HannStar sees LCD fab utilization rise

Investors are optimistic about Zimmer Biomet (ZBH) on continued procedure recovery, solid execution and increasing traction around innovations. Zimmer Biomet Holdings, Inc. ZBH is gaining from continued procedure recovery, solid execution and increasing traction around innovations. The company has been working to strengthen its foothold in emerging markets that provide long-term opportunities for growth.In the past year, the Zacks Rank #1 (Strong Buy) stock has gained 13.4% against a 29.4% fall of the industry and a 7.1% rise in the S&P 500.The renowned musculoskeletal healthcare company has a market capitalization of $28.37 billion. The company has a long-term projected growth of 7.3%.Let’s delve deeper.Factors At PlayGradually Stabilizing Market: Despite challenging market conditions in the form of pricing pressure, the last few quarters witnessed gradual stability in the global musculoskeletal market with better-than-expected sales growth in certain geographies, banking on improved procedural volume. This was driven by favorable demographics and growing utilization of musculoskeletal healthcare in emerging markets and under-penetrated developed markets.In line with this, during the fourth quarter earnings update, the company noted that it witnessed better than expected growth driven by continued procedure recovery, strong execution, and a solid momentum with the new innovation and also benefited from some favorable comps in the quarter. The company saw another positive quarter of year-over-year momentum in large joints, with the overall global hip and knee business growing more than 8% and 10%, excluding foreign exchange.Image Source: Zacks Investment ResearchFocus on Emerging Markets to Drive Growth: In the recent past, Zimmer Biomet has been working to strengthen its foothold in emerging markets that provide long-term opportunities for growth. The company's strategic investments in these regions in the past several quarters to improve operational and sales performance are yielding.Markets opportunity is expected to grow to $66.6 billion by 2025 for the orthopedic implants globally. Within emerging market, we note that strength in Asia Pacific market continued to drive strong revenue growth so far. Post the COVID-19 mayhem gets past; banking on a cadence of product launches and strong customer adoptions, Zimmer Biomet is expected to continue with this trend. In the first quarter, Zimmer Biomet’s international sales rose 14% driven by faster recovery and strength across developed and emerging markets.Dental and Spine Spin-Off to Bode Well: Zimmer Biomet recently completed its planned spin-off procedure of the dental & spine arm. According to Zimmer Biomet management, this planned spin-off of its Spine and Dental business is part of the company’s third phase of ongoing transformation, which includes changing the complexion of the business through active portfolio management to accelerate growth and drive value creation. As per management, for Zimmer Biomet, the transaction is an important next step in the company’s transition into a more streamlined company with focus in greater and more optimized resource allocation toward innovation in core businesses that are profitable and where it sees attractive markets with opportunities to become market leaders.Upbeat Guidance: During the first quarter, Zimmer Biomet raised its 2023 outlook. Revenue growth is now expected to be in the band of 5%-6% compared with 2022 (a significant increase from the earlier band of 1.5%-3.5%).Adjusted earnings per share for the full year is expected in the range of $7.40-$7.50 ($6.95-$7.15 earlier). The Zacks Consensus Estimate for 2023 adjusted earnings is pegged at $7.04 on revenues of $7.13 billion.Estimate TrendZimmer Biomet has been witnessing a positive estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its 2023 earnings has moved 10.1% north to $7.45.The Zacks Consensus Estimate for 2023 revenues is pegged at $7.45 billion, suggesting an 8.1% rise from the 2022 reported number.Key PicksA few other top-ranked stocks in the broader medical space are Addus Homecare Corporation ADUS, Merit Medical Systems, Inc. MMSI and Davita Inc DVA.The Zacks Consensus Estimate for Addus Homecare’s 2023 earnings indicates 10.9% year-over-year growth. The Zacks Consensus Estimate for ADUS’s 2023 earnings has moved 0.5% north in the past 30 days. It currently carries a Zacks Rank #2.Addus Homecare has a long-term estimated growth rate of 11.8%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Merit Medical reported a first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.DaVita, carrying a Zacks Rank #2 at present, has a long-term estimated growth rate of 14.6%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 17.3%.DaVita has lost 1.9% compared with the industry’s 18% decline over the past year. The New Gold Rush: How Lithium Batteries Will Make Millionaires As the electric vehicle revolution expands, investors have a chance to target huge gains. Millions of lithium batteries are being made & demand is expected to increase 889%.Download the brand-new FREE report revealing 5 EV battery stocks set to soar.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 DaVita Inc. (DVA): Free Stock Analysis Report Merit Medical Systems, Inc. (MMSI): Free Stock Analysis Report Addus HomeCare Corporation (ADUS): Free Stock Analysis Report Zimmer Biomet Holdings, Inc. (ZBH): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Samsung Electronics has seen its 12-inch wafer fab capacity utilization rise to 90% in the second quarter from 80% registered a quarter earlier, driven by stable 5/4nm process performance and the resulting increase in customer orders, according to Korean media reports......»»

Key Events This Week: It's All About Earnings As Macro Calendar Eases Looking at the key events this week, today will see the US debt ceiling rise up the agenda again since House Speaker Kevin McCarthy is giving a speech at the New York Stock Exchange that’s expected to cover the Republicans’ position on the issue. As a reminder, the US is expected to come up against the debt ceiling again this summer (or even sooner), and the Republicans have said they want concessions like spending cuts in return for passing an increase. Since the Republicans now have a majority in the House of Representatives, at least some of them will need to be on board to pass an increase. The situation has several echoes to the last major fight over the debt ceiling in 2011, when there was also a Democratic president negotiating with a Republican majority in the House. Although an agreement was eventually reached, that episode coincided with a noticeable slump in the S&P 500 alongside a sharp decline in consumer confidence. In the meantime, there are a few highlights ahead on the data side. Tomorrow sees the release of China’s Q1 GDP growth, where DB economists are expecting an above-consensus print of +4.5% year-on-year. Then on Friday we’ll get the April flash PMIs from around the world, which will offer an initial indication of how the global economy has been performing into Q2. Otherwise, inflation will remain in the spotlight, with this week seeing the March CPI releases from Japan and the UK. In Japan, economists expect core-core inflation excluding fresh food and energy to tick up slightly to 3.6%, up from 3.5% the previous month. And in the UK, inflation is anticipated to decline to 9.7%, down from 10.4% in February. Here is a summary of the key US events: The final big highlight this week will be earnings season, which is increasingly ramping up now as 59 companies in the S&P 500 will be reporting. Some of the financials will be of particular interest given the market turmoil last month, and we’ll get results from Bank of America, Morgan Stanley, Goldman Sachs and Charles Schwab this week. Elsewhere, some of the highlights will include Tesla, Netflix, IBM and Johnson & Johnson. In its preview of the week ahead, Rabobank writes that the market will focus mostly on US earnings season "because if these go down, the implication will be that unemployment must soon rise, and then US rates fall, and then P/E ratios are not the issue they are soon to be otherwise, apparently." Hence, will the tone be that good news is bad news and bad news is good news? Or will it be good news is good news, and there is no recession fear? It’s hard to project the collective mind of a market focused on the here and now, the never-never, and quarterly returns, rather than unfolding geopolitical reality. However, in data terms, this is what the global calendar looks like: Monday: New Zealand food price inflation for March opened the week, coming in at +0.8% m-o-m. This follows on from a 1.5% gain in February, which saw annual food price inflation hit its highest level since 1989. It’s likely that further food inflation lays ahead, as the longer-run effects of Cyclone Gabrielle continue to be felt in the coming months. No change in China’s 1-year MTLR rate is expected from 2.75% today. Later, the Empire Manufacturing index for April will be released in the US. Expectations are -18, a substantial improvement over March’s -24.6. A beat would confirm a trend of improvement following last week’s strong industrial production data. Tuesday: The minutes of the RBA’s April policy meeting will be first up. This may provide further insight into Governor  Lowe’s comments a fortnight ago that the pause doesn’t necessarily mean the RBA has finished hiking. Stronger than expected jobs figures released last week certainly lend some weight to the idea that the RBA isn’t done yet, as does the building momentum in house prices across Aussie capital cities. Afterwards we will see Q1 GDP data for China. This is expected at 3.9% y-o-y, well up on the previous read of 2.9% and accelerating toward China’s 5% target for 2023. Later in the day we have a speech from the Fed’s Bowman, as well as the ZEW survey in Germany: improved readings for both the current situation and future expectations are anticipated here. CPI data in Canada follows, with consensus of a fall from 5.2% y-o-y in February to 4.3% in March. Wednesday: The headline releases will be the Fed’s Beige Book, along with UK CPI data, seen falling from 10.4% y-o-y in February to 9.8% in March. There will also be quite a few central bank speakers on the day: Lane, de Cos, and Schnabel will be in action for the ECB, while the BoE’s Mann will also be speaking. Thursday: NZ Q1 CPI is the first cab off the rank, where markets will be looking for confirmation that inflation peaked in Q4, but a reading higher than the expected y-o-y figure of 7% will present a conundrum for the RBNZ, who are also dealing with rapidly contracting GDP. Across the ditch in Australia, we get the NAB Business Survey. This is one of the four data points that Governor Lowe nominated as being of particular interest to the RBA ahead of the April policy meeting, so will likely still be a market mover this month. Later in the day we will hear from the ECB’s Lagarde, Schnabel, Holzmann, and Guindos, while on the other side of the Atlantic, the Fed’s Goolsbee, Williams, Waller, Mester, and Bowman will all be speaking. We will also get the latest weekly jobless claims data for the USA (+240k expected). Friday: Japanese CPI figures are due, followed by April PMIs for the Eurozone, US, and UK. We will also see UK retail sales figures for March, expected to have declined by 3.0% y-o-y. That sounds really grim until you compare it with the 3.5% y-o-y fall in February. The Conference Board’s leading index also drops (-0.7% expected, down from -0.3% prior) before comments from the Fed’s Cook and Bostic close out the week.     Finally, courtesy of DB, here is a day-by-day Calendar of Events with a focus on the US Monday April 17 Data: US April NAHB housing market index, Empire manufacturing, Canada February wholesale trade sales Central banks: BoE's Cunliffe speaks Earnings: Charles Schwab, State Street Tuesday April 18 Data: US April New York Fed services business activity, March housing starts, building permits, China Q1 GDP, March industrial production, retail sales, property investment, UK March payrolled employees monthly change, February employment change, average weekly earnings, Italy February trade balance, Germany and Eurozone April ZEW survey, Eurozone February trade balance, Canada March CPI Central banks: Fed's Bowman speaks Earnings: Johnson & Johnson, Bank of America, Netflix, Lockheed Martin, Goldman Sachs, Prologis, Intuitive Surgical, BNY Mellon, United Airlines, Western Alliance Bancorp Wednesday April 19 Data: UK March CPI, PPI, RPI, February house price index, Japan February capacity utilization, Italy February current account balance, EU27 March new car registrations, ECB February current account, Eurozone February construction output, Canada March industrial product and raw materials price index, housing starts Central banks: Fed's Beige Book, Fed's Goolsbee speaks, ECB's Schnabel and deCos speak, BoE's Mann speaks Earnings: Tesla, ASML, Abbott, Morgan Stanley, IBM, Lam Research, Heineken, US Bancorp, Baker Hughes, Citizens Financial, Alcoa Thursday April 20 Data: US April Philadelphia Fed business outlook, March leading index, existing home sales, initial jobless claims, Japan March trade balance, February Tertiary industry index, Germany March PPI, France April manufacturing confidence, March retail sales, Eurozone April consumer confidence Central banks: Fed's Williams, Waller, Mester, Bowman and Bostic speak, ECB March meeting account, ECB's Visco and Holzmann speak Earnings: TSMC, AT&T, Union Pacific, American Express, Blackstone, CSX, Truist, Volvo Friday April 21 Data: US, UK, Japan, Germany, France and Eurozone April flash PMIs, UK April GfK consumer confidence, March retail sales, Japan March CPI, Canada February retail sales Central banks: Fed's Cook speaks Earnings: P&G, SAP, HCA Healthcare, Schlumberger, Freeport-McMoRan Source: DB, Rabobank, BofA Tyler Durden Mon, 04/17/2023 - 08:39.....»»

It's Not Just Failing Banks: Here Are The Week's Key Events - CPI, PPI, Retail Sales And An ECB Hike In case the market "excitement" over the past week has not been enough, with the rapidly spreading global bank crisis collapsing rate hike odds and Goldman now calling for a pause in March, tomorrow sees a pivotal US CPI print. As DB's Jim Reid reminds us, also important will be the ECB meeting on Thursday. In terms of other data, US retail sales (Wednesday), China's monthly data dump (tomorrow) and various US housing market releases through the week are the highlights. Alas, don't expect any commentary from the Fed - on these items or the ongoing bank crisis 0 as they are on their pre-FOMC blackout ahead of next Wednesday's rate decision. According to Reid, "It's fair to say that the US CPI report tomorrow is not only hotly anticipated but will likely be a swing factor in terms of 25 or 50bps from the Fed next week, alongside the fall-out from SVB." We disagree, or rather we agree with Goldman: there will be no more rate hikes. In any case, a quick preview of tomorrow's CPI from DB economists:  they expect headline CPI (+0.37% forecast vs. +0.52% previously) and core CPI (+0.36% vs. +0.42%) will both round to 0.4% mom which is where the consensus is. This will translate to headline dropping 0.4pp to 6% YoY and core down a tenth to 5.5% YoY. They discuss how at the component level, there will be much focus on core goods, as recent disinflationary pressures from used cars and trucks wane. Retails sales and PPI (both Wednesday) will also factor into the Fed's 0/25/50bp decision... actually make that -25/0/25bps. For retail sales, after a bumper January, February's data should see some reversal, as we noted previously. A dip in unit motor vehicle sales will push headline sales (-1.2% vs. +3.0%) lower, while the expected payback from food services and drinking places as well as nonstore retailers should weigh on sales excluding automobiles (-1.1% vs. +2.3%) and retail control (-0.3% vs. +1.7%). For PPI, headline (+0.5% vs. +0.7% mom) will slightly outpace core (+0.4% vs. +0.5%). Rounding out the main US data, investors will also get an array of housing market indicators including the NAHB housing market index (Wednesday) and housing starts and building permits (Thursday). Turning attention to central banks, the Fed will be in a quiet period until the next FOMC which could be a problem with the banking system suddenly imploding. A key event will be the ECB decision on Thursday. The meeting follows upside surprises from recent inflation readings across the bloc as well as generally stronger-than-expected economic performance. DB's European economists expect a third consecutive +50bps hike, taking the deposit facility rate to 3.00%, as well as messaging supporting for another +50bps move in May. After that, they see a downshift in June to +25bps, taking the terminal deposit rate to 3.75%. However, they emphasise upside risks to the landing zone of 3.50%-4.00% and do not rule out a terminal above 4%. Over in the UK, markets will be awaiting the labor market data released tomorrow and the Budget unveiled the next day. For the latter, see a preview from our UK economist here. He expects no large surprises together with a focus on fiscal prudence, with the cost-of-living crisis and public sector services likely the main themes for spending. In Asia, China's retail sales and industrial production data tomorrow will be at the forefront of investors' attention. Current median estimates on Bloomberg are pointing to a strong rebound, with retail sales seen growing 3.5% YTD YoY (vs -0.2% in January) and industrial production forecasted to expand by +2.6% (vs 3.6% in January). Courtesy of DB's Jim Reid, here is a day-by-day calendar of events Monday March 13 Central banks: BoE's Dhingra speaks Earnings: Porsche Tuesday March 14 Data: US February CPI, NFIB small business optimism, UK February jobless claims change, January average weekly earnings, unemployment rate, Italy January industrial production, Canada January manufacturing sales Central banks: BoJ minutes of the January meeting, Fed's Bowman speaks Earnings: Volkswagen Wednesday March 15 Data: US March NAHB housing market index, Empire manufacturing, February PPI, retail sales, January business inventories, China February retail sales, industrial production, property investment, Japan February trade balance, January core machine orders, Italy Q4 unemployment rate, January general government debt, Germany February wholesale price index, January current account, Eurozone January industrial production, Canada February housing starts, existing home sales Earnings: Adobe, BMW, Inditex, Prudential, Ping An Other: UK Spring Budget Thursday March 16 Data: US March Philadelphia Fed business outlook, New York Fed services business activity, February export and import price index, housing starts, building permits, initial jobless claims, China February new home prices, Japan January capacity utilization, Canada January wholesale trade sales Central banks: ECB decision Earnings: FedEx, Dollar General, Enel, Rheinmetall Friday March 17 Data: US March University of Michigan sentiment, February industrial and manufacturing production, capacity utilization, leading index, UK February BoE/ Ipsos inflation attitudes survey, Japan January tertiary industry index, Italy January trade balance, Eurozone Q4 labour costs, Canada February raw materials and industrial product price Earnings: XPeng, Vonovia * * * Finally, looking at just the US, Goldman writes that the key economic data releases this week are the CPI report on Tuesday, the retail sales report on Wednesday, and the Philadelphia Fed manufacturing index on Thursday. There are no speaking engagements from Fed officials on monetary policy this week, reflecting the FOMC blackout period. Governor Bowman will deliver a speech on innovation in the banking system on Tuesday. Monday, March 13 There are no major economic data releases scheduled. Tuesday, March 14 06:00 AM NFIB small business optimism, February (last 90.3) 08:30 AM CPI (mom), February (GS +0.40%, consensus +0.4%, last +0.5%); Core CPI (mom), February (GS +0.45%, consensus +0.4%, last +0.4%); CPI (yoy), February (GS +6.08%, consensus +6.0%, last +6.4%); Core CPI (yoy), February (GS +5.56%, consensus +5.5%, last +5.6%): We estimate a 0.45% increase in February core CPI (mom sa), which would leave the year-on-year rate unchanged at 5.6%. Our forecast reflects an 8% jump in airfares and another gain in the car insurance category as carriers seek to offset higher repair and replacement costs. We assume a small rise in used car prices (+0.5%, we assume larger increases in the spring) but a modest decline in new car prices (-0.2%) on the back of rebounding incentives. We also forecast a sequentially slower pace of shelter inflation (we estimate rent +0.62% and OER +0.59%) as weakness in new rental pricing begins to offset continued upward pressure on renewing leases. We estimate a 0.40% rise in headline CPI, reflecting stable energy prices and higher food prices. 5:20 PM Fed Governor Bowman speaks: Fed Governor Michelle Bowman will deliver a speech on innovation in the US banking system at an event in Honolulu hosted by the Independent Community Bankers of America association. Text is expected. Wednesday, March 15 08:30 AM Empire State manufacturing survey, March (consensus -8.0, last -5.8) 08:30 AM PPI final demand, February (GS +0.2%, consensus +0.3%, last +0.7%); PPI ex-food and energy, February (GS +0.3%, consensus +0.4%, last +0.5%); PPI ex-food, energy, and trade, February (GS +0.2%, consensus +0.3%, last +0.6%): We estimate that the PPI final demand index increased by 0.2% in February. We estimate a 0.3% increase for PPI ex-food and energy and a 0.2% increase for PPI ex-food, energy, and trade. 08:30 AM Retail sales, February (GS -0.9%, consensus -0.4%, last +3.0%); Retail sales ex-auto, February (GS -0.7%, consensus -0.1%, last +2.3%) ;Retail sales ex-auto & gas, February (GS -0.8%, consensus -0.3%, last +2.6%); Core retail sales, February (GS -0.4%, consensus -0.3%, last +1.7%): We estimate core retail sales declined 0.4% in February (ex-autos, gasoline, and building materials; mom sa). Our forecast reflects some sequential softness in high-frequency consumer spending data. We estimate a 0.9% decline in headline retail sales, reflecting a pullback in auto sales and restaurant spending and flattish gasoline prices. 10:00 AM Business inventories, January (consensus flat, last +0.3%) 10:00 AM NAHB housing market index, March (consensus 41, last 42) Thursday, March 16   08:30 AM Housing starts, February (GS +0.2%, consensus +0.1%, last -4.5%); Building permits, February (consensus +0.5%, last +0.1%); We estimate housing starts increased by 0.2% to 1342k in February (vs. a peak of 1,896 in December 2021). 08:30 AM Import price index, February (consensus -0.2%, last -0.2%) 08:30 AM Initial jobless claims, week ended March 11 (GS 200k, consensus 205k, last 211k); Continuing jobless claims, week ended March 4 (consensus 1,698k, last 1,718k): We estimate that initial jobless claims declined to 200k in the week ended March 11. 08:30 AM Philadelphia Fed manufacturing index, March (GS -10.0, consensus -15.0, last -24.3); We estimate that the Philadelphia Fed manufacturing index rebounded 14.3 points to -10 in March, reflecting the reopening of the Chinese economy and sequentially firmer industrial data globally. Friday, March 17 09:15 AM Industrial production, February (GS -0.5%, consensus +0.2%, last flat); Manufacturing production, February (GS flat, consensus -0.2%, last +1.0%); Capacity utilization, February (GS 77.8%, consensus 78.4%, last 78.3%): We estimate industrial production decreased 0.5% in February, reflecting weak auto, oil and gas, and mining production but strong natural gas production. We estimate capacity utilization declined to 77.8%. 10:00 AM University of Michigan consumer sentiment, March preliminary (GS 67.5, consensus 67.0, last 67.0); University of Michigan 5-10-year inflation expectations, March preliminary (GS 2.9%, consensus 2.9%, last 2.9%): We expect that the University of Michigan consumer sentiment index rose to 67.5 in the preliminary March report. We expect that the report’s measure of long-term inflation expectations remained unchanged, at 2.9%. Source: BofA, Goldman, DB Tyler Durden Mon, 03/13/2023 - 11:02.....»»

