Funko Is A "Buy" On This Weakness, Says This Analyst

DA Davidson analyst Linda Bolton Weiser reiterated its Buy rating on Funko Inc (NASDAQ: FNKO) and lowered the price target to $48 from $50. The analyst said the company had reported a bigger-than-expected gross margin decline in 2Q22. Weiser said Funko’s new product launches, expanded ...Full story available on»»

Category: earningsSource: benzingaAug 5th, 2022

High Inflation is Crushing These 10 Stocks

In this article, we discuss 10 stocks that the high inflation is crushing. If you want to see more stocks that are impacted by inflation, check out High Inflation is Crushing These 5 Stocks.  The Consumer Price Index for July reported an 8.5% rise, which was a much needed reprieve for businesses, consumers, and policymakers […] In this article, we discuss 10 stocks that the high inflation is crushing. If you want to see more stocks that are impacted by inflation, check out High Inflation is Crushing These 5 Stocks.  The Consumer Price Index for July reported an 8.5% rise, which was a much needed reprieve for businesses, consumers, and policymakers alike. While inflation slowed relatively, it is not indicative of a proper turnabout in the economic crisis. After eliminating food and fuel costs to get an accurate insight on underlying prices, the CPI showed that prices jumped by 5.9% through July. While fuel prices, air travel, and automobile prices dropped in July, the decline was offset by higher rent and food costs. Although the stock market is rejoicing about the slower inflation numbers in July, the rate of inflation is still abnormally high and the drop was largely owed to lower gas prices, which can always climb again. The US dollar also fell against multiple currencies.  According to the U.S. Bureau of Labor Statistics, prices for services rose at an annualized rate of 8.1% over the three months to July, compared to a 9.9% jump over the three months to June, which was the highest recorded level in 40 years. The growth in the Service sector has diminished notably since the beginning of the year as per the survey of purchasing managers carried out by the Institute for Supply Management. Inflation has plagued the United States since the start of this year, and it peaked to 9.1% in June. Many businesses have been impacted as consumers shift their spending patterns from discretionary and luxury purchases to basic necessities. Some of the stocks that were crushed due to high inflation include Builders FirstSource, Inc. (NYSE:BLDR), Expedia Group, Inc. (NASDAQ:EXPE), and Lowe’s Companies, Inc. (NYSE:LOW).  Photo by on Unsplash Our Methodology  We selected stocks from sectors such as consumer discretionary, luxury retail, home improvement, and entertainment, to name a few. These sectors are generally impacted severely during inflationary periods. These stocks have also received subpar analyst ratings or ratings downgrades recently, which further indicate the crushing impact of inflation.  We have ranked the list according to the hedge fund sentiment around the securities, which was gauged from Insider Monkey’s Q1 2022 database of 900+ elite hedge funds.  High Inflation is Crushing These Stocks 10. Bed Bath & Beyond Inc. (NASDAQ:BBBY) Number of Hedge Fund Holders: 15 Bed Bath & Beyond Inc. (NASDAQ:BBBY) is an American company that operates a chain of retail stores, selling bed linens, bath items, kitchen textiles, and home furnishings. Street consensus regarding Bed Bath & Beyond Inc. (NASDAQ:BBBY) is very negative due to past performance issues, however, the stock seems to be rallying amid a meme stock frenzy and short squeeze warnings.  On August 9, Baird analyst Justin Kleber downgraded Bed Bath & Beyond Inc. (NASDAQ:BBBY) to Underperform from Neutral with an unchanged price target of $4. The stock closed on August 8 up 40% to $11.41. The shares have gained 148% since July 27, including 86% in the past two trading days, the analyst told investors. However, he believes the rally has been “driven by non-fundamentally focused market participants”. With higher market share losses and Bed Bath & Beyond Inc. (NASDAQ:BBBY) “burning cash,” the stock’s fundamental risk/reward looks unattractive, contended the analyst. As per his estimates, the company needs to accumulate more than $350 million of EBITDA by fiscal 2025 to justify the present $2.3 billion enterprise value. This is a “tall order given the current macro/sector backdrop,” the analyst stressed. According to Insider Monkey’s data, 15 hedge funds were bullish on Bed Bath & Beyond Inc. (NASDAQ:BBBY) at the end of Q1 2022, down from 17 funds in the last quarter. John Overdeck and David Siegel’s Two Sigma Advisors held a notable position in the company, comprising 915,474 shares worth $20.6 million.  Like Builders FirstSource, Inc. (NYSE:BLDR), Expedia Group, Inc. (NASDAQ:EXPE), and Lowe’s Companies, Inc. (NYSE:LOW), investors are monitoring Bed Bath & Beyond Inc. (NASDAQ:BBBY) carefully amid  the soaring inflation.  Here is what Miller Value Partners Income Strategy has to say about Bed Bath & Beyond Inc. (NASDAQ:BBBY) in its Q2 2022 investor letter: “Bed Bath & Beyond 5.165% 08/2044 declined 67.4% in the period. Bed Bath & Beyond reported 4Q21 sales of $2.05 billion, down 22% Y/Y, missing consensus of $2.08 billion. The company lost $0.92 per share in the quarter, down from 4Q20 adjusted EPS of $0.40, below analyst expectations for EPS of $0.03. Management noted supply chain disruptions and the Omicron variant led to inventory availability challenges, which had an estimated sales impact of $175 million, or 8.5% of 4Q21 net sales, and a 400 basis points (bps) Y/Y contraction in 4Q21 adjusted gross margin to 28.8%, driven by product cost increases and higher than anticipated freight and shipping costs. Additional headwinds in the quarter included general weakness in the retail segment, highlighted by big earnings misses from Walmart and Target, along with Moody’s downgrading Bed Bath’s corporate family rating from B1 to B2. The ratings agency cited increased execution risk of the company’s strategic turnaround initiatives and ongoing supply chain issues weighing on the company’s market share and profitability going forward as the main drivers for the downgrade. However, Moody’s maintained a stable outlook for the retailer due to the financial flexibility provided by the company’s liquidity position and low level of funded debt.” 9. Blend Labs, Inc. (NYSE:BLND) Number of Hedge Fund Holders: 20 Blend Labs, Inc. (NYSE:BLND) is a California-based company that provides on-demand software products for mortgages, home equity loans, lines of credit, vehicle loans, personal loans, credit cards, and deposit accounts in the United States. On August 9, Blend Labs, Inc. (NYSE:BLND) traded 8% lower as fintech stocks got hammered ahead of July’s inflation data. Year to date, the stock has lost 57% in value as of August 10.  Keefe Bruyette analyst Ryan Tomasello on July 24 downgraded Blend Labs, Inc. (NYSE:BLND) to Underperform from Market Perform with a price target of $2.75, down from $4. The analyst took a rather defensive approach in real estate technology. While his optimistic long-term view on real estate technology is intact, the analyst expects the combination of a “looming recession and inhospitable environment for growth stocks to continue to weigh on valuations, particularly low profitability names with nascent, untested business models”.  Among the hedge funds tracked by Insider Monkey, 20 funds were bullish on Blend Labs, Inc. (NYSE:BLND) at the end of Q1 2022, compared to 16 funds in the prior quarter. Chase Coleman’s Tiger Global Management is the largest position holder in the company, with roughly 20 million shares worth $112.77 million.  8. TaskUs, Inc. (NASDAQ:TASK) Number of Hedge Fund Holders: 21 TaskUs, Inc. (NASDAQ:TASK) is a Texas-based company that offers digital outsourcing services for companies worldwide. As inflation cuts into profit margins of firms, they stop or reduce the jobs they outsource, in order to save on costs. This impacts companies like TaskUs, Inc. (NASDAQ:TASK). As of August 10, the stock has shed over 66% in value year to date. TaskUs, Inc. (NASDAQ:TASK) stock plummeted 21% on August 9 despite beating Q2 earnings estimates, as its FY 2022 outlook was below consensus. The company expects revenues of $930 million to $950 million, versus a consensus of $969.49 million.   Goldman Sachs analyst Brian Essex on August 9 downgraded TaskUs, Inc. (NASDAQ:TASK) to Neutral from Buy with a price target of $24, down from $26. The company’s Q2 saw better than forecasted revenue and profitability, but the Q3 outlook was less than Wall Street consensus and its FY22 forecast was also revised lower, the analyst told investors. TaskUs, Inc. (NASDAQ:TASK) will trade at a discount until the company can set a record of improved performance and give investors more comfort that estimates and valuation adequately factor in the risk associated with its customer base, the analyst contended. Among the hedge funds tracked by Insider Monkey, 21 funds were long TaskUs, Inc. (NASDAQ:TASK) at the end of Q1 2022, down from 30 funds in the last quarter. Jorge Paulo Lemann’s 3G Capital is the leading stakeholder of the company, with 1.70 million shares worth $65.3 million.  Here is what Alger Mid Cap Focus Fund has to say about TaskUs, Inc. (NASDAQ:TASK) in its Q4 2021 investor letter: “TaskUs is a modern customer care company that manages digital customer experience exclusively for highly innovative “technology Disruptor” clients. The company’s services include managing end-consumers’’ needs for its clients, such as sales, after-sales support, complaint management, trust and safety and transaction processing. It also provides content security and operations services driven by artificial intelligence. The stock underperformed in the final three months of 2021 despite the company providing a strong third quarter earnings report. We think the underperformance resulted from the company issuing 25% year-over-year earnings growth guidance for fiscal year 2022, which implies a meaningful deceleration. Additionally, an agreement preventing certain insiders from selling shares expires in the middle of January. The company’s shares, furthermore, have significant ownership by hedge funds, making them subject to year-end rebalancing. Despite the recent weakness, we think the fiscal year 2022 guidance is extremely conservative and the company is currently well positioned for future upward revisions to its earnings estimates.” 7. Bilibili Inc. (NASDAQ:BILI) Number of Hedge Fund Holders: 24 Bilibili Inc. (NASDAQ:BILI) is a Chinese company that provides online entertainment services. The stock has lost more than 46% in value year to date as of August 10. As inflation rises and salaries do not match the increase in prices, Bilibili Inc. (NASDAQ:BILI) will likely struggle to gain more paying customers. With competition from Amazon Prime, Disney+, and Netflix, consumers will select one subscription at best in this macro backdrop, which will also create competitive pressure for Bilibili Inc. (NASDAQ:BILI). On June 13, JPMorgan analyst Alex Yao raised the price target on Bilibili Inc. (NASDAQ:BILI) to $25 from $19 and maintained a Neutral rating on the shares. Elite hedge funds pulled out of Bilibili Inc. (NASDAQ:BILI) in the first three months of 2022. According to Insider Monkey’s data, 24 hedge funds were bullish on Bilibili Inc. (NASDAQ:BILI) at the end of Q1 2022, down from 33 funds in the last quarter. Jonathan Guo’s Yiheng Capital is the leading stakeholder of the company, with 9.35 million shares worth $239.3 million.  Here is what Tao Value has to say about Bilibili Inc. (NASDAQ:BILI) in its Q3 2021 investor letter: “As witnessed in the past quarter, the government intervention in the Chinese private sector is elevated to an unprecedented level. Given this background, I thoroughly reviewed all our Chinese holdings and made a few changes. We also exited Bilibili (ticker: BILI), given its priced-in valuation in the context of Chinese ADR confidence loss.” 6. Palantir Technologies Inc. (NYSE:PLTR) Number of Hedge Fund Holders: 36 Palantir Technologies Inc. (NYSE:PLTR) is a Colorado-based company that builds software platforms in the United States that help with counterterrorism investigations and operations. Palantir Technologies Inc. (NYSE:PLTR) stock has plummeted 48% year to date. On August 8, the company reported Q2 results that missed market estimates. The company also posted a soft Q3 and full-year 2022 guidance. For the third quarter, the company expects sales to be between $474 million and $475 million, compared to Wall Street estimates of $508.23 million. For the full-year, Palantir Technologies Inc. (NYSE:PLTR) revised its forecast and now predicts that it will generate $1.9 billion in revenue, below analysts’ estimates of $1.98 billion. Inflation has also hit government budgets, which is negatively impacting the likes of Palantir Technologies Inc. (NYSE:PLTR).  On August 9, Deutsche Bank analyst Brad Zelnick downgraded Palantir Technologies Inc. (NYSE:PLTR) to Sell from Hold with a price target of $8, down from $11. The company’s Q2 report leaves “little to hang our hat on,” the analyst told investors. He said the results don’t support his earlier optimistic thesis on Palantir Technologies Inc. (NYSE:PLTR)’s government business, since he sees further deceleration of easier comps and less visibility in the future. In addition to reducing sales expectations, Palantir Technologies Inc. (NYSE:PLTR) is also “aggressively” spending, which is boosting its risk profile, contended the analyst. According to Insider Monkey’s Q1 data, 36 hedge funds were bullish on Palantir Technologies Inc. (NYSE:PLTR), compared to 33 funds in the last quarter. Jim Simons’ Renaissance Technologies is the biggest stakeholder of the company, with 12.5 million shares worth $171.8 million. Like Builders FirstSource, Inc. (NYSE:BLDR), Expedia Group, Inc. (NASDAQ:EXPE), and Lowe’s Companies, Inc. (NYSE:LOW), Palantir Technologies Inc. (NYSE:PLTR) is one of the stocks impacted severely by high inflation. Here is what Tao Value has to say about Palantir Technologies Inc. (NYSE:PLTR) in its Q4 2021 investor letter: “We have no new position this quarter and have made below changes to our portfolio. We also sold Palantir (PLTR) as I identified it subject to high retail bubble risk (using above method) and are not part of our core “Mindful Compounder” holdings.”   Click to continue reading and see High Inflation is Crushing These 5 Stocks.      Suggested articles: 10 Stocks That the Russia-Ukraine War Will Affect in the Future 10 Stocks Analysts Are Downgrading After Weak Earnings Reports 10 Buy-The-Dip Restaurant Stocks to Invest In Now   Disclosure: None. High Inflation is Crushing These 10 Stocks is originally published on Insider Monkey......»»

Category: topSource: insidermonkey15 hr. 33 min. ago

Citi warns these key tech stocks are facing their worst downturn since the dotcom bust - and that"s a red flag for the global economy

The Philadelphia Semiconductor Index has plunged 27% in 2022, and there's likely further pain ahead for chip makers like Nvidia and Micron. Citi has warned of a downturn for semiconductor stocks - which have already plunged 27% year-to-date.Michael Buholzer/Reuters Citi has warned struggling semiconductor stocks are set to fall further as the global economy worsens. The Philadelphia Semiconductor Index has lost 27% this year, while Nvidia and Micron warned on revenue outlook. "We expect every company and every end-market to experience a correction," Citi analyst Christopher Danely said. Semiconductor stocks are headed for a prolonged downturn as recession risks pile up, Citigroup has warned.The bank's gloomy forecast comes after Nvidia and Micron Technology, key names in the sector, saw their share prices tumble this week after they warned about the outlook for revenue.Semiconductor companies are seen as an important bellwether for the health of the global economy, because the chips they manufacture are key components in cars, computers, and mobile phones.Stocks in the sector have struggled in 2022, with the Philadelphia Semiconductor Index (SOX) plummeting over 27% year-to-date — and Citi doesn't expect the sell-off to end any time soon."We continue to believe we are entering the worst semiconductor downturn in at least a decade, and possibly since 2001," analyst Christopher Danely said in a recent research note. "We expect every company in our coverage universe and every end-market to experience a correction."Citi believes upcoming data on PC and mobile phones will show a further weakening, and that updates on datacenters, autos and industrial chip use will be similarly negative.A comparable downturn to that in 2001 would see the SOX lose half of its current value. The index crashed by 79.6% between March 2000 and September that year, as the dotcom bubble burst.Nvidia has fallen 10.1% to below $171 a share after the chip maker warned Monday of a revenue slowdown and a softening in gaming demand. Meanwhile, Micron's stock has slipped 8.9% since it reported a decline in demand for its chips and warned of a challenging market environment.Micron chief executive Sanjay Mehrotra said that slowing economic growth would weaken chip demand in "parts of the market including data centers, industrial and automotive," speaking in an interview with Bloomberg TV earlier this week.Mehrotra's warning reflects the rising likelihood of a recession and means that there will likely be further pain ahead for chip makers, according to Danely."Micron is the first company to mention weakness in the automotive and industrial end markets, and we would note Micron has been a leading indicator in the downturn all year," Danely said.Chip sales growth has now decelerated six months in a row - and there's a strong correlation between that data and the performance of the global economy, according to the Semiconductor Industry Association.Chips' crucial role in the manufacturing of technology including cars, computers, and mobile phones means they offer significant insight into global aggregate demand.Read more: Buy these 10 recession-proof stocks that look cheap given their track record in weathering economic downturns, according to MorningstarRead the original article on Business Insider.....»»

Category: dealsSource: nytAug 10th, 2022

Defense Experts Game Out US-China War Over Taiwan; Dalio Warns Escalations "Very Dangerous"

Defense Experts Game Out US-China War Over Taiwan; Dalio Warns Escalations 'Very Dangerous' A group of American defense experts operating out of a 5th floor suite in Washington DC have been mapping out a hypothetical war between the United States and China over Taiwan. "The results are showing that under most — though not all — scenarios, Taiwan can repel an invasion," said Mark Cancian, a senior adviser at the Center for Strategic and International Studies, which has been simulating various war scenarios. "However, the cost will be very high to the Taiwanese infrastructure and economy and to US forces in the Pacific." In sessions that will run through September, retired US generals and Navy officers and former Pentagon officials hunch like chess players over tabletops along with analysts from the CSIS think tank. They move forces depicted as blue and red boxes and small wooden squares over maps of the Western Pacific and Taiwan. The results will be released to the public in December. -Bloomberg The base assumption is that China invades Taiwan to force unification, which the US responds to with its military. Another assumption (that's 'far from certain') is that Japan would grant 'expanded rights' to use US bases on its territory - but wouldn't intervene directly unless Japanese land is attacked. Nuclear weapons are not part of the scenarios, and the weapons used in the simulation are the most likely to be deployed based on current capabilities of the nations involved. News of the war game simulations come as China began test-firing missiles in recent days following House Speaker Nancy Pelosi's (D-CA) visit to Taiwan.So far, 18 of 22 rounds of the simulation to date have resulted in Chinese missiles sinking a large part of the US and Japanese surface fleet, and would destroy "hundreds of aircraft on the ground," according to Cancian, a former White House defense budget analyst and retired US Marine. "However, allied air and naval counterattacks hammer the exposed Chinese amphibious and surface fleet, eventually sinking about 150 ships," he added. "The reason for the high US losses is that the United States cannot conduct a systematic campaign to take down Chinese defenses before moving in close," Cancian continued. "The United States must send forces to attack the Chinese fleet, especially the amphibious ships, before establishing air or maritime superiority." "To get a sense of the scale of the losses, in our last game iteration, the United States lost over 900 fighter/attack aircraft in a four-week conflict. That’s about half the Navy and Air Force inventory." According to the simulations, the Chinese missile force "is devastating while the inventory lasts," which makes US subs and long-range-capable bombers "particularly important." Also key, is Taiwan's defense capabilities, because its forces would be primarily responsible for countering Chinese landings from the South. "The success or failure of the ground war depends entirely on the Taiwanese forces," said Cancian. "In all game iterations so far, the Chinese could establish a beachhead but in most circumstances cannot expand it. The attrition of their amphibious fleet limits the forces they can deploy and sustain. In a few instances, the Chinese were able to hold part of the island but not conquer the entire island." "For the Taiwanese, anti-ship missiles are important, surface ships and aircraft less so," because surface ships "have a hard time surviving as long as the Chinese have long-range missiles available." There have been no estimates so far on lives lost, or the sweeping economic impact of such a conflict between the US and China. As Bridgewater's Ray Dalio notes, "The US-China Tit-For-Tat Escalations Are Very Dangerous." Unfortunately, what is happening now between the US and China over Taiwan is following the classic path to war laid out in my book "Principles for Dealing with the Changing World Order.” If events continue to follow this path, this conflict will have a much larger global impact than the Russia-Ukraine war because it is between the world's leading superpowers that are economically much larger and much more intertwined.   For reasons previously explained, the Russia-Ukraine war is minor by comparison, though the two conflicts are related and the Russia-Ukraine war, like all wars, is having terrible consequences. For example, consider that China's share of world trade is over seven times larger than Russia's [1] and constitutes about 19% of all American manufactured goods imports. [2] Imagine if importing goods from China and doing business with China became the same as they are with Russia now. Imagine what the supply chain and economic impacts on the world would be. Imagine what sanctions on China would be like for the world. Supply chains would collapse, economic activity would dive, and inflation would soar. And that’s just what would happen to economies due to economic warfare which would pale in comparison to the impact that military warfare, which we are obviously dangerously close to, would have. For reasons explained in my book, the situation that now exists between the United States and China is very similar to that which existed between powers immediately prior to World Wars I and II and many other immediate prewar periods. The chart below shows my US-China conflict gauge since 2000. As you can see, the readings for conflict between the US and China are the highest ever. This index is composed of many indicators such as changes in military spending, personnel, and deployment; sentiment of each country's people about the other country; media attention given to the conflict, etc. The combination of military spending and attitudes toward each rival country has been particularly indicative. The chart below shows the shares of global military spending for the US and China which significantly understates China’s military spending because much government spending that supports the military is not included as direct military spending. Also, American military spending covers the world while Chinese military spending is more focused in the region. Knowledgeable parties tell me that China has significant military superiority around Taiwan. The chart below plots recent Gallop poll data and shows that 80% of Americans now have an unfavorable view of China—which is now on par with how Americans view Russia (and is up meaningfully over the past few years).   To put the existing level of conflict between China and the US in perspective, the table below compares the current US-China conflict gauge reading to past readings of other great conflicts. As shown, the current reading for the US and China is nearly 1.2 standard deviations above the average, which is a reading in the high end of the range of major conflicts. While this conveys a high level and risk of conflict, it should not be misinterpreted to mean that a worsening is to come. Sometimes, these moments of heightened conflict are followed by a stepping back from war. For example, the period leading into the Cuban Missile Crisis had a relatively high reading of 0.9, but wise heads prevailed, so a potential disaster was avoided. There are many more measures that convey the changing picture that are explained in my book which I don’t have the space to show you here, but will continue to plot along with the historical analogies I outlined in the book.   I will use them to paint as accurate a picture as I can about what's happening and put it into an historical context. The dot plot will speak for itself as to which path we are on. As for what's now happening, the Chinese are responding to Nancy Pelosi’s visit by cutting off most relations and demonstrating that they can militarily control the area around Taiwan, which implies that China could shut Taiwan off from the rest of the world. Imagine that and its implications, e.g., imagine if semiconductor chips couldn't get out of Taiwan. China is also displaying its military power and it is crossing previously uncrossed lines of demarcation, thus closing in on Taiwan. [7] Pelosi's visit was perceived by China as a move in favor of Taiwan's independence rather than toward one China with Taiwan part of China, and it is essentially challenging the US to stop it from doing what it is doing. The question is whether the US will respond with another escalation that will prompt another Chinese response, in the classic tit-for-tat acceleration into war, or if the sides will step back. To gain a picture of the past and the forces that are driving the evolution of the US and China toward war (i.e. the Big Cycle) I suggest that you review Chapter 13 "US-China Relations and Wars." I suggest that you pay particular attention to my explanation of previous Taiwan Straits crises and why I said I would worry if we had a "Fourth Taiwan Crisis" which is the crisis that we are now having. To understand what is happening you must understand these things.   As I summarized on page 455 of that Chapter in the section "The Risk of Unnecessary War:" Stupid wars often happen as a result of a tit-for-tat escalation process in which responding to even small actions of an adversary is more important than being perceived as weak, especially when those on both sides don’t really understand the motivations of those on the other side. History shows us that this is especially a problem for declining empires, which tend to fight more than is logical because any retreat is seen as a defeat. Take the issue of Taiwan. Even though the US fighting to defend Taiwan would seem to be illogical, not fighting a Chinese attack on Taiwan might be perceived as being a big loss of stature and power over other countries that won’t support the US if it doesn’t fight and win for its allies. Additionally, such defeats can make leaders look weak to their own people, which can cost them the political support they need to remain in power. And, of course, miscalculations due to misunderstandings when conflicts are transpiring quickly are dangerous. All these dynamics create strong pulls toward wars accelerating even though such mutually destructive wars are so much worse than cooperating and competing in more peaceful ways. There is also risk of untruthful, emotional rhetoric taking hold in both the US and China, creating an atmosphere for escalation. While the power of the forces behind the Big Cycle explained in "Principles for Dealing with the Changing World Order” can be overwhelming, people still have choices that will affect the outcomes. This conflict is still a low-grade military conflict (which I call a Category 2 military conflict) because 1) it has not yet produced an exchange of bloodshed of people from the two major sides i.e., Chinese and/or Americans and 2) it is not taking place on either country’s homeland (though the Chinese would say Taiwan is part of their homeland even though it’s not part of mainland China). If either of these were to change, that would be the next big step up toward unimaginable all-out war which I still consider improbable. A good thing is that sensible people on both sides are scared of war even though they don’t want to look like they are. A bad thing is that some people on both sides want to intensify the fight because to not do so in the face of the provocation wound be perceived as a sign of weakness. That dynamic of upping the ante to avoid looking like one is backing down has throughout history been shown to be a very dangerous dynamic. We have seen many historic cases which have led to terrible wars because neither side wanted to back down and only few in which sensible people stepped back from the brink when faced with the prospect of unacceptable destruction.  My hope is that China’s escalation will not lead to the next US escalation which will lead to the next Chinese escalation which, despite the strong desire of sensible people on both sides to avoid war, would lead to a war. But hope is not a strategy, so I will try to be as realistic as possible, navigate accordingly, and communicate well with you. Tyler Durden Tue, 08/09/2022 - 23:05.....»»

