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HireRight Holdings, Canoo, VEON And Other Big Gainers From Friday

U.S. stocks closed mixed on Friday, with the Dow Jones gaining around 150 points. Here is the list of some big stocks recording gains in the previous session. read more.....»»

Category: blogSource: benzingaNov 28th, 2022

Unreliable Contrarianism

Dear fellow investors,  It appears to us at Smead Capital Management that investors are behaving in a way that will damage their capital and cause them to suffer stock market failure. In 2022, as the favorite tech stocks of the last ten years got trounced, individual investors poured $100 billion into mutual funds and ETFs […] Dear fellow investors,  It appears to us at Smead Capital Management that investors are behaving in a way that will damage their capital and cause them to suffer stock market failure. In 2022, as the favorite tech stocks of the last ten years got trounced, individual investors poured $100 billion into mutual funds and ETFs dominated by ownership of the very stocks which have created the most damage to their results. We get asked all the time if we are stepping up to the plate on stocks like Apple and Google, for example. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Citigroup’s quant team came up with a list of ten highly thought of tech stocks that have fallen sharply this year and argued that contrarians are buying them because it would be the kind of contrarianism you would expect from investors: Meta (NASDAQ:META), year-to-date performance -65% PayPal (NASDAQ:PYPL), -65% Tesla (NASDAQ:TSLA), -62% AMD (NASDAQ:AMD), -57% Netflix (NASDAQ:NFLX), -51% Salesforce (NYSE:CRM), -50% Intel (NASDAQ:INTC), -50% Amazon (NASDAQ:AMZN), -49% Micron (NASDAQ:MU) -46% Edwards Lifesciences (NYSE:EW), -43% In turn, they included a list of very strong performers from last year and called selling them the contrary thing to do: Occidental Petroleum (NYSE:OXY), +99% Marathon Petroleum (NYSE:MPC), +65% Exxon Mobil (NYSE:XOM), +64% SLB (NYSE:SLB), +54% ConocoPhillips (NYSE:COP), +53% Valero (NYSE:VLO), +52% McKesson (NYSE:MCK), +48% Chevron (NYSE:CVX), +41% Daiichi Sankyo (OTCMKTS:DSKYF), +35% Glencore (OTCMKTS:GLCNF), +29% This leads to some very important questions. First, what is the history of bear markets like this one following financial euphoria episodes like the one which died in late 2021? Remember, Charlie Munger called it the biggest euphoria episode of his career because of the “totality of it.” We will examine the 1929-1932 Roaring Twenties bear market (RCA), the 1973-1974 Nifty Fifty bear (DIS and KO), and the DotCom Bubble bear of 2000-2003 (MSFT, CSCO, INTC). How did the stock market, as represented by the Dow Jones Industrial Average (DJIA), and the formerly popular stocks of the prior euphoric bull markets do in the second year of the bear market that followed? The answer is terrible (say it like Charles Barkley)! Source:stockcharts.com RCA was the glam stock of 1929: Source:Gold Eagle and RCA How did the DJIA do in the second year of the 1973-1974 Bear Market? Source:Fiendbear.com and Dow How did Disney (DIS) and Coca-Cola (KO) do in the second year of the 1973-1974 Bear Market? Source:Bloomberg How did Microsoft (MSFT), Intel (INTC) and Cisco (CSCO) do in the second year of the 2000-2003 Bear Market? Source:Bloomberg Second, does buying the list of losers look contrary vis-à-vis analysts’ opinions on the stocks which got hit hard in 2022 versus the ones which went up? The answer is that there is rampant bullishness in the shares of most of the ones which have gone down immensely other than Intel (22.9% bullish analysts) and some bullishness on the part of the gainers list in Glencore (GLCNF), Conoco (COP) and Schlumberger (SLB). However, there are significantly fewer analysts covering the list of stocks that went up this year. This would make contrarianism unreliable in the stocks which have gone down the most. We’d like to bring special attention to the analyst’s consensus on OXY: Source:Bloomberg Does this look like rampant bullishness? Third, what do you pay to participate going forward in the two lists? The average price-to-book ratio of the two lists is 4.45 times book on the ones which have gone down and 2.84 times book on the list of recently strong performers. From a historical standpoint, it would be hard to argue that these former glam tech stocks provide historically good value even though they are dramatically cheaper than one year ago. In conclusion, using price declines alone to be contrary is intuitive but should be the beginning of your research. We are being extra careful in this environment and expect to get more access to bargains in the next year. We keep that vigilant eye while we carry our usual optimism toward companies that meet our eight criteria for common stock selection. We continue to believe that inflation will be a persistent problem going forward and want to own companies that we believe will benefit from changing investor appetites. As always, fear stock market failure! Warm regards, William Smead The information contained in this missive represents Smead Capital Management’s opinions, and should not be construed as personalized or individualized investment advice and are subject to change. Past performance is no guarantee of future results. Bill Smead, CIO, wrote this article. It should not be assumed that investing in any securities mentioned above will or will not be profitable. Portfolio composition is subject to change at any time and references to specific securities, industries and sectors in this letter are not recommendations to purchase or sell any particular security. Current and future portfolio holdings are subject to risk. In preparing this document, SCM has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources. A list of all recommendations made by Smead Capital Management within the past twelve-month period is available upon request. ©2022 Smead Capital Management, Inc. All rights reserved. This Missive and others are available at www.smeadcap.com.....»»

Category: blogSource: valuewalkDec 20th, 2022

Futures Slide As Tech Giants Shed $300 Billion; Dollar Tumbles For 2nd Day

Futures Slide As Tech Giants Shed $300 Billion; Dollar Tumbles For 2nd Day US index futures are lower this morning, set to give back some of Tuesday’s 1.6% sharp rally as technology giants’ earnings and outlook disappointed investors, stoking concerns about the industry’s profitability and raising new doubts over whether this year’s $5.5 trillion selloff is nearing a bottom. S&P 500 futures dropped as much as 1.2%, and were down 0.7% at 7:30am while Treasuries extended gains, with the 10-year yield falling to around 4.05%. Nasdaq 100 fell more than 1.5% as megacap stocks tumbled in premarket trading after Alphabet's 3Q miss and disappointing outlook from Microsoft and Texas Instruments weighed on the cohort, which is set to lose approximately $300 billion in market value if losses hold at open.  The combined weight of the three companies amounts to more than 19% of the Nasdaq 100. “Google and Microsoft reversed the joyful Tuesday sentiment,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. She added that “there is nothing official pointing at a potential softening tone from the Fed just yet. Hence, the recent fall in the US dollar, and rebound in equities may not last.” S&P 500 futures had rallied 1.6% on Tuesday, closing at the highest in over a month as yields pulled back amid growing speculation the Treasury will anounce buybacks soon. The dollar and the yield on 10-year Treasuries fell for a second day after a report that US home-price growth slowed by the most on record as a doubling of borrowing costs saps demand. The Bloomberg dollar index tumbled for a second day to its lowest level in three weeks... ... following apparent massive intervention by state banks in China seeking to stabilize the plunging yuan which surged by a record 1.8% against the dollar. Alas just like Japan, expect this intervention to fizzle soon as absent a Fed pibot, the yield differentials remain just too strong to swim against the strong USD current. It wasn't just the yuan that bounced: a near 5% rebound in a gauge of US-listed Chinese stocks on Tuesday helped claw back some of the record loss suffered in the wake of President Xi Jinping breaking with China’s collective leadership. Hong Kong’s tech gauge made strong gains for a second day but was still short of recouping Monday’s near 10% slide. Meanwhile, the British pound held an advance against the greenback after the government said a much-anticipated fiscal statement will be delayed until November. Sterling rallied earlier after New Prime Minister Rishi Sunak named an experienced Cabinet to lead the UK through what he called a “profound economic crisis.” In premarket trading, megacap stocks tumbled after disappointing quarterly updates from Alphabet (which missed across the board) and Microsoft (which had a lackluster forecast for sales growth in its Azure cloud-computing services business) wiped out about $295 billion in market value from the biggest US companies. Meanwhile, Twitter is set to open at the closest to Elon Musk’s offer since he launched his takeover bid in April. Among other tech stocks falling in sympathy: Apple -0.8%, Amazon.com -3.8%, Meta Platforms -3.9%, Adobe -1.3%, Oracle +0.8%, ServiceNow -6.7%, Workday -1.2%, Intuit -0.8%, Datadog -6.2%, Snowflake -5.7%. On the other end, bank stocks are mostly higher in premarket trading putting them on track to gain for a fourth straight session. In corporate news, Barclays traders beat estimates in the third quarter, offsetting steep declines for its investment bankers. Meanwhile, Goldman Sachs’s China-focused stock hedge fund clients had their second-worst trading day this year during Monday’s sell-off. Here are the most notable premarket movers: Alphabet shares are down 6% in premarket trading after the tech juggernaut’s search-based ads business, which had largely dodged the digital-ad slowdown that hit rivals earlier this year, no longer seemed immune to macro headwinds. Among other megacaps Amazon -3.6%, Apple -0.6%, Tesla -1.2%, Meta -3% Microsoft falls 6% after the software company reported its weakest quarterly sales growth in five years and gave a lackluster forecast for sales growth in its Azure cloud-computing services business. Enphase Energy’s rises 5.6% as the solar firm’s quarterly results were strong and analysts retain confidence the company can continue to deliver robust growth and margins. Texas Instruments falls 4.2% after the chipmaker’s fourth-quarter outlook signaled that the semiconductor industry’s slump is spreading beyond PCs and smartphones to the once-healthy industrial segment. Chip stocks drop in US premarket trading after a disappointing quarterly forecast from Texas Instruments. Nvidia -2.4%, Qualcomm -0.8%, Advanced Micro Devices -1.9%, Intel -0.6% Twitter is set to open at the closest to Elon Musk’s offer since he launched a bid in April, with shares trading as high as $53.18 against the offer price of $54.20, signaling investors’ confidence to see a deal get over the line on time is growing. Skechers (SKX US) slumps 14% after the footwear brand reported weak 3Q EPS as well as 4Q profit and sales outlook. Morgan Stanley said “unique” pressures from freight and logistics offset the company’s top-line strength. Invesco (IVZ US) falls 1.5% as Credit Suisse downgrades to underperform from neutral following the company’s third- quarter earnings, saying there are “too many adverse moving parts.” Mattel (MAT US) slid 5.5% in US postmarket trading on Tuesday after the toymaker cut its adjusted EPS guidance for the year citing a “challenging macroeconomic environment.” Juniper Networks (JNPR US) analysts were encouraged by the internet infrastructure company’s results and outlook for the fourth quarter. Juniper’s shares rose more than 4% in US afterhours Stocks had been buoyed in recent days by mostly solid earnings and speculation the Federal Reserve may curb the pace of rate increases amid evidence its aggressive tightening is starting to weigh on the economy.  About a quarter of S&P 500 companies have reported third-quarter results, with more than two-thirds beating (sharply lowered) analysts’ estimates despite the big-tech setback. But concern is mounting that slowing output will dent corporate profits in coming months. “Yes we’re seeing earnings beats at the moment,” Mike Ingram, a senior market strategist at ActivTrades, said on Bloomberg TV. “But where I do start to have a bit of a problem at this juncture is that some earnings expectations going into next year are looking still a bit punchy.” Goldman strategists said conditions for a trough in US equities are not visible yet as the asset class doesn’t fully reflect the latest rise in real yields and odds of a recession. None of the US assets tracked by Goldman are fully pricing in a recession, with equities factoring in the lowest odds of a “severe hawkish scenario,” the strategists wrote. While the recent US data haven’t changed expectations that the Fed will hike interest rates by 75 basis points next month, they’re fueling speculation that an end to aggressive tightening may come next year. Analysts are also projecting challenges for now in Europe, with a jumbo hike of 75 basis points expected from the European Central Bank on Thursday. That’s even as many economists now reckon a recession has begun in the euro region. “Sentiment’s still incredibly fragile. We do expect to see further market volatility,” Catherine Yeung, investment director at Fidelity International, said on Bloomberg Radio. “All eyes are still on the rate cycle globally speaking as well as where inflation does go. I think going into the end of the year, again, it’s going to be volatile.” In Europe, the Stoxx Europe 600 index fluctuated and pared losses amid a raft of mostly positive earnings from heavyweights including Barclays Plc, Deutsche Bank and Mercedes-Benz. The technology sector dropped more than 1%, weighing on the benchmark, while brewer Heineken NV plunged after missing analysts’ estimates for volume growth; construction and miners leading while food and beverages, personal care and tech lag. Here are the biggest European movers: UniCredit climbed as much as 4.2% after the Italian lender boosted its guidance for a second quarter, which Intesa analysts said could lead to an increase in consensus estimates. Assa Abloy rises as much as 3.8% after 3Q Ebit and sales came in ahead of consensus owing to strong demand across all of the Swedish lockmaker’s geographies, further fueled by a sharp recovery for Global Technologies. BASF rises as much as 2.2% as 3Q results contain few surprises following its pre-release and the share response is likely to be subdued, analysts say. Skanska rises as much as 6.0% as co. saw a big beat on profitability in the third quarter, with stronger construction helping to offset weaker residential, Morgan Stanley writes. ASM International’s shares slump as much as 10% after the semiconductor-equipment firm warned that the impact of sanctions on China could hurt more than 40% of its sales in that country. Peer ASML also declines. Reckitt shares drop as much as 5.0%, underperforming the FTSE 100 Index, after a decline in 3Q sales volumes in the consumer goods company’s hygiene business -- which had previously benefited from the increased focus on cleanliness during the pandemic -- overshadowed a beat in total like-for-like sales. Heineken falls as much as 11%, the most since March 2020, after reporting 3Q organic beer volume that missed estimates and as the brewer noted greater reasons to be cautious on the macroeconomic outlook Santander shares declined as much as 5.0%, the most in a month as analysts flagged higher-than-expected costs and growing non-performing loans in Brazil and the US, which outweighed earnings that beat estimates. Earlier in the session, Asian stocks climbed for a second day, as Chinese authorities sought to boost investor confidence and the dollar fell alongside Treasury yields. The MSCI Asia Pacific Index rose as much as 1.3%, with most markets advancing in the region as local currencies strengthened versus the dollar. Tech stocks were among the top sectoral gainers, bolstered by a slide in benchmark borrowing costs.  Stocks in Hong Kong and China rebounded following a rout earlier in the week, as Chinese authorities said late Tuesday that they would ensure a healthy development of financial markets. The gauges pared gains as a lockdown in one of Wuhan city’s central districts reinforced investor concerns about China’s strict Covid Zero policy.   The earnings season also gave a boost to tech stocks, including heavyweight chip shares. SK Hynix shares climbed even after an earnings miss, as traders reacted positively to the Korean firm’s announcement of a cut in capital expenditure. Samsung SDI’s quarterly profit beat estimates on robust electric-vehicle battery sales.  “We are likely going into a period when very bad earnings in Asia may be good news for some ‘optically cheap’ stocks as it might imply that earnings expectations also get washed out completely - on top of already low valuations,” said Chetan Seth, Asia Pacific equity strategist at Nomura Holdings Inc. “Low earnings expectations and low valuations is a good sign for eventual bottoming out in some of these stocks,” he added.  More than 200 of the MSCI Asia index members tracked by Bloomberg have reported earnings so far, as analysts watch for the impact of China’s Covid lockdowns and the dollar’s strength on corporate profits. India markets are closed Wednesday.  Overall, the Asian gauge remains down for the month and has lost almost 30% this year, hammered by risks including China’s slowdown and global monetary tightening.   Japanese stocks climbed for the third day, following a rise in the US cash market overnight as investors continued to monitor the flow of corporate earnings coming out this week.  The Topix Index rose 0.6% to 1,918.21 as of market close Tokyo time, while the Nikkei advanced 0.7% to 27,431.84. Daiichi Sankyo Co. contributed the most to the Topix Index gain, increasing 2.9%. Out of 2,166 stocks in the index, 1,402 rose and 661 fell, while 103 were unchanged. The S&P 500 Index rallied for the third session through Tuesday. US futures slid during Asian trading hours on Wednesday, however, as post-market earnings from tech giants Microsoft and Alphabet disappointed.  “Stock prices tend to settle down when actual earnings seasons begin, once a number of companies that gave out warnings show results that exceed their original forecasts,” said Hideyuki Suzuki, general manager at SBI Securities. “Japanese companies’ earnings will be the key focus this week and early next week as they will be in full swing.”   Australian stocks also gained for a third day as inflation accelerated. The S&P/ASX 200 index edged up 0.2% to close at 6,810.90, extending gains to a 3rd day and marking the highest close in almost three weeks. The property and utility sectors led the increase. The benchmark index pared some of its earlier gains after Australia’s annual headline inflation accelerated to a 32-year high in the third quarter, validating the Reserve Bank’s rapid policy tightening. Inflation is “public enemy number one” in Australia’s economy, Treasurer Jim Chalmers said. In rates, Treasury futures were off best levels of the day, although they remain richer by up to 6bp across long-end of the curve which bull flattens. US 10-year yields dropped as low as 4.02%, and were last around 4.055%, close to bottom of Tuesday session range and outperform bunds and gilts by 6.5bp and 7.5bp on the day; long-end led gains flattens 5s30s spread by almost 4bp on the day while 20s outperform further out with 10s20s30s fly richer by 2.4bp. Gains were seen overnight in Treasuries as stocks pared back portion of Tuesday rally following soft earnings from tech giants including Microsoft, Alphabet and Texas Instruments. Auction cycle resumes with $43b five-year at 1pm, follows Tuesday’s soft two-year sale which tailed by 1.2bp -- auctions conclude with $35b seven-year Thursday. US session focused on five-year auction while Bank of Canada rate decision is at 10am New York. Bunds and gilts 10-year yields trim gains, back to unchanged on the day. In FX, the dollar tumbled for a second day, providing relief across currencies. The pound surges to $1.16; the euro trades above parity against USD, while the yen rises to around 146.71/dollar. Offshore yuan gains 1.7% to 7.1831 per dollar. However, dollar weakness wasn’t able to lift US futures as S&P 500 falls 0.5% while Nasdaq 100 slips 1.4% on disappointing mega tech earnings. The Pound rallied more than 1% to as high as $1.162 as it gained for a second day. Euro advanced past parity with the US dollar for the first time since Sept. 20; overnight volatility in the euro shows traders are preparing for a relatively wide intraday range into the European Central Bank decision. Australia’s dollar advanced, eventually finding traction as short-covering increased on expectation that local yields will recover after third-quarter CPI hit a 32-year high, putting the spotlight back on Reserve Bank pricing. The yen jumped to 147 per dollar ahead of the Bank of Japan’s policy decision Friday, when monetary settings are expected to be kept unchanged. Meanwhile, the central bank boosted purchases of longer-dated government bonds as rising yields threatened to loosen its grip on the yield curve. In commodities, oil was steady as an industry report showed a rise in US crude stockpiles and investors fretted about weaker demand amid slowing growth. Crude benchmarks were modestly firmer on the session despite initial downbeat performance in wake of readacross from US after-market earnings and on fresh COVID updates in China alongside the below Private Inventory release. WTI and Brent Dec’22 contracts reside at the top-end of 1.50/bbl parameters though remain capped by USD 86/bbl and USD 94/bbl respectively, buoyed by the USD's pullback. Metals are similarly USD driven, spot gold has surpassed the 10- & 21-DMAs with base metals similarly buoyed. Spot gold rises roughly $20 to trade near $1,673/oz. Looking to the day ahead, economic data releases will include wholesale and retail inventories, new home sales and advance goods trade balance in the US and consumer confidence in France. In earnings, results will be due from Meta, Thermo Fisher Scientific, Bristol-Myers Squibb, Boeing, Iberdrola, Boston Scientific, Mercedes-Benz, Heineken, Ford, Kraft Heinz, Santander, BASF, Barclays, Telenor and Puma. Market Snapshot S&P 500 futures down 0.6% to 3,847.75 STOXX Europe 600 up 0.2% to 408.51 MXAP up 1.2% to 137.05 MXAPJ up 1.2% to 436.97 Nikkei up 0.7% to 27,431.84 Topix up 0.6% to 1,918.21 Hang Seng Index up 1.0% to 15,317.67 Shanghai Composite up 0.8% to 2,999.50 Sensex down 0.5% to 59,543.96 Australia S&P/ASX 200 up 0.2% to 6,810.87 Kospi up 0.6% to 2,249.56 German 10Y yield down 0.4% at 2.16% Euro up 0.7% to $1.0038 Brent Futures up 0.2% to $93.68/bbl Gold spot up 1.1% to $1,670.70 U.S. Dollar Index down 0.67% to 110.20 Top Overnight News from Bloomberg UK Prime Minister Rishi Sunak may delay an economic plan scheduled for Oct. 31 to give him time to square it with his agenda, Foreign Secretary James Cleverly said. Hedge funds have cut portfolio leverage this year in a conservative turn that has sucked borrowed money from global markets, adding selling pressure to stocks and bonds. Five trillion euros of liquidity is eroding the bridge between European interest-rate policy and borrowing costs in money markets, spurring debate over the kind of toolkit needed to stop the dislocation warping the cost of funding in the wider economy. Australia faces mounting debt and deficits in the years ahead even as Treasurer Jim Chalmers scrimped and saved in his first budget to hold down spending and avoid further fueling inflation. US Treasury Secretary Janet Yellen respects Tokyo’s decision not to disclose whether it has intervened in foreign exchange markets, according to Japan’s top currency official. A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks equities traded higher across the board following the positive lead from Wall Street. ASX 200 opened firmer following the Aussie budget, but gains were capped by hotter-than-expected Australian CPI data which resulted in a modest uptick in RBA pricing for a 50bps hike at the next meeting. Nikkei 225 topped 27,500 with gains led by the pharma and manufacturing sectors. KOSPI held onto mild gains whilst chipmaker SK Hynix missed earnings expectations and cut its 2023 capex by over 50% vs 2022. Hang Seng and Shanghai Comp opened firmer as the bourses conformed to the gains across global peers, while the PBoC also injected CNY 280bln via reverse repo, with the former eventually outperforming. Top Asian News China's Hanyang district (900k population) in Wuhan city, entered a five-day temporary lockdown until October 30th, according to Chinese press. Universal Studios in Beijing temporarily closed amid COVID measures, according to a notice cited by Reuters. PBoC injected CNY 280bln via 7-day reverse repos at a maintained rate 2.00% for a daily injection of CNY 278bln. BoJ raised the purchase amounts for 10-25yr and 25yr+ JGB maturities in a bid to curb the surge in yields, via Reuters. Japan's Top FX Diplomat Kanda reiterated that they will continue to take bold steps against excessive FX moves, and are in close contact with G7 everyday, including on FX and geopolitics. Japan Chief Cabinet Secretary says it is important to keep enough FX reserves to support its own currency in case of sharp, excessive market volatility, via Reuters. Japanese life insurers' investment plans show a preference to cut holdings of foreign debt, mainly US Treasury bonds, in the second half of the fiscal year ending March amid elevated FX hedging costs, according to Nikkei citing investment plan release. Hong Kong Futures Exchange has temporarily suspended the volatility control mechanism for futures products in derivatives market; halt due to external vendor software issues. Japan is set to lower electricity bills by around 20% in early 2023 under a new package amid accelerating inflation, according to Kyodo News sources. SK Hynix (000660 KS) Q3 2022 (KRW): Revenue 10.98tln (exp. 11.1tln). Operating Profit 1.66tln (exp. 1.87tln). Net Profit 1.1tln (exp. 1.37tln), Q3 average DRAM and NAND selling prices -20%; cuts 2023 investment spending by over 50% vs 2022. Australian Treasurer Chalmers expects inflation to peak at the end of the year. European bourses are mixed and yet to make much ground either side of the unchanged mark, Euro Stoxx 50 -0.2%; amid numerous European updates and the US tech headwind. Sectors, feature Tech as the main underperformer as such with the broader picture in-fitting with bourses and mixed overall. Stateside, the NQ -1.7% is weighed on by GOOGL and MSFT post-earnings and ahead of further large-cap updates including META after-hours. Top European News UK medium-term fiscal plan has been delayed until November 17th, via BBC; upgraded to a full Autumn Statement. Subsequently confirmed by Chancellor Hunt Sunak is to meet Chancellor Hunt on Wednesday to discuss proposals to increase taxes and cut public spending, according to The Times. Heineken Warns of Softer Demand as Inflation Hits Drinkers UniCredit CEO Committed to Disengage, Reduce Russia Exposure WPP Raises Sales Forecast After Ad Budgets Prove Resilient European Stock Rally Moderates as Investors Weigh Earnings, ECB Heathrow Ramps Up Hiring, Says It Will Take Years to Recover Traders Price Less Than 150 Bps of BOE Rate Hikes By Year-End Barclays Traders Beat Estimates as Uncertainty Freezes Deals Storebrand Falls After 3Q Solvency II Misses Estimates Major Banks Upbeat on UK House Price Growth Despite Rising Rates Fixed Income Initial modest upside has waned and been replaced by an incremental negative bias, Gilts are lagging slightly and back below 101.00 post a sub-par 7yr sale and as the UK's fiscal update has been delayed. Amidst this, both Bunds and USTs have slipped though latter remain bid overall in a slight role reversal from recent performance; stateside, the curve is slightly flatter. Finally, within the periphery BTPs have slipped ahead of a Senate vote but the BTP-Bund spread remains relatively narrow and sub-220bp after yesterday's House performance from Meloni. Commodities Crude benchmarks are modestly firmer on the session despite initial downbeat performance in wake of readacross from US after-market earnings and on fresh COVID updates in China alongside the below Private Inventory release. WTI and Brent Dec’22 contracts reside at the top-end of USD 1.50/bbl parameters though remain capped by USD 86/bbl and USD 94/bbl respectively, buoyed by the USD's pullback. Metals are similarly USD driven, spot gold has surpassed the 10- & 21-DMAs with base metals similarly buoyed. US Energy Inventory Data (bbls): Crude +4.5mln (exp. +1.0mln), Cushing +0.7mln, Gasoline -2.3mln (exp. -0.8mln), Distillate +0.6mln (exp. -1.1mln). FX Scramble to cover Sterling shorts inflicts more pain for the Buck as Cable tops 1.1600 and DXY sinks below 110.000. Euro back above parity vs Greenback, but may be hampered by decent option expiry interest at the strike. Kiwi and Aussie make more headway against their US rival through 0.5800 and towards 0.6500 respectively. Yen probes 147.00 vs Dollar without thrust of obvious intervention and Loonie eyes 1.3500 ahead of BoC amidst split opinions on 50 or 75 bp rate hike. Yuan relieved Buck retreat, stronger than spot PBoC CNY fix and reports of major Chinese bank buying late yesterday. PBoC set USD/CNY mid-point at 7.1638 vs exp. 7.1983 (prev. 7.1668) Major Chinese state-owned banks sold USD in both onshore and offshore markets in late trade on Tuesday to prop up the weakening yuan, according to Reuters sources Geopolitics Japan's Vice Foreign Minister intends to further deepen trilateral cooperation between Japan, South Korea, and the US. German foreign ministry, in internal paper, said Cosco stake in German ports disproportionately strengthens China's influence on Germany and in Europe, via Reuters. US Event Calendar 07:00: Oct. MBA Mortgage Applications -1.7%, prior -4.5% 08:30: Sept. Advance Goods Trade Balance, est. -$87.5b, prior -$87.3b 08:30: Sept. Retail Inventories MoM, est. 1.2%, prior 1.4% Wholesale Inventories MoM, est. 1.0%, prior 1.3% 10:00: Sept. New Home Sales MoM, est. -15.3%, prior 28.8% New Home Sales, est. 580,000, prior 685,000 DB's Jim Reid concludes the overnight wrap Morning from NY. I say morning but I flagged after writing about the weak late US tech earnings below. Jet lag hit so I’m passing this onto Galina to finish off and send in the London morning. Indeed the weaker tech earnings have slightly ruined the joint bond and equity rally that's been in place for several days now. More specifically, I’m not sure if anyone else is playing this game but we continue to try to work out whether Friday’s WSJ article by Nick Timiraos marks the start of the 6th attempt at a sustained Fed pivot narrative over the last 12 months. If you want to examine the previous 5, see Henry's note earlier this month here for more. After a bit of push / pull on rates after the immediate Timiraos-led move, yesterday saw a fresh rates (and equity) rally on the back of obviously weaker economic data. Before we delve into that remember that from last night, 20% of the S&P 500 report in 48 hours across just 5 mega cap tech stocks. Last night, Alphabet fell -6.7% in after hours after both revenue and earnings missed estimates and the company said it was focusing on costs and constraining hiring. For Microsoft, despite beats on both revenue and net income, disappointing growth forecasts for Azure, its cloud platform, as well as strong dollar, European energy costs and falling demand for PCs weighed on the share price. In after-hours trading the stock also traded -6.7%. Elsewhere, Texas Instruments, which "only" has a market cap of c.$150bn to Alphabets' $1.36tn and Microsoft's $1.87tn, also disappointed the market after-hours due to a soft outlook for the current quarter with the stock -5.2% in extended trading. With its chips used across a variety of goods, the CEO’s comments about weakness in both personal electronics and industrial sectors is telling about demand in the broader economy. This morning we have also heard demand concerns from SK Hynix, a South Korean chipmaker. All this has cast a shadow on futures this morning with S&P 500 and Nasdaq 100 contracts -0.90% and -1.90%, respectively. Watch out for Meta earnings after hours tonight and Apple and Amazon tomorrow. Back now to that weaker data that created the rates rally and helped tech along the way in normal trading hours. Markets are getting increasingly sensitive to housing at the moment and thus the news that the FHFA house price index surprised on the downside, falling by -0.7% MoM vs -0.6% expected seemed to be the rates catalyst yesterday. This was the lowest reading and the first back-to-back monthly decline since 2011. The S&P CoreLogic Case-Schiller index also fell for a second month with the 20 largest cities falling -1.3% MoM. We also saw consumer confidence miss, coming in at 102.5, falling from 108.0 in September and by more than expected (105.9), with both present situation and expectations declining. Lastly, a miss on the Richmond Fed manufacturing index (-10 vs -5) added to a downbeat message from the data. As discussed, this softness weighed on US yields, with the 10y dropping by -14.0bps but with 2yrs only -2.8bps lower. Moves in Europe were almost a mirror image with Bunds (-16.0bps) and OATs (-16.1bps) sharply lower and with peripheral yields continuing to outperform (BTPs -20.8bps). Like the US, the front end saw milder moves (Germany 2y -2.6bps, France 2y +1.0bps). These declines in turn translated into around 2-5bps being taken out of both the Fed and the ECB pricing for next year meetings. This morning longer-end US yields continue to trend lower, with 10y down by -1.2bps and the 2y unchanged. Before the after-hours fall, US tech stocks rejoiced on the back of those rates moves, with the Nasdaq jumping +2.25%, ahead of the S&P 500 (+1.63%). Sector-wise, of the 10 top level ones only energy (-0.05%) fell despite slight upward moves in oil (WTI +0.87%). Outside of the big tech reports mentioned at the top, notable large-cap earnings beats included Coca Cola (which also had an upward guidance revision), General Motors and UPS. So aside from Fed pivot pricing there was also the fundamentals story feeding into the day time rally. Over in Europe, it was a quieter day with not much economic data released yesterday. The Ifo survey surprised on the upside on key metrics like business climate (84.3 vs 83.5 expected), current assessment (94.1 vs 92.5) and expectations (75.6 vs 75.0). Combined with falling yields, this turbocharged the Stoxx 600 (+1.44%) for another day of a more than a 1% gain amid gains in real estate (+5.06%), IT (+3.80%) and consumer discretionary (+2.47%) stocks. Undoubtedly, sub-100 euro gas prices (for a second day +0.84%) in Europe on the back of stories about potential LNG glut in the region and falling futures prices have helped. In the UK, moves were milder as much of the action post-Sunak’s victory already happened yesterday and today’s official ceremonies and cabinet reshuffle didn’t move the markets much. The 2y gilt yield declined by -1.2bps and the 10y yield was down by -10.9bps. GBP rallied +1.72% though most of the move coincided with a big fall in the dollar index at the same time. It ended -0.93%. Overnight in Asia, major bourses are defying the sell-off in US futures, with the Nikkei (+1.08%) and the KOSPI (+0.79%) in the green. Chinese stocks are having an even bigger rally, with the Hang Seng (+2.17%) and the Shanghai Composite (+1.42%) marching higher after closing in the red yesterday despite gains earlier in the day. In data, we got services PPI from Japan this morning which was in line with expectations at 2.1% (1.9% in August). To the day ahead now and economic data releases will include wholesale and retail inventories, new home sales and advance goods trade balance in the US and consumer confidence in France. In earnings, results will be due from Meta, Thermo Fisher Scientific, Bristol-Myers Squibb, Boeing, Iberdrola, Boston Scientific, Mercedes-Benz, Heineken, Ford, Kraft Heinz, Santander, BASF, Barclays, Telenor and Puma. Tyler Durden Wed, 10/26/2022 - 08:05.....»»