LyondellBasell's (LYB) Polyethylene technology will enable PetroChina to manufacture differentiated polyethylene resins through a new HDPE line. LyondellBasell Industries N.V.’s LYB Polyethylene (PE) technology has again been licensed by PetroChina Jilin Petrochemical Company at its facility located in Jilin city of China. This new license will include LYB’s high-pressure Lupotech process technology, which will be used for a 100 kiloton per year (KTA) Autoclave and a 300 KTA Tubular line by PetroChina. Additionally, a 400 KTA Hostalen “Advanced Cascade Process” (ACP) line will be built for the production of High-Density Polyethylene (HDPE).LYB’s vast experience in high-pressure application design makes its Lupotech process a preferred technology for EVA/LDPE plant operators. The Lupotech process’s high reliability, unmatched conversion rates and effective process of heat integration enable it to provide ongoing energy efficiency. LyondellBasell has licensed more than 15000 KTA of high-pressure LDPE technology in over 80 lines around the world.LYB’s Hostalen ACP process is used in the pressure pipe, film and blow molding process as it provides high performance, multi-modal HDPE resins with an industry-leading stiffness/toughness balance, impact resistance and high stress cracking resistance. The PetroChina HDPE plants will commence operations using Avant Z 501 and Avant Z509-1 catalysts to produce a comprehensive range of multi-modal HDPE products.The company enables its new licensees to take advantage of its in-house expertise of constant improvements and product development and its know-how in high-pressure design by optionally joining the Technical Service program.The company stated its excitement about being able to license its PE technology to PetroChina, as the newly added lines will enable the latter to manufacture differentiated polyethylene resins through LYB’s state-of-the-art Lupotech technology as well as its multi-modal HDPE technology.Shares of LyondellBasell have lost 2.2% in the past year against 3.6% rise of the industry. Image Source: Zacks Investment ResearchThe company, in its fourth-quarter call, said that it expects the challenging economic environment to continue, at least in the first half of 2023. It noted stable demand from consumer packaging, oxyfuels and refining markets during January. While aligning its production process with global demand trends, LYB expects utilization rates for its operating assets to be 80% for its Olefins & Polyolefins and intermediates & derivatives segments. The company also sees seasonal demand improvements in 2023. LyondellBasell Industries N.V. Price and Consensus LyondellBasell Industries N.V. price-consensus-chart | LyondellBasell Industries N.V. QuoteZacks Rank & Key PicksLyondellBasell currently carries a Zacks Rank #3 (Hold).Better-ranked stocks to consider in the basic materials space include Carpenter Technology Corporation CRS, Cal-Maine Foods, Inc. CALM and Clearwater Paper Corporation CLW. CALM and CLW both sport a Zacks Rank #1 (Strong Buy), while CRS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  CRS’ shares have gained 62.3% in the past year. The company has an earnings growth rate of 203.8% for the current year. The firm outpaced Zacks Consensus Estimate in all of the last four quarters. It delivered a trailing four-quarter earnings surprise of 33.6% on average.Cal-Maine’s shares have gained 29.3% in the past year. The company has an earnings growth rate of 417.7% for the current year. The Zacks Consensus Estimate for CALM’s current-year earnings has been revised 73.8% upward in the past 60 days.The company topped Zacks Consensus Estimate in three of the last fourth quarters. It delivered a trailing four-quarter earnings surprise of 15.3% on average.CLW’s shares have gained 21% in the past year. The company has an earnings growth rate of 278.6% for the current year.Clearwater Paper beat Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 13% on average.  7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.8% per year. So be sure to give these hand-picked 7 your immediate attention. See them 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 Cal-Maine Foods, Inc. (CALM): Free Stock Analysis Report Carpenter Technology Corporation (CRS): Free Stock Analysis Report Clearwater Paper Corporation (CLW): Free Stock Analysis Report LyondellBasell Industries N.V. (LYB): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Weak demand in Europe, consumer destocking and reduced volumes across several segments weigh on LyondellBasell's (LYB) Q4 performance amid margin stabilizations. LyondellBasell Industries N.V. LYB recorded earnings of $353 million or $1.07 per share in the fourth quarter of 2022, reflecting a fall of 51% from the year-ago quarter's profit of $716 million or $2.18 per share.LYB posted adjusted earnings of $1.29 per share, down 65% from the year-ago quarter figure of $3.63. It surpassed the Zacks Consensus Estimate of $1.09.The company’s net sales in the fourth quarter were $10,206 million, which lagged the Zacks Consensus Estimate of $10,434.3 million. Net sales decreased around 20% from $12,830 million in the prior-year quarter.In the reported quarter, the company witnessed price and margin pressure from consumer destocking, new supply and weak demand in petrochemical markets at stabilized levels, as seen during the end of the third quarter. To match the lower demand levels, LYB reduced its operating rates during the quarter. Reduced product prices were partly offset by moderate levels of energy and feedstock prices. However, the company saw its oxyfuels and refining segments margins above the normal fourth-quarter levels.LyondellBasell Industries N.V. Price, Consensus and EPS Surprise LyondellBasell Industries N.V. price-consensus-eps-surprise-chart | LyondellBasell Industries N.V. QuoteSegment HighlightsIn the Olefins & Polyolefins — Americas division, EBITDA decreased roughly 72% year over year to $359 million in the reported quarter. Olefins’ results fell due to lower margins and volumes.The Olefins & Polyolefins — Europe, Asia, the international segment witnessed a loss in EBITDA of $152 million from the prior-year quarter levels of $155 million. Olefins results declined due to reduced volumes due to lower utilization. Weak European demand also contributed to the decline in this segment.The Advanced Polymer Solutions segment posted an EBITDA of $3 million, down around 88% from the year-ago quarter. High levels of raw material and energy costs resulted in a decline in the performance of this segment. The segment also faced lower demand.EBITDA in the Intermediates and Derivatives segment increased around 16% on a year-over-year basis to $291 million. The segment saw lower volumes in the oxyfuels business, but margin levels remained above historical levels. Styrene margins also improved in the fourth quarter on a sequential comparison basis due to lower feedstock costs.The Refining segment reported an EBITDA of $322 million in the reported quarter, up around 115% from the year-ago quarter.The Technology segment’s EBITDA was $59 million in the reported quarter, down around 70% year over year. The downside was due to lower catalyst volumes due to low demand.FY22 ResultsAdjusted earnings for full-year 2022 were $12.46 per share compared with $18.19 a year ago. Net sales rose around 9.3% to $50,451 million.FinancialsLyondellBasell generated $1.6 billion in cash from operating activities during the quarter. The company returned $3.7 billion as dividends and share repurchases during the year.OutlookMoving ahead, the company expects the challenging economic environment to continue, at least in the first half of 2023. The company noted stable demand from consumer packaging, oxyfuels and refining markets during January. While aligning its production process with global demand trends, LYB expects utilization rates for its operating assets to be 80% for its Olefins & Polyolefins and intermediates & derivatives segments. The company also sees seasonal demand improvements in 2023.Price PerformanceShares of LyondellBasell have lost 3.9% in the past year against 9.4% rise of the industry.Image Source: Zacks Investment ResearchZacks Rank & Key PicksLyondellBasell currently carries a Zacks Rank #4 (Sell).Better-ranked stocks to consider in the basic materials space include Commercial Metals Company CMC, Nucor Corporation NUE and Agnico Eagle Mines Limited AEM. CMC and NUE both sport a Zacks Rank #1 (Strong Buy), while AEM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  CMC’s shares have gained 61.9% in the past year. The Zacks Consensus Estimate for CMC’S current-year earnings has been revised 9.8% upward in the past 60 days.  The firm outpaced Zacks Consensus Estimate in all of the last four quarters. It delivered a trailing four-quarter earnings surprise of 16.7% on average.Nucor’s shares have gained 58.8% in the past year. The Zacks Consensus Estimate for NUE’S current-year earnings has been revised 10.6% upward in the past 60 days. The company topped Zacks Consensus Estimate in all of the last fourth quarters. It delivered a trailing four-quarter earnings surprise of 7.7% on average.Agnico’s shares have gained 14% in the past year. The Zacks Consensus Estimate for AEM’s current-year earnings has been revised 0.4% upward in the past 60 days.Agnico Eagle beat Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 26.4% on average.  Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Nucor Corporation (NUE): Free Stock Analysis Report Agnico Eagle Mines Limited (AEM): Free Stock Analysis Report Commercial Metals Company (CMC): Free Stock Analysis Report LyondellBasell Industries N.V. (LYB): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

AU Optronics (AUO) has seen the average utilization rate of its LCD fabs rise to above 60% in the fourth quarter of 2022, up from 50% in the prior quarter, according to company chairman Paul Peng......»»

In the wake of a travel frenzy, sparked by pent-up consumer travel demand and more than two years of pandemic-induced lockdowns and border restrictions, tourism and leisure are making a strong rebound as consumers take to the skies again at a soaring pace. The recent summer of travel chaos, which ensued with hordes of canceled […] In the wake of a travel frenzy, sparked by pent-up consumer travel demand and more than two years of pandemic-induced lockdowns and border restrictions, tourism and leisure are making a strong rebound as consumers take to the skies again at a soaring pace. The recent summer of travel chaos, which ensued with hordes of canceled flights, endless queues at immigration control, thousands of lost luggage pieces, rail strikes, and confusing COVID-19 entry regulations were only among the few challenges the airline and tourism industry faced amid the sudden return of travel. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   In most cases, we can almost say that the cause behind the chaos, which ended up derailing thousands of passengers' planned trips, was due to a lack of insufficient planning, available support systems, and unreliable operational undertakings. The recent few months of travel have been a test of what lies ahead, and in part, how human innovation paired with digital and technological tools can help improve outdated systems, provide foolproof real-world solutions and enhance the overall customer journey from start to finish. In a recent conversation with David B. Stewart, CEO of Guide To Europe, an online travel aggregators and bookings platform for European-based excursions, mentioned how technological reform will see travel, tourism, leisure, and hospitality enter a new era of digital evolution despite the persisting problems we’ve already encountered. “Although the travel and tourism industry has made a strong recovery, it's only a matter of time before we encounter another surge in pent-up travel demand as consumers are more eager than ever to travel. We need to look at the current issues and see how we can address them using tech-based systems. Our consumers have become increasingly tech-savvy, and we’ll need to adjust accordingly,” Stewart shares with us. Today it’s impossible to think what our lives will be like without technology. From the food we consume to the stores we shop at, and the places we visit, to the cars we drive and the fuel we use to power them - technology plays a vital and integral part in our human existence. While on the surface we’ve become accustomed to the tools we now know and enjoy so freely. Although these drive meaningful touch points throughout the journey, a deeper understanding of how technological innovations are helping to reshape and reimagine the travel and tourism industry paints a vivid picture of how much the industry still needs to adapt in the coming years. User Mobile Apps Mobile apps have surpassed their primary function of connecting users with one another, instead, it’s now helped businesses connect with their customers, and put customers in contact with the right people whenever they require additional information or assistance. Mobile apps have become a vital tool, more than we can comprehend. Booking flights, checking time schedules, sharing itineraries, planning and booking accommodation, and even finding the best restaurants to eat at can now be done through mobile apps. Apps can be personalized to fit the customer experience, and even make the entire journey, wherever this may be, easier, more convenient, and more streamlined. It’s hard to imagine what apps aren’t capable of, and we’ve already seen some big names in the travel industry take major advantage of mobile apps, from digital hotel room keys to virtual boarding passes, everything can now be encapsulated under a single dome of control. Live in-app chat and chatbots During the height of the pandemic, live communication through mobile apps and websites with the use of chatbots and virtual assistants proved to mitigate the need for human intervention to complete mundane and tedious tasks. It hasn't taken much convincing, but we now see several businesses within the travel and leisure industry utilizing chatbots and instant messaging as a way to assist customers quicker and more effortlessly. “Communication is a critical part of what we do, not just as an online bookings platform, but in terms of the experience we create for the customer from the very first moment of interaction,” Stewart says. Travel companies, in whichever capacity they function in the value chain will need to understand that they are not only selling a product or service but rather that it’s an experience that the customer is paying top dollar for. In the fast-paced era where consumers constantly want to stay connected to the outside world, chatbots will only become a bigger part of how we travel. Recently, it was found that roughly 62% of consumers would rather use a customer service bot than wait for human agents. “In travel, the rate of response is just as important as the rate of retention.” Big data is still big news There’s a shared commonality among consumers when it comes to big data and how much companies know about us, especially after several high-end corporations are being held accountable for their involvement in the harboring of consumers’ personal information and data. While we’ll never know what our data is used for, and who it’s being sold to, for travel and tourism it plays a vital role in understanding consumer demand and changing trends. Big data offers better insight into what consumers are looking for in terms of travel and tourism, and through these metrics, companies can adjust their packages and pricing accordingly. Big data provides big results, which is what travel businesses need to better understand the anticipated demand, optimize their consumer strategies, and target their marketplace through precision marketing tactics. The use of technical data will become increasingly valuable with search engines such as Google waiving Universal Analytics and introducing Google Analytics 4. The change would mean that browsers will now be able to block third-party cookies and ads, making it difficult for businesses to collect consumer-based data and analytics. And big data can now be found in every aspect of our lives, from tourism and travel to the finance sector - there’s a lot of money behind data-driven opportunities. An example of this we already see in real life is the use of big data to help build investment models that can help build economically-motivated investment themes. This ensures that those who are investing in diverse asset classes ranging from real estate, gold IRAs, stocks, or even other cryptocurrencies can now objectively evaluate securities and ensure they make fundamentally-based decisions that will drive meaningful impact towards their portfolios. Despite industries such as finance that largely depend on big data to help drive fundamental investment themes, other industries, including tourism, hospitality and leisure will become increasingly dependent on technical consumer data to follow and understand industry trends. Big data presents itself as more than a technical analysis of what consumers want, but rather it can help industries such as tourism establish better predictive models that can help promote industry growth and business transparency. Internet of Things The Internet of Things (IoT) is an interconnected system that links devices and customers with the right information and touch points at any given time. Though we already see IoT playing its part in our everyday lives, powering our smartphones, helping us browse the internet, and sharing information instantaneously, IoT will prove more valuable to minimize certain touch points without the need for a network of human interactions. Stewart believes that IoT technology and digital delivery will make it easier for consumers to find the products and services they need without requiring in-person contact. “Within Guide To Europe, we’ve been able to launch one of the world’s largest selections of vacation packages in Europe through optimized Artificial Intelligence (AI). We’ve combined local expertise and digital resources to deliver users with a much easier way to travel.” Marrying both human and non-human elements means that users can now book a  complete vacation in under a minute.IoT will enable travelers to book and plan their travels more seamlessly, as we’ve seen with Guide To Europe which has made it easier for travelers to manage their trip, documents and itinerary in one place. On top of this, IoT can now be found in hotel rooms and restaurant kitchens and retail stores. The success of IoT will only become more apparent in the near term as consumers coordinate their needs with what service providers can offer them in terms of their technological demands. Contactless applications Contactless applications such as QR Codes and contactless payment options have already experienced massive growth during the pandemic when physical activity and movement of consumers were limited. The use of contactless applications allows for ever-changing consumer demand. These applications are more reliable, safer, and quicker, and nowadays everyone with an internet connection will be able to utilize these applications to a fuller extent. Tourism already sees an increase in contactless technology being used across the field. Boarding passes are now digital, and hotel check-in can be done without visiting the front desk while ordering a cab or taxi can be completed and paid for through one application. There’s an unlimited sequence of real-world utilization, and in the growing digital world, tech-savvy consumers want solutions that are secure, convenient, and bespoke all at the same time. Guide To Europe showcases another element of digital innovation, allowing travelers to book a travel through with Google Assistant and Amazon Alexa - another contactless application that's helped reshape the travel and tourism industry. “There’s a need for digital transformation, and we believe that travelers should have more freedom and flexibility when arranging their travel plans, that’s why we enabled voice recognition capabilities, which will help travelers complete a trip to Europe within three minutes,” Stewart shares. Contactless is the future, and in a society that has recently come out of the clutches of a global pandemic, convenience and security will triumph over traditionality. Cybersecurity The rise of tech-savvy consumers and internet-based applications has led to a growing opportunity for cybercriminals to infiltrate company data and request exuberant ransoms to safely return the information. These data breaches, which have seen a 15.1% increase between 2020 and 2021, have become a major headache for businesses in the travel and tourism industry. Not only do cybercriminals impose a direct threat on the business, but also its credibility and authority among its customers and competitors. What’s more alarming, some experts suggest that in 93% of cyber attack cases, external hackers can breach and enter an organization's network perimeter, gaining access and control over their systems and data instantaneously. Across the spectrum, cybersecurity plays a vital role and importance in the overall growth and success of the tourism industry in adapting new technologies. “The threat of cybersecurity is not only prevalent in our industry, but we see growing numbers of it in several sectors, from marketing to communications, and even finances, where the brunt of cybercrime is concentrated at the moment,” tells Stewart. The sudden rise in cybercrime, without definite solutions, could be a major hurdle for the industry and consumers going forward. Consumers want to ensure their information is safe and secure, and they place a lot of importance on trusting the companies they do business with. Whether they’re booking airline tickets, shopping online or simply trading stocks - cybersecurity is a critical element throughout the digital experience. Going Forward Technology plays a vital part in how consumers are now embracing the return of travel after enduring more than two years of lockdowns. Though travel has returned, it does however raise questions over whether the tourism industry has geared itself with the right digital tools and technologies to cope with a sudden surge in demand. Theoretically, we see how existing technology has helped the industry advance itself, providing consumers with real-world solutions, and giving them more convenient access to the right set of tools and information. Now, as we steadily enter a new era of travel and technology, it will be crucial for travel, tourism, leisure, and hospitality to adapt accordingly, not only to meet consumer demand but to remain a competitive player among their competitors and help transform the entire industry regardless of where it may be heading......»»

