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GFAI Stock Alert: Why Is Guardforce AI Skyrocketing Today?

InvestorPlace - Stock Market News, Stock Advice & Trading Tips Today, GFAI stock is one of the best movers in the market, up more than 50% on news that the company will be making two acquisitions. The post GFAI Stock Alert: Why Is Guardforce AI Skyrocketing Today? appeared first on InvestorPlace. More From InvestorPlace Stock Prodigy Who Found NIO at $2… Says Buy THIS Now Man Who Called Black Monday: “Prepare Now.” #1 EV Stock Still Flying Under the Radar Interested in Crypto? Read This First........»»

Category: topSource: investorplaceJan 14th, 2022

Futures Slide After Disappointing JPMorgan Earnings, Tech Rout Worsens

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

Category: dealsSource: nytJan 14th, 2022

Futures Flat Ahead Of Another Scorching PPI Print

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

Category: blogSource: zerohedgeJan 13th, 2022

IBM Complements Sustainability Initiatives With Envizi Buyout

IBM intends to integrate Envizi's software with its Maximo asset management solutions, Sterling supply chain solutions and Environmental Intelligence Suite to help firms create resilient businesses and sustainable operations. International Business Machines Corporation IBM recently inked a definitive agreement to acquire Envizi for an undisclosed amount. The transaction aims to complement its sustained investments in AI capabilities to enable diverse firms to achieve sustainable business goals and environmental objectives.Based in Australia, Envizi operates as a premier data and analytics software provider for environmental performance management. It offers key insights to optimize resources for major sustainability reporting frameworks with key software that automates the collection and consolidation of more than 500 data types. With user-friendly customizable dashboards, it enables organizations to analyze and manage environmental goals, identify efficiency opportunities and assess sustainability risks for remedial actions. These, in turn, help firms to fulfill their broader Environmental, Social and Governance (ESG) initiatives and reduce greenhouse gas (GHG) emissions.IBM intends to integrate Envizi’s software with its Maximo asset management solutions, Sterling supply chain solutions and Environmental Intelligence Suite to help firms create more resilient businesses, sustainable operations and supply chains by generating automated feedback. The Maximo asset management solutions help firms to extend the life expectancy of critical assets while minimizing the environmental impact by providing predictive maintenance and intelligent asset management. The Sterling supply chain solutions help improve supply chain visibility, cut waste by right-sizing inventory and reduce the carbon footprint of shipment and logistics. The Environmental Intelligence Suite allows companies to increase business resiliency by assessing and effectively planning for lower environmental impact on operations.The Envizi software will be available as a SaaS solution and run in multi-cloud environments. In addition to improving the sustainability initiatives of clients and helping them achieve their ESG goals, IBM will also utilize the software to improve its own operational efficiencies, manage energy consumption and achieve net-zero GHG emissions by 2030.IBM’s growth is expected to be driven primarily by analytics, cloud computing and security in the long haul. A better business mix, improving operating leverage through productivity gains and increased investments in growth opportunities will likely drive its profitability.However, IBM’s ongoing, heavily time-consuming business model transition to the cloud is likely to be a headwind in the near term. Although the public cloud market is expected to be one of the fastest-growing IT categories with about 25% to 30% CAGR over the next five years, IBM is unlikely to keep up with its competitors. Weakness in its traditional business and foreign exchange volatility remain significant concerns. Also, higher profit on lower revenues indicates that the company has been lowering costs to maintain profits. We believe that the scope for further cost-cutting is limited. Consequently, if costs are further reduced, there could be a negative impact on product quality. It could also delay the launch of new products, causing it to lag its peers.The stock has gained 4.6% over the past year compared with the industry’s growth of 5.1%. We remain impressed with the inherent growth potential of this Zacks Rank #2 (Buy) stock.Image Source: Zacks Investment ResearchHewlett Packard Enterprise Company HPE sports a Zacks Rank #1 (Strong Buy). It has a long-term earnings growth expectation of 5.8% and delivered an earnings surprise of 14.4%, on average, in the trailing four quarters. Over the past year, Hewlett Packard has gained a modest 40%.Earnings estimates for the current year for the stock have moved up 12.8% over the past year, while that for the next fiscal is up 26.4%. Hewlett Packard has been pursuing acquisitions to focus more on high-margin hybrid IT models that leverage on-premises and cloud-computing power. It views AI, Industrial IoT and distributed computing as the next major markets.SeaChange International, Inc. SEAC, carrying a Zacks Rank #2, is another solid pick for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.SeaChange delivered an earnings surprise of 37.2%, on average, in the trailing four quarters and has a long-term growth expectation of 10%. Earnings estimates for the current year for the stock have moved up 35.7% since January 2021. Over the past year, SeaChange has gained a modest 55.3%.Vocera Communications, Inc. VCRA sports a Zacks Rank #1. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 109.6%, on average, in the trailing four quarters.Over the past year, Vocera has gained 80.9%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. Leveraging a patent-protected, enterprise-class server software, Vocera provides an advanced clinical rules engine that simultaneously unifies data from multiple sources, prioritizes notifications and sends messages to the right care team members. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report International Business Machines Corporation (IBM): Free Stock Analysis Report SeaChange International, Inc. (SEAC): Free Stock Analysis Report Vocera Communications, Inc. (VCRA): Free Stock Analysis Report Hewlett Packard Enterprise Company (HPE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 13th, 2022

Motorola (MSI) Secures LMR Contract Expansion From US Navy

The deal reinforces Motorola's (MSI) competitive position in the public safety ecosystem and extends the operations of Land Mobile Radio network of the naval community. Motorola Solutions, Inc. MSI has secured a $29 million contract extension from the U.S. Department of Defense to bolster mission-critical communications infrastructure among the first-responder community in the U.S. Navy. The deal reinforces its competitive position in the public safety ecosystem and extends the operations of Land Mobile Radio (LMR) network of the naval community.The multi-year agreement was originally signed in January 2020. Per the contract, Motorola will be undertaking necessary steps for sustaining Naval Facilities Engineering Command Anti-Terrorism/Force Protection Ashore mobile radio systems globally. The agreement involves state-of-the-art software upgrades and licenses, asset and configuration management and benchmark testing.Showcasing its adaptability in both military and first responder markets, the Chicago-based company will leverage its much-acclaimed P25 trunked network to strengthen the deployment of LMR communication for easier access, enhanced coverage and stronger security in the Navy. Specifically designed for maintaining synchronized communication between public safety agencies and the Navy’s first responder services, the LMR network is aimed at providing assistance during emergencies like accidents, terrorist attacks, or natural calamities. It ensures secure collaboration between other federal, state and local agencies in the public safety domain for faster and effective responses.Motorola expects to record strong demand across video security and services, LMR products and related software while benefiting from a solid foundation. These systems drive the demand for additional device sales and promote software upgrades and infrastructure expansion. The comprehensive suite of services ensures continuity and reduces risks related to critical communications operations.Furthermore, Motorola intends to fortify its position in the public safety domain by entering into alliances with other players in the ecosystem. It remains poised to benefit from organic growth and acquisition initiatives, disciplined capital deployment and a favorable global macroeconomic environment. Its competitive position and an attractive portfolio for a large addressable market augur well for long-term growth.The stock has gained 47% over the past year compared with the industry’s growth of 19.5%. We remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. Image Source: Zacks Investment ResearchA better-ranked stock in the industry is Qualcomm Incorporated QCOM, carrying a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 15.3% and delivered an earnings surprise of 11.2%, on average, in the trailing four quarters.Earnings estimates for the current year for the stock have moved up 29.7% over the past year, while that for the next fiscal is up 48.1%. Qualcomm is likely to benefit in the long run from solid 5G traction and a surge in demand for essential products that are the building blocks of digital transformation in the cloud economy.SeaChange International, Inc. SEAC, carrying a Zacks Rank #2, is another solid pick for investors. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.SeaChange delivered an earnings surprise of 37.2%, on average, in the trailing four quarters and has a long-term growth expectation of 10%. Earnings estimates for the current year for the stock have moved up 35.7% since January 2021. Over the past year, SeaChange has gained a modest 55.3%.Vocera Communications, Inc. VCRA sports a Zacks Rank #1. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 109.6%, on average, in the trailing four quarters.Over the past year, Vocera has gained 80.9%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. Leveraging a patent-protected, enterprise-class server software, Vocera provides an advanced clinical rules engine that simultaneously unifies data from multiple sources, prioritizes notifications and sends messages to the right care team members. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report QUALCOMM Incorporated (QCOM): Free Stock Analysis Report Motorola Solutions, Inc. (MSI): Free Stock Analysis Report SeaChange International, Inc. (SEAC): Free Stock Analysis Report Vocera Communications, Inc. (VCRA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 13th, 2022

Vltava Fund 4Q21 Commentary

Vltava Fund commentary for the fourth quarter ended December 31, 2021. Q3 2021 hedge fund letters, conferences and more 2021 Looking back upon the past year, one could describe 2021 as a year of very strong growth in profitability among the companies we hold in our portfolio. The profits of these companies grew even faster […] Vltava Fund commentary for the fourth quarter ended December 31, 2021. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more 2021 Looking back upon the past year, one could describe 2021 as a year of very strong growth in profitability among the companies we hold in our portfolio. The profits of these companies grew even faster than did the Fund’s NAV. Indeed, if we measure the NAV of the Fund against the current profitability of the companies we own, then the Vltava Fund portfolio is cheaper at the end of 2021 than it was at its beginning, despite the past year’s substantial growth in NAV. For me personally, that is the main takeaway from a look back. Vltava Fund's Portfolio Update Regarding the list of titles held, the composition of the Vltava Fund portfolio did not change much throughout 2021. We sold two positions and we incorporated two new ones into our portfolio. Right at the beginning of the year, we sold the shares of Union Pacific Corporation (NYSE:UNP). After their price had risen greatly, they no longer seemed sufficiently attractive to us. In the final quarter of the year, we sold quite against our will both common and preference shares of Teekay Lng Partners, L.P. (NYSE:TGP). I say against our will because in January TGP will be taken over by a private equity fund and its shares will be withdrawn from trading on a stock exchange. Transactions of this sort happen from time to time, and this is nothing unusual. What we find disagreeable in this case is the price at which the takeover is taking place. In our opinion, the USD 17 price is far below the value and potential of the company, and we are racking our brains to understand what motivated the main shareholder, who controlled more than 40% of TGP shares, to sell at such a price. TGP was a solidly profitable investment for us. Nevertheless, we had expected to earn much more from it through coming years. Fortunately, it is not a problem at the moment to find a good place in the market for the cash obtained from the sale of TGP. There were two new additions to the portfolio last year – shares of the insurance broker Willis Towers Watson PLC (NASDAQ:WLTW) and shares of the retail company Williams-Sonoma, Inc. (NYSE:WSM). I mentioned both purchases already in the previous newsletter to shareholders. At first sight, these were only minor changes. There were many more transactions in the portfolio over the past year, however. Most purchases were directed to shares we have already held in the portfolio. We have been purchasing virtually all the stocks we hold, many of them repeatedly. While we are by no means opposed to anything new and always are looking for new investment opportunities, we generally tend to gravitate to what we already have in the portfolio, to what we know well, and moreover what we see is working out well. Therefore, our largest positions in the portfolio are predominantly of an older date and the newer ones, purchased let us say within the past 2 years, are rather at the bottom of the table according to size. Nevertheless, also among newer positions are companies that may well remain in the portfolio for a very long time. Stocks such as JPMorgan Chase & Co. (NYSE:JPM), Lockheed Martin Corporation (NYSE:LMT), CVS Health Corp (NYSE:CVS) or NVR, Inc. (NYSE:NVR) surely have this potential. Most of the portfolio remains invested in developed markets. In emerging markets we have three positions (Samsung, Sberbank and Quálitas Controladora), and by type our investment into the Japanese Nikkei 225 index differs slightly from the rest of our portfolio. Three companies that most pleasantly surprised us by their profitability last year are Sberbank Rossii PAO (MCX:SBER), Bayerische Motoren Werke AG (ETR:BMW) and Laboratory Corp. of America Holdings (NYSE:LH). In Sberbank’s case, we have the impression that each new crisis only further consolidates its already relatively dominant market position. Sberbank’s profitability is greatly helped by rising interest rates (Russia is one of the few countries where interest rates are more or less at the same level as inflation) and low costs for bad loans. Sberbank continues to be one of the most profitable banks in the world by the absolute amount of its profit, and perhaps it is the most profitable of all the world’s big banks according to its key ratios. Last year’s profit per share is expected to be 55 roubles and the dividend around 27 roubles. If we take into account that we first bought Sberbank stock for 90 roubles, then, relative to the original purchase price, the current earnings yield (the inverted value of the P/E) is 61% and dividend yield 30%. That shows how much Sberbank’s profits have increased over that time. BMW is another interesting case. In a year that was marked by a shortage of chips and therefore also by lower global automobiles production, BMW achieved a new historical record – by far – in its profitability. That is despite its producing about 10% fewer cars than it otherwise would have had there been enough chips. Generally, demand for cars today significantly exceeds supply and car manufacturers who have so-called pricing power are benefiting from record margins. There is even a relatively large unmet accumulated demand, which should continue to bring carmakers good sales and margins also in years to come. In BMW’s case, its profitability will also be pressed up by its plan to increase BMW’s stake in its Chinese joint venture from 50% to 75%. China is an immense and profitable market for BMW. If we consider Sberbank to be at the top in terms of profitability ratios, we can say something similar about BMW. The average ROCE (return on capital employed) over the past ten years for BMW’s automotive business is about 58%. ROCE is one of the main indicators of a company's capital efficiency, and it is not easy to find a similarly high number either among car companies or among companies in various other sectors. LabCorp is earning a lot on COVID-19 PCR tests. While 2 years ago this business did not exist at all, today it is driving the company’s huge growth in profitability. Although we expect – and hope – that the number of tests performed will drop significantly soon (and by the way, LabCorp is able to do 250,000 of them daily), LabCorp’s profitability over the past 2 years has very pleasantly surprised us. Of course, not all of our companies are doing better than we expected. Lockheed Martin Corporation (NYSE:LMT), Qualitas Controladora SAB de CV (BMV:Q) and Magna Prima Bhd (KLSE:MAGNA) fell somewhat short of our expectations last year. In the cases of Lockheed and Magna the reasons are similar: disruptions in the supply and logistics chains. Lockheed uses a great many subcontractors from various countries and could not avoid issues with continuity of supplies. As a result, production will be slightly lower than we had expected. Magna, as a major automotive supplier, suffers indirectly from the same chip shortages as does BMW, for example. In Magna’s case, the trouble is that it does not have the same kind of pricing power vis-à-vis its customers as does BMW, and the lower and irregular production is negatively reflected in its profitability. As a car insurer, Quálitas had a great year in 2020. Due to lockdowns, people drove less and there were substantially fewer accidents. Fewer cars were stolen, too, and all this together meant unexpectedly high profits for Quálitas. Profitability was last year moving back towards normal, as we had expected. That means it was lower, but we had not expected it to come down quite so much. All in all, the profitability of our companies last year was roughly in line with our expectations, perhaps a little better. All the companies, including even those that disappointed us a bit, remained strongly profitable and, most importantly, we expect the overall growth in profitability to continue this year. As you probably know, we belong to the traditional school of investors where achieving profitability is regarded as the main goal for a business, and we take that same view in choosing investments for our portfolio. Although in the short run stock prices may be wholly disconnected from what is actually going on and from the profitability of individual companies, share price developments in the long run should track the development of companies’ profitability. Therefore, we bring into the Vltava Fund portfolio stocks of companies that are regularly very profitable over the long term and whose ability to achieve profits has been tested in a variety of economic conditions. We also make sure that these are companies with high growth potential and, above all, that we do not pay exorbitant prices for their shares. In taking this approach, we may not see the prices of our stocks miraculously and quickly shooting up, but, with minor exceptions, we probably also will avoid stocks that lose us money. We think this is the right approach to take with the money you have entrusted to us. Character Of The Market If you go back to my letter to shareholders from 15 months ago, you will find that I had written that there may be a change in market trend. What was then only a faint and incipient hint has since transformed into quite a brutal bear market in some market segments. For some time, very popular among investors and speculators were stocks they regarded as innovative, disruptive, stocks they thought simply own the future and are worth investing into at virtually any price (and often no matter how dubious the business models of these companies). Similar investment opinions and motifs are nothing new or unusual in the markets. Essentially, they come back in waves of this sort time and again. In any case, they usually end badly. This latest speculative wave was huge and peaked during the first pandemic summer of 2020. At the end of that summer, however, it had seemed that common sense and an understanding that a stock’s purchase price actually matters was slowly returning to investing. Today, it is quite evident that the speculative mania of 2020 will end similarly as did the speculative mania of 2000, and that means by dramatic decline in the prices of stocks that were at the centre of all the speculation. Such market darlings of 2020 as Peloton, Zoom, Pinduoduo, Lemonade, Zillow, Teladoc, Stitch Fix, StoneCo, Nikola, Wix.com, Robinhood, Virgin Galactic, Beyond Meat, Palantir, among others, are today 50%, 60%, 70% or even more below their still quite recent highs. We had avoided these shares when they were skyrocketing, and maybe we looked foolish for doing so. We did not care, though, because we are not gamblers. Now, however, we can relax and watch how these titles are collapsing and knowing that we have nothing to do with them. That is a much more pleasant feeling. We think that a number of these stocks are still too expensive and that their declines are far from over. In comparison to this, the view of our portfolio is much calmer. Of all our positions, we have only one that is slightly in the red (Burford Capital). All the others are in the black ranging from a few percentage points to several hundred percent. Current Topics Current market events are dominated by the following three interrelated topics: slow retreat of the pandemic, disrupted supply chains, and inflation. The pandemic is slowly receding, which is good, but, the truth be told, at the beginning we all probably imagined it would come to an end more quickly. What is important from the investment point of view is that, even as various restrictions are likely still to continue for some time, a total shutdown of the economy as occurred in the spring of 2020 is unlikely to happen. Be that as it may, we are striving to invest on the assumption that the virus will remain with us for still a long time. Some sectors (tourism, airlines, hotels, restaurants) continue to be very much affected, so we would rather avoid these. Most other sectors are more or less close to normal and in some cases even are doing better than usual. On the other side of the proverbial coin, huge government budget deficits in most big countries have bubbled to the surface in the forms of large corporate profits and a big increase in the savings of the population. The high savings rate indicates large accumulated and unsatisfied demand on the consumers’ side and, combined with low interest rates, represents the potential for further economic growth. The environment of slowly receding pandemic in combination with economic normalisation has had a very positive impact on the profitability of LabCorp, JP Morgan and Sberbank in particular. Various economic closures and other restrictions have impacted negatively upon the smooth running of supply chains around the world. The notion of a smoothly functioning global economy has proven subject to serious fracturing. The changing structure of consumer demand, which has partly shifted from unavailable services towards goods, has also played a role, and the world has not been able to respond adequately. All these dysfunctional relationships will even out over time, because both people and firms have the ability to adapt to new conditions. Ironically, disruption of supply chains has had a very positive effect on the profitability of BMW and Samsung and, on the other hand, a negative effect on the profitability of Magna and Lockheed Martin. The biggest issue nevertheless remains inflation. It is much higher and more persistent than most central banks had expected. Unfortunately, the response of central banks remains often inadequate. The U.S. Federal Reserve and European Central Bank, for instance, have not yet lifted a finger against inflation and are probably praying that it will go away on its own. There is a conspicuous asymmetry in their approach to solving problems. As soon as inflation seems low, central banks loudly announce that they will do “whatever it takes” to push it higher, but as soon as inflation gets out of hand to the upside, they do nothing. As I have said earlier, part of the problem may be that central bankers are generally so young that they have never in their lives had to fight higher inflation. The overall environment with record low negative real interest rates and highly pro-inflationary budget deficits is still conducive to high inflation. Here, too, our earlier words come to mind. We have been saying already for some time that we as investors will be operating in an environment of negative real rates in the long term and that the scissors between inflation and interest rates will tend to open up. That is exactly what is happening today. We expect more of the same as we go forward. Just as inflation impacts people differently depending on their class, income and spending structure, assets and liabilities, firms also are impacted variously. Some benefit from inflation and some suffer from it. In our case, companies like BMW, Crest Nicholson and Sberbank are currently benefiting most from the inflation. Inflation, as a general increase in the price level of goods and services, tends to push the numbers up in nominal terms on companies' income statements and balance sheets. This is logical. It also tends to push up stock markets in nominal terms over the long term. A good historical example is provided by the stock markets of countries that are or have been in the past struggling with high inflation for a longer time (e.g. Argentina, Brazil, Israel). In these countries, inflation has pushed stock indices incredibly high. In nominal terms. In real terms, however, which means after accounting for the effect of inflation, this has not been so glorious. The current high inflation also will tend to push up stock indices in nominal terms. There will be a tug of war between rising profits and the impact of potentially rising interest rates. If the latter were to rise very substantially, they would push stock (and other asset) valuations downwards. Central banks of most western countries have their hands tied on raising rates, however, as they know very well that in many cases highly over-indebted government budgets would not be able to sustain it. And so the path of least resistance is marked by deeply negative real rates, which on the one hand help to wipe away the real level of government debt but on the other erode the real level of people’s deposits just as quickly. I do not like this situation, but it does not matter what I like or dislike. We realise that we must invest not according to how we would like the world to look but according to what we think it will look like. And I have to say that the environment I have described above, and which is likely to be with us for the long term, is quite conducive to long-term growth in stock prices. Updated on Jan 6, 2022, 3:23 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJan 6th, 2022

