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Magnolia (MGY) Declines 8.5% Despite Beating on Q3 Earnings

Magnolia's (MGY) average realized natural gas price during the third quarter surges 137.3% year over year to $3.75 per thousand cubic feet. Shares of Magnolia Oil & Gas Corporation MGY have dropped 8.5% since the third-quarter 2021 earnings announcement on Nov 1.The stock declined despite impressive bottom-line and top-line performances as well as an upbeat fourth-quarter production guidance, which indicates growth from the sequential quarter’s reported figure. This downtrend could be attributed to MGY’s higher capital program expenses and weaker-than-anticipated oil production.Delving DeeperMagnolia reported third-quarter adjusted net income per share of 67 cents, beating the Zacks Consensus Estimate of 60 cents and the year-ago quarter’s bottom line of 6 cents.This outperformance can be primarily attributed to better-than-anticipated production volumes. South Texas-focused MGY’s average daily total output of 67,385 barrels of oil equivalent per day (boe/d) surpassed the Zacks Consensus Estimate of 66,418boe/d.Total revenues came in at $283.58 million, ahead of the Zacks Consensus Estimate of $277 million. Moreover, the top line rose 134.2% from the year-ago level of $121.07 million.Production & PricesMagnolia’s oil and gas production reported a year-over-year increase of 24.1% to 67,385boe/d (comprising 69.3% liquids). Oil volumes at 30,989 barrels per day were up14.7% from the level achieved in third-quarter 2020. However, the same missed the Zacks Consensus Estimate of 31,678 barrels per day.The average realized crude oil price during the third quarter was $68.44 per barrel, reflecting a 77.8% rise from the year-ago period’s realization of $38.5. The average realized natural gas liquids price was $31.6 per barrel, up 182.1% from the year-ago period’s tally while natural gas prices increased 137.3% year over year to $3.75 per thousand cubic feet. Overall, MGY fetched $45.74 per boe compared with $24.23 a year ago.Magnolia Oil & Gas Corp Price, Consensus and EPS Surprise Magnolia Oil & Gas Corp price-consensus-eps-surprise-chart | Magnolia Oil & Gas Corp QuoteBalance Sheet & Capital ExpenditureAs of Sep 30, Magnolia had $245.02 million of cash and cash equivalents. The oil explorer’s long-term debt of $387.5 million represented a debt-to-capitalization of 30%. In the reported quarter, MGY spent $67.2 million on its capital program.GuidanceMagnolia plans to spend around $80 million on drilling and completion activities in the fourth quarter of this year.Total output in the fourth quarter of 2021 is expected in the 68,000-70,000 boe/d range.Zacks Rank & Other Key PicksMagnolia currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked players in the energy  space include EOG Resources EOG, Diamondback Energy FANG and ConocoPhillips COP, each presently flaunting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.EOG Resources reported third-quarter 2021 adjusted earnings per share of $2.16, beating the Zacks Consensus Estimate of $2.01. Strong earnings were driven by increased production volumes and a higher realization of commodity prices.EOG announced a quarterly dividend of 75 cents per share, indicating an 82% increase from the previous level. The dividend will be paid out on Jan 28, 2022, to its shareholders of record as of Jan 14, 2022. EOG Resources also declared a special dividend of $2 per share. Moreover, the board of directors updated its share repurchase authorization to $5 billion.Diamondback Energy reported third-quarter 2021 adjusted earnings of $2.94 per share, which surpassed the Zacks Consensus Estimate of $2.81 and the year-ago quarter’s earnings of 62 cents. FANG’s bottom line was aided by better-than-expected production.The board of directors declared a dividend of 50 cents per share for the third quarter, representing an 11.1% hike in its quarterly payout from the previous reading of 45 cents. The amount will be paid out on Nov 18, 2021, to its shareholders of record as of Nov 11. FANG also generated a free cash flow of $740 million in the third quarter.ConocoPhillips reported third-quarter 2021 adjusted earnings per share of $1.77, comfortably beating the Zacks Consensus Estimate of $1.53. This outperformance is led by increased production volumes owing to the Concho acquisition and the rising realized commodity prices.Based in Houston, TX, this one of the world’s largest independent oil and gas producers’ capital expenditures and investments totaled $1.3 billion, and dividend payments grossed $579 million. ConocoPhillips’ net cash provided by operating activities was recorded at $4.8 billion, up from the year-ago figure of $868 million. COP generated a free cash flow of $2.8 billion in the third quarter. Zacks’ Top Picks to Cash in on Artificial Intelligence This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ConocoPhillips (COP): Free Stock Analysis Report EOG Resources, Inc. (EOG): Free Stock Analysis Report Diamondback Energy, Inc. (FANG): Free Stock Analysis Report Magnolia Oil & Gas Corp (MGY): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 24th, 2021

Futures Surge After Powell-Driven Rout Proves To Be "Transitory"