Delek US Holdings (DK) hopes to start its share repurchase program by buying stock worth $25-$35 million during the July-September period. The stock of diversified downstream energy company Delek US Holdings DK has hardly moved since its second-quarter 2022 results were announced on Aug 4. The muted response, despite the top and bottom-line beats, could be attributed to the increase in the company’s full-year capital spending guidance.What Did Delek’s Earnings Unveil?Delek US Holdings reported second-quarter 2022 adjusted net income per share of $4.40, which handily beat the Zacks Consensus Estimate of $3.07 and turned around from the year-earlier loss of 88 cents. The outperformance could be attributed to supportive refining fundamentals that pushed margins higher. The company said that its adjusted EBITDA was $518.4 million, compared with $46.1 million in the year-earlier period.Meanwhile, Delek’s revenues of $6 billion surged 173% year over year and beat the consensus mark by $1.8 billion, primarily due to soaring sales from its key Refining segment. Revenues from the unit came in at $4.5 billion, more than doubling from the second quarter of 2021 and 41.9% above the Zacks Consensus Estimate.Delek is using the excess cash from a supportive environment to reward investors with dividends and buybacks. As part of that, DK’s board of directors declared a special dividend of 20 cents in June and reinstated the regular quarterly payout of 20 cents per share Delek US Holdings, Inc. Price, Consensus and EPS Surprise Delek US Holdings, Inc. price-consensus-eps-surprise-chart | Delek US Holdings, Inc. Quote backslashbackslashInside DK’s SegmentsRefining: The Refining segment’s contribution margin (refining margin minus operating expenses) rose sharply from just $14.1 million in the second quarter of 2021 to $618.3 million and trumped the Zacks Consensus Estimate of $282 million. Moreover, oil throughput achieved a record of approximately 295,000 barrels a day.The significant improvement in results reflects higher refining margins and product demand. Overall, elevated consumption paired with considerably lower refining capacity in the OECD countries provided a tailwind for refinery profits. In particular, constrained Russian fuel exports in the wake of the Ukraine conflict have further tightened refining fundamentals.Logistics: This unit represents Delek’s majority interest in Delek Logistics Partners, L.P., a publicly traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.The Logistics unit’s margin of $69.3 million was higher than the year-ago period’s income of $64.2 million but missed the Zacks Consensus Estimate of $88 million. The segment benefited from robust refinery utilization and contribution from the 3Bear Energy acquisition but was hurt by lower volumes through the East Texas Crude Logistics System.Retail: In the second quarter of 2022, the Retail segment — formed by the acquisition of Alon USA Energy in 2017 — had a contribution margin of $18.2 million compared with $21.9 million a year ago. Further, the margin failed to match the consensus mark of $26.2 million.While merchandise sales of $83.4 million were marginally below the second-quarter 2021 sales of $84.5 million, the same managed to beat the Zacks Consensus Estimate by 10.3%. Even merchandise margin of 34% improved from 32.7% in the year-ago period. In the second quarter, DK’s retail stations sold 44,911 thousand gallons of gasoline compared with 42,978 thousand gallons a year ago. However, these factors were more than offset by a lower store count (248 versus 252) and a 15.4% decline in retail fuel margin to 33 cents per gallon.Cost, Balance SheetThe company, carrying a Zacks Rank #2 (Buy), reported total operating costs and expenses of $5.5 billion for second-quarter 2022, up 144.9% from the year-ago quarter. This rise was primarily attributable to the higher cost of sales, which surged 147.9%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.As of Jun 30, Delek US Holdings had cash and cash equivalents of $1.2 billion and long-term debt of $2.7 billion, with debt-to-total capital of about 67.2%.GuidanceDelek projects third-quarter 2022 crude oil throughput to average between 285,000 and 295,000 barrels per day or roughly 96% utilization at the midpoint. For full-year 2022, the company now sees capital expenditure between $290 and $300 million compared with the prior estimate of $250-$260 million. Finally, DK hopes to start its repurchase program by buying shares worth $25-$35 million during the July-September period as part of its newly expanded buyback authorization of $400 million.Some Key Refining EarningsWhile we have discussed DK’s second-quarter results in detail, let’s see how some other refining companies fared this earnings season.Phillips 66 PSX reported adjusted earnings per share of $6.77, comfortably beating the Zacks Consensus Estimate of $5.92. The bottom line also skyrocketed from a profit of 74 cents per share in the year-ago quarter.PSX’s worldwide margins surged to $28.31 per barrel from the year-ago quarter’s $3.92. The same in the Central Corridor and Atlantic Basin/Europe increased to $26.72 and $30.39 per barrel from the year-ago levels of $6.40 and $4.63, respectively. In the Gulf Coast, Phillips 66 saw the metric jump to $24.80 per barrel from $2.10 in the prior-year quarter. The West Coast witnessed an increase in margins from $3.37 per barrel in the year-ago quarter to $33.13 in the June-end quarter of 2022.Another refining giant, Valero Energy VLO reported adjusted earnings of $11.36 per share, compared with a meager 48 cents in the year-ago quarter. The bottom line also beat the Zacks Consensus Estimate of $9.70 per share. VLO’s strong quarterly results were supported by increased refinery throughput volumes and a higher refining margin.For the quarter, Valero’s refining throughput volumes were 2,962 thousand barrels per day (MBbls/d), up from 2,835 MBbls/d in second-quarter 2021. Meanwhile, VLO’s refining margin per barrel of throughput increased to $30.01 from the year-ago level of $7.95.Finally, we have Marathon Petroleum MPC, which reported second-quarter adjusted earnings of $10.61 per share, comfortably beating the Zacks Consensus Estimate of $9.17 and compared with a profit of merely 67 cents per share in the year-ago period. MPC’s bottom line was favorably impacted by the stronger-than-expected performance of its Refining & Marketing segment, whose operating income totaled $7.1 billion, ahead of the Zacks Consensus Estimate by 108.4%.The company repurchased shares worth $4.1 billion during the May-July period and has now completed more than 80% of its target to buy back $15 billion in common stock. This was after Marathon Petroleum concluded the sale of its Speedway business, comprising approximately 3,900 c-stores in 35 states to Japan-based retail group Seven & i Holdings — the owner of the 7-Eleven convenience store chain — for $21 billion. With the existing capital return program coming to a close, the MPC board authorized a new $5 billion repurchase scheme with no expiration date.  Want to Know the #1 Semiconductor Stock for 2022? Few people know how promising the semiconductor market is. Over the last couple of years, disruptions to the supply chain have caused shortages in several industries. The absence of one single semiconductor can stop all operations in certain industries. This year, companies that create and produce this essential material will have incredible pricing power. For a limited time, Zacks is revealing the top semiconductor stock for 2022. You'll find it in our new Special Report, One Semiconductor Stock Stands to Gain the Most. Today, it's yours free with no obligation.>>Give me access to my free special report.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 Valero Energy Corporation (VLO): Free Stock Analysis Report Delek US Holdings, Inc. (DK): Free Stock Analysis Report Marathon Petroleum Corporation (MPC): Free Stock Analysis Report Phillips 66 (PSX): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Futures Tumble After UK Double-Digit Inflation Shock Sparks Surge In Yields Futures were grinding gingerly higher, perhaps celebrating the end of the Cheney family's presence in Congress, and looked set to re-test Michael Hartnett bearish target of 4,328 on the S&P (which marked the peak of yesterday's meltup before a waterfall slide lower when spoos got to within half a point of the bogey), when algos and the few remaining carbon-based traders got a stark reminder that central banks will keep hammering risk assets after the UK reported a blistering CPI print, which at a double digit 10.1% was not only higher than the highest forecast, but was the highest in 40 years. The print appeared to shock markets out of their month-long levitating complacency, and yields - both in the UK and the US - spiked... ... and with yields surging, futures had no choice but to notice and after trading at session highs just before the UK CPI print, they have since tumbled more than 40 points and were last down 0.85% or 37 points to 4,271. Nasdaq 100 futures retreated 0.9% signaling a selloff in technology names will continue. The dollar rose as investors awaited the minutes of the Fed’s last policy meeting for clues on policy makers’ sensitivity to weaker economic data. In US premarket trading, retail giant Target slumped 4% after reporting earnings that missed expectations despite still predicting a rebound. Applied Materials and PayPal dropped at least 1.3%. Tech stocks are the forefront of the growing pessimism over equity valuations on the back of Fed rate increases. The S&P 500 had posted a small gain on Tuesday, aided by earnings reports from retailers Walmart Inc. and Home Depot. Here are some of the other biggest U.S. movers today: Manchester United (MANU US) rises as much as 17% in US premarket trading before trimming most of the gains, after Tesla CEO Elon Musk said he was buying the English football club but later added that he was joking. Hill International (HIL US) shares rise 61% in premarket trading hours after it announced Global Infrastructure Solutions will commence an all-cash tender offer for $2.85/share in cash, representing a premium of 63% to the last closing price. BioNTech (BNTX US) was initiated with a market perform recommendation at Cowen, which expects demand for Covid-19 vaccines to mirror annual flu trends as the pandemic enters its endemic phase. Bed Bath & Beyond (BBBY US) shares surge 20% in premarket trading, putting the stock on track for its sixth day of gains. The home-goods company has helped reinvigorate a wave of meme stock buying Agilent (A US) saw its price target boosted at brokers as analysts say the scientific testing equipment maker’s results were strong thanks to growth in biopharma and a recovery in China, while the company’s guidance was on the conservative side. Shares rose . Jefferies initiated coverage of Waldencast Plc (WALD US) class A with a buy recommendation as analyst Stephanie Wissink sees 29% upside potential. Sea Ltd. (SE US) ADRs slipped as much as 2.1% in US premarket trading, extending Tuesday’s declines, as Morgan Stanley cut its PT on expectations of slowing growth at the Shopee owner’s e-commerce business in the third quarter. Weber (WEBR US) downgraded to sell from neutral at Citi, which says there are too many concerns to remain on the sidelines, including a decline in point-of-sale traffic and macro factors like inflation weighing on consumer demand In the past two months, US stocks rallied on signs of peaking inflation and an earnings-reporting season that saw four out of five companies meeting or beating estimates. Boosted by relentless systematic (CTA) buying and retail-driven short squeezes, as well as a surge in buybacks, stocks recovered more than 50% of the bear market retracement. Yet, continuing rate hikes and the likelihood of a recession in the world’s largest economy are weighing on sentiment. Meanwhile, concern is growing that Fed rate setters will remain focused on the fight against inflation rather than supporting growth. “We expect the FOMC minutes to have a hawkish tilt,” Carol Kong, strategist at Commonwealth Bank of Australia Ltd., wrote in a note. “We would not be surprised if the minutes show the FOMC considered a 100 basis-point increase in July.” In Europe, the Stoxx 600 fell after a strong start amid signs the continent’s energy crisis is worsening. Benchmark natural-gas futures jumped as much as 5.1% on expectations the hot weather will boost demand for cooling. In the UK, consumer-price growth jumped to 10.1%, sending gilts tumbling. Real estate, retailers and miners are the worst performing sectors. The Stoxx 600 Real Estate Index declined 2%, making it the worst-performing sector in the wider European market, as focus turned to UK inflation that soared to double digits for the first time in four decades and also to today's FOMC minutes. German and Swedish names almost exclusively account for the 10 biggest decliners. TAG Immobilien drops 5.4%, Wallenstam is down 4.7%, Castellum falls 4% and LEG Immobilien declines 3.3%. The sector tumbles on rising bond yields, with 10y Bund yield up 11bps, and dwindling demand for Swedish real estate amid rising rates. Earlier on Wednesday, stocks rose in Asia amid speculation that China may deploy more stimulus to shore up its ailing economy while Japanese exporters were boosted by a weaker yen. After a string of weak data driven by a property-sector slump and Covid curbs, China’s Premier Li Keqiang asked local officials from six key provinces that account for 40% of the economy to bolster pro-growth measures. The MSCI Asia Pacific Index advanced as much as 0.8%, with consumer-discretionary and industrial stocks such as Japanese automakers Toyota and Honda among the leaders on Wednesday. The benchmark Topix erased its year-to-date loss. Chinese food-delivery platform Meituan also rebounded after dropping more than 9% in the previous session on a Reuters report that Tencent may divest its stake in the firm. Chinese stocks erased declines early in the day, as investors hoped for more economic stimulus after a surprise rate cut on Monday failed to excite the market. Premier Li Keqiang has asked local officials from six key provinces that account for about 40% of the country’s economy to bolster pro-growth measures. “I believe policymakers have the tools to prevent a hard landing if needed,” Kristina Hooper, chief global market strategist at Invesco, said in a note. “I find investors are overly pessimistic about Chinese stocks -- which means there is the potential for positive surprise.” Asia’s stock benchmark is trading at mid-June levels as traders attempt to determine the trajectory of interest-rate hikes and economic growth globally -- as well as the impact of China’s property crisis and Covid policies. Meanwhile, minutes of the US Federal Reserve’s July policy meeting, out later Wednesday, will be carefully parsed. New Zealand stocks closed little changed as the country’s central bank raised interest rates by a half percentage point for a fourth-straight meeting. Australia's S&P/ASX 200 index rose 0.3% to close at 7,127.70, supported by materials and consumer discretionary stocks. South Korea’s benchmark missed out on the rally across Asian equities, as losses by large-cap exporters weighed on the measure In FX, the Bloomberg Dollar Spot Index rose as the dollar gained versus most of its Group-of-10 peers. The pound was the best G-10 performer while gilts slumped, led by the short end and sending 2-year yields to their highest level since 2008, after UK inflation accelerated more than expected in July. The yield curve inverted the most since the financial crisis as traders ratcheted up bets on BOE rate hikes in money markets, wagering on 200 more basis points of hikes by May. The euro traded in a narrow range against the dollar while the region’s bonds slumped, led by the front end. Scandinavian currencies recovered some early European session losses while the aussie, kiwi and yen extended their slide in thin trading. EUR/NOK one-day volatility touched a 15.12% high before paring ahead of Norges Bank’s meeting Thursday where it may have to raise rates by a bigger margin than indicated in June given Norway’s inflation exceeded forecasts for a fourth straight month, hitting a new 34-year high. Consumer sentiment in Norway fell to the lowest level since data began in 1992, according to Finance Norway. New Zealand’s dollar and bond yields both rose in response to the Reserve Bank hiking rates by 50bps, while flagging concern about labor market pressures and consequent wage inflation; the currency subsequently gave up gains in early European trading. The Aussie slumped after data showing the nation’s wages advanced at less than half the pace of inflation in the three months through June, backing the Reserve Bank’s move to give itself more flexibility on interest rates. In rates, treasuries held losses incurred during European morning as gilt yields climbed after UK inflation rose more than forecast. US 10-year around 2.87% is 6.5bp cheaper on the day vs ~13bp for UK 10-year; UK curve aggressively bear-flattened following inflation data, with long-end yields rising about 10bp. Front-end UK yields remain cheaper by ~20bp, off session highs, leading a global government bond selloff. US yields are higher on the day by by 4bp-7bp; focal points of US session are 20-year bond auction and FOMC minutes release an hour later. Treasury auctions resume with $15b 20-year bond sale at 1pm ET; WI 20-year yield at around 3.35% is ~7bp richer than July’s sale, which stopped 2.7bp through the WI level. In commodities, oil fluctuated between gains and losses, and was in sight of a more than six-month low -- reflecting lingering worries about a tough economic outlook amid high inflation and tightening monetary policy.  Spot gold is little changed at $1,774/oz Looking at the day ahead, the FOMC minutes from July will be the main highlight, and the other central bank speaker will be Fed Governor Bowman. Otherwise, earnings releases include Target, Lowe’s and Cisco Systems, and data releases include US retail sales and UK CPI for July. Market Snapshot S&P 500 futures down 0.3% to 4,293.00 STOXX Europe 600 little changed at 443.30 MXAP up 0.5% to 163.48 MXAPJ up 0.2% to 530.38 Nikkei up 1.2% to 29,222.77 Topix up 1.3% to 2,006.99 Hang Seng Index up 0.5% to 19,922.45 Shanghai Composite up 0.4% to 3,292.53 Sensex up 0.5% to 60,168.83 Australia S&P/ASX 200 up 0.3% to 7,127.68 Kospi down 0.7% to 2,516.47 German 10Y yield little changed at 1.06% Euro little changed at $1.0178 Gold spot down 0.0% to $1,775.21 U.S. Dollar Index little changed at 106.50 Top Overnight News from Bloomberg More market prognosticators are alighting on the idea of benchmark Treasury yields sliding to 2% if the US succumbs to a recession. That’s an out-of-consensus call, compared with Bloomberg estimates of about a 3% level by the end of this year and similar levels through 2023. But it’s a sign of how growth worries are forcing a rethink in some quarters The euro-area economy grew slightly less than initially estimated in the second quarter as signs continue to emerge that momentum is unraveling. Output rose 0.6% from the previous three months between April and June, compared with a preliminary reading of 0.7%, Eurostat said Wednesday Egypt became a prime destination for hot money by tethering its currency and boasting the world’s highest interest rates when adjusted for inflation Norway’s $1.3 trillion sovereign wealth fund, the world’s largest, posted its biggest loss since the pandemic as rate hikes, surging inflation and Russia’s invasion of Ukraine spurred volatility. It lost an equivalent of $174 billion in the six months through June, or 14.4% A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks just about shrugged off the choppy lead from the US where markets were tentative amid mixed data signals and strong retailer earnings, but with gains capped overnight ahead of the FOMC Minutes and as participants digested another 50bps rate hike by the RBNZ. ASX 200 swung between gains and losses with the index indecisive amid a slew of earnings and with strength in the consumer sectors offset by underperformance in tech, energy and healthcare. Nikkei 225 climbed above the 29,000 level with the index unfazed by mixed data releases in which Machinery Orders disappointed although both Exports and Imports topped forecasts. Hang Seng and Shanghai Comp were somewhat varied with Hong Kong led higher by tech amid plenty of attention on Meituan after reports its largest shareholder Tencent could reduce all or the bulk of its shares in the Co. which a Tencent executive later refuted, while the mainland was less decisive amid headwinds from the ongoing COVID situation and with power restrictions disrupting activity in Sichuan, although reports also noted that Chinese Premier Li told top provincial officials that they must have a sense of urgency to consolidate the economic recovery and reiterated to step up macro policies. Top Asian News RBNZ hiked the OCR by 50bps to 3.00%, as expected, while it stated that conditions need to continue to tighten and they agreed that maintaining the current pace of tightening remains the best means. RBNZ also agreed that further increases in the OCR were required to meet the remit objective and that domestic inflationary pressures had increased since May. Furthermore, the RBNZ raised its projections for the OCR and inflation with the OCR seen at 3.69% in Dec. 2022 (prev. 3.41%) and at 4.1% for both Sept. 2023 and Dec. 2023 (prev. 3.95%), while it sees annual CPI at 4.1% by Sept. 2023 (prev. 3.0%). RBNZ Governor Orr stated at the press conference that they are not forecasting a recession but expected below-potential growth amid subdued consumer spending. Governor Orr also stated that they did not discuss a 75bps rate hike today and that 50bps moves have been orderly and sufficient, while he added that getting rates to 4% would buy comfort for the policy committee and that a Cash Rate of around 4% is unambiguously above neutral and sufficient to meet the inflation mandate. Chongqing, China is to curb power use for eight days for industry. China’s Infrastructure Boom Gets Swamped by Property Woes Tencent 2Q Revenue Misses Estimates Hong Kong Denies Democracy Advocates Security Law Jury Trial UN Expert Says Xinjiang Forced Labor Claims ‘Reasonable’ Singapore’s COE Category B Bidding Hits New Record Delayed Deals Add to Floundering Singapore IPO Market: ECM Watch European bourses have dipped from initial mixed/flat performance and are modestly into negative territory, Euro Stoxx 50 -0.5%. Stateside, futures are under similar pressure awaiting fresh corporate updates and the July FOMC Minutes, ES -0.6%. Fresh drivers relatively limited throughout the session with known themes in play and focus on upcoming risk events; stocks also suffering on further hawkish yield action. Lowe's Companies Inc (LOW) Q1 2023 (USD): EPS 4.68 (exp. 4.58), Revenue 27.47 (exp. 28.12bln); expect FY22 total & comp. sales at bottom-end of outlook range, Operating Income and Diluted EPS at top-end. Target Corp (TGT) Q1 2023 (USD): EPS 0.39 (exp. 0.72), Revenue 26.0bln (exp. 26.04bln); current trends support prior guidance. Top European News German Gas to Last Less Than 3 Months if Russia Cuts Supply European Gas Surges Again as Higher Demand Compounds Supply Pain Entain Falls; Citi Views Fine Negatively but Notes Steps by Firm UK Inflation Hits Double Digits for the First Time in 40 Years Crypto.com Receives Registration as UK Cryptoasset Provider FX Greenback underpinned ahead of US retail sales data and FOMC minutes, DXY holds tight around 106.500. Pound pegged back after spike in wake of stronger than expected UK inflation metrics, Cable hovers circa 1.2100 after fade into 1.2150. Kiwi retreats following knee jerk rise on the back of hawkish RBNZ hike, NZD/USD near 0.6300 from 0.6380+ overnight peak. Aussie undermined by marginally softer than anticipated wage prices and lower RBA tightening bets in response, AUD/USD well under 0.7000 vs 0.7026 at one stage. Yen weaker as yield differentials widen again, but Euro cushioned by more pronounced EGB reversal vs USTs, USD/JPY probes 21 DMA just below 135.00, EUR/USD bounces from around 1.0150 towards 1.0200. Loonie and Nokkie soft amidst latest slippage in oil, USD/CAD closer to 1.2900 than 1.2800, EUR/NOK nudging 9.8600 within 9.8215-9.8740 range. Fixed Income Debt retracement ongoing and gathering pace ahead of Wednesday's key risk events. Bunds now closer to 154.00 than 156.00 and 157.00 only yesterday, Gilts not far from 114.50 vs almost 116.00 and 117.00+ earlier this week and T-note sub-119-00 vs 119-31 at best on Monday. Sonia strip hit hardest as markets price in aggressive BoE hikes in response to UK inflation data toppy already elevated expectations. Commodities Crude benchmarks are currently little changed overall, having recovered from a bout of initial pressure; newsflow thin awaiting fresh JCPOA developments Spot gold is little changed overall but with a slight negative bias as the USD remains resilient and outpaces the yellow metal as the haven of choice. Aluminium is the clear outperformer amid updates from Norsk Hydro that they are shutting production at their Slovalco site (175k/T year) by end-September, due to elevated energy prices. OPEC Sec Gen says he sees a likelihood of an oil-supply squeeze this year, open for dialogue with the US. Still bullish on oil demand for 2022. Too soon to call the outcome of the September 5th gathering. Spare capacity at around the 2-3mln BPD mark, "running on thin ice". US Private Inventory Data (bbls): Crude -0.4mln (exp. -0.3mln), Cushing +0.3mln, Gasoline -4.5mln (exp. -1.1mln), Distillates -0.8mln (exp. +0.4mln). Shell (SHEL LN) announced it is to shut its Gulf of Mexico Odyssey and Delta crude pipelines for two weeks in September for maintenance, according to Reuters. Uniper (UN01 GY) says the energy supply situation in Europe is far from easing and gas supply in winter remains "extremely challenging". China sets the second batch of the 2022 rare earth mining output quota at 109.2k/T, via Industry Ministry; smelting/separation quota 104.8k/T. Geopolitics China's military is to partake in a military exercise in Russia, their participation has nothing to do with the international situation. Taiwan's Defence Ministry says they have detected 21 Chinese aircraft and five ships around Taiwan on Wednesday, via Reuters. Iran is calling on the US to free jailed Iranian's, says they are prepared for prisoner swaps, via Fars. US Event Calendar 07:00: Aug. MBA Mortgage Applications, prior 0.2% 08:30: July Retail Sales Advance MoM, est. 0.1%, prior 1.0% 08:30: July Retail Sales Ex Auto MoM, est. -0.1%, prior 1.0% 08:30: July Retail Sales Control Group, est. 0.6%, prior 0.8% 10:00: June Business Inventories, est. 1.4%, prior 1.4% 14:00: July FOMC Meeting Minutes DB's Tim Wessel concludes the overnight wrap Starting in Europe, where the looming energy crisis remains at the forefront. An update from our team, who just published the fourth edition of their indispensable gas monitor (link here), where they note the surprisingly fast rebuild of German gas storage, driven by reductions in industrial activity, reduces the risk that rationing may become reality this winter. Many more insights within, so do read the full piece for analysis spanning scenarios. Keep in mind, that while gas may be available, it is set to come at a higher clearing price, which manifest itself in markets yesterday where European natural gas futures rose a further +2.64% to €226 per megawatt-hour, just shy of their closing record at €227 in March. But, that’s still well beneath their intraday high from March, where at one point they traded at €345. Further, one-year German power futures increased +6.30%, breaching €500 for the first time, closing at €507. Germany is weighing consumer relief measures in light of climbing consumer prices and also announced that planned nuclear facility closures would be “temporarily” postponed. The upward energy price pressure and attenuated (albeit, not eliminated) risk of rationing pushed European sovereign yields higher. 10yr German bunds climbed +7.1bps to 0.97%, while 10yr OATs kept the pace, increasing +7.4bps. 10yr BTPs increased +15.9bps, widening sovereign spreads, while high yield crossover spreads widened +10.2bps in the credit space. Equities were resilient, however, with the STOXX 600 posting a +0.16% gain after flitting around a narrow range all day. Regional indices were also robust to climbing energy prices, with the DAX up +0.68% and the CAC +0.34% higher. In the States the S&P 500 registered a modest +0.19% gain, with the NASDAQ mirroring the index, falling -0.19%. Retail shares drove the S&P on the day, with the two consumer sectors both gaining more than +1%, following strong earnings reports from Wal Mart and Home Depot. Treasury yields also climbed, but the story was the further flattening in the curve. 2yr yields were +7.5bps higher while 10yr yields managed to increase just +1.6bps, leaving 2s10s at its second most negative close of the cycle at -46bps. 10yr yields are another basis point higher this morning. A hodgepodge of data painted a mixed picture. Housing permits beat expectations (+1674k vs. +1640k) while starts (+1446k vs. +1527k) fell to their slowest pace since February 2021. However, under the hood, even permits weren’t necessarily as strong as first glance, as single family permits fell -4.3% with gains in multifamily pushing the aggregate higher. Indeed, year-over-year, single family permits have now fallen -11.7% while multifamily permits are +23.5% higher. So the single family housing market continues to feel the impact of Fed tightening. Meanwhile, industrial production climbed +0.6% month-over-month (vs. +0.3%), with capacity utilization hitting its highest level since 2008 at 80.3%. Drifting north of the border, Canadian inflation slowed to 7.6% YoY in July in line with estimates, while the average of core measures climbed to a record 5.3%. Bank of Canada Governor Macklem penned an opinion piece saying that while it looks like inflation may have peaked, “the bad news is that inflation will likely remain too high for some time.” In turn, Canadian OIS rates by December climbed +16.2bps. In other data, the expectations component of the German ZEW survey fell to -55.3, its lowest level since October 2008 at the depths of the GFC. In the UK, regular pay (excluding bonuses) fell by -3.0% in real terms over the year to April-June 2022, its fastest decline on record. On the Iranian nuclear deal, EU negotiators reportedly found Iran’s response constructive, though Iran still had some concerns. Notably, Iran is looking for guarantees that if a future US administration withdraws from the JCPOA the US will "have to pay a price”, seeking insulation from the vagaries of representative democracy. Asian equity markets are trading higher after Wall Street’s solid performance overnight. The Nikkei (+0.76%) is leading gains across the region with the Hang Seng (+0.57%), the Shanghai Composite (+0.23%) and the CSI (+0.51%) all rebounding from its opening losses this morning. US futures are struggling to gain traction this morning with the S&P 500 (-0.02%) and NASDAQ 100 (-0.09%) trading just below flat. The Reserve Bank of New Zealand lifted its official cash rate (OCR) for the fourth consecutive time by an expected +50bps to 3%, a seven-year high, while bringing forward the estimate of future rate increases. The central bank expects the OCR will reach 3.69% at the end of this year and expects it to peak at 4.1% in March 2023, higher and sooner than previously forecast. Early morning data coming out from Japan showed that exports rose +19.0% y/y in July (v/s +17.6% expected) posting 17 straight months of gains while imports advanced +47.2% (v/s +45.5% expected) driven by global fuel inflation and a weakening yen. With the imports outweighing exports, the nation reported trade deficit for the 14th consecutive month, swelling to -2.13 trillion yen in July (v/s -1.91 trillion yen expected) compared to a revised deficit of -1.95 trillion yen in June. In terms of the day ahead, the FOMC minutes from July will be the main highlight, and the other central bank speaker will be Fed Governor Bowman. Otherwise, earnings releases include Target, Lowe’s and Cisco Systems, and data releases include US retail sales and UK CPI for July. Tyler Durden Wed, 08/17/2022 - 07:55.....»»