Category: smallbizSource: nytAug 10th, 2022

10 Trending Stocks This Week

In this article, we will discuss some of the popular stocks trending this week. To take a look at some more stocks that are in the news, go to 5 Trending Stocks This Week. US equity markets are in the green as of August 8 as we head towards the end of the earnings season. […] In this article, we will discuss some of the popular stocks trending this week. To take a look at some more stocks that are in the news, go to 5 Trending Stocks This Week. US equity markets are in the green as of August 8 as we head towards the end of the earnings season. The following week will see data regarding inflation levels being published. The Consumer Price Index (CPI) will be reported on Wednesday, and investors are expecting a slight decline in the rate due to lower fuel prices in July. Analysts are expecting CPI to be posted at 8.7% for July as opposed to 9.1% a month earlier. The S&P 500 Index has closed in the green for the past three consecutive weeks. Notable companies such as Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Tesla, Inc. (NASDAQ:TSLA) are amongst the stocks trending this week.  Let’s discuss why these stocks are trending this week and see how hedge funds are positioned in them. 10. Bed Bath & Beyond Inc. (NASDAQ:BBBY) Number of Hedge Fund Holders: 15 Bed Bath & Beyond Inc. (NASDAQ:BBBY) has rocketed 40.07% this week. The New Jersey-based operator of bedding, bathroom, kitchen, and home décor retailers, is looking to close in the green for the tenth consecutive day. Experts think that Bed Bath & Beyond Inc. (NASDAQ:BBBY) stock is experiencing a short squeeze as the company’s short interest ratio increased to an 18-month high of 46.1% as of July 31. On August 5, Bed Bath & Beyond Inc. (NASDAQ:BBBY) stock gained 32% as 52.76 million shares exchanged hands without the presence of any significant news in the market. Bed Bath & Beyond Inc. (NASDAQ:BBBY) was one of the most mentioned stocks on Reddit’s WallStreetBets forum on August 8. Bed Bath & Beyond Inc. (NASDAQ:BBBY) was discussed in the Q2 2022 investor letter of Miller Value Partners. Here’s what the firm said about the company: “Bed Bath & Beyond 5.165% 08/2044declined 67.4% in the period. Bed Bath & Beyond reported 4Q21 sales of $2.05 billion, down 22% Y/Y, missing consensus of $2.08 billion. The company lost $0.92 per share in the quarter, down from 4Q20 adjusted EPS of $0.40, below analyst expectations for EPS of $0.03. Management noted supply chain disruptions and the Omicron variant led to inventory availability challenges, which had an estimated sales impact of $175 million, or 8.5% of 4Q21 net sales, and a 400 basis points (bps) Y/Y contraction in 4Q21 adjusted gross margin to 28.8%, driven by product cost increases and higher than anticipated freight and shipping costs. Additional headwinds in the quarter included general weakness in the retail segment, highlighted by big earnings misses from Walmart and Target, along with Moody’s downgrading Bed Bath’s corporate family rating from B1 to B2. The ratings agency cited increased execution risk of the company’s strategic turnaround initiatives and ongoing supply chain issues weighing on the company’s market share and profitability going forward as the main drivers for the downgrade. However, Moody’s maintained a stable outlook for the retailer due to the financial flexibility provided by the company’s liquidity position and low level of funded debt.” Bed Bath & Beyond Inc. (NASDAQ:BBBY) was held by 15 hedge funds at the end of Q1 2022. 9. First Solar, Inc. (NASDAQ:FSLR) Number of Hedge Fund Holders: 35 First Solar, Inc. (NASDAQ:FSLR) has risen 9.98% this week after the Tempe, Arizona-based provider of photovoltaic (PV) solar solutions was upgraded from a Neutral to an Overweight rating by Mark Strouse at JPMorgan. The analyst also revised the price target on First Solar, Inc. (NASDAQ:FSLR) from $83 to $126. Strouse highlighted the passing of the Inflation Reduction Act as the biggest policy step in the history of the US in accelerating the transition from conventional to renewable sources of energy. The analyst thinks that First Solar, Inc. (NASDAQ:FSLR) is in the best position to leverage the bill. Although there are chances that the bill may be amended when it is presented in the House of Representatives, it is highly unlikely that the salient features of the bill would be changed. Beech Hill Partners was the leading hedge funds investor in First Solar, Inc. (NASDAQ:FSLR) during Q2 2022. 8. Palantir Technologies Inc. (NASDAQ:PLTR) Number of Hedge Fund Holders: 36 Palantir Technologies Inc. (NASDAQ:PLTR) has plummeted 14.07% this week after the Denver, Colorado-based data analytics entity reported mixed Q2 2022 results and provided weak guidance for FY22. Palantir Technologies Inc. (NASDAQ:PLTR) reported an adjusted loss per share of one cent, as opposed to the analysts’ forecast of a profit of three cents per share. In contrast, Palantir Technologies Inc. (NASDAQ:PLTR) saw its revenue increase by 26% YoY to $473 million, outperforming the consensus estimate of $471.7 million. For Q3 2022, the company anticipates revenue to be in the range of $474 million – $475 million, lower than the forecast of $508.23 million. Furthermore, for FY22, Palantir Technologies Inc. (NASDAQ:PLTR) is expecting revenue of $1.9 billion, which also fell short of analysts’ forecast of $1.98 billion. As of Q1 2022, 36 funds reported owning a stake in Palantir Technologies Inc. (NASDAQ:PLTR). 7. Barrick Gold Corporation (NYSE:GOLD) Number of Hedge Fund Holders: 45 Barrick Gold Corporation (NYSE:GOLD) is up 3.91% this week after the Canadian miner reported better-than-expected results for Q2 2022. Barrick Gold Corporation (NYSE:GOLD) reported revenue and adjusted EPS of $2.86 billion and 24 cents, respectively, which outperformed the analysts’ forecast of $2.85 billion and 22 cents. The company also benefitted from higher copper production during the quarter. Barrick Gold Corporation (NYSE:GOLD) anticipates meeting the annual guidance for copper and gold production. However, CEO Mark Bristow highlighted that the supply of copper would not be able to keep up with the increased demand for the metal as heavy metals are an integral part of clean energy initiatives. Here’s what ClearBridge Investments said about Barrick Gold Corporation (NYSE:GOLD) in its Q2 2022 investor letter: “In addition to Iberdrola, new purchases among structural growers during the quarter included Canadian mining company Barrick Gold Corporation (NYSE:GOLD), which is seeing operating improvements in its business. The company has aggressively delevered its balance sheet and reduced capex spending to a lower level, directing its healthy free cash flow to dividends and buybacks.’’ 6. Coinbase Global, Inc. (NASDAQ:COIN) Number of Hedge Fund Holders:46 Coinbase Global, Inc. (NASDAQ:COIN) has surged 9.26% this week after notable cryptocurrencies like Bitcoin USD (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) are rallying following a positive job report for July 2022. In the last 24 hours, Bitcoin and Ethereum have gained 4.4% and 6.1%, respectively. Coinbase Global, Inc. (NASDAQ:COIN) soared last week when BlackRock, Inc. (NYSE:BLK) entered into a partnership with the company. The deal would allow BlackRock, Inc.’s (NYSE:BLK) institutional investors to buy and sell Bitcoins on the cryptocurrency exchange platform. Following this development, Carlton Lai at Daiwa gave Coinbase Global, Inc. (NASDAQ:COIN) stock a Buy rating with a target price of $100 in a note issued to investors on August 8. Rowan Street Capital LLC shared its stance on Coinbase Global, Inc. (NASDAQ:COIN) in its Q2 2022 investor letter. Here’s what the firm said: “The mentality of a passionate Founder/CEO drives a completely different thought process and decision-making that makes all the difference. This is a quote by Brian Armstrong, Founder and CEO of Coinbase (NASDAQ:COIN): ‘I can speak with some authority and say we are not going to do that because this is not why I started the company – I don’t have to give any other justification. Rather than the professional CEO that comes in that is accountable to Wall Street and quarterly earnings may start thinking about the company differently. One of the most scarce things in companies today is risk tolerance. For example, take Tesla vs. Waymo. Tesla launched self-driving cars while Google didn’t. The reason is the founder-CEO (Elon Musk) said that I care enough about the mission that we are ready and we are gonna go for it. Whether a professional CEO is thinking about his/her career trajectory, the founder CEO doesn’t care about the next job and only cares about the mission.’” In addition to Coinbase Global, Inc. (NASDAQ:COIN), popular stocks such as Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Tesla, Inc. (NASDAQ:TSLA) are also trending this week.   Click to continue reading and see 5 Trending Stocks This Week.   Suggested Articles: 10 Stocks That Billionaire Philippe Laffont Is Selling 10 Important Energy Stocks Making Moves After Earnings 10 Crypto Companies Hit By the Recent Crash Disclose. None. 10 Trending Stocks This Week is originally published on Insider Monkey......»»

Category: topSource: insidermonkeyAug 9th, 2022

5 Stocks to Buy as the Senate Passes Inflation Reduction Act

In this article, we discuss the 5 stocks to buy as the Senate passes the Inflation Reduction Act. If you want to read about some more stocks to buy as the Senate passes the Inflation Reduction Act, go directly to 10 Stocks to Buy as the Senate Passes Inflation Reduction Act. 5. SolarEdge Technologies, Inc. […] In this article, we discuss the 5 stocks to buy as the Senate passes the Inflation Reduction Act. If you want to read about some more stocks to buy as the Senate passes the Inflation Reduction Act, go directly to 10 Stocks to Buy as the Senate Passes Inflation Reduction Act. 5. SolarEdge Technologies, Inc. (NASDAQ:SEDG) Number of Hedge Fund Holders: 47   SolarEdge Technologies, Inc. (NASDAQ:SEDG) markets semiconductor equipment to the solar industry. Even though the company missed market expectations on revenue for the second quarter of 2022 in recently announced earnings results, the stock has gained in the past few weeks due to the successful passage of the Inflation Reduction Act in the US Senate. The new Act has set aside nearly $60 billion to incentivize solar and wind power manufacturing inside the United States.  On August 8, JPMorgan analyst Mark Strouse maintained an Overweight rating on SolarEdge Technologies, Inc. (NASDAQ:SEDG) stock and raised the price target to $419 from $373, noting that investor expectations with the industry would remain materially high in the coming months.  Among the hedge funds being tracked by Insider Monkey, London-based investment firm Impax Asset Management is a leading shareholder in SolarEdge Technologies, Inc. (NASDAQ:SEDG), with 588,056 shares worth more than $188 million.  In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and SolarEdge Technologies, Inc. (NASDAQ:SEDG) was one of them. Here is what the fund said: “The Strategy is well-exposed to this secular shift and to accelerated spending on alternative energy sourcing and generation. Growth in renewables should benefit SolarEdge Technologies, Inc. (NASDAQ:SEDG), a company we repurchased on weakness in the first quarter that develops electronics for solar installations and should take advantage of greater incentives for solar installations in many geographies. SolarEdge Technologies, Inc. (NASDAQ:SEDG) has expanded its products offering to address larger markets in commercial and utility solar on top of its traditional residential solar market.”.....»»

Category: topSource: insidermonkeyAug 9th, 2022

S&P 500 falls for 4th straight day as investors brace for inflation update

The July inflation report may show pressure easing, but the Fed remains determined to pull consumer inflation toward its 2% target. Average gas prices in California rose above $6 a gallon in 2022.Justin Sullivan/Getty Images US stocks fell Tuesday as investors appeared cautious before the release of the US government's July inflation report.  Tech stocks led the market lower, leaving the Nasdaq Composite with its third straight loss.  Micron and Novavax were among Tuesday's top decliners.  US stocks declined Tuesday, leaving the S&P 500 to extend its losing streak before investors parse inflation data that is key to the Federal Reserve's outlook for raising interest rates. The S&P 500 logged a fourth consecutive loss, led by consumer discretionary and information technology shares. The Nasdaq Composite recorded a third straight decline, with chip stocks back in focus. Micron warned its quarterly revenue projections may fall short of Wall Street's targets, citing in part supply chain problems. Nvidia on Monday said gaming-sector weakness will hurt second-quarter revenue. Also in focus was Novavax, plunging after it halved its quarterly sales outlook as demand for its COVID vaccine slows. Here's where US indexes stood at the 4:00 pm market close on Tuesday:   S&P 500: 4,122.47, down 0.42%Dow Jones Industrial Average: 32,774.41, down 0.18% (58.13 points)Nasdaq Composite: 12,493.93, down 1.19%The US consumer price index is due for release Wednesday at 8:30 am ET. "The market is seemingly in a holding pattern ahead of CPI data tomorrow. Expectations are for a decline in the year-over-year reading, and that will come with all sorts of questions around the 'peak inflation' narrative," Ross Mayfield, investment strategy analyst at Baird, told Insider in emailed comments.The "expectation-crushing July jobs report out last week will keep the Fed hawkish in the near-term given the implications for stickier wage inflation," he added. "We remain skeptical that the Fed will be pivoting to rate cuts by the middle of next year given the lingering labor market strength." The market is driving toward stagflation and investors should seek safety in low-volatility stocks and fixed income, BlackRock says. Warren Buffett's Berkshire Hathaway has raised its stake in Occidental Petroleum to more than 20%. Meanwhile, Norway has drawn up plans to cut energy supplies to Europe, pushing power prices to record highs. Oil prices were mixed. West Texas Intermediate crude slipped 1 cent to $91.69 per barrel. Brent crude, the international benchmark, rose 0.3% to $96.56. Gold picked up 0.3% at $1,811.30 per ounce. The 10-year Treasury yield rose 3 basis points to 2.79%. Bitcoin fell 4.2% to $23,068.14. Read the original article on Business Insider.....»»

Category: smallbizSource: nytAug 9th, 2022

Futures Slide On Tech Weakness As Meme Stocks Fade, CPI Looms

Futures Slide On Tech Weakness As Meme Stocks Fade, CPI Looms After a Monday which started off with a powerful rally only to fizzle and close in the red, overnight market action has seen a continuation of the muted drift lower, and S&P 500 futures have turned lower this morning, falling 0.2% to 4,132, near session lows after trading 0.2% higher earlier. Nasdaq futures dropped 0.5%, indicating that the index will extend its losses for a third session, and semiconductor companies like Nvidia and AMD slipped in premarket trading after Micron forecast adjusted revenue for the fourth quarter at or below the low end of its June 30 guidance. The fading of some meme stock euphoria that defined the past 3 days has not helped bullish sentiment. Treasuries dipped, with the 10-year benchmark yield rising three basis points to 2.79% as traders await Wednesday’s CPI report to gauge the path of Federal Reserve tightening. In premarket trading, US semiconductor companies like Nvidia and AMD slipped after Micron followed Nvidia and forecast adjusted revenue for the fourth quarter at or below the low end of its June 30 guidance. At the same time, bank stocks were mostly higher in premarket trading Tuesday as the US 10-year Treasury yield holds steady around the 2.79% level. In corporate news, growing tensions within the Carlyle Group reached breaking point last week with the board deciding it had lost confidence in CEO Kewsong Lee. Here are some other notable premarket movers: Novavax (NVAX US) tumbles 33% in premarket trading as analysts see the quarterly revenue miss and guidance cut as disappointing, while remaining positive on the vaccine-maker’s longer term outlook. GoodRx (GDRX US) shares soar by 50% in premarket trading, poised for their biggest jump since September 2020. The telemedicine firm’s 2Q results were good but more important for the company is the resolution of a dispute between its pharmacy benefit management customers and grocer Kroger, as this will “dramatically” improve visibility, analysts say. Upstart (UPST US) shares slump 12% in premarket trading, as Barclays says investors should brace themselves for a “lengthier period of macro-driven instability” after the consumer finance company forecast revenue for the third quarter below analyst expectations and withdrew its full-year guidance. Lemonade (LMND US) shares rally 16% in premarket trading after the insurance company posted a smaller-than-expected quarterly loss and issued a full-year revenue forecast that includes Metromile. Jefferies says the beat was largely driven by reduced growth spend. Palantir Technologies (PLTR US) falls 1.2% in premarket trading after being cut to sell from hold at Deutsche Bank, which says that 2Q results leave “little to hang our hat on.” Tandem DiabetesCare (TNDM US) drops 1.8% on low volume after the firm was double-downgraded to underweight from overweight at Wells Fargo, with the broker saying consensus estimates for the insulin pumps-maker are too high. Bed Bath & Beyond (BBBY US) rallied 14% in premarket trading, rising along with fellow meme stocks, as the home-goods retailer is set to extend its rising streak for a tenth session - longest since 2007. Avaya Holdings (AVYA US) shares sank 17% in premarket trading, after the company said there is substantial doubt about its ability to continue as a going concern. Third-quarter loss was wider than the average analyst estimate, while adjusted Ebitda and gross margin missed Focus now turns to the question of whether US inflation may have peaked in June as economists project the biggest drop in more than two years for July's CPI print due tomorrow. A blowout reading for nonfarm payrolls has eased worries about a recession, while corporate performance remains stellar. "Until inflation abates and the Federal Reserve rebalances its priorities away from inflation and toward growth, tempting rallies are likely to remain unsustainable," Seema Shah, chief strategist at Principal Global Investors, wrote in a note to clients. European stocks also fell, the Stoxx 600 declining 0.3%, with almost every sector in the red outside of banks, insurers and energy producers. Travel, tech and chemicals are the worst performing sectors. FTSE 100 is flat, but outperforms regional indexes. Here are some of the biggest movers in Europe today: European semiconductor stocks slip after US memory-chip maker Micron reduced its 4Q sales forecast, citing challenging market conditions. IWG shares drop as much as 18%, the most intraday since March 2020, with RBC saying the flexible office firm’s 1H results look “light.” Zur Rose was cut to equal-weight from overweight at Barclays, which cited balance sheet concerns and “less conviction” on near-term growth acceleration. Shares drop as much as 12%. RPS shares jump 75% to 205p after the environmental consultant received a takeover offer from Canada’s WSP at a price of 206p/share, or enterprise value of around GBP625m. Abrdn shares slump as much as 10%, the most since April 2020, after the investment firm reported revenue that missed analyst estimates and delayed ambitions for sales growth. Dufry gains as much as 4.4% after the Swiss duty-free store operator reported what RBC called a higher-than-expected set of 1H results with continued top-line recovery in July. Kindred shares drop as much as 6.6%, the most intraday since June, after Bank of America initiated coverage of the Swedish online gambling firm at underperform with a SEK88 PT, saying its recovery could prove tougher than expected. PostNL shares fall as much as 7.3% after Jefferies downgraded the stock to hold from buy citing “slower parcel volume growth, and rising fuel and labor costs.” CEZ jumped as much as 3.4% after the Czech utility increased its profit guidance for the second time this year, citing surging electricity prices. Earlier in the session, Asian stocks slid after Hong Kong damped speculation about looser stamp duty rules and China ordered a probe of the $3 trillion trust industry; meanwhile investors awaited this week’s US inflation report for cues on the pace of monetary tightening, while assessing the ongoing corporate earnings season. The MSCI Asia Pacific Index fell as much as 0.6%, as technology shares followed US peers lower after a weak revenue forecast from Nvidia. Japanese stocks underperformed the rest of the region, weighed down by Tokyo Electron on disappointing earnings. Asian equities have been struggling for direction as investors remain wary over the prospect of faster US rate increases to curb inflation as well as rising geopolitical tensions. Fresh Covid lockdowns in China also added to the cautious sentiment. Asian emerging markets “remain too close to ground zero when it comes to the negative impacts of the trifecta of higher US interest rates, a slowing global economy and a deteriorating US-China relationship,” said Olivier d’Assier, head of APAC applied research at Qontigo. “These pressures are likely to keep investors in those markets on the defensive for the time being.” Hong Kong stocks dropped for a second day, erasing earlier gains as the government said it had no plans to relax the stamp duty on home purchases. Markets in Singapore and India were closed for a holiday on Tuesday. Japan stocks dropped as investors reacted to the discouraging earnings from major US tech companies while also weighing the domestic results.  The Topix Index fell 0.7% to 1,937.02 as of market close in Tokyo, while the Nikkei declined 0.9% to 27,999.96. Tokyo Electron Ltd. contributed the most to the Topix’s decline with its 8.2% tumble, as the maker of electronics short of operating income estimates and investors reacted to Nvidia’s quarterly results. Out of 2,170 shares in the index, 1,408 fell, 667 rose while 95 were unchanged. “Stocks linked to earnings are affecting the move today,” said Makoto Furukawa, chief portfolio strategist at Mitsubishi UFJ MS Securities. “Long-term investors will not be taking much of an action as they will be waiting for the CPI data, though there may be some mid-to-long term investors that could be paying close attention to the financial earnings announcements, but not much of an major trend overall.” Australia's S&P/ASX 200 index rose 0.1% to close at 7,029.80, boosted by strength across consumer discretionary and real estate shares. The financials sub-gauge declined, dragged by shares of National Australia Bank after the lender updated its cost outlook for the full year.  Meanwhile, Australia’s consumer sentiment tumbled as surging inflation, interest-rate increases, and falling home prices weighed on the outlook for households.  In New Zealand, the S&P/NZX 50 index rose 0.4% to 11,753.48 In FX, the dollar retreated for a second day, with Group-of-10 currencies broadly in a holding pattern ahead of US CPI data on Wednesday.  Norwegian and Danish currencies outperform peers, while the Australian dollar underperformed peers, weighed by lingering fears on the outlook for global growth. The Bloomberg Dollar Spot Index fell 0.2% after declining 0.2% on Monday: “Even if inflation turned out lower than expected in July, we think the body of evidence justifies staying the course of swift monetary tightening,” wrote Danske Bank analysts in a note to clients on Tuesday. “If short-term inflation expectations do not moderate over the coming months, the Federal Reserve will likely need to hike more and extend the hiking cycle into next year.” That should support the dollar, while US LNG exporters are poised to benefit as heating season approaches, they wrote. Expect EUR/USD to drop to 0.95 in 12 months EUR/USD gains 0.3% to 1.0228. Large expiries in the pair include 1.0185 (EU1.41b), 1.0300 (EU1.27b) GBP/USD rises 0.2% to 1.2108: Bank of England Deputy Governor Dave Ramsden told Reuters that the BOE would continue to sell gilts accumulated under its bond-buying programs even if officials eventually cut rates AUDUSD fell as much as 0.3% after data show growing pessimism among Australian households despite business conditions and sentiment remaining strong. The pace of the currency’s decline has softened as there’s “some acceptance now of the tightening cycle,” says Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong. “The Aussie looks to be trading more of its own accord, less of a global high beta at the moment” USD/JPY little changed at 134.93 In rates, Treasuries were cheaper across the curve ahead as US auctions resume with 3-year note sale, to be followed in next two days by 10-year note and 30-year bond offerings. US stock index futures near day’s low with focus on earnings. Yields were cheaper by more than 4bp across belly of the curve, elevating 2s5s30s fly by around 3bp on the session; 10-year yields at 2.795% trade broadly in line with bund performance over European session and slightly underperform gilts. $42BN 3-year note sale at 1pm ET is first coupon auction of the August-October quarter; $35b 10-year and $21b 30-year follow Wednesday and Thursday. WI 3-year yield around 3.165% is above auction stops since 2007 and ~7bp cheaper than last month’s, which stopped 0.5bp through. The UK long-end shrugs off comments by BOE’s Ramsden that the central bank would sell gilts even if interest rates are reduced. In commodities, WTI crude futures trade around $90 a barrel; gold slightly firmer around $1,790. Base metals are mixed: LME aluminum outperforms while tin lags. Bitcoin is underpressure after yesterday's strong performance, action that has pushed the crypto back below USD 23.5k. To the day ahead now, and data releases from the US include Q2’s preliminary nonfarm productivity and the NFIB’s small business optimism index for July. Otherwise, earnings releases include Coinbase. Market Snapshot S&P 500 futures down 0.3% to 4,128.00 STOXX Europe 600 down 0.3% to 437.82 MXAP down 0.3% to 160.23 MXAPJ little changed at 524.51 Nikkei down 0.9% to 27,999.96 Topix down 0.7% to 1,937.02 Hang Seng Index down 0.2% to 20,003.44 Shanghai Composite up 0.3% to 3,247.43 Sensex up 0.8% to 58,853.07 Australia S&P/ASX 200 up 0.1% to 7,029.83 Kospi up 0.4% to 2,503.46 German 10Y yield little changed at 0.91% Euro up 0.3% to $1.0232 Brent Futures down 1.3% to $95.38/bbl Brent Futures up 1.3% to $97.38/bbl Gold spot up 0.2% to $1,792.75 U.S. Dollar Index down 0.31% to 106.11 Top Overnight News from Bloomberg FBI Raid Focused on Material Trump Brought From White House China Drills Show Preparation for Possible Invasion, Taiwan Says China Seizes on Pelosi Visit to Set ‘New Normal’ for Taiwan China Orders Surprise Audit of $3 Trillion Trust Industry China Corruption Probes Stem From Anger Over Failed Chip Plans Goldman Analyst Calls Out ‘Deeply Disappointing’ Energy Bets Alibaba Reduced Workforce by Nearly 10,000 in Three Months SoftBank Pledges Sweeping Cost Cuts After $23.4 Billion Loss Micron Technology to Invest $40b in US Through End of Decade Carlyle’s Billionaire Founders Reached a Breaking Point With CEO ConEd Asks Brooklyn, Queens to Reduce Power Amid High Heat Google Search Outage Affects Tens of Thousands of Users Franklin Templeton Appoints Nomura Veteran as Head of China What-If DC War Game Maps Huge Toll of US-China Clash Over Taiwan Boeing to Restart 787 Deliveries Within Days on FAA Approval Top China Analyst Sees Stocks in Limbo as GDP Growth Slows to 2% Trump Turns to Lawyer on Bannon’s Losing Case for DOJ Talks A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks eventually traded mostly higher but with gains capped as the region focused on key earnings releases and initially followed suit to the indecisive performance in the US. ASX 200 was just about kept afloat by strength in tech and miners although gains were limited by weakness in financials including NAB despite posting earnings growth as it also flagged higher costs. Nikkei 225 was the laggard with the worst performing stocks pressured by earnings releases including SoftBank which suffered a record quarterly loss and warned of a potentially dramatic reduction in its headcount. Hang Seng and Shanghai Comp were indecisive in early trade with participants tentative amid lingering geopolitical concerns and  after a Chinese press report suggested that interest rate and RRR cuts are unlikely. The Hang Seng Index later strengthened with property names underpinned after reports that Hong Kong is considering waiving double stamp duty for mainland Chinese homebuyers. However, these reports were later refuted by the government. Top Asian News Recession Watch Spreads as Global Curves Follow Treasuries Trend Felixstowe Dockers Offered £500 Bonus in Bid to Stop Strike China’s Small Caps Defy Market Slump to Trounce Blue-Chip Stocks Hong Kong Has No Plan to Cut Stamp Duty After Ip Floats Idea Treasuries Hold Rebound, Australian Bonds Eke Out Advance Tokyo Taxi Fares Set for Rare Hike as Inflation Pressures Mount European bourses are under modest pressure, Euro Stoxx 50 -0.5%, but remain relatively rangebound and lack conviction with catalysts thin. Stateside, futures are similarly rangebound though are posting incrementally more mixed/flat performance, ES -0.1%. Pressure has been seen following a downbeat Q4 guidance update from Micron (-5% pre-mkt), pressuring the NQ -0.4% and European tech performance. Micron (MU) sees Q4 revenue at or below the low end of June 30th guidance; expects challenging market environment in Q4 2022 and Q1 2023. Additionally, has announced USD 40bln investments in leading-edge US memory manufacturing; Micron expects to begin production in the second half of the decade, ramping overall supply in line with industry demand trends. Top European News Barclaycard said UK consumer spending rose 7.7% Y/Y in July which was boosted by clothing, beauty and staycations, while it added that UK consumers are starting to cut back on overseas travel, eating out and drinking to offset higher outgoings. Poland’s Kaczynski (de-facto leader) has pledged they will not undertake any further steps in adhering to the EU Commission’s rule of law demands regarding unlocking grants/loans, saying “..shown maximum goodwill, but concessions have yielded nothing”. Will, if necessary, veto EU initiatives and seek to remove President von der Leyen. (Politico) Recession Watch Spreads as Global Curves Follow Treasuries Trend Continental Sees Better Second Half on Rising Auto Output Ukraine Latest: Zelenskiy Lauds Biden Over ‘Unprecedented’ Aid UK Airfares Up 30% as Bumper Demand Runs Up Against Flight Caps Searing Temperatures Across Europe Trigger Weather Warnings FX DXY briefly dipped under 106.00 from a 106.40 peak despite a lack of news flow. Sterling saw some downside on commentary from BoE Deputy Governor Ramsden, EUR/USD eyes several notable OpEx ahead of the NY cut. Non-US Dollars are firmer to varying degrees with the aid of the softer Dollar. USD/JPY found some resistance by its 50 DMA (135.14) early in the session and trades just under 135 awaiting the next catalyst Fixed Income Sonia/Gilts supported on BoE's Ramsden before reverting to a 'hawkish' bias amid broader EGB/UST pressure. Catalysts are thin with the initial upside fizzling out in short order though seemingly unaffected by strong/poor UK and German supply respectively. US yields are incrementally stepper though the broader inversion remains while BTP-Bund spread holds around 210bp. Commodities Crude oil futures have drifted off best levels; however, pronounced upside seen most recently on Russia reportedly suspending oil exports via southern-section of the Druzhba pipeline. Spot gold eyes USD 1,800/oz to the upside amid the softer Dollar. Base metals are mixed with the breadth of the market also narrow, but LME copper reclaimed a footing above USD 8,000/t. Norway has drawn up plans to ration electricity exports in a move which could stoke fears of energy shortages in Europe and the UK this winter, according to The Telegraph. China's NDRC is to lower retail prices of gasoline and diesel by CNY 130/tonne and CNY 125/tonnes respectively as of August 10th; 4th consecutive decline in prices. Russia suspends oil exports via southern-leg of the Druzhba pipeline amid transit payment issues, via Reuters citing sources. US Event Calendar 06:00: July SMALL BUSINESS OPTIMISM 59.9, est. 89.5, prior 89.5 08:30: 2Q Unit Labor Costs, est. 9.5%, prior 12.6% 08:30: 2Q Nonfarm Productivity, est. -4.7%, prior -7.3% DB's Jim Reid concludes the overnight wrap Yesterday was the quietest day of the month after last week’s drama in Taiwan and the stronger than expected US data that put a more aggressive Fed back in play and created a lot of bond volatility and much flatter curves. There were still some big swings but it didn't feel as frantic or busy. This temporary calm could clearly all change tomorrow with the latest US CPI so maybe the next 30 hours will be the calm before the storm or perhaps herald in the real start of the dog days of summer. I'm going on holiday to Cornwall next week and after around 2 months where there's been no rain here in the UK, the first drops of rain for some time seem to be dropping on Cornwall for the first day of our holiday and then carrying on through the week. Typical. At the age of 48, I bought my first ever wetsuit yesterday for paddle boarding and the like. If you don't vote for me in next year's II survey I'll send you a picture! Anyway, having said that it was calmer yesterday, that's still relative as the NASDAQ and S&P 500, having been up around 1.5% and 1% respectively early in the session, ended up closing -0.12% and -0.1% respectively. The former was up +20% from its June lows at one point but Nvidia's preliminary results and outlook led to the stock falling -6.3% and slowly taking the market down with it. Basically a good old fashion profit warning for the biggest chipmaker. As I type, US stock futures are edging back up with contracts on the S&P 500 (+0.23%) and NASDAQ 100 (+0.25%) slightly higher. In Europe, the market closed while the S&P 500 was still up just over half a percent so the STOXX 600 (+0.74%), the DAX (+0.84%) and the CAC 40 (+0.80%) were all still able to post solid gains of their own. This morning though DAX futures are -0.17% lower. There was good news yesterday though. One of the main stories was the New York Fed’s latest Survey of Consumer expectations for July, which found that inflation expectations were declining at the 1-year, 3-year and 5 year-horizons. That’ll be music to the Fed’s ears, since if that trend continues then it means that the Fed may not have to be so aggressive in hiking rates, since one of their big fears is that higher inflation expectations will lead to a self-fulfilling prophecy of higher actual inflation as firms adjust prices and workers bargain for wages accordingly. Indeed, the numbers were pretty good across the board, with 3-year expectations down to 3.2% (from 3.6%), which is the lowest reading for that measure since April 2021. That said, when it comes to the Fed’s next meeting in just over 6 weeks, the decline in expectations didn’t seem to move the dial for investors, and futures are still pricing in a 75bps move as more likely than not following Friday’s very strong jobs report, with the hike priced in for next time priced at around 68.5bps down a basis point. Sovereign bonds rallied steadily all day further out the curve so it was hard to say there was a definite trigger even if the inflation expectations story fitted the narrative. Yields on 10yr Treasuries fell c.-7bps to 2.746%, but with 2s10s flattening a further -6bps to -46bps, which is the most inverted it’s been since 2000. It was much the same story in Europe too, since the German 2s10s curve flattened by -3.2bps to close at its flattest level so far in 2022. And whilst yields fell back there as well, with those on 10yr bunds (-5.7bps), OATs (-5.0bps) and gilts (-9.7bps) all moving lower, that went alongside a fresh widening in peripheral spreads after a good run over the last week, with the gap between 10yr Italian yields over bunds up by +7.6bps to 213ps. Elsewhere we got some further concerning news on the energy side yesterday, with Norway’s energy minister saying that they would be prepared to limit power exports if required, with refilling reservoirs to be prioritised over power production. This is a potentially significant development, since Norway is a key exporter of electricity to Europe, and this comes on top of the existing energy disruption thanks to Russia’s invasion of Ukraine, as well as the current European heatwave that has further bolstered demand. In fact, French power prices for 2023 hit a record €543 per megawatt-hour yesterday, and their German counterpart also surged to €406 per megawatt-hour. For context, exactly a year ago today those prices closed at €81.70 and €79.14 respectively, so we’re talking about increases of more than five-fold over the last 12 months. And that also came amidst a fresh rise in oil prices, with Brent crude back up by +1.82% to $96.65/bbl, while WTI rose +1.97% to $90.76/bbl. Another negative story of late have been the growing tensions between the US and China over Taiwan, with China continuing military exercises beyond their original conclusion on Sunday into yesterday. US President Biden said that he didn’t think China was “going to do anything more” but did say “I’m concerned that they’re moving as much as they are”. However, there was some more positive news for Biden domestically, as with less than 3 months to go until the mid-term elections now, FiveThirtyEight’s models are giving the Democrats their best chances of retaining the House and the Senate in recent months. For the Senate, they give the Democrats a 59% chance of retaining control (up from 47% a month earlier), and for the House they put that at 20% (up from 13% a month earlier). That comes amidst a fresh legislative win for Biden over the weekend, with the Senate passing the Inflation Reduction Act, which the House is expected to take up later in the week. Asian equity markets are struggling to gain traction on a quiet morning. The Nikkei (-0.85%) is lagging in early trade but the Hang Seng (+0.77%) has pared initial losses on news that double stamp duty on the Island may be waived for Chinese homebuyers. Over in Mainland China, stocks are rebounding as the Shanghai Composite (+0.31%) and the CSI (+0.17%) moved back into positive territory whilst the Kospi (-0.03%) is oscillating between gains and losses as I type. Elsewhere, early morning data showed that Australia’s NAB Business Confidence rose 5 points to +7 in July from the previous month, while business conditions advanced 6 points to +20 points in the same period, despite rising interest rates and high inflation. These were above expectations. To the day ahead now, and data releases from the US include Q2’s preliminary nonfarm productivity and the NFIB’s small business optimism index for July. Otherwise, earnings releases include Coinbase. Tyler Durden Tue, 08/09/2022 - 08:01.....»»

