcoin hit an all-time high of $68,990.90 on Nov 8 from a low of $27,882.79 on Jan 4 and again dropping to $45,588.83 on Dec 20, per coindesk.com data.This topsy-turvy situation is expected to remain due to the ongoing regulatory concerns over crypto transactions and crypto mining that witness greater governmental control over the cryptocurrency market.Nevertheless, the great hedging opportunities that bitcoins offer to investors against inflation are expected to continue bolstering the bitcoin adoption rate as well as driving growth in the cryptocurrency market.The blockchain technology based on which the entire cryptocurrency market stands minimizes the risks of monetary losses, double counting and hacking as it leverages a distributed consensus that makes tampering with the records very difficult.In addition, the growing momentum across other digital currencies like litecoin, ethereum and zcash, will likely continue to boost prospects of the crypto miners further.Cryptocurrencies, which hold the potential to revolutionize the process of peer-to-peer and remittance transactions, are gaining strongly from the decentralized system, low fees, transparency of distributed ledger technology, protection from consumer chargebacks and quick international transfers.Given this upbeat scenario, many companies worldwide are now adopting the idea of cryptocurrencies as payment options and increasing their bitcoin holdings. This remains another tailwind.All these factors bode well for the crypto mining companies that are making concerted efforts to capitalize on the pool of opportunities present in the cryptocurrency market.Per a Data Bridge Market Research report, the global crypto mining market is likely to witness a CAGR of 11.5% between 2021 and 2028.Stocks to WatchAgainst this backdrop, here we focus on three crypto mining stocks with strong fundamentals that poise them well to capitalize on the cryptocurrency boom in the near term.The following stocks have gained strongly in the year-to-date time frame, outperforming the S&P 500 Index’s rally.Year-to-Date Price PerformanceImage Source: Zacks Investment ResearchNVIDIA’s NVDA shares have returned 129.8% on a year-to-date basis. NVDA is strongly gaining from the growing momentum of its GPUs in the cryptocurrency space, which is also providing it with a competitive edge against other chipmakers.NVDA remains well-poised to capitalize on strong demand for cryptocurrency mining on the back of its notable launch of Cryptocurrency Mining Processor (CMP), which is ideal for professional mining. These processors are well-equipped to boost the mining power efficiency as these feature a lower peak core voltage and frequency.In third-quarter fiscal 2022, this currently Zacks Rank #2 (Buy) player generated revenues worth $105 million from the inclusion of Cryptocurrency Mining Processors in its market platform.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Marathon Digital Holdings’ MARA shares have gained 224.8% on a year-to-date basis. MARA is one of the largest enterprise bitcoin self-mining companies in North America. It is benefiting from the increasing deployment of miners, growing production of bitcoins, robust bitcoin holdings and a hike in its hash rate.The currently Zacks Rank #3 (Hold) player produced 1,252 self-mined bitcoins in the recently reported third-quarter 2021, up 91% from the previous quarter’s output. Further, its number of miners deployed reached the 25,272 mark at the end of the same quarter. Marathon Digital held 7,035 bitcoins as of Sep 30, 2021.This apart, the purchase of 30,000 S19j Pro miners from BITMAIN remains a major step toward expanding the bitcoin production. Further, Marathon Digital recently signed a contract with BITMAIN to buy ANTMINER S19 XP (140 TH/s) bitcoin miners, which are expected to be shipped between July 2022 and December 2022. This is a major positive as well.Hut 8 Mining’s HUT shares have gained 78.3% on a year-to-date basis. HUT is counted among the digital asset mining pioneers. The same is gaining from the solid momentum across its self-mining operations and expanding hosting services. Further, HUT’s increasing bitcoin holdings and prospects around its purchase of NVIDIA GPUs are noteworthy.The presently Zacks Rank #3 player’s bitcoin holdings exceeded the 5,000 mark in third-quarter 2021. Further, HUT’s bitcoin balance stood at 5,053 as of Nov 10, 2021.Additionally, Hut 8 Mining received the entire fleet of high-performance NVIDIA GPUs, which got deployed at its Medicine Hat site. HUT strives to mine the Ethereum network via Luxor pool with the help of these servers. Moreover, the move is likely to boost its aggregate operating rate by approximately 1,600 Gigahash. This apart, Hut’s building of the third mining site in North Bay, Ontario, remains noteworthy. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>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 NVIDIA Corporation (NVDA): Free Stock Analysis Report Marathon Digital Holdings, Inc. (MARA): Free Stock Analysis Report Hut 8 Mining Corp. (HUT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 2nd, 2022