Futures Surge After Powell-Driven Rout Proves To Be "Transitory" Heading into yesterday's painful close to one of the ugliest months since March 2020, which saw a huge forced liquidation rebalance with more than $8 billion in Market on Close orders, we said that while we are seeing "forced selling dump into the close today" this would be followed by "forced Dec 1 buying frontrunning after the close." Forced selling dump into the close today. Forced Dec 1 buying frontrunning after the close — zerohedge (@zerohedge) November 30, 2021 And just as expected, despite yesterday's dramatic hawkish pivot by Powell, who said it was time to retire the word transitory in describing the inflation outlook (the same word the Fed used hundreds of times earlier in 2021 sparking relentless mockery from this website for being clueless as usual) while also saying the U.S. central bank would consider bringing forward plans for tapering its bond buying program at its next meeting in two weeks, the frontrunning of new monthly inflows is in full force with S&P futures rising over 1.2%, Nasdaq futures up 1.3%, and Dow futures up 0.9%, recovering almost all of Tuesday’s decline. The seemingly 'hawkish' comments served as a double whammy for markets, which were already nervous about the spread of the Omicron coronavirus variant and its potential to hinder a global economic recovery. "At this point, COVID does not appear to be the biggest long-term Street fear, although it could have the largest impact if the new (or next) variant turns out to be worse than expected," Howard Silverblatt, senior index analyst for S&P and Dow Jones indices, said in a note. "That honor goes to inflation, which continues to be fed by supply shortages, labor costs, worker shortages, as well as consumers, who have not pulled back." However, new month fund flows proved too powerful to sustain yesterday's month-end dump and with futures rising - and panic receding - safe havens were sold and the 10-year Treasury yield jumped almost 6bps, approaching 1.50%. The gap between yields on 5-year and 30-year Treasuries was around the narrowest since March last year. Crude oil and commodity-linked currencies rebounded. Gold remained just under $1,800 and bitcoin traded just over $57,000. There was more good news on the covid front with a WHO official saying some of the early indications are that most Omicron cases are mild with no severe cases. Separately Merck gained 3.8% in premarket trade after a panel of advisers to the U.S. Food and Drug Administration narrowly voted to recommend the agency authorize the drugmaker's antiviral pill to treat COVID-19. Travel and leisure stocks also rebounded, with cruiseliners Norwegian, Carnival, Royal Caribbean rising more than 2.5% each. Easing of covid fears also pushed airlines and travel stocks higher in premarket trading: Southwest +2.9%, Delta +2.5%, Spirit +2.3%, American +2.2%, United +1.9%, JetBlue +1.3%. Vaccine makers traded modestly lower in pre-market trading after soaring in recent days as Wall Street weighs the widening spread of the omicron variant. Merck & Co. bucked the trend after its Covid-19 pill narrowly gained a key recommendation from advisers to U.S. regulators. Moderna slips 2.1%, BioNTech dips 1.3% and Pfizer is down 0.2%. Elsewhere, Occidental Petroleum led gains among the energy stocks, up 3.2% as oil prices climbed over 4% ahead of OPEC's meeting. Shares of major Wall Street lenders also moved higher after steep falls on Tuesday. Here are some of the other biggest U.S. movers today: Salesforce (CRM US) drops 5.9% in premarket trading after results and guidance missed estimates, with analysts highlighting currency-related headwinds and plateauing growth at the MuleSoft integration software business. Hewlett Packard Enterprise (HPE US) falls 1.3% in premarket after the computer equipment maker’s quarterly results showed the impact of the global supply chain crunch. Analysts noted solid order trends. Merck (MRK US) shares rise 5.8% in premarket after the company’s Covid-19 pill narrowly wins backing from FDA advisers, which analysts say is a sign of progress despite lingering challenges. Chinese electric vehicle makers were higher in premarket, leading U.S. peers up, after Nio, Li and XPeng reported strong deliveries for November; Nio (NIO US) +4%, Li (LI US ) +6%, XPeng (XPEV US) +4.3%. Ardelyx (ARDX US) shares gain as much as 34% in premarket, extending the biotech’s bounce after announcing plans to launch its irritable bowel syndrome treatment Ibsrela in the second quarter. CTI BioPharma (CTIC US) shares sink 18% in premarket after the company said the FDA extended the review period for a new drug application for pacritinib. Allbirds (BIRD US) fell 7.5% postmarket after the low end of the shoe retailer’s 2021 revenue forecast missed the average analyst estimate. Zscaler (ZS US) posted “yet another impressive quarter,” according to BMO. Several analysts increased their price targets for the security software company. Shares rose 4.6% in postmarket. Ambarella (AMBA US) rose 14% in postmarket after forecasting revenue for the fourth quarter that beat the average analyst estimate. Emcore (EMKR US) fell 9% postmarket after the aerospace and communications supplier reported fiscal fourth-quarter Ebitda that missed the average analyst estimate. Box (BOX US) shares gained as much as 10% in postmarket trading after the cloud company raised its revenue forecast for the full year. Meanwhile, the omicron variant continues to spread around the globe, though symptoms so far appear to be relatively mild. The Biden administration plans to tighten rules on travel to the U.S., and Japan said it would bar foreign residents returning from 10 southern African nations. As Bloomberg notes, volatility is buffeting markets as investors scrutinize whether the pandemic recovery can weather diminishing monetary policy support and potential risks from the omicron virus variant. Global manufacturing activity stabilized last month, purchasing managers’ gauges showed Wednesday, and while central banks are scaling back ultra-loose settings, financial conditions remain favorable in key economies. “The reality is hotter inflation coupled with a strong economic backdrop could end the Fed’s bond buying program as early as the first quarter of next year,” Charlie Ripley, senior investment strategist at Allianz Investment Management, said in emailed comments. “With potential changes in policy on the horizon, market participants should expect additional market volatility in this uncharted territory.” Looking ahead, Powell is back on the Hill for day 2, and is due to testify before a House Financial Services Committee hybrid hearing at 10 a.m. ET. On the economic data front, November readings on U.S. private payrolls and manufacturing activity will be closely watched later in the day to gauge the health of the American economy. Investors are also awaiting the Fed's latest "Beige Book" due at 2:00 p.m. ET. On the economic data front, November readings on U.S. private payrolls and manufacturing activity will be closely watched later in the day to gauge the health of the American economy. European equities soared more than 1.2%, with travel stocks and carmakers leading broad-based gain in the Stoxx Europe 600 index, all but wiping out Tuesday’s decline that capped only the third monthly loss for the benchmark this year.  Travel, miners and autos are the strongest sectors. Here are some of the biggest European movers today: Proximus shares rise as much as 6.5% after the company said it’s started preliminary talks regarding a potential deal involving TeleSign, with a SPAC merger among options under consideration. Dr. Martens gains as much as 4.6% to the highest since Sept. 8 after being upgraded to overweight from equal- weight at Barclays, which says the stock’s de-rating is overdone. Husqvarna advances as much as 5.3% after the company upgraded financial targets ahead of its capital markets day, including raising the profit margin target to 13% from 10%. Wizz Air, Lufthansa and other travel shares were among the biggest gainers as the sector rebounded after Tuesday’s losses; at a conference Wizz Air’s CEO reiterated expansion plans. Wizz Air gains as much as 7.5%, Lufthansa as much as 6.8% Elis, Accor and other stocks in the French travel and hospitality sector also rise after the country’s government pledged to support an industry that’s starting to get hit by the latest Covid-19 wave. Pendragon climbs as much as 6.5% after the car dealer boosted its outlook after the company said a supply crunch in the new vehicle market wasn’t as bad as it had anticipated. UniCredit rises as much as 3.6%, outperforming the Stoxx 600 Banks Index, after Deutsche Bank added the stock to its “top picks” list alongside UBS, and Bank of Ireland, Erste, Lloyds and Societe Generale. Earlier in the session, Asian stocks also soared, snapping a three-day losing streak, led by energy and technology shares, as traders assessed the potential impact from the omicron coronavirus variant and U.S. Federal Reserve Chair Jerome Powell’s hawkish pivot. The MSCI Asia Pacific Index rose as much as 1.3% Wednesday. South Korea led regional gains after reporting strong export figures, which bolsters growth prospects despite record domestic Covid-19 cases. Hong Kong stocks also bounced back after falling Tuesday to their lowest level since September 2020. Asia’s stock benchmark rebounded from a one-year low, though sentiment remained clouded by lingering concerns on the omicron strain and Fed’s potentially faster tapering pace. Powell earlier hinted that the U.S. central bank will accelerate its asset purchases at its meeting later this month.  “A faster taper in the U.S. is still dependent on omicron not causing a big setback to the outlook in the next few weeks,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital, adding that he expects the Fed’s policy rate “will still be low through next year, which should still enable good global growth which will benefit Asia.” Chinese equities edged up after the latest economic data showed manufacturing activity remained at relatively weak levels in November, missing economists’ expectations. Earlier, Chinese Vice Premier Liu He said he’s fully confident in the nation’s economic growth in 2022 Japanese stocks rose, overcoming early volatility as traders parsed hawkish comments from Federal Reserve Chair Jerome Powell. Electronics and auto makers were the biggest boosts to the Topix, which closed 0.4% higher after swinging between a gain of 0.9% and loss of 0.7% in the morning session. Daikin and Fanuc were the largest contributors to a 0.4% rise in the Nikkei 225, which similarly fluctuated. The Topix had dropped 4.8% over the previous three sessions due to concerns over the omicron virus variant. The benchmark fell 3.6% in November, its worst month since July 2020. “The market’s tolerance to risk is quite low at the moment, with people responding in a big way to the smallest bit of negative news,” said Tomo Kinoshita, a global market strategist at Invesco Asset Management in Tokyo. “But the decline in Japanese equities was far worse than those of other developed markets, so today’s market may find a bit of calm.” U.S. shares tumbled Tuesday after Powell said officials should weigh removing pandemic support at a faster pace and retired the word “transitory” to describe stubbornly high inflation In rates, bonds trade heavy, as yield curves bear-flatten. Treasuries extended declines with belly of the curve cheapening vs wings as traders continue to price in additional rate-hike premium over the next two years. Treasury yields were cheaper by up to 5bp across belly of the curve, cheapening 2s5s30s spread by ~5.5bp on the day; 10-year yields around 1.48%, cheaper by ~4bp, while gilts lag by additional 2bp in the sector. The short-end of the gilt curve markedly underperforms bunds and Treasuries with 2y yields rising ~11bps near 0.568%. Peripheral spreads widen with belly of the Italian curve lagging. The flattening Treasury yield curve “doesn’t suggest imminent doom for the equity market in and of itself,” Liz Ann Sonders, chief investment strategist at Charles Schwab & Co., said on Bloomberg Television. “Alarm bells go off in terms of recession” when the curve gets closer to inverting, she said. In FX, the Turkish lira had a wild session, offered in early London trade before fading. USD/TRY dropped sharply to lows of 12.4267 on reports of central bank FX intervention due to “unhealthy price formations” before, once again, fading TRY strength after comments from Erdogan. The rest of G-10 FX is choppy; commodity currencies retain Asia’s bid tone, havens are sold: the Bloomberg Dollar Spot Index inched lower, as the greenback traded mixed versus its Group-of-10 peers. The euro moved in a narrow range and Bund yields followed U.S. yields higher. The pound advanced as risk sentiment stabilized with focus still on news about the omicron variant. The U.K. 10-, 30-year curve flirted with inversion as gilts flattened, with money markets betting on 10bps of BOE tightening this month for the first time since Friday. The Australian and New Zealand dollars advanced as rising commodity prices fuel demand from exporters and leveraged funds. Better-than-expected growth data also aided the Aussie, with GDP expanding by 3.9% in the third quarter from a year earlier, beating the 3% estimated by economists. Austrian lawmakers extended a nationwide lockdown for a second 10-day period to suppress the latest wave of coronavirus infections before the Christmas holiday period.  The yen declined by the most among the Group-of-10 currencies as Powell’s comments renewed focus on yield differentials. 10-year yields rose ahead of Thursday’s debt auction In commodities, crude futures rally. WTI adds over 4% to trade on a $69-handle, Brent recovers near $72.40 after Goldman said overnight that oil had gotten extremely oversold. Spot gold fades a pop higher to trade near $1,785/oz. Base metals trade well with LME copper and nickel outperforming. Looking at the day ahead, once again we’ll have Fed Chair Powell and Treasury Secretary Yellen appearing, this time before the House Financial Services Committee. In addition to that, the Fed will be releasing their Beige Book, and BoE Governor Bailey is also speaking. On the data front, the main release will be the manufacturing PMIs from around the world, but there’s also the ADP’s report of private payrolls for November in the US, the ISM manufacturing reading in the US as well for November, and German retail sales for October. Market Snapshot S&P 500 futures up 1.2% to 4,620.75 STOXX Europe 600 up 1.0% to 467.58 MXAP up 0.9% to 191.52 MXAPJ up 1.1% to 626.09 Nikkei up 0.4% to 27,935.62 Topix up 0.4% to 1,936.74 Hang Seng Index up 0.8% to 23,658.92 Shanghai Composite up 0.4% to 3,576.89 Sensex up 1.0% to 57,656.51 Australia S&P/ASX 200 down 0.3% to 7,235.85 Kospi up 2.1% to 2,899.72 Brent Futures up 4.2% to $72.15/bbl Gold spot up 0.2% to $1,778.93 U.S. Dollar Index little changed at 95.98 German 10Y yield little changed at -0.31% Euro down 0.1% to $1.1326 Top Overnight News from Bloomberg U.S. Secretary of State Antony Blinken will meet Russian Foreign Minister Sergei Lavrov Thursday, the first direct contact between officials of the two countries in weeks as tensions grow amid western fears Russia may be planning to invade Ukraine Oil rebounded from a sharp drop on speculation that recent deep losses were excessive and OPEC+ may on Thursday decide to pause hikes in production, with the abrupt reversal fanning already- elevated volatility The EU is set to recommend that member states review essential travel restrictions on a daily basis in the wake of the omicron variant, according to a draft EU document seen by Bloomberg China is planning to ban companies from going public on foreign stock markets through variable interest entities, according to people familiar with the matter, closing a loophole long used by the country’s technology industry to raise capital from overseas investors Manufacturing activity in Asia outside China stabilized last month amid easing lockdown and border restrictions, setting the sector on course to face a possible new challenge from the omicron variant of the coronavirus Germany urgently needs stricter measures to check a surge in Covid-19 infections and protect hospitals from a “particularly dangerous situation,” according to the head of the country’s DIVI intensive-care medicine lobby. A more detailed breakdown of global markets courtesy of Newsquawk Asian equity markets traded mostly positive as regional bourses atoned for the prior day’s losses that were triggered by Omicron concerns, but with some of the momentum tempered by recent comments from Fed Chair Powell and mixed data releases including the miss on Chinese Caixin Manufacturing PMI. ASX 200 (-0.3%) was led lower by underperformance in consumer stocks and with utilities also pressured as reports noted that Shell and Telstra’s entrance in the domestic electricity market is set to ignite fierce competition and force existing players to overhaul their operations, although the losses in the index were cushioned following the latest GDP data which showed a narrower than feared quarterly contraction in Australia’s economy. Nikkei 225 (+0.4%) was on the mend after yesterday’s sell-off with the index helped by favourable currency flows and following a jump in company profits for Q3, while the KOSPI (+2.1%) was also boosted by strong trade data. Hang Seng (+0.8%) and Shanghai Comp. (+0.4%) were somewhat varied as a tech resurgence in Hong Kong overcompensated for the continued weakness in casinos stocks amid ongoing SunCity woes which closed all VIP gaming rooms in Macau after its Chairman's recent arrest, while the mood in the mainland was more reserved after a PBoC liquidity drain and disappointing Chinese Caixin Manufacturing PMI data which fell short of estimates and slipped back into contraction territory. Finally, 10yr JGBs were lower amid the gains in Japanese stocks and after the pullback in global fixed income peers in the aftermath of Fed Chair Powell’s hawkish comments, while a lack of BoJ purchases further contributed to the subdued demand for JGBs. Top Asian News Asia Stocks Bounce Back from One-Year Low Despite Looming Risks Gold Swings on Omicron’s Widening Spread, Inflation Worries Shell Sees Hedge Funds Moving to LNG, Supporting Higher Prices Abe Warns China Invading Taiwan Would Be ‘Economic Suicide’ Bourses in Europe are firmer across the board (Euro Stoxx 50 +1.6%; Stoxx 600 +1.1%) as the positive APAC sentiment reverberated into European markets. US equity futures are also on the front foot with the cyclical RTY (+2.0%) outpacing its peers: ES (+1.2%), NQ (+1.5%), YM (+0.8%). COVID remains a central theme for the time being as the Omicron variant is observed for any effects of concern – which thus far have not been reported. Analysts at UBS expect market focus to shift away from the variant and more towards growth and earnings. The analysts expect Omicron to fuse into the ongoing Delta outbreak that economies have already been tackling. Under this scenario, the desk expects some of the more cyclical markets and sectors to outperform. The desk also flags two tails risks, including an evasive variant and central bank tightening – particularly after Fed chair Powell’s commentary yesterday. Meanwhile, BofA looks for an over-10% fall in European stocks next year. Sticking with macro updates, the OECD, in their latest economic outlook, cut US, China, Eurozone growth forecasts for 2021 and 2022, with Omicron cited as a factor. Back to trade, broad-based gains are seen across European cash markets. Sectors hold a clear cyclical bias which consists of Travel & Leisure, Basic Resources, Autos, Retail and Oil & Gas as the top performers – with the former bolstered by the seemingly low appetite for coordination on restrictions and measures at an EU level – Deutsche Lufthansa (+6%) and IAG (+5.1%) now reside at the top of the Stoxx 600. The other side of the spectrum sees the defensive sectors – with Healthcare, Household Goods, Food & Beverages as the straddlers. In terms of induvial movers, German-listed Adler Group (+22%) following a divestment, whilst Blue Prism (+1.7%) is firmer after SS&C raised its offer for the Co. Top European News Wizz Says Travelers Are Booking at Shorter and Shorter Notice Turkey Central Bank Intervenes in FX Markets to Stabilize Lira Gold Swings on Omicron’s Widening Spread, Inflation Worries Former ABG Sundal Collier Partner Starts Advisory Firm In FX, the Dollar remains mixed against majors, but well off highs prompted by Fed chair Powell ditching transitory from the list of adjectives used to describe inflation and flagging that a faster pace of tapering will be on the agenda at December’s FOMC. However, the index is keeping tabs on the 96.000 handle and has retrenched into a tighter 95.774-96.138 range, for the time being, as trade remains very choppy and volatility elevated awaiting clearer medical data and analysis on Omicron to gauge its impact compared to the Delta strain and earlier COVID-19 variants. In the interim, US macro fundamentals might have some bearing, but the bar is high before NFP on Friday unless ADP or ISM really deviate from consensus or outside the forecast range. Instead, Fed chair Powell part II may be more pivotal if he opts to manage hawkish market expectations, while the Beige Book prepared for next month’s policy meeting could also add some additional insight. NZD/AUD/CAD/GBP - Broad risk sentiment continues to swing from side to side, and currently back in favour of the high beta, commodity and cyclical types, so the Kiwi has bounced firmly from worst levels on Tuesday ahead of NZ terms of trade, the Aussie has pared a chunk of its declines with some assistance from a smaller than anticipated GDP contraction and the Loonie is licking wounds alongside WTI in advance of Canadian building permits and Markit’s manufacturing PMI. Similarly, Sterling has regained some poise irrespective of relatively dovish remarks from BoE’s Mann and a slender downward revision to the final UK manufacturing PMI. Nzd/Usd is firmly back above 0.6800, Aud/Usd close to 0.7150 again, Usd/Cad straddling 1.2750 and Cable hovering on the 1.3300 handle compared to circa 0.6772, 0.7063, 1.2837 and 1.3195 respectively at various fairly adjacent stages yesterday. JPY/EUR/CHF - All undermined by the aforementioned latest upturn in risk appetite or less angst about coronavirus contagion, albeit to varying degrees, as the Yen retreats to retest support sub-113.50, Euro treads water above 1.1300 and Franc straddles 0.9200 after firmer than forecast Swiss CPI data vs a dip in the manufacturing PMI. In commodities, WTI and Brent front month futures are recovering following yesterday’s COVID and Powell-induced declines in the run-up to the OPEC meetings later today. The complex has also been underpinned by the reduced prospects of coordinated EU-wide restrictions, as per the abandonment of the COVID video conference between EU leaders. However, OPEC+ will take centre stage over the next couple of days, with a deluge of source reports likely as OPEC tests the waters. The case for OPEC+ to pause the planned monthly relaxation of output curbs by 400k BPD has been strengthening. There have been major supply and demand developments since the prior meeting. The recent emergence of the Omicron COVID variant and coordinated release of oil reserves have shifted the balance of expectations relative to earlier in the month (full Newsquawk preview available in the Research Suite). In terms of the schedule, the OPEC meeting is slated for 13:00GMT/08:00EST followed by the JTC meeting at 15:00GMT/10:00EST, whilst tomorrow sees the JMMC meeting at 12:00GMT/07:00EST; OPEC+ meeting at 13:00GMT/08:00EST. WTI Jan has reclaimed a USD 69/bbl handle (vs USD 66.20/bbl low) while Brent Feb hovers around USD 72.50/bbl (vs low USD 69.38/bbl) at the time of writing. Elsewhere, spot gold and silver trade with modest gains and largely in tandem with the Buck. Spot gold failed to sustain gains above the cluster of DMAs under USD 1,800/oz (100 DMA at USD 1,792/oz, 200 DMA at USD 1,791/oz, and 50 DMA at USD 1,790/oz) – trader should be aware of the potential for a technical Golden Cross (50 DMA > 200 DMA). Turning to base metals, copper is supported by the overall risk appetite, with the LME contract back above USD 9,500/t. Overnight, Chinese coking coal and coke futures rose over 5% apiece, with traders citing disrupted supply from Mongolia amid the COVID outbreak in the region. US Event Calendar 7am: Nov. MBA Mortgage Applications, prior 1.8% 8:15am: Nov. ADP Employment Change, est. 525,000, prior 571,000 9:45am: Nov. Markit US Manufacturing PMI, est. 59.1, prior 59.1 10am: Oct. Construction Spending MoM, est. 0.4%, prior -0.5% 10am: Nov. ISM Manufacturing, est. 61.2, prior 60.8 2pm: U.S. Federal Reserve Releases Beige Book Nov. Wards Total Vehicle Sales, est. 13.4m, prior 13m Central Banks 10am: Powell, Yellen Testify Before House Panel on CARES Act Relief DB's Jim Reid concludes the overnight wrap If you’re under 10 and reading this there’s a spoiler alert today in this first para so please skip beyond and onto the second. Yes my heart broke a little last night as my little 6-year old Maisie said to me at bedtime that “Santa isn’t real is he Daddy?”. I lied (I think it’s a lie) and said yes he was. I made up an elaborate story about how when we renovated our 100 year old house we deliberately kept the chimney purely to let Santa come down it once a year. Otherwise why would we have kept it? She then asked what about her friend who lives in a flat? I tried to bluff my way through it but maybe my answer sounded a bit like my answers as to what will happen with Omicron. I’ll test both out on clients later to see which is more convincing. Before we get to the latest on the virus, given it’s the start of the month, we’ll shortly be publishing our November performance review looking at how different assets fared over the month just gone and YTD. It arrived late on but Omicron was obviously the dominant story and led to some of the biggest swings of the year so far. It meant that oil (which is still the top performer on a YTD basis) was the worst performer in our monthly sample, with WTI and Brent seeing their worst monthly performances since the initial wave of market turmoil over Covid back in March 2020. And at the other end, sovereign bonds outperformed in November as Omicron’s emergence saw investors push back the likelihood of imminent rate hikes from central banks. So what was shaping up to be a good month for risk and a bad one for bonds flipped around in injury time. Watch out for the report soon from Henry. Back to yesterday now, and frankly the main takeaway was that markets were desperate for any piece of news they could get their hands on about the Omicron variant, particularly given the lack of proper hard data at the moment. The morning started with a sharp selloff as we discussed at the top yesterday, as some of the more optimistic noises from Monday were outweighed by that FT interview, whereby Moderna’s chief executive had said that the existing vaccines wouldn’t be as effective against the new variant. Then we had some further negative news from Regeneron, who said that analysis and modelling of the Omicron mutations indicated that its antibody drug may not be as effective, but that they were doing further analysis to confirm this. However, we later got some comments from a University of Oxford spokesperson, who said that there wasn’t any evidence so far that vaccinations wouldn’t provide high levels of protection against severe disease, which coincided with a shift in sentiment early in the European afternoon as equities begun to pare back their losses. The CEO of BioNTech and the Israeli health minister expressed similar sentiments, noting that vaccines were still likely to protect against severe disease even among those infected by Omicron, joining other officials encouraging people to get vaccinated or get booster shots. Another reassuring sign came in an update from the EU’s ECDC yesterday, who said that all of the 44 confirmed cases where information was available on severity “were either asymptomatic or had mild symptoms.” After the close, the FDA endorsed Merck’s antiviral Covid pill. While it’s not clear how the pill interacts with Omicron, the proliferation of more Covid treatments is still good news as we head into another winter. The other big piece of news came from Fed Chair Powell’s testimony to the Senate Banking Committee, where the main headline was his tapering comment that “It is appropriate to consider wrapping up a few months sooner.” So that would indicate an acceleration in the pace, which would be consistent with the view from our US economists that we’ll see a doubling in the pace of reductions at the December meeting that’s only two weeks from today. The Fed Chair made a forceful case for a faster taper despite lingering Omicron uncertainties, noting inflation is likely to stay elevated, the labour market has improved without a commensurate increase in labour supply (those sidelined because of Covid are likely to stay there), spending has remained strong, and that tapering was a removal of accommodation (which the economy doesn’t need more of given the first three points). Powell took pains to stress the risk of higher inflation, going so far as to ‘retire’ the use of the term ‘transitory’ when describing the current inflation outlook. So team transitory have seemingly had the pitch taken away from them mid match. The Chair left an exit clause that this outlook would be informed by incoming inflation, employment, and Omicron data before the December FOMC meeting. A faster taper ostensibly opens the door to earlier rate hikes and Powell’s comment led to a sharp move higher in shorter-dated Treasury yields, with the 2yr yield up +8.1bps on the day, having actually been more than -4bps lower when Powell began speaking. They were as low as 0.44% then and got as high as 0.57% before closing at 0.56%. 2yr yields have taken another leg higher overnight, increasing +2.5bps to 0.592%. Long-end yields moved lower though and failed to back up the early day moves even after Powell, leading to a major flattening in the yield curve on the back of those remarks, with the 2s10s down -13.7bps to 87.3bps, which is its flattest level since early January. Overnight 10yr yields are back up +3bps but the curve is only a touch steeper. My 2 cents on the yield curve are that the 2s10s continues to be my favourite US recession indicator. It’s worked over more cycles through history than any other. No recession since the early 1950s has occurred without the 2s10s inverting. But it takes on average 12-18 months from inversion to recession. The shortest was the covid recession at around 7 months which clearly doesn’t count but I think we were very late cycle in early 2020 and the probability of recession in the not too distant future was quite high but we will never know.The shortest outside of that was around 9 months. So with the curve still at c.+90bps we are moving in a more worrying direction but I would still say 2023-24 is the very earliest a recession is likely to occur (outside of a unexpected shock) and we’ll need a rapid flattening in 22 to encourage that. History also suggests markets tend to ignore the YC until it’s too late. So I wouldn’t base my market views in 22 on the yield curve and recession signal yet. However its something to look at as the Fed seemingly embarks on a tightening cycle in the months ahead. Onto markets and those remarks from Powell (along with the additional earlier pessimism about Omicron) proved incredibly unhelpful for equities yesterday, with the S&P 500 (-1.90%) giving up the previous day’s gains to close at its lowest level in over a month. It’s hard to overstate how broad-based this decline was, as just 7 companies in the entire S&P moved higher yesterday, which is the lowest number of the entire year so far and the lowest since June 11th, 2020, when 1 company ended in the green. Over in Europe it was much the same story, although they were relatively less affected by Powell’s remarks, and the STOXX 600 (-0.92%) moved lower on the day as well. Overnight in Asia, stocks are trading higher though with the KOSPI (+2.02%), Hang Seng (+1.40%), the Nikkei (+0.37%), Shanghai Composite (+0.11%) and CSI (+0.09%) all in the green. Australia’s Q3 GDP contracted (-1.9% qoq) less than -2.7% consensus while India’s Q3 GDP grew at a firm +8.4% year-on-year beating the +8.3% consensus. In China the Caixin Manufacturing PMI for November came in at 49.9 against a 50.6 consensus. Futures markets are indicating a positive start to markets in US & Europe with the S&P 500 (+0.73%) and DAX (+0.44%) trading higher again. Back in Europe, there was a significant inflation story amidst the other headlines above, since Euro Area inflation rose to its highest level since the creation of the single currency, with the flash estimate for November up to +4.9% (vs. +4.5% expected). That exceeded every economist’s estimate on Bloomberg, and core inflation also surpassed expectations at +2.6% (vs. +2.3% expected), again surpassing the all-time high since the single currency began. That’s only going to add to the pressure on the ECB, and yesterday saw Germany’s incoming Chancellor Scholz say that “we have to do something” if inflation doesn’t ease. European sovereign bonds rallied in spite of the inflation reading, with those on 10yr bunds (-3.1bps), OATs (-3.5bps) and BTPs (-0.9bps) all moving lower. Peripheral spreads widened once again though, and the gap between Italian and German 10yr yields closed at its highest level in just over a year. Meanwhile governments continued to move towards further action as the Omicron variant spreads, and Greece said that vaccinations would be mandatory for everyone over 60 soon, with those refusing having to pay a monthly €100 fine. Separately in Germany, incoming Chancellor Scholz said that there would be a parliamentary vote on the question of compulsory vaccinations, saying to the Bild newspaper in an interview that “My recommendation is that we don’t do this as a government, because it’s an issue of conscience”. In terms of other data yesterday, German unemployment fell by -34k in November (vs. -25k expected). Separately, the November CPI readings from France at +3.4% (vs. +3.2% expected) and Italy at +4.0% (vs. +3.3% expected) surprised to the upside as well. In the US, however, the Conference Board’s consumer confidence measure in November fell to its lowest since February at 109.5 (vs. 110.9 expected), and the MNI Chicago PMI for November fell to 61.8 9vs. 67.0 expected). To the day ahead now, and once again we’ll have Fed Chair Powell and Treasury Secretary Yellen appearing, this time before the House Financial Services Committee. In addition to that, the Fed will be releasing their Beige Book, and BoE Governor Bailey is also speaking. On the data front, the main release will be the manufacturing PMIs from around the world, but there’s also the ADP’s report of private payrolls for November in the US, the ISM manufacturing reading in the US as well for November, and German retail sales for October. Tyler Durden Wed, 12/01/2021 - 07:47.....»»