Category: worldSource: nytAug 9th, 2022

Nvidia sinks as chip maker"s warning on revenue and gaming weakness drags tech shares

Slower sales of gaming products prompted Nvidia to cut its second-quarter revenue outlook to $6.7 billion from $8.1 billion. In this photo illustration the Nvidia Corporation logo seen displayed on a smartphone screen.Rafael Henrique/SOPA Images/LightRocket via Getty Images Nvidia shares fell as much as 9% Monday after the chip maker cut its Q2 revenue guidance.  The company now sees gaming revenue of $6.7 billion, less than its previous call of $8.1 billion.  Morningstar said it anticipated slowing in the gaming segment following the crash in crypto prices.    Nvidia shares sharply dropped Monday after the chip maker said a slowdown in gaming-related sales will lead to quarterly revenue coming in less than Wall Street anticipated. The slide of as much as 9% sparked losses in the broader tech sector, weighing on key US equity benchmarks. The stock dropped to an intraday low of $172.42, the weakest price since July 27, before trimming the intraday decline to 8%. The company yanked its second-quarter revenue forecast down to $6.7 billion from $8.1 billion previously in a statement released Monday, citing weakness in the gaming segment. "Our gaming product sell-through projections declined significantly as the quarter progressed," Jensen Huang, Nvidia's founder and CEO, said in the statement. "As we expect the macroeconomic conditions affecting sell-through to continue, we took actions with our Gaming partners to adjust channel prices and inventory." Gaming sales fell 44% to $2.04 billion from the first quarter, and declined by 33% from the second quarter a year earlier. The company also said it took second-quarter charges of $1.32 billion on inventory reserves. Nvdia's warning comes as investors have broadly been concerned about how consumers and businesses are holding up in the face of soaring inflation. After Nvidia shares fell, the tech-rich Nasdaq Composite turned lower. The S&P 500 also flipped down as its information technology sector lost more than 1% during the session. "We had been anticipating a slowdown in the gaming segment following the crash in cryptocurrency prices and associated mining demand as well as weaker macroeconomic conditions, and we previously had gaming sales sequentially declining for the remainder of 2022," Morningstar analyst Abhinav Davuluri said in a research note Monday.Davuluri pointed out rival chipmaker AMD's recent and softer outlook for its graphics processing unit. AMD shares were off 2.5% during Monday's trade. "We think Nvidia could be due for a few challenging quarters, which could create a more attractive entry point," said Davuluri. The company's data center business should "prove more resilient" to macroeconomic headwinds, he added. Nvidia said Monday its second-quarter data center revenue was $3.81 billion, up 1% from the first quarter and up 61% from the prior-year period.Read the original article on Business Insider.....»»

Category: smallbizSource: nytAug 8th, 2022

Futures Storm Higher To Start The Week As "Most Hated Rally" Steamrolls Bears

Futures Storm Higher To Start The Week As "Most Hated Rally" Steamrolls Bears US equity futures rose to start the week as the "most hated meltup" continued just as we said it would over the weekend as stubborn bears are forced to cover and start chasing higher out of FOMO, while Treasury yields fell while investors assessed the path of monetary policy ahead of this week's critical CPI data. Nasdaq 100 futures rose 0.7% while S&P 500 futures gained 0.5% by 7:30 a.m. in New York after the underlying benchmarks dropped on Friday following news that US job growth soared beyond expectations. Meanwhile, the yield on the 10-year Treasury dropped to 2.79% after soaring at the end of last week, while the dollar dipped and bitcoin jumped above $24K. In premarket trading, stocks tied to renewable energy, such as Tesla, rose after the Senate passed a key bill that Democrats called the largest investment in fighting climate change ever made in the country. Meanwhile, cryptocurrency-exposed companies like Coinbase Global Inc. and Riot Blockchain Inc. climbed as Bitcoin breached $24,000. Bank stocks are also higher in premarket trading as the broader equity market rises. In corporate news, Avalara is being acquired by Vista Equity Partners for $93.50 a share in a deal that values the tax software maker at roughly $8.4 billion. Meanwhile, Robinhood is set to pay $9.9 million to resolve lawsuits over crashes on its trading platform in 2020. “The sentiment will mostly depend on this week’s inflation data,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “If US inflation starts easing, the Fed could rethink about smaller rate hikes, which could give another positive swing to the stocks.” Friday's "stellar" jobs data eased fears of a recession while increasing the chances that the Federal Reserve will be more aggressive in its fight to tame inflation. Over the weekend, San Fran Fed President Mary Daly said the central bank is “far from done yet” in bringing down prices and suggested a 50 basis-point rate increase isn’t the only option on the table for the next meeting. The Friday payrolls data surprise “was large enough to re-ignite the inflation debate and renew focus on US CPI prints,” said Peter McCallum, a strategist at Mizuho. “Indeed, a very unexpected move lower in US CPI is needed for the market to stop thinking about the Fed having to do more. And with more tightening, the probability of a hard landing rises.” Meanwhile, as Bloomberg notes, the S&P 500 climbed more than 6% over the past four weeks, approaching the level of two standard deviations for data going back 30 years. That’s unusual in the absence of a clearly event-driven market such as during the global financial crisis or the start of the Covid-19 pandemic. However, The advance in equities could face another test from a likely contraction in corporate margins next year as costs remain high, according to strategists at Morgan Stanley and Goldman Sachs. "We think it’s premature to sound the all-clear simply because inflation has peaked,” Morgan Stanley strategists led by Michael Wilson said. “The next leg lower may have to wait until September” as the negative effects of falling inflation on company profits become more reflected in earnings. Looking at the week's key data, the closely watched CPI is seen rising 0.2% in July from a month earlier, which would be the smallest advance since the start of 2021. However, the so-called core measure, which strips out energy and food, probably climbed a concerning 0.5%, based on the median estimate in a Bloomberg survey of economists. European stocks tracked US futures higher, with the Euro Stoxx 50 is up 0.5%. IBEX outperforms peers, adding 0.6%, FTSE MIB is flat but underperforms peers. Real estate, tech and financial services are the strongest-performing sectors. Earlier in the session, Asian stocks edged lower as concerns about more aggressive interest-rate hikes by the Federal Reserve and fresh Covid lockdowns on the Chinese resort island of Hainan weighed on sentiment. The MSCI Asia Pacific Index dropped as much as 0.5% before paring, with losses in technology and consumer discretionary shares offsetting gains in materials firms. Hong Kong stocks led declines around the region, even as the government cut the hotel quarantine for inbound travelers to three days from seven. A better-than-expected July jobs report in the US fueled expectations of faster Fed monetary tightening, with investors monitoring this week’s inflation data for further clues. Meanwhile, the lockdowns in China’s Hainan province have stranded tens of thousands of tourists, dealing a blow to its duty-free retail industry. Asian equities capped their third-straight weekly gain last Friday as the region shrugged off rising geopolitical risks in the Taiwan Strait. Investors also continue to assess the ongoing corporate-earnings season. “We believe markets have discounted a fair bit of the earnings cuts to come, partly driven by the tech inventory de-stocking cycle in the coming months,” said Soo Hai Lim, head of Asia ex-China equities, at Barings. “Improving fundamentals, more attractive valuations and relatively looser monetary conditions in Asia can help deliver relative equity outperformance for the region in the coming months.” Japanese stocks reversed earlier losses with the Nikkei 225 Index closing at its highest since March 29, as investors assessed a slew of earnings reports from local firms. The Topix Index rose 0.2% to 1,951.41 as of market close Tokyo time, while the Nikkei advanced 0.3% to 28,249.24. Suzuki Motor Corp. was among the top performers on the Nikkei, jumping more than 10% after an earnings beat. Bandai Namco also advanced after its outlook was raised.   Daiichi Sankyo Co. contributed the most to the Topix Index gain, increasing 5.2%. Out of 2,170 shares in the index, 1,033 rose and 1,030 fell, while 107 were unchanged. “Today’s Japan stocks are moving over micro factors such as the earnings results,” said Hiroshi Matsumoto, a senior client portfolio manager at Pictet Asset Management. “Some Japanese companies are reporting good results.” India’s equity index climbed to its highest level in nearly four months, boosted by gains in HDFC Bank and Reliance Industries.   The S&P BSE Sensex rose 0.8% to close at 58,853.07 in Mumbai, after falling by as much as 0.2% at the start of the session. The NSE Nifty 50 Index gained 0.7%. Of the 30 members on the Sensex, 20 rose and 10 fell. All but one of 19 sectoral indexes compiled by BSE Ltd. advanced, led by a gauge of capital goods companies. The market is shut on Tuesday for a local holiday.  HDFC Bank advanced to its highest level since April 13 as the Economic Times newspaper reported that the private sector lender raised $300 million in deposits from expat Indians, quoting unnamed people familiar with the matter.  Reliance Industries climbed most in a week as the oil-to-retail conglomerate said it will begin investing across the green-energy value chain. State Bank of India dropped after its quarterly report showed net income below analysts’ estimates. Bloomberg dollar spot index flat after paring earlier decline. JPY and EUR are the weakest performers in G-10 FX, AUD and NZD outperform. In rates, Treasuries held gains amassed during European session, led by bigger gains across core European bonds and unwinding a portion of Friday’s jobs-report selloff. US long-end yields richer by ~4bp, flattening 2s10s by ~2bp, 5s30s by less than 1bp; 10-year around 2.79% trails comparable bunds and gilts by 2bp-3bp. Treasuries 2s10s curve inversion deepens to as much as 42.3bps, the lowest since 2000. No US data or Fed speakers are slated for Monday; refunding auctions begin Tuesday, July CPI scheduled for Wednesday.short-end yields underperform bunds by about 4 bps. Peripheral spreads widen to Germany with 10y BTP/Bund adding ~7bps to 212.8bps after Italy’s outlook was cut to negative by Moody’s on political risk. In commodities, WTI trades within Friday’s range, falling 0.3% to around $88. Base metals are mixed; LME nickel falls 2.4% while LME lead gains 1.9%. Spot gold is little changed at $1,775/oz.  In crypto, noted upside for the space amid thin newsflow elsewhere, with Bitcoin surpassing USD 24k at best and thus marginally eclipsing last week's USD 23.9k peak. It's a quiet start to the week in econ data with nothing scheduled on the economic slate and no Fed speakers either; refunding auctions begin Tuesday, July CPI scheduled for Wednesday. Market Snapshot S&P 500 futures up 0.3% to 4,157.75 STOXX Europe 600 up 0.6% to 438.13 MXAP down 0.1% to 160.53 MXAPJ down 0.4% to 524.35 Nikkei up 0.3% to 28,249.24 Topix up 0.2% to 1,951.41 Hang Seng Index down 0.8% to 20,045.77 Shanghai Composite up 0.3% to 3,236.93 Sensex up 0.8% to 58,862.37 Australia S&P/ASX 200 little changed at 7,020.62 Kospi little changed at 2,493.10 German 10Y yield little changed at 0.89% Euro little changed at $1.0187 Gold spot down 0.1% to $1,773.21 U.S. Dollar Index down 0.11% to 106.50 Top Overnight News from Bloomberg China Extends Military Exercises Near Taiwan With New Drill Ships Resume Taiwan Routes Even as China Continues to Drill Oil Endures Choppy Start to Week With Demand Concern to the Fore Senate Passes Democrats’ Landmark Tax, Climate, Drugs Bill Yen Shorts Crumble as 2022’s Hottest FX Trade Comes to an End ‘Most Vulnerable’ Emerging Markets Now Face Euro Recession Risk Jack Dorsey Tweets ‘End the CCP’ After China Covid Report Carlyle CEO Resigns in Sudden Reversal of Generational Shift SoftBank Reports Record $23.4 Billion Loss as Holdings Fall India Seeks To Oust China Firms From Sub-$150 Phone Market Five States Risk Undoing Legitimacy of 2024 Election CVS Health Is Mulling a Bid for Signify Health, WSJ Reports Winners and Losers in Democrats’ Signature Tax and Energy Bill NYC Mayor Greets New Bus of Migrants Sent by Texas Governor Daly Says Fed Is ‘Far From Done Yet’ on Bringing Inflation Down Buffett’s Berkshire Pounces on Market Slump to Scoop Up Equities Bitcoin Believers Are Back to Watching Stocks After Crypto Crash A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks traded mixed with price action choppy as participants reflected on the encouraging Chinese trade data and post-NFP hawkish pricing of Fed rate hike expectations, with sentiment also clouded by geopolitical risks related to China’s military drills near Taiwan and renewed shelling of Ukraine's Zaporizhzhia nuclear plant. ASX 200 traded indecisively around the 7,000 level as weakness in the consumer-related sectors was offset by a strong mining industry, with OZ Minerals the biggest gainer after it rejected an indicative proposal from BHP. Nikkei 225 pared opening losses although the upside was capped amid the ongoing deluge of earnings including SoftBank which is scheduled to announce its results later today and with a cabinet reshuffle set for later this week. Hang Seng and Shanghai Comp were varied with the mainland indecisive as mostly stronger than expected Chinese trade data, including a record surplus in July, was counterbalanced by COVID woes after Sanya in the Hainan province was placed on lockdown which has trapped tens of thousands of tourists. Top Asian News Chinese authorities locked down the southern coastal city of Sanya during the weekend after a highly infectious Omicron strain was detected in the Hainan province, according to FT. China’s aviation regulator shortened the suspension time for inbound flights on routes found to have COVID-19 cases in which flights on a route with an identified COVID case will be suspended for a week if 4% of passengers test positive and will be suspended for two weeks if 8% of passengers test positive, according to Reuters. Hong Kong Chief Executive John Lee announced that the hotel quarantine will be reduced to 3 days from 7, with arrivals to be subject to a 3 + 4 format in which the 4 days will be home monitoring. Japanese PM Kishida said he will reshuffle the cabinet in the week ahead to address issues including COVID-19, inflation and Taiwan affairs, according to Reuters. European bourses are firmer across the board after shrugging off mixed APAC trade, Euro Stoxx 50 +0.8%. Similar directional performance in US futures, though magnitudes are more contained amid limited newsflow with little scheduled ahead, ES +0.3%. Sectors are firmer with no overall theme emerging though Tech, Real Estate and Utilities are among the best performers. Top European News UK Tory party leadership frontrunner Truss is under pressure to promise more to poor households facing a cost of living crisis this autumn after she expressed her preference to reduce taxes over ‘handouts’, according to FT. UK government plan to cut as many as 91k civil servant jobs over 3 years will require deep cuts to public services and cost at least GBP 1bln in redundancy payments, according to a Whitehall review cited by FT. UK government is to conduct a review of the foreign takeover of the National Grid’s gas transmission business amid increased concerns regarding energy security, according to FT. Italy’s centrist Azione party is to abandon the centre-left alliance with the Democratic Party just days after agreeing to an alliance to join forces in an effort to prevent a right-wing landslide, according to Bloomberg. Moody’s has cut its outlook on Italy to Negative from Stable, affirms BAA3 rating; risks to credit profile have been accumulating more recently due to the economic impact of Russia/Ukraine and domestic politics. Under baseline scenario, Italian debt to continue declining in 2022. FX The USD index has pulled back further from Friday’s post-NFP 106.93 before seeing a bounce at its 10 DMA (106.25). Non-Dollar G10s are gaining momentum against peers, and vs the Buck; AUD holds the top spot. EUR/USD and GBP/USD trimmed earlier upside to trade back under 1.0200 and 1.2100. The Yen is the current G10 laggard amid broader risk and as the FOMC-BOJ pricing once again widens. Fixed Income Core debt modestly firmer, experiencing some respite from Friday's post-NFP pressure amid pronounced Fed repricing and yield upside. Albeit, in the context of recent session the circa. 70 tick upside in Bunds is limited. BTPs pressured as Moody's cuts their outlook for Italy while further political developments seemingly strengthen the chances of the right. Commodities WTI and Brent front-month futures saw upside momentum fade alongside a Dollar-rebound off lows. Spot gold is trading sideways around USD 1,775/oz amid a lack of drivers. Overnight, Chinese base metal futures opened firmer with added impetus from the Chinese trade data, whilst LME contracts trade somewhat mixed. Tesla (TSLA) has reportedly signed a contract worth circa. USD 5bln to purchase battery materials from nickel processing companies in Indonesia, via Reuters citing CNBC Indonesia. Russian oil product exports from Black Sea port of Tuapse planned at 1.443mln in Aug (vs 1.388mln in July), according to traders cited by Reuters. China is poised to begin another round of tax inspections on independent refiners, according to Reuters sources. Inspections are to last months, commencing later this month. US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap August has been fascinating so far with US recession talk pushed back with a string of better than expected data last week. The US economy simply cannot be deemed to be in a recession in a month when +528k jobs have just been added as payrolls showed on Friday. This still feels to me like a classic (albeit compressed), old fashioned boom bust cycle. The Fed has been aggressively behind the curve with monetary policy amazingly loose versus history. The Fed have tightened a bit but monetary policy operates with a lag and monetary policy was and is still very loose. Remember we’ve only been hiking since March and real Fed Funds are still c.-7%. I still think recession by around the middle of 2023 is a slam dunk and that risk assets will go well below their June 2022 lows when we’re in it but I'm still not convinced the official recession happens over the next few months. As a related aside, the 2s10s yield curve first inverted at the end of March. A recession always eventually follows this in the US but the shortest gap between that and a recession is c.9 months over the last 70 years of data covering 10 recessions. The fact that the yield curve is getting more inverted just cements the likely recessionary signal from the yield curve but it always takes time. Ultimately I think a recession will be a lagged response to the necessary tighter policy put in place since March and the hikes still to come. If payrolls was a bit of a shock, next up will be US CPI on Wednesday which we will review below. Staying with US inflation we will also see PPI on Thursday and the inflation expectations in the University of Michigan consumer survey on Friday. Staying with prices China (CPI, PPI) and Japan (PPI) get in on the act on Wednesday too. A monthly dump of UK data including GDP will be out Friday and will attract attention after the BoE’s forecast of a 5 quarter upcoming recession last week. Elsewhere US earnings are 85% complete so the newsflow will slow down on this front. The full day by day week ahead is at the end but we’ll focus most attention on US CPI here today. Our economists expect the headline YoY rate to finally dip after energy prices have fallen of late. They are looking for 8.8% (from 9.1%) with consensus a tenth lower. Core however is expected to increase two tenths to 6.1% YoY. If we see such an outcome it’ll be interesting if the market cheers what could be the start of a decline from the peak in the headline rate or remains concerned that core continues to edge up. Core should be more important to the Fed but the market has been known to take the dovish interpretation to events of late, payrolls notwithstanding. On US PPI on Thursday, most of our economist’s attention will be on the healthcare component as this feeds directly into core PCE, the Fed preferred measure. So far the wedge between core CPI and PCE has been biased in CPI’s favour (i.e. higher) as CPI has a big bias to rents vs healthcare for PCE. Last month healthcare surged after 4 soft months. Our economists have detailed why they think it will continue to be strong in this note (Link here). Across the Atlantic, this week's UK GDP print is expected to be -0.2% QoQ, the first quarterly contraction since Q1 of 2021. The June figure is expected to contract by -1.2% MoM. Elsewhere earnings season is winding down after 423 S&P 500 and 403 Stoxx 600 companies have now reported. Our equity strategists have reviewed global earnings so far here, noting that while beats are roughly at the historical average in the US, they're exceeding it elsewhere. Yet, bar energy stocks, consensus estimates for Q3 have been declining across regions. Looking at the line up for this week, notable reporters include Disney (Wednesday), Porsche (today), Deutsche Telekom, RWE, Orsted and Siemens (Thursday). Asian equity markets are mostly on the softer side as we start the week. As I type, the Hang Seng (-0.73%) is lagging despite Hong Kong’s move to cut mandatory hotel quarantine from seven days to three. Additionally, the Kospi (-0.10%) is also trading lower in early trade whilst Chinese stocks are mixed with the Shanghai Composite (+0.19%) higher and the CSI (-0.33%) lower. Elsewhere, the Nikkei (+0.25%) is holding on to its gains this morning. Moving ahead, US stock futures point to a slightly negative opening with contracts on the S&P 500 (-0.16%) and NASDAQ 100 (-0.11%) dipping in overnight trading. Early morning data showed that Japan recorded its first current account deficit (-132.4 billion yen) in five months in June (v/s -706.2 billion yen expected) and reversing a +128.4 billion yen surplus in the preceding month as surging imports eclipsed exports. Over the weekend, data revealed that China’s export growth unexpectedly picked up (+18.0% y/y) in July, the fastest pace this year, against a +17.9% increase in June and beating market expectations of a +14.1% gain, thereby offering an encouraging boost to the economy as its struggles to recover from a Covid-induced slump. In overnight news, the US Senate approved a $739 billion climate and healthcare spending package ahead of crucial midterm elections in November. When signed into law, the bill, formally known as the Inflation Reduction Act, would allocate $369bn for climate action - the largest investment in US history. At the same time, it would increase corporate taxes and lower healthcare costs as part of the package. Reviewing last week now and it was a pretty volatile start to August on the back of Pelosi’s visit to Taiwan, the better than expected ISM prints, hawkish Fed speak, and finally the monster payrolls report on Friday which finally got the message through that the narrative of a dovish Fed pivot the week before was exceptionally premature. Quickly recapping Friday’s data, nonfarm payrolls came in at +528k – more than double the final estimate of +260k with a further boost from the upwardly revised June reading of +398k (vs +372k previously). It was also the highest reading since February’s +714k. The July payrolls gains also ensured that the US has now recovered the 22m of job losses in the aftermath of covid outbreak. Other indicators reinforced the risks to inflation - unemployment was down to 3.5% (3.6% previously) and average hourly earnings surprised to the upside at 0.5% or 5.2% YoY (vs consensus of 0.3% and 4.9%, respectively). Slight softness came from a -0.1ppt drop in the participation rate (62.1% vs 62.2% estimates) but this was mostly in the young and not the prime-age cohort which makes it less worrying. Upward beats in employment indices also came from ISM indices earlier in the week, with headline gauges for both beating economists’ estimates as well. The payrolls beat led to the US 2yr and 10yr jumping by +18.3bps and +13.9bps on Friday bringing the total weekly yield gains to +34.1bps and +17.8bps, respectively. These gyrations also inverted the 2s10s further, with the slope touching a low of around -43bps intraday, before finishing the day at -40.3bps, a -4.0bps move, -16bps on the week and to the most inverted since 2000. Fed futures now price in +69bps at the September meeting, so a roughly 76% probability of another +75bps hike in September (up from Thursday’s +59bps, 36%). There’s still along way to go before the next FOMC though with another set of payrolls and two CPI prints before the next meeting. For the S&P 500 it was a week with a few ups and downs (including -1% immediately after payrolls) but ultimately the market rose +0.36% (Friday -0.16%). Higher yields on Friday also drove divergences between benchmarks, with the Nasdaq (-0.50%) struggling a bit but still +2.50% on the week amid decent earnings results. For small caps, though, better economic data than feared overpowered the effect of rates, sending the Russell 2000 up by +0.81% on Friday and +1.94% on the week. Oil moved higher after payrolls (WTI +0.53% and Brent +0.85%), but were still down a significant -9.74% and -13.72% on the week. In Europe, sovereign bonds were also hammered after the payrolls report although the steady march higher started early in the morning and continued until the end of the session. Unlike in the US, however, the curves mainly steepened, with 10yr bund yields +15.2bps (+21bps on the week) edging ahead of the 2yr ones +13.5bps (+19bps on week). Friday also saw yields sell-off further in the UK, with the 2yr yield (+11.1bps) slightly less extreme than the 10yr (+16.0bps). But in part thanks to the BoE, the UK’s front end gained +25.5bps on the week relative to +28bps on the 10yr. The periphery was quiet last week with 10yr Italian spreads declining -6.5bps on Friday and -13.6bps on the week. The market has been more relaxed after the far-right populists (riding high in the polls) suggested they won't abandon EU budget rules if they win the elections. Finally, European stocks dipped as the STOXX 600 closed -0.76% on Friday, and -0.59% for the week. Financials (+0.16%) and energy (+0.54%) were the sole outperformers sector-wise on Friday after the robust payrolls. Tyler Durden Mon, 08/08/2022 - 08:03.....»»

