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JPMorgan boss Jamie Dimon says the Fed could hike interest rates as many as 7 times this year

"My view is a pretty good chance there will be more than four," Dimon said during the bank's earnings call Friday. "It could be six or seven." Jamie Dimon, chairman and CEO of JPMorgan ChaseMisha Friedman/Getty Images JPMorgan CEO Jamie Dimon expects the central bank to raise rates six to seven times in 2022. Dimon's forecast is roughly double compared to other Wall Street predictions.   The Fed has signaled it would begin hiking rates starting in March.  Sign up here for our daily newsletter, 10 Things Before the Opening Bell. JPMorgan's top executive Jamie Dimon said the Federal Reserve could be more aggressive than many may have anticipated when it comes to fighting inflation. "My view is a pretty good chance there will be more than four," Dimon said during the bank's earnings call Friday. "It could be six or seven."The CEO on Tuesday told CNBC he'd be surprised if the central bank hiked rates only four times, especially since he expects inflation to remain well above the central bank's 2% target by the end of 2022.Higher interest rates, Dimon said, would cause investors to "redo projections and look at the effective interest rate and businesses differently than they did before."Dimon's forecast is roughly double that of other Wall Street commentators.  Goldman Sachs on Monday said it expects the Fed to raise rates four times this year after the US unemployment rate ticked down in December. The central bank currently holds almost $9 trillion worth of bonds, mainly Treasuries and mortgage-backed securities. Deutsche Bank is also penciling in four rate rises this year while Bank of America sees three.Stock markets have been roiled in early 2022 by expectations that the Fed will repeatedly hike rates and start reducing its balance sheet, bringing an end to the the central bank's massive support of the US economy through the pandemic. The Fed's latest projections see it taking a more dovish course of action than most Wall Street economists expect. Estimates published after the Federal Open Market Committee's December meeting show officials expect to hike interest rates three times in 2022 and another three times next year.The new projections followed a meeting in which officials doubled the pace for shrinking its emergency asset purchases. The new schedule sets the program up to end in March, hinting the first rate increase could arrive as early as the FOMC's March meeting.Fed Chair Jerome Powell hinted during his Tuesday confirmation hearing that the central bank is open to raising rates further in 2022 should inflation prove more stubborn than expected. The economy "no longer needs this very highly accommodative stance" to continue its recovery, especially with inflation running as high as it has, Powell told the Senate Banking Committee."If we have to raise interest rates more over time, then we will," the chair said. "To get a long expansion, we're going to need price stability."Powell also reiterated his forecast that inflation will start to ease by the second half of 2022. Data out Wednesday showed prices soaring 7% year-over-year in December, marking the fastest pace since 1982 and accelerating slightly from November's rate. Yet month-over-month growth slowed for the second straight month, signaling inflation could've peaked in the fourth quarter.It would take a historic slowdown for inflation to hit the Fed's 2% target by the end of 2022. Yet with the supply-chain mess healing and Americans' spending sharply slowing, it might not take the seven rate hikes Dimon sees on the horizon.Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 14th, 2022