Category: smallbizSource: nytOct 26th, 2022

10 Best Stocks to Buy Before Recession Begins

In this article, we discuss 10 best stocks to buy before recession begins. If you want to see more stocks in this selection, click 5 Best Stocks to Buy Before Recession Begins.  Between 1929 and 1939, the period famously dubbed the Great Depression, global economies suffered from stock market crashes, sharp declines in output, high […] In this article, we discuss 10 best stocks to buy before recession begins. If you want to see more stocks in this selection, click 5 Best Stocks to Buy Before Recession Begins.  Between 1929 and 1939, the period famously dubbed the Great Depression, global economies suffered from stock market crashes, sharp declines in output, high unemployment, greater poverty, personal and corporate bankruptcies, and falling international trade. The US economy is spiraling towards yet another slowdown. The latest calls of “Poison” Ivy Zelman, the analyst who predicted the 2008 housing crash and the founder of Zelman & Associates, suggest that she expects an 8.8% drop in U.S. home prices between 2022 and 2024. History indicates that this would potentially be one of the three steepest housing price declines on record. The other two sharpest price drops were registered during the Great Depression and the Great Recession. Steve Hanke, a professor of applied economics at Johns Hopkins University, told CNBC at the end of August that the US economy is expected to fall into a recession next year, and the rake hikes will not necessarily be the primary catalyst. He further explained:  “We will have a recession because we’ve had five months of zero M2 growth, money supply growth, and the Fed isn’t even looking at it.”  M2 is an indicator of overall money supply and future inflation, consisting of cash, checking and savings deposits, and money market securities. The money supply has become stagnant in the last few months, which will result in a slowing economy, according to Hanke. He expects “one whopper of a recession in 2023”. He attributed the currently raging inflation to the “unprecedented growth” in money supply during the peak COVID period.  Nouriel Roubini, a New York University professor and the CEO of Roubini Macro Associates, who is also known as Dr. Doom due to his foresight of the 2007 and 2008 housing market crash, is of the view that the US will experience a recession by the end of 2022. He believes that the recession will continue throughout 2023. In 2020, Dr. Doom forecasted that a new “great depression” was set to hit the U.S. during the 2020s, given the increasing debt levels. In July 2022, he predicted a “severe recession and a severe debt and financial crisis” for the US economy.  Some of the best stocks to buy before the next recession starts include Costco Wholesale Corporation (NASDAQ:COST), Walmart Inc. (NYSE:WMT), and ConocoPhillips (NYSE:COP).  Niloo / Shutterstock.com Our Methodology  We selected defensive stocks operating in sectors that have historically survived extreme economic downturns. These sectors include energy, home goods, food, pharma, and alcoholic beverages. Strong business fundamentals and positive analyst coverage were important classifiers for shortlisting the following stocks.  We have arranged the list according to the hedge fund sentiment around the securities, which was assessed from Insider Monkey’s Q2 2022 database of about 900 elite hedge funds.  10. Anheuser-Busch InBev SA/NV (NYSE:BUD)   Number of Hedge Fund Holders: 14 Anheuser-Busch InBev SA/NV (NYSE:BUD) is headquartered in Leuven, Belgium, selling alcoholic beverages and soft drinks worldwide. The company primarily distributes beer under the Budweiser, Corona, Stella Artois, Bud Light, Castle, and Skol brands, among others. The company beat market estimates on earnings and revenue in the second quarter of 2022, and total sales volume also increased. Anheuser-Busch InBev SA/NV (NYSE:BUD) is one of the best stocks to buy before recession starts, as consumers increase their alcohol and tobacco intake amid stressful unemployment, monetary, and overall macro pressures.  On September 12, Deutsche Bank analyst Mitch Collett raised the price target on Anheuser-Busch InBev SA/NV (NYSE:BUD) to EUR 74 from EUR 73 and maintained a Buy rating on the shares. Similarly, HSBC analyst Carlos Laboy on September 6 upgraded Anheuser-Busch InBev SA/NV (NYSE:BUD) to Buy from Hold with a price target of EUR 65, up from EUR 64, citing valuation for the upgrade. The analyst believes Anheuser-Busch InBev SA/NV (NYSE:BUD)’s revenue and margin pressures will ease into the end of 2022 due to normalizing input prices. According to Insider Monkey’s data, 14 hedge funds were bullish on Anheuser-Busch InBev SA/NV (NYSE:BUD) at the end of June 2022, compared to 20 funds in the last quarter. Ken Fisher’s Fisher Asset Management featured as the leading stakeholder of the company, with more than 9 million shares worth roughly $487 million.  In addition to Costco Wholesale Corporation (NASDAQ:COST), Walmart Inc. (NYSE:WMT), and ConocoPhillips (NYSE:COP), Anheuser-Busch InBev SA/NV (NYSE:BUD) is one of the best defensive plays for the upcoming recession. Here is what ClearBridge Investments Large Cap Growth Strategy has to say about Anheuser-Busch InBev SA/NV (NYSE:BUD) in its Q4 2021 investor letter: “To make room for these new names and optimize the growth profile of the Strategy, we exited two additional positions during the quarter. We sold out of Anheuser-Busch InBev as we see too much work ahead for the world’s largest beer maker to re-ignite sales growth post COVID-19. While the company should benefit from a recovery in the on-premise channel, individual country complexities, the hedging of raw materials, and senior management turnover leave us more confident in the Strategy’s other reopening-related holdings.” 9. Unilever PLC (NYSE:UL)   Number of Hedge Fund Holders: 21 Unilever PLC (NYSE:UL) is a London-based fast moving consumer goods company, operating through Beauty & Personal Care, Foods & Refreshment, and Home Care segments. Unilever PLC (NYSE:UL) is one of the best stocks to invest in before the next recession starts, given its defensive nature. Consumers will not stop buying personal care products and food items despite dire economic conditions impacting household budgets.  On August 3, Unilever PLC (NYSE:UL) declared a $0.4343 per share quarterly dividend. The dividend was paid to shareholders on September 1. The company delivers a dividend yield of 4.10% as of September 22, way ahead of the average consumer staples yield of 1.89%.  Deutsche Bank analyst Tom Sykes on July 26 upgraded Unilever PLC (NYSE:UL) to Buy from Hold with an unchanged price target of 4,600 GBp, noting that “commodity headwinds are now turning to tailwinds for 2023”. The analyst believes Unilever PLC (NYSE:UL) has the potential for expanding margins in 2023, while “many companies in the market will be seeing margin declines”. Although he is cautious on the overall consumer outlook, the analyst categorized Unilever PLC (NYSE:UL) as “at least a relative outperformer”. Among the hedge funds tracked by Insider Monkey, Unilever PLC (NYSE:UL) was part of 21 public stock portfolios at the end of Q2 2022, compared to 23 in the last quarter. Tom Russo’s Gardner Russo & Gardner is the biggest position holder in the company, with approximately 7 million shares valued at $319 million.  Here is what Mayar Capital specifically said about Unilever PLC (NYSE:UL) in its second quarter investor letter: “In 1895 the Lever brothers created a new brand of hand soap. Inspired by the growing demand for hygiene products, the Lifebuoy brand of soaps was launched to ‘make health infectious’. 128 years later the Lifebuoy brand continues as a leading soap brand – albeit without the coal tar-derived ingredients list. In fact, the market research firm Kantar ranked Lifebuoy as the global #3 most chosen FMCG brand in 2020, just below Coca-Cola (KO) and Colgate (CL) – an astonishing fact given the age of the brand. While the brand is largely absent from shelves here in the UK, it is a juggernaut in Asian markets, and is the #1 brand in India. There are two observations about the Lifebuoy story which tell us a lot about Unilever PLC (NYSE:UL), which is currently our largest holding in the Fund. The first is the enduring power of brands in the consumer goods market. According to Kantar’s list of most chosen brands, the top 20 global marques have an average age of 116 years, with over half being founded in the 19th century. Fashions come and go, but there is something special about low-cost consumable goods that advantages strong, time-worn brand names…” (Click here to view full text) 8. Shell plc (NYSE:SHEL)   Number of Hedge Fund Holders: 39 Shell plc (NYSE:SHEL) is a London-based energy and petrochemical company, with presence in Europe, Asia, Oceania, Africa, the United States, and the Americas. The company operates through Integrated Gas, Upstream, Marketing, Chemicals and Products, and Renewables and Energy Solutions segments. Energy stocks are great to load up on before the next recession starts, and while industrial demand may be weaker, the residential demand for gas, electricity, renewables, and petroleum remains robust even when the economy slows.  On September 12, Piper Sandler analyst Ryan Todd raised the price target on Shell plc (NYSE:SHEL) to $80 from $75 and maintained an Overweight rating on the shares. The analyst remains constructive on the integrated oils, noting that almost record-level distillate margins are generating upside in refining estimates and this will likely continue through the winter and into an “equally tight” 2023.  Among the hedge funds tracked by Insider Monkey, 39 funds reported owning stakes in Shell plc (NYSE:SHEL) at the end of the second quarter of 2022, compared to 37 funds in the last quarter. William B. Gray’s Orbis Investment Management is one of the leading position holders in the company, with 9.13 million shares worth about $478 million.  Here is what Harding Loevner International Equity Fund has to say about Shell plc (NYSE:SHEL) in its Q1 2022 investor letter: “While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia (just as Europe, at least for now, plans to keep its gas pipelines open), and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central and optimistic case—admittedly an educated guess—is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit, relatively, from a further receding of globalization. (Global trade, after all, has never matched the peak share of GDP it reached in 2008, before the Global Financial Crisis.) We’d expect such a world to be less efficient, as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where. That would lead to a less prosperous world, since exploiting comparative advantage is a cornerstone of wealth creation. If regional blocs began to raise limits on the movement of capital as well as goods, we’d need to parse which of our multinational companies were at risk of declining sales from increasingly hostile, siloed countries. Royal Dutch Shell (NYSE:SHEL) has found its Siberian oil and gas joint venture assets stranded by the combination of sanctions and the public opprobrium of Russia’s actions.” 7. The Kraft Heinz Company (NASDAQ:KHC)   Number of Hedge Fund Holders: 41 The Kraft Heinz Company (NASDAQ:KHC) is a Pennsylvania-based company that manufactures and markets food and beverage products in the United States, Canada, the United Kingdom, and internationally. On September 21, the packaged food sector got a boost from a solid beat-and-raise earnings report from General Mills, Inc. (NYSE:GIS). The Kraft Heinz Company (NASDAQ:KHC) was one of the gainers as well, with the stock rising 3.33%. The company will pay a per share quarterly dividend of $0.40 on September 23.  Stifel analyst Christopher Growe said in a research note on September 19 that The Kraft Heinz Company (NASDAQ:KHC) highlighted the path to higher growth and it is “harnessing the significant improvement in the business operations to support its faster growth”. The analyst, who upgraded the stock recently to factor in a discounted valuation and an appreciation for the expanding growth potential in the company’s portfolio, reiterated a Buy rating and a $43 target price target. The analyst is confident about The Kraft Heinz Company (NASDAQ:KHC) stock moving forward.  According to the second quarter database of Insider Monkey, 41 hedge funds were bullish on The Kraft Heinz Company (NASDAQ:KHC), up from 35 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the leading stakeholder of the company, with 325.6 million shares worth $12.4 billion.  6. Constellation Brands, Inc. (NYSE:STZ)   Number of Hedge Fund Holders: 44 Constellation Brands, Inc. (NYSE:STZ) is a New York-based company that produces, imports, and sells beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. Constellation Brands, Inc. (NYSE:STZ)’s beer brands include the Corona Extra, Corona Premier, Corona Familiar, Corona Light, Corona Refresca, and Corona Hard Seltzer, among others. The demand for alcohol historically increases in periods of economic turmoil, which makes Constellation Brands, Inc. (NYSE:STZ) one of the best stocks to buy before recession starts.  JPMorgan analyst Andrea Teixeira on September 15 raised the price target on Constellation Brands, Inc. (NYSE:STZ) to $287 from $263 and reaffirmed an Overweight rating on the shares ahead of the company’s Q2 results on October 6. The analyst believes the overall beer setup was “largely favorable” in Q2 and that the tailwinds should continue in the future.  According to Insider Monkey’s data, 44 hedge funds reported owning stakes worth $1.3 billion in Constellation Brands, Inc. (NYSE:STZ) at the end of June 2022, compared to 41 funds in the last quarter worth $982.3 million. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the largest stakeholder of the company, with 1.4 million worth $326 million.  Like Costco Wholesale Corporation (NASDAQ:COST), Walmart Inc. (NYSE:WMT), and ConocoPhillips (NYSE:COP), elite hedge funds are piling into Constellation Brands, Inc. (NYSE:STZ) ahead of the next recession.   Click to continue reading and see 5 Best Stocks to Buy Before Recession Begins.    Suggested articles: 10 Monthly Dividend Stocks with Highest Yields 10 Penny Stocks with High Growth Potential 10 Best ESG Stocks To Buy   Disclosure: None. 10 Best Stocks to Buy Before Recession Begins is originally published on Insider Monkey......»»