Offshore Drilling Is Coming Back With A Bang Authored by Alex Kimani via OilPrice.com, It looks like the offshore oil and gas drilling market is in the early innings of an upcycle in investment and activity. Both Schlumberger and Transocean believe that the upcoming cycle will outpace the 2016-2019 cycle of investment and FID activity. Demand for offshore vessels and rigs is climbing, with most new rig contracts being fixed at day rates that are higher than their prior contracts. After years of uncertainty and stagnation, the offshore drilling market is on the rebound and is in the early innings of an upcycle in investment and activity that will outpace the 2016-2019 cycle, major services and rig providers say.   Analysts and top offshore drilling executives say that offshore rig utilization and day rates are also rising in a market that is expected to tighten going forward. In one of the latest outlooks on global offshore drilling, contractor giant Transocean says that the market is recovering, with momentum accelerating.   "While the past eight years have been extremely challenging for the entire industry, it is clear that the recovery in offshore drilling is underway, as contracting activity, utilization rates for high-specification ultra-deepwater and harsh-environment assets, and dayrates all continue to rise," Transocean CEO Jeremy Thigpen said last week, commenting on the company's Q2 performance.  "And, with a backdrop of hydrocarbon supply challenges, we are increasingly encouraged that this momentum could continue for the foreseeable future,"  Thigpen added. As the world continues to consume a lot of oil and gas and many governments are prioritizing energy security to an accelerated energy transition after the Russian invasion of Ukraine, the offshore drilling activity is set for an upturn.  "We believe the case is clear that E&P companies will continue to engage in exploration and development work to meet worldwide demand and replenish diminishing reserves. This is especially true in the offshore basins requiring our assets and services where recoverable reserve levels are high and carbon intensity is relatively low," Transocean's Thigpen said on the earnings call.  "With sustained constructive commodity prices, the economics of offshore projects remain compelling for continued development," the executive added.  The company sees a rapid tightening of the offshore market for high capability drilling assets in various regions with committed drillship utilization remaining above 90%, and further tightening is on the horizon, Thigpen said.  Last month, the world's largest oilfield services provider, Schlumberger, expressed a similarly optimistic view on offshore oil and gas drilling. "The outlook for 2022, 2025 on offshore investments and FID activity will outpace visibly at 2016-2019 cycle. So we have early innings of this offshore cycle, but it's quite interesting," Schlumberger's CEO Olivier Le Peuch said on the earnings call in July.  "We see also offshore, the return of offshore being a characteristic that will only expand going forward. If you were to just look at the -- in terms of numbers, the number of jack-up big operating in shallow waters is actually on par higher than it has been for the previous cycles, more than 300, and deepwater is starting to catch up," Le Peuch added.  The market for offshore vessels and rigs sees utilization on the rise, followed by day rates, "finally allowing a market that has been in distress for many years to reap the benefits of the hard work that has been put down in the interim," Oddmund Føre, Senior Vice President, Energy Service Research, at Rystad Energy said in June.  "After a turbulent 2020-21 period denominated by the Covid-19 pandemic, the erosion of oil demand and a crash in oil prices, the offshore O&G sector is prime for a flurry of investment to make up for limited spending over the last few years," Mark Adeosun, Manager – Offshore Energy Services, at Westwood Global Energy Group, wrote in an insight on contractor spending offshore over the next few years. According to Westwood, rig utilization is trending higher, and more currently inactive units are set to enter the offshore vessel fleet, says Teresa Wilkie, Research Director of Westwood's rig market intelligence service RigLogix.  "For the first time in several years, due to this increasing committed utilisation, most new rig contracts are being fixed at dayrates that are higher than their prior contracts – another indicator of a tightening rig market," Wilkie noted.  Tyler Durden Tue, 08/09/2022 - 11:30.....»»

Corning Inc.'s second-quarter revenue came in below Wall Street's estimate when the glass maker reported its results before market open Tuesday. Corning reported sales of $3.62 billion, up from $3.5 billion in the same period last year but below the FactSet consensus of $3.78 billion. The company posted net income of $563 million, or 66 cents a share, compared to net income of $449 million and a loss of 42 cents a share in the same period last year. Adjusted per-share earnings came to 57 cents, up from 53 cents a share. FactSet consensus was 56 cents a share. Corning says 2022 sales will "slightly exceed" $15 billion, a 6% to 8% increase on the prior year. FactSet consensus is for full year sales of $15.31 billion. The glass maker also sees full year EPS growth of 6% to 8%. FactSet EPS consensus of $2.32 implies a 12.1% rise. "Although three of our significant demand drivers - panel maker utilization, automotive production, and smartphone sales - were down, we achieved high-single digit growth through 'More Corning' content opportunities and by capitalizing on secular trends in optical and solar," said Corning Chief Executive Wendell P. Weeks, in a statement. Corning's Optical sales grew 22% year over year. The company's shares were flat at $34.49 in premarket trading.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