2021 Greatest Hits: The Most Popular Articles Of The Past Year And A Look Ahead

2021 Greatest Hits: The Most Popular Articles Of The Past Year And A Look Ahead One year ago, when looking at the 20 most popular stories of 2020, we said that the year would be a very tough act to follow as there "could not have been more regime shifts, volatility moments, and memes than 2020." And yet despite the exceedingly high bar for 2021, the year did not disappoint and proved to be a successful contender, and if judging by the sheer breadth of narratives, stories, surprises, plot twists and unexpected developments, 2021 was even more memorable and event-filled than 2020. Where does one start? While covid was the story of 2020, the pandemic that emerged out of a (Fauci-funded) genetic lab team in Wuhan, China dominated newsflow, politics and capital markets for the second year in a row. And while the biggest plot twist of 2020 was Biden's victory over Trump in the presidential election (it took the pandemic lockdowns and mail-in ballots to hand the outcome to Biden), largely thanks to Covid, Biden failed to hold to his biggest presidential promise of defeating covid, and not only did he admit in late 2021 that there is "no Federal solution" to covid waving a white flag of surrender less than a year into his presidency, but following the recent emergence of the Xi, pardon Omicron variant, the number of covid cases in the US has just shattered all records. The silver lining is not only that deaths and hospitalizations have failed to follow the number of cases, but that the scaremongering narrative itself is starting to melt in response to growing grassroots discontent with vaccine after vaccine and booster after booster, which by now it is clear, do nothing to contain the pandemic. And now that it is clear that omicron is about as mild as a moderate case of the flu, the hope has finally emerged that this latest strain will finally kill off the pandemic as it becomes the dominant, rapidly-spreading variant, leading to worldwide herd immunity thanks to the immune system's natural response. Yes, it may mean billions less in revenue for Pfizer and Moderna, but it will be a colossal victory for the entire world. The second biggest story of 2021 was undoubtedly the scourge of soaring inflation, which contrary to macrotourist predictions that it would prove "transitory", refused to do so and kept rising, and rising, and rising, until it hit levels not seen since the Volcker galloping inflation days of the 1980s. The only difference of course is that back then, the Fed Funds rate hit 20%. Now it is at 0%, and any attempts to hike aggressively will lead to a horrific market crash, something the Fed knows very well. Whether this was due to supply-chain blockages and a lack of goods and services pushing prices higher, or due to massive stimulus pushing demand for goods - and also prices - higher, or simply the result of a record injection of central bank liquidity into the system, is irrelevant but what does matter is that it got so bad that even Biden, facing a mauling for his Democratic party in next year's midterm elections, freaked out about soaring prices and pushed hard to lower the price of gasoline, ordering releases from the US Strategic Petroleum Reserve and vowing to punish energy companies that dare to make a profit, while ordering Powell to contain the surge in prices even if means the market is hit. Unfortunately for Biden, the market will be hit even as inflation still remain red hot for much of the coming year. And speaking of markets, while 2022 may be a year when the piper finally gets paid, 2021 was yet another blockbuster year for risk assets, largely on the back of the continued global response to the 2020 covid pandemic, when as we wrote last year, we saw "the official arrival of global Helicopter Money, tens of trillions in fiscal and monetary stimulus, an overhaul of the global economy punctuated by an unprecedented explosion in world debt, an Orwellian crackdown on civil liberties by governments everywhere, and ultimately set the scene for what even the World Economic Forum called simply "The Great Reset." Yes, the staggering liquidity injections that started in 2020, continued throughout 2021 and the final tally is that after $3 trillion in emergency liquidity injections in the immediate aftermath of the pandemic to stabilize the world, the Fed injected almost $2 trillion in the subsequent period, of which $1.5 trillion in 2021, a year where economists were "puzzled" why inflation was soaring. This, of course, excludes the tens of trillions of monetary stimulus injected by other central banks as well as the boundless fiscal stimulus that was greenlighted with the launch of helicopter money (i.e., MMT) in 2020. It's also why with inflation running red hot and real rates the lowest they have ever been, everyone was forced to rush into the "safety" of stocks (or stonks as they came to be known among GenZ), and why after last year's torrid stock market returns, the S&P rose another 27% in 2021 and up a staggering 114% from the March 2020 lows, in the process trouncing all previous mega-rallies (including those in 1929, 1938, 1974 and 2009)... ... making this the third consecutive year of double-digit returns. This reminds us of something we said last year: "it's almost as if the world's richest asset owners requested the covid pandemic." A year later, we got confirmation for this rhetorical statement, when we calculated that in the 18 months since the covid pandemic, the richest 1% of US society have seen their net worth increase by over $30 trillion. As a result, the US is now officially a banana republic where the middle 60% of US households by income - a measure economists use as a definition of the middle class - saw their combined assets drop from 26.7% to 26.6% of national wealth as of June, the lowest in Federal Reserve data, while for the first time the super rich had a bigger share, at 27%. Yes, the 1% now own more wealth than the entire US middle class, a definition traditionally reserve for kleptocracies and despotic African banana republics. It wasn't just the rich, however: politicians the world over would benefit from the transition from QE to outright helicopter money and MMT which made the over monetization of deficits widely accepted in the blink of an eye. The common theme here is simple: no matter what happens, capital markets can never again be allowed to drop, regardless of the cost or how much more debt has to be incurred. Indeed, as we look back at the news barrage over the past year, and past decade for that matter, the one thing that becomes especially clear amid the constant din of markets, of politics, of social upheaval and geopolitical strife - and now pandemics -  in fact a world that is so flooded with constant conflicting newsflow and changing storylines that many now say it has become virtually impossible to even try to predict the future, is that despite the people's desire for change, for something original and untried, the world's established forces will not allow it and will fight to preserve the broken status quo at any price - even global coordinated shutdowns - which is perhaps why it always boils down to one thing - capital markets, that bedrock of Western capitalism and the "modern way of life", where control, even if it means central planning the likes of which have not been seen since the days of the USSR, and an upward trajectory must be preserved at all costs, as the alternative is a global, socio-economic collapse. And since it is the daily gyrations of stocks that sway popular moods the interplay between capital markets and politics has never been more profound or more consequential. The more powerful message here is the implicit realization and admission by politicians, not just Trump who had a penchant of tweeting about the S&P every time it rose, but also his peers on both sides of the aisle, that the stock market is now seen as the consummate barometer of one's political achievements and approval. Which is also why capital markets are now, more than ever, a political tool whose purpose is no longer to distribute capital efficiently and discount the future, but to manipulate voter sentiments far more efficiently than any fake Russian election interference attempt ever could. Which brings us back to 2021 and the past decade, which was best summarized by a recent Bill Blain article who said that "the last 10-years has been a story of massive central banking distortion to address the 2008 crisis. Now central banks face the consequences and are trapped. The distortion can’t go uncorrected indefinitely." He is right: the distortion will eventually collapse especially if the Fed follows through with its attempt rate hikes some time in mid-2020, but so far the establishment and the "top 1%" have been successful - perhaps the correct word is lucky - in preserving the value of risk assets: on the back of the Fed's firehose of liquidity the S&P500 returned an impressive 27% in 2021, following a 15.5% return in 2020 and 28.50% in 2019. It did so by staging the greatest rally off all time from the March lows, surpassing all of the 4 greatest rallies off the lows of the past century (1929,1938, 1974, and 2009). Yet this continued can-kicking by the establishment - all of which was made possible by the covid pandemic and lockdowns which served as an all too convenient scapegoat for the unprecedented response that served to propel risk assets (and fiat alternatives such as gold and bitcoin) to all time highs - has come with a price... and an increasingly higher price in fact. As even Bank of America CIO Michael Hartnett admits, Fed's response to the the pandemic "worsened inequality" as the value of financial assets - Wall Street -  relative to economy - Main Street - hit all-time high of 6.3x. And while the Fed was the dynamo that has propelled markets higher ever since the Lehman collapse, last year certainly had its share of breakout moments. Here is a sampling. Gamestop and the emergence of meme stonks and the daytrading apes: In January markets were hypnotized by the massive trading volumes, rolling short squeezes and surging share prices of unremarkable established companies such as consoles retailer GameStop and cinema chain AMC and various other micro and midcap names. What began as a discussion on untapped value at GameStop on Reddit months earlier by Keith Gill, better known as Roaring Kitty, morphed into a hedge fund-orchestrated, crowdsourced effort to squeeze out the short position held by a hedge fund, Melvin Capital. The momentum flooded through the retail market, where daytraders shunned stocks and bought massive out of the money calls, sparking rampant "gamma squeezes" in the process forcing some brokers to curb trading. Robinhood, a popular broker for day traders and Citadel's most lucrative "subsidiary", required a cash injection to withstand the demands placed on it by its clearing house. The company IPOed later in the year only to see its shares collapse as it emerged its business model was disappointing hollow absent constant retail euphoria. Ultimately, the market received a crash course in the power of retail investors on a mission. Ultimately, "retail favorite" stocks ended the year on a subdued note as the trading frenzy from earlier in the year petered out, but despite underperforming the S&P500, retail traders still outperformed hedge funds by more than 100%. Failed seven-year Treasury auction:  Whereas auctions of seven-year US government debt generally spark interest only among specialists, on on February 25 2021, one such typically boring event sparked shockwaves across financial markets, as the weakest demand on record hit prices across the whole spectrum of Treasury bonds. The five-, seven- and 10-year notes all fell sharply in price. Researchers at the Federal Reserve called it a “flash event”; we called it a "catastrophic, tailing" auction, the closest thing the US has had to a failed Trasury auction. The flare-up, as the FT put it, reflects one of the most pressing investor concerns of the year: inflation. At the time, fund managers were just starting to realize that consumer price rises were back with a vengeance — a huge threat to the bond market which still remembers the dire days of the Volcker Fed when inflation was about as high as it is today but the 30Y was trading around 15%. The February auaction also illustrated that the world’s most important market was far less liquid and not as structurally robust as investors had hoped. It was an extreme example of a long-running issue: since the financial crisis the traditional providers of liquidity, a group of 24 Wall Street banks, have pulled back because of higher costs associated with post-2008 capital requirements, while leaving liquidity provision to the Fed. Those banks, in their reduced role, as well as the hedge funds and high-frequency traders that have stepped into their place, have tended to withdraw in moments of market volatility. Needless to say, with the Fed now tapering its record QE, we expect many more such "flash" episodes in the bond market in the year ahead. The arch ego of Archegos: In March 2021 several banks received a brutal reminder that some of family offices, which manage some $6 trillion in wealth of successful billionaires and entrepreneurs and which have minimal reporting requirements, take risks that would make the most serrated hedge fund manager wince, when Bill Hwang’s Archegos Capital Management imploded in spectacular style. As we learned in late March when several high-flying stocks suddenly collapsed, Hwang - a former protege of fabled hedge fund group Tiger Management - had built up a vast pile of leverage using opaque Total Return Swaps with a handful of banks to boost bets on a small number of stocks (the same banks were quite happy to help despite Hwang’s having been barred from US markets in 2013 over allegations of an insider-trading scheme, as he paid generously for the privilege of borrowing the banks' balance sheet). When one of Archegos more recent bets, ViacomCBS, suddenly tumbled it set off a liquidation cascade that left banks including Credit Suisse and Nomura with billions of dollars in losses. Conveniently, as the FT noted, the damage was contained to the banks rather than leaking across financial markets, but the episode sparked a rethink among banks over how to treat these clients and how much leverage to extend. The second coming of cryptos: After hitting an all time high in late 2017 and subsequently slumping into a "crypto winter", cryptocurrencies enjoyed a huge rebound in early 2021 which sent their prices soaring amid fears of galloping inflation (as shown below, and contrary to some financial speculation, the crypto space has traditionally been a hedge either to too much liquidity or a hedge to too much inflation). As a result, Bitcoin rose to a series of new record highs that culminated at just below $62,000, nearly three times higher than their previous all time high. But the smooth ride came to a halt in May when China’s crackdown on the cryptocurrency and its production, or “mining”, sparked the first serious crash of 2021. The price of bitcoin then collapsed as much as 30% on May 19, hitting a low of $30,000 amid a liquidation of levered positions in chaotic trading conditions following a warning from Chinese authorities of tighter curbs ahead. A public acceptance by Tesla chief and crypto cheerleader Elon Musk of the industry’s environmental impact added to the declines. However, as with all previous crypto crashes, this one too proved transitory, and prices resumed their upward trajectory in late September when investors started to price in the launch of futures-based bitcoin exchange traded funds in the US. The launch of these contracts subsequently pushed bitcoin to a new all-time high in early November before prices stumbled again in early December, this time due to a rise in institutional ownership when an overall drop in the market dragged down cryptos as well. That demonstrated the growing linkage between Wall Street and cryptocurrencies, due to the growing sway of large investors in digital markets. China's common prosperity crash: China’s education and tech sectors were one of the perennial Wall Street darlings. Companies such as New Oriental, TAL Education as well as Alibaba and Didi had come to be worth billions of dollars after highly publicized US stock market flotations. So when Beijing effectively outlawed swaths of the country’s for-profit education industry in July 2021, followed by draconian anti-trust regulations on the country's fintech names (where Xi Jinping also meant to teach the country's billionaire class a lesson who is truly in charge), the short-term market impact was brutal. Beijing’s initial measures emerged as part of a wider effort to make education more affordable as part of president Xi Jinping’s drive for "common prosperity" but that quickly raised questions over whether growth prospects across corporate China are countered by the capacity of the government to overhaul entire business models overnight. Sure enough, volatility stemming from the education sector was soon overshadowed by another set of government reforms related to common prosperity, a crackdown on leverage across the real estate sector where the biggest casualty was Evergrande, the world’s most indebted developer. The company, whose boss was not long ago China's 2nd richest man, was engulfed by a liquidity crisis in the summer that eventually resulted in a default in early December. Still, as the FT notes, China continues to draw in huge amounts of foreign capital, pushing the Chinese yuan to end 2021 at the strongest level since May 2018, a major hurdle to China's attempts to kickstart its slowing economy, and surely a precursor to even more monetary easing. Natgas hyperinflation: Natural gas supplanted crude oil as the world’s most important commodity in October and December as prices exploded to unprecedented levels and the world scrambled for scarce supplies amid the developed world's catastrophic transition to "green" energy. The crunch was particularly acute in Europe, which has become increasingly reliant on imports. Futures linked to TTF, the region’s wholesale gas price, hit a record €137 per megawatt hour in early October, rising more than 75%. In Asia, spot liquefied natural gas prices briefly passed the equivalent of more than $320 a barrel of oil in October. (At the time, Brent crude was trading at $80). A number of factors contributed, including rising demand as pandemic restrictions eased, supply disruptions in the LNG market and weather-induced shortfalls in renewable energy. In Europe, this was aggravated by plunging export volumes from Gazprom, Russia’s state-backed monopoly pipeline supplier, amid a bitter political fight over the launch of the Nordstream 2 pipeline. And with delays to the Nord Stream 2 gas pipeline from Russia to Germany, analysts say the European gas market - where storage is only 66% full - a cold snap or supply disruption away from another price spike Turkey's (latest) currency crisis:  As the FT's Jonathan Wheatley writes, Recep Tayyip Erdogan was once a source of strength for the Turkish lira, and in his first five years in power from 2003, the currency rallied from TL1.6 per US dollar to near parity at TL1.2. But those days are long gone, as Erdogan's bizarre fascination with unorthodox economics, namely the theory that lower rates lead to lower inflation also known as "Erdoganomics", has sparked a historic collapse in the: having traded at about TL7 to the dollar in February, it has since fallen beyond TL17, making it the worst performing currency of 2021. The lira’s defining moment in 2021 came on November 18 when the central bank, in spite of soaring inflation, cut its policy rate for the third time since September, at Erdogan’s behest (any central banker in Turkey who disagrees with "Erdoganomics" is promptly fired and replaced with an ideological puppet). The lira recovered some of its losses in late December when Erdogan came up with the "brilliant" idea of erecting the infamous "doom loop" which ties Turkey's balance sheet to its currency. It has worked for now (the lira surged from TL18 against the dollar to TL12, but this particular band aid solution will only last so long). The lira’s problems are not only Erdogan’s doing. A strengthening dollar, rising oil prices, the relentless covid pandemic and weak growth in developing economies have been bad for other emerging market currencies, too, but as long as Erdogan is in charge, shorting the lira remains the best trade entering 2022. While these, and many more, stories provided a diversion from the boring existence of centrally-planned markets, we are confident that the trends observed in recent years will continue: coming years will be marked by even bigger government (because only more government can "fix" problems created by government), higher stock prices and dollar debasement (because only more Fed intervention can "fix" the problems created by the Fed), and a policy flip from monetary and QE to fiscal & MMT, all of which will keep inflation at scorching levels, much to the persistent confusion of economists everywhere. Of course, we said much of this last year as well, but while we got most trends right, we were wrong about one thing: we were confident that China's aggressive roll out of the digital yuan would be a bang - or as we put it "it is very likely that while 2020 was an insane year, it may prove to be just an appetizer to the shockwaves that will be unleashed in 2021 when we see the first stage of the most historic overhaul of the fiat payment system in history" - however it turned out to be a whimper. A big reason for that was that the initial reception of the "revolutionary" currency was nothing short of disastrous, with Chinese admitting they were "not at all excited" about the prospect of yet one more surveillance mechanism for Beijing, because that's really what digital currencies are: a way for central banks everywhere to micromanage and scrutinize every single transaction, allowing the powers that be to demonetize any one person - or whole groups - with the flick of a switch. Then again, while digital money may not have made its triumphant arrival in 2021, we are confident that the launch date has merely been pushed back to 2022 when the rollout of the next monetary revolution is expected to begin in earnest. Here we should again note one thing: in a world undergoing historic transformations, any free press must be throttled and controlled, and over the past year we have seen unprecedented efforts by legacy media and its corporate owners, as well as the new "social media" overlords do everything in their power to stifle independent thought. For us it had been especially "personal" on more than one occasions. Last January, Twitter suspended our account because we dared to challenge the conventional narrative about the source of the Wuhan virus. It was only six months later that Twitter apologized, and set us free, admitting it had made a mistake. Yet barely had twitter readmitted us, when something even more unprecedented happened: for the first time ever (to our knowledge) Google - the world's largest online ad provider and monopoly - demonetized our website not because of any complaints about our writing but because of the contents of our comment section. It then held us hostage until we agreed to implement some prerequisite screening and moderation of the comments section. Google's action was followed by the likes of PayPal, Amazon, and many other financial and ad platforms, who rushed to demonetize and suspend us simply because they disagreed with what we had to say. This was a stark lesson in how quickly an ad-funded business can disintegrate in this world which resembles the dystopia of 1984 more and more each day, and we have since taken measures. One year ago, for the first time in our 13 year history, we launched a paid version of our website, which is entirely ad and moderation free, and offers readers a variety of premium content. It wasn't our intention to make this transformation but unfortunately we know which way the wind is blowing and it is only a matter of time before the gatekeepers of online ad spending block us again. As such, if we are to have any hope in continuing it will come directly from you, our readers. We will keep the free website running for as long as possible, but we are certain that it is only a matter of time before the hammer falls as the censorship bandwagon rolls out much more aggressively in the coming year. That said, whether the story of 2022, and the next decade for that matter, is one of helicopter or digital money, of (hyper)inflation or deflation: what is key, and what we learned in the past decade, is that the status quo will throw anything at the problem to kick the can, it will certainly not let any crisis go to waste... even the deadliest pandemic in over a century. And while many already knew that, the events of 2021 made it clear to a fault that not even a modest market correction can be tolerated going forward. After all, if central banks aim to punish all selling, then the logical outcome is to buy everything, and investors, traders and speculators did just that armed with the clearest backstop guarantee from the Fed, which in the deapths of the covid crash crossed the Rubicon when it formally nationalized the bond market as it started buying both investment grade bonds and junk bond ETFs in the open market. As such it is no longer even a debatable issue if the Fed will buy stocks after the next crash - the only question is when. Meanwhile, for all those lamenting the relentless coverage of politics in a financial blog, why finance appears to have taken a secondary role, and why the political "narrative" has taken a dominant role for financial analysts, the past year showed vividly why that is the case: in a world where markets gyrated, and "rotated" from value stocks to growth and vice versa, purely on speculation of how big the next stimulus out of Washington will be, the narrative over Biden's trillions proved to be one of the biggest market moving events for much of the year. And with the Biden stimulus plan off the table for now, the Fed will find it very difficult to tighten financial conditions, especially if it does so just as the economy is slowing. Here we like to remind readers of one of our favorite charts: every financial crisis is the result of Fed tightening. As for predictions about the future, as the past two years so vividly showed, when it comes to actual surprises and all true "black swans", it won't be what anyone had expected. And so while many themes, both in the political and financial realm, did get some accelerated closure courtesy of China's covid pandemic, dramatic changes in 2021 persisted, and will continue to manifest themselves in often violent and unexpected ways - from the ongoing record polarization in the US political arena, to "populist" upheavals around the developed world, to the gradual transition to a global Universal Basic (i.e., socialized) Income regime, to China's ongoing fight with preserving stability in its gargantuan financial system which is now two and a half times the size of the US. As always, we thank all of our readers for making this website - which has never seen one dollar of outside funding (and despite amusing recurring allegations, has certainly never seen a ruble from the KGB either, although now that the entire Russian hysteria episode is over, those allegations have finally quieted down), and has never spent one dollar on marketing - a small (or not so small) part of your daily routine. Which also brings us to another critical topic: that of fake news, and something we - and others who do not comply with the established narrative - have been accused of. While we find the narrative of fake news laughable, after all every single article in this website is backed by facts and links to outside sources, it is clearly a dangerous development, and a very slippery slope that the entire developed world is pushing for what is, when stripped of fancy jargon, internet censorship under the guise of protecting the average person from "dangerous, fake information." It's also why we are preparing for the next onslaught against independent thought and why we had no choice but to roll out a premium version of this website. In addition to the other themes noted above, we expect the crackdown on free speech to accelerate in the coming year when key midterm elections will be held, especially as the following list of Top 20 articles for 2021 reveals, many of the most popular articles in the past year were precisely those which the conventional media would not touch out of fear of repercussions, which in turn allowed the alternative media to continue to flourish in an orchestrated information vacuum and take significant market share from the established outlets by covering topics which the public relations arm of established media outlets refused to do, in the process earning itself the derogatory "fake news" condemnation. We are grateful that our readers - who hit a new record high in 2021 - have realized it is incumbent upon them to decide what is, and isn't "fake news." * * * And so, before we get into the details of what has now become an annual tradition for the last day of the year, those who wish to jog down memory lane, can refresh our most popular articles for every year during our no longer that brief, almost 11-year existence, starting with 2009 and continuing with 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2020. So without further ado, here are the articles that you, our readers, found to be the most engaging, interesting and popular based on the number of hits, during the past year. In 20th spot with 600,000 reads, was an article that touched on one of the most defining features of the market: the reflation theme the sparked a massive rally at the start of the year courtesy of the surprise outcome in the Georgia Senate race, where Democrats ended up wining both seats up for grabs, effectively giving the Dems a majority in both the House and the Senate, where despite the even, 50-seat split, Kamala Harris would cast the winning tie-breaker vote to pursue a historic fiscal stimulus. And sure enough, as we described in "Bitcoin Surges To Record High, Stocks & Bonds Battered As Dems Look Set To Take Both Georgia Senate Seats", with trillions in "stimmies" flooding both the economy and the market, not only did retail traders enjoy unprecedented returns when trading meme "stonks" and forcing short squeezes that crippled numerous hedge funds, but expectations of sharply higher inflation also helped push bitcoin and the entire crypto sector to new all time highs, which in turn legitimized the product across institutional investors and helped it reach a market cap north of $3 trillion.  In 19th spot, over 613,000 readers were thrilled to read at the start of September that "Biden Unveils Most Severe COVID Actions Yet: Mandates Vax For All Federal Workers, Contractors, & Large Private Companies." Of course, just a few weeks later much of Biden's mandate would be struck down in courts, where it is now headed to a decision by SCOTUS, while the constantly shifting "scientific" goal posts mean that just a few months later the latest set of CDC regulations have seen regulators and officials reverse the constant drone of fearmongering and are now even seeking to cut back on the duration of quarantine and other lockdown measures amid a public mood that is growing increasingly hostile to the government response. One of the defining political events of 2021 was the so-called "Jan 6 Insurrection", which the for America's conservatives was blown wildly out of proportion yet which the leftist media and Democrats in Congress have been periodically trying to push to the front pages in hopes of distracting from the growing list of failures of the Obama admin. Yet as we asked back in January, "Why Was Founder Of Far-Left BLM Group Filming Inside Capitol As Police Shot Protester?" No less than 614,000 readers found this question worthy of a response. Since then many more questions have emerged surrounding this event, many of which focus on what role the FBI had in organizing and encouraging this event, including the use of various informants and instigators. For now, a response will have to wait at least until the mid-term elections of 2022 when Republicans are expected to sweep one if not both chambers. Linked to the above, the 17th most read article of 2021 with 617,000 views, was an article we published on the very same day, which detailed that "Armed Protesters Begin To Arrive At State Capitols Around The Nation." At the end of the day, it was much ado about nothing and all protests concluded peacefully and without incident: perhaps the FBI was simply spread too thin? 2021 was a year defined by various waves of the covid pandemic which hammered poor Americans forced to hunker down at home and missing on pay, and crippled countless small mom and pop businesses. And yet, it was also a bonanza for a handful of pharma companies such as Pfizer and Moderna which made billions from the sale of "vaccines" which we now know do little if anything to halt the spread of the virus, and are instead now being pitched as palliatives, preventing a far worse clinical outcome. The same pharma companies also benefited from an unconditional indemnity, which surely would come in useful when the full side-effects of their mRNA-based therapies became apparent. One such condition to emerge was myocarditis among a subset of the vaxxed. And while the vaccines continue to be broadly rolled out across most developed nations, one place that said enough was Sweden. As over 620,000 readers found out in "Sweden Suspends Moderna Shot Indefinitely After Vaxxed Patients Develop Crippling Heart Condition", not every country was willing to use its citizens as experimental guniea pigs. This was enough to make the article the 16th most read on these pages, but perhaps in light of the (lack of) debate over the pros and cons of the covid vaccines, this should have been the most read article this year? Moving on to the 15th most popular article, 628,000 readers were shocked to learn that "Chase Bank Cancels General Mike Flynn's Credit Cards." The action, which was taken by the largest US bank due to "reputational risk" echoed a broad push by tech giants to deplatform and silence dissenting voices by literally freezing them out of the financial system. In the end, following widespread blowback from millions of Americans, JPMorgan reversed, and reactivated Flynn's cards saying the action was made in error, but unfortunately this is just one example of how those in power can lock out any dissenters with the flick of a switch. And while democrats cheer such deplatforming today, the political winds are fickle, and we doubt they will be as excited once they find themselves on the receiving end of such actions. And speaking of censorship and media blackouts, few terms sparked greater response from those in power than the term Ivermectin. Viewed by millions as a cheap, effective alternative to offerings from the pharmaceutical complex, social networks did everything in their power to silence any mention of a drug which the Journal of Antibiotics said in 2017 was an "enigmatic multifaceted ‘wonder’ drug which continues to surprise and exceed expectations." Nowhere was this more obvious than in the discussion of how widespread use of Ivermectin beat Covid in India, the topic of the 14th most popular article of 2021 "India's Ivermectin Blackout" which was read by over 653,000 readers. Unfortunately, while vaccines continue to fail upward and now some countries are now pushing with a 4th, 5th and even 6th vaccine, Ivermectin remains a dirty word. There was more covid coverage in the 13th most popular article of 2021, "Surprise Surprise - Fauci Lied Again": Rand Paul Reacts To Wuhan Bombshell" which was viewed no less than 725,000 times. Paul's reaction came following a report which revealed that Anthony Fauci's NIAID and its parent, the NIH, funded Gain-of-Function research in Wuhan, China, strongly hinting that the emergence of covid was the result of illicit US funding. Not that long ago, Fauci had called Paul a 'liar' for accusing him of funding the risky research, in which viruses are genetically modified or otherwise altered to make them more transmissible to humans. And while we could say that Paul got the last laugh, Fauci still remains Biden's top covid advisor, which may explain why one year after Biden vowed he would shut down the pandemic, the number of new cases just hit a new all time high. One hope we have for 2022 is that people will finally open their eyes... 2021 was not just about covid - soaring prices and relentless inflation were one of the most poignant topics. It got so bad that Biden's approval rating - and that of Democrats in general - tumbled toward the end of the year, putting their mid-term ambitions in jeopardy, as the public mood soured dramatically in response to the explosion in prices. And while one can debate whether it was due to supply-issues, such as the collapse in trans-pacific supply chains and the chronic lack of labor to grow the US infrastructure, or due to roaring demand sparked by trillions in fiscal stimulus, but when the "Big Short" Michael Burry warned that hyperinflation is coming, the people listened, and with over 731,000 reads, the 12th most popular article of 2021 was "Michael Burry Warns Weimar Hyperinflation Is Coming."  Of course, Burry did not say anything we haven't warned about for the past 12 years, but at least he got the people's attention, and even mainstream names such as Twitter founder Jack Dorsey agreed with him, predicting that bitcoin will be what is left after the dollar has collapsed. While hyperinflation may will be the endgame, the question remains: when. For the 11th most read article of 2021, we go back to a topic touched upon moments ago when we addressed the full-blown media campaign seeking to discredit Ivermectin, in this case via the D-grade liberal tabloid Rolling Stone (whose modern incarnation is sadly a pale shadow of the legend that house Hunter S. Thompson's unforgettable dispatches) which published the very definition of fake news when it called Ivermectin a "horse dewormer" and claimed that, according to a hospital employee, people were overdosing on it. Just a few hours later, the article was retracted as we explained in "Rolling Stone Issues 'Update' After Horse Dewormer Hit-Piece Debunked" and over 812,000 readers found out that pretty much everything had been a fabrication. But of course, by then it was too late, and the reputation of Ivermectin as a potential covid cure had been further tarnished, much to the relief of the pharma giants who had a carte blanche to sell their experimental wares. The 10th most popular article of 2021 brings us to another issue that had split America down the middle, namely the story surrounding Kyle Rittenhouse and the full-blown media campaign that declared the teenager guilty, even when eventually proven innocent. Just days before the dramatic acquittal, we learned that "FBI Sat On Bombshell Footage From Kyle Rittenhouse Shooting", which was read by over 822,000 readers. It was unfortunate to learn that once again the scandal-plagued FBI stood at the center of yet another attempt at mass misinformation, and we can only hope that one day this "deep state" agency will be overhauled from its core, or better yet, shut down completely. As for Kyle, he will have the last laugh: according to unconfirmed rumors, his numerous legal settlements with various media outlets will be in the tens if not hundreds of millions of dollars.  And from the great US social schism, we again go back to Covid for the 9th most popular article of 2021, which described the terrifying details of one of the most draconian responses to covid in the entire world: that of Australia. Over 900,000 readers were stunned to read that the "Australian Army Begins Transferring COVID-Positive Cases, Contacts To Quarantine Camps." Alas, the latest surge in Australian cases to nosebleed, record highs merely confirms that this unprecedented government lockdown - including masks and vaccines - is nothing more than an exercise in how far government can treat its population as a herd of sheep without provoking a violent response.  The 8th most popular article of 2021 looks at the market insanity of early 2021 when, at the end of January, we saw some of the most-shorted, "meme" stocks explode higher as the Reddit daytrading horde fixed their sights on a handful of hedge funds and spent billions in stimmies in an attempt to force unprecedented ramps. That was the case with "GME Soars 75% After-Hours, Erases Losses After Liquidity-Constrained Robinhood Lifts Trading Ban", which profiled the daytrading craze that gave an entire generation the feeling that it too could win in these manipulated capital markets. Then again, judging by the waning retail interest, it is possible that the excitement of the daytrading army is fading as rapidly as it first emerged, and that absent more "stimmies" markets will remain the playground of the rich and central banks. Kyle Rittenhouse may soon be a very rich man after the ordeal he went through, but the media's mission of further polarizing US society succeeded, and millions of Americans will never accept that the teenager was innocent. It's also why with just over 1 million reads, the 7th most read article on Zero Hedge this year was that "Portland Rittenhouse Protest Escalates Into Riot." Luckily, this is not a mid-term election year and there were no moneyed interests seeking to prolong this particular riot, unlike what happened in the summer of 2020... and what we are very much afraid will again happen next year when very critical elections are on deck.  With just over 1.03 million views, the 6th most popular post focused on a viral Twitter thread on Friday from Dr Robert Laone, which laid out a disturbing trend; the most-vaccinated countries in the world are experiencing  a surge in COVID-19 cases, while the least-vaccinated countries were not. As we originally discussed in ""This Is Worrying Me Quite A Bit": mRNA Vaccine Inventor Shares Viral Thread Showing COVID Surge In Most-Vaxxed Countries", this trend has only accelerated in recent weeks with the emergence of the Omicron strain. Unfortunately, instead of engaging in a constructive discussion to see why the science keeps failing again and again, Twitter's response was chilling: with just days left in 2021, it suspended the account of Dr. Malone, one of the inventors of mRNA technology. Which brings to mind something Aaron Rogers said: "If science can't be questioned it's not science anymore it's propaganda & that's the truth." In a year that was marked a flurry of domestic fiascoes by the Biden administration, it is easy to forget that the aged president was also responsible for the biggest US foreign policy disaster since Vietnam, when the botched evacuation of Afghanistan made the US laughing stock of the world after 12 US servicemembers were killed. So it's probably not surprising that over 1.1 million readers were stunned to watch what happened next, which we profiled in the 5th most popular post of 2021, where in response to the Afghan trajedy, "Biden Delivers Surreal Press Conference, Vows To Hunt Down Isis, Blames Trump." One person watching the Biden presser was Xi Jinping, who may have once harbored doubts about reclaiming Taiwan but certainly does not any more. The 4th most popular article of 2021 again has to do with with covid, and specifically the increasingly bizarre clinical response to the disease. As we detailed in "Something Really Strange Is Happening At Hospitals All Over America" while emergency rooms were overflowing, it certainly wasn't from covid cases. Even more curiously, one of the primary ailments leading to an onslaught on ERs across the nation was heart-related issues, whether arrhytmia, cardiac incidents or general heart conditions. We hope that one day there will be a candid discussion on this topic, but until then it remains one of the topics seen as taboo by the mainstream media and the deplatforming overlords, so we'll just leave it at that. We previously discussed the anti-Ivermectin narrative that dominated the mainstream press throughout 2021 and the 3rd most popular article of the year may hold clues as to why: in late September, pharma giant Pfizer and one of the two companies to peddle an mRNA based vaccine, announced that it's launching an accelerated Phase 2/3 trial for a COVID prophylactic pill designed to ward off COVID in those may have come in contact with the disease. And, as we described in "Pfizer Launches Final Study For COVID Drug That's Suspiciously Similar To 'Horse Paste'," 1.75 million readers learned that Pfizer's drug shared at least one mechanism of action as Ivermectin - an anti-parasitic used in humans for decades, which functions as a protease inhibitor against Covid-19, which researchers speculate "could be the biophysical basis behind its antiviral efficiency." Surely, this too was just another huge coincidence. In the second most popular article of 2021, almost 2 million readers discovered (to their "shock") that Fauci and the rest of Biden's COVID advisors were proven wrong about "the science" of COVID vaccines yet again. After telling Americans that vaccines offer better protection than natural infection, a new study out of Israel suggested the opposite is true: natural infection offers a much better shield against the delta variant than vaccines, something we profiled in "This Ends The Debate' - Israeli Study Shows Natural Immunity 13x More Effective Than Vaccines At Stopping Delta." We were right about one thing: anyone who dared to suggest that natural immunity was indeed more effective than vaccines was promptly canceled and censored, and all debate almost instantly ended. Since then we have had tens of millions of "breakout" cases where vaccinated people catch covid again, while any discussion why those with natural immunity do much better remains under lock and key. It may come as a surprise to many that the most read article of 2021 was not about covid, or Biden, or inflation, or China, or even the extremely polarized US congress (and/or society), but was about one of the most long-suffering topics on these pages: precious metals and their prices. Yes, back in February the retail mania briefly targeted silver and as millions of reddit daytraders piled in in hopes of squeezing the precious metal higher, the price of silver surged higher only to tumble just as quickly as it has risen as the seller(s) once again proved more powerful than the buyers. We described this in "Silver Futures Soar 8%, Rise Above $29 As Reddit Hordes Pile In", an article which some 2.4 million gold and silver bugs read with hope, only to see their favorite precious metals slump for much of the rest of the year. And yes, the fact that both gold and silver ended the year sharply lower than where they started even though inflation hit the highest level in 40 years, remains one of the great mysteries of 2021. With all that behind us, and as we wave goodbye to another bizarre, exciting, surreal year, what lies in store for 2022, and the next decade? We don't know: as frequent and not so frequent readers are aware, we do not pretend to be able to predict the future and we don't try despite endless allegations that we constantly predict the collapse of civilization: we leave the predicting to the "smartest people in the room" who year after year have been consistently wrong about everything, and never more so than in 2021 (even the Fed admitted it is clueless when Powell said it was time to retire the term "transitory"), which destroyed the reputation of central banks, of economists, of conventional media and the professional "polling" and "strategist" class forever, not to mention all those "scientists" who made a mockery of the "expertise class" with their bungled response to the covid pandemic. We merely observe, find what is unexpected, entertaining, amusing, surprising or grotesque in an increasingly bizarre, sad, and increasingly crazy world, and then just write about it. We do know, however, that after a record $30 trillion in stimulus was conjured out of thin air by the world's central banks and politicians in the past two years, the attempt to reverse this monetary and fiscal firehose in a world addicted to trillions in newly created liquidity now that central banks are freaking out after finally getting ot the inflation they were hoping to create for so long, will end in tears. We are confident, however, that in the end it will be the very final backstoppers of the status quo regime, the central banking emperors of the New Normal, who will eventually be revealed as fully naked. When that happens and what happens after is anyone's guess. But, as we have promised - and delivered - every year for the past 13, we will be there to document every aspect of it. Finally, and as always, we wish all our readers the best of luck in 2022, with much success in trading and every other avenue of life. We bid farewell to 2021 with our traditional and unwavering year-end promise: Zero Hedge will be there each and every day - usually with a cynical smile - helping readers expose, unravel and comprehend the fallacy, fiction, fraud and farce that defines every aspect of our increasingly broken system. Tyler Durden Sun, 01/02/2022 - 03:44.....»»