Category: blogSource: zerohedgeDec 1st, 2021

Dover (DOV) Stock Surges 42% in a Year: More Room to Run?

Dover's (DOV) solid order trends and strong demand across end markets are driving price performance. Dover Corporation’s DOV shares have gained 41.9% in the past year compared with the industry’s growth of 8.9%. Solid end-market demand across all segments, strong order trends and forecast-topping earnings over the trailing four quarters have contributed to this share-price appreciation. Benefits from cost-reduction actions, focus on investments and acquisitions as well as efforts to reduce debt levels will stoke growth. Image Source: Zacks Investment ResearchIn the last month, Dover reported impressive third-quarter 2021 results, with earnings and sales beating the respective Zacks Consensus Estimates and improved year over year.Let’s analyze the factors driving the stock.Driving FactorsDover has been gaining from robust order trends across the majority of its businesses for a while. It is witnessing solid sales growth in the Engineered Products, Pumps & Process Solutions and Refrigeration & Food Equipment segments. The company expects strong demand growth in compressor components, foodservice and textile printing business in the current year, as these markets continue to recover.In the Engineered Products segment, demand for engineered products, vehicle service and industrial automation has been solid. Fueling Solutions continues to grow on a robust increase in systems and software, recovering underground demand and vehicle wash. The Imaging & Identification segment will benefit from strong demand for consumables and fast-moving consumer goods solutions. The Marking & coding business is expected to maintain its growth trajectory with services and serialization products. Digital textile printing is recovering from the pandemic-induced declines in the past year.In the Pumps & Process Solutions business, demand for biopharma connectors and pumps will likely be healthy, aided by vaccine and non-COVID-related pharmaceutical tailwinds. The  Refrigeration & Food Equipment, heat exchanger and Belvac business are poised to perform well in the current year, given the large backlog and strong order rates in the food retail business. Dover is investing in increasing capacity and new capabilities in these two businesses to capture growth.Dover’s productivity and cost-control initiatives will continue to drive bottom-line growth. It executed restructuring programs to align costs and operations with current market conditions. The company is focused on investments in capacity expansions in high-growth businesses and productivity improvements across its portfolio. Dover has a long tradition of making successful acquisitions in diverse end markets. Its efforts to reduce debt levels, solid financial position, prudent capital structure, refinancing efforts and momentum in operational execution bode well.Dover expects adjusted earnings per share to be between $7.45 and $7.50 for 2021, up from the prior projection of $7.30 and $7.40. The mid-point of the guidance indicates year-over-year growth of 37.8%.Positive Growth ProjectionThe company’s earnings estimate for the current year is pegged at $7.52 at present, indicating year-over-year growth of 32.6%.Zacks Rank & Stocks to ConsiderDover currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the Industrial Products sector are Encore Wire Corporation WIRE, SPX FLOW, Inc. FLOW and Casella Waste Systems, Inc. CWST. All these stocks flaunt a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Encore Wire has an expected earnings growth rate of around 491% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 37% upward in the past 60 days.Encore Wire’s shares have surged 171% in the past year. The company has a trailing four-quarters earnings surprise of 271%, on average.SPX FLOW has a projected earnings growth rate of around 101.3% for 2021. The Zacks Consensus Estimate for current-year earnings has been revised upward by 5.3% in the past 60 days.The company’s shares have appreciated 56.9% in a year. SPX FLOW has a trailing four-quarter earnings surprise of 40.4%, on average. FLOW has a long-term earnings growth of 35.2%.Casella Waste has an estimated earnings growth rate of around 6% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 11.4%.The company’s shares have increased 44% in the past year. Casella Waste has a trailing four-quarter earnings surprise of 42.1%, on average. CWST has a long-term earnings growth of 14.2%. Tech IPOs With Massive Profit Potential: Last years top IPOs surged as much as 299% within the first two months. With record amounts of cash flooding into IPOs and a record-setting stock market, this year could be even more lucrative. See Zacks’ Hottest Tech IPOs 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 Dover Corporation (DOV): Free Stock Analysis Report Casella Waste Systems, Inc. (CWST): Free Stock Analysis Report SPX FLOW, Inc. (FLOW): Free Stock Analysis Report Encore Wire Corporation (WIRE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 30th, 2021

Why Is Hasbro (HAS) Up 5.1% Since Last Earnings Report?

Hasbro (HAS) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. It has been about a month since the last earnings report for Hasbro (HAS). Shares have added about 5.1% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Hasbro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Hasbro Q3 Earnings & Revenues Beat EstimatesHasbro reported solid third-quarter fiscal 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The bottom line outpaced the consensus mark for the fifth straight quarter, while the top line beat the same for the second consecutive quarter.The company reported adjusted earnings of $1.96 per share, beating the Zacks Consensus Estimate of $1.73. In the prior-year quarter, the company had reported adjusted earnings of $1.88 per share.In the quarter under review, net revenues were $1,970 million that beat the consensus mark of $1,957 million. Moreover, the top line rose 11% on a year-over-year basis.Brand PerformancesDuring the fiscal third quarter, the Franchise Brand reported revenues of $882 million, up 9% year over year. The upside was backed by growth in MAGIC: THE GATHERING, MY LITTLE PONY and TRANSFORMERS.During the quarter, Partner Brands’ revenues fell 10% year over year to $ 366.7 million. Although the brand registered growth in Hasbro products for the Marvel portfolio, it was more than offset by declines in other properties.Revenues at Hasbro Gaming amounted to $281.9 million, up 18% from the prior-year quarter’s levels. Its total gaming category revenues increased 21% year over year to $ 658.6 million. The uptick was primarily led by growth in tabletop and digital gaming including DUNGEONS & DRAGONS as well as games such as THE GAME OF LIFE, CONNECT 4 and GUESS WHO.Emerging Brands’ revenues during the fiscal third quarter increased 15% year over year to $177.5 million owing to growth in PJ MASKS, PEPPA PIG and GI JOE products.Revenues from TV/Film/Entertainment surged 58% year over year to $261.9 million. The segment’s revenues benefited from increased deliveries in scripted, unscripted as well as animated television and film.Segmental RevenuesDuring first-quarter fiscal 2021, the company had changed its reportable segments to Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment.In the fiscal third quarter, net revenues from the Consumer Products segments fell 3% year over year to $1,282.7 million. Adjusted operating margin came in at 16.4% compared with 17.2% reported in the prior-year quarter.During the quarter under review, the Wizards of the Coast and Digital Gaming segment’s revenues totaled $360.2 million, up 32% from $273.4 million reported in the year-ago quarter. The segment benefited from robust performance of MAGIC: THE GATHERING and DUNGEONS & DRAGONS as well as licensed digital gaming. The segment’s adjusted operating margin came in at 44.3% compared with 51.8% reported in the year-ago quarter.Revenues in the Entertainment segment increased 76% year over year to $ 327.1 million. The segment’s adjusted operating margin came in at 12.9% against (1.9%) reported in the prior-year quarter.Operating HighlightsDuring the fiscal third quarter, Hasbro's cost of sales (as a percentage of net revenues) came in at 30.9% compared with 34.3% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — were 18.4% compared with 18.3% in the prior-year quarter.Balance SheetCash and cash equivalents as of Sep 26, 2021 were $1,181.2 million, up from $1,132.4 million on Sep 27, 2020. At the end of the reported quarter, inventories totaled $544.1 million compared with $540 million in the year-ago period. As of Sep 26, 2021, long-term debt came in at $3,977.4 million compared with $4,777.8 million as on Sep 27, 2020.The company’s board of directors announced a dividend of 68 cents per common share. The dividend is payable on Nov 15, 2021, to shareholders of record at the close of business as of Nov 1.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -25.97% due to these changes.VGM ScoresCurrently, Hasbro has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hasbro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hasbro, Inc. (HAS): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksNov 25th, 2021

Why Is Fifth Third Bancorp (FITB) Down 3.1% Since Last Earnings Report?

Fifth Third Bancorp (FITB) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. A month has gone by since the last earnings report for Fifth Third Bancorp (FITB). Shares have lost about 3.1% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Fifth Third Bancorp due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Fifth Third Q3 Earnings Beat Estimates, Revenues UpFifth Third reported third-quarter 2021 earnings (excluding after-tax impact of certain items) of 94 cents per share, beating the Zacks Consensus Estimate of 91 cents. Including the impact of these items, earnings per share came in at 97 cents per share, indicating a 24% year-over-year rise.The company’s performance displays revenue growth, aided by fee and net interest income. Also, benefit from credit losses was a tailwind. However, marginally higher expenses and soft loan growth played spoilsport.The company reported net income available to common shareholders of $684 million or 98 cents per share compared with the $562 million or 78 cents witnessed in the prior-year quarter.Revenues & Non-Interest Income Rise, Costs Flare Up, Deposits FlatTotal adjusted revenues for the reported quarter came in at $2.03 billion, up 7% year over year, driven by higher fee and net interest income. Further, the revenue figure surpassed the Zacks Consensus Estimate of $1.99 billion.Fifth Third’s net interest income (tax equivalent) came in at $1.19 billion, up 1.6% year on year. It primarily reflects the benefits of the Government National Mortgage Association (GNMA) forbearance loan buyout purchases, lower deposit costs, a fall in long-term debt, and higher interest income from Paycheck Protection Program (PPP) loans. This was partially offset by lower commercial and industrial, home equity, and credit card balances, and the impact of lower market rates. NIM expanded 1 basis point (bp), year over year, to 2.59%, representing the lower deposit costs, PPP-related income, and a reduction in long-term debt, partially offset by reduced market rates, loan spread compression, and the impact of ample liquidity.Non-interest income climbed 13% year over year to $794 million (excluding certain non-recurring items). Including significant items, non-interest income jumped 16% year over year to $836 million. Rise in service charges on deposits, mortgage banking revenues, wealth and asset management revenues, card and processing revenues, leasing business revenues and other non-interest revenues were partly muted by a decrease in origination fees, and gains on loan sales and higher rewards.Excluding merger-related expenses, non-interest expenses flared up 2% from the prior-year quarter to $1.16 billion. This upsurge chiefly resulted from the rise in performance-based compensation expense, reflecting strong business results, increase in travel and entertainment expense, and expenses associated with the GNMA forbearance loan buyout purchases, partially offset by lower card and processing expense. Including merger expenses, costs flared up 1% year over year.As of Sep 30, 2021, average loan and lease balances, and average total deposits at $108 billion and $162.6 billion, respectively. Loans edged down 1%, as a decline in commercial loan and lease balances (primarily due to PPP balance declines) was partially offset by an increase in consumer loans. Deposits were flat, as increase in demand and savings deposit balances were offset by reductions in money market deposit balances and other time deposit balances.Credit Quality StrongThe company reported benefit from credit losses of $42 million compared with the benefits of $15 million seen in the year-ago quarter. Net charge-offs for the third quarter came in at $21 million or 8 bps of average loans and leases on an annualized basis compared with the $101 million or 35 bps witnessed in the prior-year quarter. Further, total allowance for credit losses decreased 22% to $2.16 billion from the prior-year quarter. Total non-performing assets, including loans held for sale, came in at $560 million, down 41% from the year-ago quarter.Capital Position DeclinesThe Tier 1 risk-based capital ratio was 11.27% compared with the 11.64% posted at the end of the prior-year quarter. The CET1 capital ratio (fully phased-in) was 9.85% as against the 10.14% recorded at the end of the year-ago quarter. The Tier 1 leverage ratio was 8.35% as compared with the year-earlier quarter’s 8.37%.Share Repurchase UpdateIn the third quarter, the company repurchased shares worth $550 million.4Q21 OutlookThe expectations are on sequential basis and include the impacts of PPP forecast provided.Average loans and leases are expected to be up 1%. The company expects net interest income to be down 1% and non-interest income to be up 6%. It expects NIM to decline three to four basis points due to compression in loan yields.Non-interest expenses are expected to be flat to up 1%. Net charge offs are likely to be 10-15 bps. The effective tax rate is projected to be 22 to 23%.How Have Estimates Been Moving Since Then?It turns out, estimates revision flatlined during the past month.VGM ScoresCurrently, Fifth Third Bancorp has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookFifth Third Bancorp has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. 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 Fifth Third Bancorp (FITB): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksNov 18th, 2021