Category: blogSource: zerohedgeAug 8th, 2022

Top Analyst Reports for Pfizer, Progressive & PNC

Today's Research Daily features new research reports on 16 major stocks, including Pfizer Inc. (PFE), The Progressive Corporation (PGR), and The PNC Financial Services Group, Inc. (PNC). Friday, August 5, 2022 The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Pfizer Inc. (PFE), The Progressive Corporation (PGR), and The PNC Financial Services Group, Inc. (PNC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. You can see all of today’s research reports here >>>Pfizer shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+13.3% vs. +9.4%), reflecting the company's diversified portfolio of innovative drugs and vaccines, including Ibrance and Prevnar.The Zacks analyst believes that no company is as strongly placed in the COVID vaccines/treatment market as Pfizer right now. Its COVID-19 vaccine has become a key contributor to the top line. The vaccine together with Pfizer’s promising oral antiviral pill for COVID-19, Paxlovid is expected to generate a combined $54 billion in sales in 2022.Pfizer boasts a sustainable pipeline with multiple late-stage programs that can drive growth. However, currency headwinds and pricing pressure are key top-line headwinds. Concerns remain about its long-term growth drivers beyond its COVID-related products due to competitive pressure.(You can read the full research report on Pfizer here >>>)The Progressive shares have outperformed the Zacks Insurance - Property and Casualty industry over the past year (+23.9% vs. -5.2%) on the back of a favorable outlook for premiums, a compelling product portfolio, leadership position and strength in both Vehicle and Property businesses.Its focus on becoming a one-stop insurance destination, catering to customers opting for a combination of home and auto insurance, augurs well for the company's growth. Policies in force and retention ratio should remain healthy. Competitive pricing to retain current customers and address customer needs with new offerings should continue to drive policy life expectancy.However, exposure to catastrophe losses induces underwriting volatility. Escalating expenses due to higher losses and settlement expenses remain an overhang on the company's margin. High debt level along with low times earned interest pose financial risk.(You can read the full research report on Progressive here >>>)PNC shares have declined -9.0% over the past year against the Zacks Banks - Major Regional industry’s decline of -16.7%, reflecting improving outlook as a result of higher interest rates, partly offset by recessionary risks. Higher net interest income (NII) and loan growth support PNC Financial's second-quarter results against headwinds like higher expenses and a declining deposit. Economic growth and decent pipelines are expected to support balance-sheet strength.  With the gradual rising rates, the company’s NII and margins are positioned to increase.Planned investments in inorganic expansion strategies have strengthened its banking franchise and diversified business mix. Sound capital deployment activities are other positives.(You can read the full research report on PNC here >>>)Other noteworthy reports we are featuring today include MercadoLibre, Inc. (MELI), Arista Networks, Inc. (ANET), and Hess Corporation (HES).Sheraz Mian Director of ResearchNote: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>Today's Must ReadPfizer's (PFE) 2022 Sales to Ride on COVID Vaccine & PillProgressive's (PGR) Solid Policies in Force Aid, Cat Loss AilStrong Balance Sheet Aids PNC Financial (PNC), High Costs AilFeatured ReportsMercadoLibre (MELI) Gains From Total Payment Volume GrowthPer the Zacks analyst, MercadoLibre benefits from solid total payment volume growth which is driven by strong momentum across Mercado Pago and mobile-point-of-sale business.Hess (HES) Gains From Latest Discoveries at Stabroek BlockPer the Zacks analyst, Hess' two discoveries at the Stabroek Block will add to the block's recoverable resource estimates of 11 billion barrels. Yet, its significant level of leverage is concerning.Higher Input Costs, China Slowdown Hurt DuPont (DD)Per the Zacks analyst, higher raw material costs due to supply-chain issues will weigh on DuPont's margins. Sales in its Interconnect Solutions unit will also be hurt by the slowdown in China.Business Recovery Aids Zimmer Biomet (ZBH) Amid Cost IssuesThe Zacks analyst is impressed with Zimmer Biomet's strong business recovery so far in 2022 within Knee and Hip arms globally. Yet, a contraction in the company's gross margin is concerning.Freight Demand, Dividends, Buybacks Aid C.H. Robinson (CHRW)The Zacks analyst is encouraged by C.H. Robinson's top line growth owing to strong freight demand. The company's efforts to reward shareholders through dividends and buybacks are also impressive.Hyatt (H) Banks on Unit Expansion Efforts, RevPAR DismalPer the Zacks analyst, Hyatt's focus on new hotel openings and acquisition initiatives bode well. However, lag in RevPAR from pre-pandemic levels is a concern. Programs Aid Hexcel Corporation (HXL), COVID Impacts WoePer the Zacks analyst, impressive set of programs tend to boost Hexcel's long-term growth prospects. Yet COVID-19 impact on prices and volumes of Hexcel's products might hurt the stock.New UpgradesArista (ANET) Rides on Higher Demand for Cloud DeploymentsPer the Zacks analyst, Arista is likely to benefit from continued spending on IT infrastructure for deployment in cloud environments and diversification across its top verticals and product lines.MGIC Investment (MTG) is Set to Grow on New Insurance WrittenPer the Zacks analyst, MGIC Investment is set to grow on new insurance written aided by the increase in the mortgage origination market and higher refinance activity.Strength in Resistors & Diodes Offerings Aids Vishay (VSH)Per the Zacks analyst, Vishay is benefiting from strong adoption of resistors and diodes across automotive, industrial, military and medical markets.New DowngradesKohl's (KSS) Gross Margin Hurt by Escalated Freight CostsPer the Zacks analyst, Kohl's gross margin remains troubled by freight cost headwinds. Gross margin is likely to decline 100-125 basis points in 2022 owing to freight and product cost inflation.Expenses, Tough Operating Backdrop Hurt SVB Financial (SIVB)Per the Zacks analyst, elevated operating expenses are likely to hurt SVB Financial's bottom line. Geopolitical and recessionary fears are other headwinds, which will likely weigh on its financials.Weakness in Home Furnishing Market Hurts (OSTK)Per the Zacks analyst, is suffering from weakness in the home-furnishing market, despite an expanding mobile clientele. Free: Top Stocks for the $30 Trillion Metaverse Boom The metaverse is a quantum leap for the internet as we currently know it - and it will make some investors rich. Just like the internet, the metaverse is expected to transform how we live, work and play. Zacks has put together a new special report to help readers like you target big profits. The Metaverse - What is it? And How to Profit with These 5 Pioneering Stocks reveals specific stocks set to skyrocket as this emerging technology develops and expands.Download Zacks’ Metaverse Report now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report Pfizer Inc. (PFE): Free Stock Analysis Report Hess Corporation (HES): Free Stock Analysis Report The Progressive Corporation (PGR): Free Stock Analysis Report MercadoLibre, Inc. (MELI): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis Report To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksAug 5th, 2022

Futures Flat Ahead Of Much-Anticipated Jobs Report

Futures Flat Ahead Of Much-Anticipated Jobs Report Markets are muted this morning with US equity futures paring back modest gains, ahead of the much-anticipated US jobs report later Friday. S&P 500, Nasdaq 100 and Dow Jones futures are little changed as sentiment gets hit after China imposed sanctions against Pelosi and would halt military talks with the US over Pelosi trip, while European stocks slipped after a stronger Asian session. The Nasdaq has stopped just short of a 20% rebound from its June low that would meet the technical definition of a bull market. The dollar and Treasuries were steady. Oil and gold slipped and Bitcoin recouped much of yesterday's losses.   In premarket trading, US-listed Chinese stocks slipped after China said it would cancel climate and military talks with US, as part of a countermeasure package following House Speaker Nancy Pelosi’s trip to Taiwan. Among Chinese internet stocks lower were Alibaba -3.3% as investors continue to digest earnings; Nio -1%, Baidu -0.8%, Pinduoduo -2%, -1.9%, NetEase -1.8%, Li Auto -1.5%, XPeng -1.8%, Bilibili -1.6%. Here are some of the biggest U.S. premarket movers today: Warner BrosDiscovery (WBD US) shares slump 11% in premarket trading after the media company reported a net loss and sales for the second quarter that missed the average analyst estimate. The recently merged media giant recorded about $4 billion in charges related to the deal, including amortization and restructuring expenses, wiping out profits. Virgin Galactic (SPCE US) shares tumbled 13% in premarket trading after the space tourism company announced another delay to the launch of their commercial service, pushing it back to the second quarter of 2023. Amgen (AMGN US) delivered a solid set of results and the biotech giant’s acquisition of autoimmune disease drug maker Chemocentryx looks to make sense, analysts say. Kellogg (K US) raised to neutral from underweight at Piper Sandler with the broker saying a “way-too-early” sum-of-the-parts assessment of the cereal giant ahead of its planned split suggests it is fairly valued. Block (SQ US) shares fall 6.5% in premarket trading after gross payment volume for the second quarter missed the average analyst estimate. Analysts noted signs of slowdown in the Cash App business in July. Yelp (YELP US) boosted its full-year outlook on the back of better-than-expected 2Q sales, adjusted Ebitda and margin, prompting Evercore ISI and Baird to raise price targets. Analysts say the online review company’s new products are bearing fruit, with demand from advertisers still robust despite macro risks. DoorDash (DASH US) shares jumped 13% in premarket trading, after the food delivery company reported stronger-than-expected second-quarter results. Analysts were optimistic about the “stickiness” of the company’s product and noted that demand seems to be holding up despite inflationary and macro pressures. Cloudflare (NET US) shares soared as much as 23% in US premarket trading as analysts hiked their targets on the software company, highlighting that the firm was able to keep growing in a tough macroeconomic environment. Cloudflare also boosted its revenue guidance for the full year. Cryptocurrency-exposed stocks are gaining in premarket trading after Bitcoin rose as much as 4% to trade above $23,000. On Thursday, BlackRock partnered with Coinbase to make it easier for institutional investors to manage and trade Bitcoin. Doximity’s (DOCS US) guidance cut will provide fuel to bears on the online healthcare platform, analysts say. Shares in the firm fell 14% in after-hours trading on Thursday following its results. Twilio (TWLO US) shares drop 7.9% in US premarket trading after the software firm’s guidance and margins disappointed, with questions over the latter metric ongoing, analysts say. Ventas (VTR US) reported strong revenue growth in its second-quarter earnings, as expense pressure weighs on third-quarter guidance. Analysts retain a positive long-term outlook on the stock, as an aging population drives demand for Ventas’ senior housing portfolio. . A global equity index is set for a third weekly advance and near a two-month peak in a recovery from bear-market lows, helped by resilient US company profits. The durability of the bounce remains in doubt as central banks around the world speed up rate hikes, and the inversion between two-year and 10-year yields remains near the deepest since 2000, harkening imminent recession. The stock rally is being fed by speculation that runaway inflation may have peaked and the Fed can temper interest-rate increases. With US payrolls Friday data a closely-monitored Fed indicator, an above-expectation reading could provoke a negative reaction by traders because it would be seen as emboldening the US central bank to press on with outsized hikes. “The equity market in the last month has managed to turn both hawkish and dovish data into a reason for cheer, which obviously is rather self-serving and unsustainable in the medium term,” said James Athey, investment director at Abrdn. “I would continue to be a seller of equity strength given my view that the path for the economy most certainly remains down.”  Looking at today's main event, the July payrolls report at 8:30am ET is expected by economists to show job creation slowed from past year’s pace to 250k, with crowd- sourced whisper number currently 225k; unemployment rate expected to remain at 3.6%. Goldman goes even farther and predicts that a negative print would lead to a powerful stock rally: according to Goldman flow trader John Flood "we are firmly in a BAD is GOOD and vice versa tape right now." He adds that whereas Goldman estimates a +225k headline print (vs +372 prior and +250k consensus). In this context: The market "will get hit hard (-200bps) on a print north of 372k (>prior reading) as sooner than expected “fed pivot” convos will quickly be shelved." On the other hand, "a relatively inline print (150k – 300k) mkt wont react to as traders will sit on hands and wait for CPI." Finally, "if jobs are lost and we get a negative print, tape will rally 100+bps as FOMO/COVER chase will (remain) on w/ early 2023 rate cut discussions gaining more momentum." In Europe, the Stoxx 50 index fell 0.3%. DAX is flat but outperforms peers, CAC 40 lags, dropping 0.4%. Media, energy and consumer products are the worst-performing sectors. Here are the top European movers: WPP shares fall as much as 7.3%, the most since May, despite the advertising agency raising full-year sales guidance. While the company surpassed consensus estimates on organic revenue growth in the first half, Goldman Sachs says the magnitude of the beat is smaller than peers. London Stock Exchange shares rise as much as 2% to an almost four-month high, after the financial information company reported interim results and announced a £750m share buyback. Hargreaves Lansdown shares gain as much as 5.7%, the most since March, as its reported pretax for the full year fell below analysts estimates. Vestas Wind Systems rises as much as 5.5% after US Democratic senators agreed on a revised version of an ambitious tax and climate bill. Pets at Home shares gain as much as 4% to the highest intraday since April 6, after the UK retailer reported 1Q like-for-like sales growth of 6%, beating RBC’s estimate of 3%. Rheinmetall shares fall as much as 6.9% after the defense and auto manufacturer published 2Q earnings and confirmed its lowered FY sales outlook reported last week. Deutsche Post rises as much as 6.5%, the most in more than four months, after the company reported Ebit in the second quarter that beat analysts estimates and confirmed its 2022 guidance. Bpost shares rise as much as 9.2% to the highest level since Jan. 26 after what KBC says were a “very good set of result.” Pirelli gains as much as 6.4%, the most intraday since March 9, after the tiremaker reported 2Q results ahead of expectations and raised its guidance for revenue and net cash generation, with Oddo BHF noting the new outlook should reassure. Earlier in the session, Asian stocks rose, boosted by a rally in Taiwan and gains in the region’s technology shares.  The MSCI Asia Pacific Index climbed as much as 0.9%, with TSMC and Sony among the biggest contributors to its advance. Tech was also the best-performing sector on the gauge, followed by materials. Taiwan’s equity benchmark was the biggest gainer in the region, jumping 2.3%. Semiconductor and shipping stocks climbed, helping the Taiwan Stock Exchange Weighted Index recoup all the losses fueled by US House Speaker Nancy Pelosi’s visit to the island earlier this week. That’s even as China likely fired missiles over Taiwan for the first time during its biggest military drills around the island in decades. Investors will continue to assess the ongoing corporate-earnings season and the Fed’s monetary-tightening path. US payrolls data on Friday is the next key data point for global markets; Cleveland Federal Reserve Bank President Loretta Mester reiterated Thursday the US central bank’s determination to quell inflation.  “A recession with the rising inflation rates is not going to be a constructive environment for the stock market. So I still regard this as a bear-market rally,” Jeffrey Halley, senior market analyst at Oanda Asia Pacific, said in an interview with Bloomberg TV.  Stock gauges in Japan and South Korea also rose, helped by positive earnings reports. China’s Alibaba Group Holding Ltd. posted better results than many investors feared, avoiding a sharp sales contraction. Still, the stock slumped in Hong Kong after rallying for two days ahead of the earnings report. Australia's S&P/ASX 200 rose 0.6% to close at 7,015.60, driven by mining and health shares. The benchmark climbed for a third consecutive week, up 1%. Lithium stocks extended their rally on Friday as industry executives said they were inundated by bankers and brokers at the Diggers & Dealers Mining Forum this week, talking up deals to secure some of the estimated $42 billion worth of investment needed for metal producers to meet their goals. Meanwhile, Australia’s central bank lifted its inflation and wage growth forecasts while predicting unemployment will remain under 4% through mid-2024, underscoring the need for even tighter monetary policy. In New Zealand, the S&P/NZX 50 index fell 0.1% to 11,728.47. In FX, the Bloomberg Dollar Spot Index rose 0.1% in quiet trading, snapping a two-day decline. CHF and NZD are the strongest performers in G-10 FX, SEK and AUD underperform. The euro eased as much as 0.3% to 1.0219, weighed by weaker European share prices, while the yen slipped as traders unwound a recent streak of bullish bets on the currency In rates, the Treasury yield curve was barely changed, with two-year yields rising 1.9 basis points higher to 3.06%. In Thursday’s US trading session two- and 10-year yields ended down 2 basis points while the 2s10s spread remained about 37.6bps in inversion. US yields are cheaper by as much as 2bp across front-end of the curve with spreads broadly within 1bp of Thursday’s closing levels; 10-year yields around 2.70%, cheaper by 1bp on the day and outperforming bunds and gilts by ~2bp each. European bonds eased, with the two-year German Schatz yield rising 2 basis points to 0.36%, while the 10-year Bund yield rose 3.1 basis points to 0.83%. Gilt curve bull-flattens with 2s10s widening 2.5bps after BOE’s Huw Pill cautioned against assuming a 50-bps hike in September. Short-end bunds decline, with the yield on the 2-year up about 2 bps. WTI trades within Thursday’s range at around $88. Spot gold falls roughly $4 to trade at ~$1,787/oz. Most base metals trade in the green; LME nickel rises 1.8%, outperforming peers. LME lead lags, dropping 0.1%. In today’s docket of economic data, the payrolls report in the US will be in the spotlight with June consumer credit out later in the day. In Europe, we will get June industrial production for Germany, France and Italy and Q2 private sector payrolls, wages and June trade balance for France. In central banks, speakers will include Fed’s Barkin and BoE’s Pill. Market Snapshot S&P 500 futures little changed at 4,154.00 STOXX Europe 600 down 0.2% to 438.32 MXAP up 0.8% to 161.72 MXAPJ up 0.9% to 527.30 Nikkei up 0.9% to 28,175.87 Topix up 0.9% to 1,947.17 Hang Seng Index up 0.1% to 20,201.94 Shanghai Composite up 1.2% to 3,227.03 Sensex up 0.2% to 58,442.88 Australia S&P/ASX 200 up 0.6% to 7,015.56 Kospi up 0.7% to 2,490.80 German 10Y yield little changed at 0.82% Euro down 0.2% to $1.0227 Gold spot down 0.2% to $1,787.20 U.S. Dollar Index up 0.24% to 105.95 Top Overnight News from Bloomberg Stocks in Europe and US equity futures struggled for direction as investors brace for the monthly US jobs report that’s likely to enliven the recession debate. The dollar rebounded from two days of declines. China announced it would halt cooperation with the US in a number of areas following US House Speaker Nancy Pelosi’s trip to the US, including working-level talks on climate change and defense. Bond giant Pacific Investment Management Co. saw outside clients pull money for a second straight quarter amid a global bond selloff. Investors have resumed shunning global stocks in favor of bonds, according to Bank of America Corp. strategists, who say the time is right to step back from US equities after the strong rally in July. German power prices rose to a record as utilities are increasingly reducing electricity output in western Europe because of the hot weather. A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks traded mostly positive but with gains capped amid geopolitical and growth slowdown concerns, while markets also await the upcoming US NFP jobs report. ASX 200 was lifted by strength in mining stocks after gains in underlying metal prices although the energy sector lagged due to the recent oil pressure. Nikkei 225 surpassed 28k after stronger-than-expected Household Spending and firmer wage growth. Hang Seng and Shanghai Comp lacked firm direction with Hong Kong stocks indecisive after Alibaba failed to replicate the strength in its ADRs post-earnings and with sentiment clouded by geopolitical risks Top Asian News Hong Kong to Announce Hotel Quarantine Cut as Soon as Monday Japan’s Kishida to Reshuffle Cabinet as Soon as Aug. 10: NHK Seazen Says It’s Wired Funds for $200m Dollar Bond Due Aug. 8 Indonesia’s GDP Surprise May Not Be Enough to Sway BI to Hike SpaceX Rocket Launches South Korea’s First Mission to the Moon Copper and Zinc Push Higher on Tightening Supply Backdrops European bourses are under modest pressure in wake of China taking countermeasures against "Pelosi's invasion of Taiwan", Euro Stoxx 50 -0.4%. However, as we await the key US Labour Market print (newsquawkperformance is fairly contained overall preview available) before next week's CPI. Currently US futures are lower by circa. 0.1% in narrow ranges amid thin summer conditions and a limited European schedule. Top European News German Power Climbs to Record as Plants Start to Buckle in Heat UK House Prices Fall for First Time in a Year as Crisis Bites Solvency II Plans Open Door to UK Insurance Buyback Bonanza Italian Industry Output Slumps as Election Uncertainty Mounts Vestas Surges as US Tax and Climate Bill Passes Major Hurdle WPP Shares Drop After Outlook Upgrade Fails to Live up to Peers FX DXY trades on a firmer footing and tested 106.00 as China announced sanctions against House Speaker Pelosi; CNH saw some weakness. EUR and GBP are posting mild losses vs the Buck, but the EUR sees slightly more of a downside bias vs the GBP Activity currencies hold a mild downside against the Buck, with more pronounced losses seen as reports of Chinese sanctions against Pelosi dented sentiment. Haven FX have climbed up the G10 ranks following the deterioration in sentiment. Fixed Income Pre-BoE core consolidation has dissipated and the flattening bias is back in play, albeit, only incrementally so with NFP ahead. Bunds are towards the mid point of a relatively contained 60 tick range which is capped by nearby support/resistance. OATs are in-fitting directionally but at the lower-end of ranges ahead of Fitch's review of France; currently, AA Negative Commodities Crude benchmarks are under pressure amid the mentioned countermeasures taken by China and also as Taiwan reports no/limited ships/aircraft impact from China drills WTI and Brent lower by circa. USD 0.20/bbl and towards the bottom-end of the session's parameters. China's market regulator recently carried out investigations in Shanxi, Inner Mongolia and Shaanxi, 3 major coal-producing provinces, to further supervise and regulate thermal coal prices. 18 coal companies were suspected of bidding up coal prices, accord. Spot gold is softer and incrementally losing its allure as the USD picks up while remain mixed US Event Calendar 08:30: July Change in Nonfarm Payrolls, est. 250,000, prior 372,000 Change in Private Payrolls, est. 230,000, prior 381,000 Change in Manufact. Payrolls, est. 20,000, prior 29,000 July Unemployment Rate, est. 3.6%, prior 3.6% Underemployment Rate, prior 6.7% Labor Force Participation Rate, est. 62.2%, prior 62.2% Average Hourly Earnings MoM, est. 0.3%, prior 0.3%; Average Hourly Earnings YoY, est. 4.9%, prior 5.1% July Average Weekly Hours All Emplo, est. 34.5, prior 34.5 15:00: June Consumer Credit, est. $27b, prior $22.3b DB's Jim Reid concludes the overnight wrap Welcome to another payrolls Friday which after a week of better US data on balance, probably isn’t set up with the market as worried as it could have been. There will be some concerns that continuing claims picked up last week (as released yesterday) but it’s fair to say the market is probably going into today’s print less worried about it than it was at the start of the week. Yesterday was in truth the dullest day of the month so far after three action packed days even with a well flagged 50bps hike, but with a five quarter recession call, from the BoE being the obvious highlight. US yields did rally across the curve but the moves were much smaller than we’ve seen earlier this week. The 2yr (-2.2bps) eased a touch more than the 10yr (-1.7bps). This came alongside hawkish comments from Cleveland Fed’s President Mester who stuck with her preference for rates to get above 4%, but now potentially preferring to frontload the hikes relative to her view in June’s summary of economic projections. The next edition is due at the September FOMC. It was a mixed-bag day for the S&P 500 (-0.08%). Energy (-3.60%) continued to be the worst performing sector amid gloom in oil, with WTI losing -2.78% and trading below $90 per barrel and Brent (-3.25%) also down, but it was among 3 other sectors to finish the day lower including staples (-0.79%) and healthcare (-0.49%), while discretionary (+0.54%) and IT (+0.42%) drove the index higher as earnings took over given the lack of a significant macro driver. Earnings also largely pulled the Nasdaq (+0.41%) ahead of other benchmarks as well, as the Dow Jones declined by -0.26%. Alibaba’s (+1.88%) revenue beat and a fairly optimistic take on consumer trends earlier in the session helped. Other notable movements on the day included Coinbase (+10%), which surged after news it is to partner with BlackRock to improve Bitcoin trading for institutions. But with 423 members of the S&P 500 now reported earnings for this season, the results-driven stories may fade in the coming days. As mentioned at the top there was some disappointment from the claims numbers in the US which impacted sentiment a touch. While initial claims came in line with the median Bloomberg estimate of 260k, the upside surprise in continuing claims (1416k vs 1385k expected) were notable and remember that our US economists have pointed out that this series is a better gauge when it comes to forecasting imminent recessions. This fly in the job's market soup comes after several Fed speakers have highlighted the continued tightness in the labour market this week, and with the ISM employment gauges surprising on the upside. So this puts today’s payrolls report solidly top of mind for markets from both a growth and monetary policy perspective. Our US economists expect a 250k print, down from 372k in June but enough to tip the unemployment rate lower to 3.5% from 3.6%. Consensus is also at 250k. Some softness in yields and risk assets also started around the time of the BoE’s meeting yesterday that brought a fairly gloomy set of economic projections along with the widely expected +50bps hike, the largest since 1995, and a potential roadmap for active QT. Our UK economists review the meeting here and point to three key takeaways – inflation risks outweighed growth concerns, there is less reliance on medium-run projections and fairly unconstrained forward guidance. Our economics team continue to see +50bps in September and +25bps in November, marking a peak of 2.5% for the Bank Rate. Briefly diving into the forecasts that dominated the headlines, the projections showed expectations of a prolonged contraction starting Q4 this year, with a -2.2% GDP decrease between then and Q2-24. So five quarters of recession predicted. What on earth would happen if the Fed predicted that? Inflation expectations also got a notable uptick of +200bps, and is now projected to peak at 13% in Q4 this year. While that was quite a mix for investors to digest, as our UK economists point out the Bank explicitly underscored it would assign less weight to more uncertain projections these days. That also further emphasises the importance of the next prime minister’s (results on September 5th) fiscal policy. 2s10s briefly inverted for the first time since 2019 as markets got on board with the recession story. The 2yr dropped by roughly -20bps from session’s highs at one point before closing only marginally lower (-0.5bps). The long end declined a bit more, with the 10y closing at -2.4bps, and the 2s10s finishing the day at 10bps, down -1.9bps. Nevertheless, breakevens surged by +6.2bps and the pound saw a U-turn from a nearly -1% loss in the aftermath of the meeting, recovering nearly to the level it held in early European trading. The rest of major European bond markets also saw a rally for yields but more catching up to the late previous night US rally than anything else, with those for Bunds (-7.2bps), OATs (-8.6bps) and BTPs (-8.2bps) all lower. Falling yields supported equities in the region, as the STOXX 600 (+0.18%) was propelled by materials (+1.22%), helped by Glencore’s results, IT (+1.07%) and discretionary (+0.96%) stocks. Energy (-1.34%) and real estate (-1.18%) were the main outliers on the downside and 66% of index’s members finished the day higher. Over in Asia, stock markets are trading higher this morning as markets appear to be unfazed by China’s military drills around Taiwan. As I type, the Kospi (+0.81%) is leading gains in early trade with the Nikkei (+0.71%) not far behind. Elsewhere, the Shanghai Composite (+0.28%) and the CSI (+0.37%) are also in positive territory whilst the Hang Seng (+0.06%) is swinging between gains and losses. Meanwhile, oil futures are slightly higher and reversing earlier losses as we go to print. Looking ahead, equity futures in the US point to further gains with contracts on the S&P 500 (+0.24%), and the NASDAQ 100 (+0.30%) higher. Early morning data showed that Japan’s household spending (+3.5% y/y) increased for the first time in four months in June (v/s +1.5% expected) and compared to a -0.5% decline in May. Separate data showed that real wages in Japan (-0.4% y/y) slipped for the third straight month in June (v/s -1.3% expected) as consumer prices advanced faster than nominal wages (+2.2% y/y, +1.9% consensus) which recorded its strongest growth in four years. Elsewhere, the Reserve Bank of Australia (RBA) in its monetary statement this morning upgraded its inflation and wage growth forecasts while predicting the nation’s unemployment rate would fall further by the end of this year. The central bank in its statement revealed that it sees headline inflation reaching 7.75% by the end of 2022 and assumes the key interest rate will reach 3% by December from 1.85% at present and then “decline a little” by end-2024. Additionally, it estimates the jobless rate will reach 3.25% from the 3.75% forecasted earlier in May. In today’s docket of economic data, the payrolls report in the US will be in the spotlight with June consumer credit out later in the day. In Europe, we will get June industrial production for Germany, France and Italy and Q2 private sector payrolls, wages and June trade balance for France. In central banks, speakers will include Fed’s Barkin and BoE’s Pill. Tyler Durden Fri, 08/05/2022 - 07:39.....»»