3 Gold Mining Stocks to Buy as Experts Expect Gold Rally in 2022

Fears about the impact of the Omicron coronavirus variant on the global economy, inflation, and elevated demand will support gold prices in 2022. We suggest buying stocks like SA, FURY and USAU. We are in the last trading week of 2021 and gold is currently trading at around $1,813 an ounce. The metal has held its ground lately as the spread of the Omicron variant has renewed fears that it might derail the ongoing global economic recovery. It has also quelled investors’ appetite for riskier assets, thus lifting bullion’s safe-haven appeal and bringing investors back to gold.Gold is anticipated to gain further in 2022 on the back of uncertainty regarding the coronavirus variant, continued inflation and geopolitical tensions; we suggest buying stocks like Seabridge Gold SA, Fury Gold Mines FURY and US Gold Corp USAU.Gold’s Run So Far This YearGold’s sailing has not been smooth this year due to a myriad of reasons — the rollout of vaccinations, ongoing economic recovery, lack of investment demand and consistent dollar strength. The yellow metal has shed its value 4.3% so far this year, suggesting that it is headed for the first annual loss since 2018. This is in stark contrast to last year’s growth of 24.6% — the strongest annual increase in a decade. The stellar performance was primarily due to the safe-haven demand stemming from the uncertainty amid by the COVID-19 pandemic and low interest rates. Gold had even crossed the $2,000 an ounce milestone — the first time in history.Gold has averaged around $1,806 an ounce so far in 2021. Gold prices have been weighed down mainly by low investment demand for a major part of the year, which overshadowed strength in demand in other sectors. Jewelry demand has been high aided by the ongoing global recovery. Technology demand has also been on the rise and back to pre-pandemic levels, driven by the continued recovery in electronics. On the supply side, even though mine production has picked up steadily owing to fewer COVID-19 production interruptions compared to last year, recycling activity remained weak due to lower gold prices.The lack of a spike in gold prices made investors apathetic toward the yellow metal. It was a solid year for equities, with all major market indexes racking up healthy returns year to date. A stronger greenback has not helped either, as the U.S. dollar and gold prices are generally inversely correlated. The U.S. dollar index is up around 7% this year. A stronger US dollar offsets higher inflation expectations and stable interest rates, preventing the precious metal from holding onto the gains. Also, several market commentators are suggesting that investment flows may have switched from gold to cryptocurrencies this year.On a positive note, per the latest report by the World Gold Council, gold exchange-traded funds (ETFs) saw inflows of 13.6 tons ($838 million) in November — the first month of positive flows since July. Global gold-backed ETF holdings recovered from the year-to-date lows seen in October to 3,578 tons ($208 billion) in November. This was driven by the resumption of investment demand for larger gold ETFs amid decades-high inflation and heightened market volatility. Central banks in developed markets added to their gold reserves for the first time since 2013, per the World Gold Council. This holds promise for gold.Expectations for 2022According to experts, the negative risk appetite, fueled by the Omicron worries and US Treasury yields being low that reduce the opportunity cost of holding bullion, will support gold prices in 2022. The Omicron-led uncertainty could lead to a more dovish central bank stance in 2022. Issues over the domestic investment bill and the geopolitical risks around Ukraine will also boost gold’s appeal.The personal consumption expenditures price index (PCE index), one of the main measures of inflation and consumer spending trends in the U.S. economy, surged 5.7% in November, reflecting increases in both goods and services. This was the highest since 1982. The Consumer Price Index, another key inflation metric rose 6.8% in November, also the highest since 1982. This has bolstered expectations that elevated inflation is likely to persist. Gold is widely considered as a hedge against inflation and market uncertainties.In 2022, demand for gold will be supported by growing jewelry and technology demand, and central bank purchases. Demand for physical gold is seasonally higher starting in the later part of the year aided by the festival and wedding season in India, followed by Chinese Lunar Year and Valentine's Day. Demand in India has been strong lately on pent-up demand, improving economic momentum and consumer confidence.India and China that roughly account for around 50% of consumer gold demand will continue to sustain demand for gold. Use of gold across energy, healthcare and technology is on the rise. So, there will be an eventual demand-supply imbalance that is likely to drive gold prices, which bodes well for the industry.We have handpicked three gold-mining stocks, which carry a Zacks Rank #2 (Buy) and are poised to perform well in 2022. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.3 Gold Stocks to BuySeabridge Gold: The company holds a 100% interest in several North American gold resource projects. The company's principal assets are the KSM and Iskut properties located near Stewart, British Columbia, Canada and the Courageous Lake gold project located in Canada's Northwest Territories. KSM is the world’s largest undeveloped project by gold resources. The acquisition of Snowfield is expected to increase KSM’s existing reserves and enhance project economics. The company recently engaged in an exploration and drilling program in Iskut, which continues to point toward a potential large gold-copper porphyry system. It intends to further explore the Iskut, Snowstorm and 3 Aces projects for selling or entering into joint venture arrangements with major mining companies. The company’s debt-free balance sheet provides it a competitive edge.Seabridge Gold ranks first in gold and copper reserves among major listed gold companies.  From 2003 to 2020, the company’s gold resources have grown by 915%. It strives to provide shareholders with exceptional leverage to a rising gold price. Over the past 60 days, the Zacks Consensus Estimate for the company’s 2022 earnings has moved up 18%.Fury Gold Mines: The company is a Canadian-focused gold exploration company strategically positioned in three prolific mining regions: James Bay (Quebec), the Golden Triangle (British Columbia) and the Kitikmeot Region (Nunavut). It has recently entered into an agreement to divest its 100% interest in the Homestake Ridge gold-silver project that will simplify its portfolio. The company recently announced results from the Three Bluffs deposit expansion drilling at its Committee Bay project in the Kitikmeot region of Nunavut. These are the best drill results the project has seen in five years and present a very promising achievement for the project. The high-grade hole opens up considerable expansion opportunities and confirms that Committee Bay represents a major gold exploration opportunity. It provided results for six core drill holes at the Eau Claire project located in the EeyouIstchee Territory in the James Bay region of Quebec. The drilling focused on demonstrating the potential to expand the deposit to the west on both the Hinge and Limb target areas signals that this resource has room to grow.Fury Gold continues to aggressively grow and advance its multi-million-ounce gold platform through careful project assessment and exploration excellence. It has set a goal to spend at least 70% of funds on exploration and drilling activities. The Zacks Consensus Estimate for the company’s 2022 earnings indicates year-over-year growth of 27%. Over the past 60 days, the estimates have moved up 5%.US Gold Corp: USAU is a U.S.-focused gold exploration and development company advancing high potential projects in mining-friendly jurisdictions of Wyoming, Nevada and Idaho. Its exploration efforts combine deep experience with state-of-the-art leading-edge technology to help it drive towards exploration success. It is advancing the CK Gold Project located in southeast Wyoming. The company recently provided a prefeasibility study ("PFS") for its CK Gold Project and has published its SK-1300 Technical Report Summary. The project appears to be very attractive with robust project economics. It currently has proven and probable mineral reserves of 1.01 million ounces of gold and 248 million pounds of copper. Its strong liquidity position and no debt positions it well for growth.Over the past 60 days, the Zacks Consensus Estimate for 2022 earnings has moved up 33%. The estimates currently indicate year-over-year growth of 17%. Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022? From inception in 2012 through November, the Zacks Top 10 Stocks gained an impressive +962.5% versus the S&P 500’s +329.4%. Now our Director of Research is combing through 4,000 companies covered by the Zacks Rank to handpick the best 10 tickers to buy and hold. Don’t miss your chance to get in on these stocks when they’re released on January 3.Be First to New Top 10 Stocks >>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 Seabridge Gold, Inc. (SA): Free Stock Analysis Report US Gold Corp (USAU): Free Stock Analysis Report Fury Gold Mines Limited (FURY): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksDec 28th, 2021

EV Roundup: NKLA"s SEC Settlement, GM"s "Everybody In" Strategy & More

While Nikola (NKLA) settles SEC fraud charges for a $125-million fine, General Motors' (GM) strategy to expand EV offerings beyond core portfolio boosts its e-mobility game. Nikola NKLA breathed a sigh of relief last week as the electric vehicle (EV) maker managed to pull itself out of the legal challenges that had been troubling it since 2020. The company has agreed to pay the SEC $125-million penalty to bring the controversial chapter to a close. Meanwhile, e-mobility startup Fisker FSR and tiremaker Bridgestone BRDCY joined forces for EV after-sales services. U.S. auto giant General Motors GM grabbed the spotlight by taking its electrification game a notch higher with the latest strategy of offering EV technology beyond its own vehicle portfolio. EV behemoth Tesla TSLA also made it to the headlines as its CEO Elon Musk is fast advancing to reach his goal of selling 10% of his holdings.Recap of the Week’s Important NewsNikola was levied with a $125-million penalty charge to be paid to the U.S. Securities and Exchange Commission (“SEC”) over purported misleading statements about the company’s capabilities made by its founder and former CEO, Trevor Milton, last year. The EV firm welcomed the decision as it indicated the closure of government investigations.The SEC, in its settlement, stated that Nikola is held responsible for both Milton’s remarks and other alleged deceptions, all of which falsify the actual state of the company’s business and technology. The charge levied by it has to be made in five installments over the next two years, with the first installment scheduled at 2021-end. The remaining installments will be paid semiannually through 2023. NKLA had anticipated the settlement charge as it had taken a $125-million reserve in third-quarter earnings, as was announced this November.Nikola currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Fisker and Bridgestone joined forces for comprehensive after-sales and related maintenance solutions in France and Germany. The latest collaboration scaled up Fisker’s recent agreement with Bridgestone, making the latter its exclusive tire partner for its upcoming all-electric Fisker Ocean SUV. Bridgestone will make its EV-ready retail and service network available to provide Fisker’s customers in France and Germany with widespread after-sales services throughout the Speedy, Pitstop, and Reiff-ABS networks, which are part of Bridgestone’s extensive retail network in Europe.United in their vision for a more sustainable future of mobility, the partnership is a win-win deal for both companies. Joining forces with EV startups like Fisker is a crucial aspect of Bridgestone’s approach and the company is optimistic about putting its EV-ready retail network at the disposal of Fisker’s customers. Fisker also considers Bridgestone as a compatible partner with a like-minded approach to sustainability that is investing across its entire value chain, from R&D and product development to manufacturing and retail, to make environment-friendly products aimed at shaping the future of sustainable transportation.General Motors announced the strategy of offering the EV technology beyond the core product menu and automotive applications, one component at a time, advancing the firm’s “Everybody In” electrification approach. GM will begin introducing various EV component sets in four key areas: Chevy Performance and Aftermarket, GM Powered Solutions, Ground Support Equipment, and Marine Propulsion.Chevy Performance and Aftermarket applications include the Electric Connect and Cruise eCrate Package to be launched in 2022. GM Powered Solutions will also begin unveiling customized electric component sets for tailor-made applications through its current GM Marine, On-Highway, Off-Highway and Industrial segments. As far as Ground Support Equipment is concerned, General Motors will provide EV components to electrify Textron GSE’s TUG line of baggage tractors, cargo tractors and belt loaders. Finally, for Marine Propulsion, the company’s strategic investment in Seattle-based electric watercraft company Pure Watercraft is an exciting opportunity to bring the EV technology to the marine industry. Tesla CEO Musk confirmed that he has almost met his pledge to sell 10% of his stake in the company. Last week, the billionaire offloaded another 583,611 shares for $548 million. This brings his total sales to more than $14 billion worth of Tesla stock in around 40 days. To deliver on his stated goal of selling 10% shares, Musk needs to dispose off about 17 million shares, assuming that his target excludes exercisable options. Musk left Twitterati open-mouthed with a bizarre poll asking his followers to vote whether he should sell 10% of his stock. With the majority of his followers voting in favor of the stock sale, Musk abided by his promise by starting to offload his Tesla holdings.In other news, Tesla inked a one-year agreement with Hyundai Glovis, a logistics company from South Korea specializing in car distribution, among other shipping-related services, to transport vehicles from China to other parts of the world. The contract is reportedly worth $422 million.Price PerformanceImage Source: Zacks Investment ResearchWhat’s Next in the Space?Stay tuned for announcements of upcoming EV models and any important updates from the red-hot industry. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>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 General Motors Company (GM): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis Report Bridgestone Corp. (BRDCY): Free Stock Analysis Report Fisker Inc. (FSR): Free Stock Analysis Report Nikola Corporation (NKLA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 27th, 2021