Category: personnelSource: nytJan 2nd, 2022

5 Defensive ETF Bets for Dealing With Fed Rate Hike Woes

Let's look at some safe ETF plays that investors can consider keeping in mind the rising concerns emanating from the high inflation levels and high chances of a Fed rate hike. Wall Street has been volatile since the beginning of 2022 as 10-year Treasury yields rose. The Federal Reserve has also hinted to take aggressive measures to manage rising inflation levels. It is expected to begin raising its benchmark interest rate in March. In fact, Goldman Sachs is expecting the Federal Reserve to increase interest rates four times this year, according to a CNBC article.There are certain other factors that are clouding the U.S. investment market. Investors are waiting for the fourth-quarter earnings results and the outlook to be presented by corporate America for 2022. Moreover, certain economic data releases like retail sales, industrial production, and U.S. consumer sentiment data may put further light on the U.S. economic recovery.Against this backdrop, let’s take a look at some defensive ETF options that investors can consider likeVanguard Dividend Appreciation ETF (VIG), Invesco S&P 500 Low Volatility ETF (SPLV), iShares MSCI USA Quality Factor ETF (QUAL), SPDR S&P MIDCAP 400 ETF Trust (MDY)and Vanguard Consumer Staples ETF (VDC).According to UBS strategists led by senior economist Brian Rose “We expect the US 10-year yield to move ... to around 2% over the coming months, as investors digest the Fed’s more hawkish stance along with further elevated inflation readings. That said, we don’t expect a sharp rise in yields that will imperil the equity rally. Year-over-year inflation is still likely to peak in the first quarter and recede over the year,” as mentioned in a CNBC article.Defensive ETFs in FocusGiven the current market conditions,we have highlighted some ETFs like:Vanguard Dividend Appreciation ETF VIGDividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. Moreover, dividend aristocrat funds provide investors with dividend growth opportunities compared to other products in the space but might not necessarily have the highest yields. These products also form a strong portfolio, with a higher scope of capital appreciation as against simple dividend-paying stocks or those with high yields. As a result, these products deliver a nice combination of annual dividend growth and capital-appreciation opportunity and are mostly good for risk-averse long-term investors.Vanguard Dividend Appreciation ETF is the largest and the most popular ETF in the dividend space, with AUM of $68.05 billion. VIG follows the S&P U.S. Dividend Growers Index. Vanguard Dividend Appreciation ETF charges 6 basis points (bps) in annual fees (read: 5 Top-Ranked ETFs to Add to Your Portfolio for 2022).Invesco S&P 500 Low Volatility ETF SPLVDemand for funds with “low volatility” or “minimum volatility” generally increases during tumultuous times. These seemingly-safe products usually do not surge in bull market conditions but offer more protection than the unpredictable ones. These funds are less cyclical, providing more stable cash flow than the overall market.Invesco S&P 500 Low Volatility ETF provides exposure to stocks with the lowest realized volatility over the past 12 months. The fund is based on the S&P 500 Low Volatility Index and holds 102 securities in its basket. Invesco S&P 500 Low Volatility ETF hasAUM of $9.61 billion and charges an expense ratio of 25 bps, as stated in the prospectus (read: Here's Why it Makes Sense to Invest in Low-Volatility ETFs Now).iShares MSCI USA Quality Factor ETF QUALQuality stocks are rich in value characteristics with a healthy balance sheet, high return on capital, low volatility and high margins. These stocks also have a track record of stable or increasing sales and earnings growth. Compared to plain vanilla funds, these products help lower volatility and perform better during market uncertainty. Further, academic research has proven that high-quality companies constantly provide better risk-adjusted returns than the broader market over the long term.iShares MSCI USA Quality Factor ETF provides exposure to the large- and mid-cap stocks exhibiting positive fundamentals (high return on equity, stable year-over-year earnings growth and low financial leverage) by tracking the MSCI USA Sector Neutral Quality Index. With AUM of $24.23 billion, QUAL charges 0.15% in fees (read: Quality ETFs Appear Attractive as Fed Rate Hike Nears).SPDR S&P MIDCAP 400 ETF Trust MDYConsidering the mixed sentiments, mid-cap funds are gaining attention as they provide both growth and stability compared to their small-cap and large-cap counterparts. As such, investors seeking to capitalize on the strong fundamentals but worried about uncertainty should consider mid-cap ETFs.SPDR S&P MIDCAP 400 ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P MidCap 400 Index. MDY has AUM of $21.65 billion. SPDR S&P MIDCAP 400 ETF Trust charges a fee of 23 bps (see: all the Mid Cap ETFs here).Vanguard Consumer Staples ETF VDCThe consumer staples sector is known for its non-cyclical nature and acts as a safe haven during unstable market conditions. Moreover, like utility, consumer staples is considered a stable sector for the long term as its players are likely to offer decent returns. During an economic recession, investors can consider parking their money in the non-cyclical consumer staples sector. This high-quality sector, which is largely defensive, has been found to have a low correlation factor with economic cycles.Vanguard Consumer Staples ETF seeks to track the performance of the MSCI US Investable Market Consumer Staples 25/50 Index. With AUM of $6.66 billion, VDC has an expense ratio of 10 bps. 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 Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports SPDR S&P MidCap 400 ETF (MDY): ETF Research Reports iShares MSCI USA Quality Factor ETF (QUAL): ETF Research Reports Vanguard Consumer Staples ETF (VDC): ETF Research Reports Invesco S&P 500 Low Volatility ETF (SPLV): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 14th, 2022