Category: topSource: insidermonkeySep 23rd, 2022

5 ETFs Up Most on Fed"s 75 bps Rate Hike

Wall Street rebounded strongly following the Federal Reserve's latest monetary policy decision that has rekindled investors??? interest in the stock market. Wall Street rebounded strongly following the Federal Reserve's latest monetary policy decision that has rekindled investors’ interest in the stock market. The move restored confidence that the central bank is serious about fighting inflation. Notably, the S&P 500 jumped 1.5% to end a five-day losing streak and the Dow Jones Industrial Average gained about 1%. The Nasdaq Composite climbed 2.5%.While the U.S. stocks saw smooth trading, with 10 of the S&P 500’s 11 sectors moving higher, technology, which has been among the hardest-hit areas of the market this year, was among the biggest gainers. Some of the gainers include Small/Mid Cap Growth Alpha ETF JSMD, ARK Innovation ETF ARKK, ARK Next Generation Internet ETF ARKW, Global X Education ETF EDUT, and ProShares Online Retail ETF ONLN.Fed Chair Jerome Powell raised interest rates by 75 bps, pushing the federal funds rate between 1.5% and 1.75%, to quell inflation through a tighter monetary policy. This marked the biggest interest-rate increase since 1994. Powell said that the Fed could raise rates by 50 or 75 basis points at the July Fed meeting and stressed that policy will be "sensitive and flexible.” This comment has renewed optimism in the market. All the Fed officials see rates rising to at least 3% by year-end, with a median estimate of 3.4%. They expect rates to rise to 3.8% by the end of 2023.Overall, an increase in interest rates means higher loan rates for consumers and businesses, including mortgages, credit cards and auto loans. The central bank hopes that higher borrowing costs will slow spending enough to tame inflation but will not cause a recession (read: 5 ETFs Surge As S&P 500 Slips to Bear Market).The initial phase of the rate increase will be good for stocks as it will reflect an improving economy.Small/Mid Cap Growth Alpha ETF (JSMD) – Up 7.3%Janus Henderson Small/Mid Cap Growth Alpha ETF seeks to provide risk-adjusted outperformance by identifying top-tier small and mid-cap companies with some of the strongest fundamentals that can deliver sustainable growth in a variety of market environments. It follows the Janus Henderson Small/Mid Cap Growth Alpha Index.Janus Henderson Small/Mid Cap Growth Alpha ETF holds 243 stocks in its basket with key holdings in information technology, health care, industrials and consumer discretionary. It has amassed $153.1 million in its asset base and charges 30 bps in annual fees. JSMD has a Zacks ETF Rank #3 (Hold).ARK Innovation ETF (ARKK) – Up 6.6%ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research. In total, the fund holds 35 securities in its basket with a concentration on the top three firms.ARK Innovation ETF has gathered $7 billion in its asset base and charges 75 bps in fees per year from investors. It trades in a volume of 33.2 million shares per day on average.ARK Next Generation Internet ETF (ARKW) – Up 6.2%ARK Next Generation Internet ETF is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 37 stocks in its basket, with none accounting for more than 9.4% of the assets (read: Buy the Dip With These Top-Ranked ETFs).ARK Next Generation Internet ETF has amassed $1.3 billion in its asset base and charges 83 bps in annual fees. It trades in an average daily volume of 1.7 million shares.Global X Education ETF (EDUT) – Up 4.8%Global X Education ETF seeks to invest in companies providing products and services that facilitate education, including online learning and publishing educational content, as well as those involved in early childhood education, higher education, and professional education. It follows the Indxx Global Education Thematic Index and holds 35 stocks in its basket. Consumer discretionary takes the largest share at 48.5%, while communication services and information technology round off the next two spots.Global X Education ETF has accumulated $3.8 million in its asset base and charges 50 bps in annual fees from investors. It trades in a paltry volume of 1,000 shares a day on average.ProShares Online Retail ETF (ONLN) – Up 4.3%ProShares Online Retail ETF offers exposure to the company that principally sells online or through other non-store channels and then zeroes in on the companies reshaping the retail space. It tracks the ProShares Online Retail Index, holding 38 stocks in its basket. ONLN is highly concentrated on the top two firms, while other firms hold no more than 5.1% of the assets. American firms make up three-fourth of the portfolio, while Chinese firms account for 17% share (read: Will Target Warnings Spell Trouble for Retail ETFs?).ProShares Online Retail ETF has accumulated $294.8 million in its asset base and charges 58 bps in annual fees. ONLN trades in an average daily volume of 105,000 shares. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ARK Next Generation Internet ETF (ARKW): ETF Research Reports ARK Innovation ETF (ARKK): ETF Research Reports Janus Henderson SmallMid Cap Growth Alpha ETF (JSMD): ETF Research Reports ProShares Online Retail ETF (ONLN): ETF Research Reports Global X Education ETF (EDUT): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 16th, 2022

Futures Jump Amid Optimism China"s Covid Lockdowns Are Ending

Futures Jump Amid Optimism China's Covid Lockdowns Are Ending Another day, another dead cat-bouncing, bear market rally. After Monday's flattish session which saw tech names slump on fresh inflation fears, Nasdaq futures rebounded on Tuesday, setting up technology stocks for solid gains after a six-week rout as investors were encouraged by China's easing covid lockdowns and amid speculation that Beijing regulators may ease a yearlong clampdown on internet companies at an upcoming meeting with tech executives. Nasdaq 100 futures jumped 2% by 7:00 a.m. in New York after the underlying gauge sank on Monday on concerns about a slowdown in economic growth; S&P 500 futures rose 1.6%. Treasury yields rose modestly above 2.90%, and the dollar retreated. Bitcoin managed to rebound back over $30K. Confirming what we said almost three weeks ago, Shanghai reported three days of zero community transmission, a milestone that could lead officials to start unwinding a punishing lockdown. However, flareups elsewhere in China showed how hard it is to tackle the omicron strain. Among notable moves in US premarket trading, Twitter shares fell 3.3%, set to extend declines for an eighth straight session amid uncertainties around the deal with Elon Musk, while Citigroup rose 4.9% after Warren Buffett’s Berkshire Hathaway unexpectedly disclosed a new stake in the lender, a return to banks for the billionaire who purged many of his bank holdings several years ago. Tech names including Advanced Micro Devices, Tesla and Nvidia were among the biggest premarket gainers as growing recession concerns prompt markets to reasses just how many rate hikes the Fed will pull off before it is forced to reverse. Cryptocurrency-exposed stocks climbed as Bitcoin rose above $30,000 on Tuesday in cautious trading, with the fallout from a collapsed stablecoin continuing to keep sentiment in check. Chinese stocks in US jumped across the board in premarket trading on speculation that regulators may ease a yearlong clampdown on internet companies at an upcoming meeting with tech executives. Here are the most notable premarket movers: Twitter (TWTR US) shares fell 2.4% in premarket trading, on course to extend their seven-day streak of declines, as uncertainties around a deal by buyer Elon Musk weigh on the stock. Tesla (TSLA US) shares rallied 3% in premarket trading. Chinese stocks in US jump across the board in premarket trading on speculation that regulators may ease a yearlong clampdown on internet companies at an upcoming meeting with tech executives. Alibaba (BABA US) +6.2%, JD.com (JD US) +5.6%, Pinduoduo (PDD US) +7% and Baidu (BIDU US) +3.6% Cryptocurrency-exposed stocks climb in US premarket as Bitcoin rises above $30,000 on Tuesday in cautious trading, with the fallout from a collapsed stablecoin continuing to keep sentiment in check. Riot Blockchain (RIOT US) +7.8%; Coinbase (COIN US) +6.8%; Marathon Digital (MARA US) +6.1% Advanced Micro Devices (AMD US) upgraded to overweight from neutral at Piper Sandler, which says in note that the company’s core businesses are running well and mid-to-long-term catalysts remain intact. Stock gains 3.6% in New York premarket trading. United Airlines Holdings’ (UAL US) updated second-quarter guidance is “a solid step in the right direction,” Citi says. United’s shares gained 4.3% in premarket trading. Bird Global (BRDS US) shares jump as much as 40% in US premarket trading with DA Davidson noting management’s announcement of a plan to streamline operations. Take-Two (TTWO US) reported better-than-expected fourth-quarter earnings helped by popular video games like NBA 2K22. The company’s shares rise 5.4% in premarket trading. Global-e Online (GLBE US) shares slump as much as 30% in US premarket trading as analysts slash their price targets on the e-commerce software firm after it lowered its full-year guidance for revenue and gross merchandise value. Imperial Petroleum (IMPP US) shares plunge 48% in US premarket trading. The shipping company priced an underwritten public offering of 72.7m units at $0.55 per unit, with expected gross proceeds of ~$40m. US stocks have been roiled in the past six weeks as the combination of high inflation and hawkish central banks fueled fears of a potential recession. While some strategists including Morgan Stanley’s Michael Wilson expect equities to fall further before finding a floor, they don’t foresee a recession as their base case. The main focus today will be on US retail sales data, which are expected to show a rise of 1% in April. “Investors’ appetite for riskier assets is on the rise after many welcomed today’s positive unemployment and GDP figures” from the eurozone and UK, said Pierre Veyret, an analyst at ActivTrades Plc. “The improving virus situation in China is also blowing a wind of relief in investors’ trading minds.” A challenging global economic outlook amid elevated food and record fuel costs, and tightening monetary settings continues to shape sentiment.  Oil has jumped to about $114 a barrel and an index of agricultural prices is at a record high. But one bond-market measure - the five-year breakeven rate - is signaling inflation has peaked, while the latest virus developments raised hopes China’s damaging lockdowns may soon be eased. On Monday, New York Fed President John Williams on Monday downplayed deteriorating liquidity conditions in financial markets, saying it was to be expected as investors grapple with uncertainty over global events and shifting U.S. monetary policy. No less than six Fed speakers - including Chair Jerome Powell - are due to speak later Tuesday. In Europe, technology and basic-resources stocks led a broad-based advance of the Stoxx Europe 600 following a rally in Chinese tech shares on optimism Beijing may ease up on a yearlong clampdown. Italy's FTSE MIB adds 1.6%, FTSE 100 lags, adding 0.7%. Miners, financial services and banks are the strongest-performing sectors. Equities were also buoyed by data showing the euro-area economy expanded more than initially estimated at the start of the year as the region moved past a wave of Covid-19 infections and defied headwinds from the early days of the war in Ukraine. Here are the biggest European movers: Clariant shares rise as much as 8.7% after the specialty chemical company announced its governance agreement with SABIC will expire at the June 24 AGM, and won’t be renewed. Imperial Brands climbs as much as 7.9% after the tobacco company reduced its losses from next-generation products and continued on a turnaround plan. Daimler Truck gains as much as 7.8% in Frankfurt; Oddo BHF notes strong 1Q report that will reassure in the current environment, while Citi says the company delivered an “encouraging” set of results. Engie rises as much as 6.9%, hitting the highest since March 1, after the French energy company boosted its profit guidance on higher European energy prices. CaixaBank advances as much as 5.4% after the Spanish lender released a new strategic plan that predicts a jump in a key profitability metric and announced a EU1.8b share buyback program. Prosus and Naspers both raised to overweight from neutral at JPMorgan following the broker’s upgrade of Tencent. Prosus shares gain as much as 6.5% in Amsterdam, Naspers climbs as much as 6.7% in Johannesburg. ContourGlobal gains as much as 34% after US private equity firm KKR agreed to buy the power generation business for 263.6p/share in cash, representing a premium of 36% to Monday’s close. Vodafone erases losses after dropping as much as 4.2% as the telecom operator’s forecast for adjusted Ebitda after-leases missed consensus estimates at mid- point. Earlier in the session, Asian stocks advanced for a third day -- its longest winning streak since mid-March -- amid a jump in some technology firms on the back of hopes for an unwind of Chinese lockdowns that have hurt the global economic outlook as well as a dialing back of Beijing’s regulatory crackdowns. The MSCI Asia-Pacific Index climbed as much as 1.5%, on track for a third day of gains. Chinese tech giants Tencent and Alibaba contributed most to the gain, while chipmakers TSMC and Samsung also helped. Shanghai reported no new Covid infections in the broader community for a third day, hitting a crucial milestone toward reduced restrictions. China’s top political advisory body is hosting a meeting Tuesday with some of the nation’s largest private-sector firms, sparking hopes for an improved business climate.  “The mood in Asia is risk on,” said Xue Hua Cui, a China equity analyst at Meritz Securities in Seoul. “Whether this remains a dead cat bounce or not depends on how quickly demand recovers following the end of Shanghai lockdowns.” Hong Kong outperformed, with the Hang Seng Index rising more than 3%. Benchmarks in India also advanced more than 2%, even as state-run insurer Life Insurance Corporation of India dropped in its Mumbai trading debut after a record initial public offering for the nation.  Japanese equities gained with Asian peers amid hopes that China will ease up on Covid lockdowns and regulatory crackdowns. The Topix rose 0.2% to close at 1,866.71. Tokyo time, while the Nikkei advanced 0.4% to 26,659.75. Recruit Holdings contributed the most to the Topix gain, rising 2% after its earnings report. Out of 2,172 shares in the index, 1,164 rose and 932 fell, while 76 were unchanged. Australia's S&P/ASX 200 index rose 0.3% to close at 7,112.50, taking its winning run to a third session. Miners and banks contributed the most to the gauge’s advance. Beach Energy was among the top performers, climbing with other energy shares as oil rallied. Brambles was the biggest laggard after saying CVC won’t be putting forward a proposal for the pallet maker. Investors also assessed minutes from the RBA’s May meeting. The central bank said it considered three options for the size of its first interest-rate increase since 2010. In New Zealand, the S&P/NZX 50 index fell 0.2% to 11,137.88. India’s key gauges surged on Tuesday, boosted by Reliance Industries Ltd. which climbed the most since early March. Still, Life Insurance Corp. of India, the country’s biggest listing so far, slumped on debut. The S&P BSE Sensex rose 2.5%, its biggest jump in three months, to 54,318.47 in Mumbai, while the NSE Nifty 50 Index advanced 2.6%. All of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a gauge of metal companies. Reliance Industries advanced 4.2%, providing the biggest boost to the Sensex, which had all 30 members trading higher.  “It’s a much-needed breather for the bulls after five weeks of slide and we may further rise,” said Ajit Mishra, vice-president research at Religare Broking Ltd. “Since all the sectors are participating in the rebound, we suggest focusing more on stock selection. Despite strong gains in the broader market, shares in the state-controlled insurer plunged 7.8%, following a $2.7 billion IPO, India’s biggest on record. The stock trimmed losses from the low, but failed to touch the listing price in the session. LIC’s first-day performance makes for the second-worst debut among 11 global companies that listed this year after raising at least $1 billion through first-time share sales.  In FX, the Bloomberg Dollar Spot Index fell a third consecutive day and the greenback weakened against all of its Group-of-10 peers apart from the yen. The pound lead G-10 gains followed by Scandinavian and Antipodean currencies. The pound rallied and gilts slumped across the curve after a stronger-than-expected reading of the UK employment data stoked speculation that a tighter labor market may prompt the BOE to continue its monetary tightening cycle beyond a widely expected rate rise next month. Average weekly earnings surged 7% in the three months through March, compared to the 5.4% figure economists had expected. The euro rose on the back of a broadly weaker dollar. Bunds slid as haven demand was unwound. Italian bonds also tumbled as money markets wagered on up to 98bps of ECB hikes by December. The Aussie strengthened for a third day while Australia’s sovereign bonds fell after minutes from RBA’s May meeting indicated the central bank considered an outsized rate hike. The RBA said it considered three options for the size of its first interest-rate increase since 2010, according to minutes of its May 3 policy meeting, when it raised the cash rate by 25 basis points. The Australian and New Zealand dollars also benefitted from expectations that Covid lockdowns in Hong Kong and Shanghai will be lifted. The yen gave up earlier gains as US yields resumed their climb, which also weighed on Japan government bonds. In rates, yields rose as Treasuries cheapened with losses led by front-end of the curve, following a sharper bear flattening move across EGBs after ECB Governing Council member Klaas Knot said he supports a quarter-point increase in interest rates in July and that a bigger move may be justified if data show inflation worsening. US Treasury yields cheaper by up to 5.5bp across front-end of the curve, the 10Y TSY trading at 2.91% last and flattening 2s10s spread by 2.2bp on the day; 2-year German yields cheaper by 23bp on the day following Knot comments while German 10s are cheaper by 4bp vs. Treasuries. In U.S. session, focus on a stacked Fed speaker slate led by Chair Jerome Powell who will be interviewed during a Wall Street Journal live event in the afternoon. The Dollar issuance slate includes Export Development Canada 5Y SOFR, OKB 3Y SOFR and JICA 5Y SOFR; six deals priced $9.1n Monday in order books that were 3.3x oversubscribed In commodities, WTI drifts 0.2% higher to trade at around $114. Spot gold rises roughly $3 to trade above $1,825/oz. Base metals are mixed; LME tin falls 1.6% while LME zinc gains 2.4%. European gas prices hit four-week low after EU revised guidelines for purchases of Russian supplies. To the day ahead now, and there’s an array of central bank speakers including Fed Chair Powell, along with the Fed’s Bullard, Harker, Kashkari, Mester and Evans, ECB President Lagarde and BoE Deputy Governor Cunliffe. Data releases include US retail sales, industrial production and capacity utilisation for April, along with the NAHB’s housing market index for May. Elsewhere, there’s also the UK unemployment reading for March. Finally, earnings releases include Walmart and Home Depot. Market Snapshot S&P 500 futures up 1.3% to 4,057.75 STOXX Europe 600 up 1.6% to 440.47 MXAP up 1.4% to 162.83 MXAPJ up 2.2% to 535.18 Nikkei up 0.4% to 26,659.75 Topix up 0.2% to 1,866.71 Hang Seng Index up 3.3% to 20,602.52 Shanghai Composite up 0.6% to 3,093.70 Sensex up 2.1% to 54,080.42 Australia S&P/ASX 200 up 0.3% to 7,112.53 Kospi up 0.9% to 2,620.44 German 10Y yield little changed at 0.99% Euro up 0.4% to $1.0480 Brent Futures up 0.3% to $114.53/bbl Gold spot up 0.2% to $1,827.11 U.S. Dollar Index down 0.42% to 103.75 Top Overnight News from Bloomberg The euro-area economy grew more than initially estimated at the start of the year as the region moved past a wave of Covid-19 infections and defied headwinds from the early days of the war in Ukraine. Economic output rose 0.3% in the first quarter, exceeding a flash reading of 0.2%, according to Eurostat data released Tuesday. Employment, meanwhile, gained 0.5% during same period The UK will lay out its plan to amend its post-Brexit trade deal Tuesday in a direct challenge to the European Union, which is insisting that Prime Minister Boris Johnson must honor the agreement he signed China’s main bond trading platform for foreign investors has quietly stopped providing data on their transactions, a move that may heighten concerns about transparency in the nation’s $20 trillion debt market after record outflows The American and European Union chambers of commerce in separate briefings said their members are rethinking their supply chains and whether to expand investment in the face of China’s zero tolerance approach to combating Covid-19 Turkish President Recep Tayyip Erdogan said he won’t allow Sweden and Finland to join NATO because of their stances on Kurdish militants, throwing a wrench into plans to strengthen the western military alliance after Russia’s invasion of Ukraine A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were positive but with gains capped after the uninspiring lead from Wall St and growth concerns. ASX 200 was kept afloat by strength in the commodity-related sectors after recent gains in underlying prices. Nikkei 225 traded marginally higher with Japan seeking to pass an extra budget by month-end and will begin permitting entry to a small number of tourists. Hang Seng and Shanghai Comp were both firmer with tech spearheading the outperformance in Hong Kong amid hopes of an easing of the crackdown on the sector, while the mainland lagged amid economic concerns and despite Shanghai reporting no cases outside of quarantine for a 3rd consecutive day. Top Asian News China's state planner said China's economy faces increasing downward pressure, while it will step up support for manufacturing companies, contact-intensive services, small companies and home businesses, according to Reuters. Senior Chinese officials are to meet with tech industry chiefs today amid talk of crackdown easing, according to Nikkei. It was later reported that China's top political consultative body began a conference on promoting the sustainable and healthy development of the digital economy, according to state media. Hong Kong Chief Executive Carrie Lam said they will proceed with the planned COVID curbs easing on May 19th, according to Bloomberg. BoJ Deputy Governor Amamiya said it is important to continue current powerful easing to firmly support the economy and that long-term interest rates have been stable since the adoption of fixed-rate operations, while he added that if monetary easing is reduced now, it would make the 2% price goal an even more distant target, according to Reuters. Japan is to permit small groups of tourists to visit this month as a trial ahead of its border reopening, according to Japan Times. European bourses are firmer across the board, Euro Stoxx 50 +1.7%, taking impetus from and extending on a positive APAC handover as the regions COVID situation improves. Stateside, futures are firmer across the board, ES +1.8%, following yesterday's  relatively lacklustre session with participants awaiting numerous Fed speak, including Chair Powell. Twitter (TWTR) prospective purchaser Musk says that his offer was based on the Co.'s SEC filing being accurate, however, yesterday the CEO refused to show proof of less than 5% of fake/spam accounts; deal cannot move forward until this has been disclosed. -3.5% in the pre-market. Home Depot Inc (HD) Q1 2023 (USD): EPS 4.09 (exp. 3.67/3.67 GAAP), Revenue 38.9bln (exp. 36.71bln); Raises Fiscal 2022 Guidance. +2.5% in the pre-market Top European News UK Foreign Secretary Truss is to declare her intention to bring forward legislation that rips up parts of the post-Brexit trade deal on Northern Ireland, according to LBC. Expected around 12:30BST/07:30ET Irish Foreign Minister Coveney says he spoke with UK Foreign Minister Truss on Monday, notes the EU and UK sides haven't met since February and says it is "time to get back to the table" ECB is expected to raise the deposit rate in July according to 39 out of 39 respondents in a Reuters survey, while 26 out of 48 economists see the deposit rate at 0% in Q3 and 21 out of 48 see the deposit rate at 0.25% in Q4. FX Pound the standout G10 performer in wake of outstanding UK labour report; Cable clears string of resistance levels on the way towards 1.2500 and EUR/GBP probes 0.8400 after breaching technical supports . Kiwi and Aussie relish renewed risk appetite and latter also helped by hawkish RBA minutes; NZD/USD above 0.6350 and 1.3bln option expiries at 0.6300, AUD/USD back on 0.7000 handle. Greenback concedes ground ahead of top tier US data and raft of Fed speakers including chair Powell, DXY down to 103.470 vs 104.320 at best; latest session low in wake of ECB's Knot. Franc, Euro and Loonie all up at the expense of the Buck but latter also fuelled by WTI topping USD 115/bbl; USD/CHF sub-parity, EUR/USD surpassing 1.05 in wake of hawk-Knot and USD/CAD near 1.2800. Yen lags as risk sentiment improves and yields outside of Japan rebound firmly; USD/JPY rebounds through 129.00 and just over 129.50. Norwegian Crown boosted by Brent in stark contrast to crude import dependent Turkish Lira and Indian Rupee; EUR/NOK under 10.1500, USD/TRY touches 15.8850 and USD/INR crosses 78.0000 to set fresh ATH Fixed Income Bonds make way for risk revival and brace for US data amidst a raft of global Central Bank speakers. Bunds down to 152.74, Gilts hit 119.25 and 10 year T-note as low as 119-08 before paring some heavy declines UK DMO gets welcome reception for 2015 issuance, but new German Schatz receives cold shoulder even before hawkish comments from ECB's Knot not ruling out a 50 bp July hike if data warrants more than 25 bp China's main bond trading platform is said to have stopped the reporting of bond trades by foreigners following the market downside, according to Bloomberg. Commodities WTI and Brent are firmer in-fitting with broader risk appetite and the aforementioned China COVID improvement; posting gains of circa USD 0.80/bbl. However, upside remains capped amid the ongoing standoff between the EU and Hungary over a Russian import embargo. Iran set June Iranian light crude price to Asia at Oman/Dubai + USD 4.25/bbl, according to a Reuters source   OPEC+ production was 2.6mln below quotas in April, according to a report cited by Reuters; Russian production 1.28mln below the required level in April, sources add. Spot gold is firmer, taking impetus from the USD pressure; though, the yellow metal is yet to move out of earlier ranges. Base metals are bid on risk while Wheat declined amid reports that India is easing some of its export restrictions. Central Banks ECB's Knot says a 25bp hike in July is realistic; says a 50bp rate hike should not be excluded if data in the next few months suggests that inflation is broadening and accumulating. NBH's Virag says they will increase rates further, via Reuters citing slides. NBP's Kotecki says that interest rates will continue to move higher but it is currently difficult to define their target level. US Event Calendar 08:30: April Retail Sales Advance MoM, est. 1.0%, prior 0.5%, revised 0.7% April Retail Sales Ex Auto MoM, est. 0.4%, prior 1.1%, revised 1.4% April Retail Sales Ex Auto and Gas, est. 0.7%, prior 0.2%, revised 0.7% April Retail Sales Control Group, est. 0.7%, prior -0.1%, revised 0.7% 09:15: April Industrial Production MoM, est. 0.5%, prior 0.9% 09:15: April Manufacturing (SIC) Production, est. 0.4%, prior 0.9% 10:00: March Business Inventories, est. 1.9%, prior 1.5% 10:00: May NAHB Housing Market Index, est. 75, prior 77 Fed Speakers 08:00: Fed’s Bullard Discusses Economic Outlook 09:15: Fed’s Harker Discusses Healthcare as Economic Driver 12:30: Fed’s Kashkari Takes Part in a Moderated Townhall Discussion 14:00: Powell Interviewed During Wall Street Journal Live Event 14:30: Fed’s Mester Gives Opening Remarks to Panel on Inflation 18:45: Fed’s Evans Discusses the Economic Outlook DB's Jim Reid concludes the overnight wrap Recession fears have continued to dominate markets over the last 24 hours, but Deutsche Bank Research is still the only bank to actually forecast one in the US. The tone was set for the day after some incredibly weak data out of China that we discussed yesterday, but that was then followed up with disappointing survey data from the US, which arrived ahead of an array of central bank speakers today (including Fed Chair Powell). Although markets in Asia are bouncing a little this morning, the S&P 500 (-0.39%) last night followed up its run of 6 consecutive weekly declines with a further loss. It was another volatile day that saw stocks trade in a 1.5% range, including going into positive territory briefly in the afternoon before slipping into the close. Sector dispersion was pretty wide, with energy shares gaining +2.62% and consumer discretionary stocks falling -2.12%, led by Tesla retreating -5.88%. Tech was the next biggest laggard, with the NASDAQ (-1.20%) and FANG+ index (-1.34%) underperforming the broader universe. That still leaves the S&P 500 index around 2% above its recent closing low on Thursday, but remember that if we get another week in negative territory, it would still be the first time since 2001 that the S&P has posted 7 consecutive weekly declines. After opening the week much lower, the STOXX 600 did recover through that day to post a slight +0.04% gain yesterday, continuing its recent outperformance. The prevailing risk-off mood meant that longer-dated sovereign bond yields also ended the day lower for the most part. Those on 10yr Treasuries were down -3.6bps to close at 2.88%, having already fallen by -20.8bps over the previous week as investors priced in a growing risk of recession over Fed and inflation concerns. The decline was split between breakevens and real yields. To be fair 10yr yields have gained +3.3bps this morning in Asia, thus almost reversing yesterday's losses so far. At the short-end, the amount of tightening priced in over the near-term has subsided somewhat of late, as it seems investors are searching high and low for a Fed put following a poor run of risk asset performance and the prior relentless repricing towards a more aggressive monetary tightening. Indeed if you were to stop the month right now, it would be the first month in 10 that the rate priced in by the December 2022 meeting has actually fallen rather than risen. That’s been echoed further out the curve as well, with investors now barely expecting the Fed Funds rate to get above 3% in 2023 at all, even though inflation has proven much stickier than the consensus expected over recent months. As Chair Powell put it in an interview last week, getting inflation back to target will “include some pain”. Markets are starting to price some of that out though. Over in Europe longer-dated sovereign bond yields also moved slightly lower, including those on 10yr bunds (-0.8bps), OATs (-1.4bps) and BTPs (-0.8bps). That came as we heard from Bank of France Governor Villeroy, who said to expect “a decisive June meeting, and an active summer”, which fits into the broader debate recently whereby markets are increasingly expecting an initial hike as soon as July. This saw the 2yr bund increase +3.0bps to 0.12%. Another point of interest were also his comments on the exchange rate, saying that “A euro that is too weak would go against our price-stability objective”. In line with the broader theme this year, one asset class that wasn’t impacted by the risk-off tone was commodities, and both Brent crude (+2.41%) and WTI (+3.36%) moved back above $114/bbl yesterday. This morning, both are seeing slight losses though (-0.36% and -0.46%, respectively). There were major gains for wheat futures (+5.94%) too, which saw a significant daily rise following India’s move over the weekend to restrict their exports. And that went alongside other rises in agricultural goods yesterday including corn (+3.6%) and sugar (+2.66%), which is an incredibly important story for emerging markets in particular given the much higher share of disposable income that consumers put towards food in those countries. Another asset class that has had a bad time of late is Bitcoin, shedding another -3.58% to $29,909 yesterday. This morning it is climbing back above the $30k threshold. Marion Laboure in my team published a piece yesterday looking at the recent selloff in crypto, adding some much needed context for what this means for broader adoption efforts. See here for more. Overnight in Asia, it has been a good start for the Hang Seng (+2.23%) amid optimism that today’s meeting between China’s corporates and regulators may lead to an easing of draconian measures on tech companies. Hong Kong is also on track to ease covid curbs on May 19th, a theme that also lifted the Shanghai Composite (+0.29%) after the city reported a third day of no new infections in the broader community, a threshold that allows it to roll back some of the restrictions. The sentiment is upbeat elsewhere in Asia too, with the Nikkei (+0.35%) and the KOSPI (+0.80%) also rising. This optimism is shared by S&P 500 futures, up +0.31%. Elsewhere, it’s likely that Brexit will be back in the headlines today as UK Foreign Secretary Liz Truss is expected to make a statement to parliament announcing a new law that would override parts of the Northern Ireland Protocol. For reference, the Protocol is a part of the Brexit deal which the UK and the EU agreed ahead of the UK’s departure, but has been a persistent source of controversy since. Northern Irish unionists view it as undermining their place in the UK because it places an economic border between Northern Ireland and Great Britain, and the DUP (the second-largest party in the Northern Ireland Assembly) are refusing to help form an executive following their recent elections unless action is taken on the Protocol. The EU have continued to warn the UK against any unilateral action, and there’s been fears of an UK-EU trade war if the row gets worse. There wasn’t much in the way of data yesterday, although the Empire State manufacturing survey for May underwhelmed with a reading of -11.6 (vs. 15.0 expected), which was beneath every estimate in Bloomberg’s survey. There was some easing in the prices paid index though, which fell to a 14-month low of 73.7. To the day ahead now, and there’s an array of central bank speakers including Fed Chair Powell, along with the Fed’s Bullard, Harker, Kashkari, Mester and Evans, ECB President Lagarde and BoE Deputy Governor Cunliffe. Data releases include US retail sales, industrial production and capacity utilisation for April, along with the NAHB’s housing market index for May. Elsewhere, there’s also the UK unemployment reading for March. Finally, earnings releases include Walmart and Home Depot. Tyler Durden Tue, 05/17/2022 - 07:43.....»»