Category: worldSource: nytAug 5th, 2022

US futures edge up ahead of key jobs data; oil claws back some gains

US futures rose as investors wait on key labor market data with economists expecting 250,000 jobs to be added last month, while oil prices fell. Job creation is a key measure of the health of the economy.Spencer Platt/Getty Images US futures edged up as investors wait on key labor market data due on Friday.  Economists forecast employers to have added 250,000 jobs last month, a softer number compared to June.  Oil prices rose after hitting a six-month low this week on demand destruction fears. US futures rose on Friday ahead of key labor market data, while oil edged a little higher to reverse some of the previous day's losses. Futures across the board were in the green, with those on the S&P 500,  Dow Jones and Nasdaq 100 gaining 0.19%, 0.23% and 0.22%, respectively. Investors are eagerly anticipating nonfarm payroll data, especially after data this month showed US GDP contracted for a second straight quarter in the three months to June, living up to the technical definition of a recession. Economists expect employers to have added 250,000 jobs last month compared to a rise of 372,000 in June.A stronger than expected number will likely encourage the Federal Reserve to be more aggressive in their monetary policy to tackle inflation as the economy is growing. But a weaker number than expected would reserve the Fed from raising interest rates further because the economy is not growing as robustly. "A weak US non-farm payrolls this evening will give ammunition to the riders of the apocalypse if labor market weakness is finally seeping through in tier-1 data," OANDA analyst Jeffrey Halley said in a note. Meanwhile, oil markets recovered earlier losses with international benchmark Brent crude rising 0.76% to trade at $94.87 a barrel while West Texas Intermediate increased 0.76% to $89.23 a barrel. Oil prices have fallen to their lowest level in around six months on growing concerns that a potential recession will weigh down on demand. "Crude oil prices have now dipped to their lowest levels since Russia invaded Ukraine as weaker demand and improving supply are seen in the short term," Saxo Bank analysts wrote. The dollar index rose 0.21%.The yield on the key 10-year US Treasury note wavered slightly to stand at 2.552%. Europe's continent-wide Stoxx 600 index gained 0.08%.China's CSI 300 increased 1.35%; Hong Kong's Hang Seng rose 0.16.Read the original article on Business Insider.....»»

Category: worldSource: nytAug 5th, 2022

Q2 Earnings Scorecard and Analyst Reports for Visa, Comcast & Medtronic

Today's Research Daily features updated earnings scorecard and fresh analyst reports on Visa (V), Comcast (CMCSA), Medtronic (MDT) & others. Thursday, August 4, 2022The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the ongoing Q2 earnings season and new research reports on 16 major stocks, including Visa Inc. (V), Comcast Corporation (CMCSA), and Medtronic plc (MDT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. You can see all of today’s research reports here >>>Q2 Earnings Season Scorecard Including all the reports that came out the morning of August 4th, we now have Q2 results from 410 S&P 500 members or 82% of the index's total membership. Total earnings for these companies are up +7.8% from the same period last year on +14.8% higher revenues, with 77.3% beating EPS estimates and 68.8% beating revenue estimates. The proportion of these 410 index members beating both EPS and revenue estimates is 58.5%. As we have been pointing out since the start of this reporting cycle, the EPS and revenue beats percentages are tracking towards the lower end of the historical range for this group of stocks. That said, the market has found these results fairly reassuring, particularly given concerns about a Fed-driven economic slowdown or even a recession. To that end, while some companies have guided lower, citing trends in consumer spending, FX headwinds or the pre-existing issues of inflationary and logistical challenges, the overall tone and substance of management guidance and commentary has been good enough. Estimates for the second half of the year and next year have come down a bit, but the declines are nowhere near what would be consistent with a significant economic slowdown or recession. Looking at Q2 as a whole, combining the actual results from the 410 index members that have reported with estimates for the still-to-come companies, earnings and revenues are on track to be up +6.3% and +13.7% from the year-earlier level, respectively. The aggregate total of Q2 earnings for the index are on track to reach a new all-time quarterly record, surpassing the level reached in 2021 Q3. Today's Featured Analyst ReportsVisa shares have modestly lagged Mastercard in the year-to-date period (-1.1% vs. -0.2%), but they have handily outperformed the S&P 500 index (down -13.1%) and the Zacks Finance sector (-12.9%). The company is undoubtedly faced with a number of near-term challenges, but the long-term outlook remains positive, as came through in the recent quarterly report. Visa’s fiscal third-quarter earnings beat estimates. Its numerous buyouts and alliances paved the way for long-term growth and consistently drove its revenues. Constant investments in technology are solidifying its position in the payments market. A shift in payments to the digital mode is a boon.The coronavirus vaccine rollouts and the gradual revival of consumer confidence will keep driving spending, expanding business volumes in turn. Backed by its strong cash position, it remains committed to boosting its shareholder value.(You can read the full research report on Visa here >>>)Comcast shares have declined -31.5% over the past year against the Zacks Cable Television industry’s decline of -35.0%, reflecting persistent trends in cord cutting and a leveraged balance sheet in a backdrop of tightening monetary policy. The second-quarter 2022 results reflected slowing broadband user base addition primarily due to reversal of pandemic trends and increased competition.Nevertheless, the company benefited from a growing wireless subscriber base. Comcast’s plan to transition to DOCSIS 4.0 is noteworthy in this regard. The technology will help it in expanding much faster and at a lower cost compared to competitors.Recovery in park and movie business bodes well for Comcast’s profitability. Its streaming service Peacock is a key catalyst in driving broadband sales. Strong free cash flow generation ability is noteworthy.(You can read the full research report on Comcast here >>>)Medtronic shares have outperformed the Zacks Medical - Products industry over the past 2 years (+0.9% vs. -38.4%) on the back of a succesful global expansion effort. Meanwhile, within Cardiovascular, the company is gaining market share, banking on recent product launches.Within MedSurg, Medtronic is scaling its production of Hugo RAS. Innovations and market expansion efforts are helping it offset the impact of the high inflation and supply disruptions.Medtronic’s strong liquidity position should allow it to meet its near-term debt obligations. All these factors support our bullish stance on the stock.(You can read the full research report on Medtronic here >>>)Other noteworthy reports we are featuring today include Lockheed Martin Corporation (LMT), ServiceNow, Inc. (NOW), and Chubb Limited (CB).Sheraz Mian Director of ResearchNote: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>Today's Must ReadVisa (V) Rides on Improving Top Line & Financial PositionWireless Subscriber Gain Drives Comcast's (CMCSA) ProspectsMedtronic (MDT) Market Share Grows, MedSurg Prospect RobustFeatured ReportsOrder Growth Boosts Lockheed (LMT), Tiff With Turkey AilsPer the Zacks analyst, steady order flow continues to boost Lockheed's revenue growth. Yet, the U.S. government's tiff with Turkey over its involvement in Russia's S-400 may hurt F-35 program.Growing Customer Base & Partnerships Aid ServiceNow (NOW)Per the Zacks analyst, ServiceNow benefits from rising adoption of its workflows from companies undergoing digital transformation. Also, strategic alliances with the likes of Microsoft are a tailwind.Mobile & Internet Subscriber Gain Benefits Charter (CHTR)Per the Zacks analyst, higher subscriber strength in residential and commercial internet services along with broadening Spectrum Mobile user base is driving Charter's top line.Dollar Tree's (DLTR) Real Estate Initiatives Hold PotentialPer the Zacks analyst, Dollar Tree is on track with optimizing its store portfolio through new store openings, renovations, re-banners and closings. Its new H2, Dollar Tree Plus and Combo Stores holdLoan Growth Supports M&T Bank (MTB), Rising Costs a Woe Per the Zacks analyst, M&T Bank's top line gets support from increasing loans and rising interest rates.Sports Betting Aid Wynn Resorts (WYNN), Macau Woes HurtsPer the Zacks analyst, Wynn Resorts is benefiting from robust demand for sports betting and expansion in domestic markets. However, coronavirus related restrictions in Macau hurts the company.CRISPR Therapeutics' (CRSP) Pipeline Development Fuels GrowthWhile CRISPR Therapeutics' pipeline progress is impressive, the Zacks Analyst is concerned about a lack of stable stream of income as the company has no marketed drugs in its portfolio.New UpgradesChubb (CB) Continues to Gain From Strategic AcquisitionsPer the Zacks analyst, buyouts have helped Chubb in domestic as well as international expansion, boosted the portfolio of products and services and aided revenue growth.Phillips 66 (PSX) to Gain From Higher Distillate Fuel DemandPer the Zacks analyst, Phillips 66 is well-positioned to benefit from higher distillate fuel demand amid changes in the marine fuel sulfur limits.Halliburton (HAL) to Benefit from North American ExposureThe Zacks analyst believes that Halliburton can take advantage of the tight fundamentals of the North American land drilling space through its market-leading pressure pumping operations.New DowngradesLower Current Ratio and Seasonality Bother Equifax (EFX)The Zacks analyst is pessimistic about Equifax's revenue streams, affected by seasonality. Moreover, the decreasing current ratio (a measure of liquidity) is a headwind.Supply Chain Related Headwinds to Weigh on Oshkosh (OSK)Supply chain snafus and increasing inflationary pressure will mar Oshkosh's near-term prospects, per the Zacks analyst. To that end, the firm has also trimmed its fiscal 2022 EPS view. Soft Industrial Segment & Rising Costs Hurt Woodward (WWD)Per the Zacks analyst, Woodward's performance is being affected by weakness in Industrial segment due to supply chain woes. Rising material and labor costs are added concerns. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>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 Lockheed Martin Corporation (LMT): Free Stock Analysis Report Visa Inc. (V): Free Stock Analysis Report Comcast Corporation (CMCSA): Free Stock Analysis Report Medtronic PLC (MDT): Free Stock Analysis Report Chubb Limited (CB): Free Stock Analysis Report ServiceNow, Inc. (NOW): Free Stock Analysis Report To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksAug 4th, 2022