Bet on Growth ETFs to Ride the US Economic Growth Optimism

Wall Street is expected to continue to gain on optimism surrounding new economic data and third-quarter earnings releases, which point to recovery from the pandemic-induced slowdown. The current U.S. economic optimism is dotted by many positive factors that can keep driving investor optimism. Factors like a better-than-expected third-quarter earnings season, the improving labor market conditions, growing consumer confidence and the passage of the much-awaited $1.2-trillion infrastructure bill have been triggering a Wall Street rally. Also, the coronavirus outbreak seems to be gradually coming under control as new cases from the highly-infectious Delta variant have been reducing since early September.Notably, investors seeking to gain on the impressive trends should consider growth ETFs. However, it is worth noting that these funds offer exposure to stocks with growth characteristics that have comparatively higher P/B, P/S and P/E ratios and have a higher degree of volatility when compared to value stocks. Investors can consider certain ETFs like Invesco Dynamic Large Cap Growth ETF (PWB), SPDR Portfolio S&P 500 Growth ETF (SPYG), iShares S&P 500 Growth ETF (IVW), Schwab U.S. Large-Cap Growth ETF (SCHG) and Vanguard S&P 500 Growth ETF (VOOG).The three major U.S. stock exchanges are close to their record highs. The Dow Jones Industrial Average is about 1.3% away from its all-time high level. The S&P 500 is 0.8% and the Nasdaq Composite is 1.2% away from hitting their record high levels.The impressive third-quarter earnings results have been keeping investors busy. The earnings results have also eased investors' worries surrounding the rising supply-chain disturbances eroding corporate profit margins. The upside in the market has also been driven by the much-anticipated announcements from the Federal Reserve. The central bank has informed about its plan to initiate the tapering of bond purchases “later this month” (per a CNBC article).In another positive development, the U.S. jobs report for November seems very impressive. The nonfarm payrolls rose by 531,000 in October, surpassing the estimate of 450,000, per a CNBC article. Also, beating expectations, the unemployment rate declined to 4.6%, hitting a new pandemic low level (according to a CNBC article).Wall Street has another reason to cheer as the U.S. House of Representatives has passed the more than $1-trillion infrastructure bill on Nov 5. The bill has now moved to President Biden for his signature. The legislation was approved in a 228-206 vote.Going on, consumer confidence in the United States rose in October primarily on the heels of easing Delta variant concerns, improving labor market conditions, rebounding U.S. economy from the pandemic-led slump and accelerated coronavirus vaccine rollouts. The Conference Board's measure of consumer confidence index stands at 113.8 compared to 109.8 in September.The metric has finally broken the streak of three consecutive monthly declines. October’s reading also beat the consensus estimate of the metric, coming in at 108.3, per a Reuters’ poll. The metric continues to be below the pre-pandemic level of 132.6 in February 2020.Consumers seem to be looking to buy homes, motor vehicles and major household durables. In fact, the buying attitude for vehicles and homes is expanding. The survey also showed that the proportion of the population planning to go on vacation has shot up to the highest level since February 2020, as mentioned in a Reuters article.Going on, the Atlanta Fed stated that the U.S. economy will grow 8.2% in fourth-quarter 2021 in his latest forecasts on Nov 10. This signals an improvement from the previous expectation of 6.6% on Oct 29.Heading into the holiday season, given the reopening of domestic and international borders for traveling, we are enthusiastic about U.S. economic growth. The United States has largely relaxed travel restrictions and is reopening to completely vaccinated international travelers. The news has boosted enthusiasm for economic and travel recovery. In fact, airlines recently hinted at a solid travel trend.Growth ETFs to ConsiderBelow, we have discussed in detail a few growth ETFs that could be added to the portfolio:Invesco Dynamic Large Cap Growth ETF PWBPWB is based on the Dynamic Large Cap Growth Intellidex Index. The Style Intellidexes apply a rigorous 10-factor style isolation process to objectively segregate companies into their appropriate investment style and size universe. Invesco Dynamic Large Cap Growth ETF has AUM of $837 million and charges an expense ratio of 0.56%. PWB carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook. Also, Invesco Dynamic Large Cap Growth ETF trades in three-month average volumes of about 30,000 shares (read: ETF Strategies to Cheer the Market Momentum in October).SPDR Portfolio S&P 500 Growth ETF SPYGSPYG seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the S&P 500 Growth Index. The Index contains stocks that exhibit the strongest growth characteristics based on: sales growth, earnings change to price ratio, and momentum.SPDR Portfolio S&P 500 Growth ETF has AUM of $15.05 billion and charges an expense ratio of 0.04%. SPYG carries a Zacks ETF Rank #2, with a Medium-risk outlook. Also, SPDR Portfolio S&P 500 Growth ETF trades in three-month average volumes of about 2.3 million shares (read: ETF Strategies to Ride the Market Optimism in November).iShares S&P 500 Growth ETF IVWIVW provides exposure to large U.S. companies whose earnings are expected to grow at an above-average rate relative to the market and tracks the S&P 500 Growth Index.iShares S&P 500 Growth ETF has AUM of $38.89 billion and charges an expense ratio of 0.18%. IVW carries a Zacks ETF Rank #2, with a Medium-risk outlook. Also, iShares S&P 500 Growth ETF trades in three-month average volumes of about 1.8 million shares.Schwab U.S. Large-Cap Growth ETF SCHGSCHG’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index.Schwab U.S. Large-Cap Growth ETF has AUM of $17.32 billion and charges an expense ratio of 0.04%. SCHG carries a Zacks ETF Rank #2, with a Medium-risk outlook. Also, Schwab U.S. Large-Cap Growth ETF trades in three-month average volumes of about 345,000 shares.Vanguard S&P 500 Growth ETF VOOGVOOG seeks to track the performance of the S&P 500 Growth Index.Vanguard S&P 500 Growth ETF has AUM of $7.36 billion and charges an expense ratio of 0.10%. VOOG carries a Zacks ETF Rank #2, with a Medium-risk outlook. Also, Vanguard S&P 500 Growth ETF trades in three-month average volumes of about 107,000 shares. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco Dynamic Large Cap Growth ETF (PWB): ETF Research Reports Schwab U.S. LargeCap Growth ETF (SCHG): ETF Research Reports iShares S&P 500 Growth ETF (IVW): ETF Research Reports SPDR Portfolio S&P 500 Growth ETF (SPYG): ETF Research Reports Vanguard S&P 500 Growth ETF (VOOG): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 15th, 2021