5 Small-Cap ETFs to Profit From the January Effect

After registering double-digit annual growth, Wall Street is poised to gain from the historical trend of January Effect. After registering double-digit annual growth, Wall Street is poised to gain from the historical trend of “January Effect.” While large caps tend to perform better, small-cap securities have historically proven their outperformance in January (read: Best Performing ETFs of 2021).For investors seeking to capitalize on this opportunity, small-cap ETFs like iShares Core S&P Small-Cap ETF IJR¸ Vanguard Small-Cap ETF VB, Schwab U.S. Small-Cap ETF SCHA, Vanguard Small Cap Growth ETF VBK and iShares Russell 2000 Growth ETF IWO could be solid pure plays. All these have a solid Zacks Rank #2 (Buy).What is January Effect?January Effect is a seasonal increase in stock prices due largely to year-end tax considerations. Investors redeploy their capital to speculate on weaker performers in January after selling winners in December to create tax losses. This phenomenon pushes the stock market higher in the first month of the year.According to some market experts, the January Effect actually runs from mid-December through February, with small caps continuing to outperform their large-cap cousins.January Effect Seems RealDespite skyrocketing inflation, raging COVID-19 cases and reduced fiscal stimulus, improving economy, rising consumer confidence, a massive vaccination drive and solid corporate earnings are likely to charge bulls. In fact, the Dow Jones started 2022 on a high note, hitting new peaks for the consecutive first two days of the year.Although Treasury yields rose on the Fed tightening policy, it reflects a solid economy, which bodes well for the small caps. As small-cap companies are closely tied to the U.S. economy, these are poised to outperform when the economy improves. These pint-sized stocks generate most of their revenues from the domestic market, making them great choices during an uptrend (read: Treasury Yields Jump to Start New Year: ETFs to Play).U.S. consumer confidence rose further in December, suggesting that the economy would continue to expand in 2022. Meanwhile, President Biden’s administration took steps to eliminate supply-chain bottlenecks, indicating that higher inflation will not last very long.Further, the Food and Drug Administration recently granted approval for oral antiviral COVID-19 pills to Pfizer PFE and Merck MRK, making them the first and second at-home treatments, respectively, for coronavirus and a potentially important tool in the fight against the fast-spreading Omicron variant.ETFs to BuyWe have profiled the above-mentioned ETFs here:iShares Core S&P Small-Cap ETF (IJR)iShares Core S&P Small-Cap ETF offers exposure to U.S. small-cap stocks and follows the S&P SmallCap 600 Index. iShares Core S&P Small-Cap ETF holds 684 stocks in its basket with none accounting for more than 1.3% of assets. Financials, industrials, information technology, healthcare and consumer discretionary are the top five sectors with double-digit exposure each.iShares Core S&P Small-Cap ETF has AUM of $75.6 billion and trades in an average daily volume of 3.9 million shares. The product charges investors 6 bps in annual fees.Vanguard Small-Cap ETF (VB)Vanguard Small-Cap ETF follows the CRSP US Small Cap Index and holds a basket of 1560 stocks with none holding more than 0.4% of assets. Vanguard Small-Cap ETF is widely spread across various sectors with industrials, consumer discretionary, financials, information technology, and healthcare being the top-five.Vanguard Small-Cap ETF has AUM of $50.2 billion and trades in a solid average daily volume of about 621,000 shares. VB charges 5 bps in fees per year from investors.Schwab U.S. Small-Cap ETF (SCHA) Schwab U.S. Small-Cap ETF tracks the Dow Jones U.S. Small-Cap Total Stock Market Index, holding 1,809 stocks in its basket. Each security accounts for less than 0.5% of the assets. Schwab U.S. Small-Cap ETF is widely spread across sectors with health care, financials, industrials, information technology and consumer discretionary having double-digit exposure each.Schwab U.S. Small-Cap ETF has AUM of $17.1 billion and sees a solid volume of around 508,000 shares a day. It has an expense ratio of 0.04% (read: Are Small Caps the Best Bets for 2022? ETFs in Focus).Vanguard Small Cap Growth ETF (VBK)Vanguard Small Cap Growth ETF targets the growth segment of the small-cap space and follows the CRSP US Small Cap Growth Index. It holds 728 stocks in its basket with each accounting for less than 1% of assets. Vanguard Small Cap Growth ETF has key holdings in technology, healthcare, industrials, and consumer discretionary.Vanguard Small Cap Growth ETF has amassed $16.4 billion and charges 7 bps annual fees. The product trades in an average daily volume of 254,000 shares.iShares Russell 2000 Growth ETF (IWO)iShares Russell 2000 Growth ETF also offers exposure to the growth segment of the small-cap space. It tracks the Russell 2000 Growth Index, holding 1243 stocks with each making up for less than 0.8% shares. iShares Russell 2000 Growth ETF has key holdings in technology, healthcare, industrials, and consumer discretionary.iShares Russell 2000 Growth ETF has AUM of $12.4 billion and charges 24 bps in annual fees from investors. It trades in volume of 664,000 shares per day on average. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Pfizer Inc. (PFE): Free Stock Analysis Report Merck & Co., Inc. (MRK): Free Stock Analysis Report iShares Russell 2000 Growth ETF (IWO): ETF Research Reports iShares Core S&P SmallCap ETF (IJR): ETF Research Reports Schwab U.S. SmallCap ETF (SCHA): ETF Research Reports Vanguard SmallCap ETF (VB): ETF Research Reports Vanguard SmallCap Growth ETF (VBK): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 5th, 2022

Forget Fixed Income: Add This Tax-Advantaged Investment Vehicle Instead

Forget Fixed Income: Add This Tax-Advantaged Investment Vehicle Instead While the diversification benefits of investing in fixed income securities are substantial over time, it’s difficult to justify investing in bonds in the current environment with yields set to rise and inflation eating away at any nominal return. Contrary to conventional wisdom, the opportunity still exists for investors to create a reliable stream of income from the equity markets. There are several dividend strategies that the best investors incorporate into their investment mix including blue chip dividend-paying stocks, real estate investment trusts (REITs), and Master Limited Partnerships (MLPs).Investing in companies that have a history of raising dividends can be a very reliable indicator of future earnings growth. Corporate directors know far better than anyone else the details and financial condition of their companies, including the outlook for future earnings growth. Management will only raise dividends if they have every reason to believe that future earnings growth will be able to sustain higher dividend payouts. A steady trend of rising dividends can alert investors to healthy, growing businesses. We’re going to focus on 3 MLPs that have consistently raised dividends.Due to their favorable tax treatment, this type of high-yield, high-quality investment vehicle has been providing investors with favorable returns for many years. There are countless and relatively unknown MLPs that have consistently raised their dividends over a long timeframe, providing investors with high returns. MLPs do not pay income taxes and trade on major stock exchanges.MLPs are different than other traditional investment structures – they are partnerships. A general partner is responsible for running the MLP, and individual investors serve as the limited partners. MLPs must pay their profits directly to shareholders and pay much bigger dividends because they pay no tax. The income generated from the MLP is allocated amongst all partners in proportion to their ownership interest.Relative to dividend-paying stocks, MLPs are relatively unknown and are largely ignored by the financial media. MLPs are able to sidestep the IRS and pass their earnings directly to shareholders making them the ideal investment for individual investors.  Investing in MLPs also comes with a special tax benefit for MLP dividends which are referred to as distributions. The IRS considers 80-90% of MLP distributions as a return of capital, which means investors can defer taxes on their gains for many years until they sell their shares. MLPs have attracted a diverse set of companies in many industries due to their favorable tax treatment.Below we will analyze three MLPs within the Zacks Oil & Gas – Refining and Marketing – Master Limited Partnerships industry group. This industry group is ranked within the top 7% of all Zacks Ranked Industries. Energy is also leading the charge in the first few trading days this year and was the #1 S&P sector last year.Sunoco LP (SUN)Sunoco is a Master Limited Partnership that distributes motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers, and distributors in more than 30 U.S. states. Founded in 2012 and headquartered in Dallas, TX, Sunoco also leases real estate properties and operates terminal facilities on the Hawaiian Islands.A Zacks #2 Buy stock, SUN has not decreased its dividend since its founding; the company’s current dividend yield is 8.03%. Trading at a relatively undervalued 8.35 forward P/E, SUN has exceeded earnings estimates in four of the past six quarters. SUN is averaging a positive earnings surprise of 47.31% over the past four quarters, supporting its climb of nearly 60% in the past year.Sunoco LP Price, Consensus and EPS Surprise SUN’s distribution networks reflect a strong business and sustainable cash flows which will continue to drive the share price. Sunoco is among the largest motor fuel distributors in the United States. SUN expects fuel volumes for 2021 to have totaled approximately 7.75 billion gallons, rising from the 7.09 billion in 2020.Analysts covering SUN have increased their full-year earnings estimates by 1.1% in the past 60 days. The Zacks Consensus Estimate for 2021 EPS now stands at $6.41, an astounding 743.42% growth rate relative to last year. SUN is scheduled to report earnings on February 16th.Global Partners LP (GLP)Global Partners is engaged in the purchasing, selling, storing, and logistics of transporting gasoline, distillates, oil, renewable fuels, and propane to a wide array of customers in the New England region and New York. Founded in 2005 and based in Waltham, MA, Global Partners has a portfolio of over 1,548 owned, leased, or supplied gasoline stations.GLP has surpassed earnings estimates in 15 out of the last 19 quarters. A Zacks #2 (Buy) stock, this MLP trades at a reasonable 13.79 forward P/E and has a current dividend yield of 9.53%. GLP has posted a trailing four-quarter average earnings beat of +13.4%, most recently beating by +38.71% when the company delivered EPS of $0.86 back in September. GLP has climbed by over 60% in the past year. Global Partners LP Price, Consensus and EPS Surprise Looking into 2022, GLP revenues are anticipated to grow by 25.53% compared to 2021. In the past 60 days, earnings estimates for next year have increased by 28.68%. The Zacks Consensus Estimate for 2022 EPS sits at $1.75, which would represent 56.25% growth relative to last year. GLP is slated to announce quarterly earnings on March 4th.Phillips 66 Partners LP (PSXP)Phillips 66 Partners is an energy company that owns, operates, develops and acquires midstream assets. The company offers transportation, processing, storage, and fractionation of crude oil, petroleum products, and natural gas liquids. PSXP was founded in 2013 and is headquartered in Houston, TX.PSXP has never decreased its dividend since its founding; the MLP’s current yield is 9.22%. The company is relatively undervalued, trading at a 9.24 forward P/E. PSXP most recently reported EPS of $1.00 in October of last year, a 1% positive surprise over consensus. The stock is up nearly 67% in the past year. Phillips 66 Partners LP Price, Consensus and EPS Surprise With a Zacks #2 ranking, Phillips 66 Partners is least exposed to price fluctuations in commodities as it generates stable fee-based revenues under long-term contracts from its diverse base of midstream energy assets across the United States. The partnership’s cash flows are highly stable and predictable which should further support its share price.The Zacks Consensus Estimate for 2022 EPS sits at $4.11, which would translate to growth of 51.1% versus last year. PSXP is scheduled for its next earnings report on February 4th.It’s clear that MLP investing is something that every individual investor should consider. The steady stream of income along with the potential for price appreciation warrant a closer look into adding these MLPs to your portfolio mix. Zacks’ Top Picks to Cash in on Artificial Intelligence This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sunoco LP (SUN): Free Stock Analysis Report Global Partners LP (GLP): Free Stock Analysis Report Phillips 66 Partners LP (PSXP): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 4th, 2022

What"s Behind The Surge In Yields That Sent Tech Stocks Tumbling, And What Happens Next