Futures Flat As Crushing 37bps Curve Inversion Screams Recession

Futures Flat As Crushing 37bps Curve Inversion Screams Recession US futures are mixed on Thursday, first trading in the red, then turning green before moving unchanged, as investors shrugged off growth warnings from the bond market while Taiwan war fears faded further despite drills launched by China overnight. Oil bounced back from the lowest level in almost six months. Contracts on the S&P 500 were flat while Nasdaq futures were modestly green, suggesting the tech-heavy Nasdaq will extend an advance of 19% from its June 16 low on the back of a massive CTA, buyback and retail-driven buying frenzy. In premarket trading, Alibaba gained 3.4% after reporting revenue for the first quarter that beat the average analyst estimate. Adjusted earnings per American depositary receipt also topped expectations. Altice USA shares jumped 5% after the cable television provider reported second-quarter results and announced it received inquiries for its Suddenlink assets. US-listed Chinese tech stocks including, Pinduoduo and Baidu rise in premarket trading Thursday as Alibaba shares jump 3.9% after reporting better-than-expected revenue in the first quarter. Here are some other notable premarket movers: AMTD Idea (AMTD) shares slump 11.5% putting the Hong-Kong based financial services firm on track to slump for a second straight day after a wild 237% jump earlier this week. Eli Lilly (LLY) falls 2% after the company cut its adjusted earnings per share forecast for the full year. Equinox Gold Corp. (EQX) slides 2.5% after reporting second quarter results that missed consensus analyst estimates for revenue and posted a loss per share, and announced a CEO change. Fastly Inc. (FSLY) shares are down 7% after the infrastructure software company reported second quarter revenue that beat expectations. Gannett Co. Inc. (GCI) shares plunge 5% after the company lowered its full-year revenue and Ebitda outlook, citing “current economic conditions.”. Kohl’s Corp. (KSS) was downgraded to market perform from outperform at Cowen, with analyst Oliver Chen saying a “weakening and inflationary consumer backdrop” could drive EPS downside. Shares decline 3%. Pacific Biosciences (PACB) 2Q results look broadly in line but guidance has been cut significantly, albeit this is not a major surprise, analysts say. Shares down 4% in US premarket trading. Revolve Group Inc. (RVLV) shares are down 13% after the e-commerce fashion company reported quarterly net sales and earnings per share that fell short of analysts’ expectations. Skillz (SKLZ) shares tumble 11.6% after the mobile games platform operator cut its full-year guidance for revenue, with Citi noting that revenue and user metrics disappointed. Under Armour (UAA) is downgraded to neutral from outperform at Baird, which says its view of the athletic-wear retailer’s near-term prospects has “deteriorated materially” over the past two quarters, and faces further pressure from an uncertain macroeconomic environment. The stock declines 0.5% in premarkettrading. Yellow Corp. (YELL) shares jump 37% after the logistics company reported earnings per share for the second quarter that beat the average analyst estimate. So far US stocks have proven resilient to heightened bond market anxiety and an inverted Treasury yield curve flashing warnings on economic risks, as the S&P 500 climbs back toward the highest level in two months ignoring the screaming recession warning from the 2s10s curve which is now 37bps inverted. But a global wave of monetary tightening risks upending those gains. The Bank of England unleashed its first half-point hike since 1995 in an effort to control inflation, joining some 70 other institutions around the world moving rates up in outsized steps. “There’s an intense tug-of-war happening in the economy and markets,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors. “On one side, you have a narrative that reasonable growth is going to support continued inflation pressure and keep the Fed hiking. The other narrative is that slowing growth is going to ease inflation and allow the Fed to stop hiking.” Meanwhile, US-China tension remains among the uncertainties clouding the outlook. Taiwan braced for the Chinese military to start firing in exercises being held around the island in response to US House Speaker Nancy Pelosi’s visit. Here are the latest headlines surrounding Taiwan/Pelosi: China's Taiwan Affairs Office said the Taiwan issue is not a regional issue but is a China internal affairs issue, while it added that punishment of pro-Taiwan independence diehards and external forces is reasonable and lawful. Taiwan's Defence Ministry said unidentified aircraft which were likely drones, flew above Kinmen Islands on Wednesday night, while the military fired flares to drive away the aircraft, according to Reuters. Taiwan's Defence Ministry said troops will continue to reinforce alertness level and are carrying out daily training as usual, while the military will react appropriately to an enemy situation and safeguard national security and sovereignty, according to Reuters. ASEAN Foreign Ministers are concerned about international and regional volatility and are concerned volatility could lead to a miscalculation, serious confrontation, open conflicts, and unpredictable consequences among major powers, according to Reuters. US House Speaker Pelosi plans to visit an inter-Korean border area jointly controlled by the American-led UN Command and North Korea, according to a South Korean official cited by Reuters. China's PLA has added an additional zone for its military exercise encircling Taiwan starting Thursday, exercises have been extended until Monday at 10:00, via dwnews' Yang citing Taiwan's port authority. Now seven zones around Taiwan. Gains in the Stoxx Europe 600 Index were led by retailers, leisure and technology firms, alongside an advance in shares of Chinese tech companies.  Among individual stock moves, Glencore Plc shares fell as much as 2% as its capital return plans overshadowed solid first-half results. Ubisoft shares surged as much as 21% after Tencent reached out to Ubisoft’s founding Guillemot family and expressed interest in increasing its stake, according to Reuters. Here are the most notable European movers: Rolls-Royce drops as much as 12% in London. Jefferies highlights that 1H adjusted Ebit came in 24% below consensus, is disappointed Civil margin “once stripped of a number of one-offs, remains well below breakeven.” SES shares drop as much as 10%, the most intraday since April 2020, as some analysts raised doubts about a potential combination with Intelsat after the FT reported deal talks between the two companies. Ambu falls as much as 16%, the most intraday since May 6, after the company slashed its organic revenue forecast for the full year and said it will cut about 200 jobs from its global workforce. Lufthansa gains as much as 7.4% after the airline forecast a “significant increase” in earnings in the third quarter compared to the second and provided a clearer outlook for full-year profit, predicting adjusted Ebit of more than EU500m. Next shares climb as much as 3.2% after the UK apparel retailer reported better-than-expected 2Q sales and raised its profit outlook for the year. Adidas shares gain as much as 4.4% after the German sportswear company reported 2Q results that were largely in line with expectations, following last week’s profit warning. Merck KGaA shares rise as much as 1.7% after the German pharmaceutical group’s 2Q report showed stable growth for its Life Science division despite abating Covid-19 tailwinds, with Jefferies saying it sends a “positive message” for the rest of 2022. Earlier in the session, Asian stocks rebounded as easing tensions over Taiwan and overnight gains on the Nasdaq fueled a rally in Chinese tech shares ahead of key earnings reports. The MSCI Asia Pacific Index climbed 0.5%, set for its first gain in three sessions. Alibaba, which is scheduled to release earnings later Thursday, and e-commerce peers Meituan and helped boost the Hang Seng Tech Index as much as 3.4%, most in more than a month. Other benchmarks in Hong Kong and South Korea’s tech-heavy Kosdaq were among the region’s outperformers.  “Hong Kong stock markets are getting re-rated after seeing the risk-off mood due to Taiwan tensions, as there were no military conflicts,” said Xuehua Cui, a China equity analyst at Meritz Securities in Seoul.  US House Speaker Nancy Pelosi left Taiwan after reaffirming US support for the democratically elected government in Taipei. China responded with trade curbs and military drills.  Elsewhere in Asia, the main Philippine index reached its highest since June 10 on foreign inflows. Asia’s key stock benchmark has rebounded from its July low, but its recent recovery has been lagging behind US peers amid a property crisis in China and heightened geopolitical risks. Japanese equities erased earlier gains and slipped as Toyota announced first-quarter earnings that missed estimates and as investors continue to evaluate corporate earnings both domestically and abroad.  The Topix Index was virtually unchanged at 1,930.73 with Toyota Motor leading declines as of market close Tokyo time, while the Nikkei advanced 0.7% to 27,932.20. Toyota Motor shares dropped during market hours as the automaker reported disappointing first quarter earnings and kept its conservative outlook for the current year. Out of 2,170 shares in the index, 1,198 rose and 849 fell, while 123 were unchanged. “Toyota Motor’s financial results confirmed that the impact of high raw material and fuel prices was strong enough to offset the effects of the weak yen,” said Shuji Hosoi, an analyst at Daiwa Securities. “The fact that the company didn’t change its full-year operating income forecast negatively impacted the markets, which had been expecting an upward revision.” India’s Sensex index snapped a six-session rally, dragged by Reliance Industries and leading lenders, on risk-aversion ahead of a monetary-policy announcement on Friday.  The S&P BSE Sensex fell 0.1% to 58,298.80, in Mumbai, after paring decline of as much as 1.3% in the session. The NSE Nifty 50 Index was flat. Both gauges posted early gains and appeared headed for their longest winning streaks since October 2021, but reversed course.  “The sudden drop in indexes is most likely led by ‘basket selling’ from foreign portfolio investors ahead of the central bank’s rate decision on Friday,” said Abhay Agarwal, a fund manager at Piper Serica Advisors. “Stocks have gained for six straight sessions and investors may want to reap gains ahead of a major policy event.” Reliance Industries fell 1.3%, while State Bank of India and Axis Bank led declines among lenders.  Economists expect the Reserve Bank of India to raise rates for a third consecutive time on Friday but remain divided on the level of the hike aimed at fighting inflation and supporting a weakening currency.  Of 30 shares in the Sensex index, 17 rose and 13 fell. Both of India’s equity benchmarks had gained least 5.5% in previous six sessions driven by $1.7 billion of net purchases by foreigners since the end of June amid signs that inflationary pressures are cooling.  Eight of the 19 sector sub-indexes compiled by BSE Ltd. declined on Thursday. A measure of telecom stocks was the worst performer among the sectoral measures. In FX,  the dollar consolidated as traders awaited US payrolls data due later in the day for clues on the pace of future Federal Reserve rate hikes. Sterling tumbled after the BOE delivered its biggest rate hike in 27 years, pushing rates up by 50bps, however it also warned of a devastating stagflation, hiking its inflation forecast to 13.3% in October even as it predicted a harrowing 5-quarter long recession. In rates, Treasuries were moderately cheaper across the curve - which continues to invert deeply with the 2s10s now -37bps, the biggest yield curve inversion since 2000 as traders increased wagers on Federal Reserve rate hikes ahead of Friday’s US jobs data - as US stock futures added to Wednesday’s gains.  The US 10-year yield dropping to 2.70% as Federal Reserve officials indicated they were resolute on aggressive hikes to cool inflation, dashing market hopes they were ready to embark on a shallower rate path. Treasuries offered little initial reaction to Bank of England decision to hike rates 50bp in an 8-1 vote while warning of a 5 quarter-long recession. Front-end yields cheaper by ~2bp on the day, flattening 2s10s and 5s30s spreads by ~1.5bp and ~0.5bp; 10-year yields around 2.71% trade cheaper by 5bp vs bunds.  European long-end bonds nudged higher. In the UK, focus is on the Bank of England’s rate decision, with a majority of economists anticipating a 50-basis-point hike. In commodities, oil drifted 0.2% lower to trade at the $90 level as investors weighed weaker US gasoline demand and rising inventories against a token supply increase from OPEC+. Spot gold rises roughly $20 to trade near $1,787/oz. Base metals are mixed; LME lead falls 1.1% while LME zinc gains 1.2%. Bitcoin slips back below the USD 23k mark but remains in relative proximity to the level in a tight range. Looking to the day ahead now and we have US June trade balance and Initial Jobless Claims, Germany June factory orders, July construction PMI, UK July new car registrations, construction PMI, Canada June building permits and international merchandise trade. Earnings will include Alibaba, Eli Lilly, Toyota, ICE, ConocoPhillips, Bayer, Glencore, Cigna, Rolls-Royce, adidas, Cheniere, DBS, Apollo, Lyft, Expedia, Deutsche Lufthansa, Warner Bros Discovery, Vertex Pharmaceuticals, DoorDash, Atlassian, Amgen, Block, EOG, Kellogg and AMC. Market Snapshot S&P 500 futures little changed at 4,153.75 STOXX Europe 600 up 0.2% to 439.32 MXAP up 0.4% to 159.68 MXAPJ up 0.6% to 521.36 Nikkei up 0.7% to 27,932.20 Topix little changed at 1,930.73 Hang Seng Index up 2.1% to 20,174.04 Shanghai Composite up 0.8% to 3,189.04 Sensex down 0.6% to 57,993.23 Australia S&P/ASX 200 little changed at 6,974.93 Kospi up 0.5% to 2,473.11 German 10Y yield little changed at 0.89% Euro up 0.1% to $1.0178 Brent Futures little changed at $96.78/bbl Brent Futures little changed at $96.75/bbl Gold spot up 0.4% to $1,773.19 U.S. Dollar Index down 0.13% to 106.37 Top Overnight News from Bloomberg China’s military fired missiles into the sea on Thursday in live-fire military exercises around the island in response to US House Speaker Nancy Pelosi’s visit, even as Taipei played down the impact on flights and shipping. The Bank of England on Thursday is expected to push through the biggest interest-rate increase in 27 years despite growing risks of a recession. European stocks edged higher on Thursday as investors continued to weigh the path of corporate earnings, while attention turned to the Bank of England’s policy decision later in the day. The dollar is close to a 20-year high, despite talk of its inevitable demise. While reluctant to add another article that ends up in traders’ trash cans, current pricing is extreme. Asia’s emerging economies are drawing on large foreign exchange reserves to help prop up their currencies rather than going all-out with interest-rate hikes. A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were firmer as the positive momentum rolled over from global peers. ASX 200 was kept afloat by tech after similar outperformance of the sector stateside. Nikkei 225 briefly reclaimed the 28k level amid recent JPY weakness and as the earnings deluge continued. Hang Seng and Shanghai Comp conformed to the heightened risk appetite with firm gains in tech including Alibaba ahead of its earnings and with Hong Kong set to provide HKD 2k in consumption vouchers from Sunday. Top Asian News   China’s Yiwu city will conduct mass testing and China's Sanya city is on lockdown amid a COVID flare-up, according to state media. China Cancels Japan Meeting Over G-7 Criticism of Taiwan Drills SoftBank Raises $22 Billion Through Alibaba Derivatives: FT China State-Backed Builder’s Dollar Bonds Slump as Worries Mount Tiger Global Fund Halves Stake in India Food Platform Zomato Additional Share Sales Break Asia’s Usual Summer Lull: ECM Watch Li Ka-shing’s CK to Sell AMTD Stake After Unit Soars 14,000% European bourses are firmer across the board, Euro Stoxx 50 +0.9%, with the general tone constructive though the FTSE 100 lags pre-BoE amid GBP strength. Stateside, US futures have lifted from initial rangebound action, ES +0.3%, with specific newsflow limited pre-data/Fed speak Top European News Next Raises Profit Outlook as Hot Spell Spurs Fashion Buying French Tech Startup Back Market Said to Start Early IPO Prep Goldman, Bernstein Strategists Say Stocks Rally Can Fizzle Out European Retailers Outperform, Fueled by Zalando Relief Rally Czech Finance Minister Attending Central Bank’s Rate Meeting Credit Agricole’s Investment Bank Drives Earnings Beat FX DXY remains subdued in early European trade following a relatively contained APAC session; fresh session lows are seen heading into the US entrance. GBP/USD and EUR/USD are currently buoyed, but seemingly more as a function of the Dollar with the former gearing up for the BoE. A mixed session thus far for the non-US Dollars, with the Antipodeans leading the charge whilst the Loonie remained suppressed by crude prices. JPY resides as the current G10 laggard with recent Fed rhetoric fuelling a retracement of last week’s USD/JPY downside. Fixed Income Core consolidation after recent rampant upward move, knife-edge BoE looms; Bund Sep'22 towards mid-point of a +100 tick range. USTs are following suit with the yield curve flattening modestly but generally quite contained ahead of Mester (2022 voter, Hawk) who has provided commentary recently. Pre-BoE Gilts are supported, but in narrower parameters than EGB peers, as participants look for clarity on the 25/50bp debate as pricing implies a 90% chance of 50bp and circa. 150bp total by end-2022. Commodities Crude consolidates and moves with broader sentiment post-OPEC & pre-JCPOA. Currently, benchmarks are firmer by circa. USD 1.00bbl and towards the top-end of relatively/comparably narrow ranges. Saudi Arabia OSPs (Sep) vs Oman/Dubai average: Arab Light to Asia at USD +9.80/bbl (exp. 9.80-11.10/bbl), according to Reuters sources. Spot gold is bid and benefitting from a USD pullback that has sent the yellow-metal above the 50-DMA at best; base metals somewhat mixed. US Event Calendar 07:30: July Challenger Job Cuts YoY, prior 58.8% 08:30: June Trade Balance, est. -$80b, prior -$85.5b 08:30: July Initial Jobless Claims, est. 260,000, prior 256,000; Continuing Claims, est. 1.38m, prior 1.36m DB's Jim Reid concludes the overnight wrap One thing we can say for sure is that August hasn’t been dull so far and we’ve only had three days. This is all before the biggest BoE hike for 27 years (50bps) likely today, and then US payrolls tomorrow. Indeed, there have been some remarkable ranges in treasuries so far in the three days of August. In just over 24 hours from mid-afternoon London time on Tuesday, 2yr US yields moved from 2.83% to 3.18%, 5yrs from 2.58% to 2.96% and 10yrs from 2.52% to 2.83%. These all marked the high points as the three closed at 3.07% (+1.4bps on the day), 2.83% (-2.4bps) and 2.71% (-4.5bps) respectively, 11bps to 13bps off their intra-day highs immediately after a strong US services ISM yesterday. This led to a big curve flattening as 2s10s closed c.6bps lower at -36bps. This morning in Asia, treasury yields are pretty much unchanged. If that wasn’t enough, the Nasdaq 100 (+2.73%) surged to finish the day at a level last seen on May 4th leaving a strong S&P 500 (+1.59%) slightly behind. The narratives at the moment are struggling to be consistent though as equities have recently rallied on weaker growth that has been seen as helping to limit how far the Fed can hike. However yesterday equities rallied on stronger economic data regardless of the potential Fed impact. Discretionary (+2.52%), IT (+2.69%) and communications stocks (+2.48%) were the major drivers of the S&P. The broad rally lifted 79% of benchmark’s members with energy (-2.97%) being the only sector to close in the red as oil plummeted. Speaking of which, although the OPEC+ agreed to increase its September output by 100k bpd, way below the July and August increases north of 600k, crude’s short-lived almost +3% gain unwound fairly quickly, with both WTI (-3.87%) and Brent (-3.60%) weaker on lower US gasoline demand as consumers seem to be driving less. Oil is very slightly higher in Asia. In terms of earnings, Moderna (+16%), PayPal (+9.25%) and CVS (+6.3%) were among top performers in the S&P 500 after a combination of upbeat results and perhaps more importantly buy back announcements. Another interesting snippet from this earnings season came when Bloomberg reported that Meta is looking for a potential debut in bond markets. News of debt sales by Apple and Intel already came through earlier this week as well, supporting narratives of resilience in corporate debt markets. Dissecting the data, just before the ISM services was released, we got a slight upward revision for the US services PMI (47.3 vs 47.0) but the real surprise was the ISM services index itself. The print showed an unexpected expansion from 55.3 in June to 56.7 last month, the highest since April, while the median Bloomberg estimate stood at 53.5. The employment index also improved to 49.1 from 47.4 and business activity and new orders indicators were the highest since January, while prices paid plunged from 80.1 to 72.3. Another strong reading came from June factory orders that increased +2.0% (vs +1.2% expected), up from May’s revised reading of +1.8% (from +1.6% previously). This data dovetailed with comments from a list of Fed speakers over the last 24 hours, including Bullard, Daly, Barkin and Kashkari, all saying that the central bank is not close to finishing its work and markets shouldn’t expect a quick reversal to cuts. This all supports our view that the US isn’t in recession yet. As we’ve said many times before we think it’s almost inevitable it does go into one within say 12 months but that we still might need the lagged impact of an aggressive (but necessary) series of rate hikes first to get us there. The risks to this view in terms of an earlier recession would probably be due to a sudden self fulfilling loss of confidence as everyone talks about imminent recession risk, or if financial conditions dramatically collapse. To be fair the latter was very worrying by mid-June but we’ve seen a tremendous loosening since. Over to Asia and the strong gains in US equities are echoing in Asia with all the key markets trading higher. As I type, the Hang Seng (+1.78%) is leading the way across the region helped by gains in Chinese technology companies with shares of Alibaba climbing around +5.0% ahead of its earnings results later today. Elsewhere, the Nikkei (+0.54%), and the Kospi (+0.36%) are trading higher in early trade. Over in Mainland China, the Shanghai Composite (+0.15%) and the CSI (+0.40%) are both trading in the green. Outside of Asia, stock futures in the US are pausing for breath with contracts on the S&P 500 (-0.10%) and NASDAQ 100 (-0.20%) moving slightly lower. Early morning data showed that Australia’s trade balance swelled to a record high of A$17.67bn in June (v/s A$14.0bn expected) from A$15.97bn in May driven by strong prices of key exports from grains to metals and gold. Elsewhere, although Pelosi left Taiwan yesterday without incident, remember that China will start 4 days of military drills today around the island. So be prepared for headlines to come through. Back to yesterday and European shares rallied but missed the main part of the US climb with the STOXX 600 closing with a +0.51% advance for the day after a steady march higher throughout the session. It was an across-the-board rally led by IT (+2.78%), financials (+1.60%) and discretionary (+1.52%) stocks. The few sectors in the red - utilities (-0.94%), healthcare (-0.92%) and communications (-0.35%) - were left behind by a risk-on mood. Speaking of European utilities, it is a sector that has faced challenges not only amid the Russian gas story but also the extreme heat in Europe. Our European economists cover implications of the drought-driven low water levels for the German economy here. As a reminder, it was an important topic back in 2018 but today’s situation with gas supplies reinforces its effect given coal plants’ reliance on waterways for supplies. Linked in, yesterday’s announcement by Uniper about potentially limiting output at a coal plant in Germany sent gas futures in New York up by almost +10%, with contracts holding on to a +7.71% gain by the close of US markets. Other companies depend on water traffic too and water-intensive industries are likely to get affected as well. Earlier this week EDF has warned about potential further nuclear power cuts as river water, used for plant cooling, becomes too warm. Expect this to be an increasingly pertinent and market-moving issue across industries. Diving back into market movements, the bullish sentiment in European stocks was strong enough to overpower surging yields. In Germany the belly of the curve surged, with 5y yields (+7.6bps) racing ahead of both the front end (+6.9bps) and the 10y (+5.6bps) that was mainly upheld by higher breakevens (+6.1bps). While a similar story was seen in France (OATs +3.4bps), Italy stood out with an across the curve decline in yields. 2s10s still flattened as the 2y yield (-1.5ps) fell by less than the 10y (-4.1bps). We should note that US yields rallied 7-8bps after Europe closed. Central banks and yields will be in focus today as well since today’s BoE’s meeting will likely be top of the list in terms of events for European markets and our UK economists expect the Bank to hike by +50bps (taking the Bank Rate to 1.75%). Their full preview is here. This hike would imply the largest single Bank Rate increase since 1995 and come amid the 9.4% CPI print for June, a 40-year high. They also updated their growth outlook for the country yesterday (link here) and now expect the economy to contract in Q4-22 and Q1-23 in a short and mild technical recession. Gilts behaved similar to other European bond markets yesterday, with the 2y yield (+7.1bps) rising by more than the 10y (+4.4bps) but both lagging the 5y (+9.0bps). Staying with Europe and briefly returning to yesterday’s other data releases, Germany’s exports accelerated to +4.5% in June, way ahead of the +1.0% median estimate on Bloomberg’s and May’s revised +1.3% (from -0.5% previously). Imports came in softer than expected, however, slowing to just +0.2% (+1.3% expected). Elsewhere, Eurozone’s retail sales contracted -3.7% yoy in June, missing estimates of -1.7%. The PPI accelerated to a monthly gain of +1.1% in June relative to the prior +0.5% (revised from +0.7%). To the day ahead now and we have US June trade balance, Germany June factory orders, July construction PMI, UK July new car registrations, construction PMI, Canada June building permits and international merchandise trade. Earnings will include Alibaba, Eli Lilly, Toyota, ICE, ConocoPhillips, Bayer, Glencore, Cigna, Rolls-Royce, adidas, Cheniere, DBS, Apollo, Lyft, Expedia, Deutsche Lufthansa, Warner Bros Discovery, Vertex Pharmaceuticals, DoorDash, Atlassian, Amgen, Block, EOG, Kellogg and AMC. Tyler Durden Thu, 08/04/2022 - 08:25.....»»