Futures Rise As Usual, Approaching All Time High

Futures Rise As Usual, Approaching All Time High US equity futures resumed their upward climb (after Goldman quadrupled down on its call for a massive, year-end meltup driven by $15BN in inflows every single day) as major technology stocks advanced, and as investors awaited a slew of retail earnings and economic data this week to gauge the health of consumer spending while keeping an eye on runaway inflation. Better-than-estimated profit growth has led to a rally in markets, helping ease recent concerns over the hottest U.S. inflation in 30 years. At 730 a.m. ET, Dow e-minis were up 94 points, or 0.26%. S&P 500 e-minis were up 9 points, or 0.20% and about 20 points from their all time high around 4,711; while Nasdaq 100 e-minis were up 30.5 points, or 0.19%. The three major Wall Street indexes had fallen between 0.3% and 0.7% last week when the S&P 500 also snapped its longest winning streak since August 2020, amid concerns over high inflation and weakening consumer sentiment. Investors had begun pivoting into economically resilient sectors, mainly technology, towards the end of the week. Market-heavy GAMMA (fka FAAMG) stocks rose between 0.1% and 0.8% in premarket trade, with Meta Platforms Inc leading gains. On the other end, Tesla shares fell as much as 2.6% in U.S. premarket session after Elon Musk suggested over the weekend that he would sell even more stock after offloading almost $7 billion worth of shares over the past week. Tesla's declines follow a steep 15.4% drop last week after Musk offloaded a combined $6.9 billion worth of shares in the electric-car maker. Meanwhile, blank-check company Gores Guggenheim rose as much as 25% as the stock was touted among retail traders. Rivian shares were down about 2.7% in U.S. premarket trading after the electric-truck maker surged following its IPO last week. Dollar Tree Inc added 5.4% after activist investor Mantle Ridge LP revealed a 5.7% stake in the discount retailer. Strong corporate earnings are helping drive investors into stocks and overshadowing fears about the hottest U.S. inflation print in three decades. The sentiment found its way into calmer bond markets, where these fears had played out in the highest volatility since the onset of pandemic.   “Central banks may be becoming less accommodative, but they will be anxious not to derail the recovery or financial markets,” according to Cesar Perez Ruiz, chief investment officer at Pictet Wealth Management and head of asset alloaction Christophe Donay. “Q3 results have offered further proof of corporate strength.” Focus this week will be on earnings reports from several major retailers including Walmart Inc, Target Corp, Home Depot and Macy's. Their results will round off an upbeat third-quarter earnings season, which pushed Wall Street to new highs. Retail sales data for October is also due on Tuesday, and is expected to show the impact of inflation on consumer spending. Looking ahead not everyone is euphoria: in its 2022 forecast, Morgan Stanley strategists warn that inflationary headwinds may become a bigger force against U.S. stocks next year; they prefer peers in Europe and Japan. They forecast the S&P 500 will end 2022 at 4,400 -- some 6% below current levels. For bonds, they expect 10-year yields to rise to 2.10% by the end of next year on improving growth and higher real rates, up from 1.54% on Monday. “One reason we like equities in Europe and Japan is that we think inflationary challenges there are much less daunting than elsewhere,” strategists led by Andrew Sheets wrote Sunday. They also cited “more reasonable valuations, limited central bank tightening and less risk from higher taxes” vis-a-vis the U.S. In Europe, Stoxx 600 Index was little changed near a record high as rising earnings estimates supported the region’s stocks. Travel and leisure and retailers led the gains, while miners slumped. Here’s the latest on what analysts are saying about European equities: EasyJet cut to reduce from hold at Kepler Cheuvreux due to deteriorating traffic trends and a risk that it has to incentivize demand with fare discounts. Alfen Beheer loses its only buy rating as Berenberg downgrades to hold on limited near- term upside, even after last week’s sell-off in the shares. Direct Line cut to hold and Admiral raised to buy at Berenberg with the broker switching preferences in its U.K. non- life insurer coverage. B&M European is cut to underperform from sector perform at RBC with growth set to become harder to deliver for the discount retailer and better value seen elsewhere in the sector. Wood’s strategic review of its built environment business could unlock “meaningful value,” Citi writes in note upgrading the energy-services firm to buy. Earlier in the session, shares fluctuated in Hong Kong and dipped in China, where traders weighed stronger-than-expected retail sales and industrial output, central bank liquidity support and a drop in home prices. Beijing’s crackdown on real-estate leverage is among the headwinds for the world’s second-largest economy. That said, Asian equities rose for a third day as the strength in U.S. technology heavyweights Friday helped ease market worry over global inflation, reigniting appetite for growth stocks.  The MSCI Asia Pacific Index advanced as much as 0.6%, with TSMC, Tencent Holdings and Samsung Electronics among the largest contributors to the gauge’s rise. South Korea’s Kospi was the top performer among the region’s benchmarks, adding 1%.  Futures on the Nasdaq 100 climbed in Asia after the underlying measure added 1% on Friday. U.S. equities rose led by technology and communication services, with share prices remaining near all-time highs after a strong corporate earnings season.  Overall, the positive mood from last week is extending to today’s trading, said Naoki Fujiwara, chief fund manager at Shinkin Asset Management. “Chip-related stocks are doing pretty well following the earnings season, which is also backing gains for the market.” The regional benchmark capped its second straight week of gains on Friday, helped by positive earnings readings. Price data from the U.S. and China remain in focus as traders fear elevated inflation could lead to tighter monetary policy. U.S. consumer sentiment unexpectedly collapsed in early November as Americans grew increasingly concerned about inflation. Japanese stocks rose after the Nikkei newspaper reported on Friday that the government plans to compile an economic stimulus package of more than 40 trillion yen ($351 billion) in fiscal measures. “Economic stimulus had been expected to be about 30 trillion yen, but a new figure of 40 trillion yen is likely to be cheered by investors,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute Co.  The Topix index rose 0.4% to close at 2,048.52 in Tokyo, while the Nikkei 225 advanced 0.6% to 29,776.80. Toyota Motor contributed the most to the Topix’s gain, increasing 1.1%. Out of 2,180 shares in the index, 1,051 rose and 1,029 fell, while 100 were unchanged. India’s benchmark index ended flat after wholesale prices surged higher-than-expected in October, weighing on metal and financial stocks. The S&P BSE Sensex was little changed at 60,718.71 in Mumbai, while the NSE Nifty 50 Index was flat at 18,109.45. Both gauges gained as much as 0.6% earlier on the back of an earnings season in which a majority of Nifty 50 companies reported results that beat expectations.  Both indexes, however, failed to hold onto their initial advance after wholesale prices rose 12.5% in October, more than economists’ consensus of a 11.1% advance, led by a rise in manufactured products as well as fuel and power prices. Nine of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by gauges of metal and basic materials companies.  India will release monthly trade figures after market hours. The corporate earnings season for the three months ended September finished last week with 29 of the Nifty 50 companies beating analyst estimates. Three companies made their trading debut on Monday, with chemical maker Sigachi Industries rising 267% over its IPO price. One97 Communications Ltd., the operator of digital payments app Paytm which raised $2.5b in India’s biggest IPO, is slated for Thursday. In FX, the Bloomberg Dollar Spot Index slipped with the greenback weaker against all of its Group-of-10 peers. Commodity currencies, led by Norway’s krone, were the best performers. The Treasury curve bull flattened, with yields falling by up to 2bps. The euro hovered around $1.1450; the French presidential election next year is the scheduled event carrying the highest risk for the common currency, according to options gauges. The pound steadied as traders await clues on monetary policy from BOE Governor Andrew Bailey during parliamentary testimony later Monday. U.K. economists expect a rate increase to 0.25% next month, according to a Bloomberg survey. U.K. economists have become more hawkish over the past month and now expect the Bank of England to increase interest rates in December as concerns about inflation intensify. Sweden’s krona inched up after inflation accelerated more than forecast in October. Meanwhile, the Australian dollar rose on data that China’s economy performed better than expected in October. The nation’s sovereign bonds also extended opening gains after China home prices fell again, sapping real-estate shares. Japan’s super-long government bonds underperformed amid concerns that supply may increase to finance government spending. The yen consolidated In rates, Treasury yields broadly within a basis point of Friday’s close, the curve fractionally steeper. The front-end and belly outperform, following bigger gains for Aussie front-end, which attracted buyers during Asia session. Stocks supported, with S&P 500 futures above Friday’s high.  Treasury yields were richer from front-end out to 10-year sector, which trades around 1.55%, outperforming gilts and bunds by ~1bp; long-end cheapens slightly on the day, steepening 5s30s by ~1bp.  Euro- area bonds gained, led by the periphery, following comments on inflation by ECB Chief Economist Philip Lane over the weekend. ECB’s Lane said recent price inflation is “really part of the pandemic” and people should not panic, in an interview with RTE on Saturday. The Fed begins tapered purchase schedule released Friday; schedule departed slightly from Nov. 3 plan by leaving target size of operations in 10- to 22.5-year sector unchanged while trimming 22.5- to 30-year more, which spurred outperfomance by 20-year sector In commodities, crude futures drifted lower with focus on U.S. energy policy and commentary from OPEC speakers. WTI is down 0.6%, trading either side of $80; Brent drops through Asia’s worst levels before running into support near $81. Spot gold fades Asia’s weakness to trade flat near $1,863/oz. Most base metals are in the red with LME nickel underperforming; copper trades flat.  Looking at today's calendar, it's quiet on the news front with just the US November Empire State manufacturing survey on deck. Biden will meet virtually with Chinese President Xi Jinping on Monday. Tensions between the two countries have been building over issues including Taiwan and restrictions on sales of U.S. technology to China. Market Snapshot S&P 500 futures up 0.1% to 4,685.00 STOXX Europe 600 little changed at 487.13 MXAP up 0.4% to 200.95 MXAPJ up 0.4% to 656.76 Nikkei up 0.6% to 29,776.80 Topix up 0.4% to 2,048.52 Hang Seng Index up 0.2% to 25,390.91 Shanghai Composite down 0.2% to 3,533.30 Sensex up 0.1% to 60,771.98 Australia S&P/ASX 200 up 0.4% to 7,470.11 Kospi up 1.0% to 2,999.52 Brent Futures down 0.9% to $81.46/bbl Gold spot down 0.2% to $1,860.89 U.S. Dollar Index little changed at 95.09 German 10Y yield little changed at -0.27% Euro little changed at $1.1447 Top Overnight News from Bloomberg  Federal Reserve Bank of Minneapolis President Neel Kashkari said the U.S. central bank shouldn’t overreact to elevated inflation even as it causes pain for Americans, because it is likely to prove temporary A reduction in China’s reserve requirement ratio looks increasingly unlikely after the authorities rolled over all policy loans coming due and data surprised on the upside, suggesting that bonds will have little room to gain China’s industrial output rose 3.5% in October from a year earlier, while retail sales growth accelerated to 4.9%, beating economists’ forecasts Japan’s gross domestic product contracted at an annualized pace of 3% in the three months through September from the previous quarter, the Cabinet Office reported Monday. Economists had forecast a 0.7% decline Bank of Japan Governor Haruhiko Kuroda said financial stress from the pandemic is limited to certain sectors of the economy, potentially signaling the BOJ is planning to scale back its Covid-era funding program European Central Bank President Christine Lagarde doubled down on her assessment that euro-area inflation will ease as economies rebound, falling back below the 2% target in the medium term. Yet analysts see itfaster than previously thought this year and next A short-lived reprieve for emerging- market carry trades funded in dollars looks to be over, with an upsurge in U.S. inflation making the outlook increasingly treacherous The U.K. is expanding its Covid-19 booster program to younger people as the country seeks to head off another wave of infections this winter. A third vaccine dose will be available to people aged 40 to 49 starting six months after their second shot, the government said Monday Oman said there was no need for OPEC+ to accelerate oil-production increases, signaling at least some members of the group will continue to resist U.S. pressure for more crude   A more detailed look at global markets courtesy of Newsquawk Asian equity markets began the week with a lack of firm direction as the region digested varied tier-1 economic releases including better than expected Chinese activity data and miss on Japanese GDP, with attention also on a slew of earnings results and corporate updates. ASX 200 (+0.4%) and Nikkei 225 (+0.6%) both opened higher and took impetus from last Friday’s gains on Wall Street but with upside in Australia capped as financials and energy lagged, while Japanese participants weathered the weak GDP data which showed a wider than expected quarterly contraction during Q3, when the economy was still mired by widespread state of emergency declarations in key areas including Tokyo and its surrounding prefectures. Nonetheless, Japanese stocks have taken the disappointing economic growth within their strides as it justifies the incoming stimulus package which was said to have been increased to over JPY 40tln in fiscal spending and with Japan reportedly to resume its Go To Travel campaign in mid-January. Conversely, Hang Seng (+0.2%) and Shanghai Comp. (-0.2%) were initially moderately pressured despite stronger than forecast Industrial Production and Retail Sales data from China, as well as the PBoC’s CNY 1tln MLF announcement which matched this month’s expiring MLF loans and further dampened prospects of PBoC easing. Today also saw the launch of the Beijing Stock Exchange which aims to help SMEs raise capital and included 81 companies in the first batch of listings, while participants await the Biden-Xi virtual meeting which is set to take place Monday evening at 19:45EST or Tuesday morning in Asia and with US Treasury Secretary Yellen and Secretary of State Blinken set to join in on the call. Finally, 10yr JGBs are higher as they tracked a marginal rebound in T-notes and following the disappointing Japanese GDP release, but with gains capped as stocks in Tokyo remained afloat and amid the absence of BoJ purchases in the market today. Top Asian News Cathay Crew Who Flew From Frankfurt Doing 21-Day Quarantine Duterte Runs for Philippine Senate, Avoids Clash With Daughter Greenland Jumps in Bond Market After Classification Change Chinese Startup Meicai Is Said to Pick Banks for Hong Kong IPO European equities (+0.1%) trade with minor gains which have nudged the Stoxx 600 to a high of 487.21 in what has been a quiet start to the week. The desk will continue to monitor further lockdown restrictions across the region, however, updates from the Netherlands and Austria have done little to dent sentiment thus far. The handover from the APAC region was a mixed one as the soft GDP data from Japan was overshadowed by forthcoming stimulus efforts whilst Chinese equities were unable to garner much upside from stronger than forecast Industrial Production and Retail Sales data. Participants were also awaiting the Biden-Xi virtual meeting which is set to take place Monday evening at 19:45EST or Tuesday morning in Asia. Stateside, futures are trading with gains of a similar magnitude to their European counterparts (ES +0.1%) with not a great deal on the docket beyond the NY Fed Manufacturing print at 13:30GMT/08:30EST. Back to Europe, sectors are relatively mixed with Travel & Leisure top of the leaderboard amid gains in Deutsche Lufthansa (+1.7%) after the Co. was upgraded to neutral from sell at UBS. Oil & Gas names have been granted some reprieve following the selling pressure seen towards the latter half of last week. To the downside, Basic Resources is the standout laggard amid underlying price action in the metals space. In terms of individual movers, Ahold Delhaize (+2.4%) is one of the best performers in the Stoxx 600 after announcing a EUR 1bln buyback as of 2022, accelerated its growth/investment plan and will explore an IPO of Bol.com. Shell (+1.8%) is seen higher on the session after announcing that it is looking to implement a simplified structure and move its tax residency to the UK from the Netherlands. To the downside, Philips (-12.1%) sits at the foot of the Stoxx 600 as concerns continue to mount over its ventilator recall issues in the US. Finally, BBVA (-3.7%) is seen lower on the session after launching a tender offer to acquire the remaining 50.2% of Turkiye Garanti Bankasi. Top European News U.K. Expands Covid-19 Booster Program to People in Their 40s Austria Locks Down Unvaccinated as Europe Tightens Covid Curbs Cathay Crew Who Flew From Frankfurt Doing 21-Day Quarantine Telefonica Launches Tender Offer for Hybrid Notes In FX, the Aussie and Kiwi are outperforming their major peers, or making the most of ongoing Greenback consolidation off last week’s new y-t-d highs, with the former also gleaning encouragement from Chinese data overnight as ip and retail sales beat consensus. Aud/Usd is back above 0.7350 and Nzd/Usd has reclaimed 0.7050+ status as the Aud/Nzd cross hovers in the low 1.0400 zone and eyes an unusually large 1 bn option expiry at the round number. Similarly, the Norwegian and Swedish Krona are both firmer vs a somewhat leggy/lethargic Euro, but with assistance from macro releases in the form of trade and inflation respectively. Eur/Nok is probing 9.9200 and Eur/Sek is testing bids and support around 10.0000 compared to peaks near 9.9600 and 10.0330. CAD/DXY - No lasting support from crude prices for the Loonie as WTI retreats through Usd 80/brl from Usd 81.20 at best, but Usd/Cad has reversed from 1.2550+ ahead of Canadian manufacturing sales and wholesale trade that are out alongside the more timely Empire state survey. Meanwhile, the index is meandering either side of 95.000 within a 95.152-94.963 band having ‘topped out’ at 95.266 in wake of US CPI and a far from well received new 30 year issue. GBP/EUR/CHF/JPY - All narrowly mixed against the Buck and seemingly awaiting clearer direction from their US counterpart or independently, as Cable continues to straddle a key Fib level (1.3412) in advance of testimony from the BoE on the latest MPR and top tier UK data from tomorrow. Eur/Gbp is sitting even tighter around 0.8530 before talks intensify to try and resolve differences on NI Protocol, while Eur/Usd is pivoting 1.1450, Usd/Chf is rotating around 0.9200 and Usd/Jpy is holding mostly below 114.00. Note, the Euro has ECB speakers to digest (see Headline Feed at 10.01GMT for remarks from President Lagarde) and look forward to, while the Franc has not really responded to small rises in weekly Swiss sight deposits and the Yen has largely brushed aside much weaker than expected Japanese GDP and a draft document saying that the government and BoJ share a strong sense of urgency about supply shortages, whilst maintaining an appropriate combination of monetary and fiscal policies. In commodities, WTI and Brent are softer this morning, with losses in excess of 1.0% on the session thus far. Such pressure stems from demand-side updates in the wake of further COVID-19 measures being announced/implemented, most recently that Austria is entering a lockdown for the un-vaccinated and the Netherlands is to reimpose social distancing from Saturday. Furthermore, given the surge in cases seen in Germany in recent weeks the three-parties in coalition discussions intend to put forward proposals to Parliament on Thursday for renewed measures, which will reportedly include contact restrictions. On the other hand, the supply-side of the equation is cognisant of the looming imposition of further restrictions on Belarus by the EU, particularly as Leader Lukashenko last week said they would respond to any sanctions and suggested closing gas/goods transit through Belarus. Additional sanctions are, currently, scheduled to be announced this afternoon. Separately, and perhaps adding pressure, is commentary from various oil ministers the most pertinent of which has seen the UAE representative announce they are to increase production to over 5mln BPD from the current 4mln by 2030, alongside expecting a Q1-2022 oil surplus. Currently, the benchmarks are in proximity to the sessions trough which resides around USD 0.10/bbl below Friday’s low of USD 79.78/bbl in WTI, for instance. Moving to metals, spot gold and silver have been grinding higher throughout the European morning but are yet to retrace the downside seen overnight in-spite of the stronger Chinese data though this failed to spur regional or base-metal performance either. In terms of bank views, the Head of Energy Research at Goldman Sachs predicting the precious metal is set for a boom to the USD 2k level. US Event Calendar 8:30am: Nov. Empire Manufacturing, est. 22.0, prior 19.8 DB's Jim Reid concludes the overnight wrap This morning I’ve just put out a short note which I hope will win the catchiest research title of the year award. It’s called “If you think real yields are low, look at these charts…”. See here for the link. Regular readers will know my view that inflation will be structurally higher going forward and that for the rest of my career developed market real yields will likely stay negative even if nominal yields climb. This is because with debt so high, history suggests that heavy financial repression will be necessary to manage this. However, nothing could have prepared me for 2021 so far with US CPI at 6.2% YoY in October and 10-year US yields stuck below 1.6%. On a spot basis real yields are c.-4.6% and at around 70-year lows. If you think real yields are low, however, take a look at the 200-year graphs in the note to see that whenever debt has spiked historically, real yields have moved a lot lower than even today’s levels, albeit through inflation around or above 20%. These are extreme times but history offers even more extreme examples. Staying with inflation DB’s Francis Yared and I did a webinar on inflation last week and the recording can be viewed here. You’ll need Francis’s slides at hand on Regime Shifts in Inflation (link here) and mine (link here) on what history can tell us about inflation and what it means for asset prices in the future. I thought it was a really good webinar but I am slightly biased. Maisie and mum came back from a week in hospital at the weekend. Mum slept for 18 hours on Saturday leaving me to work out how the wheelchair folds up and reopens and delivering what I hoped was the right dose of morphine. It’s going to be tough living with a wheelchair for the next year as Maisie’s hip bone tries to regrow but after hearing many stories from my wife about children in the ward with life threatening conditions you realise that you’re actually pretty lucky. Before you think I’ve gone all zen, I did nearly throw the wheelchair across the room when it wouldn’t unfold. I’d missed a small lever under the seat. After a tiring last week at home and in the markets it’s a quieter week ahead in terms of the calendar, though market attention will continue to focus on the question of who might be appointed as the next Fed Chair, as well as the latest inflation statistics from a number of countries, including the UK (Wednesday). There is a reasonable amount of Fedspeak so it’ll be especially interesting to hear those on the transitory side to see if last week’s shocking print has impacting their thinking. Otherwise, geopolitics will be in focus, with today’s virtual meeting between US President Biden and Chinese President Xi, alongside continued speculation about whether the UK might trigger Article 16 of the Northern Ireland Protocol even if tensions have eased a touch in the last few days. Starting with today’s virtual meeting between President Biden and President Xi, it is set to take place at 7:45 PM Washington time, which will be 8:45 AM on Tuesday in Beijing. While both the presidents spoke over the phone twice this year, this is the first time it is being dubbed as a summit. There is some thought that tariff reductions could be on the agenda, especially given current US inflation levels but it might be a bit early for that in any relationship rebuild. We’ll know more in time for tomorrow’s EMR. The monthly Chinese data dump came in better than expected overnight with industrial output +3.5% yoy (vs. 3% expected), retail sales 4.9% yoy (vs 3.7% expected) but fixed-asset investment slightly missing at 6.1% (vs 6.2% expected). There is some discussion that the retail sales beat may be led by higher prices and also higher food sales as consumers prepare for the possibility of winter virus restriction. Asian stocks are trading mixed with the KOSPI (+1.04%) and the Nikkei (+0.48%) trading in the green while the Hang Seng (-0.08%), Shanghai Composite (-0.29%) and CSI (-0.29%) trading lower. In Japan GDP shrank by -0.8% from the last quarter (-0.2% consensus and +0.5% previous) augmenting expectations of a stimulus package by Prime Minister Fumio Kishida, which is expected to be announced at the end of this week. The Nikkei reported last Friday that the stimulus could top 40 trillion yen ($350 bn). Futures are pointing to a muted start in US & Europe with S&P 500 futures (-0.01%) and DAX futures (-0.08%) both fairly flat. Moving onto the rest of the week, there are a few decisions from EM central banks over the week ahead, including Turkey, South Africa and Indonesia (all Thursday). However, the main focus for investors will be the speculation about who might be the next Fed Chair, particularly in light of the news out last week that both incumbent Fed Chair Powell and Governor Brainard had been interviewed for the position. Powell’s current four-year term comes to an end in February, and whoever’s nominated would require senate confirmation for another term. At this point 4, 8 and 12 years ago, the announcement of who’d be nominated had already been made, but we still don’t have a date for when we might get the news. However, it may not be too far away, with President Biden saying in Glasgow on November 2 that it would be “fairly quickly”. On the data side, there’ll be an increasing amount of hard data out of the US for October, including retail sales, industrial production (both Tuesday) and housing starts (Wednesday). Meanwhile, there’ll also be some important UK data as the Bank of England mulls over their monetary policy settings ahead of their meeting next month. On Tuesday, there’s the latest employment report, and then on Wednesday, we’ll get the latest CPI reading for October. Turning to politics, it’s worth keeping an eye out for any developments on Brexit, with speculation rising that the UK government could trigger Article 16 of the Northern Ireland Protocol. Over the last 3 or 4 days the mood music has moved a little towards compromise so we’ll see if this gathers some momentum. Lastly on the earnings front, it’s the tail end of the season now, but there are still a few major companies left to report. Tomorrow we’ll hear from Walmart and Home Depot, before Wednesday brings reports from Nvidia, Cisco, Lowe’s and Target. Then on Thursday, we’ll hear from Intuit, Applied Materials and TJX. Recapping last week now and inflation had a strong stranglehold on the market narrative, as much higher-than-expected US CPI data drove Treasury yields higher, led by the belly of the curve. Global sovereign yields increased in sympathy. Quickly recapping the highlights from the pivotal CPI data: year-over-year headline CPI of 6.2% and core CPI of 4.6% were each the highest readings since the early 1990s and we’re generally getting to levels last seen consistently at the start of the 40yr disinflationary trend in the early 1980s. Price gains were shared across a broad range of components, which prompted some rabble rousing out of Democratic politicians, including President Biden. Five-year Treasury yields increased +13.5 bps as investors brought forward the expected timing of increases to the fed funds rate. Markets are pricing the first Fed rate hike by the July FOMC and 2.5 hikes through 2022. This compares with a September FOMC lift-off and fewer than 2 hikes in 2022 a week before. All told, 2yr, 5yr, and 10yr Treasury yields increased +11.7bps (+0.5bps Friday), +17.1bps (+1.0bps Friday), and +11.9bps (+2.1bps Friday) on the week. 10yr inflation breakevens hit their highest levels on record, finishing the week at 2.72%. Real yields were the only rates declining on the week, with 10yr real Treasury yields retreating -6.6bps (+0.8bps Friday) to end the week at -1.17%, just above all-time lows. Other developed sovereign bond yields followed Treasuries higher, with ten-year yields in Germany, UK, France, and Italy increasing +2.1bps (-2.8bps Friday), +6.9bps (-0.6bps Friday), +3.5bps (-2.8bps Friday), +7.8bps (-0.8bps Friday) on the week. The spectre of higher inflation and concomitant monetary policy tightening put an end to the recent S&P 500 win streak. After posting eight straight days of record highs by Tuesday, the S&P 500 retreated -0.31% this week, including -0.82% on Wednesday alone following the inflation data, but made a heroic effort to reclaim lost ground Friday, gaining +0.72%. Mega cap stocks were notable laggards, due to the increase in discount rates, with FANG+ stocks down -0.49% (+1.00% Friday). The index was also hit by a -15.44% collapse in Tesla stocks following news that Elon Musk would liquidate some of his holdings, which he duly did. European stocks proved more resilient, with the STOXX 600 (+0.68% on the week, +0.30% Friday), DAX (+0.25%, +0.07%), and CAC 40 (+0.72%, +0.45%), again posting new all-time highs to finish the week. On the virus front, Pfizer requested regulatory approval for all US adults to be eligible to receive the company’s Covid-19 booster shot, while climbing cases in Europe have prompted renewed lockdown measures and enhanced vaccination efforts across the continent. Federal Vice Chair for Supervision Quarles announced he would resign at the end of the year, as was widely anticipated. There was a steady leak of news on the impending nomination for Fed Chair, but neither Chair Powell nor Governor Brainard, the two favorites for the position, saw their chances much changed following the news. The Fed also released its bi-annual Financial Stability Report and concluded that asset prices remain vulnerable to deteriorating investor risk sentiment, virus progress, or economic recovery. Geopolitical tensions bubbled in Europe. Threats from Belarussian President Lukashenko to cut the transit of natural gas from Russia to Europe, and reports of potential Russian plans for further military excursions into Ukraine, drove European natural gas prices higher in the second half of the week. President Putin apparently warned the US and its allies that Moscow would not tolerate expansion of Western military influence in Ukraine. Tyler Durden Mon, 11/15/2021 - 07:59.....»»