Top-Ranked Value ETFs to Focus on Fed Rate Hike Worries

It is worth noting here that value investing seems more lucrative, given the rebounding U.S. economy, the expectation of higher inflation and chances of Fed interest rate hikes. Wall Street has had a rough start to 2022 and has remained highly volatile due to a rise in benchmark 10-year Treasury yields. The yields rose as high as above 1.8% on Jan 10 after being at 1.51% on Dec 31. The Fed is expected to begin raising its benchmark interest rate in March. The Federal Reserve may take a more aggressive approach in raising interest rates. In fact, Goldman Sachs is expecting the Federal Reserve to increase interest rates four times this year, according to a CNBC article.Going by the CME’s FedWatch Tool, market participants already expect and have priced about 79% probability for the first quarter-percentage-point hike to happen in May, as mentioned in a CNBC article. They also expect a nearly 50% probability of the central bank imposing four such hikes in 2022.Growth sectors like the tech space have been feeling the pinch of rising bond yields as the same decreases the relative value of future earnings, making popular stocks seem overvalued. Tech companies also face hurdles in funding their growth and buying back stocks due to higher rates (per a CNBC article).The year 2022 has been a kind start to value stocks. The Russell 1000 Value index has returned 1.5% so far in January. Investors looking for value investing can consider iShares S&P 500 Value ETF (IVE), Vanguard Mega Cap Value ETF (MGV), Schwab U.S. Large-Cap Value ETF (SCHV), Invesco S&P 500 Enhanced Value ETF (SPVU), Vanguard S&P 500 Value ETF (VOOV) and SPDR Portfolio S&P 500 Value ETF (SPYV).Value ETFs in FocusInvestors have been upbeat about the accelerated coronavirus vaccine rollout, solid fiscal stimulus support and reopening of the U.S. economy, which may lead to faster U.S. economic recovery from the pandemic-led economic slowdown. These factors created a conducive environment for value investing.It is worth noting here that value investing seems more lucrative, given the rebounding U.S. economy, the expectation of higher inflation and chances of Fed interest rate hikes. Moreover, value stocks seek to capitalize on market inefficiencies. They can deliver higher returns with lower volatility than their growth and blend counterparts. Additionally, value stocks are less exposed to trending markets and their dividend payouts offer a shield against market turbulence.Against this backdrop, here are some top-ranked value ETFs that investors can consider betting on:iShares S&P 500 Value ETF IVEiShares S&P 500 Value ETF provides exposure to large U.S. companies that are potentially undervalued relative to comparable companies. With AUM of $24.91 billion, it charges 18 basis points (bps) in expense ratio. The fund carries a Zacks Rank #1 (Strong Buy) (read: Combat Fed Rate Hike Woes With These 5 Top-Ranked ETFs).Vanguard Mega Cap Value ETF MGVWith AUM of $5.21 billion, Vanguard Mega Cap Value ETF tracks the performance of the CRSP US Mega Cap Value Index. It charges a fee of 7 bps and has a Zacks Rank #1 (read: ETF Areas to Consider for Rotating Out of Tech in 2022).Schwab U.S. Large-Cap Value ETF SCHVSchwab U.S. Large-Cap Value ETF’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Value Total Stock Market Index. With AUM of $10.68 billion, it charges 4 bps in expense ratio. The fund has a Zacks Rank #1.Invesco S&P 500 Enhanced Value ETF SPVUInvesco S&P 500 Enhanced Value ETF is based on the S&P 500 Enhanced Value Index. With AUM of $150.1 million, it charges 13 bps in expense ratio. The fund carries a Zacks Rank #1 (read: 5 Top-Ranked ETFs to Buy At Bargain Prices).Vanguard S&P 500 Value ETF VOOVWith AUM of $2.71 billion, the Zacks Rank #1 Vanguard S&P 500 Value ETF tracks the performance of the S&P 500 Value Index. It charges a fee of 10 bps.SPDR Portfolio S&P 500 Value ETF SPYVSPDR Portfolio S&P 500 Value ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P 500 Value Index. With AUM of $13.46 billion, it charges 4 bps in expense ratio. The fund carries a Zacks Rank #1. 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 Schwab U.S. LargeCap Value ETF (SCHV): ETF Research Reports iShares S&P 500 Value ETF (IVE): ETF Research Reports SPDR Portfolio S&P 500 Value ETF (SPYV): ETF Research Reports Vanguard S&P 500 Value ETF (VOOV): ETF Research Reports Vanguard Mega Cap Value ETF (MGV): ETF Research Reports Invesco S&P 500 Enhanced Value ETF (SPVU): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 14th, 2022

Pento Warns The Fiscal & Monetary Cliffs Have Arrived

Pento Warns The Fiscal & Monetary Cliffs Have Arrived Authored by Michael Pento via PentoPort.com, According to Doug Ramsey of the Leuthold Group, 334 companies trading on the New York Stock Exchange recently hit a 52-week low, more than double the amount that marked new one-year highs. That’s happened only three other times in history — all of them occurring in December 1999. How did we get back to the precipice of the year 2000, where tech stocks plunged 80% and the S&P 500 lost 50% of its value over the ensuing two years? Well, start off with the fact that the amount of new money created by our central bank in the past 14 years is $8 trillion. That, by the way, is an increase in base money supply only and does not include all of the new money created by our debt-based monetary system. So, from 1913 to 2008, the Fed created $800 billion. And, it took from 2008 until today—just 14 years–for it to have created $8.8 trillion in base money supply. Is there really any wonder why inflation has now become a salient issue, especially for the middle and lower classes, and why the stock market is now set up for a meltdown similar to the NASDAQ collapse of two decades ago? Some might claim that the bubble in the stock market was much different in 2000 than it is today. They are correct. The overvaluation 22 years ago pales in comparison to today. With its record high P/S ratio of 3.5, as opposed to just 1.8 back in 2000. And the mind-numbing record high 210% TMC/GDP ratio, which is an incredible 68 percentage points ahead of where it ascended to 22 years ago. Ok, so the stock market is much more expensive today than at any other time in history, but what will the catalyst be to set it tumbling off the cliff? Last week I talked about the monetary cliff coming in the next two months. To review: The Fed will wind down its record-breaking $120 billion per month counterfeiting scheme to zero dollars in that timeframe. This Q.E. involved the process of handing newly created money to banks, consumers, and businesses to boost consumption. But by ending this flow of new money, the Fed will also end its tacit support for the municipal bond market, primary dealers, money market mutual funds, REPO market, International SWAP lines, ETF market, primary and secondary corporate debt markets, commercial paper market, and support for student, auto and credit card loans. All of which were directly supported by Jerome Powell’s with the Fed’s latest Q.E. program. But it doesn’t end there. Mr. Powell cannot be content with just ending Q.E., not with CPI running at 6.8%! Therefore, very soon after Q.E. is terminated, interest rates are heading higher, and the balance sheet of the Fed must start shrinking. However, an occasional 25-bps rate hike here or there won’t cut it. He has to hike rates by 680-bps just to get to a zero percent real Fed Funds Rate. Now, of course, Powell doesn’t intend to hike monetary policy that much because he is fully aware it would collapse the whole artificial market construct well before he gets anywhere close to that level. But the point here is that the FOMC has lost the luxury of being able to delay and dither as it has in the past because inflation is running at a 40-year high. Hence, the Fed will need to hike rates rather aggressively until inflation, the economy, or asset prices come crashing down. But since all three are so closely linked together, they will likely all cascade simultaneously. And, now this week, I want to shed some new light on the concurrent fiscal cliff and shoot a hole through Wall Street’s excess savings B.S. As most of you are already aware, I’ve been pretty clear about the negative consumption effects that will result from the ending of $6 trillion in government handouts over the previous two years. This massive and unprecedented largess caused the savings rate in the U.S. to jump from 7.8% in January 2020 to 33.8% by April of the same year. However, that savings rate has now collapsed back down to 6.9%—below its pre-pandemic level. But what about the stash of savings consumers are sitting on that is supposed to carry GDP ever-higher this year? Well, it appears that the rainy day fund is dwindling quickly. According to the N.Y. Times and Moody’s Analytics, the excess savings among many working- and middle-class households could be exhausted as soon as early 2022. This would not only reduce their financial cushions but also potentially affect the economy since consumer spending has risen to become nearly 70% of GDP. We have already seen multiple pandemic-era federal aid programs expire last September, including the massive federal supplement to unemployment benefits. Now, with the Expanded Child Income tax credit having expired, which gave up to $300 per child under 6, and up to $250 per child ages 7 to 17 over the period from July to December, the fiscal challenges have become salient for many Americans. But what about that pile of savings? Estimates are that it now amounts to around $2.0 trillion (8.5% of GDP). It’s mostly in the hands of the very rich, who are savers and have a much lower marginal propensity to consume than those in the middle and lower classes. According to a study from Oxford Economics, 80% of that savings is in the hands of the top 20% of earners, and 42% went to the top 1%. Again, this is important because it is the middle and lower classes that are responsible for the majority of consumption. So, how is this economically-crucial cohort doing? Well, in addition to getting hurt by inflation and falling real wages, they are running out of their stimulus hoard quickly. According to a recent study done by JP Morgan Chase, households making $68,896 per year or less only have an extra $517 in their checking accounts on average compared with their pre-pandemic level. As unimpressive as that sounds, add in the fact that people don’t eat into their savings with the same zeal that they spend a fresh government handout, and you can see that so-called “mountain of savings” Wall Street loves to tout isn’t much more than a molehill. When you factor in the massive fiscal and monetary cliffs together with the most overvalued stock market in history, you have the recipe for potential unprecedented stock market chaos, which should be front-end loaded in ‘22. If your retirement savings is with a deep state of Wall Street firm, you hold some mix of stocks and bonds that is set on autopilot. Their fate should be the same as the Hindenburg and Titanic. *  *  * Michael Pento is the President and Founder of Pento Portfolio Strategies, produces the weekly podcast called, “The Mid-week Reality Check”  and Author of the book “The Coming Bond Market Collapse.” Tyler Durden Fri, 01/14/2022 - 11:10.....»»

Category: blogSource: zerohedgeJan 14th, 2022

"Don"t Fight The Fed"

"Don't Fight The Fed" Authored by Lance Roberts via RealInvestmentAdvice.com, “Don’t Fight The Fed.” But, unfortunately, that mantra has remained a “call to arms” of the financial markets and media “bullish tribes” over the last decade. Armed with zero interest rate policy and the most aggressive monetary campaign in history, investors elevated the financial markets to heights only rarely seen in human history. Yet, despite record valuations, pandemics, warnings, and inflationary pressures, the “animal spirit” fostered by an undeniable “faith in the Federal Reserve” remain alive and well. Of course, the rise in “animal spirits” is simply the reflection of the rising delusion of investors who frantically cling to data points that somehow support the notion “this time is different.” As David Einhorn once stated: “The bulls explain that traditional valuation metrics no longer apply to certain stocks. The longs are confident that everyone else who holds these stocks understands the dynamic and won’t sell either. With holders reluctant to sell, the stocks can only go up – seemingly to infinity and beyond. We have seen this before. There was no catalyst that we know of that burst the dot-com bubble in March 2000, and we don’t have a particular catalyst in mind here. That said, the top will be the top, and it’s hard to predict when it will happen.” Is this time different? Most likely not. Such was a point James Montier noted recently, “Current arguments as to why this time is different are cloaked in the economics of secular stagnation and standard finance workhorses like the equity risk premium model. Whilst these may lend a veneer of respectability to those dangerous words, taking arguments at face value without considering the evidence seems to me, at least, to be a common link with previous bubbles.“ Mental Gymnastics While the “bulls” are adamant, you shouldn’t “fight the Fed” when monetary policy is loose, they say the same when it reverses. Such got evidenced by Fisher Investmentsarguing rate hikes are NOT bad for stocks. “Many pundits blaming 2018’s stock market decline on that year’s Fed hikes. While we can’t predict Fed policy from here, we can correct the record on 2018, which we think had very little to do with the Fed.“ Fisher does “mental gymnastics” to suggest the sell-off in 2018 was due to forces other than the Fed. However, what reversed the “bullish psychology” was evident. “The really extremely accommodative low-interest rates that we needed when the economy was quite weak, we don’t need those anymore. They’re not appropriate anymore. Interest rates are still accommodative, but we’re gradually moving to a place where they will be neutral. We may go past neutral, but we’re a long way from neutral at this point, probably.” – Jerome Powell, Oct 3rd, 2018 That sharp sell-off in the chart above started following that statement from Jerome Powell. Why? Because even though the Fed had already started hiking rates previously, the comment suggested much tighter policy to come. What reversed that “bear market psychology” just two months later? The Fed’s reversal on their “neutral stance.” “Where we are right now is the lower end of neutral. There are implications for that. Monetary policymaking is a forward-looking exercise, and I’m just going to stick with that. There’s real uncertainty about the pace and the destination of further rate increases, and we’re going to be letting incoming data inform our thinking about the appropriate path.” – Jerome Powell, Dec 18th, 2019 By the summer of 2019, the Fed’s interest rates returned to ZERO. Why did the market rally? “Don’t fight the Fed.” Never Fight The Fed “Rate hikes aren’t inherently bearish, in our view. Like every monetary policy decision, whether they are a net benefit or detriment depends on market and economic conditions at the time, including how they affect the risk of a deep, prolonged, global yield curve inversion. 2018’s rate hikes flattened the yield curve, but they didn’t invert it.” – Fisher Investments They are. It is just a function of timing between the first rate hike and when something eventually breaks the “bullish psychology.” Aswe discussed previously: “In the short term, the economy and the markets (due to the current momentum) can  DEFY the laws of financial gravity as interest rates rise. However, as interest rates increase, they act as a “brake” on economic activity. Such is because higher rates NEGATIVELY impact a highly levered economy:” Fisher is correct that rates may not impact the financial markets in the short term. However, most of the gains got forfeited in every instance as interest rates slowed economic growth, reduced earnings, or created some crisis. Most importantly, a much higher degree of reversion occurs when the Fed tightens monetary policy during elevated valuations. For example, beginning in 1960, with valuations over 20x earnings, the Fed started a long-term rate-hiking campaign that resulted in three bear markets, two recessions, and a debt crisis. The following three times when the Fed hiked rates with valuations above 20x, outcomes ranged from bear markets to some credit crisis needing bailouts. Yes, rate hikes matter, they matter more when there are elevated valuations. “I Fought The Fed, And The Fed Won“ The primary bullish argument for owning stocks over the last decade is that low-interest rates support high valuations. The assumption is the present value of future cash flows from equities rises, and subsequently, so should their valuation. Assuming all else is equal, a falling discount rate does suggest a higher valuation. However, as Cliff Asness noted previously, that argument has little validity. “Instead of regarding stocks as a fixed-rate bond with known nominal coupons, one must think of stocks as a floating-rate bond whose coupons will float with nominal earnings growth. In this analogy, the stock market’s P/E is like the price of a floating-rate bond. In most cases, despite moves in interest rates, the price of a floating-rate bond changes little, and likewise the rational P/E for the stock market moves little.” – Cliff Asness The problem for the bulls is simple: “You can’t have it both ways.” Either low-interest rates are bullish, or high rates are bullish. Unfortunately, they can’t be both. As noted, rising interest rates correlate to rising equity prices due to market participants’ “risk-on” psychology. However, that correlation cuts both ways. When rising rates reduce earnings, economic growth, and investor sentiment, the “risk-off” trade (bonds) is where money flows. With exceptionally high market valuations, the market can remain correlated to rising rates for a while longer. However, at some point, rates will matter. This time will not be different. Only the catalyst, magnitude, and duration will be. Investors would do well to remember the words of the then-chairman of the Securities and Exchange Commission Arthur Levitt in a 1998 speech entitled “The Numbers Game:” “While the temptations are great, and the pressures strong, illusions in numbers are only that—ephemeral, and ultimately self-destructive.” You can fight the Fed, but eventually, the Fed will win. Tyler Durden Fri, 01/14/2022 - 08:46.....»»