Saga Partners commentary for the first quarter ended March 31, 2022. During the first quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 42.4% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 4.6%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio […] Saga Partners commentary for the first quarter ended March 31, 2022. During the first quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 42.4% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 4.6%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio is 112.0% net of fees compared to the S&P 500 Index of 122.7%. The annualized return since inception for the Saga Portfolio is 15.4% net of fees compared to the S&P 500’s 16.5%. Please check your individual statement as specific account returns may vary depending on timing of any contributions throughout the period. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Interpretation of Results I was not originally planning to write a quarterly update since switching to semi-annual updates a few years ago but given the current drawdown in the Saga Portfolio I thought our investors would appreciate an update on my thoughts surrounding the Portfolio and the current market environment in general. The Portfolio’s drawdown over the last several months has been hard not to notice even for those who follow best practices of only infrequently checking their account balance. Outperformance vs. the S&P 500 since inception has flipped to underperformance on a mark-to-market basis and the stock prices of our companies have continued to decline into the second quarter. In past letters I have spent a lot of time discussing the Saga Portfolio’s psychological approach to investing to help prepare for the inevitable chaos that will occur while investing in the public markets from time-to-time. It’s impossible to know why the market does what it does at any point in time. I would argue that the last two years could be considered pretty chaotic, both on the upside speculation and now what appears to be on the downside fear and panic. I will attempt to give my perspective on how events played out within the Saga Portfolio with an analogy. Let’s say that in 2019 we owned a fantastic home that was valued at $500,000. We loved it. It was in a great neighborhood with good schools for our kids. We liked and trusted our neighbors; in fact, we gave them a spare key in case of emergencies. It was the perfect home for us to live in for many years to come. Based on the neighborhood becoming increasingly attractive over time, it was likely that our home may be valued around $2 million in ~10 years from now. This is strong appreciation (15% IRR) compared to the average home, but this specific home and neighborhood had particularly strong long-term fundamental tailwinds that made this a reasonable expectation. Then in 2020 a global pandemic hit causing a huge disorientation in the housing market. For whatever reasons, the appraised value of our home almost immediately doubled to $1 million. Nothing materially changed about what we thought our home would be worth in 10 years, but now from the higher market value, the home would only appreciate at a lower 7% IRR assuming it would still be worth $2 million in 10 years. What were our options under these new circumstances? We could move and try to buy a new home that provided a higher expected return. However, the homes in the other neighborhoods that we really knew and liked also doubled in price, so they did not really provide any greater value. Also, the risk and hassle of moving for what may potentially only be modestly better home appreciation did not make sense. We could buy a home in a less desirable neighborhood where prices looked relatively cheaper, but we would not want to live long-term. Even if we decided to live there for many years, the long-term fundamental dynamics of the crummy neighborhood were weak to declining and it was uncertain if the property would appreciate at all despite its lower valuation. We could sell our home for $1 million and rent a place to live for the interim period while holding cash and waiting for the market to potentially correct. However, we did not know if, when, or to what extent the market would correct and the thought of renting a place temporarily for our family was unappealing. For the Saga family, we decided to stay invested in the home that we knew, loved, and still believed had similar, if not stronger prospects following the COVID-induced surge in demand in our neighborhood. Now, for whatever reason, the market views our neighborhood very poorly and the appraised value of our home declined to $250,000, below any previous appraisals. It seems odd because it is the exact same home and the fundamentals of the neighborhood are much stronger than several years ago, suggesting that the expected $2 million value in the future is even more probable than before. It is a very peculiar situation, but the market can do anything at any moment. Fortunately, the lower appraisal value does not impact how much we still love our home, neighborhood, schools, or what the expected future value will be. In fact, we prefer a lower value because our property taxes will be lower! One thing is for certain, we would never sell our home for $250,000 simply because the appraised value has declined from prior appraisals. We would also never dream of selling in fear that the downward price momentum continues and then hopefully attempt to buy it back one day for $200,000. We can simply sit tight for as long as we want while the neighborhood around us continues to improve fundamentally over time, fully expecting the value of our home to eventually go up with it. It just so happens humans are highly complex beings and do not always react in what an economist may consider a rational way. Our emotions are highly contagious. When someone smiles at you, the natural reaction is to smile back. When someone else is sad, you feel empathy. These are generally great innate characteristics for helping to build the strong relationships with friends and family that are so important throughout life. But it also means that when other people are scared, it also makes you feel scared. And when more and more people get scared, that fear can cascade exponentially and turn into panic, which can cause people to do some crazy things, especially when it comes to making long-term decisions. As fear spreads, all attention shifts from thinking about what can happen over the next 5-10+ years to the immediate future of what will happen over the next day or even hour. Of course, during times of panic, “this time is always different.” It may very well be the case, but the world can only end once. Historically speaking, things have tended to work out pretty well over time on average. I am by no means immune to these contagious feelings. My way of coping with how I am innately wired is by accepting this fact and then trying to know what I can and cannot control. A core part of my investing philosophy is that I do not know what the market will do next, and I never will. Inevitably the market or a specific stock will crash, as it does from time-to-time. This “not timing the market” philosophy or treating our public investments from the perspective of a private owner may feel like a liability during a drawdown, but it is this same philosophy of staying invested in companies we believe to have very promising futures which positions us perfectly for the inevitable recovery. Eventually, emotions and the business environment will normalize, and the storm will pass. It could be next quarter, year, or even in several years, but we will be perfectly positioned for the recovery, at which point the stock price lows will likely be long gone. The whole investing process improves if one can really take the long-term view. However, it is not natural for people to think long-term particularly when it comes to owning pieces of publicly traded companies. It is far more natural to want to act by jumping in and out of stocks in an attempt to outsmart others who are trying to outsmart you. When the market price of your ownership in a business is available and fluctuating wildly every single day, it is hard to ignore and not be influenced by it. While one can get lucky through speculation, the big money is made by investing, by owning great businesses and letting them compound owner’s capital over many years. As the market has evolved over the last few decades, there appears to be an ever-increasing percent of “investors” who are effectively short-term renters, turning over the companies in their portfolios so quickly that they never really know the business that lies below the surface of the stock. While more of Wall Street is increasingly focused on the next quarter, a potentially looming recession, the Fed’s next interest rate move, or trying to time the market’s rotation from one industry into another, we are trying to think about what our companies’ results will be in the year 2027, or better yet 2032 and beyond. The most significant advantage of investing in the public market is the ability to take advantage of it when an opportunity presents itself or to ignore the market when there is nothing to do. The key to success is never giving up this advantage. You must be able to play out your hand and not be forced to sell your assets at fire sale prices. Significant portfolio declines are a good reminder of the importance of only investing money that you will not need for many years. This prevents one from being in a position where it is necessary to liquidate when adverse psychology has created unusually low valuations. However, we do not want to simply turn a blind eye to stock price declines of 50% or more and dig our heals into the ground believing the market is just being irrational. When the world is screaming at you that it believes your part ownership in these companies is worth significantly less than the market believed not too long ago, we attempt to understand if we are missing something by continually evaluating the long-term outlooks of our companies using all the relevant information that we have today from a first principles basis. Portfolio Update Instead of frequently checking a stock’s price to determine whether the company is making progress, I prefer looking to the longer-term trends of the business results. There will be stronger and weaker quarters and years since business success rarely moves up and to the right in a perfectly straight line. As a company faces headwinds or tailwinds from time-to-time, the stock price may fluctuate wildly in any given year, however the underlying competitive dynamics and business models that drive value will typically change little. Regarding our companies as a whole, first quarter results reflected a general softness in certain end markets, including the used car, real estate, and advertising markets. However, the Saga Portfolio’s companies, on average, provide a superior customer value proposition difficult for competitors to match. Most of them have a cost advantage compared to competitors; therefore, the worse it gets for the economy, the better it gets for our companies’ respective competitive positions over the long-term. For example, first quarter industry-wide used car volumes declined 15% year-over-year while Carvana’s retail units increased 14%. Existing home sales decreased 5% during the quarter while Redfin’s real estate transactions increased 1%. Digital advertising is expected to grow 8-14% in 2022 while the Trade Desk grew Q1’22 revenues 43% and is expected to grow them more than 30% for the full year 2022. While industry-wide TV volumes remain below 2019 pre-COVID levels, Roku gained smart TV market share sequentially during the quarter, continuing to be the number one TV operating system in the U.S. and number one TV platform by hours streamed in North America. Weaker industry conditions will inevitably impact our companies’ results; however, our companies should continue to take market share and come out on the other side of any potential economic downturn stronger than when they went in. For the portfolio update, I wanted to provide a more in-depth update on Carvana and Redfin which have both experienced particularly large share price declines and have recent developments that are worth reviewing. Carvana I first wrote about Carvana Co (NYSE:CVNA) in this 2019 write-up. I initially explained Carvana’s business, superior value proposition compared to the traditional dealership model, attractive unit economics, and how they were uniquely positioned to win the large market opportunity. Since then, Carvana has by far exceeded even my most optimistic initial expectations. While the company did benefit following COVID in the sense that customers’ willingness to buy and sell cars through an online car dealer accelerated, the operating environment over the last two years has been very challenging. Carvana executed exceedingly well considering the shifting customer demand in what is a logistically intensive operation and what has been a tight inventory environment due to supply chain issues restricting new vehicle production. Sales, gross profits, and retail units sold have grown at a remarkable 104%, 151%, and 87% CAGR over the last five years, respectively. Source: Company filings Shares have come under pressure following their first quarter results, which reflected larger than expected losses. The quarter was negatively impacted by a combination of COVID-related logistical issues in their network that started towards the end of the fourth quarter as Omicron cases spread. Employee call off rates related to Omicron reached an unprecedented 30% that led to higher costs and supply chain bottlenecks. As less inventory was available due to these problems, it led to less selection and longer delivery times, lowering customer conversion rates. Additionally, interest rates increased at a historically fast rate during the first quarter which negatively impacted financing gross profits. Carvana originates loans for customers and then sells them to investors at a later date. If interest rates move materially between loan origination and ultimately selling those loans, it can impact the margin Carvana earns on underwriting those loans. Industry-wide used car volumes were also down 15% year-over-year during the first quarter. While Carvana continues to grow and take market share, its retail unit volume growth was slower than initially anticipated, up only 14% year-over-year. Carvana has been in hyper growth mode since inception and based on the operational and logistical requirements of the business, typically plans, builds, and hires for expected capacity 6-12 months into the future. This has historically served Carvana well given its exceptionally strong growth, but when the company plans and hires for higher capacity than what occurs, it can lead to lower retail gross profits and operating costs per unit sold. When combined with lower financing gross profits in the quarter from rising interest rates, losses were greater than expected. In February, Carvana announced a $2.2 billion acquisition of ADESA (including an additional $1 billion plan to build out the reconditioning sites) which had been in the works for some time. ADESA is a strategic acquisition to help accelerate Carvana’s footprint expansion across the country, growing its capacity from 1.0 million units at the end of Q1’22 to 3.2 million units once complete over the next several years. It is unfortunate the acquisition timing followed a difficult quarter that had greater than expected losses, combined with a generally tighter capital market environment. Carvana ended up raising $3.25 billion in debt ($2.2 billion for the acquisition and $1 billion for the buildout) at a higher than initially expected 10.25% interest rate. Given these higher financing costs and first quarter losses, they issued an additional $1.25 billion in new equity at $80 per share, increasing diluted shares outstanding by ~9%. Despite the short-term speedbumps surrounding logistical issues, softer industry-wide demand, and a higher cost of capital to acquire ADESA, Carvana’s long-term outlook not only remains intact but looks even more promising than before. To better understand why this is the case and where Carvana is in its lifecycle, it helps to provide a little background on the history of retail. While e-commerce is a more recent phenomena that developed from the rise of the internet in the 1990s, the retail industry has undergone several transformations throughout history. In retailing, profitability is determined by two factors: the margins earned on inventory and the frequency with which they can turn inventory. Each successive retail transformation had a similar economic pattern. The newer model had greater operating leverage (higher fixed costs, lower variable costs). This resulted in greater economies of scale (lower cost per unit) and therefore greater efficiency (higher asset turnover) with size that enabled them to charge lower prices (lower gross margins) than the preceding model and still provide an attractive return on capital. The average successful department store earned gross margins of ~40% and turned inventory about 3x per year, providing ~120% annual return on the capital invested in inventory. The average successful big box retailer earned ~20% gross margins and turned its inventory 5x per year. Amazon retail earns ~10% gross margins (including fulfillment costs in COGS) and turns inventory at a present rate of 12x times annually. The debate that surrounds any subscale retailer, particularly in e-commerce, is whether they have enough capital/runway to build out the required infrastructure and then scale business volume to spread fixed costs over enough units. Before reaching scale, analysts may point to an online business’ lower price points (“how can they charge such low prices?!”), higher operating costs per unit (“they lose so much money per item!”), and ongoing losses and capital investments (“they spend billions of dollars and still have not made any money!”) as evidence that the model does not make economic sense. Who can blame them since the history books are filled with companies that never reached scale? However, if the retailer does build the infrastructure and there is sufficient demand to spread fixed costs over enough volume, the significant capital investment and high operating leverage creates high barriers to entry. If we look to Amazon as the dominant e-commerce company today, once the infrastructure is built and reaches scale, there is little marginal cost to serve any prospective customer with an internet connection located within its delivery footprint. For this reason, I have always been hesitant to invest in any e-commerce company that Amazon may be able to compete with directly, which is any mid-sized product that fits in an easily shippable box. As it relates to used car retailing, the infrastructure required to ship and recondition cars is unique, and once built, the economies of scale make it nearly impossible for potential competitors to replicate. Carvana is in the very early stages of building out its infrastructure. There is clearly demand for its attractive customer value proposition. It has demonstrated an ability to scale fixed costs in earlier cohorts as utilization of capacity increases, providing attractive unit economics at scale. Newer market cohorts are tracking at a similar, if not faster market penetration rate as earlier cohorts. Carvana is still investing heavily in building out a nationwide hub-and-spoke transportation network and reconditioning facilities. In 2021 alone, Carvana grew its balance sheet by $4 billion as it invested in its infrastructure while also reaching EBITDA breakeven for the first time. The Amazon story is a prime example (pun intended) of a new and better business model (more attractive unit economics) that delivered a superior value proposition and propelled the company ahead of its competition, similar to the underlying dynamics occurring in the used car industry today. Amazon invested heavily in both tangible and intangible growth assets that depressed earnings and cash flow in its earlier years (and still today) while growing its earning power and the long-term value of the business. The question is, does Carvana have enough capital/liquidity to build out its infrastructure and scale business volume to then generate attractive profits and cash flow? Following Carvana’s track record of scaling operating costs and reaching EBITDA breakeven in 2021, the market was no longer concerned about its liquidity position or the sustainability of its business model. However, the recent quarterly loss combined with taking on $3 billion in debt to buildout the 56 ADESA locations across the country raises the question of whether Carvana has enough liquidity to reach scale. Carvana’s current stock price clearly reflects the market discounting the probability that Carvana will face liquidity issues and therefore have to raise further capital at unfavorable terms. However, I think if you look a little deeper, Carvana has clearly demonstrated highly attractive unit economics. It has several levers to pull to protect it from any liquidity concerns if needed. The $2.6 billion in cash (as well as $2 billion in additional available liquidity in unpledged real estate and other assets) it has following the ADESA acquisition, is more than enough to sustain a potentially prolonged decline in used car demand. The most probable scenario over the next several quarters is that Carvana will address its supply chain and logistical issues that were largely due to Omicron. As the logistical network normalizes, more of Carvana’s inventory will be available to purchase on their website with shorter delivery times, which will increase customer conversion rates. This will lead to selling more retail units, providing higher inventory turnover and lower shipping costs, and therefore gross profit per unit will recover from the first quarter lows. Other gross profit per unit (which primarily includes financing) will also normalize in a less volatile interest rate environment. Combined total gross profit per unit should then approach normalized levels by the end of the year/beginning of 2023 (~$4,000+ per unit). Like all forms of leverage, operating leverage works both ways. For companies with higher operating leverage, when sales increase, profits will increase at a faster rate. However, if sales decrease, profits will decrease at a faster rate. While Carvana has high operating leverage in the short-term, they do have the ability adjust costs in the intermediate term to better match demand. When demand suddenly shifts from plan, it will have a substantial impact on current profits. First quarter losses were abnormally high because demand was lower than expected. Although, one should not extrapolate those losses far into the future because Carvana has the ability to better adjust and match its costs structure to a lower demand environment if needed. As management better matches costs with expected demand, operating costs as a whole will remain relatively flat if not decline throughout the year as management has already taken steps to lower expenses. As volumes continue to grow at the more moderate pace reflected in the first quarter and SG&A remains flat to slightly declining, costs per unit will decline with Carvana reaching positive EBITDA per unit by the second half of 2023 in this scenario. Source: Company filing, Saga Partners Source: Company filing, Saga Partners With the additional $3.2 billion in debt, Carvana will have a total interest expense of ~$600 million per year, assuming no paydown of existing revolving facilities or net interest income on cash balances. Management plans on spending $1 billion in capex to build out the ADESA locations. They are budgeting for ~$40 million in priority and elective capex per quarter going forward suggesting the build out will take ~6 years. Total capex including maintenance is expected to be $50 million a quarter. Carvana would reach positive free cash flow (measured as EBITDA less interest expense less total Capex) by 2025. Note this assumes the used car market remains depressed throughout 2022 and then Carvana’s retail unit growth increases to 25% a year for the remainder of the forecast and no benefit in lower SG&A or increased gross profit per unit from the additional ADESA locations was assumed. Stock based compensation was included in the SG&A below so actual free cash flow would be higher than the chart indicates. Source: Company filings, Saga Partners Note: Free cash flow is calculated as EBITDA less interest expense less capex After the close of the ADESA acquisition, Carvana has $2.6 billion in cash (plus $2 billion in additional liquidity from unpledged assets if needed). Assuming the above scenario, Carvana has plenty of cash to endure EBITDA losses over the next year and a half, interest payments, and capex needs. Source: Company filings, Saga Partners The above scenario does not consider the increasing capacity that Carvana will have as it continues to build out the ADESA locations. After building out all the locations, Carvana will be within one hundred miles of 80% of the U.S. population. This unlocks same-day and next-day delivery to more customers, leading to higher customer conversion rates, higher inventory turn, lower risk of delivery delays, and lower shipping costs, which all contribute to stronger unit economics. Customer proximity is key. Due to lower transport costs, faster turnaround times on acquired vehicles, and higher conversion from faster delivery speeds, a car picked up or delivered within two hundred miles of a recondition center generates $750 more profit than an average sale. It is possible that industry-wide used car demand remains depressed or even worsens for an extended period. If this were the case, management has the ability to further optimize for efficiency by lowering operating costs to better match demand. This is what management did following the COVID demand shock in March 2020. The company effectively halted corporate hiring and tied operational employee hours to current demand as opposed to future demand. During the months of May and June 2020, SG&A (ex. advertising expense and D&A) per unit was $2,600, far lower than the $3,440 reported in 2020 or $3,654 in 2021. Carvana has also historically operated between 50-60% capacity utilization, indicating further room to scale volumes across its existing infrastructure without the need for materially greater SG&A expenses. Advertising expense in older cohorts reached ~$500 per unit, compared to the $1,126 reported for all of 2021, while older cohorts still grew at 30%+ rates. If needed, Carvana could improve upon the $2,600 SG&A plus $500 advertising expense ($3,100 in total) per unit at its current scale and be far below gross profit per unit even if used car demand remains depressed for an extended period of time. When management optimizes for efficiency as opposed to growth, it has the ability to significantly lower costs per unit. Carvana has highly attractive unit economics and I fully expect management will take the needed measures to right size operating costs with demand. They recently made the difficult decision to layoff ~2,500 employees, primarily in operations, to better balance capacity with the demand environment. If we assume it takes six years to fully build out the additional ADESA reconditioning locations, Carvana will have a total capacity of 3.2 million units in 2028. If Carvana is running at 90% utilization it could sell 2.9 million retail units (or ~7% of the total used car market). If average used car prices decline from current levels and then follow its more normal longer-term price appreciation trends, the average 2028 Carvana used car price would be ~$23,000 and would have a contribution profit of ~$2,000 per unit at scale. This would provide nearly $5.6 billion in EBITDA. After considering expected interest expense, maintenance capex, and taxes, it would provide over $4 billion in net income. If Carvana realizes this outcome in six years, the company looks highly attractive (perhaps unreasonably attractive) compared to its current $7 billion market cap or $10 billion enterprise value (excluding asset-based debt). Redfin I recently wrote about Redfin Corp (NASDAQ:RDFN) in this December 2021 write-up. I explained how Redfin has increased the productivity of real estate agents by integrating its website with its full-time salaried agents and then funneling the demand aggregated on its website to agents. Redfin agents do not have to spend time prospecting for business but can rather spend all their time servicing clients throughout the process of buying and selling a home. Since Redfin agents are three times more productive than a traditional agent, Redfin is a low-cost provider, i.e., it costs Redfin less to close a transaction than a traditional brokerage at scale. It is a similar concept as the higher operating leverage of e-commerce relative to brick & mortar retailers. Redfin has higher operating leverage compared to the traditional real estate brokerage. Real estate agents are typically contractors for a brokerage. They are largely left alone to run their own business. Agents have to prospect for clients, market/advertise listings, do showings, and service clients throughout each step of the real estate transaction. Everything an agent does is largely a variable cost because few of their tasks are automated. Redfin, on the other hand, turned prospecting for demand, marketing/advertising listings, and investments in technology to help agents and customers throughout the transaction into more of a fixed cost. These costs are scalable and become a smaller cost per transaction as total transaction volumes grow across the company. Because Redfin is a low-cost provider, it has a relative advantage over traditional brokerages. No other real estate brokerage has lowered or attempted to lower the costs of transacting real estate in a similar way. This cost advantage provides Redfin with options about how to share these savings on each transaction. Redfin has primarily shared the cost savings with customers by charging lower commission rates than traditional brokerages. By offering a similar, if not superior, service to customers compared to other brokerages yet charging lower fees, it naturally attracts further demand which then provides Redfin with the ability to scale fixed costs per transaction even more, further widening their cost advantage to other brokerages. So far, the majority of those cost savings are shared with home sellers as opposed to homebuyers. Sellers are more price sensitive than homebuyers because the buyer’s commission is already baked into the seller’s contract and therefore buyers have not directly paid commissions to agents historically. Also, growing share of home listings is an important component of controlling the real estate transaction. The seller’s listing agent is the one who controls the property, decides who sees the house, and manages the offers and negotiations. Therefore, managing more listings enables Redfin to have more control over the transaction and further streamline/reduce inefficiencies for the benefit of both potential buyers and sellers. Redfin also spends some of their cost savings by reinvesting them back into the company by hiring software engineers to build better technology to continue to lower the cost of the transaction. This may include building tools for agents to service clients better, improving the web portal and user interfaces, on-demand tours for buyers to see homes first, automation to give homeowners an immediate RedfinNow offer, etc. Redfin also invests in building other business segments like mortgage, title forward, and iBuying which provide a more comprehensive real estate offering for customers which attracts further demand. So far, the lower costs per transaction have not been shared with shareholders in the form of dividends or share repurchases, and for good reason. In theory, Redfin could charge industry standard prices and increase revenue immediately by 30-40% which would drop straight to the bottom-line assuming demand would remain stable. However, giving customers most of the savings through lower commissions has obviously been one of the drivers for attracting demand and growing transaction volume, particularly for home sellers. The greater the number of transactions, the lower the fixed costs per transaction, which further increases Redfin’s cost advantage compared to traditional brokerages, which provides Redfin with even more money per transaction to share with either customers, employees, and eventually shareholders. With just over 1% market share, Redfin should be reinvesting in growing share which will increase the value of the business and inevitably benefit long-term owners of the company. Redfin’s stock price has experienced an especially large decline this year. I typically prefer to not attempt to place an explanation or narrative on short-term stock price movements, but I will do it anyways given the substantial drop. There are primarily two factors contributing to the market’s negative view of the company: first, the market currently dislikes anything connected to the real estate industry and second, the market currently has little patience for any company that reports net losses regardless of the underlying economics of the business. Real estate is currently a hated part of the market, and potentially for good reason. It is a cyclical industry, and the economy is potentially either entering or already in a recession. Interest rates are expected to continue to rise, negatively impacting home affordability, while an imbalance in the housing supply persists with historically low inventory available helping fuel an unsustainable rise in housing prices. From a macro industry-wide perspective, the real estate market will ebb and flow with the economy over time, but demand to buy, sell, and finance homes will always exist. I do not have the ability to determine how aggregate demand for buying or selling a home will change from year-to-year, but I do know that people have to live somewhere and if Redfin is able to help them find, buy or rent, and finance where they live better than alternative service providers, then the company will gain share and grow in value overtime. Redfin has also reported abnormally high losses of $91 million in the first quarter for which the current market has little appetite. It feeds the argument that Redfin does not have a sustainable business model. While losses can be a sign of unsustainable economics, that is not the case for Redfin. There are several factors that are all negatively hitting the income statement at the same time, and all should improve materially over the next year or two. Higher first quarter losses largely reflect: Agent Productivity: First quarter brokerage sales increased 7% year-over-year, but lead agent count increased 20%, which meant agents were less productive, leading to real estate gross profits declining $17 million from the prior year. Lower productivity was a result of a steeper ramp in agent hiring towards the end of the year against lower seasonal transaction volumes. It typically takes about six months for new agents to get trained and start closing transactions and then contributing to gross profits. Any accelerated hiring, particularly during a softer macro environment, will be a headwind while Redfin is paying upfront costs before any revenue is being generated. Further, closing transactions has been difficult particularly for buyers, which is where most new agents start. The housing market has been unbalanced where there is not enough inventory. A home for sale will typically receive many competing offers which makes it difficult for a buyer to win the deal. Since Redfin agents are mostly paid on commission (~20% salary plus the remainder being commission), it has been more difficult for new agents to earn a sufficient income in the current real estate environment. In response, Redfin started paying $1,500 retention bonuses for new agents who could guide customers to the point of bidding on a home, regardless of whether those bids win. While the bonus may impact gross profits in the near-term before a customer closes a transaction, it will not impact gross margins in the long-term when a transaction eventually takes place. Going forward, agent hiring will return to more normal rates and the larger number of new hires from recent quarters will ramp up which will improve productivity and gross profits. RentPath: Redfin bought RentPath out of bankruptcy for $608 million in April 2021, primarily to incorporate its rentals on its website which helps Redfin.com show up higher on Internet real estate searches. Prior to the acquisition, RentPath had no leadership direction for several years and declining sales and operating losses. RentPath had new management start in August 2021 and was integrated into Redfin.com in March. It finally started to see operational improvement with sales increasing in February and March year-over-year for the first time since 2019 despite a significant decrease in marketing expenses. While RentPath had $17 million in losses during the first quarter and is expected to have $22 million in losses in the second quarter, operations will improve going forward. Management made it clear that RentPath will be a contributor to net profits in its own right and not just a driver of site traffic and demand to Redfin’s brokerage business. Mortgage: A recent major development was the acquisition of Bay Equity for $135 million in April. Redfin was historically building out its mortgage business from scratch but after struggling to scale the operation decided to buy Bay Equity. Redfin was spending $13 million per a year on investing in its legacy mortgage business but going forward, mortgage will now be a net contributor to profits with Bay expected to provide $4 million in profit in the second quarter. The greater implication of having a scaled mortgage underwriter that is integrated with the real estate broker is that they can work together to streamline and expedite the transaction closing which has become an increasingly important value proposition for customers. Looking just a little further into the future, having a scaled and integrated mortgage underwriter can provide Redfin with the capability of providing buyers with the equivalent of an all-cash offer to sellers. Prospective homebuyers who offer all-cash offers to sellers are four times as likely to win the bid and sellers will often accept a lower price from an all-cash buyer vs. one requiring a mortgage. A common problem that many homeowners face is that when they are looking to move, it is difficult to get approved for a second mortgage while holding the current one. Much of their equity is locked in their current home. Frequently, a homebuyer wins an offer on a new home and then is in mad dash to sell their existing home in order to get the financing to work. It is not ideal to attempt to sell your home as fast as possible because it decreases the chance of getting the best price possible. A solution that Redfin could offer as a customer’s agent and underwriter is provide bridge financing between when a customer buys their new home and is then trying to sell their existing home and is therefore paying on two mortgages. Redfin would be able to make a reasonable appraisal for what a customer’s existing home will sell for (essentially what Redfin already does with iBuying) and underwriting the incremental credit exposure they are willing to provide the buyer. The buyer would then have “Redfin Cash” which would work like a cash offer. If this service helps buyers win a bid four times more often, it would even further differentiate Redfin’s value proposition and attract further demand. At least in the near-term, the mortgage segment will go from being a loss center to a contributor to net profits as well as further improving Redfin’s customer value proposition. Restructuring and transaction costs: Redfin had $6 million in restructuring expenses related to severance with RentPath and the mortgage business as well as closing the Bay Equity acquisition. $4 million in restructuring expenses are expected in the second quarter but these expenses will go away in future quarters. The combination of the above factors provided the headline $91 million net loss for the first quarter. Larger than normal losses between $60-$72 million are still expected in the second quarter. However, going forward losses are expected to continue to improve materially. While Redfin is not done investing in improving its service offerings, it should benefit from the significant investments it has already made over the last 16 years. Redfin has been building and supporting a nationwide business that only operated in parts of the country and had to incur large upfront costs. Going forward, it will benefit from the operating leverage baked into its cost structure with gross profits expected to grow twice as fast as overhead operating expenses. Redfin is expected to be cash flow breakeven in 2022 and provide net profits starting in 2024. Redfin has built a great direct to consumer acquisition tool that is unmatched by any real estate broker. It has spent the costs to acquire the customer and has now built out the different services to provide customers any of the real estate services that they may need, whether that is one or a combination of brokerage services, mortgage underwriting, title forward, iBuying, or rental search. Being able to monetize each customer that it has already acquired by offering them any of these services provides Redfin with a better return on customer acquisition costs that no other competitor is able to do to the same extent. Additionally, these real estate services work better when they are integrated under the same company. One does not have to dig very deep to see how attractive Redfin’s shares are currently priced. Shares are now selling around all-time historic lows since its IPO in August 2017. The prior all-time lows were reached during the COVID crash which was a time the world was facing an unknown pandemic that would shut down the economy and potentially put us through a great depression. At its current $1.2 billion market cap, Redfin is selling for 3x expected 2022 real estate gross profits, or 4x its current $1.7 billion enterprise value (excluding asset-based debt). Both are far below the historic average of 15x (which excludes peak multiples reached towards the end of 2020 and early 2021), or the previous all-time low of 6x reached in the depths of March 2020. If we assume Redfin can raise brokerage commissions by 30%, in line with traditional brokerage commission rates, and it does not lose business, Redfin would be able to provide ~20% operating margins. If we take a more conservative view and say Redfin can earn 10% net margins on its 2022 expected real estate revenues of $990 million, it would provide $99 million in net profits, providing a current 12x price-to-earnings ratio. This is for a company that has a long track record of being able to grow 20%+ a year on average, consistently gains market share each quarter, and has barely monetized its significant upfront investments and fixed costs with a long runway to continue to scale. This also does not place any value on its mortgage or iBuying segments which are now contributors to gross profits. There may be macro risks as well as other concerns today, however Redfin’s business and relative competitive advantage have never been stronger. The net losses reported are not representative of Redfin’s true underlying earning power. Redfin has untapped pricing power, an increasingly attractive customer value proposition, and a growing competitive advantage compared to alternative brokerages, which will help Redfin to continue to grow and take market share in what is a very large market. Conclusion Of course, the future can look scary, as it often does when headlines jump from one risk to the other. Despite what may be happening in the macro environment, our companies on average are stronger than they have ever been and are now selling for what we believe are the most attractive prices we have seen relative to their intrinsic value. I have no idea what shares will do in the near-term and I never will. Stock prices can swing wildly for many reasons, and sometimes seemingly for no reason at all. They can diverge, sometimes significantly from their true underlying value. I have no idea when sentiment will shift from optimism to pessimism and then back to optimism. This is what keeps us invested in both good times and in bad. The current selloff can continue further, but assuming our companies continue to execute over the coming years by winning market share and earning attractive returns on their investment spending, the market’s sentiment surrounding our portfolio companies will eventually reflect their underlying fundamentals. I will continue to look towards the longer-term operating results of our companies and not to the movements in their stock price as feedback to whether our initial investment thesis is playing out as expected. While the market can ignore or misjudge business success for a certain period, it eventually has to realize it. During times of greater volatility and periods of large drawdowns, I am reminded of how truly important the quality of our investor base is. It is completely natural to react in certain ways to rising or declining stock prices. It takes a very special investor base to look past near-term volatility and to trust us to make very important decision on their behalf as we continually try to increase the value of the Saga Portfolio over the long-term. As always, I am available to catch up or discuss any questions you may have. Sincerely, Joe Frankenfield Saga Partners Updated on May 16, 2022, 4:44 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});.....»»