Category: blogSource: zerohedgeNov 15th, 2021

Suncor Energy (SU) Up 9.5% Despite Missing on Q3 Earnings

Suncor Energy's (SU) Exploration and Production segment (comprising International, Offshore and Natural Gas segments) produces 93,500 Boe/d in Q3 compared with 97,200 Boe/d in the prior-year quarter. Shares of Suncor Energy SU have risen 9.5% since third-quarter 2021 earnings announcement on Oct 27.Despite the company’s lower-than-anticipated earnings and revenue results, its stock has continued to rise. This was possibly as a result of the firm’s expectation to generate $450 million of additional annual cash flow by 2021, primarily through margin enhancements, such as the debottlenecking of the Firebag and Edmonton, trading efficiencies, lower reclamation expense and linking pipelines.By dedicating more than 70% of its year-to-date earnings from operations to dividends and buybacks, Suncor Energy decreased its net debt position by more than $3 billion and returned above $2.6 billion to its shareholders in the form of dividends and buybacks. This might have further boosted investor confidence. The rise in price performance has also been led by soaring oil prices over the past few weeks.Behind the Earnings Headlines Suncor Energy reported third-quarter 2021 operating earnings per share of 56 cents, missing the Zacks Consensus Estimate of 58 cents. This underperformance is due to accelerated costs and expenses. However, the bottom line improved from the year-ago quarter’s earnings of 15 cents, attributable to ramped-up production in the upstream segment and improved refined product sales.Quarterly operating revenues of $8.11 billion lagged the Zacks Consensus Estimate of $9.1 billion. However, the top line rose 67.4% from $4.85 billion in the year-ago quarter.Suncor Energy Inc. Price, Consensus and EPS Surprise Suncor Energy Inc. price-consensus-eps-surprise-chart | Suncor Energy Inc. QuoteUpstreamTotal upstream production in the reported quarter was 698,600 barrels of oil equivalent per day (Boe/d), up 13.4% from the prior-year level of 616,200 Boe/d. This rise in output was owing to better Syncrude production and a robust performance from the company’s In Situ assets. Evidently, this upstream unit recorded operating earnings of C$407 million compared with C$25 million in the prior-year quarter.Output from Syncrude operations scaled up to 190,200 barrels per day (BPD) from 161,100 BPD a year earlier.Fort Hills production came in at 50,800 BPD in the quarter, higher than 42,600 BPD registered in the year-ago period.Oil Sands operations volume was 381,700 BPD compared with 325,600 BPD in the year-earlier quarter. Operating costs per barrel decreased to C$29.05 in the quarter under review from C$31.75 in the corresponding period of 2020. Upgrader utilization increased to 91% from 78% in the comparable quarter of last year.Suncor Energy’s Exploration and Production segment (consisting of International, Offshore and Natural Gas segments) produced 93,500 Boe/d compared with 97,200 Boe/d in the prior-year quarter. Results were affected by the natural production declines.DownstreamOperating earnings from the downstream unit rose to C$658 million from the year-ago figure of C$356 million, attributable to expanded demand, improved margins and strong refined product sales. Suncor Energy recorded impressive refined product sales in the quarter under consideration, which increased to 551,500 BPD from the prior-year level of 534,000 BPD.Crude throughput came in at 460,300 BPD in the third quarter compared with 399,700 BPD in the year-ago period. Also, refinery utilization was 70%.ExpensesTotal expenses in the reported quarter climbed to C$8.9 billion from C$6.7 billion in the year-earlier period. This downtrend is mainly caused by higher costs related to the purchases of crude oil and products as well as a rise in operating, selling and general costs along with increased transportation and financing expenses.FinancialsCash flow from operating activities summed C$4.72 billion in the third quarter, up from the prior-year figure of C$1.25 billion. The company incurred a capital expenditure worth C$1.18 billion in the quarter under discussion.As of Sep 30, 2021, Suncor Energy had cash and cash equivalents worth C$2.31 billion and a total long-term debt of C$14 billion. Its total debt to total capital was 27.8%.During the quarter under review, the company distributed $309 million of dividends.GuidanceFor the full year, this Alberta-based integrated player reiterates its Fort Hills production guidance of 45,000-55,000 BPD to reflect extra work necessary to preserve slope integrity on the mine's south side. As a result, the cash operating expenses per barrel at Fort Hills are estimated in the $37-$42 range.Upstream E&P capital expenditure is forecast in the $300-$400 million range while Downstream capex view is anticipated in the $750-$850 million band.Final WordsAfter suffering a frightening crash in 2020, the energy  space has been uphill since the start of this year, courtesy of surging demand from the economic reopening. The rally in oil and natural gas prices allowed the operators to deliver a solid financial performance. In particular, upstream players like EOG Resources EOG, Diamondback Energy FANG and ConocoPhillips COP turned in a better-than-expected third-quarter bottom-line numbers.  ConocoPhillips reported third-quarter 2021 adjusted earnings per share of $1.77, comfortably beating the Zacks Consensus Estimate of $1.53. This outperformance is led by increased production volumes owing to the Concho acquisition and rising realized commodity prices.Based in Houston, TX, this one of the world’s largest independent oil and gas producers’ capital expenditures and investments totaled $1.3 billion, and dividend payments grossed $579 million. ConocoPhillips’ net cash provided by operating activities was recorded at $4.8 billion, up from the year-ago figure of $868 million. The presently Zacks Rank #1 (Strong Buy) company generated a free cash flow of $2.8 billion in the third quarter.You can see the complete list of today’s Zacks #1 Rank stocks here.EOG Resources reported third-quarter 2021 adjusted earnings per share of $2.16, beating the Zacks Consensus Estimate of $2.01. Strong earnings were driven by increased production volumes and higher realization of commodity prices.The company announced a quarterly dividend of 75 cents per share, indicating an 82% increase from the previous level. The dividend will be paid out on Jan 28, 2022 to its shareholders of record as of Jan 14, 2022. EOG also declared a special dividend of $2 per share. Moreover, its board of directors updated its share repurchase authorization to $5 billion.Diamondback Energy reported third-quarter 2021 adjusted earnings of $2.94 per share, which surpassed the Zacks Consensus Estimate of $2.81 and also the year-ago quarter’s earnings of 62 cents. The company’s bottom line was aided by better-than-expected production.Diamondback’s board of directors declared a dividend of 50 cents per share for the third quarter. This signifies an 11.1% hike in its quarterly payout from the previous level of 45 cents. The amount will be paid out on Nov 18, 2021 to its shareholders of record as of Nov 11. It also generated a free cash flow of $740 million in the third quarter. Tech IPOs With Massive Profit Potential: Last years top IPOs surged as much as 299% within the first two months. With record amounts of cash flooding into IPOs and a record-setting stock market, this year could be even more lucrative. See Zacks’ Hottest Tech IPOs 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 ConocoPhillips (COP): Free Stock Analysis Report EOG Resources, Inc. (EOG): Free Stock Analysis Report Suncor Energy Inc. (SU): Free Stock Analysis Report Diamondback Energy, Inc. (FANG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 11th, 2021