What's Behind The Surge In Yields That Sent Tech Stocks Tumbling, And What Happens Next For a while it appeared that stocks, and especially giga-techs, were willing to ignore the plungefest in Treasuries and were riding the wave of new capital (some $125 billion according to Goldman) allocated to stocks of all stripes to start the new year. However, it wasn't meant to last, and with yields suffering their biggest 2-day surge since the chaos in March 2020... ... high-duration names, which just happen to be the market's all-important generals, are finally sliding which in a market with as little breadth as this one... ... is a very big problem because as Goldman warned a few weeks ago, a crack in the largest market leaders (the FAAMGs of course) could result in major pain: for those who forgot, the five most popular tech names - AAPL, MSFT, NVDA, TSLA, GOOGL - have contributed 51% of S&P 500 returns since April. And what goes up can just as easily go down if rates rise high - and fast - enough. Which brings us to the big question: what's behind the puke in Treasuries and will it persist? From 30,000 feet, the catalyst for the selling in Treasuries is hardly a surprise: the Fed is all hawked up and with the accelerated taper, rate hikes are scheduled to take place potentially as soon as April, with some speculating that the Fed may hike more than 25bps at a time (we seriously doubt it absent inflation truly spiraling out of control in the coming weeks). More likely, however, the recent yield spike is tactical (flow/positioning/liquidity-driven), and so we go to one of the most fastidious market tacticians, Nomura's Charlie McElligott who in his morning notes today does a post-mortem of the selloff that started yesterday and has continued for much of Tuesday. According to Charlie, the selloff in US Rates and Treasuries turned violent by the US midday on the first day of the new PNL year as bearish bets were re-engaged (with UST 10Y Yields now cleanly through 50, 100 and 200 DMA’s to the upside, while 30Y Yields are nearing a test of the 200 DMA themselves), and shares the following thesis checklist as a list of the drivers behind the move: Inflation “stuck” and currently unrelenting at multi-decade highs, with more Omicron supply-chain snarls further squeezing prices Still above multi-year trend growth in US (Atlanta Fed GDPNow @ 7.641% last) US Employment pushing “near full” again (4.2% U-Rate back to levels last seen pre-COVID) Imminent (obvious) Fed tapering commencement, but now, with actual balance-sheet runoff (QT) potential thereafter in UST and MBS being socialized by some Fed members, all of which would mean the need for actual (gasp) price-discovery for “private side” buyers--including convexity hedgers in Mortgages. Translation: we may very soon discover what the true yield of TSYs should be. Start-of-year resumption of heavy Corp debt issuance calendar @ ~ $11.25B of paper (Street expectations of ~$140B for the full-month of January), with a particularly duration-heavy (> 10 years) WAM seen in yesterday’s paper (note: more of the same today, with another 7 deals early, mostly Financials) Last but not least, we have seen the shift to the market not just pricing-in 3 full FOMC hikes this year, but pulling the liftoff forward almost every day, with the March meeting now ~ 72% “priced” These key drivers behind persistent Treasury weakness were not lost on the market, and as Charlie writes, there was lumpy Duration selling in both Cash and Futs on Monday (especially a notable late-day WN block seller ~ $1.1mm in DV01), which was matched by "particularly aggressive options flows", including what McElligott calls "an eye-wateringly ENORMOUS buyer of TY downside, where HUGE prem was spent on 71k of the TYH2 127 Puts (~1.95% yield target by mid-Feb exp) at nearly ~$5.5mm bp dv01" (here he notes that this was an ADD to a view, with OI on Dec 31st at 161k, but now 231k as of Jan 3rd). The move has led to Treasuries posting their worst start to the year since 2009, sending ripples through markets from Australia to the U.K. Adding to this, and in agreement with point 1 above, Bloomberg adds that Treasury traders "are betting the rapid spread of the omicron variant will increase inflationary pressures in the U.S. economy, rather than weaken them." Specifically, the article looks at 10-year breakeven rates which climbed to as high as 2.66% on Tuesday, the most since November, and up from as low as 2.36% on Dec. 14. Even real rates jumped from as low as -1.13% at the end of 2021 to -0.96% today. “Inflation continues to be the major theme of the market given life with the coronavirus,” said Makoto Noji, chief currency and foreign bond strategist at SMBC Nikko Securities Inc. in Tokyo. There is speculation that “the widening spread of the virus will lead to a decline in labor participation and supply constraints,” he wrote in a research note. So how has this rate puke impacted stocks? Well, as McElligott continues, yesterday there was an outright “Momentum Shock” in the US Equities factor space, with the “Long-Term Momentum” factor absolutely "rekt" -3.5%, a 1d -3.1 std dev move over the past 1Y window and the largest drawdown in the factor since the peak of the meme stock / HF unwind on 1/27/21! Furthermore, the Nomura quant writes that the rally/short-squeeze in “Low Quality/High Vol” stocks seen yesterday - i.e. “Leverage” and “Short Interest” factors booming - was a stark contrast to the recent theme of the grab into “Quality” (high over low), “Size” (large over small), “Low Risk” (over high vol). Putting this together, this end-of-’21 “up in Quality” dynamic noted above was a large part of the blow-up in “Unprofitable Tech/Highly Speculatives” trade seen since the start of Nov ’21 into year-end (as the “short” leg of the trade), but yesterday, all of that “high spec” stuff really squeezed higher again, according to McElligott, as it looks like short books were de-grossed in a major way, while some too simply were taking discretionary punts on “high beta” to play for the January effect raising all boats, but particularly in the stuff which has just been the most beaten-down and ripe for O/P. Of course, this “Momentum shock” reversal (lower in Size, Quality, Low Risk “longs” vs the squeeze in “junk” Leverage / High Vol / Cyclical Value) also meant a frustrating day for hedge fund long & short “Crowding” proxies on the first day of the year, as both suffered outsized losses: Hedge Fund Crowding Factor -0.8% (-1.3 z-score) Hedge Fund L/S Proxy -1.5% (-1.8 z-score) Adding to the confusion, while hedge funds were clearing out their 2021 short-book leftovers, CTA/vol control funds were mechanistically rushing back into stocks, leading to the overall market ramp. According to McElligott's calculations, the Nomura QIS CTA model showed +$16.4B of fresh buying in Global Equities on the day (particularly focused in Asia with the Nikkei signal flipping from “-49% Short” to “+100% Long”—notionally buying +$15.6B, on top of +$800mm in US and and +$100mm in European equity futs). In the US, Nomura's Vol Control model estimated another +$3.8B of S&P futures buying as 1-month Realized Vol continued its collapse with a 6th straight day of buying, and now +$23.3B over the past 2 weeks (take a look at where the VIX is and compare it a month ago (spoiler alert: it has been cut in half). So what happens next? Well, as the Nomura strategist reminds us, next week should see the concentration of the forward buying - with particular focus on tomorrow (he is projecting a 1.0% chg = +$7.8B buying; 0.5% chg = +$14.5B buying; 0.0% chg = +$16.9 buying). Yet mechanistic buying aside, the risk is that with Index Options Gamma- and Delta getting longer/more positive, McElligott warns that we are slowly inching nearer towards “potential for a pullback” territory, and as usual Nomura's clients are urged again to focus on the monthly Op-Ex as the “unclench” catalyst there later mid-month January QQQ $Delta back to $13.2B, 94.9%ile SPX / SPY $Delta back to $291.6B, 80.1%ile In conclusion, the Op-Ex tied “window for a pullback” also corresponds with again “stress-y” vol signals as spot indices trade to new highs, and with “Skew” and “Put Skew” flashing again - but particularly noting that “Term Structure” is screening “extreme” and to the point made at the top of the note on the heavy selling of Vol / optionality.  Translated to plain English, what all of the above means is that instead of waiting until Friday to see where this week's op-ex chips may fall, the market is trading more or less as it should, and high duration giga-techs are dumping as yields are spiking... just as one would expect. The only question is whether this "logical" behavior will continue - one look at the chart below shows that the Nasdaq has a ways to drop if indeed it is allowed - or alternatively, if the remarkable bounceback from every op-ex makes another appearance, and spoos trade solidly back over 4,800 on their way to fresh all-time highs. Tyler Durden Tue, 01/04/2022 - 15:01.....»»

Category: blogSource: zerohedgeJan 4th, 2022

Telecom Stock Roundup: Verizon to Power Smart Glass, AT&T"s EC Approval & More

While Verizon (VZ) will deliver an immersive AR experience in the sports and gaming arena, AT&T (T) secures an unconditional antitrust clearance from the European Commission for WarnerMedia sale. Over the past week, U.S. telecom stocks have witnessed a steady downtrend as the industry appeared to be on a collision course with the aviation sector due to the potential interference of the C-Band spectrum with aviation safety standards. With the C-Band spectrum for 5G expansion slated to take off on Jan 5, the Federal Aviation Administration (“FAA”) has released a ‘Safety Alert for Operators’. The alert includes recommended action in the form of ‘Notice To Air Missions’, primarily based on restrictions issued earlier by the FAA. This, in turn, is likely to significantly affect air cargo and commercial air travel at most of the biggest airports and highest traffic destinations across the country, with airlines warning that about 4% of daily flights are likely to be delayed, canceled, or diverted.     The FAA has raised concerns that the commercial launch of the C-band wireless service in the 3.7-3.98 GHz frequency band could cause the airwaves to interfere with radar or radio altimeter signals that measure the distance between the aircraft and ground. Data from these devices are fed to the cockpit safety system that helps pilots gauge the air safety metrics and prevent mid-air collision, avoid crashes and ensure a safe landing. Consequently, the FAA has issued certain flight restrictions that would prevent pilots from operating the automatic landing option and other cockpit systems during inclement weather conditions. This has put the transportation industry and the broader economy in jeopardy. Although the FCC has argued that both systems could safely co-exist, the impasse is unlikely to resolve anytime soon, fueling uncertainty within the industry.Notable company-specific news that grabbed the spotlight over the past week includes Verizon Communications Inc.’s VZ collaboration with Vuzix and AT&T Inc.’s T approval from European Commission for WarnerMedia sale. Also, Telefónica, S.A. TEF has decided to retrench 2,700 workers in Spain and Vodafone Group Public Limited Company VOD has launched a 5G mobile broadband device.Meanwhile, the U.S. Court of Appeals has supported an FCC move to open up 1,200 MHz of spectrum in the 6GHz band for unlicensed use. The court approval is likely to witness a proliferation of Wi-Fi standards as demand to connect more devices to the network rises exponentially. This, in turn, will facilitate enterprises and service providers to support emerging applications and ensure all connected devices perform at optimum levels.Recap of the Week’s Most Important Stories1.     Verizon recently inked a definitive agreement for an undisclosed amount with Vuzix to deliver an immersive augmented reality (AR) experience in the sports and gaming arena. The first-of-its-kind offering is likely to sow the seeds for future endeavors related to the commercialization of AR technology in various domains.  Per the deal, Vuzix will aim to leverage Verizon’s 5G and edge computing technologies for AR experience in its Shield smart glass. The collaboration is the culmination of a proof-of-concept program that was completed earlier this year, which demonstrated the power of Verizon's 5G and edge computing platform on Vuzix smart glasses in terms of improved response time, longer battery life and increased computing capacity.      2.     AT&T’s game-changing deal with Discovery, Inc. for the divesture of its WarnerMedia business recently got a big boost, with the European Commission granting unconditional antitrust clearance for the transaction. AT&T expects the merger to be completed by mid-2022. The transaction aims to spin off the carrier’s media assets and merge them with the complementary assets of Discovery.The antitrust clearance enables both the companies to move a step closer to the formation of Warner Bros. Discovery, a premium entertainment firm with enviable media content under a single platform. Post completion of the deal, AT&T will receive $43 billion in a combination of cash and debt securities and will own 71% of the new entity, while Discovery will own the remainder. The transaction is expected to enable the carrier to trim its huge debt burden and focus on core businesses. The separation of the media assets is likely to offer the company an opportunity to better align its communications business with a focused total return capital allocation strategy.3.    Telefónica has inked an agreement with local labor unions in Spain to retrench about 15% of its domestic workforce. The strategic decision is aimed at reducing operating costs, lowering debt and improving cash flow for extensive 5G deployment and upgrade of existing network infrastructure.The company is reportedly the third-largest telecom firm in Europe, with a global employee count of approximately 114,000. Telefonica will cut about 2,700 jobs from an estimated workforce of 18,500 in Spain. The voluntary severance package is likely to yield annual savings of more than 230 million euros from 2023. In addition, it is likely to generate positive cash flow in 2022 as the employees exit during the first quarter.4.    Vodafone recently announced the launch of its first-ever 5G mobile broadband device — 5G MiFi. This innovative offering has been specifically designed to cater to the connectivity requirements of customers ‘on the go’. The touchscreen device from Vodafone is ideal for supporting the connectivity of small businesses and it can also be used in the home premises. It is equipped with a simple web interface. It boasts an exceptional 8.5-hour battery life that enables customers to seamlessly share Wi-Fi with up to 32 users or devices, backed by hassle-free configuration.  Price PerformanceThe following table shows the price movement of some of the major telecom stocks over the past week and six months.Image Source: Zacks Investment ResearchIn the past five trading days, Juniper gained the most, with its stock rising 5.4%. Bandwidth has declined the most, with its stock falling 3.1%.Over the past six months, Arista has been the best performer, with its stock appreciating 37.8%, while Bandwidth has declined the most, with its stock falling 94.9%.Over the past six months, the Zacks Telecommunications Services industry has declined 9.1%, while the S&P 500 has rallied 10.8%.Image Source: Zacks Investment ResearchWhat’s Next in the Telecom Space?In addition to 5G deployments and product launches, all eyes will remain glued to how the new year unfurls for the industry and how the administration aims to address the potential deadlock between the aviation and telecom industry. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AT&T Inc. (T): Free Stock Analysis Report Verizon Communications Inc. (VZ): Free Stock Analysis Report Vodafone Group PLC (VOD): Free Stock Analysis Report Telefonica SA (TEF): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJan 2nd, 2022

Bet on These 3 Stocks to Cash in on Soaring Lithium Prices

Rising demand for lithium and scarce supply are driving the price of the silver-grey metal. Amid the upbeat scenario, stocks like ALB, LAC and LTHM are worth investing in. Prices of lithium have been rapidly rising of late. Per Trading Economics Website, prices of lithium carbonate — the main source for lithium — have jumped more than 400% year over year, having topped the all-time highs reached in 2017 and 2018.Rising demand for lithium and scarce supply are driving the price of the silver-grey metal. Amid the trending electric vehicle (EV) revolution, the demand for green vehicles is increasing every passing day. Thus, lithium, being the elemental metal in the manufacturing of EV battery packs, has become a hot commodity these days.The metal is used to manufacture lithium-ion batteries, the most common battery type used to power cutting-edge electric cars. The batteries flaunt a higher energy density than lead-acid or nickel-metal hydride batteries. Their compact size and lightweight make them highly coveted in the automotive industry.Buoyant Prospects of Lithium MarketThe US Geological Survey estimates that more than 70% of the lithium produced worldwide is now used in EV batteries. Thus, amid the rising popularity of EVs, the demand for lithium-ion batteries, which is currently the dominant technology for green vehicles, is burgeoning.Per the International Energy Agency, exponential growth in the EV space is likely to lead to a lithium demand surge of more than 40 times by 2030. Per a report by Mordor Intelligence, an analytics firm, the lithium market size was 280 kilotons in 2020 and is expected to grow, witnessing a CAGR of more than 10% between 2021 and 2026. Per Reuters, lithium demand is set to hit 1 million tons by 2025 and 3 million tons by 2030 from the 320,000 tons registered in 2020.Meanwhile, the supply of this metal is failing to keep at par with the raging demand. Under the scenario, crucial battery material prices have been skyrocketing, and the upward trajectory is set to continue next year.Per Fitch Solutions Country Risk and Industry Research, lithium carbonate prices will average $21,000 per ton in 2022, suggesting a 16.3% rise from this year’s average price.3 Lithium Players to Keep an Eye onHigh lithium price is a boon for lithium producers. With the prices set to soar further, the time is ripe for investors to power their portfolios with lithium stocks. Below we highlight three such stocks, namely Albemarle ALB, Lithium Americas LAC and Livent Corp LTHM, which investors can consider buying to cash in on the rallying lithium prices. Image Source: Zacks Investment Research Albemarle: The Charlotte-based company is one of the leading lithium producers for batteries that power electric vehicles. It produces both types of lithium, carbonate and hydroxide, as ALB sources lithium through its brine and rock mining operations in several countries. The company remains focused on investing in high-return projects to drive productivity. It is well-placed to gain from long-term growth in the battery-grade lithium market. Albemarle should also gain from synergies from the Rockwood acquisition and cost-cut actions.ALB remains committed to maintaining adequate financial flexibility and ample liquidity. It has plenty of cash to fund new projects. The company generates consistent operating profit margins. Its investor-friendly moves are also encouraging. This Zacks Rank #1 (Strong Buy) stock has a market capitalization of $27.2 billion and an expected earnings growth rate of 49.75% for 2022. Over the past year, the stock has gained 58.9%.You can see the complete list of today’s Zacks #1 Rank stocks here.Lithium Americas: The Canada-based company operates as a lithium resource firm. This emerging entrant in the lithium space is not producing any lithium right now. Nonetheless, construction activities at the company’s Caucharí-Olaroz lithium brine project in Argentina continue to advance with production in mid-2022 to eventually produce 40,000 tons per annum of lithium carbonate equivalent.Moreover, as far as the company’s Thacker Pass project in Nevada is concerned, an integrated pilot plant to support enhanced scale and ongoing optimization work is expected to be operational in the first half of 2022.The projects make the company’s long-term prospects promising.Further, this Zacks Rank #3 company’s recent deal to acquire Millennial Lithium, another lithium property developer, for $400 million is a rare opportunity to add a complementary lithium brine project. This will further leverage the company’s expertise in developing Caucharí-Olaroz as the largest new lithium carbonate operation to become operational in upcoming years.LAC has a market capitalization of $3.48 billion and an expected earnings growth rate of 92.33% for the next year. Shares of the company have rallied 135.7% in the past year.Livent: The United States-based company is one of the largest lithium pure plays producing and distributing lithium chemicals. The company operates worldwide and offers lithium compounds for specific requirements, including EV batteries.Livent’s lithium carbonate resource in Argentina provides the company with a unique competitive advantage. Then again, its lithium hydroxide conversion plants in the United States and China help it attract high-profile buyers. LTHM remains on track to deliver near-term capacity expansions. The 5,000-metric-ton hydroxide addition in Bessemer City and initial lithium carbonate expansion of 10,000 metric tons in Argentina are anticipated to start commercial production by the third quarter of 2022 and the first quarter of 2023, respectively.This Zacks Rank #3 company has a market capitalization of roughly $4 billion and an expected earnings growth rate of 173.33% for 2022. Shares of LTHM have rallied 31.5% in the past year. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Albemarle Corporation (ALB): Free Stock Analysis Report Lithium Americas Corp. (LAC): Free Stock Analysis Report Livent Corporation (LTHM): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 2nd, 2022