Category: blogSource: zerohedgeMay 17th, 2022

US Equity Futures Reverse Overnight Decline, Turn Positive As Oil Surges

US Equity Futures Reverse Overnight Decline, Turn Positive As Oil Surges U.S. equity futures and European bourses stocks reversed modest overnight losses and turned higher as US traders got to their desks on Monday as crude oil extended a climb and investors monitored diplomatic efforts to bring an end to Russia’s almost month-old war in Ukraine.  S&P futures rose 0.07% or 3 points after earlier sliding almost 30 points; Nasdaq futures were flat. Focus on Monday will be on a speech by Fed Chair Jerome Powell after the central bank kicked off a rate-hiking cycle last week.  Powell is set to speak at the annual meeting of the National Association for Business Economics at 12pm ET; text release and Q&A are expected. In addition to concerns about Russian crude supply, which Russia's deputy prime minister Novak said could surge to $300/bbl if Russian oil is shunned, also jumped after Saudi Arabia announced a “temporary reduction” in oil output at an Aramco facility after Yemen’s Houthi rebels launched multiple cross-border attacks on Sunday .A drone assault on the YASREF refinery, in the Yanbu Industrial City on the Red Sea, has “led to a temporary reduction in the refinery’s production, which will be compensated for from the inventory,” the energy ministry said in a statement. WTI rose as high as $108, surging $15 from prices hit last Tuesday, with Brent trading around $113. The S&P 500 last week had its biggest gain since November 2020 and European equities recouped all of their losses triggered by Russia’s invasion of Ukraine nearly a month ago as peace negotiations and the lure of cheap valuations drew investors back. But that optimism may not be justified, given the “increasingly brutal measures that Russian forces are taking,” according to  Michael Hewson, chief analyst at CMC Markets in London. “There appears to be a growing disconnect between what markets are doing and what is happening on the ground in Ukraine,” he said in a report. “Commodity markets continue to chop wildly” and “concerns about inflation are still posing awkward questions for central banks,” Hewson wrote. A key question is whether last week’s stock rebound and drop in volatility are durable. European equities have recouped all of their losses triggered by Russia’s invasion of Ukraine nearly a month ago as optimism around peace negotiations and the lure of cheapened valuations draw investors back. But a historic spike in commodity prices on supply concerns shows little sign of easing, keeping traders on high alert over inflation and shaking their faith in the Federal Reserve to douse price pressures while keeping the economic recovery on track. “The Fed comes out last week and basically tells you they have to do more -- into higher inflation but slowing growth,” Brian Weinstein, head of global fixed income at Morgan Stanley Investment Management, said in an interview with Bloomberg TV. “It certainly looks like the market is afraid of a traditional Fed goes too much, slows the economy down, and we don’t get the much-anticipated soft landing.” In premarket trading, Boeing stock tumbled 6.6% after a China Eastern Airlines Boeing 737-800NG (yes, THE 737 MAX) plane carrying 132 people crashed in southwestern China. Additionally, US-listed Chinese stocks slumped in premarket trading Monday, following their Asian peers lower, as investors were disappointed after Chinese banks left the loan prime rate unchanged despite expectations of some easing. Large-cap technology stocks are leading the decline including Alibaba -5.6%, JD.com -6%, NetEase -5.7%, Pinduoduo -5.6% and Baidu -3.4%. Among other China stocks listed in the U.S. that are lower this morning: Nio -2%, Li Auto -4.2%, XPeng -4.3%, Didi -5.9%, KE Holdings -6.4%, Lufax -3.2%, Trip.com -6.2%, Bilibili -7.6% and Tencent Music -7.5%. Other notable premarket movers: Anaplan (PLAN US) shares jump 27% in U.S. premarket after Thoma Bravo agreed to acquire U.S. enterprise software company in a deal valued at $10.7 billion, adding to a string of deals this year by cash-rich private equity firms. Nielsen Holdings (NLSN US) shares decline in U.S. premarket after it rejected an acquisition proposal from a private equity consortium, valuing the company at $25.40/share, a price that doesn’t “adequately compensate shareholders for Nielsen’s growth prospects.” Uber (UBER US) shares are slightly lower in U.S. premarket trading after price target is lowered at RBC Capital Markets, with broker less positive on the ride-hailing giant versus peer Lyft following proprietary driver supply analysis. Alleghany Corp. (Y US) shares could be active as Berkshire Hathaway Inc. is buying it for $11.6 billion in cash. In the latest developments, Ukraine rejected a Russian demand that its forces lay down their arms Monday and leave the besieged southern port of Mariupol, which has been under intense Russian bombardment. Morgan Stanley’s chief U.S. equity strategist Michael Wilson said the recent rebound in U.S. stocks is an opportunity to sell and position more defensively.  Meanwhile, U.S. President Joe Biden will speak with European leaders ahead of his trip to the continent this week. Senior U.S. officials will also meet with executives of Exxon Mobil Corp., JPMorgan Chase & Co. and other firms about the impact of the invasion and sanctions.  European equities had a subdued start to the week with most indexes opening flat. Euro Stoxx 50 and DAX rise slightly, while the FTSE MIB outperformed gaining 0.7%. Energy and mining stocks lead gains, tech and travel are in the red. Commodity-linked stocks are the biggest gainers on the Stoxx Europe 600 as prices rally with the war in Ukraine nearing the end of its first month with no conclusion in sight. The basic resources sub-index rises 1.8% as the energy sub-index gains 1.5%. Rio Tinto, Glencore and Anglo American are among the miners rising while Shell, BP and Equinor lead gains among energy stocks. Meanwhile, Europe’s formerly “unstoppable” luxury stocks are facing a swath of new challenges, from rising rates, war in Ukraine and China risks, leaving investors and analysts divided on whether valuations have fallen far enough yet. The MSCI Europe Textiles Apparel & Luxury Goods Index is down 14% this year, following three years of outsized gains. Hermes, the maker of $10,000 Birkin bags, is among top decliners, down 21% after a whopping 75% jump last year. Louis Vuitton owner LVMH, meanwhile, recently lost its crown as Europe’s biggest company to food giant Nestle. Investors were already dumping pricey luxury stocks in favor of cheaper shares amid concerns about rate hikes, while the war in Ukraine added further uncertainty. Valuation-wise, the group now trades at about a 60% premium to the broader market, near pre-pandemic levels and below its 5-year average. Asia stocks fell after China’s lenders kept borrowing costs unchanged. The MSCI Asia Pacific Index was down 0.5% as of 3:13 p.m. in Singapore, erasing an earlier gain of 0.4%, weighed by declines in financials and communication services. The regional benchmark’s bumpy day followed its best week since February 2021. “Some may have clung to expectations for an LPR cut today, which I think will come later when they assess the growth drag from the outbreak,” said Wai Ho Leong, strategist at Modular Asset Management. “Peace talks and the Xi-Biden call also did not deliver substantive outcomes.” Stocks climbed last week as China pledged to stabilize its markets, and some traders had expected some help from banks’ loan prime rate announcement Monday. Talks between Xi Jinping and Joe Biden held Friday also failed to excite investors, although China’s top envoy to Washington pledged his country “will do everything” to de-escalate the war in Ukraine.  Hong Kong Lifts Overseas Flight Ban; Cuts Hotel Quarantine Shares slid in China and Hong Kong, erasing earlier gains. Stocks in South Korea and Malaysia led declines in the region. Japanese markets were closed for a holiday. India’s stocks took a breather on Monday after a sharp rally last week, as a drop in financial and consumer goods companies weighed on the indexes. The S&P BSE Sensex fell 1% to 57,292.49 in Mumbai, while the NSE Nifty 50 Index dropped by an equal measure. The gauges posted their biggest single-day drop since March 15. All but three of the 19 sector sub-indexes compiled by BSE Ltd fell, led by a gauge of utility companies. “Slowing rural sector is a risk even as urban consumption is showing signs of relatively better performance,” according to JM Financial analyst Dhananjay Sinha. Lower than expected growth and higher inflation are a key risk to Indian companies’ profitability, he added. Metal stocks were among gainers as Vedanta, Hindalco Industries and Coal India rose on the back of rising prices and worsening demand-supply scenario.   ICICI Bank contributed the most to Sensex’s decline, decreasing 1.3%. Out of 30 shares in the Sensex, 25 fell, while 5 declined. In FX, most FX majors are range-bound, as the DXY hovers on 98.000 handle awaiting speeches from Fed’s Bostic and chair Powell. Loonie underpinned by strong oil prices -Usd/Cad straddling 1.2600. Franc firm ahead of SNB policy assessment as Swiss sight deposits suggest less intervention; USD/CHF near 0.9300 and EUR/CHF sub-1.0300. Euro straddles 1.1050 with hawkish ECB commentary supportive, but hefty option expiries capping the upside (almost 2.8bln at 1.1100) Aussie unwinding recent gains on technical grounds and in wake of defeat for PM Morrison’s liberal party in local election - Aud/Usd back below 0.7400. Sterling still smarting after last week’s dovish BoE hike - Cable around 1.3150 and Eur/Gbp probing 100 DMA at 0.8415. In rates, Treasuries followed wider losses across gilts while front-end leads the move lower, flattening the curve.  2Y-5Y yields cheaper by ~4bp, flattening 5s30s spread by ~3bp; 10-year yields around 2.18%, higher by ~2bp vs ~4bp for U.K. 10- year. Bunds and gilts bear steepen, cheapening roughly 3bps across the back end. Cash USTs open bear flatter with short dated yields up close to 5bps. Peripheral spreads are slightly wider to core. In commodities, crude futures extend Asia’s gains; WTI adds ~4% to trade just shy of a 109-handle. Spot gold trades a narrow range in small positive territory near $1,924/oz. Base metals are mixed; LME nickel trades limit down for the fourth straight session. LME aluminum gains 3.8%, trading just off the late-Asia highs after Australia, the world’s biggest exporter of alumina, announced a ban on shipments to Russia. Bitcoin is modestly pressured but contained within last week's parameters overall, holding above USD 41k. Today's calendar is relatively quiet, with just the Chicago Fed National Activity Index on dex (exp 0.5, down from 0.69). Powell speaks at NABE at 12pm although it is unlikely he will make any monetary policy comments. Market Snapshot S&P 500 futures up 0.1% to 4,448.75 STOXX Europe 600 little changed at 455.00 MXAP down 0.5% to 177.54 MXAPJ down 0.7% to 579.14 Nikkei up 0.7% to 26,827.43 Topix up 0.5% to 1,909.27 Hang Seng Index down 0.9% to 21,221.34 Shanghai Composite little changed at 3,253.69 Sensex down 0.8% to 57,428.60 Australia S&P/ASX 200 down 0.2% to 7,278.55 Kospi down 0.8% to 2,686.05 Brent Futures up 3.8% to $112.03/bbl Gold spot up 0.2% to $1,924.77 U.S. Dollar Index little changed at 98.27 German 10Y yield little changed at 0.39% Euro little changed at $1.1048 Brent Futures up 3.8% to $112.03/bbl Top Overnight News from Bloomberg Ukraine rejected a Russian demand to surrender of the embattled southern port city of Mariupol, and an aide to President Volodymyr Zelenskiy said Russian forces are using “more destructive artillery.” More talks on ending the war are expected on Monday after Turkey said the two sides had made progress on key points Chinese banks left borrowing costs unchanged in line with expectations as the focus shifts to other possible easing measures from the central bank after top leaders pledged to boost the economy European Central Bank Vice President Luis de Guindos has yet to see any indication that soaring inflation rates are leading to higher wage demands, according to an interview with Handelsblatt Oil rose for a third day as the war in Ukraine neared the end of its first month with no end in sight, and Iranian-backed rebels attacked energy facilities in key exporter Saudi Arabia Hong Kong will lift a ban on flights from nine countries including the U.S. as of April 1, and cut the time incoming travelers need to spend in hotel quarantine in half provided they test negative, Chief Executive Carrie Lam said China and Russia’s trade relationship has become more complicated since the war started more than three weeks ago, raising questions about the future flow of energy, metals and crops between the two powerhouses A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were choppy with sentiment clouded amid the uncertain geopolitical climate and higher oil prices. ASX 200 was indecisive as outperformance in tech was offset by losses in financials and with PM Morrison’s Liberal Party defeated in South Australia's state election, raising concerns for the government ahead of the federal election in two months Nikkei 225 was closed for the Vernal Equinox holiday. Hang Seng and Shanghai Comp. swung between gains and losses with an early surge in Hong Kong tech stocks ahead of a widely speculated relaxation to COVID restrictions after the city’s daily cases fell to a threeweek low and with China’s tech hub of Shenzhen resuming normal work output. However, the gains were wiped out with the mainland hampered as Shanghai tussles with a COVID-19 outbreak, while the PBoC also kept its Loan Prime Rates unchanged, as expected. Top Asian News Indonesia Ends Quarantine Requirement for Overseas Travelers Asia Stocks Edge Down as Concerns Linger on China Policy Support Russia’s War Lifts Default Risk for Distressed Economies China Confirms Ambassador Met With Russian Defense Official European bourses are contained and haven't differed too far from the unchanged mark overall, Euro Stoxx 50 +0.1%, as we await updates on Russia-Ukraine. Developments throughout the morning have been limited, and commentary from the Kremlin is predominantly infitting with last-week's/weekend updates. US futures are pressured, ES -0.2%, awaiting geopolitical catalysts with Fed speak, including Chair Powell, ahead. China Eastern airlines passenger jet flying from Kunming to Guangzhou on Monday experienced an accident in Guangxi, via State Media; unknown injuries/deaths from the accident. Craft was a Boeing (BA) 737 . Subsequently, China's Aviation Regulator confirms the crash of the China Eastern airlines passenger jet carrying 132 people. Boeing -8.3% in the pre-market Berkshire Hathaway (BRK/B) is to purchase Alleghany Corp (Y) for USD 848.02/shr (vs. close USD 676.75 /shr) in a USD 11.6bln transaction. Top European News ECB’s Lagarde Says She’s Not Seeing Elements of Stagflation Now LSE Group to Sell BETA+ to Motive Partners, Clearlake: Sky S&T CEO’s Grosso Tech to Offer EU15.30/Shr for ~5.5m S&T Shares Julius Baer Says Sanctioned Clients in ‘Low Single Digits’ In FX, DXY hovers on 98.000 handle awaiting speeches from Fed’s Bostic and chair Powell. Loonie underpinned by strong oil prices -Usd/Cad straddling 1.2600. Franc firm ahead of SNB policy assessment as Swiss sight deposits suggest less intervention; USD/CHF near 0.9300 and EUR/CHF sub-1.0300. Euro straddles 1.1050 with hawkish ECB commentary supportive, but hefty option expiries capping the upside (almost 2.8bln at 1.1100) Aussie unwinding recent gains on technical grounds and in wake of defeat for PM Morrison’s liberal party in local election - Aud/Usd back below 0.7400. Sterling still smarting after last week’s dovish BoE hike - Cable around 1.3150 and Eur/Gbp probing 100 DMA at 0.8415. In commodities, WTI and Brent have been dipping from best-levels, but remain underpinned on the session amid weekend geopolitical premia.; albeit, the European morning's developments have been more limited. WTI May resides around USD 107/bbl (vs high ~108.20/bbl) while its Brent counterpart trades just under USD 112 /bbl (vs high ~112.75/bbl). Saudi-led coalition reported that Yemen Houthis targeted a gas station in Khamis Mushait on Saturday which resulted in material damage to civilian cars and homes but no casualties, according to the state news agency. Saudi-led coalition also said it destroyed an explosive-laden boat to thwart an attack on shipping in the Red Sea, while it was also reported that Aramco’s petroleum products distribution plant in Jeddah was attacked and production at a Saudi oil refinery in Yanbu declined momentarily after an attack by Houthis. Saudi Aramco reported FY net income USD 110.0bln vs prev. USD 49.0bln Y/Y, while the CEO expects oil demand to return to pre-pandemic levels by year-end and said they are seeing healthy demand especially in Asia. Saudi Aramco's CEO also noted that there is limited spare capacity which is declining every month with global spare capacity around 2mln bpd and that the market is very tight in terms of available barrels. US Event Calendar and Central Bank speakers 8am: Fed’s Bostic Gives Speech at NABE Conference 8:30am: Feb. Chicago Fed Nat Activity Index, est. 0.50, prior 0.69 12pm: Fed Chair Powell speaks at NABE DB's Jim Reid concludes the overnight wrap After a few weekends with some dramatic news of late, this weekend was relatively sparse in terms of new incremental news flow. The conflict and negotiations continue but without any major developments. Last week was the best for US and European equities since November 2020’s US election week; so markets are coming to terms with the current state of the conflict. Over the weekend, Ukrainian officials rejected an offer given by the Russian military for its forces and civilians to surrender the city of Mariupol as shelling continued in Kyiv. Separately, the White House announced that President Joe Biden will travel to Poland in his upcoming trip to Europe for urgent talks with NATO and European allies. Mr. Biden is also hosting a call with his counterparts in the UK, Germany and Italy today at 11am UK time. Overnight, Turkey’s Foreign Minister Mevlut Cavusoglu indicated that Ukraine and Russia are close to an agreement following progress in peace talks and is hopeful for a ceasefire if both the sides do not backtrack from their current positions. However there is no other developments on the current state of negotiations. Asian equity markets have started the week on a weaker footing with the Hang Seng (-0.69%), reversing its early morning gains after it rose more than 1%. Mainland Chinese stocks are also dipping as I type with the CSI (-0.66%) and Shanghai Composite (-0.10%) lower after the PBOC kept the one-year loan prime rate unchanged at 3.7%. Elsewhere, markets in Japan are closed for a holiday. Moving on, stock futures in the DMs are also falling, as contracts on the S&P 500 (-0.42%), Nasdaq (-0.60%) and DAX (-0.58%) are all down. Oil prices are up this morning with Brent futures advancing +3.08% to $111.25/bbl while WTI futures are up +3.23% at $108.08/bbl, as I type. Elsewhere, today's holiday in Japan means no USTs trading in Asia. One of the key events this week will be Thursday’s March flash PMIs from around the world where we’ll see the first impact of the Russia/Ukraine conflict on activity, especially in Europe. Outside of that, UK CPI data on Wednesday is going to be very interesting after the BoE warned on both growth and inflation last week in their surprisingly dovish hike. See our UK economist’s review here. There is also the Spring UK (Budget) Statement on Wednesday (preview here) where all things fiscal will be in focus. Wednesday's new home sales, Friday's pending home sales and Thursday's durable goods are the main economic releases in the US. There's plenty of Fed speak to sharpen up the message from last week's FOMC but don't expect a chorus line singing from the same song sheet. The dot plot showed the range of YE '22 Fed funds rates, as forecast by the committee, was a historically wide 1.4% to 3.1%. Boston (non-voter hawk) and Chair Powell himself are up today with the latter also on the docket on Wednesday. Williams (dove) will be on a panel tomorrow but also gives a speech on Friday. Daly (non-voter / dove) speaks tomorrow, Wednesday and Friday. Mester (voter / hawk) speaks tomorrow. Bullard (voter / hawk) is up on Wednesday and remember he was the lone 50bps dissenter last week. Kashkari (non-voter / dove), Governor Waller (hawk) and Chicago President Evans (non-voter / dove) speak on Thursday. Barkin (non-voter / hawk) concludes the Fed's business for the week on Friday. Looking back at last week now and the conflict raged on but peace negotiations between Ukraine and Russia continued, with the headlines presenting a staccato back and forth about Ukrainian and Russian leaders’ current perceptions of the negotiation outlook. Markets seemed to look through this back-and-forth and took solace that negotiations