Futures Fall, Yields And Dollar Jump Ahead Of Highest CPI In 31 Years

Futures Fall, Yields And Dollar Jump Ahead Of Highest CPI In 31 Years For the third day in a row, early weakness in futures - in this case as a result of China's soaring, record producer price inflation - reversed and spoos rose from session lows but were still down on the session as traders awaited inflation data due later on Wednesday. Treasury yields climbed and the dollar and cryptos rose. At 7:45 a.m. ET, Dow e-minis were down 47 points, or 0.12%, S&P 500 e-minis were down 10.25 points, or 0.22%, and Nasdaq 100 e-minis were down 68 points, or 0.42%. Earlier, China's Shanghai Composite fell as much as 1.7% and the Hang Seng dropped more than 1% after China’s factory inflation soared to a 26-year high. The number came just hours before today's US CPI print is expected to rise 5.8% in October, the highest level since since December 1990, after a 5.4% increase in the previous month. The report comes a day after producer prices data showed a solid rise in October and will be scrutinized for clues on the extent to which manufacturers were passing on higher costs to consumers, whose spending accounts for 70% of the U.S. economy Elevated inflationary pressures “would be the latest test for the Fed’s ‘transitory’ view and challenge the central bank’s stance on policy tightening,” Han Tan, chief market analyst at Exinity Group, said in written comments. “The worry is that such stubborn inflationary pressures could choke the recovery in global demand or hasten policy tightening by major central banks.” On Tuesday, Wall Street's main indexes ended their long streak of record closing highs on Tuesday as Tesla tumbled and as investors booked profits from the recent run-up in gains, especially in the absence of market-moving catalysts. The declines on Wednesday came after data showed Chinese factory gate prices hit a 26-year high in October, while economic advisers to the German government said they expected the current rise in inflation to continue well into 2022. It has been a busy premarket trading session with lots of movers. We start with Coinbase which fell 11% as analysts said the crypto exchange’s quarterly results were well below expectations. DoorDash shares surged as analysts raised price targets on the food-delivery firm after expectation-beating results and purchase of Finnish food-delivery startup Wolt Enterprises Oy.  Here are some other premarket movers today: DoorDash (DASH US) shares surge 19% in U.S. premarket trading, with analysts raising their price targets on the food-delivery firm after expectation-beating results and its biggest ever acquisition Chinese technology stocks listed in the U.S. rise premarket after Tencent reported 3Q profit that exceeded expectations even as revenue missed amid China’s crackdown on the tech industry Tesla (TSLA US) shares inch higher 1.9% in premarket trading, set for a positive open after a 16% slump in two days amid several negative headlines for the stock Stran & Co. (STRN US) shares jump as much as 43% in U.S. premarket trading, recovering ground after a sharp drop following the branding solutions firm’s IPO Society Pass (SOPA US) shares drop as much as 54% in U.S. pre trading hours, after the loyalty tech platform had surged following its IPO in the prior session Upstart Holdings (UPST US) plunged 19% in U.S. premarket trading after the company released 3Q earnings and 4Q forecasts; Piper Sandler ascribes share drop to “elevated investor expectations” and lack of quantification of auto opportunity Poshmark (POSH US) shares sink 29% in U.S. premarket trading with Berenberg (buy) saying the online retail platform’s 3Q results and guidance were disappointing PubMatic (PUBM US) surges 22% in U.S. premarket trading after the company’s 4Q sales forecast topped expectations and it posted 3Q results that Jefferies called “impressive” FuboTV (FUBO US) shares drop 4.3% in U.S. premarket trading as a 3Q results beat for the “sports first” streaming-video platform was overshadowed by higher costs and some weakness on its ad revenue Purple Innovation (PRPL US) slumps 31% after it cut its net revenue forecast for the full year; the guidance missed the average analyst estimate RingCentral (RNG US) rises 22% premarket, a day after the provider of cloud-based communications services forecast 4Q revenue that beat the average analyst estimate Toast (TOST US) slides after reporting financial results that included a net loss that widened compared with the same period last year Turning back to CPI, here is a lenghtier preview courtesy of DB's Jim Reid: I may have just about found it vaguely conceivable at the start of the year that on November 10th we’d see a 5.9% YoY US CPI print and the sixth month above 5%; however, I would certainly not have thought that such a number if it had materialized would be greeted with a collective market “meh” with 10yr Treasury yields 450bps below this rate. A lot is resting on this inflation being transitory. This will be the multi-trillion dollar question for 2022, that’s for sure. Last month saw yet another upside surprise that further undermined the transitory narrative, and, in fact, if you look at the last 7 monthly readings, 5 of them have come in above the median estimate on Bloomberg, with just 1 below and the other in line. In terms of what to expect, our US economists are looking for a reacceleration in the monthly prints, with a +0.47% forecast for the headline measure (+0.6% consensus), and +0.37% for core (+0.4% consensus). Their view is that the main driver is likely to be price pressures in those categories most sensitive to supply shocks, such as new and used vehicles. But they also see some downside risk from Covid-19-sensitive sectors like lodging away and airfares, where prices fell over the late summer as the delta variant slowed the recovery in travel. Look out for rental inflation too – last month we saw owners’ equivalent rent experience its strongest monthly increase since June 2006. It’s a measure that reflects underlying trend inflation, so it is important to monitor moving forward. Many models suggest it will be over 4% for much of next year, which is large given that it makes up around a third of the headline rate and c.40% of core. Shifting back to markets, we next look at Europe, where equities also recovered off opening lows with the Euro Stoxx 50 and DAX recovering to trade flat. FTSE 100 outperformed, rising as much as 0.6%. Sector gains in oil & gas, utilities and insurance names are broadly offset by losses in luxury, tech, household & personal goods and travel. Earlier in the session, Asian equities fell for a second day after data showed China’s monthly factory-gate prices grew at the fastest pace in 26 years. The MSCI Asia Pacific Index slid as much as 0.6% before paring its loss, with materials and IT the biggest drags. The CSI 300 Index slid as much as 1.9% before sharply paring its drop, after China’s producer and consumer price inflation numbers both exceeded forecasts. Commodity prices have soared globally this year amid expectations for a rebound from the pandemic, with energy getting a further boost from a supply crunch. Traders await Wednesday’s U.S. consumer-price report for further clues on monetary policy and economic growth. “Eyes are now closely watching inflation as that is the next market catalyst,” said Justin Tang, head of Asian research at United First Partners. For some Asian companies “the candle is burning on both ends -- with the supply chain crisis as a ceiling on revenues while obligations to expenses and liabilities remain.”  The Hang Seng turned higher in late trading as real estate developers climbed on a report that China’s bond-issuance policies may be loosened, while Tencent led a surge in tech stocks ahead of its earnings report. Vietnam and Taiwan showed small gains, while benchmarks in most other markets fell. Japanese equities fell, following Asian peers lower after China reported worse than expected inflation. Electronics makers and trading houses were the biggest drags on the Topix, which fell 0.5%. SoftBank Group and Tokyo Electron were the largest contributors to a 0.6% drop in the Nikkei 225. The MSCI Asia Pacific Index slid 0.5%, while China’s CSI 300 Index tumbled 1.1% after monthly factory-gate prices in Asia’s largest economy grew at the fastest pace in 26 years. U.S. consumer price data is scheduled to be reported later Wednesday. “Asia is on inflation alert, fearing future costs of inputs from goods sourced from the mainland,” Jeffrey Halley, senior market analyst at Oanda, wrote in a note. “It seems that investors are keen to lower exposure into the U.S. CPI data tonight.” Australian stocks ended lower for a third session as miners tumbled: the S&P/ASX 200 index fell 0.1% to close at 7,423.90 after a volatile session. Miners were the worst performing industry group as iron ore prices dropped, with eight of the 11 subgauges closing lower.  Bluescope was the day’s biggest laggard after iron ore plunged to a fresh 18-month low as debt troubles in China’s real-estate market deal blow after blow to prospects for steel demand. United Malt advanced after a media report said the company could be a takeover target. Australia’s central bank Governor Philip Lowe is anchoring his bet that he won’t need to raise interest rates until 2024 on a view that unemployment needs to be lower to spur wage gains. In New Zealand, the S&P/NZX 50 index fell 0.5% to 13,022.46. In FX, the Bloomberg Dollar Spot Index rose as the greenback traded higher against all of its Group-of-10 peers apart from the Canadian dollar. The euro extended an Asia session loss and traded firmly below the $1.16 handle. The pound slipped against a broadly stronger dollar, and edged higher versus the euro before a speech by the BOE’s Tenreyro; market is focused on the outlook for rate hikes and traders are also turning attention back to Brexit risks, with the European Union preparing a package of retaliatory measures in case the U.K. decides to suspend parts of a trade accord. Australia’s dollar fell to a one-month low as a slump in iron ore prices prompted short-term leveraged funds to cut long positions. The kiwi declined after a preliminary New Zealand business confidence index weakened In rates, Treasuries traded weak in the early U.S. session, following a selloff in gilts as U.K. markets start to price a higher terminal rate, bear-steepening the curve. Treasury yields are mostly cheaper by 2bp-3bp across the curve with 10-year around 1.475%; gilts lag by additional 1bp vs Treasuries while bunds outperform. During the Asian session, China’s CPI data beat expectations, adding to downside pressure in front eurodollars. Focal points for U.S. session include October CPI expected to show steep increase in y/y rate and final quarterly refunding auction, a $25b 30-year bond sale. Reduced-size U.S. refunding auctions conclude with $25b 30-year bond vs $27b in previous four; Tuesday’s 10- year sale tailed by 1.2bp after steep gains into the bidding deadline. Wednesday's WI 30-year yield around 1.85% is below 30-year stops since January and ~19bp richer than last month’s, which stopped 1.3bp below the WI level at the bidding deadline. In commodities, Crude futures drift lower: WTI drops 0.5% to trade near $83.70. Brent dips back below $85. Base metals are mixed. LME aluminum is the strongest performer; tin and lead are in negative territory. Spot gold drifts lower, losing $5 to trade near $1,826/oz To the day ahead now, and the main highlight will be the aforementioned CPI release from the US for October. Otherwise, there’ll also be Italian industrial production for September. From central banks, we’ll hear from the ECB’s Elderson and the BoE’s Tenreyro, whilst earnings releases include Disney. Market Snapshot S&P 500 futures down 0.2% to 4,669.75 STOXX Europe 600 little changed at 482.35 MXAP down 0.1% to 198.31 MXAPJ up 0.1% to 648.70 Nikkei down 0.6% to 29,106.78 Topix down 0.5% to 2,007.96 Hang Seng Index up 0.7% to 24,996.14 Shanghai Composite down 0.4% to 3,492.46 Sensex little changed at 60,399.20 Australia S&P/ASX 200 down 0.1% to 7,423.90 Kospi down 1.1% to 2,930.17 Brent Futures little changed at $84.75/bbl Gold spot down 0.3% to $1,825.71 German 10Y yield little changed at -0.29% Euro down 0.2% to $1.1574 U.S. Dollar Index up 0.18% to 94.13 Top Overnight News from Bloomberg The European Central Bank would risk exacerbating inequality if it were to raise interest rates before ceasing asset purchases, according to Executive Board member Isabel Schnabel U.S. President Joe Biden and his Chinese counterpart Xi Jinpingare are scheduled to hold a virtual summit next week, although no specific date has been set, according to people familiar with the matter A lack of top-tier intelligence on Chinese President Xi Jinping’s inner circle is frustrating senior Biden administration officials struggling to get ahead of Beijing’s next steps, according to current and former officials who have reviewed the most sensitive U.S. intelligence reports China’s inflation risks are building as producers pass on higher costs to consumers, reigniting a debate over whether the central bank has scope to ease monetary policy to support a weakening economy and potentially adding to the pressure on global consumer prices The U.K. opposition called for a parliamentary investigation into former Conservative cabinet minister Geoffrey Cox, as the scandal over sleaze and lobbying engulfing Boris Johnson’s ruling party gains momentum A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded negatively after a lacklustre handover from Wall Street where the major indices took a break from recent advances and the S&P 500 snapped an eight-day win streak ahead of looming US inflation data. ASX 200 (-0.1%) was rangebound with early strength in financials gradually offset by losses in the commodity-related sectors and with the improvement in Westpac Consumer Sentiment data doing little to spur risk appetite. Nikkei 225 (-0.6%) was subdued with exporters pressured by unfavourable currency inflows and with the list of biggest movers in the index dominated by companies that recently announced their earnings, although Nissan and NTT Data Corp were among the success stories on improved results including a surprise return to quarterly profit for the automaker. Hang Seng (+0.7%) and Shanghai Comp. (-0.4%) initially underperformed amid ongoing developer default concerns as Evergrande has reportedly failed to pay coupon payments at the end of its 30-day grace period. Rating agencies have also downgraded a couple of developers and Fantasia Holdings shares fell as much as 50% on resumption from a one-month trading halt after it missed bond payments due early last month. Furthermore, tensions continued to brew on the Taiwan Strait after US lawmakers made a surprise visit to Taiwan and with China conducting combat readiness patrols in the area ahead of a potential Biden-Xi virtual meeting that could occur next week, which potentially lifted sentiment, while participants also reflected on the firmer than expected inflation data from China which showed consumer prices registered their fastest increase in more than a year and factory gate prices rose at a fresh record pace. Finally, 10yr JGBs traded marginally higher amid the lacklustre mood in stocks and presence of the BoJ in the market for over JPY 1.3tln of JGBs with 1yr-10yr maturities, although gains were capped by resistance ahead of the 152.00 focal point and a pull-back in T-notes. Top Asian News China SOEs Suggest Govt Ease Debt Rules in Property M&A: Cailian Iron Ore Gloom Deepens as China Property Woes Threaten Demand Chinese Developers Surge on Report Bond Rules May be Eased Tencent’s ‘Other Gains’ Unexpectedly Double, Helping Profit Beat European equities (Eurostoxx 50 -0.1%) have traded with little in the way of firm direction as a slew of earnings dictate the state of play amid a lack of fresh macro impulses. The handover from Asia was mostly a downbeat one with focus on firmer than expected CPI and PPI prints out of China and ongoing developer default concerns as Evergrande bond holders have reportedly not received coupon payments by the end of today's Asia-close grace period, in reference to missed coupon payments totalling USD 148.1mln. Stateside, futures are a touch softer (ES -0.2%) after cash markets saw the S&P 500 snap its eight-day winning streak during yesterday’s session. Ahead, the main event for the US will be the CPI release at 13:30GMT whilst the earnings docket continues to slow down with Disney the main standout after-hours. Back to Europe, sectors are mixed with Oil & Gas outperforming peers alongside price action in the crude complex. Banking names saw initial gains trimmed after earnings from Credit Agricole (-1.1%) and ABN AMRO (+1.9%) were unable to provide sustained support for the sector despite the former exceeding profit expectations. The retail sector has been provided a boost by Marks & Spencer (+11.4%) after the Co. reported stellar earnings and raised guidance. Elsewhere in the UK, ITV (+12.0%) sits at the top of the FTSE 100 after printing solid revenue metrics and a bullish revenue outlook. To the downside, Personal and Household goods lag in the wake of earnings from Adidas (-6.0%) which saw the Co.’s performance hampered by factory closures in Vietnam and product boycotts in China. Finally, Alstom (+9.6%) sits at the top of the CAC post-earnings with the Co. stating that supply chain shortages had no material impact on H1 sales. Top European News ECB May Aid Rich If Rates Rise Before QE Ends, Schnabel Says Merkel Advisers Urge ECB Exit Strategy as Price Pressures Rise King Sinks Impala Plan to Create World’s No. 1 Platinum Firm Alstom’s Cash Drain Is Less Than Forecast; Shares Jump In FX, the Greenback remains relatively firm in the run up to US inflation data having turned a corner of sorts on Tuesday, with the index extending beyond 94.000 following its rebound from 93.872 and inching closer to the current 94.380 w-t-d peak, at 94.221, thus far. Interestingly, the Buck has regained momentum irrespective of the benign Treasury (and global) yield backdrop, softer than forecast elements in the PPI release and most Fed officials maintaining a distance between the end of tapering and tightening. However, risk sentiment if wavering to the benefit of the Dollar more than others and the aforementioned CPI readings may be supportive if in line or above consensus. Note, initial claims are also scheduled due to tomorrow’s Veteran’s Day holiday and the final leg of supply comes via Usd 25 bn long bonds. NZD/JPY - Ironically perhaps, the Kiwi is struggling to keep sight of 0.7100 vs its US peer on the very day that COVID-19 restrictions were eased in Auckland, and a further deterioration in NZ business sentiment alongside a fall in the activity outlook may be the catalyst, while the Yen has run into resistance again above 113.00 and is now relying on decent option expiry interest between the round number and 113.05 (1.1 bn) to keep its bull run going. GBP/EUR/AUD/CHF - All softer against the Greenback, as Cable hovers below 1.3550, the Euro pivots 1.1575, Aussie meanders within a range just above 0.7350 amidst favourable Aud/Nzd crossflows and an improvement in Westpac consumer sentiment, and the Franc treads water inside 0.9150-00 parameters. However, Eur/Usd appears to be underpinned by heavier option expiries on the downside than upside rather than ostensibly hawkish ECB promptings from Germany’s Government advisors given 2.1 bn between 1.1575-65 and a further 1.2 bn from 1.1555-50 vs 1.5 bn at the 1.1600 strike. CAD - The Loonie is outperforming or holding up better than other majors near 1.2400 vs its US rival even though WTI has backed off from best levels just shy of Usd 85/brl, but Usd/Cad could still be drawn to expiry interest starting at 1.2450 and stretching some way over 1.2500 in the absence of anything Canadian specific, and pending US inflation data of course. WTI and Brent have been somewhat choppy this morning, but remain within reach of overnight ranges and well within yesterday’s parameters as fresh newsflow has been light; a performance that is similar to the morning’s directionless equity trade. Focus has been on last nights/yesterday's events after the EIA’s STEO release seemingly lessened the likelihood of a SPR release followed by the weekly private inventory report, which printed a headline draw of 2.485M against the expected build of 2.1mln – reaction was minimal. Later today, we get the DoE equivalent for which expectations remain at a headline build of 2.13mln, but the components are expected to post draws of around 1mln. Elsewhere, spot gold and silver are a touch softer on the session with the US Dollar and yields perhaps weighing, though the previous metals have once again not deviated too far from overnight parameters. On copper, prices were hampered by the Chinese inflation data though LME copper has staged a marginal recovery as the session has progressed. US Event Calendar 8:30am: Oct. CPI YoY, est. 5.9%, prior 5.4%; CPI MoM, est. 0.6%, prior 0.4% 8:30am: Oct. CPI Ex Food and Energy YoY, est. 4.3%, prior 4.0%; MoM, est. 0.4%, prior 0.2% 8:30am: Nov. Initial Jobless Claims, est. 260,000, prior 269,000 8:30am: Oct. Continuing Claims, est. 2.05m, prior 2.11m 8:30am: Oct. Real Avg Weekly Earnings YoY, prior -0.8% 8:30am: Oct. Real Avg Hourly Earning YoY, prior -0.8% 10am: Sept. Wholesale Trade Sales MoM, prior -1.1%; Wholesale Inventories MoM, est. 1.1%, prior 1.1% 2pm: Oct. Monthly Budget Statement, est. -$179b, prior - $61.5b DB's Jim Reid concludes the overnight wrap After three days in hospital in traction, little Maisie has a 3-hour hip operation this morning. Showing one benefit of the pandemic, she had a zoom call with her class at school yesterday on their big screen where they all got to ask her questions. The best one apparently was one boy who put his hand up and said “will your new wheelchair have an engine?”. I was reading last night about people with Maisie’s condition (perthes) ending up playing international sport as an adult after a long recovery as a kid, including a Danish striker who played in the semi-finals of the Euros this summer and a 132kg American football player. As long as she waits a polite time after her long recovery to beat me at golf then I’ll be very happy. Keeping my mind off things today will undoubtedly be US CPI. Given my inflationary bias views I may have just about found it vaguely conceivable at the start of the year that on November 10th we’d see a 5.9% YoY US CPI print and the sixth month above 5%; however, I would certainly not have thought that such a number if it had materialised would be greeted with a collective market “meh” with 10yr Treasury yields 450bps below this rate. A lot is resting on this inflation being transitory. This will be the multi-trillion dollar question for 2022, that’s for sure. Last month saw yet another upside surprise that further undermined the transitory narrative, and, in fact, if you look at the last 7 monthly readings, 5 of them have come in above the median estimate on Bloomberg, with just 1 below and the other in line. In terms of what to expect, our US economists are looking for a reacceleration in the monthly prints, with a +0.47% forecast for the headline measure (+0.6% consensus), and +0.37% for core (+0.4% consensus). Their view is that the main driver is likely to be price pressures in those categories most sensitive to supply shocks, such as new and used vehicles. But they also see some downside risk from Covid-19-sensitive sectors like lodging away and airfares, where prices fell over the late summer as the delta variant slowed the recovery in travel. Look out for rental inflation too – last month we saw owners’ equivalent rent experience its strongest monthly increase since June 2006. It’s a measure that reflects underlying trend inflation, so it is important to monitor moving forward. Many models suggest it will be over 4% for much of next year, which is large given that it makes up around a third of the headline rate and c.40% of core. Staying with inflation, China’s year-on-year numbers for October surprised on the upside overnight with CPI +1.5% (consensus +1.4%, last month +0.7%), the highest since September 2020. PPI +13.5% (consensus +12.3%) was also at a 26-year high. Asian stocks are trading lower with the KOSPI (-0.86%), Shanghai Composite (-1.20%), CSI (-1.40%), the Nikkei (-0.49%) and Hang Seng (-1.20%) all down after the China numbers. Futures are pointing to a weak start in the US & Europe too with S&P 500 futures (-0.4%) and DAX futures (-0.23%) both down. As investors look forward to today’s number, the long equity advance finally petered out yesterday as the S&P 500 (-0.35%) snapped a run of 8 successive gains. A 9th day in the green would have marked the longest winning streak since November 2004, but in the end it wasn’t to be.It also prevented an 18th up day out of the last 20 for the first time since September 1954.So reset your counters. Instead, we saw a broader risk-off move as equity indices moved lower on both sides of the Atlantic alongside a fresh rally and flattening in sovereign bond yields and curves. So the S&P 500 (-0.35%), the NASDAQ (-0.60%) and Europe’s STOXX 600 (-0.19%) all fell back from their record highs in the previous session although the equal weighted S&P 500 was almost flat (-0.03%) showing that there wasn’t huge breadth to the US weakness. Sector dispersion was tight in the US, with materials (+0.43%) among the leaders again along with the more typically defensive utilities sector (+0.44%). Financials (-0.55%) declined on the flatter curve story but it was discretionary stocks (-1.35%) that took the biggest hit, dragged down by Tesla declining a further -11.99% and now losing c.$200bn of market cap over two days or the equivalent of 8.5 times Ford’s market cap. The VIX index of volatility ticked up another +0.58pts to hit its highest level in nearly 4 weeks, but remains comfortably below the peaks reached during September’s 5% pullback in the S&P. By contrast, Bitcoin proved to be one of the few winners of yesterday as it increased to an all-time high of $67,734, although that was slightly down from its all-time intraday high of $68,513 earlier in the day. Meanwhile, the question of the various Federal Reserve appointments has been occupying increasing attention and impacting bond markets, but in spite of the gossip there’s been no fresh news over the last 24 hours we didn’t already know. Earlier this week, Politico cited two sources with knowledge of the process saying that a decision would be made by Thanksgiving. But for those with longer memories, it was reported by Bloomberg back in August that people familiar with the process were saying that President Biden was likely to make his choice around Labor Day in early September, and over two months have passed since. So we’ll have to see what the real deadline is. Nevertheless, the news from late Monday night in the US that Fed Governor Brainard had been interviewed for the Fed Chair position helped support US Treasuries, thanks to the perception that Brainard would be a more dovish pick. Regardless of whether Powell or Brainard is Chair come this time next year, the Board will likely become more dovish as President Biden replaces outgoing Governors (and fills empty seats should he choose to do so). By the close of trade, 10yr yields were down -5.4bps to 1.44%, and the 30yr yield was down -6.4bps to 1.82%, which was its lowest closing level since mid-September. Another striking thing was that the moves lower in Treasury yields were entirely driven by a fresh decline in real yields, with the 10yr real yield down -7.0bps to -1.20%, marking its lowest closing level since TIPS began trading in 1997. Meanwhile, there was another round of curve flattening yesterday, with the 5s30s slope down -2.8bps to 73.5bps, which is the flattest it’s been since the initial market panic over the pandemic back in March 2020. For Europe it was a similar story as yields fell across the continent, and those on 10yr bunds (-5.5bps), OATs (-5.5bps) and BTPs (-5.3bps) all saw decent moves lower. Ahead of today’s CPI, investors had the PPI numbers to digest yesterday, though there was little market reaction to speak of as they came in almost entirely in line with the consensus. The monthly reading was up by +0.6% in October, which in turn saw the year-on-year measure remain at +8.6%, with both of those in line with expectations. The core measure did come in a touch below, at +0.4% (vs. +0.5% expected), but again that left the yoy reading at +6.8% as expected. One factor that may help on the inflation front over the coming months was a major decline in natural gas prices yesterday, with both European (-8.16%) and US (-8.26%) futures witnessing substantial declines. This wasn’t reflected elsewhere in the energy complex though, with WTI (+2.71%) and Brent crude (+1.62%) oil prices seeing a further rise following reports that the US would not need to release strategic reserves due to the demand outlook, and gold prices (+0.42%) closed at their highest levels since June. There wasn’t a massive amount of other data yesterday, though the ZEW survey from Germany for November saw the expectations reading unexpectedly rise to 31.7 (vs. 20.0 expected), which is the first increase after 5 consecutive monthly declines. However, the current situation measure did fall to 12.5 (vs. 18.3 expected). Finally out of the US, the NFIB’s small business optimism index for October fell to a 7-month low of 98.2 (vs. 99.5 expected). To the day ahead now, and the main highlight will be the aforementioned CPI release from the US for October. Otherwise, there’ll also be Italian industrial production for September. From central banks, we’ll hear from the ECB’s Elderson and the BoE’s Tenreyro, whilst earnings releases include Disney. Tyler Durden Wed, 11/10/2021 - 07:56.....»»