Category: smallbizSource: nytAug 4th, 2022

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

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

Category: personnelSource: nytAug 2nd, 2022

Futures, Oil Fall As Searing Rally Wobbles

Futures, Oil Fall As Searing Rally Wobbles While European and Asian stocks have extended the blistering July rally to start August, US futures remain have traded in the red in the overnight session, if only modestly, which is to be expected after the best month for US markets since November 2020. Contracts on both the Nasdaq 100 and S&P 500 were lower by about 0.1%, alongside a drop in oil, the dollar and crypto, as investors assessed recession risks against the latest remarks from Neel Kashkari over the weekend and Bill Dudley this morning that higher interest rates are needed to bring inflation under control. The Stoxx 600 Index rose 0.2%, led by banks, as HSBC Holdings Plc posted better-than-estimated profits. 10Y yields dipped to 2.64%. Oil declined after poor Chinese economic data added to concerns that a global slowdown may sap demand. West Texas Intermediate dropped below $97 a barrel after sinking almost 7% in July in the first back-to-back monthly loss since late 2020. In thin premarket trading, bank stocks were lower as investors remain on edge over recession risks. In corporate news, Global Payments agreed to buy Evo Payments for $34 per share in cash. Meanwhile, HSBC delivered better-than-estimated profits and pledged to return to paying quarterly dividends next year as it seeks to head off a call by its largest shareholder to split up. Here are some of the biggest U.S. movers today: Siga Technologies (SIGA US) shares are set to rebound on Monday after the stock sank in the previous session following an FDA update on monkeypox. Shares of other companies making vaccines and antiviral products tied to the disease were also higher in premarket trading. Mobile Global Esports (MGAM US) shares surge as much as 76%, set for another day of gains, following the esports platform’s initial public offering on Friday when it jumped 180%. Cryptocurrency-linked stocks fall as Bitcoin slips following its best month since October 2021, with traders assessing the strength of a recovery from the market’s worst levels. Coinbase (COIN US) down 2%, Marathon Digital (MARA US) falls 4.2%. Comcast (CMCSA US) and Charter Communications (CHTR US) both downgraded at Barclays which said it sees the cable companies as “likely past peak growth.” Comcast shares down 0.1%. Bumble (BMBL US) is cut to hold at Jefferies, with the broker citing incremental FX headwinds and a valuation that is not “compelling.” PubMatic (PUBM US) and Taboola (TBLA US) both cut to sector weight at KeyBanc as the broker anticipates “disparate” 2Q results from the adtech sector. Prefers overweight-rated TradeDesk (TTD US). Traders have been speculating the Federal Reserve will tone down its anti-inflation campaign and opt for a slower path of rate hikes after data showed the US economy shrank a second quarter. While that sentiment drove July’s market turnaround after historic first-half losses, over the weekend some Fed officials - such as Kashkari and Dudley - sought to reinforce the message that higher rates are needed to stamp out price pressures and downplayed recession risks. "The fact that a very weak run of data is seen as equity bullish just purely on the basis of lower rates speaks to just how utterly dominant Fed policy has become in driving investor behavior,” said James Athey, investment director at abrdn. "Unless the Fed pulls off a miracle I am afraid the bear market is absolutely not over." Investors are also monitoring US House Speaker Nancy Pelosi’s trip to Asia. A statement from her office skipped any mention of a possible stopover in Taiwan. A visit may stoke US-China tension over the island. Here are a handful of related headlines: US House Speaker Pelosi’s official itinerary for her trip to Asia was released which did not mention Taiwan, while Radio France Internationale’s Chinese website quoted sources that stated Pelosi will fly to Taiwan via Clark Air Base in the Philippines on August 4th, according to Dimsum Daily HK. China held live-fire drills off the coast opposite Taiwan and its air force said it will resolutely safeguard national sovereignty and territorial integrity regarding Taiwan, according to Associated Press and Chinese state media. A senior official in Beijing said the atmosphere of last week’s Biden-Xi telephone conversation was the worst among the five talks between the leaders and President Xi was said to have showed the toughest attitude he has ever shown to any world leader, while the most important topic in the conversation was China-US relations especially the 'Taiwan Question'. Furthermore, the official believes the probability of US House Speaker Pelosi's visit to Taiwan is low, as President Xi’s tough position on Taiwan will push President Biden to put more pressure on Pelosi to bypass Taiwan on this trip and the official warned that an accidental military conflict around the island of Taiwan cannot be ruled out if Pelosi insists on visiting Taiwan, according to SGH Macro Advisors. European stocks climb as earnings continue to buoy risk sentiment, while US futures slide, with S&P 500 and Nasdaq 100 down 0.4%. Euro Stoxx 50 rises 0.3%. FTSE MIB outperforms peers, adding 0.9%, Stoxx 600 lags, adding 0.2%. Banks, telecoms and autos are the strongest-performing sectors. Here are the other notable European movers: HSBC jumps as much as 7%, the most since January 2021, after the lender reported interim results. Analysts were impressed with second-quarter pretax profit coming in ahead of consensus. Pearson shares rise as much as 10% after first-half sales beat analyst estimates, with weakness in the higher education segment more than offset by strong growth in other divisions. EssilorLuxottica shares climb as much as 4.2% after CEO Francesco Milleri told Les Echos he’s bullish about the eyewear giant’s outlook. Analysts also are positive about its prospects. Deutsche Telekom shares rise after Kepler Cheuvreux re-initiated coverage with buy, saying its free cash flow yield is set to rise to over 13% by 2024 from about 8% in 2022. Air- France KLM shares gain as much as 6.1% after being upgraded to buy at HSBC and to outperform at Oddo BHF, with the latter noting that the effects of the airline’s restructuring seem to be underestimated. Quilter shares gain as much as 18% amid a report that NatWest is considering a bid for the wealth management firm. The article said several other private equity firms are also considering an offer. Spectris drops as much as 8.2%, the most since Feb. 28, after the precision instrumentation and controls supplier reported half-year results. Jefferies said the interims were a “touch light.” Heineken shares fall as much as 3.5% after the company reported strong 1H results, with investors focusing on the cautious outlook and tweaked 2023 guidance. Samhallsbyggnadsbolaget i Norden shares plunged after a fresh sell rating by Goldman Sachs, which downgraded the landlord, saying it’s overleveraged as financing costs continue to surge. Varta fell the most since November 2021 after the German battery maker cut its full-year forecast for sales and earnings over headwinds including rising raw materials and energy costs. CEZ shares fell the most in a month as investors in the Czech power utility digested mounting signals that the government was ready to impose a windfall tax on the most profitable companies. Earlier in the session, Asian stocks rose as investors bet corporate earnings will support market valuations and as weak economic data from China spurred hopes for more stimulus.   The MSCI Asia Pacific Index gained as much as 0.8% with Toyota boosting the measure the most ahead of its earnings release later this week. Industrials led gains among the sectoral gauges as Mitsubishi jumped ahead of its quarterly report. Benchmarks in Japan, Singapore, Vietnam and Thailand outperformed.  Hong Kong and mainland China indexes reversed their earlier losses, buoyed by prospects that weak factory data increases the likelihood of fresh policy support from Beijing. China’s factory activity unexpectedly contracted in July while property sales continued to shrink, data over the weekend showed. Some investors said the weak figures have already been priced into last month’s losses in Chinese markets.  “Expecting more stimulus is reasonable, although the market feels the GDP target is no longer a hard target,” said Steven Leung, an executive director at UOB Kay Hian in Hong Kong. “Weak economy means more policies needed to achieve their target, or get closer to their target.” Asian stocks have been on a downtrend despite Monday’s pending gain, with the regional benchmark down almost 30% from its February 2021 high. The gauge has underperformed US peers so far this year as Covid woes continue in China, along with the nation’s property crisis, while ongoing earnings reports in the region are being closely watched.  Japanese equities erased earlier losses to end higher as better-than-expected domestic corporate earnings boosted sentiment. The Topix Index rose 1% to 1,960.11 as of the close in Tokyo, while the Nikkei advanced 0.7% to 27,993.35. Toyota Motor Corp. contributed the most to the Topix Index’s gain, increasing 3.5%. Out of 2,170 shares in the index, 1,706 rose and 395 fell, while 69 were unchanged. Earnings are “fairly good,” said Hiroshi Namioka, chief strategist and fund manager at T&D Asset Management. “The numbers coming out are clearly positive compared to the previous quarter especially in terms of profit growth.” In Australia, the S&P/ASX 200 index rose 0.7% to close at 6,993.00, the highest since June 9, boosted by gains across mining, healthcare and energy shares. A subgauge of miners climbed for a third session, closing the highest since June 29. Investors await the Reserve Bank of Australia’s interest rate decision due Tuesday, with it expected to lift the key interest rate by 50 basis points to 1.85%.  In New Zealand, the S&P/NZX 50 index rose 0.3% to 11,525.87 In FX, the Bloomberg Dollar Spot Index is down about 0.4%; NOK and CAD are the weakest performers in G-10 FX, NZD and JPY outperform. Yen trades at 132.33/USD. The yen climbed as much as 1% against the greenback to 131.89, rising a fourth day in its longest-winning streak since February. While the gains were initially spurred by signs the Federal Reserve will rein back rate hikes, an Asia-based FX trader said Monday that the yen is increasingly seen as a haven play. The euro edged up 0.4%, bolstered by dollar weakness; Goldman Sachs strategists have revised down their three- and six-month forecasts for EUR/USD to 0.99 and 1.02 (from 1.05 and 1.10 previously), citing the shifting European growth outlook. In rates, Treasuries bear-flatten, with the 10-year rate at 2.64%, well down from June’s peak near 3.50%, after hawkish comments from Kashkari and Bostic. Bund 10-year yields rose about 5 bps, after German and Euro Area PMIs were revised higher, while the yield on 10-year gilts climbs about 4 bps to 1.91%. Italian bonds rallied, sending the 10-year yield below 3% for the first time since May, as investors bet that a new government will stick to commitments needed to unlock about 200 billion euros ($205 billion) of European Union funds. In commodities, WTI drifted 2.2% lower to trade at around $96. Base metals are mixed; LME aluminum falls 1.8% while LME nickel gains 4.4%. Spot gold is little changed at $1,766/oz.  Bitcoin declined after reaching the highest levels since mid-June on Saturday amid optimism that the market may have recovered from its worst levels. Looking at today's calendar, we get the July ISM index and June Construction Spending data, Japan July vehicle sales, Eurozone June unemployment rate, Italy July PMI, budget balance, new car registrations, June unemployment rate. We also get earnings from Devon Energy, Activision Blizzard. Market Snapshot S&P 500 futures down 0.3% to 4,123.00 STOXX Europe 600 up 0.2% to 439.12 MXAP up 0.7% to 161.54 MXAPJ up 0.2% to 523.50 Nikkei up 0.7% to 27,993.35 Topix up 1.0% to 1,960.11 Hang Seng Index little changed at 20,165.84 Shanghai Composite up 0.2% to 3,259.96 Sensex up 0.8% to 58,043.18 Australia S&P/ASX 200 up 0.7% to 6,992.97 Kospi little changed at 2,452.25 Gold spot up 0.0% to $1,766.44 U.S. Dollar Index down 0.26% to 105.63 German 10Y yield little changed at 0.87% Euro up 0.2% to $1.0241 Brent Futures down 1.2% to $102.77/bbl Top Overnight News from Bloomberg European stocks climb as earnings continue to buoy risk sentiment, while US futures slide, with S&P 500 and Nasdaq 100 down 0.3%. Stoxx 600 rises 0.1% with banks, telecoms and autos the strongest-performing sectors. In fixed income, Bund 10-year yield rises about 5 bps, after German and Euro Area PMIs were revised higher, while the yield on 10-year gilts climbs about 4 bps to 1.91%. Italian bonds hold gains, with the 10-year yield falling below 3% for the first time since May. European factory activity plunged and Asian manufacturing output continued to weaken in July amid lingering supply-chain complications and a slowing global economy. Natural gas prices in Europe rose, after posting the biggest weekly gain in more than a month, as Russia’s tightening grip over supply rips through the economy and heightens concerns about shortages in the winter. The US Treasury is expected to make its fourth straight reduction in a quarterly sale of longer-term debt this month, with most dealers predicting extra cutbacks for the 20-year bond. China’s massive trade surplus helped to offset capital outflows in the first half of the year, anchoring its balance of payments even as the Federal Reserve’s aggressive interest rate hikes fuel outflows from developed and emerging markets alike. A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were choppy as momentum from last week’s earnings-inspired euphoria on Wall St was partially offset by disappointing Chinese PMI data and cautiousness ahead of upcoming risk events including central bank rate decisions, NFP jobs data and US House Speaker Pelosi’s trip to Asia. ASX 200 was kept afloat by strength in energy and utilities after the competition regulator’s interim gas report forecast Australia’s east coast could face a shortfall of 56PJ in 2023, while the latest domestic manufacturing PMI data remained in expansion territory. Nikkei 225 was also positive with the biggest movers driven by recent earnings releases and reports also noted that Japan’s panel is expected to seek a record increase of at least JPY 30 to minimum wages. Hang Seng and Shanghai Comp were initially pressured after Chinese PMI data missed expectations in which the official manufacturing reading printed at a surprise contraction, with sentiment also not helped by US-China tensions as the world second-guesses whether or not US House Speaker Pelosi will defy China’s warnings regarding visiting Taiwan during her Asia trip. However, the mood in Chinese stocks gradually improved and retraced the majority of losses. Top Asian News US House Speaker Pelosi’s official itinerary for her trip to Asia was released which did not mention Taiwan, while Radio France Internationale’s Chinese website quoted sources that stated Pelosi will fly to Taiwan via Clark Air Base in the Philippines on August 4th, according to Dimsum Daily HK. China held live-fire drills off the coast opposite Taiwan and its air force said it will resolutely safeguard national sovereignty and territorial integrity regarding Taiwan, according to Associated Press and Chinese state media. A senior official in Beijing said the atmosphere of last week’s Biden-Xi telephone conversation was the worst among the five talks between the leaders and President Xi was said to have showed the toughest attitude he has ever shown to any world leader, while the most important topic in the conversation was China-US relations especially the 'Taiwan Question'. Furthermore, the official believes the probability of US House Speaker Pelosi's visit to Taiwan is low, as President Xi’s tough position on Taiwan will push President Biden to put more pressure on Pelosi to bypass Taiwan on this trip and the official warned that an accidental military conflict around the island of Taiwan cannot be ruled out if Pelosi insists on visiting Taiwan, according to SGH Macro Advisors. Macau is to permit dine-in services and will reopen gyms, bars and beauty parlours beginning this Tuesday, according to Bloomberg. US, South Korea and Japan will begin joint ballistic missile defence exercises in waters off Hawaii this week, according to Yonhap. "China is willing to boost China-New Zealand comprehensive strategic partnership to yield more results based on the principle of mutual respect and mutual benefit while appropriately handling differences," according to the Chinese Foreign Minister via Global Times. European bourses remain firmer across the board, Euro Stoxx 50 +0.4%, as the region shrugs-off Final Manufacturing PMIs and a mixed APAC handover given Friday's strong Wall St. performance. However, US futures are underpressure in a continuation of downbeat APAC trade amid poor Chinese PMIs and with multiple key risk events looming for the week, ES -0.2%. In Europe, sectors are mixed with the breadth of performance narrow ex-banks given pronounced upside in HSBC, +6.0%, post-earnings; note, HSBC accounts for 18% of the Europe Stoxx 600 Banking sector. Top European News HSBC Shares Jump After Profit Rise and Vow to Restore Dividends Ukraine Latest: First Grain Ship Since Start of War Leaves Odesa Marex Agrees to Buy ED&F Man Brokerage in Global Expansion Italy 10-Year Yield Falls Below 3% for the First Time Since May Quilter Gains; Potential NatWest Deal Has Clear Logic: Investec Vinci Agrees Deal for 30% Stake in Mexico Airport Operator OMA FX DXY down to deeper cycle low sub-105.500 as Yen revival continues and activity currencies climb, USD/JPY retesting underlying bids and support into 132.00 including next layer of Japanese importer buying interest. Aussie up in anticipation of RBA and Kiwi ahead of NZ jobs data, AUD/NZD and NZD/USD firmly back above 0.7000 and 0.6300 respectively. Euro eyes recent peaks and Sterling probes stops around last Friday’s high, EUR/USD touches 1.0270 and Cable tops 1.2250 . Yuan softer in wake of weaker than expected Chinese PMIs, but Rand remains bid irrespective of inflation contractionary SA PMI as Gold underpins, USD/CNH and USD/CNY 6.7600+ and 6.7500+, USD/ZAR under 16.5000. Fixed Income Debt continues to consolidate and retrace from new corrective peaks, but curves remain steeper. Bunds and Gilts sub-par within 157.74-156.74 and 118.22-117.72 respective ranges, T-notes flattish between 121-07+/120-28 parameters. BTPs bid and sharply outperform ahead of Italy's snap elections and into month bereft of issuance. 10 year bond tops 127.50 from 126.40 low just 7 ticks above prior close. Commodities Crude benchmarks are pressured in a resumption of Friday's action after modest overnight consolidation as the complex looks towards OPEC+. Currently, benchmarks are firmer by over USD 1.50/bbl; while Dutch TTF remains around the EUR 200/MWh mark as Russia put the onus on others re. Nord Stream 1. Spot gold is firmer, deriving upside from the pressure seen in the USD though the magnitude of the yellow metal's move perhaps capped by the generally constructive European tone. OPEC Secretary General Al-Ghais said OPEC is not in competition with Russia and that Russia is a big main player in the world energy map with its membership in OPEC+ vital for the success of the agreement. Al-Ghais added OPEC doesn’t control oil prices but practices tuning markets in terms of supply and demand, while he added that the recent rise in prices is not just related to the Ukraine crisis but is also due to lack of spare production capacity. Furthermore, he said the current state of the global oil market is very volatile and that the most important factor to affect oil prices by year-end is the lack of investments in the sector, according to an interview with Al Rai newspaper cited by Reuters. Libya’s Unity government oil minister said oil production is at 1.2mln bpd, according to Reuters. Gazprom said it is halting gas supplies to Latvia and accused it of violating conditions, while Latvia said that it doesn’t expect Gazprom’s decision to have any major impact, according to Reuters. European governments have eased back on efforts to curb trade in Russian oil in which they are delaying a plan to shut Moscow out of the vital Lloyd’s of London maritime insurance market and will permit some international shipments amid fears of rising crude prices and tighter global energy supplies, according to FT. The first ship with grain left the port of Odessa, according to CNN Türk; subsequently, Ukrainian Infrastructure minister says if the grain deal works in full, they will start consultations to open the port of Mykolaiv, via Reuters. Part of the damaged Beirut port silos collapsed following a weeks-long fire, according to Al Jazeera US Event Calendar 10:00: June Construction Spending MoM, est. 0.2%, prior -0.1% 10:00: July ISM Manufacturing, est. 52.0, prior 53.0 Employment, est. 48.2, prior 47.3 New Orders, est. 49.0, prior 49.2 Prices Paid, est. 73.5, prior 78.5 DB's Jim Reid concludes the overnight wrap The 2023 global II survey opens in 11 months' time. If you are likely to value our work in the next year please ...... ah ok, I did promise not to mention it again. Thanks for all the support and we'll see how we do in October or November when the results drop. Talking of results, congratulations to the England women's football team for winning the Euros. After years of watching the men's team lose time and time again in important moments it was strange watching them win, especially against Germany. First second place in the Eurovision Song Contest and now this. The world order is being turned upside down! Anyway, welcome to August and a spectacular start to H2 for markets with the S&P 500 in July (+9.1%) seeing its best month since November 2020 and 10yr US Treasuries (-37bps and +1.7%) seeing their best performance since March 2020. This follows the worst H1 since 1962 and 1788 respectively. A stunning comeback for 60/40, 50/50 or whatever ratio you chose to allocate. See our monthly performance review, out soon after this mail, for all the details. It's a complicated outlook at the moment as we don't think the US is in a typical recession yet but will almost certainly be within a few quarters. That delay is supportive for markets relative to what was priced a few weeks ago but it's hard to say the outlook is positive. However the market has more rallied on lower expected terminal rates and the move to price rate cut probabilities within 6 months. We don't think either will come to pass but my rates colleague Francis Yared always tells me not to fight bullish fixed income markets in the summer. Indeed the CoTD on Friday (link here) showed that August is by far and away the best month of the year for bonds. Interestingly Larry Summers had some harsh words over the weekend suggesting the Fed is engaging in "wishful thinking" in what it will take to tame inflation and that “Jay Powell said things that, to be blunt, were analytically indefensible ...." and that “...there is no conceivable way that a 2.5% interest rate, in an economy inflating like this, is anywhere near neutral.” So this debate will rage on but the winner in August may not be the winner by year end. Markets haven't had a chance to wind down for summer yet and maybe they won't get the chance with US payrolls on Friday, followed by CPI on Wednesday 10th. If nothing out of the ordinary occurs in these two prints though maybe we can have a quiet two or three weeks. However if payrolls are far from consensus and/or CPI is strong then we may have some fun and games in August. It’s a month of low liquidity and if something big happens it can be multiplied in such thin trading. Outside of payrolls, the other most important events this week include the manufacturing PMIs and ISM today, the RBA decision and US JOLTS tomorrow, services PMIs and ISM Wednesday, and the likely biggest hike from the BoE for 27 years alongside the increasingly important US jobless claims data on Thursday. Apart from that, earnings are still coming from all directions, but we are past halfway in the US with over 260 companies having reported. It’s 232 in the Stoxx 600. It might be hard to eclipse the big US tech week last week though. The other thing to look out for is whether US House Speaker Pelosi visits Taiwan this week on her Asian trip. It could set off a major geopolitical incident if she does and domestic accusations of backing down to China if she doesn't given she'd previously said she would visit. The full day by day week ahead is at the end as usual on a Monday but let's preview the main highlights in detail with the big one being payrolls of course. Our US economists expect a 250k reading for nonfarm payrolls (down from 372k in June with consensus also at 250k) and for the unemployment rate to slightly decline to 3.5% from 3.6% (consensus 3.6%). Our economists think the gradual increase in continuing claims since last month is enough to slow the pace of job growth. Remember we did a CoTD on payrolls day last month showing that the first month of a recession on average has a negative payroll print whereas the months leading up to it don't (including R-1). See here for a reminder. This is one of the main reasons we don't think we're there yet in terms of a recession. Our favoured measure of the strength of the labour market has been the JOLTS data which next comes out tomorrow for June. The problem is that it is always one month behind other data. However it gives us a decent if slightly rear-view mirror look at job openings and labour market tightness. Moving on, the BoE's decision on Thursday will be a big event with our UK economists and consensus expecting a +50bps move, which will take the Bank Rate to 1.75% and become the largest single increase since 1995. It will likely also be accompanied by somewhat hawkish economic forecasts from the Bank. The team's full preview, including expectations on forward guidance and QT, can be found here. Before the BoE, our economists expect the RBA to also hike +50bps tomorrow. Regarding policy guidance, they expect the central bank to reiterate the need for higher interest rates, which would implicitly keep another +50bps hike in September among the options. Turning to corporate earnings, this week's line-up will feature a number of important commodities companies, including BP, Occidental Petroleum (tomorrow), ConocoPhillips and Glencore (Thursday). Travel & leisure firms like Marriott, Airbnb (tomorrow) and Booking (Wednesday) will be in the spotlight as well to assess trends in consumer spending on services. Notable carmakers reporting results will include Toyota (Thursday), BMW (Wednesday) and Ferrari (tomorrow). In healthcare, investors will be focused on Regeneron, Moderna (Wednesday), Eli Lilly, Novo Nordisk and Bayer (Thursday). Other notable reporters will include Advanced Micro Devices, PayPal (tomorrow), Maersk (Wednesday) and Alibaba (Thursday). Asian equities are quiet at the start of the week but with China’s disappointing economic data pointing to further weakness in the world’s second biggest economy (more below). As I type, the Nikkei (+0.47%), Shanghai Composite (+0.15%), the CSI and the Kospi (+0.10%) are holding on to their gains helped by a strong US session on Friday. Elsewhere, the Hang Seng (-0.25%) is lower. Outside of Asia, DM stock futures are weaker with contracts on the S&P 500 (-0.50%), NASDAQ 100 (-0.45%) and DAX (-0.25%) edging lower. Oil prices are around -1.5% lower post China data and uncertainty over the OPEC+ meeting this week. Separately, yields on 10yr USTs (-2.0bps) have moved lower, trading at 2.67%, as we go to press. Onto that China data, and factory activity expanded at a slower pace with the Caixin/Markit manufacturing PMI for July easing to 50.4 from 51.7 in June, below analysts’ expectations for a slight dip to 51.5 as growth momentum softened in output, new orders and employment. Over the weekend, China’s factory activity contracted unexpectedly in July with the official reading falling to 49.0 (50.3 expected) from 50.2 in June, underscoring the extent of the uncertainty around growth stemming from fresh virus flare-ups, declining global demand and property market risks. Onto last week now, the FOMC raised rates a super-charged 75bps for the second consecutive meeting, yet financial conditions eased as the market latched onto comments that the hiking cycle would slow at some point and that the Committee was paying heed to slowing activity data. On that news, the splashiest data of the week was the Q2 US GDP which showed the second consecutive quarter of contraction, spurring endless debates as to what constitutes a recession. In Europe, lower Nord Stream capacity continues to ratchet energy pressure higher. The perceived pivot in Fed communications along with slowing activity data drove a shallower pricing of global monetary policy, and thus a rally in global sovereign yields. 10yr Treasuries were -10.2bps lower (-2.7bps Friday), led by a -30.8bp decline in real yields, while 2yr Treasuries were -8.6bps lower on the week (+2.2bps Friday). Not to be outdone, 10yr bunds fell even more, declining -21.4bps (-0.9bp Friday), as the continent looks exposed to even larger potential external shocks. With less aggressive tightening expected, 10yr BTPs tightened -8.1bps versus bunds, -14.3bps of which came on Friday as the main populist far-right party Brothers of Italy, who are polling very strongly, were reported to be likely to adhere to EU budget rules if elected. The easing of expected tightening was a boon to equity markets, which staged big gains across the Atlantic. The S&P 500 was +4.26% higher (+1.42% on Friday) while the NASDAQ picked up +4.70% (+1.88%). Many of the mega cap tech companies reported this week in the US to mixed results. Advertising revenue was sluggish, but supply chain pressures seemed to ease which helped those facing retail customers. Across the board, it seemed like hiring was either slowing or plans were in place to start reducing hiring. European equities also enjoyed some respite from global policy tightening, with the STOXX 600 picking up +2.96% (+1.28% Friday), the DAX +1.74% (+1.52% Friday), and the CAC higher by +3.73% (+1.72% Friday). Despite slowing activity data, oil prices showed no signs of a demand slowdown, with Brent futures climbing +6.60% over the week (+2.68% Friday). On Friday’s data, the US Employment Cost Index increased +1.3%, above 1.2% expectations but a marginal deceleration from 1Q’s 1.4%. The final University of Michigan Sentiment reading was 51.5, versus 51.1 expectations, while year-ahead inflation expectations stayed at 5.2% even if longer term ones edged back up a tenth to 2.9%. Tyler Durden Mon, 08/01/2022 - 07:56.....»»

Category: blogSource: zerohedgeAug 1st, 2022

Top Analyst Reports for Novartis, Duke Energy & Boston Scientific

Today's Research Daily features new research reports on 16 major stocks, including Novartis AG (NVS), Duke Energy Corporation (DUK), and Boston Scientific Corporation (BSX). Friday, July 29, 2022 The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Novartis AG (NVS), Duke Energy Corporation (DUK), and Boston Scientific Corporation (BSX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. You can see all of today’s research reports here >>> Novartis shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+21.0% vs. -3.0%). The company’s second quarter performance was good on improvement in the lagging Sandoz business and cardiovascular drug Entresto’s momentum.  Sandoz's performance was driven by growth in Europe on both launches and the recovery of the healthcare systems.Consequently, the company also raised the full-year guidance for Sandoz. Drugs like Cosentyx, Entresto, Kesimpta, Zolgensma, Kisqali and Leqvio should continue to fuel growth and offset the impact of generic competition. The launch of additional drugs like Pluvicto, Piqray, Leqvio and Mayzent, and the label expansion of key drugs should also boost performance further.The pipeline progress is impressive, and the company has some promising candidates. However, generic competition for key drugs and pipeline setbacks pose concerns.(You can read the full research report on Novartis here >>>)Duke Energy shares have outperformed the Zacks Utility - Electric Power industry over the year-to-date basis (+5.8% vs. +2.3%). The company is a premier utility service provider that invests heavily in infrastructure and expansion projects. During the 2022-2026 period, it projects to spend the capital of $63 billion, while $130 billion over the next decade.It has lowered its carbon emissions by 44% since 2005 and is now expanding its 2050 net-zero goals to include Scope 2 and certain Scope 3 emissions. It expects a projects load growth to increase nearly 1.5% in 2022. Yet, its ability to achieve a net-zero target by 2050 at a cost-effective price could be at risk due to higher technological resources prices.Also, the fluctuating energy prices may impact its results. A comparative analysis of the its trailing 12-month Enterprise Value/Sales ratio shows a gloomy picture that may concern investors.(You can read the full research report on Duke Energy here >>>)Boston Scientific shares have declined -9.7% over the past year against the Zacks Medical - Products industry’s decline of -29.0%. The company’s mounting costs and expenses are putting pressure on its margins. The ongoing macro-environment challenges related to increasing freight costs and higher direct labor wages continue to hamper business. Unfavorable foreign exchange deters growth. The upper end of the full-year adjusted EPS guidance has been reduced increasing concerns.However, Boston Scientific ended the second quarter of 2022 on a bullish note with adjusted earnings and revenues surpassing the Zacks Consensus Estimate. The company registered a year-over-year improvement in organic sales, indicating a strong rebound in the legacy business from the pandemic mayhem. Organic revenues at each of its core business and geographies were up. The raised 2022 organic revenue guidance looks promising.(You can read the full research report on Boston Scientific here >>>)Other noteworthy reports we are featuring today include Norfolk Southern Corporation (NSC), Centene Corporation (CNC), and Cadence Design Systems, Inc. (CDNS).Sheraz Mian Director of ResearchNote: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>Today's Must ReadCosentyx, Entresto Fuel Novartis (NVS) Amid CompetitionSolid Investments Aid Duke Energy (DUK), Weak Solvency WoesNew Buyouts Aid Boston Scientific (BSX), Core CRM GrowsFeatured ReportsDividends Lift Norfolk Southern (NSC) Despite Cost WoesThe Zacks analyst is impressed with the company's efforts to pay out dividends even in the current uncertain scenario. High costs due to elevated oil price are, however, stunting bottom-line growth.Centene (CNC) Rides on Growing Revenues Amid Rising CostsPer the Zacks analyst, solid Medicaid business, several contract wins and acquisitions continue to drive the company's revenues. However, elevated expenses remain a concern.Energy Drinks Category Aids Growth at Monster Beverage (MNST)Per the Zacks analyst, Monster Beverage is experiencing continued strength in its energy drinks category driven by its Monster Energy brand. This is likely to continue throughout 2022.United Rentals (URI) Rides on Buyouts Amid Supply Chain WoesPer the Zacks analyst, United Rentals gains from accretive acquisitions and solid end-market demand. However, unprecedented supply-chain disruptions are headwinds.Growth Projects, Kirkland Buyout Aid Agnico Eagle (AEM)Per the Zacks analyst, the company will benefit from investment in growth projects to expand output and its acqusition of Kirkland Gold amid headwinds from higher costs.Ecolab (ECL) Continues to Gain From its Business StrengthThe Zacks analyst is upbeat about Ecolab's strength in its business despite its operation in a stiff competitive space.Uber (UBER) Rides on Delivery Business Amid Rising ExpensesThe Zacks Analyst likes Uber's efforts to expand its Delivery operations in response to the surge in business. However rising costs and expenses are concerning as they pose a threat to its bottomlineNew UpgradesCadence (CDNS) Benefits from Product Portfolio & AcquisitionsPer the Zacks analyst, Cadence's performance is gaining from robust demand for the company's diversified product portfolio. Synergies from recent acquisitions also bode well.Higher Rates, Loan Demand to Aid East West Bancorp (EWBC)Per the Zacks analyst, steady rise in loan demand, rising interest rates, a strong balance sheet and liquidity position will support East West Bancorp. Its capital deployments are sustainable.Corcept (CORT) Rides High on Robust Korlym Sales PerformancePer the Zacks analyst, solid performance of its approved drug, Korlym, has fueled growth for Corcept, and should be a top-line booster. The company's pipeline progress has been encouraging as well.New DowngradesCrestwood (CEQP) to Suffer From Rising Operation ExpensesThe Zacks analyst is worried about Crestwood's rising operation and maintenance expenses limiting earnings. Also, lower cash-generating abilities show weakness in the partnership's operations.Logitech (LOGI) Hurt by Soft Demand & Higher Component CostsPer the Zacks analyst, waning pandemic-led demand for peripherals and accessories will hurt Logitech's sales in the near-term while elevated component costs might weigh on profitability.Soft Demand & Lower Lease Renewal Rate Ails Aaron's (AAN)Per the Zacks analyst, Aaron's weak demand stemming from continued inflation as well as lower lease portfolio size and lease renewal rates are likely to dent second half 2022 performance. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Novartis AG (NVS): Free Stock Analysis Report Boston Scientific Corporation (BSX): Free Stock Analysis Report Duke Energy Corporation (DUK): Free Stock Analysis Report Norfolk Southern Corporation (NSC): Free Stock Analysis Report Cadence Design Systems, Inc. (CDNS): Free Stock Analysis Report Centene Corporation (CNC): Free Stock Analysis Report To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksAug 1st, 2022

US stocks trade mixed as traders weigh strong mega-cap tech earnings against worrisome new inflation data

US stocks were on track to advance in July, with the Nasdaq Composite looking at a 10% gain. Apple shares rise after quarterly results.REUTERS/Alyssa Pointer US stocks on Friday were mixed as Apple and Amazon reported their respective quarterly results.  Stocks were on track to rise in July, with the Nasdaq Composite on course to jump about 10%.  PCE inflation in June rose 0.6%, higher than a consensus estimate of 0.5%.  Stocks opened mixed on Friday, with investors rounding off the last trading session of July with solid quarterly results from tech behemoths Apple and Amazon, but inflation remained on the radar as the Fed's preferred gauge was near a four-decade high. The tech-concentrated Nasdaq Composite rose, bolstered by stock advances for Amazon and Apple. The online retailer issued an upbeat outlook for third-quarter sales after second-quarter sales of $121.2 billion beat expectations, while the iPhone maker said it fought through a challenging operating environment to keep quarterly sales on track. "A better-than-feared earnings picture is providing a lift and thus far justifying the July rally in stocks," Ross Mayfield, investment strategy analyst at Baird, told Insider in emailed comments. The Nasdaq Composite was headed for a July advance of more than 10% and the S&P 500 was looking at a near 8% gain for the month.Here's where US indexes stood at 9:30 a.m. on Friday:  S&P 500: 4,084.33, up 0.29%Dow Jones Industrial Average: 32,506.84, down 0.07% (22.79 points)Nasdaq Composite: 12,219.07, up 0.46%The Dow was also on course for a win in July but trailed in its daily performance on Friday after the PCE inflation reading for June came in at 0.6% month over month, hotter than the Econoday estimate of 0.5%. The annual rate of 4.8% was the highest since 1983. "While the economy will likely need to slow further for Fed to reach its inflation goals, market is already pricing a 2023 pivot at Fed," said Mayfield. "In the end, inflation needs to comply, and market could see a re-test of lows if it doesn't, but strong earnings and corporate resilience likely puts somewhat of a floor under equity markets in the near-term."Around the markets, the Japanese yen is on track for its largest monthly gain against the US dollar since 2020, with analysts pointing to investors' fears about weakness in the US economy. Oil prices advanced. West Texas Intermediate crude rose 2.2% to $98.55 per barrel. Brent crude, the international benchmark, claimed a 2% rise to $109.33. Gold gained 0.4% at $1,758 per ounce. The 10-year Treasury yield rose 3 basis points to 2.70%. Bitcoin fell 0.5% to $23,889.12..Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJul 29th, 2022

The US dollar could fall from 20-year highs as the Bank of England sets sight on its largest rate hike in nearly 3 decades, says analyst

The BOE could hike its key rate by 50 basis points. Meanwhile, forget about a Fed rate-hike 'hat trick' of 75 basis points, says The US dollar's value has climbed nearly 11% against the British pound during 2022.Joe Giddens/PA Images via Getty Images The US dollar will drop against the pound if the Bank of England issues a hefty rate hike in August, said Thursday.  The BOE could raise its key rate by 50 basis points, marking the largest increase since 1995.  The pound may then rise to $1.25 against the greenback, a level it hasn't traded above since early June.  The Bank of England could soon issue its largest rate increase in nearly 30 years, knocking down the US dollar to a nearly two-month low against the British currency, a analyst said Thursday. The BOE is considering raising its benchmark interest rate by 50 basis points at its August 4 meeting as policy makers continue to confront high UK inflation. That would be the biggest rate increase since 1995, taking the benchmark borrowing level to 1.75%. "The Bank of England's 'steady as she goes' approach to interest rate hikes (25 basis points) has been heavily criticized as inflation in the UK surged to [a] new 40-year high of 9.4%," Fawad Razaqzada, market analyst at, wrote in a note. If the central bank goes with a half-point increase, "then expect the GBP/USD to climb towards mid-1.20s, possibly reaching 1.2500 by Friday, especially if we also see further weakness in US macro data as well," he said. The pound hasn't traded above $1.25 since June 9. The dollar has risen by roughly 11% against the British pound during 2022. The UK currency was buying about $1.216 during Thursday's session. The dollar has also flown up against other currencies this year, including the euro and the Japanese yen. The US Dollar Index recently hit a fresh 20-year high above 109. The index on Thursday was above 106, marking a year-t0-date rise of almost 11%. The dollar has rallied as the Federal Reserve continues an aggressive rate-hike campaign to cool down hot inflation. The Fed on Wednesday raised the fed funds rate by 75 basis points, the second straight rate hike of that size and the fourth increase this year. The US benchmark interest rate now stands at 2.25% to 2.5%. While a hefty BOE rate hike could dent the dollar's value, the greenback is also vulnerable to sluggish US economic reports, said Razaqzada. The US Dollar Index fell Thursday as a preliminary second-quarter report on US gross domestic product showed economic activity shrank by 0.9%. The Commerce Department's reading was worse than a Bloomberg consensus estimate of a 0.5% contraction. The data puts the US economy on course for a technical recession as the economy shrank by 1.6% in the first quarter. The "GDP [report ] was quite poor, so there won't be a hat trick of 75 basis point hikes in September, that's for sure," the analyst said about the Fed's meeting next month. Read the original article on Business Insider.....»»