were even happening, which was a material step up from where we were but a short time ago. In particular, both sides reported common ground on Ukraine’s neutral status and lack of NATO membership as a positive. Another positive came on Friday after Presidents Biden and Xi Jinping spoke. China’s support for Russia remained a key unknown, but following the call both sides expressed aspirations for a peaceful resolution to the conflict, and for tensions to not escalate any further. Ahead of the meeting, US diplomatic officials warned that the US would impose costs on China were it to support the Russian invasion. Russian sovereign bond payments made their way to creditors via custodians, despite some uncertainty, avoiding a default. Nevertheless, S&P cut the rating on Russian sovereign debt another notch, considering it at high risk of default. However, Russia’s remaining interest repayments this month will keep investors anxious as a $447 million payment is due on March 31, followed by a $2 billion payment as a bond comes due on April 4. Dragging on sentiment were American intelligence reports that President Putin was prepared to re-engage in nuclear sabre rattling should the conflict drag on. That drove futures lower at the time of release but was not enough to drag risk negative on the week. That said it was a good week for risk with the S&P 500 and STOXX 600 gaining +6.16% (+1.17% Friday) and +5.43% (+0.91% Friday) over the week, respectively. That marked the best weekly performance for both indices since the week of the US Presidential election in November 2020. Financials and mega cap tech stocks performed even better. The S&P and STOXX bank indices gained +6.60% (-0.15% Friday) and +8.72% (+0.22% Friday), respectively, while the FANG+ gained +13.61% (+3.37%). That was the best weekly performance ever for the FANG+, which also put in its best daily performance ever on Wednesday following the Fed meeting, and more positive Chinese state support news (the index contains Baidu and Alibaba), gaining +10.19%. Speaking of the Fed, after two years at the zero lower bound, the FOMC raised policy rates by 25 basis points, with the dots projecting an additional 150 basis points of tightening this year, in line with DB expectations. Further, the Fed’s projections put policy into an explicitly restrictive stance by 2023. Despite the tightening, Chair Powell did not place particularly high risks on a recession occurring in the next year, which was apparently enough to help equities, with the S&P gaining +2.24% the day of the meeting in addition to the gangbusters day for the FANG+ index. The Fed also announced plans to start reducing their bond holdings at a coming meeting. Chair Powell noted the asset holding reductions would roughly equate to an additional 25 basis points of tightening this year and could commence as early as the FOMC’s next meeting in May. Money markets ended the week pricing around 167 basis points of additional policy rate tightening, suggesting some probability of a 50 basis point hike this year, which the Chair did not rule out. 10yr Treasury yields gained +15.8bps (-2.1bps Friday) on the week, driven entirely by real yields, which increased +22.7bps (+1.5bps Friday). The 2s10s yield curve continued its flattening, as 2yr yields gained +18.8bps (+2.2bps Friday), bringing the level to 20.5bps, the lowest since early March 2020. The Bank of England also hiked rates, raising the Bank Rate by 25 basis points in an 8-1 decision. The lone dissenter preferred to keep policy rates on hold, in contrast to the four dissenters in the February meeting which voted for a 50 basis point increase. Forward guidance added to the dovish tone, as it emphasised two-sided risks around the outlook, with downside impacts to growth featuring as prominent as upside risks to inflation, in contrast with recent advanced economy central bank communications. In line, 10yr gilt yields lagged other DM yields, gaining +0.6bps (-6.8bps Friday), as 10yr bunds increased +12.4bps (-1.2bps Friday). 2yr gilt yields priced out hikes, falling -10.9bps (-8.9bps Friday). Markets are pricing the Bank Rate to end the year at 1.87%, as opposed to 2.0% a week ago. Meanwhile, the Bank of Japan left policy unchanged, and warned of downside risks to growth stemming from the invasion of Ukraine, picking up the BoE’s dovish mantle. In line with the improvement in risk sentiment, crude oil prices fell a modest -3.97% over the week (+1.21% Friday), but still put in some large intraday swings. Prices also eased following reports that progress on the Iran nuclear deal would not be handcuffed by sanctions on Russia. European natural gas also fell -23.42% (-0.65% Friday). Given the volatility in energy markets, French President Macron warned the state may need to seize control of some energy firms. Elsewhere, sentiment was boosted by reports that China would actively introduce policies that benefit markets and take steps to avoid the most spartan lockdown measures. Tyler Durden Mon, 03/21/2022 - 07:52.....»»

Category: blogSource: zerohedgeMar 21st, 2022

Boyar Value Group 3Q21 Commentary

Boyar Value Group commentary for the third quarter ended September 30, 2021. Q3 2021 hedge fund letters, conferences and more “Cryptocurrencies, regardless of where they’re trading today, Will eventually prove to be worthless. Once the exuberance Wears off, or liquidity dries up, they will go to zero. I wouldn’t recommend anyone invest in Cryptocurrencies.” – […] Boyar Value Group commentary for the third quarter ended September 30, 2021. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Warren Buffett Series in PDF Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more “Cryptocurrencies, regardless of where they’re trading today, Will eventually prove to be worthless. Once the exuberance Wears off, or liquidity dries up, they will go to zero. I wouldn’t recommend anyone invest in Cryptocurrencies.” – John Paulson Stock market investors have a laundry list of worries these days, from partisan bickering over the infrastructure package and a massive social and climate spending bill (amid a high-stakes game of political chicken over the debt ceiling) to supply chain disruptions and a spike in the costs of critical commodities. Geopolitical tensions are escalating between the United States and China—which is undergoing a significant regulatory crackdown—and question marks surround the future of interest rates and the consequences of a future Fed taper. And that’s to say nothing of the coronavirus! So it’s no surprise that investors are on edge—we’re getting depressed just reading through the list. Yet volatility in 2021, measured by how much the S&P 500 has decreased from its all-time high (~5%), has been tame. (According to David Lebovitz, a global market strategist with JP Morgan, the average peak-totrough decline for the S&P 500 over the past 41 years has been 14.3%.) In fact, until September, the S&P 500 was regularly charting new all-time highs, at ~54 and counting. But then the stock market got spooked, with the S&P 500 suffering its worst monthly performance (down 4.65%) since March 2020 and its worst September performance since 2011 (during the European debt crisis). Worse, all but one sector was in the red, with Energy the only advancer. Despite a 4.65% September loss, the S&P 500 eked out a 2% gain for the quarter, marking the sixth consecutive quarter of advances. But its 227 days without a 5% drop from the high ended on September 29—the seventh-longest such streak on record, Jacob Sonenshine of Barron’s tells us. The Dow and the Nasdaq were less fortunate, with their fivequarter winning streaks ending after respective falls of 4.2% and 5.31% in September. The Dow declined by 1.46% for the quarter, and the Nasdaq fell by 0.38%. Historically speaking, a September decline in the S&P 500 isn’t surprising: the past 100 years have seen 89 monthly drops of more than 5%. Felice Maranz of Bloomberg notes that September and October have accounted for 12 of the 26 times the market has dropped by more than 10% in a month. Encouragingly, these 26 drops were followed by subsequent 12-month gains on 16 occasions (for an average gain of 6.8%). Bond yields also began to increase (the 10-year Treasury went from 1.18% to 1.61% in less than 3 months), which dragged down technology shares. Higher yields on long-term risk-free investments make future profits less valuable, harming many tech company valuations, which are often based on expectations of significant profits many years down the line. Since technology companies are weighted heavily in the S&P 500 (nearly 28%, or more than 2x the weighting of the next-largest sector, Health Care, at 13.3%), the index dropped quite a bit more than the average stock did. (In September the S&P 500 index declined by 4.65%, while the S&P 500 equal-weighted index fell 3.90%.) The S&P 500 finished 3Q 2021 selling for 20.3x earnings (fwd.) versus 19.2x at its February 19, 2020, pre-COVID peak and 13.3x at its March 23, 2020, pandemic low. Since the March 23 bottom, the S&P 500 has gained well over 90%. By most traditional valuation measures (price to earnings, price to book, price to free cash flow, etc.), the S&P 500 is historically overvalued. Overvaluation against historical averages does not mean that investors should avoid equities, because extraordinarily low interest rates make prior valuation comparisons less meaningful. More important, at The Boyar Value Group, we don’t buy “the market”; rather, we purchase, and hold, businesses that sell far below our estimate of their worth. It might be especially hard uncovering bargains right now, but we’ve identified quite a few businesses selling at attractive levels even so. What’s Been Driving Share Price Returns in 2021? None of the 11 S&P 500 GICS sectors had standout performance in 3Q 2021, with 4 in negative territory and 1 flat (Consumer Discretionary). The biggest gainer, Financials, advanced a mere 2.7%. (For comparison, last quarter’s biggest gainer, Real Estate, advanced 13.1%.) By the end of 3Q, no sector was in negative territory YTD, and the best-performing sector by far was Energy (+43.2%). However, its low weighting in the S&P 500 (2.7%) gave it little effect on the index’s return, and its fantastic rise should be viewed in context, following as it did a loss of 37.3% in 2020. Other notable gainers thus far in 2021 have been Financials (+29.1%), Real Estate (+24.4%), and Communication Services (+21.6%). Interestingly, according to JP Morgan, since the market bottomed in March 2020, the S&P 500 had advanced ~97.3% as of September 30, 2021—leaving the index “only” ~30.6% above its February 2020 peak. The FAAMG stocks (Facebook, Apple, Amazon, Microsoft, and Alphabet—formerly Google), which have seemingly been leading the market ever upward, have struggled lately. Since their September peak, they have lost ~9%, or nearly $1 trillion, in market value. Due to FAAMG’s heavy weighting in the S&P 500 (~22%), if this area of the market continues struggling, the S&P 500 likely won’t perform well. Even so, we think there could be plenty of opportunities to make money investing in companies that have lower index weightings and/or that are outside the major indices. Some of the biggest “pandemic winners” are struggling too, with shares in Zoom Video Communications Inc (NASDAQ:ZM), Peloton Interactive Inc (NASDAQ:PTON), and Teladoc Health Inc (NYSE:TDOC) down 24%, 43%, and 34%, respectively, in 2021. (Though it’s worth noting that each company’s share price is trading significantly higher than before the pandemic.) One pandemic standout that has continued to soar throughout 2021 is vaccine maker Moderna, whose shares are up 192% in 2021 and up over 1,000% since March 2020. In hindsight, many signs of an imminent pullback were present. Market sentiment, for example, was very bullish (usually a contrarian indicator). At the beginning of August, two-thirds of JP Morgan clients surveyed were planning to increase their stock exposure in the coming weeks. A recent Bank of America gauge that tracks levels of optimism among market strategists was at a postcrisis high, and as of mid-August, 56% of all Wall Street analyst recommendations on S&P 500 index components were buys, the highest figure since 2002. However, we aren’t market timers. That’s because we know that trying to pinpoint the exact start of a market correction is a fool’s errand that impedes long-term results by prompting more trades (making results less tax-efficient) while removing the chance to make spectacular gains with companies that may be temporarily overvalued based on current earnings but that still have great long-term potential. When selling a high-quality company that has temporarily gotten ahead of itself in terms of valuation but that has excellent future growth prospects, knowing when to repurchase shares is extremely difficult, because the company’s share price often never drops enough to tempt investors into buying it again. So if you sell early to lock in a profit, anticipating a future correction, your profit on a well-timed sale might short-change you on future outsized gains. Reasons for Optimism According to Bloomberg, the final quarter of the year has been the strongest quarter for stocks since 2001, with an average increase of 4.1%. If history is any guide, 4Q 2021 could be a good quarter: 412 members of the S&P 500 are heading into it with gains for the year, the third-highest figure during the past 20 years. During that same period, each time 400 or more stocks have been positive through 3Q, the S&P 500 has produced a gain for 4Q.In another potentially bullish sign for stocks, cash holdings among S&P 500 companies hit $1.8 trillion in August 2021, as reported by Dow Jones Market Data—an increase of almost 30% from 3Q 2019. According to recent research by Goldman Sachs cited by Hardika Singh in a Wall Street Journal article, corporate America seems unlikely to be hoarding this cash, with S&P 500 companies expected to increase cash spending to $2.8 trillion in 2021 (mostly on capital expenditures, mergers, and business investment). Corporations also seem willing to buy back their own shares, having collectively authorized ~$870 billion in share repurchases thus far in 2021, $50 billion ahead of the record set in the first 9 months of 2018. If they deploy this capital wisely, share buybacks could buoy share prices in the short run, with capital investments spurring long-term earnings growth. What Does TINA Have to Do with the Stock Market? TINA, meaning “there is no alternative,” has become a popular catchphrase among investors, used to express the idea that stocks should continue doing well simply because interest rates are so low as to leave investors few investment options to produce an adequate rate of return. With the 10-year Treasury yielding ~1.6% and municipal bonds yielding ~1.17%, investors certainly are lacking attractive traditionally “safe” investment opportunities! Interest rates are so low that even the yields on some risky European junk bonds don’t earn any real return after factoring in inflation. Until rates rise meaningfully, equities should continue to see support—because there truly are few alternatives. The State of Value Investing Since April 2020, the S&P 500 value index has risen a little under 60%, while the S&P 500 growth index has surged over 90%, says Jacob Sonenshine of Barron’s. Value stocks should start outperforming if history is any guide: in the first 2 years of a recovery after a recession, value has bested growth by an average of 24%, based on data from Research Affiliates. The swift rotation back into value shares that began in September 2020 ended abruptly in July of this year as the delta variant slowed down the economic recovery, interest rates fell, and investors once again began embracing technology-oriented shares. But value looks like it might be making a comeback, with interest rates rising again and investors starting to embrace industrial and financial shares. Market Tops With the S&P 500 having advanced well over 80% since its March 2020 highs, and in view of all the political and economic uncertainty on the horizon, investors are questioning whether the latest bull market has ended. However, Mark Hulbert of the Wall Street Journal points out that unlike bear-market bottoms, which usually occur quickly (thankfully), bull markets end slowly, because individual sectors or investment styles peak and retreat at different times: “A recent illustration that not all sectors and styles hit their bull-market highs at the same time came at the top of the internet-stock bubble in early 2000. Though the S&P 500 and Nasdaq Composite indexes hit their bull-market highs in March 2000, value stocks—and small-cap value stocks, in particular—kept on rising. The S&P 500 at its October 2002 bear-market low was 49% lower than its March 2000 high, and the Nasdaq Composite was 78% lower, but the average small-cap value stock was 2% higher than it was in March 2000. Hulbert analyzed 30 bull-market tops since the mid-1920s, using data maintained by Ned Davis Research, and identified the dates when individual sectors and market styles (value, growth, blend) reached their bull-market peaks, reporting a 225-day spread between the dates when the first and last market sectors reached their bull-market tops. There are exceptions, of course, such as with bear markets caused by exogenous events such as 9/11 and the pandemic, but in general, he says, “it’s more accurate to view a bull-market top as a process rather than a single event.” As Hulbert points out, even the so-called experts can’t determine when a market peaks. Over the past 40 years, on days when the S&P 500 reached a bull-market high, the market timers that he followed recommended equity exposure at an average of 65.7%—a higher level of recommended investment than on 95% of all other days over the period. The experts were even worse at picking bear market lows, with their average equity exposure at market lows over the same period a mere 5%—yet another example of investors buying high and selling low! The takeaway is that knowing when a market has peaked is pretty much impossible to do regularly: even the so-called experts are consistently wrong. Individual investors would do much better to base their decisions on the value of each of their holdings rather than trying to guess whether they’re in a bull or bear market. Speculation in the Market The amount of speculation in the stock market worries us. A good example is the heightened use of stock options, which have legitimate hedging purposes, but which individuals seem to have recently embraced for speculative purposes. CBOE data indicate that option trading by individual investors has risen 4x over the past 5 years. As noted by Gundan Banerdi in the Wall Street Journal, “Nine of 10 of the most-active call-options trading days in history have taken place in 2021, Cboe Global Markets data show. Almost 39 million option contracts have changed hands on an average day this year, up 31% from 2020 and the highest level since the market’s inception in 1973, according to figures from the Options Clearing Corp.” As a result, the options market has grown so large that in some respects it’s bigger than the stock market. In 2021, for example, according to CBOE data, the daily average notional value of single stock options was over $432 billion, compared with $404 billion in stocks. We’ve said it before, and we’ll say it again: staying the course and taking a long-term view is one of individual investors’ best ways of stacking the odds of investment success in their favor. According to Dalbar, over the past 20 years the S&P 500 has advanced 7.5% annually, yet the average investor has gained a mere 2.9% (barely beating the 2.1% inflation over the period). Why this underperformance? Partly because investors let their emotions get the best of them and chase the latest investment fad (or they pile into equities at market peaks and sell out at market troughs)—or sell for nonfundamental reasons, such as simply because a company’s share price (or an index) has increased in value. By contrast, taking a multiyear view tilts the odds of success in investors’ favor. Since 1950, the range of stock market returns measured by the S&P 500 (using data supplied by JP Morgan) in any given year has been from +47% to -39%. For any given 5-year period, however, that range is +28% to -3%—and for any given 20-year period, it is +17% to +6%. In short, since 1950, there has never been a 20-year period when investors did not make at least 6% per year in the stock market. Although past performance is certainly no guarantee of future returns, history shows that the longer the time frame you give yourself, the better your chances of earning a satisfactory return. As always, we’re available to answer any questions you might have. If you’d like to discuss these issues further, please reach out to us at jboyar@boyarvaluegroup.com or 212-995-8300. Best regards, Mark A. Boyar Jonathan I. Boyar Boyar Value Group Updated on Oct 14, 2021, 2:01 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkOct 14th, 2021