CF Industries (CF) benefits from higher average selling prices across all segments on reduced supply availability and strong demand in Q1. CF Industries Holdings, Inc. CF reported a profit of $883 million or $4.21 per share in the first quarter of 2022, surging from a profit of $151 million or 70 cents in the year-ago quarter. Earnings per share were in line with the Zacks Consensus Estimate.Net sales jumped around 174% year over year to $2,868 million in the quarter. The figure topped the Zacks Consensus Estimate of $2,596.9 million. The company benefited from higher average selling prices across all segments on reduced supply availability and strong demand. Supply was impacted by higher global energy costs leading to lower global operating rates and geopolitical factors that disrupted the global fertilizer supply chain.Sales volumes were higher year over year in the reported quarter, helped by greater supply availability from higher capacity utilization rates in North America. CF Industries Holdings, Inc. Price, Consensus and EPS Surprise  CF Industries Holdings, Inc. price-consensus-eps-surprise-chart | CF Industries Holdings, Inc. Quote Segment ReviewNet sales in the Ammonia segment increased more than three-fold year over year to $640 million in the reported quarter. Sales volume increased from the prior year’s levels on greater supply availability from higher production. Average selling prices in the quarter increased year over year on strong global demand and lower supply availability.Sales in the Granular Urea segment jumped 92% year over year to $765 million. Average selling prices for urea increased while sales volume declined in the quarter. Sales in the UAN segment surged more than four-fold year over year to $1,015 million. Sales volume in the quarter were up from prior year’s levels. Average selling prices increased in the quarter.Sales in the AN segment more than doubled year over year to $223 million. In the first quarter, sales volumes were flat year over year while average selling prices increased on strong demand and reduced supply.FinancialsCF Industries’ cash and cash equivalents increased more than three-fold year over year to $2,617 million at the end of the quarter. Long-term debt was $2,963 million at the end of the quarter, down around 20% year over year.Cash flow from operations were $1,391 million for the reported quarter, up around 141% year over year.The company repurchased around 1.3 million shares for $100 million during the first quarter. Its board raised its quarterly dividend by 33% to 40 cents per share.OutlookCF Industries sees strong global nitrogen industry dynamics for the foreseeable future with robust global nitrogen demand along with tight nitrogen supply worldwide and wide energy differentials between North America and marginal production in Europe and Asia.Demand for nitrogen remains strong globally, supported by the need to replenish global grains stocks, per the company. It projects corn plantings in the United States to be 91-93 million acres in 2022. Nitrogen demand in North America is expected to be supported by positive U.S. manufacturing and mining activities. CF Industries also expects India to tender on a regular basis throughout 2022 to meet the demand for urea required to boost grain production. The company also envisions urea consumption to remain strong in Brazil in 2022, aided by high crop prices, anticipated high planted corn acres and improved farm incomes. In Europe, natural gas prices remain elevated partly due to the Russia-Ukraine conflict and the uncertainty about gas flows from Russia, the company noted.Price PerformanceShares of CF Industries have surged 103.7% in the past year compared with a 56.9% rise of the industry. Image Source: Zacks Investment Research Zacks Rank & Other Stocks to ConsiderCF Industries currently carries a Zacks Rank #1 (Strong Buy).Other top-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. STLD, AdvanSix Inc. ASIX and Commercial Metals Company CMC.Steel Dynamics, sporting a Zacks Rank #1, has an expected earnings growth rate of 18.5% for the current year. The Zacks Consensus Estimate for STLD's current-year earnings has been revised 32.5% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.Steel Dynamics beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being roughly 2.5%. STLD has rallied around 45% in a year.AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 63.4% for the current year. ASIX's consensus estimate for current-year earnings has been revised 31.9% upward in the past 60 days.AdvanSix beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 23.6%, on average. ASIX has rallied around 48% in a year.Commercial Metals, carrying a Zacks Rank #1, has a projected earnings growth rate of 78.2% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 31.9% upward over the past 60 days.Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 16%, on average. CMC has gained around 35% in a year. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Steel Dynamics, Inc. (STLD): Free Stock Analysis Report CF Industries Holdings, Inc. (CF): Free Stock Analysis Report Commercial Metals Company (CMC): Free Stock Analysis Report AdvanSix (ASIX): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