Category: dealsSource: nytJan 14th, 2022

Top investor Kyle Bass warns the Fed could crash the stock market this year — and predicts oil prices will surge this summer

Stocks could plunge 25% if Fed officials hike interest rates and reduce bond holdings as expected, Bass said. Kyle Bass.Reuters Kyle Bass warned the Federal Reserve's inflation fight could send the stock market down 25%. The Hayman Capital boss predicted a surge in oil prices when the global economy reopens this summer. Bass cautioned against buying Chinese stocks, citing fraud and regulatory risks. Veteran investor Kyle Bass warned stocks could crash this year, predicted an oil-price surge within months, and blasted buyers of Chinese equities as irresponsible, in a CNBC interview this week.Federal Reserve officials, under pressure to curb soaring inflation, are widely expected to hike interest rates and trim the central bank's bond holdings in the coming months."There's no way the stock market goes up this year, and it probably goes down pretty aggressively, if they stick to that plan," Bass said.The Hayman Capital Management boss added that raising short-term interest rates by just 100 or 125 basis points could spark a 25% drop in the stock market. That scale of decline would likely spook the Fed and lead to it scrapping its plans for further tightening, he said.Bass predicted that West Texas Intermediate, the benchmark US oil price, would jump from $83 a barrel to $100 in the first half of this year. He suggested the global economy's reopening would reignite energy demand, and the recent shift of capital spending from hydrocarbons to clean energy would result in supply constraints."Buckle your seatbelts," he said, adding that he doesn't expect hydrocarbon demand to fall over the next 20 years, as a global transition to renewable energy will take 40 or 50 years.Finally, Bass cautioned against gambling on Chinese stocks rallying this year. "People who are betting on a bounce, that's a fool's game," he said.The hedge fund manager highlighted the risk of accounting fraud due to a lack of financial audits in China, and the prospect of further regulatory crackdowns on Chinese companies."People investing in Chinese equities are breaching their fiduciary duties to their investors," he said.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 14th, 2022

Anthony Scaramucci says he"s not buying the dip in bitcoin as he expects more "sloppiness" and volatility

The bitcoin price is likely to consolidate for a while, SkyBridge Capital CEO Anthony Scaramucci said. Former Trump White House communications director Anthony Scaramucci is a big bitcoin investor.AP Photo/Pablo Martinez Monsivais, File Anthony Scaramucci has said he's not buying the dip in bitcoin after its sharp fall to around $42,000. The SkyBridge Capital CEO told CNBC that he sees more "sloppiness" and volatility ahead for the token. Scaramucci has recommended buying the dip in the past, but investors are uncertain about bitcoin in 2022. SkyBridge Capital CEO Anthony Scaramucci has said he's not buying the dip in bitcoin after it tumbled to near $40,000, saying he expects more volatility and "sloppiness" ahead."I think what happens next is just more consolidation," Scaramucci told CNBC Thursday. Consolidation is when an asset trades in a narrow band, often at a lower level than recent highs.When asked whether he has been buying more bitcoin he said: "No, not really… [SkyBridge Capital is] not really adding any more or taking any away at this point.""There'll likely be some sloppiness near term," he said. "You're gonna see these volatility waves as people jump on, they get scared, [they] jump off."Bitcoin has fallen sharply over the last couple of weeks as financial markets have been hit by expectations that the Federal Reserve is set to raise interest rates numerous times in 2022, bringing an end to the ultra-loose monetary policy which boosted assets over the previous two years.The world's biggest cryptocurrency traded at around $42,195 Friday, having fallen roughly 4% over the previous 24 hours. It was far below its November record high of close to $69,000.Read more: Bitcoin's hashrate is sitting close to all-time highs, but the price keeps falling. 8 experts break down what investors need to know about trading bitcoin in 2022Scaramucci has previously recommended buying bitcoin when it has fallen in the past, suggesting he's now more worried about the outlook for the token.The Fed is likely to hike interest rates at least three times this year, according to analysts. So far, those expectations have been particularly bad for assets that are seen as very risky, notably, speculative tech stocks and cryptocurrencies.Investors have pivoted away from tech and crypto towards stocks that stand to do better as interest rates rise, inflation remains elevated and the economy grows, such as banks and energy companies.Scaramucci, who briefly served as President Donald Trump's White House communications chief, said he doesn't think bitcoin is a good hedge against inflation, saying it's "too immature."But he did say bitcoin can lower the cost of sending money around the world, saying this has been beneficial to people in El Salvador, where the digital asset is legal tender.Scaramucci also said he thinks long-term holders of bitcoin are going to be fine, despite the recent volatility. "This is an early-adoption technology story," he said.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 14th, 2022

Markets have flipped upside down as the Fed prepares to hike rates. 3 charts explain what"s going on.

As the easy-money era comes to a close, investors are completely changing their minds about stocks. Traders have faced heavily volatility so far in 2022.Andrew Burton/Getty Images Stock markets have turned on their head in 2022 as investors ditch flashy tech companies. Bond yields have risen sharply as investors prepare for the Fed to hike rates this year. That's changed the calculation on stocks, and boosted more interest-rate sensitive sectors. Andy Kiersz/Insider/BloombergStock markets roared higher in 2020 and 2021 as the Federal Reserve pumped trillions of dollars into the economy and slashed interest rates to record lows.Technology stocks were the big winners, with the tech-heavy Nasdaq 100 index shooting more than 130% higher between the bottom of the coronavirus-driven sell-off in March 2020 and November 2021.Yet the Fed has abruptly pivoted to inflation-fighting mode, as it tries to cool the hottest price rises for 39 years. It's bringing its bond purchases to an end and is likely to hike interest rates numerous times this year.The prospect of higher rates has caused bond yields to shoot up, as investors demand higher returns.Higher bond yields have a huge effect on the rest of the market. Not only do they make the bond market look somewhat more attractive, they dramatically alter calculations about stocks, because they erode the present value of future earnings. Higher yields also increase companies' borrowing costs and, by and large, benefit banks.Tech stocks, particularly at the more speculative end of the spectrum, have tumbled.Andy Kiersz/Insider/BloombergNowhere is the impact of rising interest rates and bond yields more evident than banks – which have jumped – and speculative technology companies – which have slumped.The Dow Jones banks index was up more than 10% for 2022 as of Wednesday's close, with higher rates and yields set to boost the amount of money banks can make from lending. But the Ark Innovation ETF, run by star stockpicker Cathie Wood, has cratered. That's because it's chock full of technology companies that don't yet make any money. Their far-off future earnings look a lot less attractive when there's more money to be made in bonds and other assets in the here and now.Andy Kiersz/Insider/BloombergInvestors have "rotated" heavily away from so-called growth stocks, companies that are expected to grow more rapidly than the broader market, which are often in the tech sector.They've moved instead towards so-called value stocks, those whose price looks cheap when their financial performance is taken into account. That's because these companies' health is more closely tied to the economy, which is set to stay strong, and interest rates, which are going up.The Russell 1000 value index has fared particularly well in 2022 so far. Among its biggest components are Warren Buffett's Berkshire Hathaway, which invests largely in consumer companies such as Coca-Cola, JPMorgan and Walt Disney.By contrast the Russell 1000 growth index has dropped. Among its biggest components are Apple, Tesla and chip-maker Nvidia – the latter of which is down more than 8% for the year. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 13th, 2022

Markets have flipped upside down as the Fed prepares to hike rates. Three charts explain what"s going on.

As the easy-money era comes to a close, investors are completely changing their minds about stocks. Traders have faced heavily volatility so far in 2022.Andrew Burton/Getty Images Stock markets have turned on their head in 2022 as investors ditch flashy tech companies. Bond yields have risen sharply as investors prepare for the Fed to hike rates this year. That's changed the calculation on stocks, and boosted more interest-rate sensitive sectors. Andy Kiersz/Insider/BloombergStock markets roared higher in 2020 and 2021 as the Federal Reserve pumped trillions of dollars into the economy and slashed interest rates to record lows.Technology stocks were the big winners, with the tech-heavy Nasdaq 100 index shooting more than 130% higher between the bottom of the coronavirus-driven sell-off in March 2020 and November 2021.Yet the Fed has abruptly pivoted to inflation-fighting mode, as it tries to cool the hottest price rises for 39 years. It's bringing its bond purchases to an end and is likely to hike interest rates numerous times this year.The prospect of higher rates has caused bond yields to shoot up, as investors demand higher returns.Higher bond yields have a huge effect on the rest of the market. Not only do they make the bond market look somewhat more attractive, they dramatically alter calculations about stocks, because they erode the present value of future earnings. Higher yields also increase companies' borrowing costs and, by and large, benefit banks.Tech stocks, particularly at the more speculative end of the spectrum, have tumbled.Andy Kiersz/Insider/BloombergNowhere is the impact of rising interest rates and bond yields more evident than banks – which have jumped – and speculative technology companies – which have slumped.The Dow Jones banks index was up more than 10% for 2022 as of Wednesday's close, with higher rates and yields set to boost the amount of money banks can make from lending. But the Ark Innovation ETF, run by star stockpicker Cathie Wood, has cratered. That's because it's chock full of technology companies that don't yet make any money. Their far-off future earnings look a lot less attractive when there's more money to be made in bonds and other assets in the here and now.Andy Kiersz/Insider/BloombergInvestors have "rotated" heavily away from so-called growth stocks, companies that are expected to grow more rapidly than the broader market, which are often in the tech sector.They've moved instead towards so-called value stocks, those whose price looks cheap when their financial performance is taken into account. That's because these companies' health is more closely tied to the economy, which is set to stay strong, and interest rates, which are going up.The Russell 1000 value index has fared particularly well in 2022 so far. Among its biggest components are Warren Buffett's Berkshire Hathaway, which invests largely in consumer companies such as Coca-Cola, JPMorgan and Walt Disney.By contrast the Russell 1000 growth index has dropped. Among its biggest components are Apple, Tesla and chip-maker Nvidia – the latter of which is down more than 8% for the year. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 13th, 2022

3 Reasons and 3 Stocks to Bet On The Construction Sector In 2022 (Revised)

A hawkish Fed may not be encouraging for the construction sector, but there are other tailwinds that can help us pick winners. A hawkish Fed is bad news for the construction sector, as higher interest rates will increase borrowing costs for both the construction companies and those looking to buy homes. And although the Fed has indicated that it will keep the stock market impact in mind, it is under a lot of pressure to bring down inflation. So interest rate hikes are likely to follow soon after bond purchases normalize. The tapering started in November, when the Fed was buying $120 billion worth, but overall purchases will still continue to increase until some time in March, according to some estimates. And we should expect rate hikes some time after that, certainly by the end of the year. But that still means that we have a full year during which a lot of things are set to change for the construction sector.The first point to keep in mind is that inventories are still low and housing prices are still continuing to rise. And inventories are unlikely to grow rapidly given the fact that there are a lot of constraints. The first constraint is with respect to labor, where supply is very tight. The second constraint is with respect to supply chain issues, which is limiting raw material availability and pricing. The third is with respect to availability of lots, which is a longer-term issue that affects different players differently (depending on the way each has dealt with the situation) and won’t be solved any time soon.  The second reason why I think that there will still be opportunities here is the fact that there is secular demand for housing that is related to demographics. Because 2021 was so tight, a lot of this demand was shelved. On the other hand, those forced into the new normal of operating from home created incremental demand, not all of which was satisfied by the tight conditions last year. So the demand situation remains conducive. If there’s a rate hike toward the end of the year, that’s even more reason to buy before that to lock in a lower rate.And finally, the construction sector doesn’t just include home builders but also non-residential and other kinds of construction and the companies that supply to them. And this segment is going to benefit from Biden’s $550 billion allotment over the next five years for a number of things including roads and bridges, rail repair, public transit, airports, ports, pipelines, EV infrastructure and other public infrastructure.Winnebago Industries WGOHeadquartered in Iowa, Winnebago Industries is a leading producer of recreational vehicles in the United States. The motorhomes or RVs are made in the company's vertically integrated manufacturing facilities in Iowa, while the travel trailer and fifth wheel trailers are produced in Indiana. Winnebago distributes its RV and marine products through independent dealers throughout the United States and Canada.The demand for recreational vehicles picked up during the pandemic and is showing no signs of letting up. It was initially driven by the need to travel while also maintaining social distancing. But as the pandemic ebbed and flowed, it was apparent that a new normal was in order. Since the millennial and younger population is anyway looking for an active outdoor kind of lifestyle, RVs that are increasingly better connected and built on sustainable considerations have been the way to go. Fleet owners have also been increasing capacity as there’s also increasing demand in the rental market. Management quoted RBIA survey data on the last earnings call showing that an additional 9.6 million households say they are considering buying an RV in the next five years and that over 14 million households have camped for the first time during 2020 and 2021.Winnebago beat November quarter earnings expectations by 53.3%. Its 2022 and 2023 (ending August) earnings estimates are up a respective $2.74 (28.7%) and $1.05 (11.2%) in the last 60 days. Analysts currently expect Winnebago revenue and earnings to increase 25.7% and 43.7% in 2022. The dealer order business model ensures that there’s no excess inventory and the backlog indicates that the company is racing to replenish dealer inventories. As such, estimates are on track to keep moving upward.Winnebago carries a Zacks Rank #1 (Strong Buy) stock and Value Score of A, and belongs in the top 13% of Zacks-classified industries, indicating strong upside potential.  Beazer Homes USA BZHBeazer Homes USA designs, builds and sells single family homes primarily for the entry-level and first move-up segment. So their homes tend to balance quality and value.Beazer Homes is one of the lucky homebuilders that has substantially increased its lot position in recent times. At the end of fiscal 2021 ending September, active lots were up 25% from the prior year. It also grew its share of lots controlled by option from about 35% to nearly 50%. This ensures a steady capacity to grow. While supply chain disruptions and cost increases are impacting Beazer Homes just as it is other players, the strong demand environment facilitates record growth.As a result, Beazer Homes topped the Zacks Consensus Estimate by 91.5% in the last quarter. Additionally, the estimated earnings for 2022 increased $1.53 (44.0%) in the last 60 days. The estimated earnings for 2023 increased $1.34 (33.6%) during the same period.Shares of this Zacks Rank#1 company carry a Value Score of A and Growth Score of B. Besides, Beazer Homes belongs in the top 36% of Zacks-classified industries, another indication of upside potential.Toll Brothers TOLToll Brothers Inc. builds single-family detached and attached home communities; master planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities, principally on the land it develops and improves.Toll Brothers offers a broader product range than Beazer and it also sells land. So, while it is also benefiting from the strong demand that has so far allowed it to transfer rising cost to the customer, it also benefits from strategic initiatives related to its land business. Management has said that its land acquisition has become more capital efficient now, which along with improving operating efficiencies, is contributing to its profitability.  Toll Brothers beat the Zacks Consensus Estimate by 21.8% in the last quarter. In the last 60 days, The Zacks Consensus Estimate for its fiscal 2022 (ending October) earnings has increased 89 cents (10.1%) while the 2023 estimate has increased $1.13 (11.2%). Analysts currently expect Toll Brothers’ revenue and earnings to grow a respective 17.8% and 46.3% this year followed by 8.5% and 15.9% growth in the next.Toll Brothers shares carry a Zacks Rank #1 and an A for both Value and Growth. They’re in the same industry as Beazer, so they too have good upside potential.(We are reissuing this article to correct a mistake. The original article, issued on January 07, 2022, should no longer be relied upon.) Bitcoin, Like the Internet Itself, Could Change Everything Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities. Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. See 3 crypto-related stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Toll Brothers Inc. (TOL): Free Stock Analysis Report Beazer Homes USA, Inc. (BZH): Free Stock Analysis Report Winnebago Industries, Inc. (WGO): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 13th, 2022

Fed Hawks Grow Stronger. Will Gold Stand Its Ground?