: Carvana stock soars in active trading to lead the NYSE’s gainers

Shares of Carvana Co. CVNA soared 20.8% in active afternoon trading Friday, enough to pace the New York Stock Exchange’s (NYSE) gainers list. Trading volume swelled to 28.6 million shares, already well above the full-day average of 18.6 million. The last press release from the online used car marketplace was late Thursday, with the company saying it will report fourth-quarter results on Feb. 23, after the market closes. The stock had shown “meme”-like tendencies earlier this month, amid a relatively high short-interest position in the stock, and the company also adopted a shareholder rights plan (“poison pill”) to block investors for taking advantage of the stock’s weakness to buy up a large stake. Short interest, or bearish bets on the stock, represented 59.6% of the public float, or shares available for trading, according to the latest exchange data. That percentage is more than double that of original meme stocks, with GameStop Corp. GME at 23.5% and AMC Entertainment Holdings Inc. AMC at 22.6%. The stock has tumbled 45.9% over the past three months, while GameStop’s stock has lost 11.2%, AMC shares have shed 15.6% and the S&P 500 SPX has gained 7.3%.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......»»

Category: topSource: marketwatch7 hr. 11 min. ago

Goldman Slashes Pay Of CEO And DJ D-Sol By 30% To $25 Million

Goldman Slashes Pay Of CEO And DJ D-Sol By 30% To $25 Million A few weeks ago, when Goldman reported dismal Q4 earnings which saw its subprime-targeting consumer finance group report very ugly numbers, we joked that while "In 2008 Goldman made a killing on subprime; in 2022/23 Goldman is getting killed by subprime" Goldman provision for credit losses (mostly credit cards and wholesale loans) +183% Y/Y to $972MM. In 2008 Goldman made a killing on subprime; in 2022/23 Goldman is getting killed by subprime — zerohedge (@zerohedge) January 17, 2023 The final joke however appears to be on the CEO himself: on Friday, Goldman announced in a regulatory filing that it paid chief executive David Solomon $25 million for 2022, down almost 30% from the year before after the Wall Street bank reported a steep drop in profits, cut thousands of jobs and slashed employee bonuses. But don't cry for the part-time DJ: in 2021 his bonus was doubled to $35 million from the year before so he probably won't starve (then again, we doubt D-Sol's predecessor Lloyd Blankfein would even bother bending over for such pittance). Goldman also disclosed that Solomon received a base salary of $2mn, and $23 million in variable compensation. Mr. Solomon’s total annual compensation for 2022 is $25 million (which consists of an annual base salary of $2 million, unchanged year-over-year, as well as annual variable compensation of $23 million). 70% of this annual variable compensation (i.e., $16.1 million) is in the form of performance-based restricted stock units (“PSUs”), which tie 100% of Mr. Solomon’s equity-based compensation to ongoing performance metrics, with the remainder to be paid in cash. This compares to Mr. Solomon’s total annual compensation for 2021 of $35 million. Goldman said its compensation committee considered, among other things, “the firm’s 2022 performance, both on an absolute basis and relative to peer results, as well as in comparison to the record performance delivered in 2021”. As the FT notes, Solomon’s pay for 2022 had been the subject of speculation among Goldman’s rank and file in recent weeks, with many expecting a sizeable cut given the bank’s financial performance and a far-reaching review of expenses at the company. Not surprisingly, the cut to Solomon’s pay is larger than that taken by Wall Street peers and reflects a challenging year for Goldman. However, it is still less than the cut to the bonus pool for the firm’s senior partner ranks, which as was previously reported, is about 40%. The cut to Solomon's bonus comes as Goldman’s profits plunged almost 50% from record earnings in 2021 and the bank fell short of a key profitability target. Its investment banking business suffered from an industry-wide dearth of dealmaking activity, resulting in a cut to bonuses for employees in that unit. Goldman was also hit by sharp markdowns in public equity holdings at its asset management division and reported $2bn in losses for 2022 at its fledgling “Platform Solutions” unit, which houses part of its retail banking business that has been pared-back following disappointing performance. Goldman’s overall spending on compensation and benefits for 2022 was down 15% year on year at $15.1bn. Despite the cut, we are confident that Solomon will be just fine: the $35 million the Goldman CEO earned in 2021 made him the highest-paid big bank chief executive alongside Morgan Stanley boss James Gorman. In 2022, Gorman’s compensation was cut 10% to $31.5 million despite much stronger performance by the bank, especially when compared to Goldman. Other bank CEOs also won't starve: JPMorgan's Jamie Dimon was paid $34.5 million in 2022, the same as last year; Wells Fargo CEO Charlie Scharf’s pay was also flat at $24.5mn. According to FT calculations, Solomon’s compensation for 2022 is his lowest since the $17.5 million he earned in 2020 when his pay was hit by Goldman’s involvement in the 1MDB corruption scandal. Tyler Durden Fri, 01/27/2023 - 13:06.....»»

Category: worldSource: nyt8 hr. 11 min. ago

Weyerhaeuser (WY) Q4 Earnings Beat, Adjusted EBITDA Falls

Weyerhaeuser's (WY) Q4 results reflect soft demand and lower export activity owing to the work stoppage. Weyerhaeuser Company’s WY shares inched up 0.21% in the after-hour trading session on Jan 26 after it reported fourth-quarter 2022 results. Although its earnings beat the Zacks Consensus Estimate, the same declined from the year-ago period's levels.The quarter’s performance reflects strong execution across the businesses, which was offset by macroeconomic headwinds, supply chain disruptions and dynamic market conditions.On an impressive note, the company unveiled a 90 cents per share supplemental dividend.Pertaining to the result, Devin W. Stockfish, president and chief executive officer of Weyerhaeuser, said, “Our teams drove continued improvements across each of the value levers of our investment thesis in 2022. Notably, we grew our timberlands holdings through a strategic acquisition in the Carolinas, captured additional operational excellence improvements, announced our first two carbon capture and storage agreements and joined the Climate Pledge. We also increased our base dividend by 5.9 percent, repurchased $550 million of our shares and refinanced $900 million of debt. Entering 2023, our balance sheet is exceptionally strong, and we are well positioned to navigate through a range of market conditions. We remain focused on serving our customers and driving long-term value for shareholders through our unrivaled portfolio, industry-leading performance, strong ESG foundation and disciplined capital allocation.”Inside the HeadlinesIn the fourth quarter, the company reported adjusted earnings of 24 cents per share, beating the consensus mark of 18 cents by 33.3%. The bottom line, however, decreased 51% from the year-ago reported figure of 49 cents per share.Weyerhaeuser Company Price, Consensus and EPS Surprise  Weyerhaeuser Company price-consensus-eps-surprise-chart | Weyerhaeuser Company Quote Net sales for the quarter came in at $1,823 million, missing the consensus mark of $1,883 million by 3.2% and declining 17.4% from $2,206 million reported in the prior-year quarter.Adjusted EBITDA came in at $369 million, down 45.3% from $674 million in the year-ago period.Segment DetailsTimberlands: Net sales (including inter-segment sales of $111 million) from the segment came in at $548 million, down from the year-ago figure of $565 million. Adjusted EBITDA came in at $150 million, down from $176 million in the year-ago quarter.Real Estate, Energy and Natural Resources: For the reported quarter, the segment’s net sales amounted to $55 million, down from $59 million a year ago. Adjusted EBITDA came in at $46 million, reflecting a decline from $49 million reported in the year-ago level.Wood Products: For the fourth quarter, segment sales totaled $1,331 million, down from $1,718 million in the prior-year period. Adjusted EBITDA came in at $197 million, significantly down from $517 million a year ago.2022 HighlightsFor the full year 2022, adjusted earnings came in at $3.02 per share, reflecting a decrease of 10.4% from $3.37 reported in 2021. Revenues were $10.18 billion versus $10.2 billion reported a year ago. The adjusted EDITDA of $3.65 billion increased by 10.7% from 2021.Financial HighlightsAs of Dec 31, 2022, Weyerhaeuser had cash and cash equivalents of $1.58 billion, up from $1.88 billion at 2021-end. Long-term debt was $4.07 billion at quarter-end, down from $5.099 billion at 2021-end.Net cash from operations was $167 million for fourth-quarter and $$2,832 million for 2022, down from $494 million and $3,159 million reported in the respective year-ago period.Q1 OutlookFor first-quarter 2023, the company expects earnings (before special items) and adjusted EBITDA in the Timberland segment to be slightly higher sequentially. In the West, the company expects fee harvest volumes to be significantly high from the fourth-quarter 2022.Domestic sales realizations are expected to be significantly low owing to lower demand and per-unit log and haul costs are expected to be moderately lower sequentially. Fee harvest volumes, forestry and road costs and sales realizations in the South and North are expected to be slightly lower.In the Real Estate, Energy and Natural Resources segment, Weyerhaeuser expects earnings to be $10 million higher sequentially. Adjusted EBITDA is likely to be $35 million higher than fourth-quarter 2022 thanks to the timing and mix of sales.Within the Wood Products segment, the company predicts earnings and adjusted EBITDA to be moderately high sequentially (excluding the effect of changes in average sales realizations for lumber and oriented strand board).2023 GuidanceFor the year, fee harvest volume is approximately 35 million tons. South and West is likely to be moderately higher year over year, while North is expected to be slightly up from prior year. Real Estate, Energy and Natural Resources segment’s adjusted EBITDA is anticipated to be $300 million.Interest expense is projected at nearly $270 million, the tax rate is expected to be in the range of 12-14% (excluding special items) and capital expenditure of $440 million compared with 2022.Zacks RankCurrently, WY carries a Zacks Rank #5 (Strong Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.A Few Recent ReleasesKB Home KBH reported lackluster results in fourth-quarter fiscal 2022 (ended Nov 30, 2022). Both earnings and revenues lagged the Zacks Consensus Estimate.On a year-over-year basis, both metrics increased on the back of measures undertaken to stimulate additional sales during the seasonally slower time frame.RPM International Inc. RPM reported tepid results in second-quarter fiscal 2023 (ended Nov 30, 2022). Its earnings met the Zacks Consensus Estimate and sales missed the same. On a year-over-year basis, both metrics grew on strong segmental sales.During the quarter, the company introduced the MAP 2025 operating improvement program and is ahead of targets so far in the fiscal second quarter.Acuity Brands, Inc. AYI reported mixed first-quarter fiscal 2023 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus mark in four consecutive quarters, while revenues missed the estimate after beating the same for the third straight quarter.Nevertheless, earnings and revenues increased on a year-over-year basis. The upside was backed by product vitality and service in its lighting and space businesses. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Weyerhaeuser Company (WY): Free Stock Analysis Report KB Home (KBH): Free Stock Analysis Report RPM International Inc. (RPM): Free Stock Analysis Report Acuity Brands Inc (AYI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacks10 hr. 27 min. ago

Stock Market News for Jan 27, 2023

U.S. stocks closed higher on Thursday in a choppy trading session that saw investors weigh in an onslaught of economic data, as the fourth-quarter gross domestic product came in higher than expectations, and digested mixed corporate earnings. U.S. stocks closed higher on Thursday in a choppy trading session that saw investors weigh in an onslaught of economic data, as the fourth-quarter gross domestic product came in higher than expectations, and digested mixed corporate earnings. All three major indexes ended in positive territory.How Did The Benchmarks Perform?The Dow Jones Industrial Average (DJI) climbed 0.6% or 205.57 points to end at 33,949.41 points.The S&P 500 rose 1.1% or 44.21 points to close at 4,060.43 points. Energy and consumer discretionary stocks were the biggest gainers.The Energy Select Sector SPDR (XLE) gained 3.2%, while the Consumer Discretionary Select Sector SPDR (XLY) added 2.1%. Ten of the 11 sectors of the benchmark index ended in positive territory.The tech-heavy Nasdaq advanced 1.8% or 199.06 points to finish at 11,512.41 points.The fear-gauge CBOE Volatility Index (VIX) was down 1.83% to 18.73. Advancers outnumbered decliners on the NYSE by a 2.35-to-1 ratio. On Nasdaq, a 1.45-to-1 ratio favored advancing issues. A total of 11.34 billion shares were traded on Thursday, higher than the last 20-session average of 10.93 billion.GDP Data Boosts Investors’ SentimentWall Street opened lower on Thursday but reversed soon following an onslaught of economic data that included the advance estimate report on the fourth-quarter gross domestic product, which came in higher than the consensus estimate. The U.S. economy grew 2.9% at an annualized pace in the fourth quarter, higher than economists’ expectations of a rise of 2.8%, according to the Bureau of Economic Analysis.Although the GDP growth in the fourth quarter slowed slightly, the economy has now expanded more than the normal rate for the second consecutive quarter. U.S. GDP grew 3.2% in the third quarter, following two straight quarters of declines.The impressive data gave the much-required boost to investors’ confidence and raised hopes of a softer landing in 2023 instead of the economy slipping into recession.Investors are also hopeful about the Fed going slow on its pace of interest rate hikes on signs that inflation is easing as they wait for the central bank’s policy meeting scheduled in February. The impressive GDP reading helped sent stocks on a rally with the S&P ending at the highest level since December.Earnings Season Gains PaceIt has been a mixed earnings season so far and investors have been closely watching quarterly reports from big companies to gauge the economy’s health. On Thursday, investors digested another batch of mixed earnings reports.Corporate earnings released after the closing bell on Wednesday and before the bell on Thursday helped boost investors’ confidence after Microsoft Corporation MSFT issued lackluster guidance earlier this week.On Thursday, shares of Tesla, Inc. TSLA rallied 11% after the company posted solid quarterly earnings. Tesla posted fourth-quarter 2022 earnings of $1.19 a share, surpassing the Zacks Consensus Estimate of $1.09 per share.However, shares of Mastercard Incorporated MA declined 1.4% despite beating earnings. Mastercard reported fourth-quarter 2022 adjusted earnings of $2.65 per share, which outpaced the Zacks Consensus Estimate and our estimate of $2.56 per share. Mastercard has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Airline companies also started reporting their quarterly reports on Thursday. Shares of Southwest Airlines Co. LUV fell 3.2% after the company reported a quarterly loss of $0.38 per share, wider than the Zacks Consensus Estimate of a loss of $0.03 per share.Economic DataIn other major economic data released on Thursday, the Labor Department reported that jobless claims totaled 186,000 for the week ending Jan 21, decreasing 6,000 from the previous week’s revised level of 192,000. The four-week moving average was 206,000, an increase of 750 from the previous week’s revised average of 206,750.Continuing claims came in at 1,675,000, an increase of 20,000 from the previous week’s revised level of 1,655,000. The 4-week moving average was 1,664,250 a decrease of 10,750 from the previous week's revised average of 1,675,000.The Commerce Department reported that U.S. new home sales grew for the third-straight month in December, rising 2.3% to a seasonally-adjusted annual rate of 616,000 from 602,000 in the month earlier.The U.S. Census Bureau said on Thursday that durable goods orders jumped $15.3 billion or 5.6% to $286.9 billion in December, increasing in four of the past five months. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report Mastercard Incorporated (MA): Free Stock Analysis Report Southwest Airlines Co. (LUV): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacks10 hr. 27 min. ago

Is BlackRock Equity Dividend A (MDDVX) a Strong Mutual Fund Pick Right Now?