5 ETFs Most Loved by Investors Last Week

Dec 10-16 was a bumper week for the broad market ETFs with a net inflow of $78.2 billion. Dec 10-16 was a bumper week for the broad market ETFs with a net inflow of $78.2 billion. This brings inflows of $895.4 billion year to date. About half of the inflows came on Dec 16 following the Fed’s decision and volatility arising from the Omicron COVID-19 variant. U.S. equity ETFs remained the major money puller with $66.7 billion, closely followed by $9.9 billion in international equity ETFs and $133.4 million in U.S. fixed-income ETFs, per etf.com.SPDR S&P 500 ETF Trust SPY, Vanguard Total Stock Market ETF VTI, Vanguard Mid-Cap ETF VO, iShares S&P 500 Growth ETF IVW and Invesco QQQ Trust QQQ dominated the top asset-creation list last week.Stock Market SynopsysWall Street saw a tumultuous week with the major bourses in red. The tech-heavy Nasdaq Composite Index underperformed, declining 2.9% while the S&P 500 Index and the blue-chip Dow Jones Index dropped 1.9 and 1.7%, respectively (read: Forget Omicron: Tap S&P 500 ETFs for At Least 6% Gains in 2022).The decline came on the back of a rapid surge in the Omicron COVID-19 cases. A study warned that the rapidly spreading Omicron was five times more likely to reinfect people than its predecessor, Delta. Additionally, European countries geared up for further travel and social restrictions. The losses were also backed by year-end tax selling and the simultaneous expiration of stock options, stock index futures and index options contracts (known as triple witching).Further, the Fed’s more aggressive unwinding of its pandemic-era monthly bond buying led to a selloff in growth stocks, especially technology. The central bank plans to buy $60 billion per month of bonds in combined Treasuries and agency mortgage-backed securities starting in January, down from $90 billion in December and 120 billion from the start of the pandemic through November.We have detailed the ETFs below:SPDR S&P 500 ETF Trust (SPY)SPDR S&P 500 ETF Trust topped asset flow creation last week, gathering $9.1 billion in capital. It tracks the S&P 500 Index and holds 505 stocks in its basket, with each accounting for no more than 7% of assets. SPDR S&P 500 ETF Trust is heavy on the information technology sector, while healthcare, consumer discretionary, financials and communication services round off the next four spots with a double-digit allocation each.SPDR S&P 500 ETF Trust charges investors 9 bps in annual fees and trades in an average daily volume of 62.3 million shares. It has AUM of $440.1 billion and a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.Vanguard Total Stock Market ETF (VTI)Vanguard Total Stock Market ETF has gathered $1.1 billion in capital, taking its total AUM to $297 billion. It provides exposure to the broader stock market by tracking the CRSP US Total Market Index. Vanguard Total Stock Market ETF holds a large basket of well-diversified 4,156 stocks with key holdings in technology, consumer discretionary, industrials, healthcare and financials.Vanguard Total Stock Market ETF charges 3 bps in fees per year from investors and trades in an average daily volume 3.4 million shares. VTI has a Zacks ETF Rank #2 with a Medium risk outlook (read: 5 Hot ETFs of 2021 Driving Global Inflows to Record $1T).Vanguard Mid-Cap ETF (VO)Vanguard Mid-Cap ETF pulled in $3.2 billion in capital last week. It targets the mid-cap segment of the broad stock market and tracks the CRSP US Mid Cap Index. Vanguard Mid-Cap ETF holds 383 stocks with a well-diversified portfolio as each firm holds no more than 1% of the total assets. The fund has key holdings in technology, industrials, consumer discretionary, financials and healthcare.With AUM of $59.2 billion, the fund charges investors 4 bps in fees per year and trades in an average daily volume of 739,000 shares. Vanguard Mid-Cap ETF has a Zacks ETF Rank #2 with a Medium risk outlook.iShares S&P 500 Growth ETF (IVW)iShares S&P 500 Growth ETF accumulated $3.1 billion last week. It tracks the S&P 500 Growth Index and holds 242 stocks in its basket. iShares S&P 500 Growth ETF is heavily concentrated on the top two firms with double-digit exposure each. Additionally, iShares S&P 500 Growth ETF is skewed toward information technology at 43.4%, while consumer discretionary, communication and health care round off the next three spots with double-digit exposure each (read: 5 ETF Bets for Those Undeterred by the Omicron Threat).iShares S&P 500 Growth ETF charges 18 bps in annual fees and has amassed $43.3 billion in its asset base. The fund trades in an average daily volume of 1.7 million shares and has a Zacks ETF Rank #2 with a Medium risk outlook.Invesco QQQ Trust (QQQ)Invesco QQQ gathered about $3 billion in its asset base last week. QQQ provides exposure to the 101 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Invesco QQQ is heavily concentrated on the top two firms with a double-digit allocation while its other firms hold no more than 7.1% of assets. The product is also heavily tilted toward information technology at 50.6% while communication services and consumer discretionary round off the next two spots.Invesco QQQ is one of the largest and most-popular ETFs in the large-cap space with AUM of $212.2 billion and an average daily volume of 43.4 million shares. QQQ charges investors 20 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook. 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 Invesco QQQ (QQQ): ETF Research Reports SPDR S&P 500 ETF (SPY): ETF Research Reports Vanguard Total Stock Market ETF (VTI): ETF Research Reports iShares S&P 500 Growth ETF (IVW): ETF Research Reports Vanguard MidCap ETF (VO): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 20th, 2021