4 Business Services Stocks That More Than Doubled in 2021

Driven by the sector's rebound on the back of manufacturing and service strength, a few business services stocks have performed well year to date. Notable among them are CAR, CCRN, HSON and IT. Looking back at 2021, we see that it was the year of steady reopening of the economy, boosting both manufacturing and service activities, and of ramped-up vaccinations. While Omicron and Delta variant cases have raised concerns lately, manufacturing and service strength has acted as a tailwind for the Business Services sector, which is a major beneficiary of the broader economy.The sector is currently benefiting from growth in services pertaining to transportation, real estate, rental, leasing, warehousing, retail, wholesale, professional, technical, information, entertainment, finance, healthcare, education, accommodation and food.2021 Trends That Should Prevail in 2022With both manufacturing and service activities remaining in good shape, the demand for business services is expected to continue rising. Notably, the Institute for Supply Management has measured that Manufacturing PMI and Services PMI have clocked the 18th consecutive month of expansion in November. The November Manufacturing PMI touched 61.1%, increasing 0.3 percentage points from the October reading of 60.8%. The November Services PMI registered an all-time high of 69.1%, increasing 2.4 percentage points from October’s reading of 66.7%.Markedly, companies that have established successful work-from-home models, are focused on digital transformation, and have witnessed demand for their services going up or staying constant amid the pandemic-induced mayhem, have performed significantly well this year. With digitization and remote working becoming parts of the new normal, these companies are poised to continue their stellar performance in 2022 as well.4 Business Services Stocks That Warrant a LookHere we have picked four Business Services stocks with Zacks Rank #1 (Strong Buy) or #2 (Buy) that have gained more than 100% in 2021 and have witnessed upward estimate revisions in the past 60 days.Avis Budget Group, Inc. CAR: This car and truck rentals, car sharing, and ancillary services provider has seen its stock skyrocketing 501.6% year to date.Avis Budget remains focused on structurally improving its business amid the pandemic through cost discipline and operational efficiencies. It is trying to improve and expand its relationships with key original equipment manufacturing partners besides maintaining disciplined fleet buy according to customer demand.Further, Avis Budget continues to increase its use of technology and improve its offerings through connected cars, the Avis app and the Avis QuickPass offering to increase cost efficiency and customer satisfaction. Although COVID-19 remains as a major headwind, the improving travel demand trend bodes well for the company.Avis Budget currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its 2022 earnings has been revised more than 100% upward in 60 days’ time to $19.97. You can see the complete list of today’s Zacks #1 Rank stocks here.Avis Budget Group, Inc. Price, Consensus and EPS Surprise Avis Budget Group, Inc. price-consensus-eps-surprise-chart | Avis Budget Group, Inc. QuoteCross Country Healthcare, Inc. CCRN: This provider of talent management and other consulting services for healthcare clients is currently benefiting from the pandemic-induced increase in demand for healthcare staffing, investments in headcount and technology, and an increase in operational effectiveness.Digital transformation and operational efficiency have been enabling the company to cater to the continuously increasing demand in specialties such as emergency room, operating room, labor, pediatrics, and delivery and medical-surgical services. The recent acquisition of Workforce Solutions Group expands Cross Country Healthcare’s go-to-market strategy and strengthens its foothold in the home care market.The Zacks Consensus Estimate for the company’s 2022 earnings is currently pegged at $1.56, having moved 95% north over the past 60 days. This Zacks Rank #1 stock has appreciated a whopping 234.6%, so far this year.Cross Country Healthcare, Inc. Price, Consensus and EPS Surprise Cross Country Healthcare, Inc. price-consensus-eps-surprise-chart | Cross Country Healthcare, Inc. QuoteHudson Global, Inc. HSON: This Zacks Rank #1 company offers talent solutions to multinational companies and government agencies under the Hudson RPO brand. The company’s new business pipeline remains strong and continues to grow.The 2020 acquisition of Coit has significantly expanded Hudon RPO’s foothold in the technology space and contributed $625 million to the company’s third-quarter 2021 adjusted net income. The November 2021 acquisition of Karani is expected to improve Hudson RPO’s global delivery capability, and create new business opportunities in India and other new markets.Shares of Hudson have rallied a massive 166.6% year to date. The Zacks Consensus Estimate for the 2022 bottom line has been revised from $1.25 to $2.22 in the past 60 days, calling for a year-on-year surge of more than 100%.Hudson Global, Inc. Price, Consensus and EPS Surprise Hudson Global, Inc. price-consensus-eps-surprise-chart | Hudson Global, Inc. QuoteGartner, Inc. IT: This research and advisory giant sports a Zacks Rank of 1, at present.Operating in an industry with low barriers to entry, Gartner has an integrated research and consulting team designed to best serve clients’ needs. This enables it to have a competitive advantage over its rivals. Over time, Gartner’s research reports have become indispensable tools for diverse companies across different sectors, fortifying its leading position in the market.The Zacks Consensus Estimate for 2022 EPS has been revised 7.6% upward in the past 60 days. The stock has surged 109.5% in the past year.Gartner, Inc. Price, Consensus and EPS Surprise Gartner, Inc. price-consensus-eps-surprise-chart | Gartner, Inc. Quote Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022? From inception in 2012 through November, the Zacks Top 10 Stocks gained an impressive +962.5% versus the S&P 500’s +329.4%. Now our Director of Research is combing through 4,000 companies covered by the Zacks Rank to handpick the best 10 tickers to buy and hold. Don’t miss your chance to get in on these stocks when they’re released on January 3.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Avis Budget Group, Inc. (CAR): Free Stock Analysis Report Gartner, Inc. (IT): Free Stock Analysis Report Cross Country Healthcare, Inc. (CCRN): Free Stock Analysis Report Hudson Global, Inc. (HSON): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 28th, 2021

S&P 500 Set To Notch New All-Time Closing High: 3 Prosperous Strong Buys

S&P 500 Set To Notch New All-Time Closing High: 3 Prosperous Strong Buys The market has a way of proving the majority wrong. Just when investors thought December wasn’t looking strong, the S&P 500 looks set to post a new all-time closing high in what is historically one of the most bullish seasonal periods of the year.The S&P 500 had been getting repeatedly rejected over the past two months right around the 4715 price level as we can see below. A strong finish into today’s closing bell will signal a break above the trendline, which could lead to further strength as we head into the new year.Image Source: Zacks Investment ResearchAfter skyrocketing more than 100% over the course of a month by early December, volatility has plunged back down to the range seen throughout the majority of the year. The VIX index, widely referred to as the ‘fear gauge’, is now down over 40% from the highs seen in the beginning of the month. As volatility has subsided and fears over the Omicron variant have receded, stocks look ready to continue their uptrend.Rather than attempting to catch a falling knife from a beaten down tech stock, we recommend sticking with leaders that have held up well this year. The Zacks Agriculture – Products industry group is ranked within the top 7% of all 253 industry groups. This industry group has returned 26% on the year and we expect it to outperform the market over the next 3 to 6 months.Image Source: Zacks Investment ResearchHistorical research has illustrated that approximately half of a stock’s return is due to its industry grouping. By focusing on stocks within the top Zacks Ranked Industries, you can dramatically improve your stock-picking success.The Zacks Agriculture – Products industry group also boasts projected EPS growth of 208.52%, far above the 21.15% for the S&P 500. Next, we’ll delve into three companies within this industry group that all sport a Zacks #1 Strong Buy ranking.The Andersons, Inc. (ANDE)The Andersons is a global agricultural company operating in trade, ethanol, plant nutrient, and rail sectors. ANDE operates as a regional grain merchandiser with other diversified businesses such as turf production and general merchandise. Based in Maumee, Ohio, the Andersons maintain grain and production facilities throughout the Midwest and six retail locations in northern and Central Ohio.Trading at a relatively undervalued 13.77 P/E, ANDE has proven that analyst earnings estimates have been far too conservative in the recent past. The company has posted a trailing four-quarter average earnings surprise of +293%. In November, ANDE reported EPS of $0.15, a +225% surprise over consensus. The stock is handily outperforming the market this year with a return of 58.5%.The Andersons, Inc. Price, Consensus and EPS Surprise Analysts covering ANDE are taking notice of this trend and have increased their 2021 EPS estimates by 26.61% in the past 60 days. The Zacks Consensus Estimate for full-year EPS now stands at $2.76, an incredible 2,966.67% growth rate over last year. ANDE is due to report earnings on February 15th, 2022.West Fraser Timber Co. (WFG)West Fraser Timber produces and sells lumber, panels, pulp and papers in the southern U.S. and western Canada. West Fraser Timber exports its lumber to the Far East, Asia, the Caribbean, Europe, the Middle East, and South America. Based in Vancouver, BC, WFG operates a diversified wood business including plywood, newsprint, wood chips, and other residuals.For the value seekers amongst us, WFG is trading at a highly undervalued 3.14 P/E. The company has beaten earnings estimates in each of the last three quarters and has delivered an average positive surprise of 13.65% over the past year. WFG stock has followed suit, climbing 42.3% this year and showing strength as we close out the final trading days of 2021.West Fraser Timber Co. Ltd. Price, Consensus and EPS Surprise Analysts covering the firm have upped their 2021 WFG EPS estimates by 5.09% in the past 60 days. The Zacks Consensus Estimate for full-year earnings is now $28.26, representing a 208.52% increase compared to last year. WFG is scheduled to report quarterly earnings on February 10th.Bunge Limited (BG)Bunge Ltd. operates as a global agribusiness and food company. Founded in 1818 and headquartered in St. Louis, MO, Bunge processes, produces, markets and distributes food on five different continents.Similar the other stocks in this industry group, Bunge is relatively undervalued at a 7.39 P/E and has strung together a notable history of earnings surprises, averaging a +105.73% beat over the past four quarters. BG most recently reported EPS in October of $3.72, a +169.57% surprise over estimates. The consistent earnings beats have supported the stock’s 41% ascent on the year.Bunge Limited Price, Consensus and EPS Surprise What the Zacks Model UnveilsThe Zacks Earnings ESP (Expected Surprise Prediction) seeks to find companies that have recently witnessed positive earnings estimate revision activity. The technique has proven to be very useful in predicting positive surprises. In fact, when combined with a Zacks Rank #3 or better, stocks produced a positive surprise 70% of the time according to our 10-year backtest.BG has an ESP of +3.16%. Our model predicts yet another earnings beat for the upcoming earnings announcement.Analysts covering BG have augmented their full-year earnings estimates by 35.43% over the past 60 days. The Zacks Consensus Estimate for 2021 EPS is currently $12.04, translating to growth of 45.06% over 2020. BG is set to report earnings on February 9th. Zacks’ Top Picks to Cash in on Artificial Intelligence This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Andersons, Inc. (ANDE): Free Stock Analysis Report Bunge Limited (BG): Free Stock Analysis Report West Fraser Timber Co. Ltd. (WFG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 23rd, 2021