ArcelorMittal (MT) acquires an 80% shareholding in Voestalpine's Hot Briquetted Iron plant valued at $1 billion. ArcelorMittal S.A. MT recently inked a deal to purchase an 80% shareholding in Voestalpine’s Hot Briquetted Iron (‘HBI’) plant located in Corpus Christi, TX. Voestalpine will retain the balance of 20%. Per the deal, the Corpus Christi operations are valued at $1 billion and closing is subject to customary regulatory approvals.The Corpus Christi facility covers an area of two square kilometers and employs over 270 people. It is located in an optimal coastal position with direct access to a broad and deep shipping channel, which facilitates cost-effective transportation to the Americas and Europe.The plant has an annual capacity of two million tons of HBI, a high-quality feedstock manufactured through the direct reduction of iron ore. It is used to produce high-quality steel grades in an electric arc furnace (‘EAF’) and can also be utilized in blast furnaces, leading to lower coke consumption. HBI is a premium, compacted form of Direct Reduced Iron (‘DRI’) developed to overcome issues linked with shipping and handling DRI.The company also signed a long-term offtake agreement with Voestalpine to supply a certain volume of HBI each year proportionate to the latter’s equity stake in its steel mills in Donawitz and Linz, Austria. The balance production will be delivered to third parties under current supply contracts, and to ArcelorMittal sites, including AM/NS Calvert in Alabama, upon the commissioning of its 1.5 million tons EAF. The commissioning is expected in the second half of 2023.Shares of ArcelorMittal have increased 12.3% in the past year compared with a 23.3% rise of the industry.Image Source: Zacks Investment ResearchIn its last earnings call, ArcelorMittal stated that it envisions global apparent steel consumption (“ASC”) to increase 0-1% in 2022. The company recorded ASC growth of 4% in 2021. The global steel industry is benefiting from a favorable supply-demand balance, supporting higher utilization and improved demand. ArcelorMittal sees overall ASC, excluding China, to grow in the range of 2.5-3% year over year in 2022.The capex is expected to increase from $3 billion in 2021 to $4.5 billion in 2022.ArcelorMittal Price and Consensus  ArcelorMittal price-consensus-chart | ArcelorMittal Quote Zacks Rank & Key PicksArcelorMittal currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the basic materials space are The Mosaic Company MOS, AdvanSix Inc. ASIX and Allegheny Technologies Incorporated ATI.Mosaic has a projected earnings growth rate of 143.5% for the current year. The Zacks Consensus Estimate for MOS' current-year earnings has been revised 39.7% upward in the past 60 days.Mosaic’s earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing once. It delivered a trailing four-quarter earnings surprise of roughly 3.7%, on average. MOS has rallied around 133.6% in a year and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.AdvanSix has a projected earnings growth rate of 54.7% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised 43.6% upward in the past 60 days.AdvanSix’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average being 23.6%. ASIX has surged 88.8% in a year. The company sports a Zacks Rank #1.Allegheny, currently sporting a Zacks Rank #1, has an expected earnings growth rate of 684.6% for the current year. The Zacks Consensus Estimate for ATI's earnings for the current year has been revised 20% upward in the past 60 days.Allegheny’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 127.2%. ATI has rallied around 31.3% over a year. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ArcelorMittal (MT): Free Stock Analysis Report Allegheny Technologies Incorporated (ATI): Free Stock Analysis Report The Mosaic Company (MOS): Free Stock Analysis Report AdvanSix (ASIX): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Futures, Yields And Oil All Rise On Last Day Of Turbulent Week After several extremely volatile days, US equity futures are ending the week in the green (for now) with European equities snapping two days of declines sparked by the Federal Reserve’s plan for aggressive monetary-policy tightening, and Asian stocks trading higher. S&P 500 and Nasdaq 100 futures trimmed earlier gains to trade 0.3% higher as traders weighed the latest developments about the war in Ukraine. Contracts on U.S. stock benchmarks trim earlier gains as traders weigh developments about the war in Ukraine.Nasdaq 100 futures flat; S&P 500 futures +0.1%; Dow Jones futures +0.2%. The dollar rose for a 7th consecutive week and US Treasuries sold off across the curve; gold and bitcoin were flat. Oil was steady after three days of losses stoked by plans to release millions of barrels of crude from strategic reserves and China’s demand-sapping virus outbreak. Markets had a subdued session yesterday after sinking more than 4% in the previous two days as hawkish signals from the Federal Reserve sent Treasury yields surging. Among notable premarket moves, Robinhood slid 3% after Goldman Sachs, not too long ago the lead underwriter on the company's IPO, cut their rating on the stock to sell, saying softening retail engagement levels and profitability concerns will likely limit any outperformance. Some other notable premarket movers: Alcoa (AA US) is 1.2% lower as Credit Suisse analyst Curt Woodworth trims his recommendation to neutral as he views LME aluminum prices near peak levels. Quidel (QDEL US) gained in extended trading Thursday after it posted preliminary revenue for the first quarter that beat the average analyst estimate. CrowdStrike (CRWD US) advanced 4.1%. Analysts responded positively after management set a framework to reach $5 billion in annual recurring revenue (ARR) by 2026, during the cybersecurity company’s investor briefing. WD-40 (WDFC US) is poised to gain after producing a “solid” beat in the second quarter, Jefferies said, adding that an increased market share and new product launches would support volume growth of 3% in 2022. Kura Sushi (KRUS US) shares rose in postmarket trading after the restaurant chain reported a year-over-year jump in quarterly sales. ACM Research (ACMR US) edged lower in extended trading Thursday after saying in a release its first quarter revenue would be “significantly below” expectations, but reiterated full-year revenue guidance for 2022. U.S. stocks are on course to snap a three-week winning streak with investors shedding risk assets following indications from the Fed of a faster-than-expected pace of tightening in monetary policy. Concerns are also growing about the impact of high inflation and slowing economic growth on corporate earnings. The two-year Treasury yield rose five basis points and the 10-year yield climbed one point, reversing some of the curve steepening seen in the wake of the Fed minutes Wednesday, which outlined plans to pare the central bank’s balance sheet by more than $1 trillion a year alongside interest-rate hikes. Global equities are nursing losses for the week as markets grapple with the Fed’s campaign against elevated price pressures, Russia’s grinding war in Ukraine and China’s Covid travails. The lockdown in Shanghai -- which recorded more than 21,000 new daily virus cases -- has become one of President Xi Jinping’s biggest challenges. Expectations are growing that China will take steps to support its economy. “Stocks have had a little bit of a harder time this week digesting the fact that interest rates are going to be higher” amid a major shift in expectations around monetary policy, Anthony Saglimbene, global market strategist at Ameriprise Financial Inc., said on Bloomberg Television. Still, U.S. equities saw a second straight week of inflows at $1.5 billion, with large-cap and growth stocks outperforming small-cap and value sectors, according to Bank of America strategists. Marija Veitmane, a senior strategist at State Street Global Markets, also said stocks still appeared to be the safest option. “Cash gives you nothing with 7% inflation, bonds just had one of the worse quarters in history, and then if you look at stocks, we still have decent earnings outlook, and to me the biggest attraction is really strong balance sheets,” she said on Bloomberg TV. In the latest news out of Ukraine, dozens were killed Friday morning as Russian troops allegedly bombed civilians waiting at a train station to be evacuated from the Donetsk region. Meanwhile, U.S. officials warned that the war may last for weeks, months or even years, as Kyiv’s foreign minister pleaded for urgent military assistance. Here are the latest Ukraine war developments: Ukraine intends to establish up to 10 humanitarian corridors on Friday, those leaving Mariupol will need to use private vehicles. Ukrainian advisor Podolyak says negotiations with Russia continue online constantly, but the mood changed after Bucha events, via Reuters. Kremlin says it does not understand EU concerns about European countries paying for Russian gas in RUB, adds Commission President von der Leyen probably needs more information. On planned EU ban of Russian coal, says coal is in high demand. Special operation in Ukraine could be completed in the foreseeable future, given aims are being achieved and work is being carried out by peace negotiators and the military. EU ready to release EUR 500mln for arms to Ukraine, according to AFP citing EU chief. Russia says it has destroyed a training centre for foreign mercenaries within Ukraine, was located north of Odesa, via Tass. Japan's Industry Ministry plans to reduce Russian coal imports gradually while looking for alternative suppliers, according to Reuters. Ukraine PM says they have large stocks of grain, cereals and vegetable oil. Are able to provide themselves with food; this year's harvest will be 20% less YY. Ukraine gas grid warns that Russian actions could impact gas flows to Europe, via Reuters. On Thursday, St Louis Fed president James Bullard said he prefers boosting the policy rate to 3%-3.25% in the second half of 2022. Chicago Fed President Charles Evans and his Atlanta counterpart Raphael Bostic said they favor raising rates to neutral while monitoring the economy’s performance. The steepening in the Treasury yield curve contrasts with the flattening and inversions that have vexed markets this year. The two-year rate topped the 10-year last week for the first time since 2019, a possible warning of recession. “We’re seeing a tactical re-steepening right now but the curve is going to continue to flatten,” Kelsey Berro, fixed income portfolio manager at JPMorgan Asset Management, said on Bloomberg Television. “That’s because the Fed has told us, we’d like to get to neutral expeditiously. On top of that, they may need to tighten beyond neutral. Front-end yields can still go higher.” In Europe, Euro Stoxx 50 rallies over 1.8% before stalling while the Stoxx 600 index climbed 1.2% but drifted off best levels as investors took advantage of beaten-down stock valuations with energy, banks and autos the strongest-performing sectors. Banks outperformed as Banco BPM SpA surged after Credit Agricole SA bought a 9.2% stake in the Italian lender. An Asia-Pacific share index eked out a small increase.  Here are some of the biggest European movers today: Scout24 shares rise as much as 17%, the most intraday since December 2018, after a report that Hellman & Friedman, EQT and Permira have discussed taking the firm private. Banco BPM shares rise as much as 17% after Credit Agricole bought a 9.2% stake in the Italian lender, with Bank of America saying the deal is a reminder that real value should be based on fundamentals. Sodexo shares jump as much as 7.4%, their biggest single-day gain in a month, after RBC Capital Markets upgrades the French caterer to outperform from sector perform. K+S gains as much as 10% after JPMorgan double-upgraded the shares to overweight from underweight, seeing a very positive environment for fertilizers amid supply disruptions and high energy prices. Atlantia shares rise as much as 4.5% following a report in a Italian newspaper that the Benetton family and Blackstone may start their takeover offer for Atlantia at more than EU22 per share. Saab rise as much as 5% as SEB upgrades the shares to buy from hold on the Swedish defense firm’s sales potential in the coming decade in the wake of Russia’s invasion of Ukraine. Moncler shares rise as much as 4.2% after Barclays upgrades the Italian luxury company to overweight, citing an “attractive” defensive profile in the current environment. Genmab fall as much as 10%, the most since September 2020, after saying a tribunal decided in favor of Janssen Biotech over two issues surrounding the cancer drug daratumumab (Darzalex). Ahead of this weekend's French election, Macron's lead is shrinking: the current President led his rivals in the April 10 election with 26.2% support, down from 27.2% a day earlier, according to a polling average calculated by Bloomberg on April 8. Macron was 3.5 percentage points ahead of second-placed Marine Le Pen, down from 4.1 points. Asian stocks edged higher on Friday, poised to snap three days of declines as traders assessed the prospect of policy easing by Beijing.  The MSCI Asia Pacific Index erased early losses of as much as 0.4% to climb 0.2%. Chinese property and infrastructure-related stocks surged on hopes for fiscal as well as monetary easing as the government seeks to prop up growth.   For the week, the Asian benchmark was down 2% as investors turned cautious on risk assets after latest comments from the Federal Reserve suggested aggressive tightening lies ahead. Tech shares were hit hard in particular, with the MSCI Asia-Pacific Information Technology Index losing 4% this week, on track for its worst performance since end-January. “There appears to be speculation that monetary easing by the PBOC might be imminent,” said Kazutaka Kubo, senior economist at Okasan Securities. There are also expectations that once lockdowns are over, the economy could be supported by pent-up demand, he added.  Chinese authorities have repeatedly vowed to support the economy and markets in thet past few weeks, as rising Covid-19 infections and lockdowns darken the outlook for growth. The pledges have spurred bets that some form of monetary easing may come soon.  Movements in most national benchmarks in the region were modest on Friday, gaining less than 1%. Stocks in the Philippines and Indonesia outperformed, while Singapore shares fell.  Indian stocks gained after the Reserve Bank of India kept borrowing costs at a record low, while India’s 10-year bond yield hit 7% - the highest since 2019 - as the nation’s central bank boosted an inflation forecast. The central bank also announced the start of policy normalization as the pandemic’s impact fades. The S&P BSE Sensex climbed 0.7% to 59,447.18 in Mumbai to complete a second week of gains, while the NSE Nifty 50 Index rose 0.8%. Gauges of small- and mid-sized companies gained 1% and 0.9%, respectively. The Reserve Bank of India’s monetary policy panel held the benchmark rate at 4%, in line with predictions of all 36 economists surveyed by Bloomberg. RBI Governor Shaktikanta Das said the central bank will start focusing on withdrawal of banking liquidity accommodation to target inflation but such a move would be “multi-year” and carried out without disrupting the markets. “Equity markets will like the RBI’s continued focus on growth and its commitment to an accommodative stance,” said Abhay Agarwal, a fund manager at Mumbai-based Piper Serica Advisors Pvt.  The RBI’s commentary means adequate flow of liquidity will continue and immediate beneficiaries will be consumers who are borrowing to purchase real estate and autos, he added. All but one of 19 sectoral sub-indexes compiled by BSE Ltd. advanced, led by a gauge of power companies. Reliance Industries Ltd. was a key gainer on the Sensex, which saw 22 of its 30 components advance. The RBI has comforted markets by refraining from being aggressive, unlike its global peers, and by ensuring that the liquidity withdrawal will be gradual, Yesha Shah, head of equity research at Samco Securities wrote in a note.  “On the growth front, one can assume that the central bank expects private investment to ramp up now that capacity utilization has improved further,” she said, adding the policy lays the framework for a possible rate increase in coming reviews. Australian stocks advanced - the S&P/ASX 200 index rose 0.5% to close at 7,478.00 - supported by materials and industrial stocks. GrainCorp shares surged to a record high, after the firm upgraded its FY22 earnings guidance as high levels of rain in Australia lay a path for a bumper crop.  Platinum Asset plunged to an all-time low after the company reported net outflows of A$222 million in March. In New Zealand, the S&P/NZX 50 index was little changed at 12,066.27. In rates, Treasuries fell across the curve, with the front-end of the Treasuries curve pressured lower, flattening 2s10s spread by ~5bp as 2-year yields trade more than 7bp cheaper on the day at ~2.54%. S&P 500 futures near top of Thursday’s range, following bigger advance for European stocks after three straight declines. Yields across long-end of the curve are little changed on the day, as flattening extends out to 5s30s spread which is tighter by ~4bp; 10-year yields around 2.683%, cheaper by 2.5bp vs Thursday close; bunds and gilts outperform by 1bp-2bp in the sector. Bunds reversed opening gains, adding to a three-day run of declines; French debt underperformed bunds ahead of presidential elections beginning Sunday. The German curve bull-flattens, richening 2bps across the back end. Peripheral spreads widen to core with Italy underperforming. In FX, Bloomberg dollar index advanced a seventh consecutive day and neared the strongest level since July 2020 as the greenback advanced against all of its Group-of-10 peers apart from the Norwegian krone. The euro pared losses after touching a one-month low against the dollar in early London trading. The pound fell to the lowest in more than three weeks as bets for aggressive policy tightening by the Federal Reserve boost the dollar. Gilts rose across the curve as U.S. Treasury yields stabilized following the recent selloff. The Australian and New Zealand dollars were the worst-performing G-10 currencies; Australia’s yield curve steepened following a similar move in Treasuries on Thursday. Most Japanese government bonds rose, thanks to support from the central bank’s regular purchase operations. The yen briefly reversed early an Asia session loss after an ex-BOJ official said there’s likelihood of a policy shift as soon as this summer. Bitcoin is contained and unable to derive traction either way from the broader risk tone. Strike payment platform launches Shopify (SHOP) integration, which allows merchants to accept Bitcoin (BTC), according to Bloomberg. In commodities, crude futures trade within Thursday’s range; WTI holds above $96, Brent stalls near $102. Spot gold holds steady near $1,930/oz. Most base metals trade well: LME zinc and lead outperforming, tin lags. To the day ahead now. Central bank speakers include the ECB’s de Cos, Centeno, Panetta, Stournaras, Makhlouf and Herodotou. Italian retail sales for February and Canadian employment for March round out this week’s data. Market Snapshot S&P 500 futures up 0.5% to 4,517.00 STOXX Europe 600 up 1.4% to 461.27 MXAP up 0.2% to 176.33 MXAPJ up 0.3% to 584.66 Nikkei up 0.4% to 26,985.80 Topix up 0.2% to 1,896.79 Hang Seng Index up 0.3% to 21,872.01 Shanghai Composite up 0.5% to 3,251.85 Sensex up 0.9% to 59,558.63 Australia S&P/ASX 200 up 0.5% to 7,477.99 Kospi up 0.2% to 2,700.39 Brent Futures up 1.2% to $101.76/bbl Gold spot down 0.0% to $1,931.38 U.S. Dollar Index up 0.14% to 99.89 German 10Y yield little changed at 0.68% Euro down 0.1% to $1.0865 Top Overnight News from Bloomberg The Bank of Russia delivered a surprise cut in its key interest rate Friday, reversing some of the steep increase it made after the invasion of Ukraine as the ruble recovered. The central bank lowered the rate to 17% from 20% and said further cuts could be made at upcoming meetings if conditions permit EU countries agreed to ban coal imports from Russia, the first time the bloc’s sanctions have targeted Moscow’s crucial energy revenues. Japan is also looking to curb imports, in what could be a shift in policy from one of the world’s largest energy buyers The EU is aiming to lock in progress on trade and technology disputes with the U.S. during President Joe Biden’s first term amid concerns that any gains could otherwise be easily reversed The relationship between Australia’s equities and currency has become the closest in a decade as commodity prices surge. The 180-day correlation between the country’s stock benchmark and the Australian dollar has climbed to the highest level since late 2011, according to data compiled by Bloomberg. The strengthened ties come as rallies in materials from oil to iron ore have boosted both the nation’s equities and the Aussie The ECB will look past threats to economic growth from the war in Ukraine, ending asset purchases in the summer and setting the stage for a first interest-rate increase in more than a decade in December, according to a survey of economists Junk bond sales across Europe are experiencing their longest drought in more than 10 years, as the Russian invasion of Ukraine and the prospect of rising interest rates neuter risk appetite A more detailed look at global markets courtesy of Newsquawk: Asia-Pacific stocks were choppy and eventually conformed to a mixed picture; some weakness was seen shortly after the Chinese cash open. ASX 200 bucked the trend and was propped up by its energy and gold names. Nikkei 225 was choppy and moved in tandem with action in USD/JPY whilst the KOSPI was weighed on by its chip and telecoms sectors. Hang Seng remained pressured by losses across its large constituents - Alibaba and JD.com. Shanghai Comp swung between gains and losses but overall remained supported by reports from China's Securities Journal which noted of a potential PBoC RRR in Q2. Top Asian News Hong Kong Tycoons Heed China, Endorse John Lee to lead City Chinese Tech Stocks Fall as Tencent Shuts Game Streaming Site Abu Dhabi’s IHC Invests $2 Billion in Billionaire Adani’s Empire ADDX Rolls Out Private Market Services for Wealth Managers European bourses are firmer across the board, Euro Stoxx 50 +1.5%, bouncing in a morning of quiet newsflow with the broader tone modestly risk-on. Albeit, benchmarks are still negative on the week and some way from earlier WTD peaks; unsurprisingly, sectors are all in the green with defensive-bias names lagging. Stateside, futures are similarly in the green, ES +0.2%, though magnitudes are more contained ahead of a limited US schedule to round off the week. Top European News U.S. Sanctions Russian Miner Producing 30% of World’s Diamonds Atlantia Gains After Reports of Offer Price Above EU22/Share Generali CEO Says He Won’t Change Plan Challenged by Investors Baader Downgrades Six Chemical Firms, Citing Ukraine War In FX: DXY touches 100.000 as US Treasury yields continue to soar and curve steepen, but unable to break barrier. Kiwi underperforms awaiting NZIER Q1 survey, while Aussie holds up better after hawkish warning in RBA FSR; NZD/USD around 0.6950, AUD/USD nearer 0.7460. Yen sub-124.00 as Japanese export supply is absorbed, Euro supported by bids circa 1.0850 and Sterling treading water above 1.3000. Rouble relatively resilient in the face of 300 bp CBR rate reduction as it remains above pre-conflict highs. Fixed income: Choppy trade in bonds approaching the end of another very bearish week. Bunds and Gilts nurse losses mostly above par around 157.00 and 120.00 handles vs fresh cycle lows of 156.40 and 119.83. US Treasuries most seeing red, but curve less steep in correction after hawkish FOMC minutes and Fed commentary, via Brainard and Bullard especially Central Banks: RBA Financial Stability Review: important that borrowers are prepared for an increase interest rates; global asset markets are vulnerable to larger-than-expected rate increases, via Reuters. RBI leave rates unchanged as expected, retains "accommodative" stance as expected; will focus on withdrawing accommodation going forward. RBI is to restore LAF corridor to 50bps and floor to be constituted by SDF, according to Reuters. CBRT April survey sees Turkish End-Year CPI at 46.44% (prev. 40.47%) CNB Minutes (March): Dedek and Michl voted in the minority for stable rates. Board assessed risks and uncertainties of winter forecast as being markedly inflationary, particularly in short-term CBR cuts its Key Rate to 17.00% (prev. 20.00%) as of April 11th; holds open the prospect of further key rate reduction at its upcoming meetings. In commodities, WTI and Brent are bolstered amid broader sentiment, though crude/geopolitical specific developments have been limited In-fitting with equities, the benchmarks are negative on the week and some way shy of best levels as such. New York will suspend the state gas tax from June 1st to December 31st, according to Reuters. Barclays raises oil forecasts by USD 7-8/bb assuming no material disruption in Russian supplies beyond Q2 2022, according to Reuters. Spot gold is marginally firmer, but, remains drawn to USD 1930/oz after marginally eclipsing the level overnight; base metals bid in-line with sentiment. US Event Calendar 10:00: Feb. Wholesale Trade Sales MoM, est. 0.8%, prior 4.0% 10:00: Feb. Wholesale Inventories MoM, est. 2.1%, prior 2.1% DB's Henry Allen concludes the overnight wrap Yesterday’s ECB minutes reinforced what we learned from the March FOMC minutes and soon-to-be Vice Chair Brainard earlier this week – there are no doves in fox holes – by casting doubt on the likelihood of inflation returning to target this year. We also heard from St. Louis Fed President Bullard, the hawk leading the charge, who called for a fed funds rates above 3% this year. That would beckon a faster pace of hikes along with more aggregate tightening. Regional Presidents Bostic and Evans, non-voters each, meanwhile, want to get rates to neutral. The tighter path of global policy continued to drive sovereign yields higher and equity indices lower. Market-implied ECB policy rates by the end of the year increased +6.0bps to +62.3bps, the highest level this cycle. Sovereign yields rose to multi-year highs of their own, with those on 10yr bund (+3.4bps), OATs (+4.4bps) and BTPs (+3.5bps) moving higher, with 10yr breakevens falling in Germany (-1.9bps) and France (-0.7bps) for the first time in five days, while Italian breakevens were essentially flat (+0.2bps). Meanwhile, fed funds futures by end-2022 staged a slight retreat, falling -1.2bps to 2.50%, albeit +10bps higher than a week ago. While the probability of a +50bp hike in May remained steady at 85.4%. 2yr yields fell in line, declining -1.2bps, while 10yr Treasuries gained +6.0bps, leaving the curve at +19.2bps. If you’re up on the yield curve discourse, you’ll know the Fed discounts the signal coming from 2s10s, instead preferring shorter-dated measures of the yield curve, which wound up flattening yesterday. Yesterday’s yield curve steepening should not be viewed in a vacuum. The 2s10s curve has taken a 58.3bp round trip over the last two weeks, falling from +23.1bps two weeks ago, to -8.0bps last Friday, to +19.2bps at yesterday’s close. The fundamental outlook hasn’t changed dramatically over that time span. Instead, this likely reflects the elevated rates volatility environment we currently sit in. This, all before QT has even begun. Real Treasury yields continue to march higher in the back end, with 10yr real yields gaining +5.3bps to -0.19%, their highest level since March 2020, having gained +25.1bps this week alone, and +91.3bps YTD. Despite higher rates and more restrictive language, the S&P 500 ended the day +0.43% higher, after losing -2.21% the previous two sessions. The S&P 500 is now -5.58% YTD following the massive repricing of Fed expectations, while the Bloomberg Financial Conditions index is just a hair tighter than the post-2010 average. Monetary policy may need to adjust tighter yet to engineer the demand slowdown commensurate with a return of inflation to target. European equities were modestly lower, with the STOXX 600 slipping -0.21% and the DAX down -0.52%. The CAC (-0.57%) underperformed the STOXX 600 for the seventh consecutive session, on the back of growing Presidential election jitters. Polls between President Macron and his closest rival, Marine Le Pen, tightened. In particular, one poll (caveat emptor) from Atlas actually put Le Pen marginally ahead of Macron in a head-to-head runoff for the first time, by 50.5%-49.5%. The news immediately saw the French 10yr spread over bund yields widen in response, ending the day at 54.2bps, its widest since March 2020. While one poll a race does not make, it’s worth noting the broader poll narrowing over the last month. That has seen Macron’s lead in the first round over Le Pen go from 30%-17% a month ago (according to Politico’s average), to just 27%-22% now. In the second round, polls are likewise pointing to a tight contest, with Macron ahead of Le Pen by 52-48% (Ifop) and 53%-47% (Ipsos). For those looking for more details on the presidential race, DB’s Marc de-Muizon put out a guide yesterday (link here), where he looks at the current state of play in the election, the main aspects of both Macron and Le Pen’s programmes, as well as some potential challenges for both candidates. Back to the US, in a rare show of bi-partisanship, the Senate voted 100-0 to discontinue normal trade relations with Russia and Belarus and to ban Russian oil imports. Brent crude prices fell below $100/bbl for the first time since mid-March intraday, ultimately falling -0.48% to close at $100.58/bbl. The EU also moved to include a Russian coal embargo in its fifth round of sanctions. The opprobrium was global, with the UN General Assembly voting to suspend Russia from the Human Rights Council following its human rights violations, the first such suspension since Libya in 2011. On the ground, the Kremlin admitted to enduring heavy troop losses, and while the locus of the war still seems set to shift eastward, Ukrainian commanders have their guard up for a renewed assault on Kyiv. Elsewhere, Judge Ketanji Brown Jackson was confirmed to the Supreme Court. It’s expected the Senate will now turn to approving President Biden’s nominations for the Fed Board of Governors later this month, which will still have one empty seat following Sarah Bloom Raskin withdrawing her nomination. Asian equity markets this morning aren’t matching Wall Street’s resilience from yesterday. The Hang Seng (-0.57%) is leading the moves lower with the Nikkei (-0.08%), Kospi (-0.10%), Shanghai Composite (-0.06%) and CSI (-0.10%) all slightly on the wrong foot. Along with tighter global monetary policy, China’s Covid outbreak is worsening and dragging on sentiment. US stock futures are unperturbed, with S&P 500 and Nasdaq futures virtually unchanged. Meanwhile, the aforementioned rates volatility continues to rear its head, with the curve snapping back flatter as we go to press, with 2yr Treasuries +4.2bps higher and the 10yr a bit softer at -0.5bps. Oil prices are extending their decline this morning with Brent futures (-0.74%) sliding below $100/bbl. On the data side, Japan’s current account swung back to surplus in February to +¥1.6 trillion, following a -¥1.2 trillion deficit in January - the second-biggest deficit on record. The main release yesterday came from the US weekly initial jobless claims, which fell to their lowest level since 1968, with just 166k initial claims in the week through April 2 (vs. 200k expected). In addition, the previous week was revised down to 171k from 202k, which left the smoother 4-week moving average at 170k, the lowest ever in the entire data series going back to 1967. Euro Area retail sales grew by +0.3% in February (vs. +0.5% expected), and German industrial production grew by +0.2% that same month, in line with expectations. To the day ahead now. Central bank speakers include the ECB’s de Cos, Centeno, Panetta, Stournaras, Makhlouf and Herodotou. Italian retail sales for February and Canadian employment for March round out this week’s data. Tyler Durden Fri, 04/08/2022 - 07:51.....»»