Stocks, Yields Tumble As Quad-Witching Fears Add To Broader Market Slide

Stocks, Yields Tumble As Quad-Witching Fears Add To Broader Market Slide US futures tumbled after hitting an all time high less than 24 hour ago, as the favorable if paradoxical bounce in risk from the hawkish FOMC pivot faded from memory and as investors questioned whether global stocks are due for a rough ride on the backdrop of growing risks from inflation and the omicron virus variant. S&P 500 futures slumped about 0.5% Friday morning, while the U.S. 10-year Treasury yield fell for a second straight day to 1.394%, the lowest since Dec. 6. Futures were dragged down by tech stocks as volatility surged amid mounting concerns about monetary tightening and the omicron coronavirus variant. “Rates hikes do not end bull markets, but reversal of central banks’ liquidity means less speculative froth and more volatility,” said Barclays strategist Emmanuel Cau. “Policy angst may be here to stay, but following months of unclear guidances and conflicting signals, the direction of travel is clear now.” Investors are also bracing for the quarterly rebalancing of the S&P 500 Index after the market close and the triple witching expiration of equity derivatives that could magnify market moves. General Motors dropped in premarket trading after the company said Cruise unit Chief Executive Officer Dan Ammann is leaving the company.  Here are some of the other notable premarket movers today: Tesla (TSLA US) shares fall as much as 2.4% in U.S. premarket trading as CEO Elon Musk sells another chunk of shares in the electric vehicle maker. FedEx (FDX US) boosted its adjusted earnings-per-share forecast for the full year, with the guidance beating the average analyst estimate. Shares rose about 4.8% in premarket trading. Spruce Biosciences (SPRB US) shares soar as much as 30% in U.S. premarket trading after Oppenheimer initiated coverage with an outperform rating and a $15 price target that implies 500% upside in the stock from Thursday’s closing price. Cerner (CERN US) shares rise 17% in U.S. pre- trading hours amid a report that Oracle is in talks to buy the medical-records company for about $30b. Rivian Automotive (RIVN US) shares slump 9% in U.S. premarket trading after the electric pickup maker reported results. Piper Sandler says that after- hours share-price loss is “noise,” and remains positive following earnings call. General Motors (GM US) dropped postmarket after it said Cruise Chief Executive Officer Dan Ammann is leaving the company. Steelcase (SCS US) declined in the after hours session after the furniture company reported 3Q revenue that missed the average analyst estimate due to supply chain disruptions. U.S. Steel Corp. (X US) shares declined premarket after it warned fourth-quarter results will be lower than Wall Street had been expecting. In Europe, technology companies and carmakers were among the worst-performing industries, dragging the Stoxx Europe 600 Index down 1%. Tech, autos and utilities are the weakest sectors. Miners and travel are the only Stoxx 600 sectors in small positive territory.  Cellnex slumped 4.1% to a six-month low after a British regulator said the Spanish company’s purchase of CK Hutchison Holdings’s European telecommunication towers raised “significant” competition concerns. Asian stocks slid, as a risk-off mode resumed amid concerns over tighter monetary policies and ongoing tensions between the U.S. and China. The MSCI Asia Pacific Index dropped as much as 1%, set for the fifth decline over the past six days. Technology shares around the region took a hit, led by Chinese giants including Tencent and Alibaba Group, as a global sector selloff continued on higher rate fears. China was among the region’s worst performers after the Biden administration added 34 Chinese targets to its banned-entity list, weighing on sentiment. Japanese stocks held their losses after the Bank of Japan lengthened its cautious withdrawal from emergency pandemic aid. Asia’s benchmark was set to cap a more than 1% slide this week as central banks around the world attempt to curb inflation, dampening prospects for the usual year-end rally. The Federal Reserve plans to double the pace of its asset-tapering program and the Bank of England hiked interest rates, prompting investors to edge away from riskier assets. “I expect the choppy price action to continue to spoof fast-money players into the year-end, both in the U.S. and elsewhere,” said Jeffrey Halley, a senior market analyst at Oanda. In Australia, the S&P/ASX 200 index rose 0.1% to close at 7,304.00, snapping a three-day losing streak. Material and energy shares led the advance on the back of strong commodity prices. Gold miner Norther Star was the best performer on the benchmark. Domain Holdings was the worst performer, followed by Afterpay, after the U.S. government said it launched a regulatory probe into buy now, pay later companies. In New Zealand, the S&P/NZX 50 index fell 0.5% to 12,717.94 In rates, treasuries were mixed with the yield curve flatter as U.S. trading begins, retracing a portion of Thursday’s bull-steepening move that unfolded as futures further marked down likelihood of Fed rate increases beyond mid-2022. Yields out to the 10-year are within 1bp of Thursday’s closing levels, with longer maturities lower by 1bp-2bp; 5s30s is flatter by ~2bp after steepening 7.2bp Thursday, remains ~4bp steeper on week. Yields remain lower on week led by the 5Y, which declined 8.1bp Thursday.  Bunds bull flatten a touch, long-end richer by ~2bps, brushing off some hawkish comments from ECB’s Muller. Peripheral spreads tighten slightly. Gilts are bear steeper, cheaper by 2.5bps at the back end. In FX, the Bloomberg Dollar Spot Index was steady and the greenback was mixed versus its Group-of-10 peers, with most currencies confined to narrow ranges. Treasury yields rose by up to 2bps, led by the belly. The euro was flat at $1.1330 and bund yields were little changed. The pound steadied amid seasonal flows into the dollar and as the boost from Thursday’s surprise Bank of England rate hike wore off. U.K. retail sales last month rose 1.4% from October, when they grew a revised 1.1%, the Office for National Statistics said. Economists had expected an increase of 0.8%. Sales excluding auto fuel grew 1.1%. The yen edged higher on concerns about the risk that eventual draw-down in central bank liquidity could trigger a reversal in the rally. Japanese government bonds were in ranges as they shrugged off the Bank of Japan’s status quo outcome. Australian and New Zealand dollar led G-10 declines as falling stocks and mounting virus numbers sapped demand for risk currencies. Turkish lira once again goes sharply offered, briefly weakening over 9% to print through 17/USD before further central bank intervention. In commodities, WTI dropped 1.5%, holding above $71 so far; Brent trades slips below $74. Spot gold holds Asia’s gains, near $1,804/oz. Base metals are in the green with LME tin outperforming. Bloomberg’s Markets Live team is running an anonymous survey on asset views for 2022. It takes about two minutes and the results will be shared in the latter part of December. Looking at the day ahead, data releases include Germany’s Ifo business climate indicator for December, as well as November data on German PPI and UK retail sales. From central banks, we’ll also hear from the Fed’s Waller and the ECB’s Rehn. Market Snapshot S&P 500 futures down 0.8% to 4,635.00 MXAP down 0.9% to 191.41 MXAPJ down 0.8% to 618.58 Nikkei down 1.8% to 28,545.68 Topix down 1.4% to 1,984.47 Hang Seng Index down 1.2% to 23,192.63 Shanghai Composite down 1.2% to 3,632.36 Sensex down 1.5% to 57,011.01 Australia S&P/ASX 200 up 0.1% to 7,303.97 Kospi up 0.4% to 3,017.73 STOXX Europe 600 down 0.6% to 473.64 German 10Y yield little changed at -0.36% Euro little changed at $1.1330 Brent Futures down 1.4% to $73.99/bbl Gold spot up 0.5% to $1,808.56 U.S. Dollar Index little changed at 95.98 Top Overnight News from Bloomberg Boris Johnson suffered a seismic political upset as his ruling Conservatives lost a key parliamentary election, a result that will heap intense pressure on the U.K. prime minister and may even call his position into question Leading central banks made a big call this week, deciding that the coronavirus is no longer calling the shots in their economies, and inflation is now the bigger threat Bank of France Governor Francois Villeroy de Galhau said the difference between the new forecast for 1.8% inflation in 2023 and 2024 and the ECB’s 2% target is within the “margin of uncertainty.” In a Bundesbank report showing German inflation will run above 2% through 2024, Jens Weidmann urged vigilance as he sees “risks to the upside” throughout the currency bloc ECB Governing Council member Olli Rehn said “there’s considerable uncertainty about the path which inflation will take” Germany’s main gauge of business expectations slipped to 92.6 in December, falling for a sixth month, according to the Ifo institute. That’s a bigger decline than predicted by economists in a Bloomberg survey. Current conditions were also assessed as weaker than in November EU leaders failed to reach a deal on how to react to the unprecedented gas crisis that sent energy prices to record levels after Poland and the Czech Republic demanded stronger action to cap the costs of pollution A more detailed look at global markets courtesy of Newsquawk Asian equity markets were mostly lower with sentiment in the region downbeat after the tech-led declines in the US and yesterday’s central bank frenzy. Overnight US equity futures held a downside bias. The ASX 200 (+0.1%) traded positively amid notable outperformance in the commodity-related sectors which was spearheaded by gold miners as the precious metal reclaimed with the USD 1800/oz level and with sentiment also helped by the announcement of a UK-Australia trade deal. The Nikkei 225 (-1.8%) was the biggest laggard as exporters suffered from detrimental currency inflows and following the BoJ announcement to scale back its pandemic relief measures in March. The Hang Seng (-1.2%) and Shanghai Comp. (-1.2%) were lacklustre after further restrictive measures by the US on Chinese companies including the passage of the Uyghur bill aimed at China which bans imports from Xinjiang unless the US government determines they were not produced with forced labour, while tech suffered after the US included several Chinese companies to its investment and trade restrictions lists. Finally, 10yr JGBs were flat despite the steepening seen in the US and underperformance of Japanese stocks, with demand subdued amid the BoJ decision to scale back pandemic relief measures. Top Asian News Japan Expedites Virus Boosters for Some as Omicron Looms Hong Kong Stock Exchange to Allow SPAC Listings Next Month Thailand May Impose Stock-Trading Tax to Lift Government Revenue Asian Stocks Drop as Worries on Global Policy Tightening Linger European equities have succumbed to the weakness seen on Wall Street and across most APAC markets (Euro Stoxx 50 -1.1%; Stoxx 600 -0.6%) as global central banks turn hawkish and Quad Witching gets underway in holiday-thinned liquidity. US equity futures have also drifted lower, with the March 2022 contracts softer to the tune of 0.1-0.3% across the ES, NQ, YM and RTY. On the recent central bank pivots, analysts at Barclays suggest that rate hikes do not end bull markets, but reduced liquidity means “less speculative froth”. Barclays sees persisting inflation as a risk to markets and Omicron as an increasing downside risk to European growth, albeit the impact is contained thus far. Back to trade, Eurozone bourses see broad-based weakness whilst the UK’s FTSE 100 (+0.2%) holds its head above water – aided by outperformance in the basic materials sector and a softer Sterling. Overall sectors kicked off the day with a defensive bias, albeit that theme has since faded, with some cyclicals making their way up the ranks. Sectors are mostly in the red, however. Auto names are the laggards, with European car registrations -17.5% in November (prev. -30% MM). Tech also resides towards the bottom amid outflows from growth, and with the hefty valuations state-side also stoking some concerns. Chip names are also hit amid news Apple (-0.8% pre-market) is reportedly planning to build a new office to bring wireless chips in-house which may replace parts from Broadcom and Skyworks. STMicroelectronics (-3%), ASM (-2.4%), BE Semiconductor (-2.6%) are among the biggest losers in the Stoxx 600. Top European News European Gas Plunges After Russia Books Pipeline at Last Minute Stellantis Revamps Auto-Finance Business With BNP, Santander Cellnex Drops Most in 11 Months on CK Hutchison Deal Woes Johnson Suffers Humiliating Defeat in U.K. Special Election In FX, it feels like Friday fatigue has set in and markets are already in weekend mode as the Greenback sticks to relatively tight lines against most G10 peers and the index holds close to the 96.000 level within a narrow 96.118-95.875 band. Consolidation and sideways price action is hardly a surprise given this week’s extremely volatile trade on a combination of thin seasonal volumes and the abundance of final global Central Bank policy meetings for the year all scheduled within a few days. However, the Dollar and a few of its key counterparts may also be tied up in option expiry interest that ranges from large to huge in certain cases, awaiting comments from Fed’s Waller as the first official post-FOMC speaker. CHF/EUR/GBP/JPY - The Franc remains above 0.9200 vs the Buck and is testing 1.0400 against the Euro again in wake of an unchanged SNB yesterday, while the single currency is holding above 1.1300 vs the Greenback even though Germany’s latest Ifo survey was downbeat and perhaps underpinned by hawkish remarks from ECB’s Simkus and Muller over the comparatively neutral/dovish Rehn. Elsewhere, Sterling retains an element of its post-BoE hike momentum, but not enough for Cable to breach the 30 DMA that comes in at 1.3344 today or stay above a Fib retracement at 1.3321 irrespective of Chief Economist Pill expressing the view that further tightening is likely. Conversely, the BoJ stuck to its dovish stance and balanced the termination of corporate and commercial QE by extending the COVID-19 funding facility for SMEs another 6 months, to leave the Yen meandering between 113.86-44, though nearer 113.50 amidst the latest bout of risk aversion. Note also, Usd/Jpy will likely be contained by a swathe of option expiries stretching from 113.00 up to 114.50 and the same can be said for Eur/Usd and the Pound given the sheer size of interest at various strikes rolling off today - see 7.24GMT post on the Headline Feed for details. NZD/AUD/CAD - A further deterioration in NBNZ business outlook and decline in own activity have compounded the aforementioned downturn in overall sentiment to the detriment of the Kiwi more than Aussie or Loonie that is feeling the heat from renewed weakness in WTI crude. Hence, Nzd/Usd is nearer 0.6750 than 0.6800, while Aud/Usd is hovering within a 0.7185-53 range and Usd/Cad sits just above 1.2800. In commodities, WTI and Brent futures have been trundling lower in tandem with risk appetite – with WTI Jan closer to USD 71/bbl (vs high USD 72.26/bbl) whilst Brent Feb resides under USD 73/bbl (vs high USD 74.98/bbl). The morning did see updates on the Iranian nuclear front whereby sources suggested the parties in the Vienna talks have been able to reach a new draft by incorporating Iran's views, which, if finalised, will be the basis for upcoming talks. Although nothing is yet set in stone, this is much more constructive than had been the case this time last week. Further, the oil complex juggles the fluid COVID situation as the steeper rise in global cases backs the notion of stricter measures. That being said, reports thus far continue to suggest the lower severity of the Omicron variant. Analysts at Goldman Sachs said Omicron hasn't had much of an impact on mobility and oil demand, while it sees strong oil demand in 2022 from rising CAPEX and infrastructure construction. Furthermore, it stated that average oil demand is to hit record highs in 2022 and 2023. Elsewhere, spot gold remains firm after topping the group of DMAs yesterday (21 at 1787, 100 at 1788, 200 at 1794 and 50 at 1798) alongside the USD 1,800/oz mark. LME copper hovers around the USD 9,500/t mark awaiting the next catalyst, whilst Dalian iron ore continued to gain overnight with traders citing a recovery in steel demand. US Event Calendar No economic events 1pm: Fed’s Waller Discusses the Economic Outlook DB's Jim Reid concludes the overnight wrap Well this is my last EMR of 2021. Henry will be in charge on Monday and Tuesday of next week but by then I’ll be catching up on sleep to prepare myself for the onslaught of Xmas with three hyper excitable kids. Thanks for all your support and interactions over the past year. Hopefully you’ll continue to read in 2022. Try to have as exciting a holiday season as the virus permits and see you on the other side. As I have done most years, at the end today I’m