Futures Ramp Above 4,700 On Growing Omicron Optimism

Futures Ramp Above 4,700 On Growing Omicron Optimism If you had gone to bed on Thanksgiving after eating a little too much tryptophan and only woken up today, roughly one month later, you would have completely avoided a rollercoaster move in global markets, and much of the omicron panic, with the S&P now trading precisely where it was the night before scattered reports of Omicron in South Africa sparked a global selloff. As of 730am, e-mini S&P futures were trading at exactly 4,700, up 14 points or 0.3% - and once again less than 1% from all time highs - on rising hopes the omicron variant won’t impact global growth even as officials remain cautious about its spread, after studies showed it’s less severe than other strains; Dow Jones futures also rose 0.3% while Nasdaq 100 futures were 0.2% higher. US Treasury yields rose, the 10Y trading at 1.475%, while the USD index traded flat. The  pound rose as traders stepped up bets on a Bank of England rate hike. Soaraing European natural gas prices plunged more than 20% as this year’s rally attracted a flotilla of U.S. cargoes, helping offset lower flows from Russia. U.S. stocks reversed a sharp drop earlier in the week, advancing over the past two days amid signs the omicron variant won’t thwart growth, with consumer confidence rising by more than expected in December. Pfizer Inc.’s Covid-19 pill gained clearance for emergency use in the U.S. on Wednesday and three studies showed omicron appears less likely to land patients in the hospital than the delta strain, fueling optimism.  Adding to the positive newsflow on omicron, lab results indicated a third dose of AstraZeneca Plc’s vaccine significantly boosted antibodies against the strain, and Pfizer Inc.’s Covid-19 pill gained clearance for emergency use in the U.S. “Markets hate uncertainty and not knowing, and when omicron hit the markets, we didn’t know,” Carol Schleif, BMO Family Office deputy chief investment officer, said on Bloomberg Television. “But it seems like it’s edging toward something more positive.” A gauge of global stocks is up more than 2% so far this month, leaving the index 15% higher for the year and on course to surpass 2020’s gain. In U.S. premarket trading, Tesla Inc. shares rose after Chief Executive Officer Elon Musk sold down more of his stake. Nikola gained after the electric-vehicle startup said that more deliveries were to come. Here are some other notable premarket movers today: Novavax (NVAX US) shares jump 5% in U.S. premarket after the biotech firm said that both a vaccine booster dose as well as an omicron-specific shot may be beneficial in helping to protect against the Covid-19 variant. Nikola (NKLA US) rises 3.5% in U.S. premarket trading after the electric-vehicle startup said on Twitter that more deliveries were to come, posting photos of a previous event. Tesla (TSLA US) shares gain 1.1% in U.S. premarket trading after CEO Elon Musk sells down more of his stake, drawing nearer to his pledge of cutting his stake in the EV maker by 10%. JD.com’s (JD US) ADRs slump 9.2% in U.S. premarket trading after Tencent said it plans to hand out more than $16 billion of JD.com shares to its investors as a one-time dividend. SciPlay (SCPL US) the maker of mobile and web games such as Jackpot Party Casino, falls 17% in premarket after ending talks to sell out to majority owner Scientific Games. Shares in tiny biotech stocks soar in U.S. premarket trading in strong volume, amid broad risk-on appetite thanks to positive omicron variant studies, ahead of the holiday period. “Our outlook for the global economy remains positive, but we have preference on developed markets,” Janet Mui, director of investment at Brewin Dolphin Limited, said in an interview with Bloomberg TV. “The economic recovery will continue in the major economies like the U.S., U.K. and the Euro area, thanks to the very high vaccination rates and ongoing rollout of the booster jabs.” Elsewhere, European shares advanced for a third day, with travel shares leading gains. The Euro Stoxx 50 rose 0.6%; travel is the strongest sector with recent studies showing omicron appears less likely to land patients in the hospital than the delta strain. IBEX leads with a 1% gain. Travel and leisure was the top-performing sector in Europe on Thursday amid optimism of fewer hospitalizations linked to the omicron variant of Covid-19. Airlines shruged off a profit warning from Ryanair (+1.1%) that was first reported late in the trading session on Wednesday. British Airways-owner IAG adds 3.7%, Wizz +3.3%, hotelier Whitbread +2.6%, Deutsche Lufthansa +2%, caterer Sodexo +0.8%. Stoxx travel and leisure index also helped by Flutter (+3%) which gains following M&A news Earlier in the session, Asian stocks were on track to gain for a third straight day, bolstered by signs the omicron strain is less severe than previous variants. Tech and communication services sectors led the advance. The MSCI Asia Pacific Index climbed as much as 0.9%, with Tencent as the biggest contributor to gains after a 4.2% rally in Hong Kong. The Chinese internet giant declared a one-time dividend in the form of JD.com’s shares worth more than $16 billion, causing the latter’s stock to plunge intraday by the most on record. Sentiment in Asia improved as a trio of studies found that the omicron variant led to lower hospitalization risk than the delta strain, and Pfizer Inc.’s Covid-19 pill gained clearance for emergency use in the U.S. Separately, lab results indicated a third dose of AstraZeneca’s vaccine significantly boosted antibodies against the strain though another study released late in the Asia day found that three doses of Sinovac’s vaccine weren’t enough to protect against it. “We expect Asian equities to improve their relative performance in 2022 given less demanding valuations and prospects for solid earnings growth,” said Tai Hui, Asia chief market strategist at JPMorgan Asset Management. “Reflation and economic reopening could help to boost earnings expectations for cyclical sectors, especially those focusing on domestic demand.” The MSCI Asia Pacific Index is down almost 4% for the year compared with a 25% gain in the S&P 500 Index, which is trading close to a record high.  Equity benchmarks in the Philippines, Malaysia and Thailand were among the top gainers amid a broad advance in the region Thursday even as trading volumes were thin ahead of the Christmas holidays. Japan stocks also rose as the country looks set to unveil another record annual budget this week. Shares in China also rose even as the country locked down the western city of Xi’an to stamp out a persistent virus outbreak. Equities slumped in Vietnam as Covid-19 cases continued to rise. In rates, fixed income is thin with only ~100k bund futures contracts trading as of 10:50am London. Cash space is under small pressure: bunds and USTs bear steepen, gilts bear flatten with short dates ~5bps cheaper. 10-year TSY yields were around 1.47%, with gilts notably underperforming and are cheaper by around 3bp in the sector vs. Treasuries; curves are steady with U.S. cash spreads broadly within a basis point of Wednesday close. Treasuries drifted lower into early U.S. session as S&P futures grind higher. 10-year futures remained inside Wednesday session lows with yields cheaper by up to 2bp across long-end of the curve. Thursday’s highlights include a packed data slate, and cash markets are due for an early 2pm ET close ahead of Friday’s full closure. In FX, tge Bloomberg dollar index chopped either side of flat. The pound was the stand out mover in London hours, topping the G-10 leaderboard with cable regaining a 1.34 handle. USD/JPY was little changed as it holds above 114. Aussie dollar drifts back towards 0.72 against the greenback. Bloomberg Dollar Spot Index is steady after falling for three days. In commodities, crude futures are little changed; WTI trades near $72.70. Spot gold is rangebound, holding just above $1,800/oz. Most base metals are in the green, drifting higher in quiet trade. LME copper and tin lag. European natural gas prices plunged more than 20% as this year’s rally attracted a flotilla of U.S. cargoes, helping offset lower flows from Russia. Looking at today's calendar, we get personal spending and income as well as a new look at inflation data, including the Fed’s preferred price measure -- the change in the core personal consumption expenditures price index -- and jobless claims. We also get the latest Durable goods orders, UMichigan sentiment and new home sales prints. Market Snapshot S&P 500 futures up 0.1% to 4,692.00 STOXX Europe 600 up 0.4% to 480.16 German 10Y yield little changed at -0.28% Euro little changed at $1.1317 MXAP up 0.9% to 192.23 MXAPJ up 0.8% to 623.33 Nikkei up 0.8% to 28,798.37 Topix up 0.9% to 1,989.43 Hang Seng Index up 0.4% to 23,193.64 Shanghai Composite up 0.6% to 3,643.34 Sensex up 0.7% to 57,350.50 Australia S&P/ASX 200 up 0.3% to 7,387.57 Kospi up 0.5% to 2,998.17 Brent Futures down 0.4% to $74.99/bbl Gold spot up 0.2% to $1,807.61 U.S. Dollar Index little changed at 96.16 Top Overnight News from Bloomberg The highly-mutated omicron variant appears less likely to land patients in the hospital with Covid-19 than the delta strain, according to preliminary data from a trio of studies France reported a jump in Covid-19 infections as the fast-spreading omicron variant tightens its grip on Europe The Chinese yuan is having a greater impact on its emerging-market counterparts than ever before and may play a crucial role in determining their performance in the coming year New Prime Minister Fumio Kishida’s rhetoric of distributing wealth more equally appears to signal a change of priorities for post-pandemic Japan that may run counter to plans to improve the country’s presence as an international financial hub Oil settled at the highest level in nearly a month after U.S. crude stockpiles decreased and economic data pushed equities higher A more detailed look at global markets courtesy of Newsquawk Asia-Pac equities traded modestly higher amid some tailwinds from Wall Street in holiday-thinned trade and the absence of fresh catalysts. The US majors closed in the green across the board, with the S&P 500 and Nasdaq propelled higher by Tesla shares which jumped 7.5% to regain USD 1tln market cap. US equity futures resumed trade relatively flat with an upside bias. In APAC, the ASX 200 (+0.3%) was supported by its gold miners following the recent gains in the yellow metal. Japan’s Nikkei 225 (+0.6%) was underpinned by its mining names, while South Korea’s KOSPI (+0.2%) saw gains in Tech mostly offset by losses in Autos. The Hang Seng (+0.3%) and Shanghai Comp (+0.2%) quickly dipped at the open into modest negative territory but later recovered. The overnight focus was on Tencent declaring an interim dividend payable in JD.com shares – which would reduce Tencent's holding of JD to about 2.3% vs prev. nearly 17% reported earlier this month. JD.com shares extended downside in early trade to losses of over 10%, whilst Tencent rose over 3%. US 10yr Treasury futures traded with no firm direction overnight despite the mild positivity seen across APAC stocks, with the debt now looking ahead to the November PCE report. Top Asian News Asian Stocks Head for Third Day of Gains as Tencent Shares Rally Alibaba-Backed RoboSense Said to Pick JPMorgan for Hong Kong IPO Foreigners Haven’t Finished Selling India Stocks: Street Wrap Asia Traders Are Most Bullish Stocks, Europe Least: Markets Live European bourses are firmer in very thin trading conditions, with a distinct holiday-feel setting in. News flow has been minimal, and remains focused on the familiar themes of Omicron and geopolitics. The Euro Stoxx 50 trades around +0.5%, after a constructive handover from Asia, although there are some very modest regional discrepancies. Sectors are predominantly in the green, with the likes of Travel & Leisure, Oil & Gas, and Autos benefitting from the generally constructive tone of news flow around Omicron. US futures are firmer, though the magnitude is limited, and benchmarks have essentially been in a holding pattern since the US cash close on Wednesday. Top European News Spain Revises GDP Growth Sharply Higher After Data Doubts Traders Ramp Up BOE Bets to See Key Rate at 1.25% Next Year U.K. PM Not Expected to Announce Post-Xmas Curbs This Week: Sky Pound Reaches One-Month High After BOE Rate Hike Bets Increase In FX, in stark contrast to this time yesterday, the Dollar index is trying to grind higher from a fractionally firmer base between 96.018-199 parameters, though well below Tuesday’s range amidst an ongoing improvement in overall risk sentiment based on the latest Omicron analysis. In short, studies continue to find lower hospital admissions and generally less acute symptoms even though the mutation is more virulent, while the current batch of vaccines provide varying degrees of protection and new drugs designed specifically for the new strain are in the pipeline. On the fundamental front, the final full trading day before the Xmas break contains some potential market-moving US data, including the Fed’s preferred inflation measure, core PCE, plus jobless claims, new home sales and the often volatile durable goods. NZD/GBP/AUD - The Kiwi, Pound and Aussie have all picked up where they left off on Wednesday, with impetus from the aforementioned positive market tone allied to increasingly bullish technical impulses. Indeed, Nzd/Usd didn’t encounter much in the way of psychological resistance at 0.6800, while Sterling has breached 1.3350 more emphatically to expose/probe 1.3400 and Aud/Usd overcame any sentimentality that might have hampered its progress beyond 0.7200. Cable has also advanced with the aid of Eur/Gbp tailwinds as the cross approaches 0.8450 following sell orders above, and an element of relief after reports suggesting that UK PM Johnson is now likely to hold off from making any further decisions on pandemic measures until after Xmas. Back down under, some good news for the Aussie via a pickup in private sector credit and loans for housing. CAD/EUR - Both narrowly mixed vs their US counterpart, but the Loonie has extended its rebound towards 1.2800 in advance of Canadian monthly GDP and average weekly earnings, while the Euro is forming a firmer base on the 1.1300 handle as EGBs continue to underperform/outperform in futures and cash terms respectively. However, Eur/Usd topped out around 1.1341/2 again and may be wary of decent option expiry interest between 1.1330-40 in 1.3 bn as much as 1.6 bn rolling off at 1.1300-05. CHF/JPY - The Franc and Yen are still lagging on risk factors and their carry characteristics, with the former unable to sustain advances through 0.9200 against the Buck and the latter failing to overcome offers/resistance into 114.00. Hence, Usd/Jpy remains poised for more attempts to scale the next Fib retracement at 114.38 in the run up to Japanese inflation data and post-remarks from BoJ Kuroda who adhered to pretty standard lines on currency matters. To recap, he repeated that FX rates must move in a stable fashion and reflect economic fundamentals, while the negative impact of a weak Jpy on Japanese household income may be increasing, though the benefits outweigh the demerits. In commodities, crude benchmarks continue to see modest pressure that crept in during APAC trade; Brent is pivoting USD 75.00/bbl, with losses of circa USD 0.30/bbl. News flow has been minimal. Russia’s President Putin is making some geopolitical noises, although he is largely reiterating familiar themes. Elsewhere, Exxon’s (XOM) Baytown complex (560k BPD capacity) in Texas reported a fire at a gasoline component processing unit; reports thus far indicate no facility impact from this incident. Moving to metals, spot gold and silver remain contained as the yellow metal holds onto the USD 1800/oz mark it reclaimed amid USD weakness in APAC hours. While base metals are firmer but again within familiar ranges. Russian President Putin says Russia meets gas supply obligations under long-term deals, prior to providing gas to spot markets; adds that Gazprom has not booked gas via the Yamal-Europe line due to a lack of requests, pipeline in reverse mode. Europe has created its own gas problems, should resolve this themselves; are prepared to assist.Germany is selling Russian gas to Poland, think it ends up in Ukraine. Exxon (XOM) Baytown complex (560k BPD capacity) in Texas has reported a fire at the facility, according to the community alert system; Some injuries have been reported following a 'major industrial accident' at the Exxon (XOM) Baytown complex (560k BPD capacity) in Texas, via the Harris County Sheriff - No reports to evacuate/shelter in place after the fire. Based on current information, no adverse impact. US Event Calendar 8:30am: Dec. Initial Jobless Claims, est. 205,000, prior 206,000; Continuing Claims, est. 1.84m, prior 1.85m 8:30am: Nov. Personal Income, est. 0.4%, prior 0.5% Personal Spending, est. 0.6%, prior 1.3% 8:30am: Nov. PCE Deflator MoM, est. 0.6%, prior 0.6%; YoY, est. 5.7%, prior 5.0% PCE Core Deflator MoM, est. 0.4%, prior 0.4%; YoY, est. 4.5%, prior 4.1% 8:30am: Nov. Durable Goods Orders, est. 1.8%, prior -0.4% Durables-Less Transportation, est. 0.6%, prior 0.5% Cap Goods Orders Nondef Ex Air, est. 0.7%, prior 0.7% Cap Goods Ship Nondef Ex Air, est. 0.6%, prior 0.4% 10am: Nov. New Home Sales MoM, est. 3.3%, prior 0.4% 10am: Dec. U. of Mich. Sentiment, est. 70.4, prior 70.4 Current Conditions, prior 74.6 Expectations, prior 67.8 1 Yr Inflation, est. 4.9%, prior 4.9%; 5-10 Yr Inflation, prior 3.0%; 10am: Nov. New Home Sales, est. 770,000, prior 745,000 Tyler Durden Thu, 12/23/2021 - 08:06.....»»

Category: blogSource: zerohedgeDec 23rd, 2021

Reminiscences of the Tech Bubble: 3 Former Darlings Eclipsing Prior Highs

3 Former Tech Darlings Eclipsing Prior Highs The Nasdaq Composite has a history of outperforming during bullish cycles and underperforming in bear markets. While the index is underperforming the S&P 500 this year, the past has illustrated that these periods of relative underperformance don’t tend to last very long.Both indexes are showing weak overall breadth. Only 39.1% of stocks in the S&P are trading above their 50-day moving average. The lagging Nasdaq is less than half that – just 17.5% of stocks are above their respective 50-day moving averages.Back in the late ‘90s, many technology stocks increased drastically in price and experienced stretched valuations. Breadth in the major indexes was much stronger at the time as most stocks were up.We know what happened next – stocks cratered as the Nasdaq fell into a multi-year descent. Financial media gurus claimed in the years that followed that even the biggest names would never see those high prices ever again.Image Source: Zacks Investment ResearchYet here we are, 20 years in the making, with a select few of the tech bubble darlings making new all-time highs. Many companies from that era were not structured to handle an economic downturn and didn’t survive to tell the tale. But the ones that are still here have proven time and again that they have what it takes to succeed through the different phases of the economic cycle.These companies have adapted to changing times. They have been able to withstand market shocks, all the while consistently increasing revenues and rewarding shareholders. At Zacks, our job is to help you identify these stocks that are outperforming the market. Our proprietary model detects positive changes in individual company fundamentals, allowing our subscribers the opportunity to benefit from the stock’s future price appreciation.Buying a stock at the right time and building a profit cushion makes it much easier to hold through the inevitable corrections. Unlike many investors in the tech bubble who rode the whole way down, at Zacks we also alert you to profit-taking opportunities and outright sell signals, helping you not just make money – but keep it as well.The three former tech sweethearts we will discuss below have all surged past the highs from two decades ago and are holding up well through the recent volatility. Stocks that emerge from volatile periods relatively unscathed tend to continue their outperformance.Qualcomm, Inc. (QCOM)Qualcomm is a global leader in next-generation wireless technologies. Qualcomms’ businesses include Qualcomm Technologies which handles its engineering, research and development functions; the company’s semiconductor business, QCT; and the licensing arm, QTL. Headquartered in San Diego, CA, QCOM designs, manufactures, and markets digital wireless telecom products including integrated circuits, wireless voice and data communications software, as well as global positioning system (GPS) products.A Zacks #2 Buy stock, QCOM has either met or beaten earnings estimates in each of the last 28 quarters. The company has produced a trailing four-quarter average earnings surprise of +11.23%. QCOM most recently reported EPS of $2.24 back in November, an +8.74% surprise over consensus.Qualcomm (QCOM) Price, Consensus and EPS SurpriseImage Source: Zacks Investment ResearchQCOM continues to benefit from solid 5G traction and a surge in demand for its essential products and services that are the foundation for digital transformation in the cloud economy. The stock broke out of a long base in November and last week printed a fresh high as most stocks fell.What the Zacks Model RevealsThe Zacks Earnings ESP (Expected Surprise Prediction) identifies companies that have recently witnessed positive earnings estimate revision activity. This more recent information can be a better predictor of the future and give investors a leg up during earnings season. In fact, when combining a Zacks #3 rank or better along with a positive Earnings ESP, stocks produced a positive surprise 70% of the time.QCOM’s Earnings ESP is +0.87%. Analysts are in agreement in terms of earnings revisions and increased their estimates in the past 60 days for both the current fiscal year (+14.04%) as well as next year (+17.62%). The Zacks Consensus Estimate for the present full-year EPS now stands at $10.48, a 22.72% growth rate over last year. QCOM is slated to report quarterly earnings on February 2nd, 2022.Motorola Solutions, Inc. (MSI)Motorola Solutions provides communication and networking equipment, devices, software and services. Based in Chicago, IL, Motorola Solutions has a strong market position in various areas including bar code scanning, wireless infrastructure gear, and government communications.MSI operates through two divisions – Government and Enterprise. The Government segment develops radio systems, devices and control centers for governments around the world. The Enterprise segment is focused on mobile computing systems, advance data capture and wireless networks. Motorola management expects continued strength across video security and devices and is well-positioned to benefit from organic growth and acquisition initiatives.MSI has also displayed an impressive track record in terms of earnings surprises, beating estimates for the past seven years running. The company has delivered an average surprise of +9.49% over the past four quarters. MSI delivered a 12.89% surprise in November when it reported EPS of $2.19 for the quarter ending in September.Motorola Solutions (MSI) Price, Consensus and EPS SurpriseImage Source: Zacks Investment ResearchMSI boasts one of the more attractive charts this year as the stock has advanced 53.6% with very little volatility. The stock is clearly in a strong uptrend and continues to make a series of new highs even as the major indices have taken a breather.The Zacks Consensus Estimate for 2021 EPS stands at $9.04, representing 17.56% growth over 2020. MSI will report earnings on February 3rd.Clearfield, Inc. (CLFD)Clearfield designs, manufactures and distributes fiber optic management, along with protection and associated products for communication networks. CLFD features the FieldSmart fiber management platform, which includes its latest generation Fiber Distribution System and Fiber Scalability Center. These product lines support a wide range of panel configurations, densities, and connectors. Headquartered in Minneapolis, MN, Clearfield deploys millions of fiber ports annually.CLFD sports a Zacks #2 Buy ranking and has weathered the recent volatility extremely well. The stock has soared nearly 200% this year and is showing no signs of slowing down, hitting a new all-time high today.Clearfield (CLFD) Price, Consensus and EPS SurpriseImage Source: Zacks Investment ResearchCLFD has surpassed earnings estimates in each of the past six quarters. The company is averaging a +50.77% surprise over the past year, most recently reporting EPS of $0.53 in November – a +29.27% surprise over estimates.The stock has seen positive earnings estimate revision activity, with analysts upping their 2021 EPS estimates by +8.82% in the last 60 days. The Zacks Consensus Estimate for current year EPS sits at $1.85, translating to 25.85% growth over 2020. CLFD is due to report earnings next month on January 27th.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 QUALCOMM Incorporated (QCOM): Free Stock Analysis Report Motorola Solutions, Inc. (MSI): Free Stock Analysis Report Clearfield, Inc. (CLFD): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 21st, 2021