Category: worldSource: nytJul 28th, 2022

Furious Rally Pauses As Sentiment Turns Metaworse Amid Record Earnings Barrage

Furious Rally Pauses As Sentiment Turns Metaworse Amid Record Earnings Barrage One day after the Nasdaq 100 posted its biggest jump since November 2020 when the market exploded higher after it interpreted Powell's forward guidance purge and comment that it is "likely appropriate to slow rate increases at some point" as more dovish than expected, US stocks were set to pull back as downbeat earnings and a dire outlook from bad to Metaworse weighed on demand. Futures contracts on the technology-heavy Nasdaq 100 dropped 0.5% by 7:15 a.m. in New York, after the underlying gauge rallied 4.3% in the previous session. S&P 500 futures were down 0.2% after the benchmark index jumped to its highest level in seven weeks. Treasury yields were little changed and the dollar and bitcoin edged up. In premarket trading, Facebook parent Meta tumbled after it reported its first-ever quarterly sales decline as ad spend by businesses cooled, leading to a far worse than expected forecast. Qualcomm also slipped as it issued a lackluster forecast.  Renewable energy companies soared in Europe and premarket trading following a deal by Democrats and Senator Manchin to advance a bill that will spend hundreds of billions of dollars on energy security and climate change. Vestas Wind Systems A/S surged more than 14% as oil also rose.  Spirit Airlines Inc. rose in premarket on a deal with JetBlue Airways Corp. Among other individual movers, Best Buy dropped in premarket trading as analysts slashed their price targets on the retailer after it cut its profit and sales outlook. Ford Motor on the other hand, jumped after reporting better-than-expected adjusted earnings per share for the second quarter. Here are some other notable premarket movers: Qualcomm (QCOM US) shares fall 4.5% in premarket trading after the chipmaker issued a lackluster forecast for the current quarter as it expects weakening economy to weigh on consumer spending on mobile devices. Watch shares of US chipmakers and semiconductor capital equipment stocks, including Lam Research (LRCX US), Applied Materials (AMAT US), Nvidia (NVDA US), Advanced Micro Devices (AMD US), Intel (INTC US), after Samsung’s quarterly profit missed estimates and Qualcomm’s forecast. Meta Platforms (META US) shares are down 5.9% in premarket trading, after the Facebook parent reported its first- ever quarterly sales decline as ad spend by businesses cooled. Ford (F US) shares jumped as much as 7.7% in US premarket trading after the carmaker’s adjusted earnings per share for the second quarter beat the average analyst estimate. Solar energy and renewables stocks gain in US premarket trading after Senator Joe Manchin and Senate Majority Leader Chuck Schumer struck a deal on a tax and energy policy bill. First Solar (FSLR US) +10%, SunRun (RUN US) +12%, Enphase Energy (ENPH US) +3.6%, SolarEdge (SEDG US) +4.0% Etsy (ETSY US) rises 6.1% in premarket trading on Thursday after the company posted stronger-than-expected second- quarter results, with most analysts seeing the online retailer retaining its market-share gains made during the pandemic ServiceNow (NOW US) shares fall 7.5% in US premarket trading, after the software company cut its full-year revenue forecast due to a stronger dollar and a potential pull back in demand. Spirit Airlines (SAVE US) shares climb 4.5% in premarket trading as JetBlue Airways is said to be close to an agreement to buy the carrier. Best Buy (BBY US) shares drop 4.4% in US premarket trading as analysts slashed their price targets on the retailer after it cut its profit and sales outlook, with brokers blaming the macroeconomic backdrop. Teladoc Health (TDOC US) shares fall about 25% in premarket trading after the virtual- care company’s 3Q Ebitda guidance came in below expectations, with analysts saying the outlook for Teladoc is likely to be revised downward. Community Health Systems Inc. (CYH US) shares plummet 52% in premarket trading after the hospital company reported a surprise loss per share for the second quarter. US stocks have rallied in July, putting the S&P 500 Index on course for its biggest monthly gain since October 2021, as the market finally grasps what we have been saying since January, namely that the weaker macroeconomic will prompt the central bank to "pivot" to easier policy, coupled with bets that much of the bad news was now priced in. It could get even worse, er better, today when the US reports Q2 GDP which may confirm that the world's largest economy is in a technical recession further shortening the Fed tightening phase. To be sure, the knee-jerk relief in markets on possible crumbs of comfort from the Fed outlook echoes a pattern seen after earlier hikes. Those bouts of optimism stumbled on recession risks from a global wave of monetary tightening, Europe’s energy woes and China’s property sector and Covid challenges. “We do feel the hikes are going to slow from these levels,” Laura Fitzsimmons, JPMorgan Australia’s executive director of macro sales, said on Bloomberg Television. But financial-industry participants are skeptical about the pricing indicating Fed rate cuts in 2023, she added. “As the tug-of-war between inflation and recession fears plays out in the second half of the year, we expect to see highly volatile markets,” Richard Flynn, UK Managing Director at Charles Schwab, wrote in a note. All eyes have also been on corporate earnings for signs of resilience in profit margins to surging inflation and weaker sentiment. A record number of US and European firms worth more than $9.4 trillion will report their results on Thursday. Of these $6.8 trillion are 55 S&P500 companies if constituents of the Nasdaq 100 are included. That comes on the heels of the Fed raising rates by 75 basis points for a second month, saying such a move is possible but that the pace of hikes will slow at some point. Chair Jerome Powell said policy will be set meeting-by-meeting as he tries to control rising prices amid signs of an economic slowdown. Big Tech will be a particular focus again with results from Amazon, Apple and Intel. “We see the earning season as a mixed bag and it’s not necessarily very good news looking forward because we have an economic momentum that is this decelerating very fast and we also have central banks all around the world hiking interest rates,” Geraldine Sundstrom, portfolio manager for asset allocation strategies at Pimco, said on Bloomberg TV. “For financial markets, the risk of the Fed taking an overly aggressive stance has eased over the past week due to mixed growth and inflation data,” said Gurpreet Gill, macro strategist of fixed income and liquidity solutions at Goldman Sachs Asset Management. “Growing evidence of slowing demand has curbed the need for speed –- hence the Fed did not provide forward guidance on its policy path.” The dovish Fed euphoria also helped lift European stocks, which initially faded a strong opening bounce only to recover all gains. Euro Stoxx 600 rose 0.5%, with the FTSE MIB outperforming, adding 0.8%, IBEX lags, dropping 1.3%. Telecoms, food & beverages and utilities are the worst-performing sectors. The Stoxx 600 Basic Resources index rose as much as 3.6%, the top-performing sub-index in the benchmark, following well-received results and with metals prices gaining. ArcelorMittal jumped following a cash flow beat and new buyback in its results, while Anglo American gains as its earnings and dividend both topped expectations. Other steel stocks SSAB, Voestalpine higher after ArcelorMittal and after beat from Acerinox. Copper miners KGHM and Antofagasta the biggest gainers with copper price up for fifth day. Here are some of the most notable market movers: Shell rises as much as 2.2% after the company reported what RBC Capital Markets described as strong results and announced that it will repurchase a further $6 billion of shares in the third quarter. Renewable energy companies’ shares soared following a deal by US senators to advance a bill that will spend hundreds of billions of dollars on energy security and climate change. Vestas Wind Systems stock gained as much as 15%, Nordex +12%, Orsted +6.5%, SMA Solar +7.6%, Meyer Burger +9.3% Schneider Electric shares were up as much as 5.2% after it reported a strong set of results; analysts welcome the increased FY growth targets and the company’s ability to pass on inflation. Diageo rises as much as 2.7% after the British distiller’s FY22 organic sales beat estimates. The group reiterated its medium-term guidance even as it expects a challenging environment for FY23. Stellantis shares gain as much as 4.3%, after the carmaker reported 1H results that Jefferies called “impressive and clean.” TotalEnergies declines as much as 3.8%, after its plan to maintain the pace of buybacks disappointed some analysts amid expectations for accelerated share repurchases in the industry. Airbus shares fall as much as 6.6% in Paris after the aircraft maker cut its full-year delivery projections and pushed back ramping up the A320 build rate to 65 a month from summer 2023 until early 2024. Nestle shares drop as much as 2.2% after the company cut its margin outlook for the year. The results are “mixed,” given the sales beat and increased FY organic revenue forecast, but there are questions around margin, according to analysts. Fresenius Medical Care shares slide as much as 15% after the dialysis services firm issued a guidance downgrade that showed significant cost pressures on many fronts, Truist says in a note. Ironically, as Europe edges toward a full-blown energy crisis and recession, its manufacturing giants are raking in the cash. Luxury-car leader Mercedes-Benz joined Europe’s biggest chemicals maker BASF, Swiss building-materials producer Holcim, shipping company Hapag-Lloydand others to report a jump in profit and raise earnings forecasts for the year. The results offered a stark contrast to the wave of grim economic news sweeping across Europe. Confidence in the euro-area fell to the weakest in almost 1 1/2 years as fears of energy shortages haunt consumers and businesses, and the European Central Bank’s first interest-rate increase in a more than decade feeds concerns that a recession is nearing. Earlier in the session, Asian stocks also advanced after the Federal Reserve said it will slow the pace of interest-rate increases at some point. The MSCI Asia Pacific Index climbed as much as 1.1%, driven by gains in material and energy stocks. Equity benchmarks in the Philippines and New Zealand led gains in the region as a weakening dollar boosted risk appetite. “The stock markets may reverse their recent falls” following the Fed’s decision, said Heo Pil-Seok, chief executive officer at Midas International Asset Management in Seoul. “Starting today, we should see if there’s any changes in foreign fund flows, as outflows have somewhat eased recently,” he said, adding however that the stock rally may be short-lived as investors remain cautious on earnings. Gains in Asia were small relative to the rally in US stocks overnight, as investors monitored the latest local earnings along with China’s property crisis and the Covid situation. Asian tech bellwether Samsung Electronics provided a weak demand forecast Thursday, citing uncertainties following a rare earnings miss. Chinese benchmarks were flat amid the Politburo meeting and a possible call between Xi Jinping and Joe Biden. Elsewhere, traders are awaiting a phone call between President Joe Biden and China’s Xi Jinping, which could touch on US tariffs and other points of tension. Japanese equities climbed, following US peers higher on relief after the Federal Reserve raised interest rates by 75 basis points and indicated that monetary policy tightening will eventually slow down. The Topix rose 0.2% to 1,948.85 as of the market close in Tokyo, while the Nikkei 225 advanced 0.4% to 27,815.48 as the yen gained against the dollar, weighing on exporters such as Toyota. Recruit Holdings Co. contributed the most to the Topix’s gain, increasing 4.4%. Out of 2,169 shares in the index, 1,406 rose and 652 fell, while 111 were unchanged. “It does seem as if the market bottomed out at the end of June,” said Hitoshi Asaoka, a strategist at Asset Management One. “There is a sense that a rise in interest rates is receding worldwide and stocks are also calming down along with that.” Fed Hikes by 75 Basis Points as Powell Sees No US Recession Now In FX, the Bloomberg dollar spot index revered a drop of 0.6% to trade higher. SEK and DKK are the weakest performers in G-10 FX, JPY maintains outperformance, trading at 135.33/USD.  The yen was around 135.40 per dollar, after strengthening more than 1% to 135.11 in Asia, extending an overnight rise to hit a three-week high. It jumped by a similar amount against the euro and the Australian dollar. In rates, Treasury yields were little changed to 3bps lower in European trading after dropping on Wednesday. The Treasury curve extended Wednesday’s post-FOMC steepening move as short end leads recovery from losses during European morning. Declines followed a large downside options trade, while gilts and bunds have underperformed over the London session. Focal points of US session include first estimate of 2Q GDP and 7-year note auction.US long-end yields remain cheaper by ~2bp while front-end and belly yields are richer on the day, steepening 2s10s by ~2bp, 5s30s by ~3bp; 10-year yields around 2.79% are little changed with bunds cheaper by ~2bp, gilts by ~4bp. Bunds lag following German regional CPI data, with national gauge due at 8am ET. German curve steepens with two-year yields lower after some state inflation gauges slow, while rates at the longer end rise. US 10-year yields are steady at 2.79%. In commodities, WTI drifts 1.7% higher to trade below $99. Spot gold rises roughly $10 to trade near $1,745/oz. Most base metals trade in the green; LME zinc rises 3%, outperforming peers. Looking the day ahead, in addition to the US GDP we get core PCE, consumption, and jobless claims in the US. In Europe, German CPI and France PPI are due with the first German regional numbers out just after we press send this morning. Our economists expect MoM CPI at +0.8% in Germany, and +0.5% on the EU harmonized MoM measure. Market Snapshot S&P 500 futures down 0.3% to 4,011.25 STOXX Europe 600 up 0.2% to 428.98 MXAP up 1.0% to 160.34 MXAPJ up 0.8% to 524.61 Nikkei up 0.4% to 27,815.48 Topix up 0.2% to 1,948.85 Hang Seng Index down 0.2% to 20,622.68 Shanghai Composite up 0.2% to 3,282.58 Sensex up 1.7% to 56,792.04 Australia S&P/ASX 200 up 1.0% to 6,889.75 Kospi up 0.8% to 2,435.27 German 10Y yield little changed at 0.98% Euro little changed at $1.0206 Gold spot up 0.7% to $1,746.23 U.S. Dollar Index down 0.18% to 106.26 Top Overnight News from Bloomberg Chair Jerome Powell said the Federal Reserve will press on with the steepest tightening of monetary policy in a generation to curb surging inflation, while handing officials more flexibility on coming moves amid signs of a broadening economic slowdown. The yen catapulted higher against major peers on Thursday as lowered expectations for rate hikes caused hedge funds to cover short bets from one of the biggest global macro trades of the year. US Stocks Set to Dip After Biggest Tech Gain Since November 2020 Meta Disappoints With Forecast Miss, First-Ever Revenue Drop China Leaders Call for ‘Best’ Growth Outcome at Key Meeting US Offers Russia to Swap Jailed Basketball Star for Arms Deale US Aircraft Carrier Enters South China Sea Amid Taiwan Tensions US Offers Russia to Swap Griner and Whelan for Arms Dealer Bout Barclays Latest Bank to Make Provision for US WhatsApp Fine Yen Roars Back as Hedge Funds Cut and Run From Big Macro Short China-US Deal Needed Soon to Avoid Delistings, Gensler Says Alibaba’s Gains From Primary Listing Plan Wiped out in Two Days Samsung’s Profit Is Latest Tech Casualty to Recession Fears Senate Deal Includes EV Tax Credits Sought by Tesla, Toyota Manchin Backs $369 Billion Energy-Climate Plan, Rejects SALT A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks eventually traded higher across the board following the firm lead from Wall Street. ASX 200 saw firm gains across its Tech, Gold, and Mining sectors. Nikkei 225 gained in early trade and briefly topped the 28k mark before recoiling as the JPY saw a sudden bout of strength. KOSPI benefited from Samsung Electronics' rise post-earnings, although the firm echoed recent remarks from SK Hynix regarding weaker H2 memory demand. Hang Seng moved on either side of breakeven but later saw an upside bias as Hong Kong Finance Secretary said Hong Kong's H2 economic performance will be better than H1. Shanghai Comp eventually gained despite the recent cautious commentary from Chinese President Xi. Top Asian News Chinese Politburo says it will keep economic operations in a reasonable range. Australian Treasurer Chalmers said the final budget outcome for 2021/22 likely to show a dramatically better-than-expected outcome. Samsung Electronics (005930 KS) - Q2 2022 (KRW): Revenue 772tln (Co. exp. 77tln); operating profit 14.1tln (exp. 14tln). Net profit 11.1tln (exp. 10.3tln); Chip operating profit 9.98tln (exp. 11.08tln); expects weaker H2 phone/PC memory chip demand. South Korean President Yoon has ordered to take steps against illegal activities regarding stock short selling, via Yonhap. Hong Kong Finance Secretary said Hong Kong's H2 economic performance will be better than H1; property market fundamentals remain sound. Hong Kong Monetary Chief expects overnight and one-month interbank rate to continue to rise at a much faster pace; says HKD has been stable and has been operating in an orderly manner; public should be prepared for interbank rate to climb further, via Reuters. PBoC injected CNY 2bln via 7-day reverse repos with the maintained rate of 2.10% for a net drain of CNY 1bln. PBoC set USD/CNY mid-point at 6.7411 vs exp. 6.7425 (prev. 6.7731). Japanese government spokesperson says there is currently no plan to impose restrictions on people's movements following increasing COVID cases; Tokyo COVID cases reach 40,406 vs. previous record of 34,995. European bourses are modestly softer, Euro Stoxx 50 -0.10%, but relatively contained now after fading initial gains from the FOMC-inspired upside. Amid numerous earnings updates from Europe & in the US aftermarket. US futures are relatively stable but continue to post modest losses with the NQ -0.8% lagging amid pre-market downside in Meta post-earnings, -6.0%. Meta Platforms Inc (META) Q2 2022 (USD): EPS 2.46 (exp. 2.59), Revenue 28.82bln (exp. 28.95bln), Advertising revenue 28.15bln (exp. 28.53bln). Outlook reflects continuation of weak advertising demand environment it experienced throughout Q2. Guidance assumes FX will be about a 6% headwind to Y/Y total revenue growth in Q3. Co. said the economic downturn will have a broad impact on digital advertising business, says the situation seems worse than it did a quarter ago. -6.0% in the pre-market. Jack Ma intends to relinquish control of Ant Group, via WSJ sources; to transfer some voting power to executives, could push-back IPO timing by over a year. Top European News German consumer energy bill to increase by EUR 1k/year, following a cost shift, via Bloomberg; Effective from October 1st, via Reuters sources; levy will cover 90% of costs. Subsequently, German Economy Minister says the gas level would cost several hundred EURs per household. India to Restart Ukraine Sunflower Oil Imports as Trade Eases Wind, Solar Stocks Surge After US Energy Bill Agreement Vanguard Europe MD Says Climate Is Now ‘the Most Material Risk’ Schroders Up; Jefferies Says Results Show Resilience of Platform EDF Posts $1.3 Billion Loss as State Readies Nationalization Turkey Raises 2022 Inflation Forecast to 60.4% on Imports, Lira Central Banks BoJ Deputy Governor Amamiya said we must not loosen our grip in keeping monetary policy easy as there is no prospect yet of sustainably meeting the 2% inflation target. He added that consumer sentiment has been worsening due to rising energy and food prices. BoJ must be vigilant to financial and forex moves and their impact on economy and prices. ECB's Visco refrains from saying whether markets should expect a 25bps or 50bps hike in September; not prepared to say the ECB would go for 50bps in September in order to reach its target quicker. Adds, the ECB doesn't really know where its target is. BoK to strengthen monitoring of FX and capital flows following the FOMC hike, according to Bloomberg. HKMA raised its base rate by 75bps to 2.75%, as expected, following the earlier Fed rate hike. NBH hikes the one-week deposit rate to 10.75% (prev. 9.75%) at tender. CBRT Governor says the bank has enough FX reserves to meet high energy costs and reserves continue to increase. FX Fed leaves Dollar in limbo with no firm forward guidance and reliant on unfolding macro fundamentals, DXY depressed within 106.580-050 range vs pre-FOMC high of 107.430. Yen outperforms on prospect of less BoJ vs Fed policy divergence, USD/JPY sub-135.50 and key Fib level. Kiwi outpaces Aussie as NZ business outlook and activity turn less downbeat, while Australian retail sales miss consensus and slow to softest pace in 2022 so far; AUD/NZD retreats through 1.1150 as AUD/USD and NZD/USD hover just under 0.7000 and 0.6300 respectively. Pound extends gains against Euro through 0.8400 and chart trend line, but both fade from post-FOMC peaks vs Buck, Cable unable to reach 1.2200 and EUR/USD fails to hold above 1.0200. Lira and Forint flounder irrespective of supportive CBRT rhetoric and NBH raising 1-week deposit rate by 100bp, USD/TRY touches 17.9300 in wake of jump in year end Turkish CPI forecast and EUR/HUF approaches 408.00. Fixed Income Bonds remain volatile post-Fed, but curve steepening the clear trend as markets reset rate expectations to data rather than forward guidance. Bunds choppy within wide 154.75-155.87 extremes, Gilts between 116.70-117.19 parameters and T-note from 119-23+ to 120-08+. US Treasuries also conscious of looming 7 year supply after potentially pivotal Q2 GDP and jobless claims. Commodities WTI and Brent are firmer by over 1.5% on the session after spending much of the European morning relatively contained. European gas prices are significantly more contained when compared to price action earlier in the week but remain at elevated levels comfortably above EUR 200/MWh for TTF. Gazprom continues shipping gas to Europe via Ukraine, Thursday's volume is 42.1MCM (vs Monday's 42.2MCM). Shell (SHEL LN) has cut gas use at the Rotterdam Pernis (404k BPD) facility by 40% and at German sites by ~70%, due to the ongoing gas situation. India's gold demand in H2 is seen falling Y/Y due to lower disposable income; H1 gold demand rose 42% Y/Y, according to World Gold Council. Magnitude 6.3 earthquake hits Tocopilla in Chile, according to the EMS; 5.5 magnitude earthquake occurs near Nicaragua coast, via EMSC. Nornickel Q2 production: Nickel 48k tonnes, Palladium 709/koz, via Reuters. Spot gold is bid by just over USD 10/oz but, again, remains subject to USD action as while the index is bid it has dipped markedly. Amidst the USD’s relative weakness, base metals are similarly supported. US Event Calendar 08:30: 2Q GDP Annualized QoQ, est. 0.5%, prior -1.6% Personal Consumption, est. 1.2%, prior 1.8% PCE Core QoQ, est. 4.4%, prior 5.2% GDP Price Index, est. 8.0%, prior 8.2% 08:30: July Initial Jobless Claims, est. 250,000, prior 251,000 Continuing Claims, est. 1.39m, prior 1.38m 11:00: July Kansas City Fed Manf. Activity, est. 4, prior 12 DB's Jim Reid concludes the overnight wrap Just before the June FOMC, the surprise last minute leak that the Fed were about to hike rates by 75bps shocked yields much higher and equities much lower. However last night's routine 75bps July FOMC hike was cheered to the rafters by the equity market with yields also falling, especially at the front end. So how times change! Today we could see confirmation of the start of a technical recession in US with Q2 GDP out, and also German CPI which might show some signs of falling before we think it hits new highs again in the autumn. So a busy day. Back to the Fed and the expected 75bps hike brings the rate into territory that some Committee members may deem ‘neutral’ (Our full US econ review, here). The statement maintained guidance that the Committee sees further rate hikes, and thus moves into restrictive territory, as appropriate, even as the statement opened by acknowledging that some activity data had softened. Nothing in the statement came as a particular surprise, leaving equities and rates little changed upon release with the bulk of the rally after the press conference started. At the press conference, the Chair left open the possibility of another super-charged 75bp hike (or larger) in September, but demurred on providing forward guidance, saying that the Committee would be making policy decisions on a meeting-per-meeting basis. A tacit acceptance of what they have already been doing, to an extent. Nevertheless, the Chair did note that the SEP from June, that shows policy getting to between 3% and 3.5% by the end of year, and a terminal rate of 3.8% was probably still the best guide for the path of policy. Despite the continued insistence on more hikes being necessary, and inflation being much too high, markets instead latched onto the fact that the Committee was cognisant of the signs of slowing growth in the economy, and that the Fed would logically slow the path of tightening at some point. Upon this, markets priced in a shallower policy path, which saw 2yr Treasuries -5.5bps lower on the day, with 10yr yields down -2.2bps, and no more rate hikes in 2023 after hitting a terminal rate of 3.3%. What was left unsaid is that slowing growth has to translate to slowing inflation for the FOMC to pivot policy. That cuts are being priced in within six months when inflation is still climbing from lofty levels seems too optimistic. However this very much fits it with the current market narrative so this doesn't feel the time to fight it. That optimistic pricing path drove US equities through the roof after the FOMC, with the NASDAQ ending the day +4.06% higher, climbing around +1.58% after the FOMC events, it’s best daily return since April 2020, while the FANG+ was up +5.30%, its best day in two months. Tech stocks outperformed given the sensitivity of their valuations to rate policy, but the broad S&P 500 climbed +2.62% as well, with every sector in the green. After the FOMC, Meta missed analyst estimates, posting its first ever decline in sales over a quarter, and traded around -4.5% lower in after-hours trading. In the release the company also noted hiring has slowed this year much like its other mega cap brethren. This morning, S&P 500 futures are trading -0.14% lower, with Meta having taken some shine out of the post-FOMC glow. Elsewhere overnight, Senator Joe Manchin reportedly reached a deal with Senate Majority Leader Chuck Schumer on a tax and spending plan focused on climate spending, capping health care costs, while raising additional tax revenue. This will be a huge story out of Washington heading into the fall midterms, and the overall impact of the bill – which is being structured to pass through the reconciliation process and thus with a simple majority – will be assessed over coming days as more people get eyes on it. An announcement that came out of the blue after Senator Manchin shot down reconciliation efforts in light of growing inflation time and again. One we will surely be talking about more over the near-term. Ahead of the FOMC, equities were higher on both sides of the Atlantic on buoyant sentiment following optimistic forecasts from tech giants Microsoft and Alphabet the night before. European equities closed modestly higher across the board, with the STOXX 600 closing up +0.47%, the DAX +0.53% higher, and the CAC up +0.75%. The big focus in Europe remained on the gas situation. A German government spokesperson acknowledged there had been a reduction of gas supplies from Russia and noted there was no technical reason for Russia to cut supplies. European natural gas futures climbed another +2.54% on the day to €205. Core European and Treasury yield curves were flatter heading into the Fed, with 2yr bund yields climbing +8.7bps and 10yr bunds +2.0bps higher to 0.94%. The spread widening in BTPs continued, with 10yr BTPs +5.5bps wider to bunds at 236bps, just under 5bps from their widest levels reached in mid-June. Meanwhile, Treasury yields were lower across the curve, with the curve even more inverted. The data out before the Fed was never going to be the main driver of rates on the day, and they painted a mixed picture. Housing continued its torrid run, with pending home sales down -8.6% MoM versus expectations of -1.0%. Meanwhile, Durable Goods Orders expanded 1.9% versus -0.4% expectations, while inventories increased 1.9% as well versus 1.5% expectations. Those data helped some GDP trackers, with the Atlanta Fed’s nowcast for 2Q GDP increasing to -1.2% from -1.6% following the data. We get the first advance reading of US 2Q GDP today, but know today’s reading will be subject to many revisions before we have the final figure. 10yr TSY yields are little changed at 2.78% as we go to press this morning. Brent crude futures climbed +2.13% to $107/bbl, following EIA data that showed inventories fell by 4.52mln barrels, while demand for gasoline in the US looks more robust than some recent survey measures have suggested, putting more upward pressure on energy. Finally, a Biden aide said the Iran deal was not likely to return in the near future, effectively keeping potential additional supply from hitting the market for longer. Asian equity markets are trading higher this morning following the Fed. Stocks in mainland China are gaining with the Shanghai Composite (+0.89%) and the CSI (+0.95%) both up whilst the Nikkei (+0.32%), the Hang Seng (+0.20%) and the Kospi (+0.97%) all edging higher. Early morning data showed that retail sales in Australia rose +0.2% m/m in June, its slowest pace this year and down from May’s downwardly revised +0.7% pace of growth and falling short of markets expectations of a +0.5% increase. The soft data represents that soaring inflation and rising interest rates may be finally hampering consumer demand. To the day ahead, in addition to the US GDP we get core PCE, consumption, and jobless claims in the US. In Europe, German CPI and France PPI are due with the first German regional numbers out just after we press send this morning. Our economists expect MoM CPI at +0.8% in Germany, and +0.5% on the EU harmonized MoM measure. Tyler Durden Thu, 07/28/2022 - 08:04.....»»

Category: blogSource: zerohedgeJul 28th, 2022