listing my favourite TV series and films of the year. I used to do favourite albums of the year but I’m ashamed to say that the person who used to buy a few hundred albums a year and try out all sorts of new music has turned into someone who listens to playlists and old albums. All a bit dull. The odd film and lots of TV continues to keep me sane after a day working in financial markets. So I hope you enjoy the countdown. Talking of countdowns, yesterday was probably the last active market day of the year with a slew of Central Bank activity over the last 36 hours. However the FOMC-inspired risk rally peaked out by lunchtime in Europe and the S&P 500 eventually shed -0.87% amidst significant declines in technology stocks (Nasdaq -2.47%). Meanwhile there was continued caution about the Omicron variant among investors, as many of the key economies await a fresh wave of cases over the coming weeks. We’ll start with the ECB, who yesterday said that they would be ending net asset purchases under their Pandemic Emergency Purchase Programme (PEPP) at the end of March 2022, and that purchases over Q1 would be “at a lower pace than in the previous quarter”. Nevertheless, they also moved to soften the blow by confirming a step up in purchases by the Asset Purchase Programme (APP) to €40bn a month in Q2 2022, followed by a reduction to €30bn in Q3, and then €20bn a month from October “for as long as necessary to reinforce the accommodative impact of its policy rates.” They also said that they expected net purchases would conclude “shortly before it starts raising the key ECB interest rates.” Overall this was a somewhat hawkish decision (see European economists’ recap here), since although APP purchases will be increasing, those volumes are fixed and will taper out, whilst expectations were that the ECB may retain more flexibility with the APP. That flexibility seems confined to PEPP reinvestments, which will grant policy optionality as the inflation outlook remains uncertain. That said, it seems like the ECB communicated a set path for policy during 2022, with rate hikes not coming until 2023, according to our economists. Sovereign bond yields ended the day higher across most of the continent, although they gave up some of that increase towards the close, with those on 10yr bunds (+1.1bps), OATs (+2.2bps) and BTPs (+5.5bps) all rising. However, some shorter-dated yields did move lower, with those on 2yr bunds (-1.3bps) and OATs (-0.2bps) declining. When it comes to the ECB’s inflation forecasts, these were upgraded yet again, with the central bank now expecting 2022 inflation at +3.2% (vs. +1.7% in September), whilst their 2023 and 2024 projections now stand at +1.8%. However, the 2023 and 2024 projections are still beneath the ECB’s 2% target, and in their forward guidance they’ve said that they wouldn’t raise raises until inflation was seen reaching the target “durably for the rest of the projection horizon”, so even with the upgrade to 2023 they’re still forecasting inflation beneath target then. The other central bank decision came from the BoE yesterday, who hiked rates by 15bps to 0.25%. The consensus had been expecting them to keep rates on hold given the Omicron variant, hence the decision came as something of a surprise to markets, although we should say that DB’s own UK economist made an out-of-consensus but accurate call for a 15bps hike. In the minutes, the decision was described as “finely balanced” due to the uncertainty around Covid, but an 8-1 majority on the MPC voted in favour, and Governor Bailey said afterwards in a BBC interview that “We’ve seen evidence of a very tight labour market and we’re seeing more persistent inflation pressures, and that’s what we have to act on”. It comes as inflation has continued to surpass the BoE’s own forecasts, and the summary of the latest meeting said that Bank staff were now expecting inflation to peak “around 6% in April 2022”, up from its current level of 5.1%. Given the decision came as a surprise to many, there was a sharp rise in gilt yields in response, with those on 10yr gilts initially up +10bps before following the global bond rally which meant we only closed up +2.2bps to 0.75%. That move was entirely driven by higher real rates, and the 10yr inflation breakeven fell -5.5bps as investors moved to price in a lower trajectory for inflation, with the 5yr breakeven down by an even larger -12.3bps. Meanwhile investors also moved to price in a faster pace of hikes over the coming months, with the next 25bps hike fully priced in by the time of the March 2022 meeting, and a +73% chance of one priced in at the next meeting in February. In terms of DB’s own expectations, our UK economist writes in his reaction note (link here) that he now expects the next 25bps hike as soon as February 2022, followed by two further hikes in November 2022 and May 2023. Against this backdrop there was a fairly mixed equity reaction on either side of the Atlantic. The S&P 500 fell -0.88% as mentioned, with the NASDAQ seeing a major -2.47% decline, erasing their post-FOMC gains. In Europe however there was a much stronger performance as they caught up with the US rally following the Fed’s policy decision, and the STOXX 600 advanced +1.23%. Separately, US Treasuries also diverged from their European counterparts, with the 10yr yield down -4.6bps at 1.41%. In terms of the latest on the pandemic, there was a further record number of cases in the UK yesterday, with 88,376 reported, which beats the previous record set only the day before. Against that backdrop, France moved to restrict travel from the UK, with tourist and non-essential business travel prohibited. Separately in South Africa, hospitalisations now stand at 7,614, which is currently up +59% on the previous week. When it comes to the economic impact, yesterday’s release of the December flash PMIs from around the world pointed to weakening growth momentum across the major economies. Indeed, the composite PMI declined on the previous month in the US, Euro Area, Germany, France, UK, Japan and Australia. The headline numbers were the Euro Area composite PMI, which fell to a 9-month low of 53.4 (vs. 54.4 expected), whilst the US composite PMI fell to 56.9. So both still above the 50-mark that separates expansion from contraction, but some way down from their peaks in the middle of the year. Over in the US, it appears the gap between Democratic senators on President Biden’s Build Back Better bill is just too big, as Democratic leaders acknowledged that negotiations and votes could well drag over into next year. In a statement, President Biden said that “It takes time to finalize these agreements, prepare the legislative changes, and finish all the parliamentary and procedural steps needed to enable a Senate vote. We will advance this work together over the days and weeks ahead”. Obviously longer-term outlooks will hinge on whether or not the bill passes, but there’s implications for 2022 growth, too, as the bill was set to extend child tax credits that comprise a not-insubstantial portion of consumer income. Overnight in Asia the main equity indices are trading lower, with the KOSPI (-0.33%), Shanghai Composite (-0.90%), Hang Seng (-1.28%), CSI (-1.31%) and the Nikkei (-1.75%) all declining amidst losses in technology stocks. Some of the main headlines came from the Bank of Japan however, which kept its main policy rates unchanged, announced that it would slowly reduce its corporate debt holdings, but also extended a special covid loans program by six months to end in September 2022, which aims to support small and medium-sized firms. Futures markets in US & Europe are also indicating a slow start, with those on the S&P 500 (-0.14%) and the DAX (-0.67%) both trading in the red. In terms of yesterday’s other data, the weekly initial jobless claims in the US moved up from their half-century low the previous week to 206k (vs. 200k expected). In spite of the uptick however, it was still enough to push the 4-week moving average down to 203.75k. Otherwise, US industrial production grew by +0.5% in November (vs. +0.6% expected), housing starts accelerated to an annualised rate of 1.679m (vs. 1.567m expected), their highest level in 8 months, and building permits rose to an annualised 1.712m (vs. 1.661m expected). To the day ahead now, and data releases include Germany’s Ifo business climate indicator for December, as well as November data on German PPI and UK retail sales. From central banks, we’ll also hear from the Fed’s Waller and the ECB’s Rehn. Tyler Durden Fri, 12/17/2021 - 08:07.....»»