2022 may be the year of Fed hawks. After tapering, they may hike rates and then start quantitative tightening. Will they tear gold apart? Q3 2021 hedge fund letters, conferences and more During the Battle of the Black Gate in the War of the Ring, Pippin cried out: “The eagles are coming!”. It was a […] 2022 may be the year of Fed hawks. After tapering, they may hike rates and then start quantitative tightening. Will they tear gold apart? .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 Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio 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 During the Battle of the Black Gate in the War of the Ring, Pippin cried out: “The eagles are coming!”. It was a sign of hope for all those fighting with Sauron. Now, I could exclaim that hawks are coming, but that wouldn’t necessarily give hope to anyone fighting the bearish trends in the gold market. Yesterday (January 5, 2022), the FOMC published the minutes from its last meeting, held in mid-December. Although the publication doesn’t reveal any revolutions in US monetary policy, it strengthens the hawkish rhetoric of the Fed. Why? First, the FOMC participants acknowledged that inflation readings had been higher, more persistent, and widespread than previously anticipated. For instance, they pointed to the fact that the trimmed mean PCE inflation rate, which trims the most extreme readings and is calculated by the Dallas Fed, had reached 2.81% in November 2021, the highest level since mid-1992, as the chart below shows. It indicates that inflation is not limited to a few categories but has a broad-based character. The Committee members also noted several factors that could support strong inflationary pressure this year. They mentioned rising housing costs and rents, more widespread wage growth driven by labor shortages, and more prolonged global supply-side frictions, which could be exacerbated by the emergence of the Omicron variant; as well as easier passing on higher costs of labor and material to customers. In particular, supply chain bottlenecks and labor shortages could likely last longer and be more widespread than previously thought, which could limit businesses’ ability to address strong demand. Second, the FOMC admitted that the US labor market could be tighter than previously thought. They judged that it could reach maximum employment very soon, or that it had largely achieved it, as indicated by near-record rates of quits and job vacancies, labor shortages, and an acceleration in wage growth: Many participants judged that, if the current pace of improvement continued, labor markets would fast approach maximum employment. Several participants remarked that they viewed labor market conditions as already largely consistent with maximum employment. The consequence of higher inflation and a tighter labor market would be, of course, a more hawkish monetary policy. Although the central bankers didn’t discuss the appropriate number of interest rate hikes, they agreed that they should raise the federal funds rate sooner or faster: Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated. Additionally, Fed officials also discussed quantitative tightening. They generally agreed that – given fast economic growth, a strong labor market, high inflation, and bigger Fed assets – the balance sheet runoff should start closer to the policy rate liftoff and be faster than in the previous normalization episode: Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate. However, participants judged that the appropriate timing of balance sheet runoff would likely be closer to that of policy rate liftoff than in the Committee's previous experience. They noted that current conditions included a stronger economic outlook, higher inflation, and a larger balance sheet and thus could warrant a potentially faster pace of policy rate normalization. Implications for Gold What do the recent FOMC minutes imply for the gold market? Well, referring once more to the Lord of the Rings, they are more like the Nazgûl that wreak despair rather than the Eagles offering hope. They were hawkish – and, thus, negative for gold prices. The minutes revealed that after tapering of quantitative easing, the Fed could also reduce its overall asset holdings to curb high inflation. In December, the US central bank accelerated the pace of tapering and signaled three interest rate increases in 2022. The minutes went even further, signaling a possibility of an earlier and faster rate hike and outright reduction in the Fed’s balance sheet: Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve's balance sheet relatively soon after beginning to raise the federal funds rate. Some participants judged that a less accommodative future stance of policy would likely be warranted and that the Committee should convey a strong commitment to address elevated inflation pressures. Hence, the price of gold responded accordingly to the FOMC minutes and declined from about $1,825 to $1,810, as the chart below shows. Luckily, there is a silver lining: the drop hasn’t been too big, at least so far. It may indicate that a lot of hawkish news has already been priced into gold, and that sentiment is rather bullish. However, the hawks haven’t probably said the last word yet. Please remember that the composition of the Committee will be more hawkish this year, but also that the mindset is changing among the members. For example, Minneapolis Fed President Neel Kashkari, one of the Committee’s most dovish members, said this week that the U.S. central bank would have to need to raise interest rates two times this year. Previously, he believed that the federal funds rate could stay at zero until at least 2024. Thus, although inflationary risk may provide support for gold, the yellow metal may find itself under hawkish fire in the upcoming weeks. We will see whether it will stand its ground, like the soldiers of Gondor. If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today! Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care Updated on Jan 6, 2022, 5:16 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJan 6th, 2022

Payments on everything from credit cards to cars could creep higher in March as the Fed ramps up its fight against inflation

The Fed could hike its benchmark interest rate "as early as the March meeting" to cool inflation, St. Louis Fed President James Bullard said Thursday. Bloomberg via Getty Images/Scott Eells New signals from the Federal Reserve suggest its first pandemic-era rate hike could arrive in March. Such an increase would lift rates on car loans, mortgages, savings interest, and credit card debt. The Fed has indicated it will raise rates multiple times in 2022 to fight historically high inflation. Buying a house or opening a credit card could get much more expensive in just a few months as the Fed plans its first interest rate hikes since the beginning of the pandemic.The move will touch everything from today's red-hot inflation to the price of paying back credit card debt.After nearly two years of near-zero rates, the Fed is pivoting. Progress toward economic recovery and the highest inflation in four decades has prompted the central bank to start reining in its loose money policies intended to support the economy through the worst of the pandemic.Officials said in December they would shrink the Fed's emergency asset purchases twice as quickly as previously expected, and projections published after last month's meeting showed participants anticipating three rate hikes in 2022, a faster pace than the Fed had signaled earlier in 2021.The anticipated rate hikes will almost certainly have ripple effects throughout the US economy. The Fed's benchmark interest rate influences rates on everything from credit card payments to mortgages.When the Fed lowers rates, payments on loans fall. Conversely, upcoming hikes will make borrowing more expensive. Paying off a car or credit card debt will get tougher as the benchmark rate rises, but those holding their cash in savings accounts will make slightly more in interest.The first of the increases could come as early as the Fed's March 16 policy meeting. The new tapering pace suggests the Fed's asset purchase program will end then, and new commentary from central bank officials signal higher rates could arrive immediately after. The Federal Open Market Committee "could begin increasing the policy rate as early as the March meeting" to better counter inflation, James Bullard, president of the Federal Reserve Bank of St. Louis, said in a Thursday presentation to the CFA Society St. Louis.Separately, minutes of the December FOMC meeting published Wednesday showed policymakers bracing for a faster tightening of monetary conditions. Participants noted it might be warranted to raise rates "sooner or at a faster pace" than previously expected, citing their outlooks for inflation and the labor market.Rate increases also serve as the Fed's weapon-of-choice for fighting inflation. Low rates tend to spur demand and spending, but an imbalance between supply and demand can drive prices sharply higher.That's certainly been the case in the last 12 months. New stimulus and the reversal of lockdown measures in early 2021 powered a wave of demand as Americans returned to stores and unleashed pent-up savings. Year-over-year inflation neared a four-decade high of 6.8% in November, according to the Consumer Price Index. That's a huge leap from the 5.4% pace seen in September and well above the 2% average the Fed has been targeting."There's a real risk now, I believe, that inflation may be more persistent ... and the risk of higher inflation becoming entrenched has increased," Fed Chair Jerome Powell said in a press conference following the FOMC's December 15 meeting.By starting its crawl to higher rates, the Fed is shifting its focus from economic aid to cooling inflation. It will likely be years before the central bank's benchmark rate returns to the level seen before the pandemic, as the Fed will want to slowly wean the economy off of its policy aid. But as prices continue to rip higher, all signs point to the March 16 as a key date for the US recovery.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 6th, 2022

Here"s why tech stocks are tumbling as the Fed prepares to hike interest rates.

The tech-heavy Nasdaq 100 stock index suffered its worst day since March on Wednesday, plunging more than 3%. The Nasdaq 100 index fell more than 3% Wednesday.Andrew Burton/Getty Images Tech stocks took a beating Wednesday, with the Nasdaq 100 suffering its worst day since March. Rising interest rates and expectations of strong economic growth and inflation are all key factors. Investors are looking for companies that can ride out 2022, and leaving speculative tech stocks behind. Tech stocks took an almighty beating Wednesday, with the Nasdaq 100 falling 3.12% in its worst day since March. Many are deep in the red again Thursday.But why are tech stocks falling so hard? Is it rising bond yields, expectations for strong growth, hot inflation, or all of the above? We'll try to explain.Central banks juiced the market in 2020 and 2021First, it's important to understand why tech rocketed to begin with. When coronavirus hit in 2020, central banks slashed interest rates and pumped trillions of dollars into economies.Bond yields cratered, so investors started looking elsewhere for returns. Banks, energy companies and the like were in the doldrums, so investors turned to the so-called stay-at-home stocks like Amazon, Apple and Google.But borrowing was cheaper than ever. So, investors thought, why not take a bet on flashy – if unprofitable – tech companies that might be the next Netflix or Tesla?Fast forward a year and almost all of those calculations have changed.Bond yields are rising – and that's bad news for techThe Fed signaled last year that it's going to raise interest rates in 2022, and has already started slowing bond purchases, as it tackles the strongest inflation since the 1980s.But the trigger for Wednesday's sell-off was the release of minutes from the last Fed meeting in December. They revealed officials are weighing up moving faster than previously expected, sending investors into a panic.Read more: These 6 stocks are the favorites in the 'stock pickers' market' of 2022, says the investing chief of a firm that handles nearly $30 billion in assets — though an overlooked risk could rattle marketsRising interest rates – and the resulting higher bond yields – hurt tech stocks for a few reasons.The key one is that many technology companies are currently unprofitable or make little money. If bond yields are higher, then investors are losing out on returns in the here and now by holding tech companies that will only start earning properly in the distant future. That makes those firms look a lot less appealing.Higher interest rates are also good for the financial sector. Banks have fared particularly well over the last few months, drawing investors away from tech.Growth is expected to stay strongAnother key factor at play is that investors expect the US and global economy to be strong in 2022.US jobs data from private company ADP came in much stronger than expected Wednesday. On top of this, the Omicron coronavirus variant tearing across the US seems to be considerably milder than previous iterations.The prospect of a strong economy is sending investors back to the very kinds of companies – airlines, restaurants, hotels – that they dumped during the worst of the pandemic in favor of stay-at-home and speculative tech stocks.Inflation is also sticking aroundYet inflation is also red hot, and is expected to remain strong in 2022. Not only does that make it more likely that the Fed will raise rates, but it also sends buyers searching for companies that can ride out the storm.Instead of flashy tech names, investors are snooping around for firms that can successfully raise their prices, such as luxury consumer brands. And they're buying sectors that traditionally fare well during times of inflation, like real estate and energy.But not all tech companies are equal. Analysts expect stocks such as Apple, Amazon and Google to fare much better in 2022 than unprofitable tech companies, because, simply put, they make tons of money.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 6th, 2022

US stock futures tread water after Fed minutes spark a sell-off, while bitcoin slumps to a 1-month low

As well as embarking on rate hikes, the Fed may reduce its balance sheet — the "most notable development" in its minutes, an analyst said. ING analysts said March is too early for a rate hike.Spencer Platt/Getty Images US stock futures were wavering around the flatline Thursday in the wake of a Federal Reserve-inspired sell-off. The Fed is considering cutting its balance sheet — the "most notable development" in its minutes, an analyst said. Bitcoin fell 8% to about $42,000, as coming rate hikes may squeeze the liquidity that benefited crypto last year. Sign up here for our daily newsletter, 10 Things Before the Opening Bell. US stock futures wavered Thursday, struggling to recover from a global sell-off prompted by signs the Federal Reserve is ready to be more aggressive on interest rate rises and in cutting back on support for the US economy.Nasdaq futures were down 0.27% as of 6:10 a.m. ET, after technology stocks bore the brunt of Wednesday's rout. Futures on the Dow rose 0.24%, while those on the S&P 500 were up 0.06%, suggesting a cautious start to trading later in the day.With their hawkish tone, the Fed's December meeting minutes released Wednesday burst the early-year calm in markets. Officials agreed that a tight job market and high inflation mean they may not wait for more people to return to work before hiking interest rates.In mid-December, the US central bank said it would double the pace of tapering, or cutting back on its bond purchases, and signaled it would raise interest rates three times in 2022 to cool sky-high inflation.The minutes suggest the Fed might now reduce its balance sheet, as opposed to merely pulling back on its emergency asset buying — a move to quantitative tightening, to cut the amount of liquidity in the market."The most notable development in the minutes undoubtedly came in the form of the Fed's view on balance sheet reduction," said Simon Harvey, senior FX market analyst at Monex Europe.Major US stock indices retreated after the minutes, with the tech-centric Nasdaq falling 3% for its biggest daily drop in nearly a year. Wednesday's losses came after a two-week rally for US stocks, during which the S&P 500 rose 5% to close at an all-time on Monday.In Europe, stocks followed US markets lower. London's FTSE 100 lost 0.4%, the Euro Stoxx 600 was down 0.9%, and Frankfurt's DAX fell 0.9%.Asian equities mainly dropped, too, as the US losses dented the regional outlook for corporate profit growth. The Shanghai Composite fell 0.2%, and Tokyo's Nikkei fell 2.8%. Hong Kong's Hang Seng added 0.7%.Highly valued tech companies and real-estate names are among the sectors most sensitive to rising interest rates. Higher long-term rates increase borrowing costs and weigh on future earnings estimates for high-growth businesses. They also turn bonds into safer investments for institutional investors.The 10-year US Treasury yield rose to 1.73% on Thursday, to its highest level since April 2021, after surging to 1.71% after the Fed news.Analysts are now assessing when the Fed might make its first interest-rate hike this year. ING analysts James Knightley and Padhraic Garvey said March is too early for a rate increase, given the uncertainty caused by Omicron, but May is "clearly on the cards.""With several participants noting that the maximum employment objective has largely been met, and uncertainty over the recovery in the participation rate in the coming months, jobs data will be key in determining whether the growing consensus in money markets for lift-off at March's meeting is the correct bet," Harvey said in a note.One key economic indicator, the monthly US jobs report for December, is due Friday. Private-sector job growth data from ADP out Wednesday came in at double the estimates and far outstripped November's reading.Bitcoin slumped as much as 8.5% to about $42,961, according to CoinGecko, in its worst day since the flash crash on December 4. Analysts said the Fed's faster-than-expected rate hike puts at risk the liquidity that has benefitted many asset classes, including bitcoin.In an inflationary period, market participants can expect some peaks and troughs along the way "as markets never move in a straight line," and investors can expect to see bitcoin and other major cryptocurrencies "revert to an upward trajectory," said Nigel Green, founder of investment firm DeVere Group.Read More: Apple just became the first member of the $3-trillion club. Here are the bull and bear cases for the stock.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 6th, 2022