The Great Reconciliation Of Asset Prices In 2022

The Great Reconciliation Of Asset Prices In 2022 Authored by Michael Pento via PentoPort.com, The coming new year will be fraught with risk due to the removal of central bank and government supports. This could very likely lead to the collapse of the most overvalued stock market in history. According to the Conference Board, US economic growth is set to slow from 5.5% annual growth for all of 2021, to 3.5% during 2022. Of course, Wall Street apologists almost never predict a recession until we are in the middle of one. Nevertheless, it is clear that the growth of the economy will slow significantly next year. And, in the view of Pento Portfolio Strategies, the risk of a recession and an asset bubble collapse is high. S&P 500 EPS growth will plunge from 45% this year, to just 5-6% in ’22. Again, this is the optimistic view that leaves a great deal of room for error to the downside and virtually zero to the upside. After all, you can only open up an economy once following a global pandemic, and that already happened this year. And, it will be nearly impossible to comp the previous two years’ $6 trillion fiscal support, along with the $4.6 trillion expansion of the monetary base. We recently learned from the Bureau of Labor Statistics (BLS) that Consumer Price Inflation (CPI) surged by 6.8%, and Producer Price Inflation (PPI) shot up by 9.6% y/y in November. This helped to send Real Average Hourly Earnings down by 1.9 percent from November 2020 to 2021. CPI is running at a 40-year high and is at a rate that is 3.4 times higher than the Fed’s asinine 2% target. Of course, the clueless Fed finally started reacting to all this inflation by announcing at the December FOMC meeting that it would be speeding up the pace of its taper by two times. But this is happening just when the rate of inflation is actually peaking. In reality, Fed-Head Jerome Powell had no choice but to expedite the tapering of his QE program. After all, it is an untenable notion that the Fed should be adding to the supply of money at a breakneck pace when CPI is the highest since 1982. But without question, Mr. Powell deserves much derision for waiting until inflation reached a multi-decade high before starting to taper asset purchases, let alone begin to raise interest rates off the current level of 0%. It will take (ten) 25 basis point rate hikes to reach a 2.5% Fed Funds Rate (FFR), which the FOMC now regards as a neutral overnight lending rate. Powell believes a neutral FFR would be 50 bps above the FOMC’s 2% inflation target—assuming inflation falls to that level. In spite of these plans, the chances are very small that the Fed will end up being able to hike rates very much at all before the entire artificial economic construct comes crashing down. This is because the yield curve is already rapidly heading towards inversion even before the tapering of QE has really even begun. An inverted yield curve is a predictor of a recession that has worked 100% of the time. The spread between 2 and 10-year Notes has already contracted from 159 bps at the end of March to just about 75 bps today. Meaning, by the time the QE taper is consummated, there probably won’t be very much room at all to hike rates before an inversion takes place. But regardless of the Fed’s feckless nature, the fact remains that the biggest buyer and direct supporter of Mortgage-Backed Securities and Treasury Bonds, along with its stated support of corporate debt (including Junk bonds), will be exiting the market entirely come March ‘22. This leaves a tremendously dangerous vacuum in place, especially in non-government-backed debt. The Fed’s QE program has kept the massive real estate and equity bubbles afloat, as well as the $12 trillion worth of Business debt from imploding. But Powell’s Put has expired because inflation is now a big problem. Then, you must factor in the stubborn COVID Delta variant and the new and more contagious Omicron mutation, which Mr. Powell now views as potentially adding upward pressure on inflation. This could cause the Fed to tighten its monetary policies even more quickly. The consumer will also be left with the complete lack of any fiscal support of any significance next year, after receiving $50k on average per American family over the previous two years. The truth is, the solvency of nearly every developed nation on earth is contingent on interest rates that remain in the sub-basement of history–AKA, record lows and around zero percent. This is only possible if central banks maintain complete domination of free-market forces and keep their hydraulic presses down on yields. Let’s be honest, without the backstop of these state-owned entities, solvency and inflation concerns would combine to force yields much higher. In the case of the US, with CPI inflation at 6.8% and a national debt-to-income ratio above 725%, it would be impossible for a 10-year Treasury bond to yield just 1.4% without the heavy hand of the Federal Reserve. The point here is that the US has immense solvency and inflation problem now, yet still enjoys record-low borrowing costs thanks to the Fed. However, this function is now changing. A central bank can usually usurp the free market regarding its sovereign borrowing costs as long as both solvency and inflation concerns are quiescent. For example, the Fed has yet to truly exit its yield curve suppression programs, which have existed for the better part of the last two decades, because consumer price inflation was not an issue. This is true even though our Nation’s debt to GDP ratio is higher today than any time since WWII. Up until this point, that growing trend towards insolvency has been veiled thanks to the central bank’s interventions. But the resurgence of inflation, in conjunction with that humongous debt burden, has become extremely problematic. In the absence of inflation, central banks have been able to print enough money to ameliorate recessions, bear markets, real estate debacles, and solvency concerns–such as the European debt crisis circa 2012. Where Bond yields in the southern periphery soared to 40% before European Central Bank chief Mario Draghi promised to monetize the debt issues away. Again, he could only accomplish that because inflation was not a concern a decade ago in the Eurozone. Turning back to the US, the next recession, which is likely to occur in ’22, will cause solvency concerns to spike as revenue collapses and the National Debt-to-Federal-income ratio soars. However, this time around the Fed’s ability to monetize away collapsing asset prices and crumbling economic growth will be fettered by an inflation rate that is already many times greater than it is comfortable with. That leaves the Fed and Treasury with a dangerous dilemma: allow asset prices and the economy to implode, which will certainly fix the inflation problem; but will most likely lead to a depression. Or, try and pull the economy and assets higher by once again borrowing and printing multiple trillions of dollars, which will send the rate of inflation skyrocketing from its 40-year high. That will risk destroying confidence in the USD and any faith that remains in the bond market. Therefore, the stock market and economy would collapse anyway as inexorably rising inflation pulls yields on sovereign, municipal and corporate bonds ever higher. Wall Street’s perma-bulls will never admit that the Fed’s Put has now expired. Of course, the Powell Pivot will indeed happen once again as he continues to meander between hawkish and dovish depending on the lagging economic data he receives. But his next pivot back to an uber dove will only occur ex-post the Great Reconciliation of Asset Prices. This is why a buy-and-hold strategy no longer works and why identifying inflation and deflation cycles has become so critical. *  *  * Michael Pento is the President and Founder of Pento Portfolio Strategies, produces the weekly podcast called, “The Mid-week Reality Check”  and Author of the book “The Coming Bond Market Collapse.” Tyler Durden Tue, 12/21/2021 - 08:44.....»»

Category: blogSource: zerohedgeDec 21st, 2021

Medtronic"s (MDT) INVOS System Gets FDA 510 (k) Clearance

Medtronic's (MDT) INVOS 7100 system can deliver key signals to pediatric clinicians for making time-sensitive decisions Medtronic plc MDT recently announced the receipt of the FDA 510 (k) clearance for its INVOS 7100 cerebral/somatic oximetry system for children from birth to age 18. The INVOS 7100 system with pediatric indications will be available for commercial use in spring 2022 across the globe.The receipt of the FDA 510(k) clearance for the INVOS 7100 cerebral/somatic oximetry system is likely to bolster Medtronic’s patient monitoring business, which is part of the company’s Medical Surgical Portfolio.More on INVOS SystemThe INVOS system is designed to pick up crucial signals to inform time-sensitive decisions by pediatric clinicians. These signals are associated with hemodynamic management, ventilation and resuscitation for premature infants, neonates, children and other patients treated by pediatric clinicians.The INVOS 7100 system delivers first-alert performance with unique algorithms for measuring acute alterations in hemodynamics, regional oxygen saturation and oxygen metabolism.  The system offers continuous, non-invasive readings of organ-specific regional blood oxygen levels in up to four site-specific areas as selected by the care team as well as oxygen saturation from vascular beds to evaluate organs individually or in combination to track brain/body perfusion shifts.Significance of the INVOS SystemPer Medtronic’s management, the INVOS 7100 system can alert clinicians to changes in patient condition before traditional monitored parameters can even react. Moreover, the INVOS 7100 system allows clinicians to decide if intervention is necessary, which acts as a core element in successful outcomes.Image Source: Zacks Investment ResearchFurther, the FDA clearance expands the use of the INVOS 7100 system, helping clinicians better monitor organ-specific oxygen levels and detect warnings signs for neonates and children in advance.Industry ProspectsPer a report by Market Research Future, the global cerebral oximetry monitoring market was $130 million in 2018 and is projected to see a CAGR of 7.1% by 2024. Increasing demand for non-invasive procedures and rising penetration in surgical procedures are the factors driving the market.Recent DevelopmentsIn December 2021, Medtronic’s subsidiary, Medtronic Canada ULC, received a Health Canada license for the Hugo robotic-assisted surgery (RAS) system for utilization in urologic and gynecologic laparoscopic surgical procedures. The Hugo RAS system is a modular, multi-quadrant platform that brings together wristed instruments, 3D visualization and a cloud-based surgical video capture option in Touch Surgery Enterprise.In the same month, Medtronic Canada ULC received a Health Canada license for the GI Genius intelligent endoscopy module. The GI Genius is a computer-aided detection (CADe) system that employs artificial intelligence (AI) to highlight colon regions that may have visual characteristics associated with various forms of mucosal abnormalities.Price PerformanceShares of the company have lost 12.1% in a year against the industry's decline of 6.2%.Zacks Rank and Key PicksMedtronic currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Few better-ranked stocks from the broader medical space are Thermo Fisher Scientific Inc. TMO, Laboratory Corporation of America Holdings LH or LabCorp and Medpace Holdings, Inc. MEDP.Thermo Fisher, currently carrying a Zacks Rank #2 (Buy), reported third-quarter 2021 adjusted earnings per share (EPS) of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%.Thermo Fisher has an estimated long-term growth rate of 14%. TMO surpassed estimates in the trailing four quarters, the average surprise being 9.02%.LabCorp, carrying a Zacks Rank #2, reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%.LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.Medpace reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.Medpace has an estimated long-term growth rate of 16.4%. MEDP surpassed estimates in the trailing four quarters, the average surprise being 11.9%. It currently sports a Zacks Rank #2. 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 Laboratory Corporation of America Holdings (LH): Free Stock Analysis Report Medtronic PLC (MDT): Free Stock Analysis Report Thermo Fisher Scientific Inc. (TMO): Free Stock Analysis Report Medpace Holdings, Inc. (MEDP): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 20th, 2021

4 Solid Retail Stocks to Buy in a Challenging Industry

The retail sector is trying to get back on its feet, with help from e-commerce, which is helping stocks like Boot Barn Holdings. (BOOT), Target (TGT), Costco Wholesale (COST) and Tapestry (TPR). The retail sector, which has been trying to make a steady comeback after taking a beating last year, slowed down in November. However, sales still have been growing despite challenges like the supply chain crisis.This saw retail sales growing again in November. Moreover, with the holiday still not over, sales are likely to get a further boost in the coming weeks. Given this situation, stocks like Boot Barn Holdings, Inc.BOOT, Target Corporation TGT, Costco Wholesale Corporation COST and Tapestry, Inc. TPR are likely to benefit in the near term.Retail Sales Grow in NovemberRetail sales, slowed down a bit but still grew 0.3% month over month in November the Commerce Department said on Dec 15. On a year-over-year-basis, retail sales grew 18.2% in November. This marked the fourth straight month of increase, indicating that people are willing to spend more but in a calculated way.Excluding gas and automobiles, retail sales grew 0.2%. The holiday season has always proved good for retailers. Sales haven’t been that impressive this year but there are enough reasons.The holiday season, unlike other years, started earlier this time, which saw people starting buying gifts as early as n October. Also, people are aware of the supply chain crisis, which saw them begin shopping for the holiday season a lot earlier. Retail sales thus registered its best figures in seven months in October, jumping an unexpected 1.8%.This somewhat slowed down the retail sales figures in November but overall retail sales still managed to grow, indicating that the economy is on track for a faster recovery.Retail Sector Poised to GrowThe supply chain crisis is just one of the many challenges being faced by several sectors, including retail, in the United States. People have continued to spend despite skyrocketing prices, helping the retail space. Earlier this month, the Labor Department said that the consumer price index jumped a staggering 6.4%, the biggest year-over-year jump since 1982.The retail sector had been left battered and bruised last year due to the pandemic. Since then, the sector has been trying to bounce back, thanks to e-commerce, which has so far played a major role in saving thousands of retailers.The pandemic also saw people shifting their shopping habits, as most people are shopping online. However, retail sales remained unchanged in November for the first time in months.With the economy opening, people have also been spending on holidaying and recreational activities. This saw both apparel and sales at restaurants and bars jump in November. Apparel sales grew 0.5%, while sales at restaurants increased 1% in November.Our Choices The retail sector is presently facing a number of challenges but its growth hasn’t stagnated, which is a good sign. In fact, with the economy still reopening and the holiday season far from over, the sector is poised to grow in the near term. Given this scenario, it would be ideal to invest in retail stocks with a strong online presence. We have hand-picked four stocks for you. Each of the stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Boot Barn Holdings, Inc. operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. BOOT’s products include boots, denim, western shirts, cowboy hats, belts and belt buckles, and western-style jewelry and accessories. Boot Barn sells its products through bootbarn.com, an e-commerce Website. Boot Barn Holdings’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 25.7% over the past 60 days. Shares of BOOT have gained 22.9% in the past three months. Boot Barn Holdings carries a Zacks Rank #1.Tapestry, Inc. is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. TPR offers lifestyle products, which include handbags, women’s and men’s accessories, footwear, jewelry, seasonal apparel collections, sunwear, travel bags, fragrance and watches. Tapestry reported stronger-than-expected first-quarter fiscal 2022 earnings, thanks to robust demand and strong customer engagement. TPR posted first-quarter adjusted earnings of 82 cents a share, beating the Zacks Consensus Estimate of 69 cents.Tapestry’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 11.5% over the past 60 days. Shares of TPR have gained 2.1% in the past three months. Tapestry sports a Zacks Rank #1.Costco Wholesale Corporation sells high volumes of food and general merchandise (including household products and appliances) at discounted prices through membership warehouses. Costco is one of the largest warehouse club operators in the United States. COST also operates e-commerce websites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.Costco Wholesale Corporation’s expected earnings growth rate for the current year is 13.2%. The Zacks Consensus Estimate for current-year earnings improved 5.6% over the past 60 days. Shares of COST have gained 19.2% in the past 30 days. Costco Wholesale Corporation has a Zacks Rank #2.Target Corporation has evolved from being a pure brick & mortar retailer to an omni-channel entity. TGT has been investing in technologies, improving websites and mobile apps, and modernizing the supply chain to keep pace with the changing retail landscape and better compete with pure e-commerce players.Target Corporation reported third-quarter fiscal 2021 earnings of adjusted earnings of $3.03 per share, beating the Zacks Consensus Estimate of $2.87 and rising 8.7% from the year-ago period. TGT’s total revenues for the quarter came in at $25,652 million, increasing 13.3% year over year and surpassing the Zacks Consensus Estimate of $24,906 million. Target Corporation’s expected earnings growth rate for the current year is 40%. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the past 60 days. Shares of TGT have advanced 26.5% year to date. Target carries a Zacks Rank #2. 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 Target Corporation (TGT): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report Tapestry, Inc. (TPR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 20th, 2021

Robinhood: After A Terrible IPO Year, Is It Ripe For A Buyout?

Robinhood: After A Terrible IPO Year, Is It Ripe For A Buyout? Submitted by QTR's Fringe Finance Two weeks ago, I wrote about why I was nibbling shares of a name that I thought was a potential buyout candidate in the future and how I planned on adding more shares if the price of the company’s stock fell lower. Last week, I’ve found a semi-similar situation. In addition to last week’s writeup, there’s now a second name that I am entertaining as a potential buyout candidate, should it fall much more. As one of my readers was quick to point out at the bottom of my recent writeup pitching it as a potential buyout candidate, it wasn’t a “Benjamin Graham-style” pitch for a buyout that was based on earnings. It was based on synergies, top line growth and competitive forces in what is still a mutating industry (retail and e-commerce). It wasn’t a name I was looking at FCF and earnings for to justify my reasoning. I was looking at comparative P/S ratios for other names in its industry and was realizing that: The industry is likely going to continue to consolidate Nobody really focuses on what this company did specifically and that it would make for a good option for any other type of name in its industry that wants to expand their foothold Today’s idea, Robinhood Markets (HOOD) is obviously also not a “Benjamin Graham-style” idea. Its financials are ugly, but it’s in an industry that is aggressively consolidating and is led by investment banks that are much larger than it is and companies like the $150 billion Charles Schwab. Consolidation in the industry has been plentiful. Ameritrade, which had about 11 million users at the time, was recently bought out for $22 billion by Schwab. eTrade, which had about 22 million users at the middle of this year, was recently bought out for $13 billion by Morgan Stanley. If you think that Robinhood is at the forefront of a “new generation” of investing, its $16 billion market cap: …with its more than 22 million total funded accounts and 18.9 million MAUs, starts to potentially look interesting to bigger players in the industry. Remember, I was harshly critical of Robinhood just 3 months ago in October, calling the name a short while it was near $40 and while ARK’s Cathie Wood was still “buying the dip” that wasn’t really even a dip. I wrote: Robinhood had trouble finding a bid at its $37/share valuation when it went public and, since then, has done nothing but reported Q2 earnings that included a warning about a slowdown in trading activity, either setting the stage for a rougher Q3 or sandbagging. Between the valuation skyrocketing in the midst of poor earnings and the outstanding risks, Robinhood makes for what I believe to be an obvious short leg of this pair trade. But today’s price for Robinhood - in the teens - is an actual dip. The stock is trading at almost a 50% “discount” to its IPO price and more than 50% off its highs back in August. In October, I explained that despite the fact that Cathie Wood was “buying the dip” in Robinhood that the stock was still vastly overpriced and that I felt it belonged in the high $20 range: In this case, I believe Robinhood belongs trading closer to a high $20/low $30 handle (again, its overvalued IPO was $37, there’s a huge retail bid in the company and it’s been nothing but bad news since). It has overshot that mark by an order of magnitude, now trading under $20 per share. Don’t get me wrong, however - the risks to owning Robinhood are serious: The company does not make money and looks like it may not any time soon. Despite revenues increasing 35%, in Q3 2021, its net loss was a monstrous $1.32 billion compared to $11 million the year prior. In other words, this is in many ways a risky bet that someone is going to swoop in and “save” Robinhood by buying them out because owning their client base and software is more important than waiting to try and deal with some type of bidding war as the stock goes materially lower. Most of Robinhood’s trading volume lately has come from crypto, which has been extremely volatile and may even wind up simply being a multi-trillion dollar air pocket. Crypto activity declined from record highs in the prior quarter, the company announced during its Q3 2021 report, which was another reason the stock sold off so aggressively. But at a $16 billion market cap, I’ve re-evaluated the name. I definitely don’t want to be short here anymore, and the long thesis is starting to look like a not totally out of whack risk/reward. Some of you may point out that a lot of the criticisms I had about the name in October - that the payment for order flow model is risky and that a lot of its business relies on crypto while its financial results have been ugly – still apply. You are 100% right and these concepts should be taken into account when considering a long position in the name. This is a cash losing business run by a kid that I don’t particularly like with a somewhat questionable business model that can’t seem to elude controversy. Not generally an ideal long candidate… Having said that, let’s talk about potential upside. You may have noticed over the last year or two the only thing the brokerage industry has done is consolidate. Robinhood forced a lot of this change with its zero dollar commission model and names like Ameritrade and  eTrade were both bought out. This type of ongoing race for clients and hunger for consolidation in a extremely competitive industry leads me to believe that appetites for acquisitions must still be high and there have to be some people looking at Robinhood as a potential acquisition at a certain price. Normally if the climate in the industry wasn’t as aggressive, I’d suggest that people may let it fall further and buy it out on the cheap, or maybe even in bankruptcy. But, I think that the climate for consolidation and acquisitions in the industry is too robust for people to let it plunge that far. I could be wrong, and that is worth taking into account. By acquiring Robinhood, not only do you get access to arguably the most popular mobile app for trading, but you get the company’s clients and  you get the “industry standard” when it comes to the no commission model. This means that if you ran a brokerage and wanted to theoretically start to try and re-introduce a commission model, starting with Robinhood would be a good place to “set the standard”. Even without an acquisition, I think if Robinhood brought in a banker as CEO and kicked Tenev to the curb, investors would celebrate and take the company a bit more seriously. The company has yet to do this, but it remains one of the few arrows it has in its quiver. Look, I don’t really care for management, nor do I care for the company‘s financials that much. This isn’t a Benjamin Graham style buyout situation where the company looks cheap on an earnings basis at all. This is an extremely speculative idea for a buyout that carries with it risk of the company stock moving significantly lower, due to there not being any type of floor of free cash flow or earnings. But for right now,  it actually might look appealing to a traditional brokerage that wants to expand its mobile footprint, expand its reach to retail clients and expand its crypto offerings. That is why, as the price of Robinhood moves lower, I’m going to look at it more and more seriously. I am no longer short the name as I was around $40 per share. I remain long Virtu (VIRT), the other leg of my previous pair trade. I still think this stock should be valued between $30 and $40. I also started a small long position in Robinhood  over the last couple of days and will look to add more aggressively proportionate with how much further the stock moves lower. As HOOD’s market cap approaches $10 billion, I think it becomes “cheap” to own its brand equity, software, crypto trading and its client base - even with its dogshit financials. The bottom line is the company doesn’t make money and carries with it a lot of risk. These aren’t usually the types of names that I like – I am more often than not concerning myself with value. But, in this case, I think if the company gets much cheaper it’s going to look like an opportunity for a competitor with a much larger market cap to just come in and scoop them up. -- This has been a free preview of paid subscriber content. If you enjoy, as always, Zerohedge readers get a 20% discount to my blog at any time, that lasts forever, by clicking here: Get 20% off forever My Disclaimer: I bought a small long position in HOOD over the last week or two and will continue to add if it moves lower, perhaps using LEAPS. I also own some short dated calls. I may add any name mentioned in this article and sell any name mentioned in this piece at any time. None of this is a solicitation to buy or sell securities. These positions can change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot.  Tyler Durden Mon, 12/20/2021 - 05:00.....»»