Category: blogSource: zerohedgeDec 17th, 2021

At least 15 lawmakers who shape US defense policy have investments in military contractors

The lawmakers serve on the House Armed Services Committee and the Senate Armed Services Committee. Rebecca Zisser/InsiderFrom left: Rep. Jim Cooper, Sen. Tommy Tuberville, Sen. Jacky Rosen, and Rep. Pat Fallon.US House of Representatives; US Senate; Marianne Ayala/Insider The politicians hold posts on either the House or Senate armed-services panels. They're investing their money in defense contractors such as Lockheed Martin, Raytheon, and Boeing. Potentially profiting off oversight duties is indefensible, ethics watchdogs say. At least 15 lawmakers who hold powerful positions on a pair of House and Senate committees that control US military policy have financial ties to prominent defense contractors that together were worth nearly $1 million in 2020, according to an Insider analysis of federal financial records.And throughout 2021, both Democrats and Republicans serving on the congressional Armed Services committees have continued to invest in or cash out of the most important players in the military and defense industry. Some of the world-renowned weapons makers and defense-technology developers peppered across the committee members' financial disclosures were Lockheed Martin Corp., Boeing Co., Raytheon Technologies Corp., Honeywell, and General Electric. All are companies that also annually spend millions of dollars lobbying the federal government to prod elected officials, shape policy, and win lucrative government contracts.Lawmakers with investments riding on defense contractors' well-being — some worth upward of five figures — include seasoned Capitol Hill veterans and Washington newcomers, Insider found when analyzing documents disclosing their personal financial holdings for 2020.The tally is part of the exhaustive Conflicted Congress project, in which Insider reviewed nearly 9,000 financial-disclosure reports for every sitting lawmaker and their top-ranking staffers.House investmentsAtop the list is the 16-term Rep. Jim Cooper, a Democrat of Tennessee who chairs the House panel's Strategic Forces Subcommittee. He reported owning up to $65,000 worth of stock in General Electric at the end of 2020, with up to $50,000 worth of it held in a tax-favored individual retirement account and up to $15,000 worth held in a brokerage account established for one of his children. A diversified company that produces a variety of products, GE describes itself as a "leading supplier of integrated systems and technologies for combat aircraft, military transport, helicopters, land vehicles and unmanned aerial vehicles." Democratic Reps. Joe Courtney of Connecticut and Mikie Sherrill of New Jersey reported briefly owning defense-related stocks during 2020. Courtney is in his eighth term and chairs the House panel's Seapower and Projection Forces Subcommittee. Sherrill is a second-term lawmaker and considered a more junior member of the House Armed Services Committee. Both told Insider they had since divested themselves of individual stock holdings and diversified their portfolios by investing in mutual funds or exchange-traded funds. The wife of Democratic Rep. Ro Khanna of California, Ritu Khanna, invested up to several hundred thousand dollars in a collection of defense contractor stocks at some point in 2020, including Boeing, General Dynamics, General Electric, Honeywell, Northrop Grumman, and Raytheon. Ro Khanna served on the House Armed Services Committee then, as he does now in his third term as a member of Congress.While Ritu Khanna sold many of those stocks before 2021, she has made several four- or five-figure trades in Honeywell in 2021, according to federal financial disclosures.House Armed Services Committee member Ro Khanna, a Democrat of California, fields questions from reporters after a meeting of the House Democratic Caucus in the US Capitol.Tom Williams/CQ-Roll Call, Inc via Getty Images"My wife has assets prior to marriage which are legally not mine, and it's not my place to tell her what to do with her separate assets," Ro Khanna told Insider.Two more Democrats — Reps. Rick Larsen of Washington and Joe Morelle of New York — both reported having less than $1,000 tied up in defense companies. Larsen is in his 11th term and one of the House committee's most senior members, though he doesn't hold an official leadership position on the panel. Morelle is in his third term but just got his seat on the Armed Services panel in January. Their offices did not respond to repeated requests for comment about their finances.Across the aisle, Republican Rep. Pat Fallon, a freshman of Texas who secured a coveted spot on the armed-services panel upon his arrival on Capitol Hill, reported buying and selling up to $1.4 million worth of Boeing stock this year, much of it between January and April. He also reported owning up to $50,000 worth of stock in General Electric.Fallon did not respond to repeated requests for comment about his finances. Insider earlier this year reported that Fallon failed to properly disclose dozens of stock transactions together worth millions of dollars, which his spokesperson attributed to the congressman's unfamiliarity with federal conflict-of-interest laws. Fellow new arrival Rep. Blake Moore, a GOP freshman from Utah, reported owning up to $50,000 worth of stock in Boeing and up to $50,000 in Raytheon shares at the end of 2020. The congressman has continued purchasing defense contractor stocks in 2021, buying up to $60,000 worth of Raytheon shares between February and May and $15,000 worth of Boeing shares in July. Shares in Raytheon have increased in value since the beginning of 2021, while shares in Boeing have fallen.Moore in 2021 has also bought and sold up to $180,000 worth of stock and stock options in Alibaba Group, the Chinese e-commerce giant that has demonstrated ties to China's Communist Party. His most recent Alibaba stock option purchase came on November 19, federal records show. US military officials have regularly warned of China's advances in military technology and capabilities, and Moore himself is an outspoken critic of China's government. Moore, who also this year failed to properly disclose stock trades in violation of federal law, did not respond to repeated requests for comment about his finances for this story. In July, Moore's office told Insider in a written statement that "upon entering Congress, Congressman Moore made an intentional effort to learn the new financial requirements and simplify and consolidate his financial investments."Republican Rep. Austin Scott of Georgia reported buying and selling up to $45,000 worth of stock in General Electric in late 2020. A spokesperson for the six-term lawmaker, Rachel Ledbetter, said Scott and his wife "own stocks like millions of American families do."And they follow all laws on trading," she added.Republican Rep. Mike Gallagher of Wisconsin, now in his third term in Congress, reported that his wife, Anne Horak Gallagher, sold up to $50,000 worth of stock in Lockheed Martin in January 2020 as part of the couple's shift to investing in mutual funds or exchange-traded funds. Six-term Republican Rep. Mo Brooks of Alabama said he inherited shares of General Electric when his mother died in 2019 but otherwise depended on a financial advisor to handle his investments. Republican Rep. Rob Wittman of Virginia said he had no knowledge of the up to $15,000 worth of Lockheed Martin stock and up to $15,000 in Honeywell shares that flowed through his portfolio, telling Insider an investment manager handled his finances. Now in his eighth term, Wittman is the GOP ranking member for the panel's Seapower and Projection Forces Subcommittee.  "Mr. Wittman believes members of Congress should not improperly benefit from their role," Sarah Newsome, a spokesperson for Wittman, wrote in an email, adding that her boss "remains committed to accountability and transparency in government." Senate investmentsAcross the Capitol, Republican Sen. Tommy Tuberville, a freshman of Alabama, reported owning nearly $200,000 worth of stock combined in Honeywell, Lockheed Martin, General Electric, Raytheon, and General Dynamics.Tuberville also violated the federal Stop Trading on Congressional Knowledge Act of 2012 this year by disclosing nearly 130 stock trades weeks or months late. Tuberville has continued trading defense contractor stocks during 2021, most recently on October 18, when he sold his stakes in General Dynamics and General Electric, each worth up to $50,000, according to federal records. Like Moore, Tuberville also trades heavily in Alibaba, buying and selling up to $215,000 in stock options on September 13.Freshman Sen. Tommy Tuberville, a Republican of Alabama, quizzes US military leaders about ongoing operations during Senate Committee on Armed Services hearing on September 28, 2021 on Capitol Hill.Alex Wong/Getty ImagesRyann DuRant, his spokesperson, previously downplayed questions about her boss' finances, telling Insider the former college-football coach had "long had financial advisors who actively manage his portfolio without his day-to-day involvement." Altogether, Tuberville's campaign received $89,100 in contributions from defense-sector PACs and employees when he ran for office in 2020, according to OpenSecrets.Democratic Sen. Jacky Rosen of Nevada and her husband, Larry Rosen, reported co-owning up to $110,000 worth of stock in General Electric. Democratic Sen. Gary Peters of Michigan reported owning up to $15,000 worth of stock in Raytheon. Rosen and Peters — both are more junior members without leadership roles on the Senate Committee on Armed Services — did not respond to repeated requests for comment about their personal finances.Dialing up defenseWhether they have leadership positions on the committees or not, all 15 lawmakers who have made investments in the defense industry all sit on the House and Senate panels responsible for writing the annual defense-authorization bill that bankrolls the military personnel and subcontractors in their home districts. Earlier this month, the House passed its version of the nearly $770 billion National Defense Authorization Act bill. It now awaits a Senate vote and Biden's signature.Under current law, members of Congress must disclose all of their individual stock trades in a public database within 30 to 45 days of conducting the transaction, depending on the trade. There is also no prohibition against lawmakers sitting on congressional committees, writing legislation, or voting on bills that might affect them financially.The defense companies that members of Congress invested in spend millions of dollars annually lobbying the federal government, including Congress, on a variety of issues. In 2020, Lockheed Martin spent nearly $14 million, General Dynamics spent nearly $11 million, and Honeywell spent nearly $5 million, according to OpenSecrets.The defense-contracting industry also has huge influence on other congressional panels, including the House and Senate Appropriations committees that funnel hundreds of billions of federal dollars every year into government programs and contractors.Numerous federal policymakers also have defense contractors in their states and districts. Their job is to call up lawmakers as the defense-spending bills are being drafted to say people will lose their jobs if funding decreases. This year, as Congress prepared to debate the National Defense Authorization Act for fiscal year 2022, Rep. Diana Harshbarger, a Republican of Tennessee, purchased thousands — possibly up to tens of thousands — of dollars of stock in the defense contractors Oshkosh Corp. and Raytheon, according to a federal financial disclosure.Harshbarger, who Insider in August reported violated the federal Stop Trading on Congressional Knowledge Act through her tardy disclosure of hundreds of stock trades, is a member of the House Committee on Homeland Security. The committee has congressional oversight responsibilities for the Department of Homeland Security, an agency that frequently contracts with Raytheon, for one. The congresswoman employs a financial planner to manage her portfolio "without any authorization, direction, or approval from Congresswoman Harshbarger," said Zac Rutherford, her chief of staff.Reps. Diana Harshbarger of Tennessee (left) and Marjorie Taylor Greene of Georgia (right) pose for a group photo on the steps of the US Capitol with other freshmen from the House Republican Conference on Monday, January 4, 2021.Tom Williams/CQ-Roll Call, Inc via Getty ImagesMeanwhile, Rep. Marjorie Taylor Greene, the Georgia Republican whom the House stripped of committee assignments earlier this year over the 1st-term congresswoman's history of violent comments and promotion of conspiracy theories, purchased up to $15,000 worth of Lockheed Martin stock as recently as November 15, federal records indicated.Conflicts between stock portfolios and constituentsGovernment watchdogs criticized the practice of US lawmakers trading in defense-contractor stocks, especially members of the committees with oversight of policy, budgets, and spending."It is impossible to avoid the appearance of a conflict of interest when you have individual stock in a company whose industry you influence, and you can pick the winners and losers," Kedric Payne, the general counsel and senior director of ethics at the nonprofit Campaign Legal Center, told Insider.Divorcing policymaking power from personal enrichment is paramount to preserving our democracy, officials at the nonprofit watchdog organization Citizens for Responsibility and Ethics in Washington said."Americans shouldn't have to be concerned about members of Congress being more focused on their stock portfolio than on the country's problems and their constituents' best interests," Meghan Faulkner, CREW's digital director, wrote.One of her colleagues who spoke to Insider put it more bluntly. This person who was not authorized to speak to a reporter flat out urged Congress to ban individual stock trading — for the good of everyone. "At worst, it's a sign of abject corruption," the CREW aide told insider. "And at best, it's a distraction — even for well-meaning members — from the work that they're actually supposed to be doing: passing laws and conducting oversight." Senior correspondent Robin Bravender contributed to this report.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 13th, 2021