Mutual Fund Report for MDDVX Any investors hoping to find a Mutual Fund Equity Report fund could think about starting with BlackRock Equity Dividend A (MDDVX). MDDVX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.History of Fund/ManagerBlackRock is based in New York, NY, and is the manager of MDDVX. The BlackRock Equity Dividend A made its debut in October of 1994 and MDDVX has managed to accumulate roughly $4.87 billion in assets, as of the most recently available information. The fund is currently managed by Tony DeSpirito who has been in charge of the fund since August of 2014.PerformanceObviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 7.03%, and it sits in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 6.04%, which places it in the bottom third during this time-frame.When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Over the past three years, MDDVX's standard deviation comes in at 20.69%, compared to the category average of 17.77%. The standard deviation of the fund over the past 5 years is 18.04% compared to the category average of 15.55%. This makes the fund more volatile than its peers over the past half-decade.Risk FactorsThe fund has a 5-year beta of 0.88, so investors should note that it is hypothetically less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a negative alpha over the past 5 years of -1.18, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.HoldingsInvestigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is principally on equities that are traded in the United States.This fund is currently holding about 78.65% stock in stocks, with an average market capitalization of $119.51 billion. The fund has the heaviest exposure to the following market sectors: Finance Technology With turnover at about 47%, this fund makes fewer trades than comparable funds.ExpensesFor investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, MDDVX is a load fund. It has an expense ratio of 0.92% compared to the category average of 0.99%. From a cost perspective, MDDVX is actually cheaper than its peers.While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $50.Bottom LineOverall, BlackRock Equity Dividend A ( MDDVX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.This could just be the start of your research on MDDVXin the Mutual Fund Equity Report category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (MDDVX): Fund Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacks14 hr. 11 min. ago

Is DFA US Targeted Value I (DFFVX) a Strong Mutual Fund Pick Right Now?

Mutual Fund Report for DFFVX If investors are looking at the Mutual Fund Equity Report fund category, DFA US Targeted Value I (DFFVX) could be a potential option. DFFVX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.History of Fund/ManagerDimensional is responsible for DFFVX, and the company is based out of Austin, TX. Since DFA US Targeted Value I made its debut in November of 2000, DFFVX has garnered more than $11.76 billion in assets. The fund is currently managed by a team of investment professionals.PerformanceObviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 7.05%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 11.17%, which places it in the top third during this time-frame.When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. DFFVX's standard deviation over the past three years is 29.49% compared to the category average of 20.6%. Over the past 5 years, the standard deviation of the fund is 26.18% compared to the category average of 18.13%. This makes the fund more volatile than its peers over the past half-decade.Risk FactorsThe fund has a 5-year beta of 1.21, so investors should note that it is hypothetically more volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. DFFVX's 5-year performance has produced a negative alpha of -2.42, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.HoldingsInvestigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is principally on equities that are traded in the United States.As of the last filing date, the mutual fund has 92.7% of its assets in stocks, with an average market capitalization of $4.66 billion. The fund has the heaviest exposure to the following market sectors: Finance Industrial Cyclical Other This fund's turnover is about 12%, so the fund managers are making fewer trades than comparable funds.ExpensesAs competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, DFFVX is a no load fund. It has an expense ratio of 0.31% compared to the category average of 1.22%. From a cost perspective, DFFVX is actually cheaper than its peers.Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.Bottom LineOverall, DFA US Targeted Value I ( DFFVX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.For additional information on the Mutual Fund Equity Report area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into DFFVX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (DFFVX): Fund Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacks14 hr. 11 min. ago

Is Zacks Small-Cap Core Investor (ZSCCX) a Strong Mutual Fund Pick Right Now?

Mutual Fund Report for ZSCCX If you've been stuck searching for Mutual Fund Equity Report funds, consider Zacks Small-Cap Core Investor (ZSCCX) as a possibility. The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.History of Fund/ManagerZacks Funds is based in Milwaukee, WI, and is the manager of ZSCCX. Zacks Small-Cap Core Investor debuted in June of 2011. Since then, ZSCCX has accumulated assets of about $14.73 million, according to the most recently available information. The fund's current manager, Mitch Zacks, has been in charge of the fund since June of 2011.PerformanceObviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 4.18%, and is in the bottom third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 4.84%, which places it in the bottom third during this time-frame.When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Over the past three years, ZSCCX's standard deviation comes in at 25.53%, compared to the category average of 21.51%. The fund's standard deviation over the past 5 years is 22.56% compared to the category average of 19%. This makes the fund more volatile than its peers over the past half-decade.Risk FactorsInvestors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. ZSCCX has a 5-year beta of 1.06, which means it is likely to be more volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a negative alpha over the past 5 years of -4.52, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.HoldingsExploring the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is primarily on equities that are traded in the United States.Right now, 93.69% of this mutual fund's holdings are stocks, with an average market capitalization of $2.34 billion. The fund has the heaviest exposure to the following market sectors: Industrial Cyclical Finance Other Turnover is 102%, which means this fund makes more trades in a given year than the category average.ExpensesAs competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, ZSCCX is a no load fund. It has an expense ratio of 1.39% compared to the category average of 1.08%. From a cost perspective, ZSCCX is actually more expensive than its peers.While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.Bottom LineYour research on the Mutual Fund Equity Report segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (ZSCCX): Fund Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacks14 hr. 11 min. ago

Futures Drop After Horrific Intel Guidance, Brace For PCE Data

Futures Drop After Horrific Intel Guidance, Brace For PCE Data US futures dropped after yesterday's meltup, led lower by semiconductor stocks and traded in a tight range on Friday after a catastrophic earnings report and guidance from (former?) chip giant Intel, while investors awaited key inflation figures for clues on what the Fed will do next week. Nasdaq 100 futs were down 0.3% by 7:30 a.m. ET while S&P 500 futures dropped 0.2%. Europe’s Stoxx 600 index was 0.1% higher, building on its 0.4% gain from Thursday. The Bloomberg Dollar Spot index was modestly higher, while most Group-of-10 currencies remained under pressure amid muted trading. Treasuries were on the back foot, mirroring moves in German and UK bond markets. Oil and gold rose, while Bitcoin fell for a second-straight day. Focus today will be on the latest reading of the core personal consumption expenditures index, the Fed’s preferred inflation data. Before the Intel report on Thursday, the S&P 500 index achieved its highest close in more than a month and the Nasdaq 100 rose 2% to a four-month high. Yesterday’s rally began with Tech earnings and then accelerated with macro data both a showing a resilient economy but one whose metrics are approaching Fed-preferred levels. Yesterday’s 7Y auction was strong, making 8 of 8 auctions this year where demand was strong enough to move yields lower. Data on Thursday also showed US gross domestic product expanded at a faster-than-forecast pace into the end of 2022. That encouraged hopes the world’s biggest economy can achieve a soft landing, but could temper expectations of a Federal Reserve pivot towards rate cuts later this year. “Stronger data may negate the argument for recession, but then, it means the Fed has to be more hawkish,” Boardman-Weston said. “Markets are in a bit of a Catch-22.” “You are seeing more and more companies turn cautious about the earnings outlook,” said Dan Boardman-Weston, chief investment officer at BRI Wealth Management. “If there is a recession, earnings will have to decline and price-to-earnings ratios have to come down.” Another dampener was the continued rout in companies linked to Indian billionaire Gautam Adani. His corporate empire has shed some $50 billion of market value in less than two sessions following an explosive report from short seller Hindenburg. The losses dragged India’s Nifty 50 index to three-month lows. In premarket trading, Intel shares plunged 11% after the chipmaker issued one of its weakest ever quarterly forecasts as a slump in personal-computer sales hits the business. Analysts say they were surprised by the magnitude of the weakness in the forecast. Visa shares rise as much as 1% in US premarket trading after the payments company’s earnings beat expectations, prompting analysts to raise their targets on the stock in the hope that the firm will be able to weather a weaker economic environment as travel rebounds and foreign exchange pressures ease. Bank stocks were lower in premarket trading, putting them on track to snap a two day winning streak. In corporate news, Wells Fargo kept Chief Executive Officer Charlie Scharf’s pay at $24.5 million for 2022. Meanwhile, South Korea’s financial regulator has fined US-based Citadel Securities almost $10 million over its use of high-frequency trades that allegedly disrupted the market. Here are some more notable premarket movers: Buzzfeed shares jump as much as 28% in US premarket trading, set to extend yesterday’s 120% rally on the digital-media firm’s plans to use OpenAI. Eastman Chemical’s results missed expectations and the chemicals group’s outlook implies an improvement across 2023 that may be viewed as ambitious, analysts say. Eastman shares fell 3% in extended trading after the update. Hasbro shares sink as much as 5.3% in US premarket trading after the toy and game maker reported weaker 4Q sales that fell short of analyst estimates. Jefferies says the quarter is just a “painful period” in the firm’s transformation, which will see it cut 1,000 jobs and reshuffle management. Truist Securities says the results raise concerns around the firm’s ability to grow in 2023. L3Harris outpaced estimates in its 4Q results and its outlook is good enough to match low expectations, analysts say. Shares in the aerospace and defense group rose 3% in after- hours trading. KLA Corp shares declined 5.5% in extended trading on Thursday after the semiconductor capital equipment company gave a third-quarter revenue forecast that was below expectations at the midpoint. Despite Friday's weakness, US stocks remain on track for their best month since July, while the Nasdaq 100 is on course for its fourth straight week of gains - its longest such streak since mid-August - as investors bet signs of easing inflation will prompt the Fed to ease the pace of rate hikes.  While the Fed is set to hike interest rates by 25 basis points next week — shifting away from last year’s bigger moves — hopes for end-2023 rate cuts are “a step too far” and may end up being frustrated, according to Erick Muller, head of product and investment strategy at Muzinich & Co. Ltd. “We will probably see the Fed say ‘we are entering the final phase but listen carefully guys: we will continue to raise rates,” Muller said. “A lot of volatility in rates will depend on the path of inflation from here.” Victoria Scholar, head of investment at Interactive Investor, said Friday’s declines also suggested some profit taking after the strong run of gains. “On top of that, there’s growing caution ahead of the PCE price index, which could provide some clues into the US inflation outlook at the Fed’s next move,” she said. Meanwhile, a note from Bank of America showed investors continued to prefer non-US equities in the week through Jan. 25. European stock funds had $3.4 billion of inflows, the note said citing EPFR Global data, while US funds saw just $300 million. And speaking of Europe, the continent's equity indexes were slightly higher on the day and on course for a weekly gain as earning season continues in earnest. The Stoxx 600 is up 0.1%, led by outperformance in the energy, construction and consumer product sectors. Travel and retail fall. The Stoxx index has gained almost 7% so far, but caution has seeped in as company earnings trickle out. Here are some of the biggest European movers on Friday: LVMH rose to a fresh record high, up 0.8% in early trading as the market focused on the prospects of the Chinese market reopening for the luxury behemoth rather than its weak 2H operating profit margins SSAB gains as much as 11% as the Swedish steelmaker’s higher-than-forecast dividend and plans for a buyback offset its 4Q earnings miss, according to analysts Husqvarna rises as much as 16% after Germany’s Bosch said it would acquire shares in the Swedish lawn-care and outdoor equipment firm, increasing its stake to about 12% Sainsbury climbs as much as 6.5%, the most intraday since November, after convenience-store operator Bestway Group said it has acquired or agreed to acquire a 3.45% stake in the grocer JCDecaux gains as much as 6.6% after reporting better- than-expected 4Q revenue, even though the outdoor advertising firm’s China business was hit by a drop in mobility Adidas rises as much as 2.5% after the sportswear brand was upgraded to buy at Warburg, which said the company’s low starting point will ensure earnings will improve Hennes & Mauritz drops as much as 7.9%, the most since May, after the clothing retailer reported fourth-quarter gross margin that missed analyst estimates Remy Cointreau falls as much as 3.2% after the premium spirits maker’s US inventories overshadowed 3Q organic revenue that beat the average estimate Scor drops as much as 8.2%, the most intraday since July, after Chief Executive Officer Laurent Rousseau resigned less than two years into the role Vestas pares declines of as much as 5.6% as analysts said external challenges continue to weigh on the firm, but that there are signs of improvements Earlier in the session, Asian stocks advanced for a sixth straight day, supported by mild risk-on sentiment ahead of US consumer spending data that would offer further clues on the Federal Reserve’s policy path. The MSCI Asia Pacific Index climbed as much as 0.6%, headed for its highest close since April. India’s benchmarks fell the most in the region, dragged by Adani Group shares. Hong Kong’s Hang Seng Index climbed despite increasing restrictions against China’s semiconductor industry. The gains in broader Asia track overnight moves in US markets, where stocks jumped as data showed that America’s economic growth is cooling somewhat and as tech shares rallied. Investors are awaiting data on US personal income and consumption as well as home sales later in the day, among the final set of data the Fed will analyze before setting rates next week. “The disinflation impulse is likely to stretch further, as has been evident from CPI releases lately, likely continuing to build a case for a 25bps rate hike by the Fed next week,” Saxo Capital Markets strategists wrote in a note. With Friday’s gains, the MSCI Asia gauge is set to cap its fifth weekly advance. Shares in South Korea were among the top gainers in the region while Vietnam’s stock measure jumped in a catch-up rally as traders returned from the Lunar New Year holidays. Mainland markets reopen Monday.  Next week is set to be one of the busiest this earnings season in Asia with over 200 companies reporting, according to Bloomberg-compiled data. Traders will assess the impact of higher interest rates and slowing demand on corporate profits in the region, with China’s reopening expected to provide some reprieve Japanese equities posted modest gains after a tech rally drove peers higher in New York, with investors assessing the implications of the latest economic data including a slowdown in US economic growth.  The Topix Index rose 0.2% to close at 1,982.66 in Tokyo, while the Nikkei advanced 0.1% to 27,382.56. Mitsubishi UFJ Financial Group Inc. contributed the most to the Topix Index gain, increasing 2.7%. “US GDP data showed that interest rate hike is slowly taking effect, and concerns about further hikes have receded,”said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. Indian stocks declined for a straight second session on Friday as a selloff in Adani Group shares deepened after a damaging report from a short-seller.  The S&P BSE Sensex shed 1.5% in Mumbai as traders returned from a one-day holiday, while the NSE Nifty 50 Index extended its drop to 1.6%. Friday’s drop was biggest single-day plunge since Dec. 23 for both gauges while their two-day slide was most since Sept. 26. For the week the indexes slipped more than 2% each and are more than 6% away from their all-time high level seen early December. The India VIX Index, a measure of volatility expectations, rose 18%, the most since Feb. 24, tracking plunge in the benchmark. S&P BSE AllCap Index, India’s broadest gauge by number of companies, saw 1006 companies declining while 158 advanced.  Adani Green Energy, Adani Transmission and Adani Total Gas all slumped 20% in the second trading session after US investment firm Hindenburg Research released a report alleging financial malpractice.  The fresh bout of selling happened as market participants evaluated the impact of US short-seller Hindenburg Research’s report on Adani Group, Nishit Master, a portfolio manager with Axis Securities said in note.  Markets will likely stabilize over the next few days as investors opt for bargain buying as good stocks with history of free cash flow generation are available at reasonable valuations, he added. Foreign investors have been sellers of Indian shares this month, taking out $1.6 billion through Jan. 24, after net selling $167 million in December.  The Dollar Index is flat ahead of US PCE data later today, trading mixed against its Group-of-10 peers, though currencies largely consolidated recent moves. The yen led gains and the pound and the Swedish krona were the worst performers and the pound underperformed its G10 rivals. The euro traded in a narrow 1.0866-1.0900 range. Volumes were 60% above recent averages Thursday as traders position for next week’s meetings by the Fed and the ECB. European bonds slipped, led by the belly, and 10-year German yields headed for their biggest weekly increase so far in 2023 The pound and gilts slipped, with the UK currency heading for its first week of losses against the dollar since the start of the year. BOE also meets next week The yen strengthened after Tokyo inflation data beat estimates, adding to expectations that the Bank of Japan may tweak its ultra-loose monetary policy. Tokyo consumer prices excluding fresh food rose 4.3% y/y in January, fastest pace since 1981; estimate 4.2% gain New Zealand dollar was steady after paring an earlier advance. Business confidence index rose to -52 in January from -70.2 in December, according to ANZ Bank New Zealand In rates, treasuries were pressured lower, following losses across core European rates with Italian bonds notably underperforming over the London session. US yields were cheaper by up to 6.5bp across 10-year sector which leads losses on the day, cheapening 5s10s30s fly by 2.6bp and steepening 2s10s by 3bp; in 10-year sector bunds lag by additional 1.5bp on the day while Italian bonds trade 5bp cheaper. US session focus switches to data with US personal spending and PCE deflator expected. In commodities, oil prices extended gains, benefiting signs of a resilient US economy and China’s continued recovery; WTI added 1.2% to trade near $82.00. Analysts at Goldman Sachs predicted crude prices to head to $100 a barrel later this year from current levels just above $80. Spot gold is little changed at $1,928/oz. Gas markets were pressured as Freeport's Texas LGN plant has received approval to restart alongside forecasts for elevated European temperatures next week. EU proposed a price cap on Russian premium oil products of USD 100/bbl and USD 45/bbl on discounted oil products, while EU governments are to discuss the proposals today before entry into force on February 5th. Bitcoin is little changed and holding around the USD 23k mark, with fresh catalysts limited and focus on upcoming key US data. Looking at the day ahead, data releases from the US include personal income, personal spending and the Fed's preferrered inflation indicator, the core PCE, as well as December’s pending home sales and the University of Michigan’s final consumer sentiment index for January. Over in Europe, there’s also French consumer confidence for January, the Euro Area money supply for December. Lastly, earnings releases include American Express, Charter Communications and Chevron. Market Snapshot   S&P 500 futures down 0.3% to 4,061.25 MXAP up 0.4% to 170.70 MXAPJ up 0.2% to 560.17 Nikkei little changed at 27,382.56 Topix up 0.2% to 1,982.66 Hang Seng Index up 0.5% to 22,688.90 Shanghai Composite up 0.8% to 3,264.81 Sensex down 1.5% to 59,300.13 Australia S&P/ASX 200 up 0.3% to 7,493.83 Kospi up 0.6% to 2,484.02 STOXX Europe 600 up 0.1% to 454.54 German 10Y yield little changed at 2.25% Euro little changed at $1.0884 Brent Futures up 1.4% to $88.67/bbl Gold spot down 0.1% to $1,927.47 U.S. Dollar Index little changed at 101.84 Top Overnight News from Bloomberg Back-to-back interest-rate increases of 50 basis points are approaching from the European Central Bank, whose battle with persistent inflation will see it hike borrowing costs until May, according to a Bloomberg survey of economists The IMF said Sweden might have to require banks to hold more capital and increase funding for the financial regulator, as risks rise in the country’s property sector Japan and the Netherlands are poised to join the US in limiting China’s access to advanced semiconductor machinery, forging a powerful alliance that will undercut Beijing’s ambitions to build its own domestic chip capabilities, according to people familiar with the negotiations Nearly a year into an invasion that was supposed to take weeks, Vladimir Putin is preparing a new offensive in Ukraine, at the same time steeling his country for a conflict with the US and its allies that he expects to last for years Putin demanded his government to come up with a plan for re-jigging Russia’s oil levies in a move to offset the effects from western energy sanctions on the nation’s budget revenues A more detailed look at global markets courtesy of Newsquawk APAC stocks traded with a positive bias after the mostly strong US data releases, albeit with advances capped as participants also digested earnings including disappointing results from Intel, and firm Tokyo CPI data. ASX 200 was marginally higher on return from holiday with the index propped up by tech and financials. Nikkei 225 lacked decisiveness following firm Tokyo CPI data in which core inflation rose at its fastest pace since 1981 and further added to the pressure for the BoJ to rethink its ultra-easy policy. Hang Seng was choppy and struggled to sustain early gains after data showed a wider contraction in Hong Kong’s exports and with Japan and the Netherlands set to join the US’s chip curbs on China. Top Asian News Japan and the Netherlands agreed to join the US on China chip curbs with US, Dutch and Japanese officials set to conclude talks as early as today, while the Netherlands is to expand restrictions on ASML (ASML NA) and Japan will set similar limits on Nikon (7731 JT), according to Bloomberg and Reuters. Hong Kong Dollar Bears Stage a Comeback as Funding Costs Slide India Regulator to Study Hindenburg Report on Adani Group: Rtrs Apple’s iPhone Dominated China Last Quarter Despite Disruptions European bourses are near unchanged levels, Euro Stoxx 50 +0.3%, though a very mild positive skew is seen in quiet post-earnings newsflow. LVMH slips with attention on lower margins, Intel (-9.5% pre-market) lags after a miss on the headline metrics and a weak market outlook. US futures are lower across the board with the NQ -0.5% lagging post-INTC; focus for the session ahead is firmly on US PCE before next week's hefty Central Bank docket. Top European News UK Chancellor Hunt says the best cut in tax right now would be a cut in inflation, today's announcement is more of a general plan/guide, will need to wait for budgetary events for further details. Should aim for the most competitive tax regime of any major nation but sound money needs to come first. Need restraint in public spending. Unlikely that we will have the headroom to cut business taxes in March. 7 EU nations Finance Ministers have sent a letter to Trade Commissioner Dombrovskis have pushed back on plans for "permanent or excessive non-targeted subsidies" in response to the US green subsidies/Inflation Reduction Act, via Politico. IMF Article IV review of Sweden: mild recession likely, 2023 growth -0.3%. HICP expected to moderate to 6.5% in 2023. Strong employment is a positive, should somewhat offset household burden from rates/inflation Vestas Sees More Pain Ahead for Beleagured Wind Industry Sainsbury Rises After Bestway Group Buys Stake, May Add More Libya Says More Deals to Follow Eni’s $8 Billion Gas Investment Ionos Owners See IPO Proceeds Raising Up to €543 Million FX DXY is firmer but somewhat mixed vs peers, with the index sub-102.00 as the JPY outperforms after hot Tokyo CPI. At best, USD/JPY tested but failed to move below 129.50 to the downside, and remains towards the lower-end of a 129.51-130.26 range. Overall, EUR, CAD and CHF are little changed awaiting impetus from the afternoon US data docket with specific developments elsewhere limited; pivoting, 1.0880, 1.3320 and 0.92 respectively. GBP is the main laggard for no obvious/specific reason, Cable has struggled to make any move above 1.24 stick, with EUR/GBP above 0.8800 at best though the move stalled ahead of the 0.8811 21-DMA. Fixed Income Core benchmarks have continued to slip despite a limited early-doors bounce/ any positivity from another well-received US auction. Bunds have given up a handful of touted interim levels during their descent to a 137.09 low, with the associated yield above 2.25%, though shy of the 2.27% 11th January best. Gilts fell to a 104.30 trough, but remain above recent lows, while the UST decline has seemingly paused for breath above 114.15 ahead of US PCE. Commodities WTI and Brent March futures have been moving higher since the European cash equity open, with the former back above USD 82/bbl (vs low USD 81.08/bbl) and the latter north of USD 88.50/bbl (vs low USD 87.55/bbl), in limited fresh newsflow. Gas markets are pressured as Freeport's Texas LGN plant has received approval to restart alongside forecasts for elevated European temperatures next week. EU proposed a price cap on Russian premium oil products of USD 100/bbl and USD 45/bbl on discounted oil products, while EU governments are to discuss the proposals today before entry into force on February 5th. Strikes at TotalEnergies (TTE FP) sites have been suspended, will be proposed again on January 31st, via CGT Union. Spot gold is little changed in narrow sub-15/oz parameters with any potential upside capped by the firmer USD, base metals are mixed but contained overall. Geopolitics Japan is to impose additional sanctions against Russian individuals and entities, while it will impose an additional export ban on military-related items to Russia as part of sanctions. according to Reuters. US Event Calendar 08:30: Dec. Personal Income, est. 0.2%, prior 0.4% Personal Spending, est. -0.1%, prior 0.1% Real Personal Spending, est. -0.1%, prior 0% 08:30: Dec. PCE Deflator MoM, est. 0%, prior 0.1% PCE Deflator YoY, est. 5.0%, prior 5.5% PCE Core Deflator YoY, est. 4.4%, prior 4.7% PCE Core Deflator MoM, est. 0.3%, prior 0.2% 10:00: Jan. U. of Mich. Sentiment, est. 64.6, prior 64.6 Current Conditions, est. 68.6, prior 68.6 Expectations, est. 62.0, prior 62.0 1 Yr Inflation, est. 4.0%, prior 4.0%; 5-10 Yr Inflation, est. 3.0%, prior 3.0% 10:00: Dec. Pending Home Sales YoY, est. -35.4%, prior -38.6% Dec. Pending Home Sales (MoM), est. -1.0%, prior -4.0% 11:00: Jan. Kansas City Fed Services Activ, prior -5 DB's Jim Reid concludes the overnight wrap I’m relieved to nearly make it to the end of the week in one piece. Whilst my fever has gone I’m still weak and at home there’s 2 sets of penicillin being taken, one perforated ear drum, and a wife who went to bed at just after 7pm last night. In the olden days there would be a big cross on our door. We are supposed to be going to a containment room tonight, where you get locked into a room for an hour and have to find a way out by deciphering all the clues with your team. Sounds like hard work! Markets deciphered a lot of mixed clues yesterday and, after some cause for concerns, decided that it was easier to shrug it all off and drive equities to fresh 2023 highs. Earnings also helped the mood, to be fair. The S&P 500 closed up +1.10% (YTD highs), just as credit spreads tightened and oil prices recovered from their losses earlier in the week. We still think we are in a positive sweet spot but there was certainly stuff to worry about in the US data yesterday. It depends on whether you saw the glass half full or half empty element of it. When it came to those data releases, an important one was the Q4 GDP release from the US, which showed the economy grew by an annualised +2.9% at the end of last year (vs. +2.6% expected). That’s certainly some distance from a recession and there was lots of focus on it being above consensus. However, a key point of caution is that 1.5pp of it was attributable to inventory growth, with net exports and the government adding 0.6pp each. Final sales to private domestic purchasers was soft and showed signs of grinding to a halt. So the details weren’t as flattering as the headline number might suggest at first glance. In the meantime though, the report also offered confirmation that inflation was slowing down, with the PCE price index that the Fed targets up by an annualised +3.2% in Q4, the slowest since Q4 2020, whilst core PCE was up +3.9%, the slowest since Q1 2021. It wasn’t just the GDP release that aided hopes of a soft landing, however, as the weekly initial jobless claims for the week ending January 21 came down to 186k (vs. 205k expected). That’s their lowest level since April, and this isn’t just a blip either, since the 4-week moving average fell beneath 200k for the first time since May. Continuing claims were up to +1,675k (survey +1,658k) though so a bit mixed. Net, net the market took the more positive side of the ledger though and investors moved to price in slightly more central bank rate hikes over the coming months. For instance, the rate priced in by Fed funds futures for the December meeting was up by +3.8bps to 4.47%. Similarly, the ECB rate priced for December was also up +4.7bps. That led to a noticeable rise in sovereign bond yields, with the 10yr Treasury yield up +5.3bps on the day to 3.495%, followed up by a +3.13bps move overnight in Asia to 3.53%. The US dollar (+0.19%) also advanced into the afternoon before giving back some gains toward the end of the US session. In Europe it was much the same story, with yields on 10yr bunds (+5.8bps), OATs (+7.7bps) and BTPs (+8.6bps) all posting a solid increase as we approach next week’s round of central bank meetings. More details on that equity rally now. It was a big roundtrip for the S&P 500, which had been up +0.91% in the first 15 minutes of trading, before being down nearly -0.1% on the day just 90 minutes into trading. Once all the data was absorbed risk rallied through the rest of the day right through the European close. In Europe the STOXX 600 came down from its own intraday high of +0.76% to end at +0.42%, but it missed out on the last lag of the rally last night. On a sectoral basis, energy stocks (+3.32%) were the biggest outperformer in the S&P, aided by a +1.89% rise in Brent crude oil prices that took oil back to $87.47/bbl and then another +0.4% higher to $87.82/bbl in early trading in Asia. Megacap tech stocks were another winner, with the FANG+ index up +3.02% to its highest level since September thanks to a surge in Tesla (+10.97%) after its earnings release. However, some of the more defensive sectors like consumer staples (-0.28%) lagged behind the broader index. Intel was down -9.7% in after-market trading following its earnings announcement. The chipmaker surprised investors by offering a negative earnings forecast for Q1’23 and the lowest quarterly revenue target since 2010. The company has pointed to poor PC sales as the main driver of the expected weakness. Visa was trading +1.1% higher in post-market trading despite seeing purchase volumes rise less than expected in Q4’22, and expectations that higher prices will slow consumer demand. Against that backdrop, US stock futures are indicating a negative start with contracts tied to the S&P 500 (-0.29%), as well as the NASDAQ 100 (-0.61%), ticking down. Asian equity markets are struggling to gain traction this morning despite that strong tech-led handover from Wall Street overnight. Across the region, the KOSPI (+0.70%) is leading gains with the Nikkei (-0.03%) and the Hang Seng (-0.05%) slightly below the flatline. Elsewhere, markets in China are closed for the Lunar New Year. In early morning data, Tokyo’s CPI for January came out with an upside surprise as headline inflation advanced to +4.4% year-on-year (vs. +4.0% expected), hitting a four-decade high. It followed a downwardly revised +3.9% increase in the previous month. Meanwhile, the Japanese Yen (+0.15%) is positively responding against the dollar, trading at $130.03 as the stronger inflation data reinforced market expectations that increasing quickening inflation could push the Bank of Japan to move away from its ultra-easy policy. Looking at yesterday’s other data, US durable goods orders were up by +5.6% in December (vs. +2.5% expected), although excluding transportation they were much as expected at -0.1% (vs. -0.2% expected). Otherwise, new home sales in December came in at an annualised 616k (vs. 612k expected), with a downward revision in November’s figure to 602k (vs. 640k previously). Lastly, the Kansas City Fed’s manufacturing activity index beat expectations at -1 (vs. -8 expected), which is the first increase in that measure in 6 months. To the day ahead now, and data releases from the US include personal income, personal spending and PCE for December, as well as December’s pending home sales and the University of Michigan’s final consumer sentiment index for January. Over in Europe, there’s also French consumer confidence for January, the Euro Area money supply for December. Lastly, earnings releases include American Express, Charter Communications and Chevron. Tyler Durden Fri, 01/27/2023 - 08:07.....»»