Category: blogSource: zerohedgeDec 20th, 2021

Futures Ramp On China Stimulus Hopes Ahead Of Central Bank Barrage

Futures Ramp On China Stimulus Hopes Ahead Of Central Bank Barrage U.S. futures rose again, starting the Santa rally predicted over the weekend by Goldman, after the underlying index surged to a record on Friday with risk appetite returning ahead of this week’s barrage of central bank meetings including the Fed on Wednesday, followed by the Bank of England and ECB. Nasdaq 100 futures climbed 0.4% as major technology and internet stocks rose in premarket trading with Apple inching closer to a $3 trillion market valuation; S&P 500 futures rose 11 points or 0.2%; with Dow Jones futures also rising 0.2%. Chinese developers’ bonds and shares experienced a wave of selling after the sudden plunge in Shimao Group's notes restarted concern over the health of the sector 10-year Treasury yields inched lower to 1.4684% and the dollar pushed higher. Bitcoin extended losses toward $48,000 as Binance bailed on plans for a Singapore exchange. Traders pared bets that the BOE will raise rates next year as concerns over fresh Covid restrictions outweighed inflation fears. Risk sentiment got a boost from predictions China will start adding fiscal stimulus in early 2022, said Ipek Ozkardeskaya, a senior analyst at Swissquote. “The chances of a massive hawkish surprise are limited, and the actual expectation doesn’t interfere with equity investors’ craving for a Santa rally to close a record-breaking year with one last record,” she wrote. Indeed, as we have been expecting for much of the past 6 months, China’s top decision makers last week signaled policies may become more supportive of growth next year. Economists predict China will start adding fiscal stimulus in early 2022. US stocks close Friday at a new record after in-line inflation data did not surprise to the upside for the first time in months and spurred bets that the Federal Reserve won’t have to accelerate plans to tighten monetary policy. That came amid a backdrop of uncertainty from the omicron coronavirus variant, a factor that traders are likely to also monitor closely as the week starts. Volatility should remain high as several central banks will decide on interest rates this week, Pierre Veyret, a technical analyst at ActivTrades, said in written comments. The “policies should set the trading tone, providing investors with more clues on next year’s investing environment.” The Federal Reserve on Wednesday is expected to speed up stimulus withdrawal and perhaps open the door to earlier interest-rate hikes in 2022 if price pressures stay near a four-decade peak. After repeated jawboning, it would be a major surprise if the bank doesn't announce a faster tapering, and the bond market will have to adapt to the new approach. “Global equities had a solid run last week and we’ll see if the goodwill lasts into what is a behemoth when it comes to event risk,” Chris Weston, head of research with Pepperstone Financial Pty Ltd., wrote in a note. Omicron and the Fed should dictate sentiment, he added. Meanwhile, in the world of covid, at least 30 U.S. states have reported omicron cases, with Anthony Fauci of course stepping up calls for boosters to increase protection and making pharma CEOs even richer. That said, all cases for which there's available information were asymptomatic or mild, European health chiefs said. That did not stop Boris Johnson from warning that the U.K. faces a tidal wave of infections and set a year-end deadline for its booster program. South Africa's Cyril Ramaphosa tested positive. Here are some of the biggest U.S. movers today: Arena Pharmaceuticals soars after Pfizer agrees to buy it for $100/Shr in Cash Apple shares rose 1%, leaving the stock close to hitting $3t market capitalization if the move holds. Airbnb, Lucid, Zscaler and Datadog shares all rise in U.S. premarket trading with the companies set to be added to the Nasdaq 100 index later this month. Peloton Interactive shares gain after the home-exercise firm put out an advert responding to a scene in the TV show “And Just Like That...” where a character dies using its product. The stock closed 5.4% lower on Friday, the day after the episode aired. TherapeuticsMD fell 25% in premarket trading after the FDA said it couldn’t approve revisions to some manufacturing testing limits for the Annovera birth-control ring requested by the company through a supplemental new drug application. European stocks also advanced, led by technology and mining stocks. The Euro Stoxx 50 rose as much as 1%, DAX outperforming at the margin.  In the U.K., traders are paring back bets on Bank of England rate hikes over the next year as concerns over fresh Covid restrictions outweigh inflation fears. Asian stocks erased an early advance as deepening losses in shares of Chinese property developers and persistent concerns over the omicron coronavirus variant soured sentiment. The MSCI Asia Pacific Index was down 0.2% after having climbed as much as 0.8%. Equity benchmarks in India and South Korea led regional declines. While stocks in China and Hong Kong rallied in morning trade on signals policies may become more pro-growth next year, the Hang Seng Index erased a gain of as much as 1.6%. That was owing to a selloff in real estate names after a plunge in the bonds and shares of Shimao Group sparked renewed concern over the health of the sector. Monday’s trading in Asia also highlighted investor caution as markets confront potential economic risks from omicron’s spread and a series of central bank meetings this week, including the Federal Reserve. The Fed on Wednesday is expected to speed up stimulus withdrawal and perhaps open the door to earlier interest-rate hikes in 2022 if price pressures stay near a four-decade peak. “We are in the last three weeks of the year -- no investor is going to place new bets and are more likely to be taking profits off the table,” said Justin Tang, head of Asian research at United First Partners. “Any negative news will be taken as a reason to press the sell button.” Meanwhile, China’s stocks climbed for the fourth day in five after the nation’s annual economic conference ended Friday with a vow to ensure “stability” and “front load” policies. Foreign investors on Monday added to record purchases of mainland shares last week. Focus now shifts to data due later in the week, including industrial production, retail sales and fixed-asset investment. India’s benchmark stock index dropped, with a fall in Reliance Industries Ltd. weighing on the market. The S&P BSE Sensex slipped 0.9% to close at 58,283.42 in Mumbai, reversing gains of as much as 0.7%. The index had posted its best weekly performance since mid-October on Friday. The NSE Nifty 50 Index also fell 0.8% on Monday. Still, a measure of small-cap companies gained 0.2%. Reliance, the nation’s most valuable company, dropped 2%. Out of 30 shares in the Sensex, 23 fell and seven rose. All but one of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by a gauge of energy companies. “Selling is more evident in benchmark indices as overseas investors are booking at least a part of their profits ahead of the U.S. Fed’s rate-setting meeting that is likely to speed up the policy normalization process,” Abhay Agarwal, founder of Mumbai-based Piper Serica Advisors Pvt., an investment management company with assets of 5 billion rupees under management, said by phone.  The Fed.’s policy announcement is due Wednesday, where it is expected to speed up stimulus withdrawal and perhaps open the door to earlier interest-rate hikes in 2022. “Post-event, we expect to see a reallocation, though at a slower pace as FPIs will factor in the possible hike in interest rates, apart from the tapering of stimulus,” Agarwal said. Locally, the government will release its consumer inflation print for the month of November later on Monday. Inflation likely rose to 5.1% year-on-year in November from 4.5% in the previous month, according to a Bloomberg survey. Fixed income drifts higher with bund and UST curves bull flattening. Treasury yields were lower as the U.S. trading day begins, with the 10Y sliding to 1.46% and short-term little changed, prolonging the curve-flattening trend. With no U.S. economic data slated and Fed speakers silent ahead of Wednesday’s policy meeting, supply is a focal point, and Fed is slated to buy long-end sectors with no coupon supply until next week’s 20-year reopening. 10- to 30-year yields lower by about 1bp-2bp, 10-year by 1.5b at ~1.468%; 2- to 5-year yields little changed, narrowing 2s10s and 5s30s by 1bp-2bp.Peripheral spreads tighten slightly with short-dated BTPs leading a cautious move higher. Gilts bull steepen, trading ~2.5bps richer across the short end as money markets continue to price out hikes in light of the latest Covid restrictions. In FX, Bloomberg Dollar index drifts 0.3% higher, erasing Friday’s decline and rallying against all its peers with the focus on Wednesday’s Federal Reserve meeting amid speculation officials might accelerate the pace of policy normalization. Flows in the spot market are running at 70% of the recent average, a Europe-based trader told Bloomberg. Volatility term structures in the major currencies remain inverted as the market awaits forward guidance that could shape trading for the better part of 2022 U.S. inflation data in line with expectations on Friday “almost certainly won’t change the balance-of-risk assessment for the Fed, and the communications of late expressing concern over inflation risks remain valid,” says MUFG’s Derek Halpenny. “The week starts quietly in terms of data today but it remains likely that the dollar will remain supported into the FOMC on Wednesday with anticipation high of some hawkish rhetoric to accompany the decision to speed up QE tapering.” GBP/USD fell 0.2% to 1.3244 after gaining 0.5% over the previous two sessions. The Bank of England is set to opt for caution over Covid rather than worries about inflation, pushing back its first rate increase since the pandemic into 2022, according to economists. U.K. Health Secretary Sajid Javid said there’s no certainty the government will be able to keep schools in England open, as it battles to contain the spread of the omicron Covid-19 variant.  “This week is interesting for GBP as markets scrutinize labor-market report tomorrow ahead of BOE,” said Christopher Wong, senior foreign-exchange strategist at Malayan Banking Bhd. in Singapore. “There are concerns unemployment will spike if workers are made redundant or if people cannot find jobs, and this labor report will provide the first assessment.” The Yen outperformed amid broad dollar strength; USD/JPY still up 0.2% at 113.69. AUD and NOK are the weakest in G-10.  Turkish lira crashed again, plunging to a new record low in early London trade with USD/TRY initially rallying over 6% to highs of 14.7590, before fading some of the move after another intervention from the Turkish central bank. In commodities, crude futures give back Asia’s gains; WTI is little changed near $71.78, Brent dips below $75.50. Spot gold holds a narrow range near $1,785/oz. Most base metals are in the green with LME aluminum outperforming.  Bitcoin once again failed to rise above $50,000, extending losses toward $48,000 as Binance bailed on plans for a Singapore exchange There are no major economic developments on today's calendar, but it's a busy week with about 20 central banks making monetary policy announcements, including the Fed, the BOE and ECB, and the divergence of their paths will be evident. Jerome Powell may turn more hawkish as he fights rising inflation, while the ECB joins China in leaning dovish and playing down soaring prices. Market Snapshot S&P 500 futures up 0.4% to 4,728.00 STOXX Europe 600 up 0.7% to 478.82 MXAP down 0.2% to 193.62 MXAPJ down 0.3% to 630.93 Nikkei up 0.7% to 28,640.49 Topix up 0.1% to 1,978.13 Hang Seng Index down 0.2% to 23,954.58 Shanghai Composite up 0.4% to 3,681.08 Sensex down 0.9% to 58,278.65 Australia S&P/ASX 200 up 0.4% to 7,379.26 Kospi down 0.3% to 3,001.66 Brent Futures up 0.8% to $75.74/bbl Gold spot up 0.1% to $1,784.20 U.S. Dollar Index up 0.34% to 96.42 German 10Y yield little changed at -0.36% Euro down 0.4% to $1.1265 Top Overnight News from Bloomberg Almost 20 central banks meet this week, including the world’s biggest. No surprise that volatility term structures in the major currencies remain inverted as the market awaits forward guidance that could shape trading for the better part of 2022 The Bank of Japan offered to buy 2 trillion yen ($17.6 billion) of government bonds under repurchase agreements after repo rates jumped to a two-year high Turkey’s central bank intervened in the market by selling FX after the lira tumbled past 14 to the dollar for the first time, piling pressure on a central bank that’s forecast to keep cutting interest rates this week despite rising inflation. The decline came after S&P Global Ratings lowered the outlook on the nation’s sovereign credit rating to negative on Friday, citing risks from the “extreme currency volatility” The ECB’s biggest decision this week is to decide if it can still call the current inflation spike “transitory.” The answer will have a huge bearing on the euro-area economy, which is already dealing with resurgent coronavirus infections, new restrictions and lockdowns, and uncertainty about the omicron variant ECB Vice President Luis de Guindos is self-isolating after testing positive for Covid-19 on Saturday, the ECB said in a statement posted on its website. Guindos hasn’t been in close contact with ECB President Christine Lagarde over the past week, according to the statement. The Spaniard, who is double- vaccinated and has very mild symptoms, will work from home until further notice Two doses of the Pfizer Inc. and AstraZeneca Plc. vaccines induced lower levels of antibodies against the omicron variant, increasing the risk of Covid infection, according to researchers from the University of Oxford. A more detailed breakdown of overnight news from Newsquawk Asia-Pac equity markets took their cues from last Friday’s gains on Wall Street where the S&P 500 notched a fresh record close and its best weekly performance since February, with markets now bracing for a risk-packed week including a busy schedule of central bank meetings. The ASX 200 (+0.4%) traded higher with risk appetite supported by the reopening of Australia’s borders to international students and skilled workers from Wednesday, while the government will also partially underwrite up to AUD 7bln in new loans for small businesses impacted by lockdowns. The Nikkei 225 (+0.7%) benefitted from the mild outflows from the JPY, with the index unphased by mixed Tankan and Machinery Orders data in which the Tankan Large Manufacturers Index and Outlook missed expectations but sentiment among Large Non-Manufacturers and Small Manufacturers improved for the sixth consecutive quarter. The Hang Seng (-0.2%) and Shanghai Comp. (+0.4%) predominantly conformed to the upbeat mood amid economists' expectations for China to add fiscal stimulus from early next year following last week’s conclusion to the Central Economic Work Conference, which noted that China's economy faces shrinking demand, supply shock, and weakening expectations but added that economic operations are to be kept within a reasonable range. Alibaba shares were among the biggest gainers in Hong Kong as it extended its rebound from YTD lows. Finally, 10yr JGBs were rangebound with March futures contained by resistance at the key 152.00 level and amid the positive mood across riskier assets, although JGBs were off the lows seen late last week where there were source reports that the BoJ is likely to scale back its pandemic relief programs in March with a potential announcement as early as this week’s meeting. Top Asian News Shriram Units Merge to Form Largest India Retail Financier Intel to Spend $7 Billion on Big Malaysia Chipmaking Expansion Shimao Group Appoints Xie Kun as Executive Director Daimler Reveals Chinese Partner BAIC Raised Stake to Almost 10% Stocks in Europe have continued to gain since the cash open (Euro Stoxx 50 +1.0%; Stoxx 600 +0.5%) as the APAC sentiment reverberates through the region following a fleeting blip lower in early European trade. US equity futures are also firmer but to a lesser magnitude – with the RTY (+0.3%) narrowly outpacing the ES (+0.%), NQ (+0.4%) and YM (+0.2%). Focus this week will be on the slew of central bank updates which kicks off with the FOMC on Wednesday, followed by the BoE and ECB on Thursday - with Flash PMIs, Christmas liquidity and Quad Witching also part of this week’s concoction. Add to that the potential tail-risk from geopolitics and headline risk from COVID. Nonetheless, European cash markets at the moment seem unfazed by what’s ahead. Sectors are pro-cyclical with Basic Resources and Autos topping the charts, whilst the defensive Healthcare, Telecoms and Personal & Household goods reside at the bottom. A recent Citi note suggests that rising earnings should keep European stocks moving higher and offset expansive valuations and tightening monetary policy in the US. Citi targets some 9% upside for the Stoxx 600 next year, with a target of 520 (vs current c.477), whilst 12% upside is targeted in the FTSE 100 to 8,200 (vs current c. 7,303). Citi leans in favour of cyclicals vs defensives - with overweights in Banks, Insurance, Basic Resources, Industrials, Media, Luxury Goods and Chemicals. Citi is underweight Utilities, Telecoms, Food & Beverages, Personal Care, Travel, Autos and Financial Services. The bank has also added to its focus list: AstraZeneca (+0.1%), Aviva (+0.7%), Capgemini (+1.2%), Faurecia (+0.9%), Iberdrola (-0.3%), Lloyds (-0.7%), Prosus (+1.5%), Royal Mail (+1.6%), Sanofi (Unch), Tesco (+0.4%), UBS (+0.2%), Vodafone (Unch), Volvo (+1.1%). Separately, Goldman Sachs sees muted returns for global stocks next year amid negative real rates coupled with high equity risk premia and in the absence of a growth shock. GS suggests that risks are growing in the US on a relative basis and sees a maximum drawdown of between -5 to -10% over the next 12 months. Top European News European Gas, Power Prices Surge on Nord Stream 2 Worries U.K. Says Can’t Rule Out Shutting Schools as Omicron Spreads UBS Global Wealth Management Discontinues USDTRY Coverage Vivendi Has ‘Never Been a Threat’ to Lagardere: Arnaud Lagardere In FX, the Greenback has clawed back all and a bit more of its post-US inflation data losses, partly on reflection perhaps that the CPI prints were broadly in line, and actually a tad above consensus in terms of the m/m headline rate, so highly unlikely to derail the Fed from upping the pace of QE tapering this week and probably won’t deter the more hawkish FOMC members from pencilling in a steeper lift-off. Hence, having ended Friday’s session fractionally below a Fib retracement level (96.098), the index subsequently eclipsed the intraday peak (96.429) to turn what was a bearish technical close into a constructive start to the new week within a 96.080-450 range and a ‘close’ above 96.500 would be deemed positive, if not bullish. CHF/EUR/AUD - Very little traction from latest signs of building inflation pressure in the Eurozone via German wholesale prices reaching a record high 16.6% y/y in November, but the Euro has held above 1.0400 against the Franc in wake of latest weekly Swiss sight deposits showing a rise in domestic bank balances. Meanwhile, the single currency has absorbed some stops triggered on a breach of 1.1265 vs the Buck and could derive underlying support from decent option expiry interest at 1.1250 (1.5 bn) at the base of a band extending to 1.1320 (2 bn) through 1.1270-1.1300 (1.1 bn), and Usd/Chf is hovering around 0.9250 at the upper end of a 0.9257-00 band ahead of producer/import prices on Tuesday. Elsewhere, the Aussie has not been able to benefit from good news in the form of Australia opening its borders to international students and skilled workers from Wednesday, Government plans to partially underwrite up to Aud 7 bn new loans for small businesses impacted by lockdowns, or buoyant risk appetite, as it straddles 0.7150 against its US counterpart. JPY/NZD/CAD/GBP - Also conceding ground to their US peer, with the Yen back below 113.50 and hardly helped by mixed Japanese macro releases including December’s Tankan survey and October machinery orders, while the Kiwi is back under 0.6800 even though NZ PM Ardern said the COVID-19 alert level for Auckland is to be eased on December 30 and the next review is scheduled for January 17. The Loonie is slipping alongside WTI between 1.2753-06 parameters and Cable has tested Fib support into 1.3200 at 1.3200 amidst ongoing UK political furore over Conservative Party transgressions during lockdown last year and heightened Omicron restrictions to prevent a tidal wave of infections. In commodities, WTI and Brent front-month futures have been drifting lower since the European morning after the former tested USD 73/bbl to the upside and the latter briefly topped USD 76/bbl. Newsflow for the complex has been light but there have been further positive omens regarding the Iranian nuclear talks - Iran’s top nuclear negotiator said good progress was made in nuclear talks and can quickly pave the way for serious negotiations, whilst Russia's Deputy Foreign Minister said they have reason to anticipate some progress. That being said, we are yet to hear from some of the western nations. Meanwhile, on the OPEC front, Iraq’s Oil Minister said he expects OPEC to maintain its current policy of gradual monthly increases of 400k BPD at the next meeting – slated for early January. On the COVID front, the UK opted not to further tighten restrictions over the weekend but instead boosted the booster programme, whilst reports surrounding the Omicron variant have all highlighted a mild illness. The geopolitical space may require some more attention as tensions remain high on the Ukraine/Russia and Taiwan/China front, with the US involved in both. Russian Deputy Foreign Minister, according to reports this morning, said if the US and NATO do not provide them with guarantees around security, it may lead to confrontation – and emphasised that the lack of progress on this would lead to a military response. Further, there were reports that Saudi Arabia and Iran held security talks. Ahead, the monthly OPEC oil market report is due to be released, but focus this week will likely remain on the slew of central bank meetings. Elsewhere, spot gold and silver are constrained to recent ranges ahead of a risk-packed week, with the former still in a purgatory zone below its 50 DMA (1,789/oz), 200 DMA (1,793/oz) and 100 DMA (1,795/oz). Meanwhile, LME copper is firmer on the mild market optimism but has receded south of the USD 9,500/t mark. US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap We had our first Xmas lunch yesterday with my golf club hosting Santa (arriving on a golf buggy up the 18th fairway) and welcoming kids to the dinning room. I spent the whole lunch worrying their behaviour would get me black balled and banned from golf. Before we went my wife and I took lateral flow tests and Maisie asked if this was to stop Santa getting the virus? She then asked who would deliver all the presents if he had to self isolate. I must admit that I thought this was a very good question, especially as she’s starting to slowly question his existence. I said it was likely ok as Santa had just got his booster as he is over 50. I remember when the third week of December was one long string of Xmas client lunches that you desperately tried the leave as early as you could politely do so even if that was 8pm. This week they’ll be no time for lunches and we’ll be glued to our screens with just the eight G20 central banks deciding on monetary policy. The Fed’s decision on Wednesday will be key of course, with anticipation that they might accelerate the tapering of their asset purchases, but there’s also the ECB and Bank of England meetings to watch out for as well. All of them are very much “live” meetings. Elsewhere the flash PMIs for December (Thursday) could give us an initial indication as to how increased restrictions have begun to affect economic activity. US retail sales and UK CPI (both Wednesday) might be other interesting data points. Reviewing the main highlights in more details now. The Fed’s decision on Wednesday will be the focal point of the week. In terms of what to expect, our US economists write in their preview (link here) that they anticipate a doubling in the pace of tapering, which would bring the monthly drawdown of Treasury and MBS to $20bn and $10bn per month respectively. That would see the process of tapering conclude in March, giving them greater optionality for an earlier liftoff. Bear in mind that this meeting will also see the release of the latest dot plot, as well as the projections for inflation, growth and unemployment. On that, our economists see the median dot in 2022 likely showing two rate hikes, with risks of more, up from September when only half the dots saw any hikes by the end of 2022. The ECB’s decision will then follow on Thursday. In our European economists’ preview (link here) they write that until the arrival of the Omicron variant, the ECB appeared on track to initiate a transition to a monetary policy stance based more on policy rates and rates guidance and less on liquidity provision. They were also set to create a policy framework with more optionality to better respond to inflation uncertainties. The Omicron variant reinforces the need for optionality, but until there’s greater clarity on what it means for the pandemic and the recovery, the ECB may stall the expected decisions in part or in whole until early 2022. As with the Fed, it’ll be interesting to see the December staff forecasts on inflation, which could influence the market view on lift-off timing. The Bank of England’s decision will then take place on Thursday, and our UK economist expects the MPC will raise Bank Rate by +15bps to 0.25%. In the preview (link here) it argues that news of the Omicron variant has changed little on the medium-term economic outlook, with the labour market remaining as tight as it has been in recent memory, and inflation continuing to outpace staff forecasts. Nevertheless, the risks to this view are finely balanced, and risk management considerations may lead them to delay a rate hike, as they instead opt to find out more information on Omicron’s impact. Finally on the central bank front, the Bank of Japan will be holding their final monetary policy meeting of the year on Friday. In our economist’s preview (link here), it says that although there had been an expectation that the bank would revise their special pandemic corporate financing support program at this meeting, the emergence of the Omicron variant has changed the situation. Given the next meeting is only a month later, the view is now that they’ll maintain a wait-and-see stance in this meeting and adjust the policy in January, although a revision remains possible this week if more positive evidence is found on the new variant. Moving on to the data, the main highlight will be the flash PMIs for December from around the world on Thursday which will offer an initial indication as to whether there’s been any economic reaction yet to rise in restrictions and the emergence of the Omicron variant. There’ll also be an increasing amount of hard data out of the US for November, including retail sales (Wednesday), industrial production, housing starts and building permits (all Thursday). In China, Wednesday will see the release of their own retail sales and industrial production data for November, and in Germany on Friday there’s the Ifo’s business climate indicator for December. Finally on the inflation side, releases will include the US PPI data for November tomorrow, along with the UK and Canadian CPI readings for November on Wednesday. Late on Friday the UK released a paper looking at vaccine effectiveness against the Omicron variant. The good news is it suggested those who’d been boosted at least a couple of weeks ago still had decent protection, with 3 doses of Pfizer offering 75.5% effectiveness against symptomatic disease, and those who’d had two doses of AstraZeneca followed by a Pfizer booster had 71.4% effectiveness. Those are both lower than the 90+% effectiveness against delta with a booster, but is still much better than some of the worst outcomes had feared. Furthermore, if the past variants are anything to go by, then the protection against severe disease and hospitalisation could be even higher. However, the bad news is it indicated those who’ve been double-jabbed for some months now have significantly waning protection against this new variant from a purely symptomatic basis without a booster, so this will only encourage governments to ramp up their booster campaigns. The UK last night accelerated their plans to get all over 18s offered a booster. It’s now by the end of the year which will be a Herculean task. This follows PM Johnson last night telling the nation that there’s a tidal wave of Omicron cases coming. The government expects it to become the dominant strain very soon in what will be an incredibly short space of time. Overnight in Asia, markets are trading notably higher with the CSI (+1.31%), Hang Seng (+1.01%), Shanghai Composite (+1.00%), the Nikkei (+0.89%) and KOSPI (+0.28%) all strong after China's policymakers' hinted at more stimulus at the end of annual Central Economic Work Conference on Friday. Indeed our economists suggest that this is the decisive policy shift that markets have been waiting for and believe it’s a big deal. See their report on it here. This optimism is being reflected in the near 6% jump in Iron Ore trading overnight. DM futures are indicating a positive start to markets in the US and Europe with S&P 500 (+0.37%) and DAX (+0.44%) futures both in the green. Looking back at last week now and the focus remained squarely on Omicron, where the lack of any concrete bad news lent a more optimistic tone. This modestly improved risk sentiment sent equities and yields higher, and pushed volatility lower with the VIX ending the week -11.88 ppts lower at 18.79. The S&P 500 and Stoxx 600 gained +3.82% and +2.76% over the week (+0.95% and -0.30% Friday respectively). Cyclical sectors and tech stocks led the gains in the US. The small cap Russell 2000 advanced +2.43% (-0.38% Friday) while the Nasdaq climbed +3.61% (+0.73% Friday). The optimism also pushed yields higher and yield curves slightly steeper, with the 10yr treasury gaining +14.1bps this week after a poor close the previous week (-1.5bps Friday) and 10yr bunds climbing +5.1bps (+0.7bps Friday). The 2s10s treasury curve steepened +7.2bps (+1.6bps Friday). Ahead of the Fed’s meeting this week, the market is pricing the first full Fed rate hike by June. In the world of central banking, the Bank of Canada kept policy on hold and reinforced expectations for their inflation target to be sustainably achieved in the middle of 2022, enabling policy rate hikes. Like most DM central banks, they are focused on persistently elevated inflation, which they ascribe to supply constraints that will take time to alleviate. The Reserve Bank of Australia also left its benchmark interest rate unchanged while cautioning that price pressures remain subdued, in contrast to the rest of the DM space. In China, the PBoC cut the required reserve ratio by -50bps to support the economy, while FX reserve ratio was lifted +2.0% to lean against an appreciating renminbi. Property developers Evergrande and Kaisa defaulted on dollar debt. Chinese officials asserted the defaults would be dealt with “in a market-oriented way”. Geopolitical rumblings out of Europe also garnered focus. Presidents Biden and Putin held a phone call to discuss tensions following the build-up of Russian forces on the Ukrainian border. The readouts following the call offered few details but signalled both sides would follow up. President Biden has cautioned severe economic sanctions would be levied should Russia invade Ukraine, including sanctions on Putin’s inner circle, energy companies, and banks. The US would also consider severing Russian access to the US-run international payments system, SWIFT. On Friday, US CPI increased 0.8% and core US CPI increased 0.5% month-over-month in November, with the headline reading a tenth ahead of expectations. Commensurate year-over-year readings were 6.8% and 4.9%, the highest readings since 1982 and 1991, respectively. Measures of underlying and trend inflation continued to move higher, suggesting the Fed’s recent hawkish pivot will continue to be embraced by policymakers. Tyler Durden Mon, 12/13/2021 - 07:56.....»»