What Spooked Markets So Badly In Today"s Fed Minutes? JPMorgan, Goldman Explain

What Spooked Markets So Badly In Today's Fed Minutes? JPMorgan, Goldman Explain Considering that today's minutes covered a FOMC meeting that took place some three weeks ago, with numerous Fed speakers having ample opportunity to set the stage for what was to come (talk about those famous Fed "communication" skills), it is rather shocking how powerful and violent today's stock tantrum was. But what exactly spooked traders so badly? Well, as JPM Michael Feroli writes in his FOMC post-mortem, the minutes portray "a Committee on the march toward removing policy accommodation" which is not a surprise to anyone except perhaps the biggest cubic zirconium hands out in Seoul. Regarding the expected path of policy rates the minutes note that meeting participants generally see rate hikes “sooner or at a faster pace" than previously expected. Of course, this too had already been hinted at by the dots released after the meeting. What was new in these minutes, and was also unexpectedly hawkish, were the clues given to how balance sheet normalization would play out. While most favored allowing assets to run off after the first rate hike, it was generally thought that this runoff would occur sooner after liftoff relative to the 2014-17 episode. Moreover, it was generally felt that the pace of runoff would be faster than the last experience: as a reminder, last time it took two years between the first rate hike and the beginning of balance-sheet contraction (see excerpt below) so the Fed is now hinting that it could shorten this to less than nine months so that runoff begins in 2022... or at least that's how the market reads it. And the other big surprise is that some on the Committee felt that tightening financial conditions by relying more on balance sheet runoff and less on rate hikes would help steepen the curve, a desirable outcome in their opinion, though it’s not clear this was a widely-shared view, especially considering the catastrophic conclusion to the Fed's tapering in Sept 2019 when JPMorgan had to crash to repo market to force the Fed to launch Not QE (narrator: it was QE) when the financial system promptly ran out of reserves. Here is the section in question: Some participants commented that removing policy accommodation by relying more on balance sheet reduction and less on increases in the policy rate could help limit yield curve flattening during policy normalization. A few of these participants raised concerns that a relatively flat yield curve could adversely affect interest margins for some financial intermediaries, which may raise financial stability risks. However, a couple of other participants referenced staff analysis and previous experience in noting that many factors can affect longer-dated yields, making it difficult to judge how a different policy mix would affect the shape of the yield curve. Many participants judged that the appropriate pace of balance sheet runoff would likely be faster than it was during the previous normalization episode. Many participants also judged that monthly caps on the runoff of securities could help ensure that the pace of runoff would be measured and predictable, particularly given the shorter weighted average maturity of the Federal Reserve's Treasury security holdings. Separately, Feroli also notes that "many" also felt the recently-authorized standing repo facility should support faster and smoother balance sheet normalization, and as has been the case recently, “some” participants favored a quicker runoff pace for agency MBS relative to US Treasuries. There were fewer surprises regarding the Fed's views on the economy where the staff revised up their inflation forecast for coming years, noting the “salience” of ’21 inflation outcomes. On the labor market, some on the Committee noted that the recovery was already “more inclusive.” In the discussion of the labor force participation rate, the Committee sounded more pessimistic that participation would soon recover, if ever. More generally, “several” thought the labor market was already at maximum employment, and many others thought it would “fast approach” that criterion. It was also noted by “some” participants that liftoff could happen before maximum employment had been reached if inflation expectations appeared to become unanchored. Commenting on the maximum employment assessment, Bloomberg economist Yelene Shulyatyeba said that “the FOMC participants’ labor-market assessment suggests they see the economy at or very close to full employment. Apart from ‘a number of signs that the U.S. labor market was very tight,’ policy makers also saw little potential for a significant short-term improvement in participation. Therefore, the economy may have achieved full employment earlier and with a smaller labor force than previously foreseen, which implies the need for tighter policy sooner than anticipated.” We disagree with this for reasons we explained in "A March Rate Hike? Not So Fast" Finally, while virus variant risks were noted several times, the overall tone of the minutes suggests this was not expected to be a major headwind to the growth outlook. Shifting from JPM to Goldman's post-mortem, the bank's Jan Hatzius cut to the chase and titled his note with the big punchline. namely that "Fed Balance Sheet Runoff Could Start “Relatively Soon” After Liftoff." Similar to Feroli, this is how he explains it: The December FOMC minutes indicated that participants continued to view mid-March as an appropriate end date for net asset purchases. The minutes also noted that “some” participants said that it could be appropriate to start runoff “relatively soon after beginning to raise the federal funds rate” and “many” participants judged that the appropriate pace of balance sheet runoff would likely be faster than last cycle.  In our view, today’s minutes increase the chances that the FOMC might be ready to reach a decision on the runoff process and issue new normalization principles in the second quarter, which could mean that runoff begins somewhat earlier than our standing assumption of Q4.  We still expect that the start of runoff will substitute for a quarterly hike, so that the FOMC would still hike 3 times total in 2022 if runoff begins in Q3, but an earlier announcement of the start of runoff would be somewhat less likely to substitute for a hike than one that comes toward the end of the year. This is all fine and good, and it is certainly far more hawkish than the market expected, but it does raise several questions, as today's market action indicated. First, and foremost, back in 2018 when r-star was far higher than it is today, the Fed managed to get away with 8 rate hikes before a 20% drop in stocks forced Powell into a premature easing cycle in the summer of 2019, right around the time the repo crisis emerged and the Fed realized it needs to add far more reserves (and lo and behold 7 months later, we got just the perfect Made in China excuse to inject trillions into the financial system). So the first question is how many rate hikes can the Fed get away with now that global debt is orders of magnitude higher than it was just 4 years ago. 3 hikes? 4 hikes and a run off, before the next big crash forces the Fed into early easing. Keep a close eye on fwd OIS swaps markets for the tell on when the next rate cut cycle/QE will start. And tied to that are two more question: while it is clear that Biden is freaking out about inflation far more than he is about the prospect of a market crash, is the president even remotely aware of what a 20%, 30% (or more) crash in the market will do to Democrats in the polls, and midterms, not to mention 2024? Something tells us the answer is no. Last but not least is the question everyone would like answered: just how is the Fed tightening financial conditions going to ease a historic supply chain collapse which is driven by countless other factors than just excess demand sparked by Biden's stimmies. We doubt we will find out the answer, but we also doubt that the market's latest freak out about much tighter financial conditions - including 3 rate hikes and balance sheet run off starting in 2022 - will ever come to pass. Because if it does, the only question then is how long before the Fed starts monetizing ETFs, cryptos and NFTs to preserve the $145 trillion or so in US net worth parked squarely in the hands of the 1%, the only legacy the US central bank will leave on this earth. The full JPM and GS reports are available to pro subs in the usual place. Tyler Durden Wed, 01/05/2022 - 20:00.....»»

Category: blogSource: zerohedgeJan 5th, 2022

Stocks will rally in 2022 even as US interest rates hit 2%, Wharton professor Jeremy Siegel says

Stocks will rise because "there is no alternative in an inflationary environment," Jeremy Siegel said. Jeremy Siegel is a long-time market commentator.CNBC/Getty Images US stocks will rally in 2022 even as the Federal Reserve hikes rates, Jeremy Siegel said. The Wharton professor told Bloomberg that there is no alternative to stocks if investors want to beat inflation. The S&P 500 rose more than 25% in 2021, and analysts are divided about the 2022 outlook. US stocks will rise in 2022 even as the Federal Reserve hikes interest rates to around 2% to stamp down on inflation, according to Wharton finance professor Jeremy Siegel.Sky-high inflation has spurred the central back to action, and it has signaled that it's likely to raise rates three times this coming year. Markets expect the Fed to start hiking in either March or May.Siegel told Bloomberg TV he thinks the Fed is behind the curve on inflation, and so will have to increase interest rates more than expected."I would not be surprised to see the short-term interest rate go to 2% by year-end," he said Monday.Yet even a sharp rise in borrowing costs will not stop US stocks from marching higher this year, Siegel said. He predicted that equities will still have an "up year, but not as much as 2021."The S&P 500 index rallied more than 25% in 2021, as the Fed's ultra-low interest rates and huge bond purchases juiced the markets. The arrival of coronavirus vaccines added to the optimism.But analysts are divided on the outlook for equities in 2022, citing factors such as coronavirus variants and US midterm elections as a source of uncertainty.Siegel told Bloomberg TV that inflation and the Fed's plans to hike interest rates will cause some volatility in stocks, with "bumps coming toward the middle."Even so, equities remain the only option for investors who want to try to beat inflation, he said, given that bond yields remain historically low and the real value of cash is being eroded.Read more: Wall Street's biggest banks share why they're most bullish on stocks in these 6 sectors in 2022Stocks will rise because of "that old saying that we all know: TINA, there is no alternative, in an inflationary environment," Siegel said.At the same time, investors will have to be more selective than before about which stocks to buy, he noted.Stocks with good dividends are likely to fare well because they offer investors stronger returns and the chance to beat inflation, according to the Wharton professor.In contrast, "high-flying tech stocks" that are yet to yield much in the way of profit will likely suffer, he said, as higher bond yields and inflation make them look less attractive.Siegel added that he doesn't think the US stock market looks overvalued, especially when the dominant tech names such as Apple are removed.He said earnings ratios are above the historical average "but still not that expensive, certainly with interest rate levels as they are … I still think it's a reasonable stock market."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 4th, 2022

Gartman: No Question The Bear Market Hits This Year; Stocks Will Drop 10-15%

Gartman: No Question The Bear Market Hits This Year; Stocks Will Drop 10-15% For a while, things looked shaky: after exploding higher out of the gate, stocks swooned lower and for a few minutes, the S&P was even red for the year. But then the levitation returned right on schedule the moment algos heard of the most bullish market catalyst known to man: Dennis Gartman had doubled down on his bearishness. As a reminder, the most recent Gartman appearance on these pages sparked a furious rally after the iconic contrarian indicator said on the morning of Monday, Dec 6 that "stocks are headed lower" and that a "bear market is required at this point." Stocks have soared higher since and hit a new all time high on Dec 30. So fast forward to today when just as algos were starting to lose in the market's latest ramp, and that the all time high at 4,800 would be overcome any time soon, they got an unexpected tailwind when speaking on Bloomberg radio, Dennis Gartman said the most bullish thing imaginable: the "commodity guru" said that stocks could face a “slow, laborious” decline in 2022 as a result of a more hawkish Federal Reserve that may raise interest rates four times. The moment the interview hit is when stocks bottomed for the day. Gartman, who is somehow also the University of Akron Endowment Chairman said that stocks could trade 10% to 15% lower this year. While Gartman has long been calling for a bear market, he said the catalyst for the decline could be the central bank raising interest rates amid a continued rise in inflation. "The advent of a bear market will come when the Fed begins to tighten monetary policy, and that will be later this year. No question," said Gartman, who formerly published the influential “The Gartman Letter.” While most of Wall Street is forecasting that the Fed will raise rates three times in 2022, Gartman expects a more aggressive approach in part because of newly appointed members who tilt hawkish. He also said one hike could be as much as 50 basis points and the benchmark overnight rate could jump at least 100 basis points from current levels by the end of the year. Of course, none of that will ever happen because by mid-2022 the CPI base effect will have passed, the economy will be in freefall, and Biden will realize that a strong stock market is all he has left going into the midterms so he would truly have to be demented to also push for a market crash as well. But the clearest signal that stocks will continue ramping higher was Gartman's bearishness itself: as have have documented several thousand times, Gartman's record of calling out contrarian inflection points (i.e., being wrong) is 100% and... yes, our condolences to the bears, but this sucker is going higher. The irony of continuing to call for a bear market as he has been proven wrong time and time and time again was not lost on Dennis: he admitted he’s been wrong for the past six months to call for a bear market. As the chairman of the University of Akron endowment, he reduced equity exposure by 10% to assure the foundation has ample spending money, but he said the risk in this strategy is that they miss out on further gains.  “I think it’ll be a slow, laborious decline in prices, not a crash of any sort of any substance,” said Gartman. “So it’s a matter of being less involved in the market. Going to the sidelines in a quiet and reasonable manner I think is the proper way to trade for the next year or two.” Translation: the meltup will continue, and we will keep on hitting new all time highs until Gartman turns bullish. Tyler Durden Mon, 01/03/2022 - 13:21.....»»