Elon Musk has now cashed out $12 billion in Tesla stock in a 5-week selling spree, as he jokes he wants to quit his jobs

The billionaire sold another 934,091 shares of the electric-vehicle maker worth $963.2 million on Thursday, a Securities and Exchange Commission filing showed. Britta Pedersen/Pool/AFP via Getty Images Elon Musk sold Tesla stock worth $963 million on Thursday, and joked he's thinking of quitting his jobs. The EV-maker's CEO has now sold nearly $12 billion of shares since asking Twitter whether to sell 10% of his holding. Tesla's stock is down 18% since Musk began to offload his shares on November 8. Elon Musk has sold another $1 billion of Tesla stock, meaning he has cashed in nearly $12 billion in shares since asking Twitter whether he should shed one-tenth of his holdings.The billionaire took to social media again overnight, this time to tweet that he was thinking of quitting his roles as CEO of Tesla and SpaceX — taken as a joke by his fans.Musk sold 934,091 shares of the electric-vehicle maker worth $963.2 million on Thursday, a Securities and Exchange Commission filing showed.But at the same time, he exercised stock options to buy 2.17 million shares in Tesla, at a price of $6.24 each. The stock sales were made to cover tax obligations around the options exercise, according to the SEC filing.In early November, the Tesla boss asked his Twitter followers whether he should shed 10% of his stock, getting a resounding "yes" in reply.In the five weeks since then, he has offloaded 11.03 million shares in a series of chunks, bringing the total divestment to $11.82 billion.The stock's price has dropped 18% since Musk began the selling spree, but is up 42% so far this year. It was down 1.2% in pre-market trading Friday, after falling 6% at Thursday's close. To hit the 10% target for cutting his holding, Musk would need to have sold about 17 million shares (without counting exercisable options.) But while the world's richest man has been culling Tesla stock, he has also picked up a hefty amount via exercising options — a total of 12.9 million shares, according to Reuters. That means his acquisitions have outstripped sales, and he has raised his overall stake in the EV-maker.Even before the Twitter poll, Musk said in September he planned to sell shares to cover the cost of taxes resulting from exercising options that were set to expire in 2022.Analysts estimated Musk would likely incur a $10 billion tax bill next year from exercising options, which gives him an incentive to liquidate some holdings. Meanwhile, the Tesla CEO  said on Twitter overnight that he's thinking of quitting his jobs to become a full-time influencer —  but didn't give any more details. As well as being CEO of the EV maker and aerospace manufacturer SpaceX, Musk is the founder of brain-chip company Neuralink and infrastructure firm The Boring Company.@elonmusk/TwitterThat meant it wasn't clear whether he was being serious, but Musk is known for his trolling on social media. His replies to comments on the tweet — suggesting he start an OnlyFans account or a YouTube channel — suggested he was joking.Read More: An exclusive look at JPMorgan Asset Management's 2022 investment outlook reveals which 4 stock sectors the firm is most bullish on — and why rich US valuations and inflation aren't worth worrying aboutRead the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 10th, 2021

Cathie Wood"s nightmarish 2021: Ark Innovation has plunged 24% as tech has crashed, with 6 out of 8 Ark funds in the red

Ark Invest boss Cathie Wood's year has gone from bad to worse in December, with the flagship ARKK ETF tumbling 10%. Superstar stock-picker Cathie Wood is having a bad 2021.Photo by PATRICK T. FALLON/AFP via Getty Images Cathie Wood's Ark Invest ETFs have taken a hammering in December as investors have avoided tech stocks. With the Fed set to raise interest rates, suddenly, other parts of the market are starting to look more attractive. Ark's Innovation ETF is now down 23.7% for the year, and six out of eight of Ark's ETFs are in the red. Cathie Wood's 2021 has gone from bad to worse in December, with her Ark Invest exchange-traded funds tumbling in highly volatile trading as investors ditch unprofitable tech stocks.Ark Invest's flagship Innovation ETF has dropped more than 10% in December and is now down a whopping 23.7% for the year – putting it in bear-market territory.Six out of eight of Wood's main ETFs are now in the red in 2021. Ark Genomic Revolution has crashed more than 30% and Ark Fintech Innovation is down around 15%.Wood, the founder and CEO of Ark invest, shot to investing stardom last year. Ark's selection of ETFs placed big bets on the technologies of the future – from fintechs to 3D printing – and made huge returns. Investors were flush with cash from government and central bank stimulus programs and they piled into flashy tech names. Ark's Innovation ETF returned around 150% in 2020.Yet many of those tech bets have begun to flop in recent months, as global central banks have started gearing up to turn off the stimulus taps in response to soaring inflation. Concerns about the Omicron variant are also affecting investors.Many tech companies – especially the ones Wood specializes in – are not expected to become properly profitable for many years. With central banks set to raise interest rates in the next year, the far-off returns these companies offer have started to look a lot less attractive compared to other parts of the market.Going into 2022, investors will be faced with less fiscal and monetary stimulus supporting the economy and markets, with the Fed removing liquidity by "tapering" bond purchases, Steen Jakobsen, chief investment officer at Saxo Bank, told Insider."And that means that high-growth stocks, which is built entirely on low rates and high top-line growth, of course is getting impacted massively," he said.Big Ark holdings such as Teladoc, Square and Coinbase have tumbled. Many of Wood's funds would be doing even worse were it not for her big bets on Tesla, which has jumped more than 40% this year.A sort of "inverse Ark Innovation ETF" that's betting against Wood's stock picks – ticker SARK – has soared more than 20% since launching last month, as many investors have spotted an opportunity.Read more: Veteran professor Erik Gordon outlines why he doesn't expect a stock-market crash, calls Cathie Wood a dot-com 'throwback' for her grand claims, and warns against owning meme stocksBut despite investors dumping Ark funds, Wood has remained upbeat. She told CNBC last week that it's the traditional S&P 500 stalwarts that are in a bubble, because they have a less bright future."We are not in a bubble. Our strategies would be flying if we were. I think we have not begun rewarding innovation for what's about to happen and so that's where our conviction comes from," she said.Wood has floated the idea of an "Ark on steroids" fund that would also bet against stocks. And this week Ark is launching its Transparency ETF, designed to track an index of "transparent" companies. Ark Invest did not respond to Insider's request for comment.Looked at from a broader angle, things don't look so bad. The average annualized total return for Ark funds is still around 30% over the last five years.Saxo's Jakobsen said he thinks Ark's funds have a bright future and that investors need to remember their premise."The premise of the Ark funds is not to give you an S&P or a Nasdaq performance. It is to buy into the concept that the future has technology embedded into it, and to be part of the future you need to buy a big number of lottery tickets."Ark's ETFs have been hit hard this year, with the majority of returns in the red.Bloomberg dataRead the original article on Business Insider.....»»

Category: smallbizSource: nytDec 7th, 2021