Crude steel production from China fell for the eighth straight month in February on government's measures to curb production to reduce pollution during the Winter Olympics. Global crude steel production fell for the seventh straight month in February, dragged down by a slump in output from top producer China on Beijing’s aggressive decarbonization drive. Production went up in India and the United States for the reported month.According to the latest World Steel Association (“WSA”) report, crude steel production for 64 reporting nations dropped 5.7% year over year to 142.7 million tons (Mt) in February. Lower output across Asia & Oceania, the Europe Union (EU), CIS and South America more than offset higher production across North America, Africa and the Middle East in the reported month.Softer Demand, Green Push Hurt China ProductionCrude steel production from China fell for the eighth straight month in February on government’s measures to curb production to reduce pollution during the Winter Olympics. Steel mills in northern China accelerated output cuts during February to ensure blue skies for Winter Olympics. Weaker steel demand in the property sector and the Lunar New Year holiday also contributed to the decline.Per the WSA, production in China, which accounts for roughly half of the global steel output, tumbled 10% year over year to 75 Mt in February. Output is also down from 81.7 Mt in January. Production also slipped 10% year over year to 158 Mt in the first two months of 2022. China’s monthly steel output has been declining since July after hitting a record high of 99.5 Mt in May 2021. China’s steel output fell 3% year over year to 1.03 billion tons in 2021, per the country’s National Bureau of Statistics (“NBS”).Beijing has been pushing steel mills in the country since early July 2021 to implement output and capacity curbs to comply with the norms to cut carbon emissions. The steel sector is among the biggest sources of carbon emissions in China, accounting for roughly 15% of national carbon emissions. China has set a national goal to achieve peak carbon emissions for the steel sector by 2025.Steel demand in China has softened since the second half of 2021 due to a slowdown in the country’s economy. China's GDP growth slowed to 4% year over year in the fourth quarter of 2021 from a 4.9% growth in the third quarter, per NBS. A downturn in the country’s real estate sector and the impacts of the pandemic contributed to the slowdown.A slowdown in construction and manufacturing activities has led to the contraction of demand for steel in China. Manufacturing is being hurt by semiconductor shortages, supply-chain disruptions and power outages. Beijing’s move to take the heat out of its property market partly through credit tightening measures bodes ill for construction steel demand. The debt crisis at one of China top property developers, Evergrande, also increases the risk of a financial contagion in the country’s property sector. Real estate accounts for roughly 40% of China's steel consumption. The WSA sees no growth in steel demand in China this year factoring in a depressed real estate sector.How Other Major Producers Fared in February?Among the other major Asian producers, India — the second-largest producer — saw a 7.6% rise in production to 10.1 Mt in February. Steel demand has picked up in India on a revival in economic activities post the deadly second wave and the subsequent Omicron outbreak. Domestic steel consumption has been driven by strengthening construction activities. Government’s infrastructure push and focus on accelerating the rural economy augur well for steel demand in India.Production in Japan fell 2.3% to 7.3 Mt in the reported month. Output from the country declined for the second consecutive month. Crude steel output in South Korea slipped 6% to 5.2 Mt. Consolidated output went down 7.1% to 102.6 Mt in Asia and Oceania reflecting the decline in China.In North America, crude steel production ticked up 1.4% to 6.4 Mt in the United States in February. Steel demand has rebounded in the Unites States with the resumption of operations, leading to an uptick in capacity utilization and domestic steel production. Overall production in North America went up 1.8% to 8.8 Mt.  In the EU, production from Germany, the largest producer in the region, rose 3.8% to 3.2 Mt. Total output was down 2.5% in the EU to 11.7 Mt. European steel makers are facing headwinds from soaring energy costs. The spike in electricity costs is weighing on steel producers in Europe, especially electric arc furnace producers, due to an increase in steelmaking costs.  Output in the Middle East rose 2.8% to 3.5 Mt in February. Iran, the top producer in the region, saw a 3.7% rise to 2.5 Mt. Production in Africa went up 4.1% to 1.3 Mt.Among other notable producers, output from Turkey fell 3.3% to 3 Mt. Production from Brazil, the biggest producer in South America, dropped 6.9% to 2.7 Mt in February.Industry Fundamentals Remain FavorableThe steel industry staged a strong comeback in 2021 after being rattled by the fallout from the coronavirus pandemic in 2020, courtesy of a strong revival in end-market demand and an upswing in steel prices to historic highs.The pandemic hurt demand for steel across major end-use markets for much of the first half of 2020. However, the industry rebounded strongly last year on solid pent-up demand and a rally in steel prices. The resumption of operations across major steel-consuming sectors such as construction and automotive following the easing of lockdowns and restrictions globally has led to an uptick in steel demand.Steel prices also escalated to all-time high last year on solid demand, higher raw material costs, tight supply and low steel supply-chain inventories globally. Notably, U.S. steel prices skyrocketed in 2021 on demand-supply imbalance. The benchmark hot-rolled coil (“HRC”) prices broke above the $1,900 per short ton level in August 2021 on supply tightness and robust demand. HRC prices hit a record high of $1,960 per short ton in late September, according to S&P Global Platts.Strong pent-up demand for steel fueled a rally in steel prices in 2021. However, demand growth has slowed in the United States and globally. Demand stabilization contributed to shorter lead times, thereby putting pressure on prices.HRC prices lost steam since October after peaking in September 2021. Steel production rose as more capacity was brought online, partly driven by the completion of scheduled maintenances by steel mills in the final quarter of 2021. Higher steel imports also exerted downward pressure on U.S. steel prices. The strong price arbitrage triggered more steel shipments to U.S. shores despite the hefty tariffs.However, on a positive note, global steel prices are moving up since Russia's invasion of Ukraine on supply concerns. Steel prices have witnessed a significant rally in Europe as the war threatened supplies from the two important producing nations. Both Russia and Ukraine are key producers and suppliers of steel and steel-making raw materials, including coking coal and pig iron. U.S. steel prices are also going up of late amid the supply worries. HRC prices have rebounded in the recent weeks to above $1,400 per short ton after slumping to nearly $1,000 per short ton at the beginning of this month.The ongoing conflict has also led to a spike in steel input costs due to the disruptions in the supply chains. Some of the U.S. steelmakers are taking price hike actions in the wake of soaring raw material costs, which are contributing to the uptick in HRC prices. More price increases are expected as steel producers scramble to tackle the rising input costs. Steel prices are, thus, expected to further tick higher in the coming weeks and months due to the strained supply situation.Meanwhile, demand weakness in the automotive market is likely to continue over the near term amid the ongoing chip crunch. However, solid demand in other end markets including construction and supply disruptions are likely to lend support to HRC prices, driving profit margins of steel companies.Steel Stocks Worth a LookA few stocks currently worth considering in the steel space are Nucor Corporation NUE, Olympic Steel, Inc. ZEUS, Commercial Metals Company CMC and TimkenSteel Corporation TMST.Nucor sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for NUE’s current-year earnings has been revised 30.7% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.Nucor has a trailing four-quarter earnings surprise of roughly 0.8%, on average. NUE shares have surged around 107% in a year.Olympic Steel carries a Zacks Rank #1. The consensus estimate for ZEUS’s current-year earnings has been revised 109% upward over the last 60 days.Olympic Steel has surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average being 49.7%. ZEUS shares have gained around 40% over the past year.Commercial Metals carries a Zacks Rank #1 and has an expected earnings growth rate of 80.7% for the current fiscal year. The consensus estimate for CMC's current fiscal-year earnings has been revised 13.7% upward over the last 60 days.Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 16%, on average. CMC has rallied around 46% over the past year.TimkenSteel carries a Zacks Rank #2 (Buy) and has a projected earnings growth rate of 10.6% for the current year. The Zacks Consensus Estimate for TMST’s current-year earnings has been revised 16.4% upward over the last 60 days.TimkenSteel beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 41.3%. TMST shares have shot up around 137% in a year. Investor Alert: Legal Marijuana Looking for big gains? Now is the time to get in on a young industry primed to skyrocket from $13.5 billion in 2021 to an expected $70.6 billion by 2028. After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could kick start an even greater bonanza for investors. Zacks Investment Research has recently closed pot stocks that have shot up as high as +147.0%. You’re invited to immediately check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.Today, Download Marijuana Moneymakers 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 Nucor Corporation (NUE): Free Stock Analysis Report Commercial Metals Company (CMC): Free Stock Analysis Report Olympic Steel, Inc. (ZEUS): Free Stock Analysis Report Timken Steel Corporation (TMST): Free Stock Analysis Report To read this article on Zacks.com click here......»»

TimkenSteel's (TMST) buyback program worth $50 million reflects the board's and senior leadership's confidence in generating sustainable through-cycle profitability. TimkenSteel Corporation TMST recently announced that its board approved a share buyback program. According to the program, the company may repurchase outstanding common shares worth up to $50 million.The board also approved the capital expenditure budget of $40 million for 2022.TimkenSteel intends to use methods like open market repurchases, including repurchases through Rule 10b5-1 plans, and privately-negotiated transactions for the buyback of shares. The price of shares, general market and economic conditions, capital needs and other factors will determine the actual timing, number and value of shares repurchased under the program, if any.The buyback program does not necessitate the procurement of any dollar amount or number. It could be modified, suspended, extended or terminated by the company at any time without former notice.The company stated that this buyback program reflects the board's and senior leadership's confidence in its ability to generate sustainable through-cycle profitability while maintaining a strong balance sheet and cash flow. Given its significant transformation in the past two years, it now has the financial flexibility to return capital to shareholders while also investing in the business to drive profitable growth.The company expects capital expenditures in the band of $15-$20 million for 2021.TimkenSteel raised its 2022 capital expenditure budget to $40 million with over half of the amount dedicated to high-return internal investment projects.Shares of TimkenSteel have surged 248.9% in the past year compared with a 36.9% rise of the industry.Image Source: Zacks Investment ResearchTimkenSteel sees fourth-quarter shipment to be lower than third-quarter levels. Although its order book is full for the rest of 2021, fourth-quarter shipments are expected to be affected by reduced melt utilization stemming from the recently completed annual Faircrest melt shop maintenance shutdown. The company also noted that periodic automotive customer manufacturing outages due to the chip shortage might impact mobile shipments in the fourth quarter.Timken Steel Corporation Price and Consensus  Timken Steel Corporation price-consensus-chart | Timken Steel Corporation Quote Zacks Rank & Other Key PicksTimkenSteel currently sports a Zacks Rank #1 (Strong Buy).Some other top-ranked stocks in the basic materials space are Nutrien Ltd. NTR, The Chemours Company CC and AdvanSix Inc. ASIX.Nutrien has an expected earnings growth rate of 233.3% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 16.3% upward in the past 60 days.Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 73.5%, on average. The stock has increased 44.1% in a year. NTR currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.Chemours has an expected earnings growth rate of 105.1% for the current year. The Zacks Consensus Estimate for the current year has been revised 10% upward in the past 60 days.Chemours beat the Zacks Consensus Estimate for earnings in all of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 34.2%, on average. CC has increased 22.8% over a year. Chemours currently sports a Zacks Rank #1.AdvanSix has a projected earnings growth rate of 194.5% for the current year. ASIX's consensus estimate for the current year has been revised 5.9% upward in the past 60 days.AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 127.6%. ASIX has rallied 123.5% in a year. 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Key Events This Week: Central Banks Galore, Retail Sales In Store, PMIs And PPIs In the last busy week of the year, which sees no less than 20 central bank announcements, the Fed’s decision on Wednesday will be the focal point of the week. In terms of what to expect, DB's Jim Reid writes that the bank's US economists 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 (this is in line with what both Goldman and Morgan Stanley expect). 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, DB 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, with economists noting 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. However, the Omicron variant reinforces the need for optionality, and 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 also take place on Thursday, and many - but not all - economists expect the MPC to raise Bank Rate by +15bps to 0.25%. DB is one of those arguing for a hike, noting that news of the Omicron variant has changed little on the medium-term economic outlook, with the labor 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 again, 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. Here, 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 usual data dump release of 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. Looking at the coming days, expect more geopolitical rumblings from the Russia-Ukraine border: 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. Courtesy of DB, here is a day-by-day calendar of events Monday December 13 Central Banks: ECB’s Centeno speaks, BoE release Financial Stability Report Tuesday December 14 Data: UK October unemployment, Euro Area October industrial production, US November NFIB small business optimism index, PPI Wednesday December 15 Data: China November retail sales, industrial production, UK November CPI, US November retail sales, December Empire state manufacturing survey, NAHB housing market index Central Banks: Federal Reserve monetary policy decision, Bank of Canada governor Macklem speaks Thursday December 16 Data: December flash PMIs from Japan, France, Germany, Euro Area, UK and US, Euro Area October trade balance, US weekly initial jobless claims, November housing starts, building permits, industrial production, capacity utilisation, December Philadelphia Fed business outlook, Kansas City Fed manufacturing index Central Banks: Monetary policy decisions from the ECB, Bank of England, Bank Indonesia, Central Bank of Turkey and Bank of Mexico Politics: EU leaders meet for European Council Friday December 17 Data: UK December GfK consumer confidence, November retail sales, Germany November PPI, December Ifo business climate indicator, Euro Area final November CPI Central Banks: Monetary policy decisions from the Bank of Japan and the Central Bank of Russia, ECB’s Rehn speaks * * * Finally, looking at just the US, Goldman writes that the key economic data releases this week are the PPI report on Tuesday, the retail sales report on Wednesday, and the Philadelphia Fed manufacturing index on Thursday. The December FOMC meeting is this week, with the release of the statement at 2:00 PM ET on Wednesday, followed by Chair Powell's press conference at 2:30 PM. Monday, December 13 There are no major economic data releases scheduled. Tuesday, December 14 06:00 AM NFIB small business optimism, November (consensus 98.4, last 98.2) 08:30 AM PPI final demand, November (GS +0.6%, consensus +0.5%, last +0.6%); PPI ex-food and energy, November (GS +0.5%, consensus +0.4%, last +0.4%); PPI ex-food, energy, and trade, November (GS +0.5%, consensus +0.4%, last +0.4%): We estimate a 0.5% increase for PPI ex-food and energy and PPI ex-food and energy, and trade, reflecting a continued boost from supply chain bottlenecks, labor shortages, and commodity prices. We estimate that headline PPI increased by 0.6% in November. Wednesday, December 15 08:30 AM Empire State manufacturing survey, December (consensus +25.0, last +30.9) 08:30 AM Retail sales, November (GS +0.4%, consensus +0.8%, last +1.7%): Retail sales ex-auto, November (GS +0.4%, consensus +0.9%, last +1.7%); Retail sales ex-auto & gas, November (GS +0.3%, consensus +0.8%, last +1.4%); Core retail sales, November (GS +0.3%, consensus +0.8%, last +1.6%): We estimate a 0.3% increase in core retail sales (ex-autos, gasoline, and building materials) in November (mom sa). The elevated level of retail sales—at +12.9% year-on-year in October—implies a high hurdle for incremental growth during the holiday season. Additionally, the pace of ecommerce purchasing slowed during Black Friday weekend, according to Adobe’s large panel of online retailers. Brick and mortar trends were more encouraging however, and in this week’s report, we expect firm gains in mall-based categories to partially offset a sequential decline in non-store sales. We estimate a 0.4% increase in headline retail sales, reflecting flat-to-down auto sales but higher auto and gas prices. 08:30 AM Import price index, November (consensus +0.7%, last +1.2%) 10:00 AM Business inventories, October (consensus +1.1%, last +0.7%) 10:00 AM NAHB housing market index, December (consensus 84, last 83) 02:00 PM FOMC statement, December 14-15 meeting: As discussed in our FOMC preview, we expect that the FOMC will double the pace of tapering to $30bn per month at its December meeting next week, putting it on track to announce the last two tapers at the January FOMC meeting and to implement the last taper in March. We now expect the FOMC to deliver rate hikes next year in May, July, and November (vs. June, September, and December previously). Thursday, December 16 08:30 AM Initial jobless claims, week ended December 11 (GS 222k, consensus 195k, last 184k); Continuing jobless claims, week ended December 4 (consensus 1,938k, last 1,992k): We estimate initial jobless claims increased to 222k in the week ended December 11. 08:30 AM Housing starts, November (GS +2.5%, consensus +3.0%, last -0.7%); Building permits, November (consensus +0.4%, last +4.2%): We estimate housing starts increased by 2.5% in November, reflecting higher permits in October. 08:30 AM Philadelphia Fed manufacturing index, December (GS 32.0, consensus 29.6, last 39.0): We estimate that the Philadelphia Fed manufacturing index declined by 7.0pt to 32.0 in December, partly reflecting reversion following an outsize jump in the prior month. 09:15 AM Industrial production, November (GS +0.5%, consensus +0.7%, last +1.6%): Manufacturing production, November (GS +0.7%, consensus +0.7%, last +1.2%) Capacity utilization, November (GS 76.7%, consensus 76.8%, last 76.4%): We estimate industrial production rose by 0.5% in November, with strong mining production offsetting weaker oil and gas production. We estimate capacity utilization rose by 0.3pp to 76.7%. 09:45 AM Markit Flash US manufacturing PMI, December preliminary (consensus 58.5, last 58.3); Markit Flash US services PMI, December preliminary (consensus 58.7, last 58.0) 11:00 AM Kansas City Fed manufacturing index, December (consensus 25, last 24) Friday, December 17 There are no major economic data releases scheduled. Source: Deutsche Bank, Goldman, BofA Tyler Durden Mon, 12/13/2021 - 09:52.....»»

TechnipFMC plc (FTI) expects subsea inbound orders to reach nearly $8 billion by 2025 - in line with or eclipsing the 2019 peak levels. At its 2021 Analyst Day on Tuesday, oilfield services provider TechnipFMC plc FTI presented a summary of its 2025 operational targets. The company’s intermediate-term financial performance will be largely driven by its Subsea unit, which constitutes some 85% of its adjusted EBITDA and 95% of backlog. FTI also looks poised to prioritize shareholder distribution and improve free cash flow conversion.  TechnipFMC said it expected subsea inbound orders (including services) to reach nearly $8 billion by 2025 — in line with or eclipsing the 2019 peak levels. In particular, FTI sees subsea services orders to grow approximately 35% (from $1.1 billion this year) through the middle of this decade. Subsea revenues are set to reach $7 billion during that time frame, while adjusted EBITDA is likely to jump more than 85% from 2021 guidance midpoint to $1.05 billion. Adjusted EBITDA margin is forecast to be around 15%, expanding from the 10.5% targeted for 2021, primarily built on the company’s increased productivity and utilization.Over the next few years, TechnipFMC believes that its Subsea 2.0 platform — a new, technologically sophisticated suite of products that improves project economics by cutting down on the dimensions of the equipment installed underwater — would enjoy fast-track adoption. The next-generation, environment-friendly all-electric system should increase opportunities further.  As far as the Surface Technologies unit is concerned, the guidance was less specific though FTI envisions incremental EBITDA margins of roughly 30% in 2025.Throwing light on its financial projections, the company is looking to convert 40-50% of its adjusted EBITDA into free cash flow by 2025. This will be facilitated by debt reduction, allowing the leading manufacturer and supplier of integrated technology solutions for the energy industry to lower its annual interest expense. Its capital budget, on the other hand, is expected to be restricted between 3.5% and 4.5% of revenues. TechnipFMC aims to bring the gross debt down to $1.3 billion in the next four years (compared to $2.3 billion as of Sep 30) with a cash balance of at least $800 million. The company is also expecting to introduce a sustainable dividend starting in the second half of 2023With the rise of ESG (Environmental, Social and Governance) investing and a broad-based transition toward clean energy, FTI is striving to focus on the opportunities created by efforts to reduce carbon footprint. As part of that, the company’s newly established ‘New Energy Ventures’ could win orders worth $1 billion through 2025, with 60% coming from Europe (chiefly hydrogen) and 40% from North America (mainly carbon transportation and storage). By 2030, TechnipFMC sees the market size for such services soaring to some $80 billion.Zacks Rank & Stock PicksTechnipFMC currently carries a Zacks Rank #3 (Hold). While FTI shares have largely underperformed the industry in a year (-20.8% versus +33.6%), we believe that the company is trending toward the right direction, which will help the stock catch up. Image Source: Zacks Investment Research Some better-ranked players in the energy space are ConocoPhillips COP, EOG Resources EOG and Suncor Energy SU. All the companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.ConocoPhillips has a projected earnings growth rate of 705.2% for the current year. The Zacks Consensus Estimate for COP’s current-year earnings has been revised 23.8% upward over the last 60 days.ConocoPhillips beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 13%. COP shares have gained around 89.1% in a year.EOG Resources has a projected earnings growth rate of 491.1% for the current year. EOG's consensus estimate for the current year has been revised 15.5% upward over the last 60 days.EOG Resources beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 29.8%. EOG has rallied around 104% in a year.Suncor Energy has an expected earnings growth rate of 318.2% for the current year. The Zacks Consensus Estimate for SU's current-year earnings has been revised 27% upward over the last 60 days.Suncor Energy beat the Zacks Consensus Estimate for earnings in two of the last four quarters but missed twice. It has a trailing four-quarter earnings surprise of roughly 7.5%, on average. SU has rallied around 69.5% in a year. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. 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