Category: blogSource: zerohedgeJan 3rd, 2022

5 Stocks From Top-Ranked Industries Ready to Explode in 2022

The strengthening U.S. economy, and counter-measures to deal with the pandemic, cost and supply-chain issues are favoring several industries. BLDR, CF, KSS, WCC and WGO are potential gainers in 2022. Are you looking forward to investing in U.S. stocks in 2022? A well-diversified stock portfolio is recommended for you. Risks related to market volatility are lower for such portfolios than those concentrating on a single industry or sector.At present, fears are ripe related to the spread of the Omicron variant of the pandemic across nations. Any trade and travel restrictions to curb its impacts will hamper corporate margins and profitability. Companies are already dealing with supply-chain restrictions, labor issues and cost-inflation headwinds.On a positive note, the counter-measures taken by corporates and the government are likely to limit the impacts of the aforementioned headwinds. The government has decided to hike interest rates three times in 2022 to curb the impacts of inflation. Also, suitable steps to limit the spread of the virus are being considered. Then again, the companies have resorted to effective pricing actions as well as considered developing a reliable supplier base and actions to manage costs.Also, industrial production has flourished, unemployment has lowered, international trade activities have improved, and consumer spending has increased in the first three quarters of 2021. The U.S. GDP grew 6.4% in the first quarter of 2021, 6.7% in the second quarter and 2.3% in the third quarter. The International Monetary Fund projects the U.S. economy to expand 6% in 2021 and 5.2% in 2022.Using the Zacks Stock Screener tool, we have zeroed in on five stocks from the top-ranked industries that are worthy investment options for 2022. The selected stocks’ performances have been impressive in 2021 and their growth opportunities are solid for the year ahead.Selected Top-Rank IndustriesThe selected industries are in the top 5% of the more than 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The Zacks Electronics - Parts Distribution industry has advanced 41.1% in the past year. The industry’s earnings estimates for 2022 have increased 23.9% over the past year. Looking at the aggregate earnings estimate revisions, it appears that analysts are keeping more faith in this group’s earnings growth potential.Then again, the Zacks Building Products - Mobile Homes and RV Builders industry has risen 44.7% in the past year. Its earnings estimates have increased 92.9% for fiscal 2022 (ending March 2022) and 45.5% for fiscal 2023 (ending March 2023).The past year’s price returns of the Zacks Retail - Regional Department Stores industry is 89.5%. Its earnings estimates have advanced 367.4% for fiscal 2022 (ending January 2022) and 286.6% for fiscal 2023 (ending January 2023) in the past year.For the Zacks Building Products - Retail industry, the past year’s price return is 50.6%. Its earnings estimates for 2022 have been increased by 20.8% in the past year.The Zacks Fertilizers industry has grown 42.2% in the past year. Its earnings estimates have been raised by 401.2% for 2022 in the past year.5 Potential Winners for 2022The selected companies currently sport a Zacks Rank #1 (Strong Buy), and have a VGM Score of A or B, market capitalization > $2 billion and year-to-date price changes of more than 20%.You can see the complete list of today’s Zacks #1 Rank stocks here.Builders FirstSource, Inc. BLDR: Based in Dallas, TX, the company is a supplier of construction services, building materials and manufactured components. Its customer base includes remodelers, professional homebuilders, consumers and sub-contractors. Its market capitalization is $16.3 billion.The company’s VGM Score is A. In the past year, BLDR’s shares have gained 106% compared with the Zacks Building Products - Retail industry’s growth of 50.7%. In the last reported quarter, the company’s earnings beat was 117.31% and that for the last four quarters was 71.45%, on average. In the past 60 days, BLDR’s earnings estimates have increased 50.2% for 2022.Builders FirstSource, Inc. Price, Consensus and EPS Surprise  Builders FirstSource, Inc. price-consensus-eps-surprise-chart | Builders FirstSource, Inc. QuoteCF Industries Holdings, Inc. CF: This is a manufacturer and distributor of nitrogenous fertilizer and other nitrogen products globally. Its nitrogenous fertilizer includes urea ammonium nitrate solution, ammonia, ammonium nitrate and granular urea. It is based in Deerfield, IL. CF presently has a $15.8-billion market capitalization.The company has a VGM Score of B and it gained 85.7% compared with the Zacks Fertilizers industry’s growth of 42.2% in the past year. CF’s earnings surprise was negative 1.03% in the last reported quarter.The earnings surprise was 97.82%, on average, for the last four quarters. In the past 60 days, the Zacks Consensus Estimate for CF Industries’ earnings increased 101.8% for 2022.CF Industries Holdings, Inc. Price, Consensus and EPS Surprise  CF Industries Holdings, Inc. price-consensus-eps-surprise-chart | CF Industries Holdings, Inc. QuoteCF is poised to gain from healthy demand for nitrogen fertilizers and a rise in nitrogen prices. Also, the efforts to boost shareholders’ value and lower debts are other boons for CF Industries.Kohl’s Corporation KSS: This is a retail company offering beauty, apparel, home, footwear, accessories and other products in the United States. It is based in Menomonee Falls, WI. KSS presently has a $7-billion market capitalization.The company has a VGM Score of A at present. Kohl’s has gained 23.5% compared with the Zacks Retail - Regional Department Stores industry’s growth of 89.4% in the past year. KSS’ earnings surprise was 139.13% in the last reported quarter.The same was 114.45%, on average, for the last four quarters. In the past 60 days, the Zacks Consensus Estimate for Kohl’s earnings has increased 21.1% for fiscal 2022 (ending January 2022) and 14.8% for fiscal 2023 (ending January 2023).Kohl's Corporation Price, Consensus and EPS Surprise  Kohl's Corporation price-consensus-eps-surprise-chart | Kohl's Corporation QuoteStrength in digital operations, robust partnerships, promotional efforts, pricing actions and strategic framework are beneficial for the company. A healthy liquidity position and shareholder-friendly policies raise the company’s attractiveness.WESCO International, Inc. WCC: The Pittsburgh, PA-based company is a well-known distributor of electrical construction products in North America. It serves customers in the construction, utility, hospitals, industrial and other markets. Its market capitalization presently is $6.6 billion.The company presently has a VGM Score of B. Over the past year, WESCO International’s shares have gained 65.5% compared with the Zacks Electronics - Parts Distribution industry’s growth of 41.1%. Its earnings surprise in the past reported quarter was 7.03%. The same for the last four quarters, on average, was 30.75%. In the past 60 days, the Zacks Consensus Estimate for WCC’s earnings has increased 9.1% for 2022.WESCO International, Inc. Price, Consensus and EPS Surprise  WESCO International, Inc. price-consensus-eps-surprise-chart | WESCO International, Inc. QuoteWESCO International is well-placed to benefit from strengthening businesses in multiple markets, solid contract wins and partnership contracts, and focus on upgrading infrastructures. Its solid cost-saving efforts and gains from acquired assets are also beneficial.Winnebago Industries, Inc. WGO: The company manufactures and distributes recreational vehicles (RVs) in the United States. It also builds quality boats, mobile medical clinics, law enforcement command centers, and mobile office space. The company is based in Forest City, IA, and presently has a $2.5-billion market capitalization.The company currently has a VGM Score of B. In the past year, the stock has gained 25.2% compared with the Zacks Building Products - Mobile Homes and RV Builders industry’s growth of 44.7%. Its earnings beat in the last reported quarter was 53.28%. WGO’searnings surprise for the last four quarters was 39.58%, on average. In the past 60 days, the Zacks Consensus Estimatefor WGO’s earnings has increased 27.9% for fiscal 2022 (ending August 2022) and 11.2% for fiscal 2023 (ending August 2023).Winnebago Industries, Inc. Price, Consensus and EPS Surprise  Winnebago Industries, Inc. price-consensus-eps-surprise-chart | Winnebago Industries, Inc. QuoteThe company is poised to benefit from solid demand from recreational homes and expanded offerings by adding assets to its portfolio. Its shareholder-friendly policies and a healthy balance sheet add to its attractiveness. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Kohl's Corporation (KSS): Free Stock Analysis Report WESCO International, Inc. (WCC): Free Stock Analysis Report CF Industries Holdings, Inc. (CF): Free Stock Analysis Report Builders FirstSource, Inc. (BLDR): Free Stock Analysis Report Winnebago Industries, Inc. (WGO): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 2nd, 2022

5 Best Emerging Market Stocks to Tap 2022 Market Rebound

Here we discuss five emerging market stocks like JD, INFY, CPNG, BIDU, and VALE that are expected to gain enormously in 2022 amid all adversities. A year back, despite a severe COVID-19 scenario, market watchers were widely bullish about a bright 2021 for the emerging market stocks. Unfortunately, even though the severity of the pandemic declined, shareholders have had it tough as emerging market equities endured a frail 2021.  The iShares MSCI Emerging Markets ETF (EEM) has lost 5.7% year to date. The lackluster performance blatantly compares with the developed economies’ stocks indices. For example, there has been a 26.2% surge in the S&P 500 index and a 20.2% rise in the STOXX Europe 600 for the same period, implying a buoyant year ending for the U.S. and European bigwigs.While the overall financial outlook for the emerging region seems bearish at present, as we head into 2022, the improving rate of vaccination and opening up of the economy even amid new virus emergence has the potential to turn the tables in another few months. Here are five emerging market stocks, JD.com JD, Infosys INFY, Coupang, Inc. CPNG, Baidu, Inc. BIDU, and Vale S.A. VALE that are expected to gain enormously in 2022 capitalizing on their growth prospects.The Roadblocks So FarThe pandemic severity and response varied across the emerging market regions through 2021. Densely populated countries like India, Russia, Brazil and different parts of Latin America were the hardest hit by the resurgence of the virus through the major part of the year in the face of severe delay in vaccination drives and inadequate social distancing.Added to this, the latest Evergrande credit crisis in China has made the situation go out of hand, weakening the currencies of the emerging market on the whole. The selloff in Chinese equity (a major driver of the emerging market equity index) followed by a series of regulatory actions continued to increase apprehensions among the emerging market investors.Concerns about the other potential defaulters and their ripple effect on global growth have gradually bottomed out investors’ sentiment for the entire emerging market. Going by a Lazard Asset Management report of October, the consumer discretionary, communication services, real estate, and health care sectors, all of which have a large proportion of Chinese equities, underperformed the MSCI Emerging Markets Index.Added to this, China's energy supply crisis since September has put Korean companies operating in the country under major threat.Last but not the least, the developed economies’ latest approach to tackle the post COVID situation has led to a rise in global inflation. Last week, the Fed provided a lot of signals on winding down pandemic response initiatives, tightening bond purchase and increasing interest rates multiple times in 2022.  On Dec 15, the Bank of England too announced a rate hike to 0.25% aiming to meet the 2% inflation target needed for sustained growth and development of the country. With the tapering of bond purchases, there are high chances that foreign direct investments (FDI) in the emerging markets may get pulled back in 2022. This is forcing emerging market policymakers to tighten their interest rates as well, further jeopardizing their pandemic response initiatives.The Organization for Economic Cooperation and Development or OECD in its December-released outlook noted that a full recovery is likely in a handful of emerging-market economies in 2022. However, for the majority of countries, the output will likely fall short of pre-pandemic expectations, particularly in lower-income countries, leaving sizable long-term income scars from the crisis. Apart from headwinds in China and Korea, the GDP growth in European emerging economies like Poland and Russia might get stalled as well with the emergence of new COVID virus variants and ensuing containment measures.Silver Lining: 2022 a Year of Potential RecoveryOn a brighter note, post third-quarter 2021, which showed better-than-expected GDP growth for the G20 nations, estimates for 2022 growth of emerging market stocks have been raised by many analysts. For instance, from the second half of 2021, following an initial blow due to the second wave of COVID-19, India’s economy has started witnessing an upside, thanks to lowering of interest rates, favorable fiscal reforms and improved vaccine access.For Indonesia and Malaysia too, ongoing strong growth recovery in their manufacturing sector (especially in electronics and auto) is expected to continue through the 2022 months. Brazil too, following a stark GDP decline in 2021, is projected to show a recovery on a rebound in export growth. Per OECD, domestic demand growth is projected to pick up in 2022, supported by further progress with vaccination and the easing of worldwide supply-chain disruptions. However, the trend of FDI inflow seems to be crucial in projecting the definitive growth.Our ChoicesAmid the chances of potential recovery, adding stocks from emerging countries is a prudent step. We have narrowed our search to the following five stocks based on a favorable Zacks Rank and/or solid metrics for the upcoming period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.JD.com: Headquartered in Beijing, JD.com is a leading supply chain-based technology and service provider. Despite the COVID-led multiple headwinds leading to a profound change in consumption patter, JD.com has been able to consistently outperform the industry based on stronger control across its supply chains and entire business processes.JD.com carries a Zacks Rank #1. Its 2022 sales and earnings growth rate is pegged at 22.4% and 31.6%, respectively. In terms of forward-12-month P/E, JD.com is trading at a discount of 31.6X compared with the industry’s 40.4X.JD.com, Inc. Price and EPS Surprise JD.com, Inc. price-eps-surprise | JD.com, Inc. QuoteInfosys Ltd.: Headquartered in India, Infosys Technologies enables its clients to leverage its performance by utilizing its proprietary Global Delivery Model (‘GDM’). The high-margin digital business is expected to offset the additional investments that Infosys is undertaking.Infosys carries a Zacks Rank #3 (Hold). Its fiscal 2022 (ending March 2022) sales and earnings growth is pegged at 17.7% and 13.1%, respectively. In terms of forward-12-month P/E, Infosys is trading at a discount of 32.8X compared to the industry’s 37.5X.Infosys Limited Price and EPS Surprise Infosys Limited price-eps-surprise | Infosys Limited QuoteCoupang, Inc: Seol, South Korea-based Coupang is one of the largest e-commerce companies in Asia. Bolstered by the broader retail market tailwind in Korea, Coupang’s total e-commerce segment grew 20% year over year in the third quarter of 2021.Coupang carries a Zacks Rank #3. Its 2022 sales and earnings growth rate is pegged at 29.9% and 54.7%, respectively. In terms of forward-12-month P/S, Coupang is trading at a discount of 2.23X compared to the industry’s 2.73X.Coupang, Inc. Price and EPS Surprise Coupang, Inc. price-eps-surprise | Coupang, Inc. QuoteBaidu, Inc.: This is a renowned Chinese language Internet search provider. Baidu’S AI Cloud continues to witness solid growth. Leading companies across industries are currently adopting Baidu AI Cloud solution to improve their operations. Baidu is currently working hard to standardize such solutions for industry adoption.This Zacks Rank #3 stock’s 2021 sales growth rate is pegged at 14.4%. In terms of forward-12-month P/E, Baidu is trading at a discount of 18.4X compared with the industry’s 26.4X.Baidu, Inc. Price and EPS Surprise Baidu, Inc. price-eps-surprise | Baidu, Inc. QuoteVale S.A.: Brazil-based Vale S.A. is one of the world’s largest mining companies with a market capitalization of approximately $70 billion. Vale continues to gain from focus on delivering higher margins in iron ore operations, investment in projects and efforts to transform its base metals business into a significant cash generator.This Zacks Rank #3 stock’s long-term expected earnings growth is pegged at 19.9%. In terms of forward-12-month P/E, Vale is trading at a discount of 6.49X compared with the industry’s 6.6X.VALE S.A. Price and EPS Surprise VALE S.A. price-eps-surprise | VALE S.A. Quote Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022? From inception in 2012 through November, the Zacks Top 10 Stocks gained an impressive +962.5% versus the S&P 500’s +329.4%. Now our Director of Research is combing through 4,000 companies covered by the Zacks Rank to handpick the best 10 tickers to buy and hold. Don’t miss your chance to get in on these stocks when they’re released on January 3.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Infosys Limited (INFY): Free Stock Analysis Report VALE S.A. (VALE): Free Stock Analysis Report Baidu, Inc. (BIDU): Free Stock Analysis Report JD.com, Inc. (JD): Free Stock Analysis Report Coupang, Inc. (CPNG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 24th, 2021

The Fed is set to hike interest rates in 2022. Here"s what that means for US stocks.

The S&P 500 has a history of rising even when the Federal Reserve lifts interest rates. But inflation and coronavirus are clouding the outlook. Stock markets face a bumpier ride in 2022, analysts said.Photo by Spencer Platt/Getty Images The Federal Reserve is set to start hiking interest rates next year as it tries to tackle sky-high inflation. History shows that on average, the S&P 500 has risen in the 12 months after the first rate-hike of a cycle. Yet a number of uncertainties, such as new coronavirus variants, are clouding the stock market outlook right now. US stocks have had a banner year in 2021.The Federal Reserve held interest rates low and pumped more than $1 trillion into the economy, and growth rebounded after the slump of 2020. The benchmark S&P 500 stock index has duly soared by more than 20%.But sky-high inflation has caused the Fed to sharply scale back its bond purchases, and eye up a number of interest-rate rises next year.Markets expect the central bank to start hiking in May, given it signaled it's likely to raise rates three times in 2022.Rate hikes aren't bad for stocksSo is the end of easy money bad news for stocks? History says no.Over the last 30 years, the Fed has embarked on a rate-hiking cycle four times, according to FactSet figures shared with Insider. The data company defines a cycle as a run of four rate increases, made at no more than six-month intervals.On average, the S&P 500 has moved 1.8% lower in the three months after the first hike. But it has then gained to stand 4.6% higher after six months, and 7.7% higher after 12 months."Rising rates alone aren't bad for stocks," Bank of America strategist Savita Subramanian said in a note.Yet history may not always be the best guide. After all, stocks rose 6% in the year after the Fed started hiking rates in 1999, only for the S&P 500 to plunge dramatically in 2000 as the dotcom bubble burst.The outlook is unusually uncertain, and analysts are divided about what might happen over the next year.BMO's Brian Belski reckons the S&P 500 — which closed at 4,568 Monday — will surge to 5,300 by the end of 2022, as the recovery continues and Fed policy remains supportive, by historical standards.But Morgan Stanley thinks it'll be much lower, at 4,400.Tech stocks could struggleAnalysts say the uncertainty — such as around inflation, coronavirus variants, the pace of rate rises, US midterm elections — means investors have to think harder about which stocks can thrive.The prospect of higher rates has hit tech stocks, particularly unprofitable ones, in recent weeks. The future earning potential of techs is usually exciting, but looks less attractive when there are higher yields to be had elsewhere.Read more: The CIO of $3.2 trillion UBS Wealth Management shares 10 New Year's investing resolutions to get your portfolio into top shape in 2022US inflation is expected to remain elevated for much of 2022. That could further hurt many tech stocks, by pushing investors toward other companies with solid dividends or that can pass costs on to customers, analysts said."Our core [picks] are sectors that should benefit from further economic expansion into 2022, stabilizing China activity, and have earnings/pricing power to defend their valuations against potentially higher rates volatility," said Emmanuel Cau, equity strategist at Barclays, in a note.Barclays likes the look of the energy, industrials and healthcare sectors.Brace for more volatilityInvestors are preparing for a rougher time in 2022, compared with the relative calm of 2021, as growth rates cool and inflation remains elevated.Steen Jakobsen, chief investment officer at Saxo Bank, told Insider he thinks there's a 25% chance that the Fed lets inflation get out of control and has to hike rates faster than investors expect, in what is called a policy mistake. "Then we get a full-blown sell-off in the market," he said.Wall Street analysts on average expect the S&P 500 to end 2022 at 4,843, according to a November poll by Bloomberg.But they agree that it's unlikely to be a smooth ride. "Volatility is likely to increase precipitously over the next 12 months," said BofA's Subramanian.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 21st, 2021