Category: blogSource: zerohedge14 hr. 11 min. ago

Is iShares Investment Grade Bond Factor ETF (IGEB) a Strong ETF Right Now?

Smart Beta ETF report for IGEB Making its debut on 07/11/2017, smart beta exchange traded fund iShares Investment Grade Bond Factor ETF (IGEB) provides investors broad exposure to the Investment Grade Corporate Bond ETFs category of the market.What Are Smart Beta ETFs?Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.Fund Sponsor & IndexThe fund is managed by Blackrock, and has been able to amass over $205.61 million, which makes it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. Before fees and expenses, IGEB seeks to match the performance of the BlackRock Investment Grade Enhanced Bond Index.The BlackRock Investment Grade Enhanced Bond Index comprises of U.S. dollar-denominated, investment-grade corporate bonds.Cost & Other ExpensesWhen considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.Operating expenses on an annual basis are 0.18% for IGEB, making it on par with most peer products in the space.It has a 12-month trailing dividend yield of 3.48%.Sector Exposure and Top HoldingsWhile ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.Looking at individual holdings, Jpmorgan Chase & Co-2.74%-10-15-30 accounts for about 0.56% of total assets, followed by Jpmorgan Chase & Co-5.00%-12-31-49 and Bank Of America Corp-5.88%-12-31-49.Its top 10 holdings account for approximately 5.32% of IGEB's total assets under management.Performance and RiskYear-to-date, the iShares Investment Grade Bond Factor ETF has added roughly 4.34% so far, and is down about -8.25% over the last 12 months (as of 01/27/2023). IGEB has traded between $41.26 and $51.07 in this past 52-week period.IGEB has a beta of 0.27 and standard deviation of 8.68% for the trailing three-year period. With about 413 holdings, it effectively diversifies company-specific risk.AlternativesIShares Investment Grade Bond Factor ETF is not a suitable option for investors seeking to outperform the Investment Grade Corporate Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.Vanguard ShortTerm Corporate Bond ETF (VCSH) tracks Bloomberg Barclays U.S. 1-5 Year Corporate Bond Index and the Vanguard Total International Bond ETF (BNDX) tracks Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index. Vanguard ShortTerm Corporate Bond ETF has $41.28 billion in assets, Vanguard Total International Bond ETF has $45.82 billion. VCSH has an expense ratio of 0.04% and BNDX charges 0.07%.Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Investment Grade Corporate Bond ETFs.Bottom LineTo learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report iShares Investment Grade Bond Factor ETF (IGEB): ETF Research Reports Vanguard ShortTerm Corporate Bond ETF (VCSH): ETF Research Reports Vanguard Total International Bond ETF (BNDX): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacks14 hr. 55 min. ago

Elon Musk banks almost $12B of Tesla money in seven days

While Forbes lists Elon Musk’s overall worth at $168.7 billion, data compiled by the Dow Jones Market Data Group shows Musk earned $11.98 billion over the last seven days from his Tesla holdings......»»

Category: topSource: foxnews15 hr. 11 min. ago

Why Bitcoin & Crypto ETFs are Surging

Crypto ETFs, 2022's worst performers, are now top-performing funds year-to-date. (0:45) - Is The Cryptocurrency Winter Finally Over?(5:30) - The Collapse of FTX: What Will Be The Long Term Damage?(10:50) - Breaking Down The Bitcoin Mining Industry: How Much Profit Is There For The Taking?(17:20) - Understanding Blockchain Technology: How Can This Benefit Other Industries?(24:00) - What Are The Best Ways To Invest Into The Cryptocurrency Industry?(33:05) - Episode Roundup: AMD, NVDA, CAMT, IMXI                Podcast@Zacks.com In this episode of ETF Spotlight, I speak with David Bartosiak, Zacks Stock Strategist and the Editor of Zacks Blockchain Innovators newsletter, about cryptocurrencies and blockchain related stocks.Bitcoin price crashed about 65% last year and crypto linked ETFs had cratered as investors dumped risky assets due to changes in the macroeconomic environment. The Viridi Bitcoin Miners ETF (RIGZ) lost 87% and was the worst performing ETF of 2022.Crypto stocks have rebounded strongly as Bitcoin has jumped about 40% this year. Crypto related ETFs are the best performing products among equity ETFs year-to-date.The Valkyrie Bitcoin Miners ETF WGMI is up almost 100%, thanks to surge in stocks likeBitfarms BITF and Argo Blockchain ARBK. NVIDIA NVDA and Advanced Micro Devices AMD are also among WGMI’s holdings.The ProShares Bitcoin Strategy ETF BITO and Short Bitcoin Strategy ETF BITI provide long and short exposures to bitcoin-linked returns using futures that trade on regulated exchanges.Blockchain technology has the potential to revolutionize many industries as it provides a secure way to record and verify transactions. The Amplify Transformational Data Sharing ETF BLOK invests in companies that are involved in developing or using blockchain technologies.Dave also likes Camtek CAMT and International Money Express IMXI, which he owns in the Blockchain Innovators portfolio.Tune in to the podcast to learn more.Make sure to be on the lookout for the next edition of the ETF Spotlight and remember to subscribe! If you have any comments or questions, please email podcast@zacks.com.  Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Camtek Ltd. (CAMT): Free Stock Analysis Report ProShares Short Bitcoin Strategy ETF (BITI): ETF Research Reports Amplify Transformational Data Sharing ETF (BLOK): ETF Research Reports INTERNATIONAL MONEY EXPRESS, INC. (IMXI): Free Stock Analysis Report Bitfarms Ltd. (BITF): Free Stock Analysis Report Argo Blockchain PLC Sponsored ADR (ARBK): Free Stock Analysis Report ProShares Bitcoin Strategy ETF (BITO): ETF Research Reports Valkyrie Bitcoin Miners ETF (WGMI): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 26th, 2023

Black And White Gold + BRICS And Mortars = Inflation

Black And White Gold + BRICS And Mortars = Inflation By Michael Every of Rabobank Black gold, white gold = inflation Trigger warning: today’s Daily again references big picture issues and literal triggers, rather than the up-and-down xbp or y% of assets a, b, or c. Except in one regard: markets were juiced yesterday by a major US energy firm announcing it would start share buy-backs on a huge scale. That is despite the backdrop of rising refinery crack spreads and worries about the future upwards trajectory of energy prices. Regardless, financialisation again takes priority over productive investment and production - although the US firm involved points to the regulatory backdrop steering towards a green transition as part of reason for its choice. On which, the Guardian(!) yesterday “Revealed:” --though it’s no revelation to some-- “How US transition to electric cars threatens environmental havoc.” In short, the required lithium is three times current global production, with appalling environmental side-effects and destruction of water tables; and that’s just for the US, not the growing global market. The Guardian argues the only sustainable solution is to build more walkable US cities with public transport and bicycle options. Which rules out the American Way; and that of Canada and Mexico; Latin America; obviously the Middle East; most of Asia; Australia; even fluffy New Zealand; and Africa too, as it develops. Indeed, we would need an unfeasibly expensive economic geography-economic model redesign to make everywhere work like Amsterdam, nice as that would be. Logically, therefore production of either black gold, oil, and/or white gold, lithium, is going to be needed on a vast, and environmentally damaging scale ahead. Yet the market is celebrating a return to financialization and share buybacks that produces nothing but inequality and, for the real economy, volatility. BRICS and mortars = inflation That backdrop also has enormous geopolitical and geoeconomic implications. Given where many key commodities reside, we recently saw the proposed launch of a pan-LatAm currency, the ‘Sur’, to be used for international trade settlement to replace the US dollar. Russia’s Foreign Minister Lavrov is suggesting 2023 might also see the launch of a new BRICS currency tied to gold at the summit to be held in South Africa at a later date. Some think that if new bricks in an anti-US wall mean the US dollar is doomed; and gold is picking up of late, with China stepping up its purchases (even if total holdings are still miniscule compared to dollars), which some think makes that case. However, this new paradigm doesn’t recall how gold worked when it was around – and I mean the true gold standard prevailing before WW1, not the ‘let’s pretend we are on  gold’ that was evident after WW1 and after WW2, both of which broke down. In the ‘gold old days’, it was used for international trade settlement, and local paper money could be redeemed for it. Banks still made fiat loans. Governments often still spent far more than they taxed. If the economy overheated, imports flooded in, and gold flooded out. Devaluation of the paper currency vs. gold followed, so imports got more expensive and exports cheaper. The same thing happened if other countries raised the deposit rates they paid on gold above those elsewhere. To prevent painful devaluations, gold deposit rates needed to rise to entice foreign gold back into the country, and/or public spending had to be slashed, or taxes raised, to cool things down. Overlooking the fact that inflation therefore swung wildly from high rates to deep deflation, because gold was the target, not stable prices, this arrangement was no different from the neoliberalism of the IMF and Wall Street. Brave, anti-imperialist, anti-Western BRICS governments thinking a new, more humanistic path can be paved with gold --with public transport, bicycle lanes, and walkable cities-- are deluding themselves. It’s a policy straitjacket. Globally, it is also a black or white zero-sum game that will see the US weaponize itself, and the dollar, further. The concept is the BRICS keep their local currencies but switch to a gold-backed currency for trade settlements: freedom! Except you can’t run trade deficits on gold without having an ‘IMF’ policy response forced on you. So, logically: The BRICS would have to force the West they export to move onto gold too, and watch them suffer devaluation, deprivation, and desperation for once – how bullish for markets!; or The BRICS would accept dollars as settlement, then sell them in the market for the new gold-backed currency – to whom? No BRICS would want dollars, and the West would not use gold; or The BRICS would have to decouple from trading with the West and sell all their output to each other… while balancing intra-bloc trade to avoid anyone becoming a Germany to anyone else's Greece. That’s despite them being commodity exporters, with the exception of China. Furthermore, this is all going to happen while the West watches impotently on, not seeing an existential threat emerging, even to the wolves of Wall Street. The bloodthirsty world-dominating US imperialists some intellectual BRICS fans decry are also structurally incapable of doing anything at all to snuff out evident threats to their franchise from the disenfranchised. True, the latest heralding of energy-sector share buybacks and the usual inanities at Davos suggest that could be the case. Yet, as always, I urge you to look elsewhere, and at the military. Western Leopard 2 tanks will now trundle towards Ukraine, although in uncertain, but certainly low numbers. More importantly, the New York Times tweets: “To keep Ukraine's howitzers firing, the Pentagon will increase its production of 155-mm shells six-fold, to 90,000 rounds per month - raising ammunition production in the US to the highest levels since the Korean War.” Moreover, the Washington Post has an editorial about the $858bn Pentagon budget, and how it adopts wartime purchasing practices. In particular, a provision allows the US military to sign “emergency” multiyear, non-competitive agreements to produce munitions, missiles, rockets, and mortars, aimed at cost-saving via bulk buying, two things the Pentagon has failed badly at for years. The Post also notes the budget proposal does far more than that: “It lays the foundation for a vastly revitalised defence industrial base – and does so with one eye on the People’s Republic of China.” 25 new mass-assembly lines will soon roll out weapons quantities “far in excess of what is required to replenish Ukraine.” 700 HIMARS systems are ordered vs. the 20 sent to aid Kyiv, and 3,600 of two kinds of anti-ship missile, more appropriate for the South China than the Black Sea. Concurrently, there is also a lobbying effort underway for the US to start to rebuild its merchant marine, as well as reversing planned cuts to the US Navy.      Strategically, Vegetius would argue this is the right thing for the US to do, and the Pentagon specifically echoes him in stating, “Production is deterrence.” More US production of mortars is also a response to the BRICS, and sits alongside the CHIPS Act and Inflation Reduction Act that together bring tech production back home. However, this boost in production is also inflationary before it eventually moderates via a domestic supply-side response. I repeat that until now the Ukraine war, and the wider new Cold War, have been fought with INVENTORY run-downs; now they will have to shift to PRODUCTION, reordering economies in the process. This surge in Pentagon demand against supply constraints in the US defence-industrial sector is going to have a similar effect to that of Covid stimulus (which a recent Fed paper suggests added 2.6 percentage points to headline CPI). That suggests a risk that the Fed might have to do more on rates than some think it will after its upcoming pause (which the market just got excited about hearing the BOC use too). Indeed, as just shown, an interest rate response was a past method of draining gold from rival countries, and it’s true for the Fed today too; and if means less financialisation and more production, all the better. (Which may be why Wall Street really won’t talk about this.) Plus, the Fed has swap lines it can use, or not, within the hegemonic Eurodollar system. Also, even if the Fed ignores the Pentagon --highly unlikely-- and opts for more financialization, the drop in production --and geopolitical drop in the dollar-- would also prove inflationary. Again, that would shock some in markets. Okay, that’s enough references to big picture issues and literal triggers: please go focus on the up-and-down xbp or y% of assets a, b, or c. Tyler Durden Thu, 01/26/2023 - 13:30.....»»

Category: worldSource: nytJan 26th, 2023

Tesla Did Not Buy or Sell Any Bitcoin in the Fourth Quarter

The company reported $34 million in impairment charges to its bitcoin holdings, however......»»

Category: forexSource: coindeskJan 25th, 2023