Category: blogSource: zerohedgeDec 13th, 2021

5 Stocks Driving Homebuilding ETF to All-Time Highs

After being pulled down by surging raw material prices, increasing construction costs and rising mortgage rates in the first half of this year, the housing sector is back on track. After being pulled down by surging raw material prices, increasing construction costs and rising mortgage rates in the first half of this year, the housing sector is back on track. This is especially true as iShares U.S. Home Construction ETF ITB has been hitting record highs lately, having gained 46.8% this year (read: Homebuilding ETF Hits New 52-Week High).While most of the stocks in the fund’s portfolio delivered strong returns, a few have gained more than 80% so far this year. These include Skyline Corporation SKY, Louisiana-Pacific Corporation LPX, Century Communities CCS, Builders FirstSource BLDR and Cavco Industries CVCO.Though the Fed has turned hawkish, mortgage rates are still near historic lows that are encouraging people to buy more homes, making refinance cheaper. This in turn has led to skyrocketing demand for new homes. U.S. existing home sales in October rise to the highest level in nine months and are on track for the best year since 2006.Homebuilder confidence is also rising with single-family homes rising more than expected in November, to the highest level since last May. Lack of resale inventory combined with strong consumer demand continues to boost single-family home building. Further, homebuilders are currently well placed, belonging to a top-ranked Zacks industry (placed at the top 27% of 250+ industries), which suggests a solid outlook.Let’s take a closer look at the fundamentals of ITB.ITB in FocusiShares U.S. Home Construction ETF provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. It holds 46 stocks in its basket with a heavy concentration on the top two firms. Homebuilding and building products take the largest share at 64.8% and 13.5% of assets, respectively, followed by home improvement retail.iShares U.S. Home Construction ETF has amassed $3 billion in its asset base and trades in a solid volume of around 2.8 million shares a day. It charges investors 41 bps in fees per year and has a Zacks ETF Rank #2 (Buy) with a High-risk outlook (see: all the Materials ETFs here).Below we have profiled the five best-performing stocks in the ETF with their respective positions in the fund’s basket:Best-Performing Stocks of ITBSkyline Corporation designs, produces and distributes manufactured housing and recreational vehicles. The stock has skyrocketed nearly 171% in the year-to-date timeframe. Skyline has witnessed a solid earnings estimate revision of 64 cents over the past 60 days for the fiscal year (ending Mar 2022) and has an estimated earnings growth rate of 117%.Skyline currently has a Zacks Rank #1 (Strong Buy) and a Growth Score of A. The stock makes up 1.82% of the total assets in ITB. You can see the complete list of today’s Zacks #1 Rank stocks here.Louisiana-Pacific is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products as well as exterior siding for use in residential, industrial and light commercial construction. The stock has surged about 100% in the same timeframe. Louisiana-Pacific has seen a solid earnings estimate revision of $1.58 for the next year over the past 60 days.Louisiana-Pacific has a Zacks Rank #3 (Hold) and a top VGM Score of A. The stock accounts for just 0.88% share in ITB.Century Communities is a home building and construction company. Its activities comprise land acquisition, development, and entitlements, and the acquisition, development, construction, marketing, and sale of various single-family detached and attached residential home projects. The stock makes up for 1% allocation. It has also delivered robust returns of 88.2% so far this year.Century Communities has seen a positive earnings estimate revision of 44 cents for this year over the past month and has an estimated earnings growth rate of 123%. Century Communities has a Zacks Rank #3 and a VGM Score of A.Builders FirstSource is the largest supplier of building materials, manufactured components and construction services to professional homebuilders, sub-contractors, remodelers and consumers. It has seen a solid earnings estimate revision of $1.01 for this year over the past 30 days and has an estimated growth rate of 206.6%.Builders FirstSource claims 1.96% of the assets in ITB’s portfolio and has jumped more than 87% this year. BLDR has a Zacks Rank #1 and a VGM Score of A (read: 5 ETFs That Survived the Last Week's Rout).Cavco Industries designs and produces factory-built housing products primarily distributed through a network of independent and Company-owned retailers. The stock has gained 81.5% in the year-to-date timeframe. Cavco Industries has seen a solid earnings estimate revision of $2.01 for the fiscal year (ending Mar 2022) over the past two months and has an expected earnings growth rate of 66.2%.Cavco Industries sports a Zacks Rank #1 and has a VGM Score of B. The stock makes up for 1.14% share in ITB. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report LouisianaPacific Corporation (LPX): Free Stock Analysis Report Builders FirstSource, Inc. (BLDR): Free Stock Analysis Report Century Communities, Inc. (CCS): Free Stock Analysis Report iShares U.S. Home Construction ETF (ITB): ETF Research Reports Cavco Industries, Inc. (CVCO): Free Stock Analysis Report Skyline Corporation (SKY): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 10th, 2021