Category: blogSource: zerohedgeNov 10th, 2021

Consumer Discretionary ETFs to Gain as COVID-19 Situation Improves

The recovering U.S. economy, lifting travel restrictions, improving COVID-19 situation and progress in coronavirus vaccine rollout are expected to drive investors toward the consumer discretionary sector. The coronavirus pandemic seems to be under control in the United States amid accelerated coronavirus vaccine rollout programs and booster shots. The current market situation is making the consumer discretionary sector a bright investment space with great prospects.Moreover, the U.S. economy seems to be steadily recovering from the outbreak-led slowdown, as some recently-released economic data highlight the same. The U.S. jobs report for November looks very impressive. The nonfarm payrolls rose by 531,000 in October, surpassing the estimate of 450,000, per a CNBC article. Also, beating expectations, the unemployment rate declined to 4.6%, hitting a new pandemic low level (according to a CNBC article).Wall Street has another reason to cheer as the U.S. House of Representatives has passed the more than $1-trillion infrastructure bill on Nov 5. The bill has now moved to President Biden for his signature. The legislation was approved in a 228-206 vote, per a CNBC article.Going on, consumer confidence in the United States rose in October primarily on the heels of easing Delta variant concerns, improving labor market conditions, rebounding U.S. economy from the pandemic-led slump and accelerated coronavirus vaccine rollouts. The Conference Board's measure of consumer confidence index stands at 113.8 in comparison to 109.8 in September. The metric has finally broken the streak of three consecutive monthly declines. October’s reading also beat the consensus estimate of the metric, coming in at 108.3, per a Reuters’ poll. The metric continues to be below the pre-pandemic level of 132.6 in February 2020.Consumers seem to be looking to buy homes, motor vehicles and major household durables. In fact, the buying attitude for vehicles and homes is expanding. The survey also showed that the proportion of the population planning to go on vacation has shot up to the highest level since February 2020, as mentioned in a Reuters article.Heading into the holiday season, given the reopening of domestic and international borders for traveling, we are enthusiastic about the consumer discretionary sector. The United States aims to remove travel restrictions and reopen to completely vaccinated international travelers. The news boosted enthusiasm for economic and travel recovery. In fact, airlines recently hinted at a solid travel trend.The impressive third-quarter earnings results have been keeping investors busy. The earnings results have also eased investors' worries surrounding the rising supply-chain disturbances eroding corporate profit margins.ETFs to ConsiderAlong with the favorable factors mentioned above, the moderate improvement in consumer sentiment is likely to boost the consumer discretionary sector. Below, we have highlighted the four most popular ones that target the broader consumer discretionary sector (see all Consumer Discretionary ETFs):The Consumer Discretionary Select Sector SPDR Fund XLYThis is the largest and most popular product in the consumer discretionary space, with AUM of $23.90 billion. It tracks the Consumer Discretionary Select Sector Index. The fund charges 12 basis points (bps) in fees per year and carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: Fed to Start QE Taper: Is It Time for Cyclical Sector ETFs?).Vanguard Consumer Discretionary ETF VCRThis fund currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index. VCR charges investors 10 bps in annual fees. The product has managed $7.62 billion in its asset base and carries a Zacks ETF Rank #1 (Strong Buy), with a Medium-risk outlook (read: 4 Sector ETFs & Stocks for Bountiful Returns in November).First Trust Consumer Discretionary AlphaDEX Fund FXDThis fund tracks the StrataQuant Consumer Discretionary Index, employing the AlphaDEX stock-selection methodology to select stocks from the Russell 1000 Index. FXD has AUM of $2.01 billion. It charges 63 bps in annual fees and has a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook (read: ETFs to Gain as US Consumer Confidence Rises in October).Fidelity MSCI Consumer Discretionary Index ETF FDISThis fund tracks the MSCI USA IMI Consumer Discretionary Index. The product has amassed $1.82 billion in its asset base. It charges 8 bps in annual fees from investors and carries a Zacks ETF Rank #2, with a Medium-risk outlook (read: How Are ETFs Reacting to Starbucks' Q4 Earnings Results?). 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 Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports Fidelity MSCI Consumer Discretionary Index ETF (FDIS): ETF Research Reports First Trust Consumer Discretionary AlphaDEX ETF (FXD): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 9th, 2021

Futures Flat As Yields, Dollar Slide On Speculation Demo-Dove Brainard Will Replace Powell

Futures Flat As Yields, Dollar Slide On Speculation Demo-Dove Brainard Will Replace Powell For the second session in a row, S&P 500 futures reversed earlier losses and traded flat after falling as much as 0.3% earlier in the run-up to today's PPI report - the first of a couple of readings on inflation this week - as investors weighed the Federal Reserve’s warning that stock prices are "vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall." US Treasury yields fell and the dollar index slipped for a third consecutive day following a late Monday report that Joe Biden interviewed uber-dove and Hillary Clinton fan Lael Brainard for the central bank’s top job, although prediction markets were not impressed. European stocks advanced for a ninth day, the longest streak since June while Asian shares drifted. Some more stats from DB's Jim Reid There wasn’t an awful lot of newsflow for investors yesterday as they looked forward to tomorrow’s US CPI release, but the astonishing equity advance showed no signs of relenting just yet, with the S&P 500 (+0.09%) up for an 8th consecutive session to another record high. For reference, that’s the longest winning streak since April 2019, and if we get a 9th day in the green today, that would mark the longest run of consecutive gains since November 2004, back when George W. Bush had just beaten John Kerry to win a second term. It's also 17 out of 19 days up, which hasn’t happened since December 1971. At 715am S&P futures were up 1 point or 0.02% to 4,965. If, or rather when, the S&P closes green today, it will be up 9 consecutive sessions, the longest such streak since Nov 2004. Nasdaq futures rose another 33.25 points; If the nasdaq index is up today, it will be 12 days in a row, a feat it last achieved in 2009 and which hasn't been topped since 1992. “U.S. indexes continue flirting with all-time high levels following a surprise NFP read, the approval of Biden’s $550 billion spending bill and the discovery of an oral Covid treatment from Pfizer,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “But inflation worries come to overshadow the Monday optimism.” Sysco and DoorDash are among companies reporting earnings. Rivian Automotive is scheduled to price its initial public offering, seeking to raise as much as $10 billion in a listing that could give the producer of electric trucks a fully diluted valuation of more than $70 billion. “The company is seen as the most serious competitor to Tesla in the EV race,” Ozkardeskaya said. “The company will be worth more than Honda and Ferrari." Paypal Holdings fell 4.5% in U.S. premarket trading with analysts saying the payments firm’s full-year guidance was a disappointment and that the shares are likely to remain under pressure near-term despite announcing a new Venmo deal with Amazon, while General Electric surged 11.6% in premarket after the U.S. conglomerate said it would split itself into three companies focused on aviation, healthcare and power. Tesla Inc shares rose 1.4%, rebounding from a nearly 5% fall on Monday after Chief Executive Elon Musk’s Twitter poll proposing to sell a tenth of his holdings garnered 57.9% vote in favor of the sale. The proposal also raised questions about whether Musk may have violated his settlement with the U.S. securities regulator again. Zynga Inc jumped 6.6% after the “FarmVille” creator beat quarterly net bookings estimates, while Tripadvisor Inc fell 7.4% after reporting downbeat quarterly earnings and announcing the departure of Chief Executive Stephen Kaufer. Here are some of the other notable premarket movers today: TripAdvisor (TRIP US) shares fall as much as 7% in U.S. premarket trading with analysts saying the company’s 3Q results and outlook are a disappointment given the travel recovery being seen across the board. Cryptocurrency-exposed stocks rise in U.S. premarket trading on Tuesday, set to extend Monday’s gains after the global crypto market hit the $3 trillion milestone Roblox (RBLX US) shares jump as much as 27% in U.S. premarket trading after the video-game platform firm’s quarterly bookings topped estimates even after the easing of Covid restrictions Naked Brand (NAKD US) shares rise as much as 45% in U.S. premarket trading, after the company said it will acquire commercial EV technology company Cenntro Automotive in a stock-for-stock deal Robinhood Markets (HOOD US) slides 3% in premarket trading after it said personal information of millions of customers was compromised in a data breach last week and that the culprit demanded a payment. Arrival (ARVL US) plunged 19% in extended trading after the electric-vehicle maker says previous long-term forecasts from the merger with the CIIG special purpose acquisition company should no longer be relied upon SmileDirectClub (SDC US) slumps 21% in U.S. premarket trading after its 3Q revenue and 4Q forecast missed the lowest analyst estimates Aterian (ATER US) shares jumped 24% in postmarket trading on Monday, after third-quarter revenue and gross margin topped analysts’ estimates Five9 (FIVN US) shares rose 8.8% in extended trading on Monday, after the software company reported third-quarter results that beat expectations RealReal (REAL US) shares jumped 5.5% in Monday extended trading, after the online marketplace reported third- quarter revenue that beat expectations Invitae (NVTA US) shares tumbled 14% postmarket after the genetics company cut its full- year revenue forecast 3D Systems (DDD US) fell 8.5% postmarket after reporting third-quarter results. The 3D printing firm narrowed its 2021 adjusted gross margin guidance to 41% to 43% from an earlier range of 40% to 44% Data from the Labor Department due at 8:30 a.m. ET is expected to show that its producer price index for final demand rose 0.6% in October, with accelerating inflation and tighter monetary policy becoming a bigger concern for investors than the COVID-19 pandemic. Global equities hovered near all-time highs as investors weigh strong earnings, easing travel curbs and U.S. infrastructure spending against the risk of persistent inflation that may lead to tighter monetary policy.  A better-than-expected earnings season, positive developments around COVID-19 antiviral pills and the loosening of travel curbs have recently helped the market continue its record run. European equities faded small opening losses in otherwise quiet trade, with Euro Stoxx 50 little changed and other major indexes adding ~0.2%. Retailers traded well, insurance and financial services are under pressure but ranges are relatively narrow. Bayer jumped 3% after the German producer of healthcare and agricultural products raised its earnings forecast. In the latest positive development in uranium, Rolls-Royce surged 4.9% after the British engineering company raised an equivalent $617 million to fund the development of small modular nuclear reactors. Investor sentiment in Germany rose unexpectedly in November on expectations that price pressures will ease at the start of next year and growth will pick up in Europe’s largest economy, a survey showed on Tuesday. The ZEW economic research institute said its economic sentiment index increased to 31.7 from 22.3 points in October. A Reuters poll had forecast a fall to 20.0. “Financial market experts are more optimistic about the coming six months,” ZEW President Achim Wambach said in a statement. “For the first quarter of 2022, they expect growth to pick up again and inflation to fall both in Germany and the euro zone,” Wambach added. A fall in a current conditions index to 12.5 from 21.6 - compared with a consensus forecast for 18.0 - showed investors expected that supply bottlenecks and inflationary pressures would hold back the economy in the current quarter, he said. Supply bottlenecks for raw and preliminary materials have weighed down industrial production here in Germany. Exports fell here for a second consecutive month in September. Asian equities were mixed, struggling to follow a positive lead from Wall Street as traders weighed economic optimism and Covid treatments against virus outbreaks across China. The MSCI Asia Pacific Index was up 0.1% on Tuesday, trimming an earlier 0.4% gain. SoftBank surged 11% after the company said it would buy back as much as 1 trillion yen ($8.8 billion) of its own stock. Wuxi Biologics rebounded from the previous day’s tumble, after the U.K. government said it will add some of China’s shots to approved vaccines for visitors.  Taiwan and the Philippines had the region’s top-performing benchmarks, with those in Japan and Malaysia slipping. While Asian markets attempted to follow increases seen on Wall Street overnight, “paring back of initial gains suggest that several factors including China’s Covid-19 situation and its property sector remain of concern,” said Jun Rong Yeap, market strategist with IG Asia Pte. in Singapore.  Investors are also awaiting news from China on the Communist Party’s meeting this week, its first major convention in more than a year. “The sixth plenum will quite possibly be a manifesto from Xi Jinping as he adopts the mantle of effective leader for life,” said Kyle Rodda, an analyst at IG Markets Ltd. “His agenda and rhetoric will be important, with investors nervous about what comes out about China’s strategic and economic direction.”  Over in Japan, a morning rally in Japanese stocks gave way to profit-taking for a second day, even as SoftBank Group surged on its latest buyback announcement. Electronics and chemical makers were the biggest drags on the Topix, which fell 0.8%, reversing an early 0.7% gain. Fast Retailing was the biggest contributor to a 0.8% decline in the Nikkei 225. The yen was up 0.4% against the dollar, in its forth day of advance. SoftBank jumped more than 10% after it said it will repurchase as much as 1 trillion yen ($8.8 billion) of its stock. Its climb helped drive Japanesestocks higher in early trading, after the S&P 500 rose to a new record high. “Futures were sold after the open as investors moved to book profits with the Nikkei 225 approaching 30,000,” said Hideyuki Ishiguro, a strategist at Nomura Asset Management in Tokyo. “There is a lack of catalysts for further gains, and the stronger yen is also limiting the upside.” Australian stocks edged lower, weighed down by bank. The S&P/ASX 200 index fell 0.2% to close at 7,434.20, with banks contributing the most to its drop. Eight of the benchmark’s 11 subgauges declined, while miners rallied. Inghams tumbled to its lowest price since May 27. Chalice Mining surgend after reporting its maiden Mineral Resource Estimate for the Gonneville Deposit at Julimar. In New Zealand, the S&P/NZX 50 index rose 0.4% to 13,090.58. In rates, USTs bull steepened, returning to Asia’s richest levels after speculation about a dovish change in leadership at the Fed. Treasuries advance across the curve, following wider gains across bunds; a bull-flattening move during Europe session was extended after Netherlands 2038 auction. Gilts long-end also well bid, adding support for Treasuries. Focal points for U.S. session include Fed’s Powell speaking at 9am ET, 10-year note auction at 1pm. Treasury yields were richer by 2bp-3bp across the curve, with curve spreads broadly within 1bp of Monday’s close; bunds outperform by ~1bp in the 10-year sector while long-end gilt yields are ~5bp lower on the day. Long-end Germany outperforms gilts and USTs, richening ~4bps. Peripheral spreads tighten with 10y Bund/BTP near 112bps. In FX, the Bloomberg Dollar Spot Index fell to its lowest level this month and Treasuries rallied following the report that Federal Reserve Governor Lael Brainard was interviewed for the top job at the central bank, with speculation that a Brainard-led Fed would be more dovish than that of current Chair Jerome Powell. The dollar was weaker against most of its Group-of-10 peers while the yen was among the top performers as traders wound back bets on higher global central- bank interest rates; the euro briefly rose above the $1.16 level before erasing gains. JPY tops the leaderboard with USD/JPY remaining sub-113. Cable briefly regains a 1.36-handle. In commodities, Crude futures push higher after a subdued Asia session. WTI adds 0.9% to trade near $82.60, Brent regains a $84-handle. Spot gold is range bound near $1,825/oz. Base metals hold modest gains with LME zinc the marginal outperformer Looking at the day ahead now, and data releases includethe US PPI reading for October, along with that month’s NFIB small business optimism index. Over in Germany, there’s also the ZEW survey for November and the trade balance for September. Central bank speakers include Fed Chair Powell, ECB President Lagarde, BoE Governor Bailey and PBoC Governor Yi Gang, along with the ECB’s Panetta, Rehn, Knot and Schnabel, the Fed’s Bullard, Daly and Kashkari, and BoE Deputy Governor Broadbent. Market Snapshot S&P 500 futures little changed at 4,693.50 STOXX Europe 600 up 0.1% to 484.28 MXAP little changed at 198.97 MXAPJ up 0.3% to 649.50 Nikkei down 0.8% to 29,285.46 Topix down 0.8% to 2,018.77 Hang Seng Index up 0.2% to 24,813.13 Shanghai Composite up 0.2% to 3,507.00 Sensex down 0.3% to 60,381.61 Australia S&P/ASX 200 down 0.2% to 7,434.20 Kospi little changed at 2,962.46 German 10Y yield little changed at -0.26% Euro little changed at $1.1588 Brent Futures up 0.7% to $83.99/bbl Gold spot up 0.0% to $1,824.68 U.S. Dollar Index little changed at 93.96 Top Overnight News from Bloomberg Just weeks ago, Wall Street analysts and central bankers were quick to assure investors that a collapse by China Evergrande Group wouldn’t be a Lehman moment. Regulators in Beijing said that the crisis would be “contained.” Now that a bond selloff has spread to China’s entire real estate sector and beyond, concern is growing about the potential risk to the global financial system The Federal Reserve warned that fragility in China’s commercial real-estate sector could spread to the U.S. if it deteriorates dramatically, as investor focus turns to China Evergrande Group’s next bond payment deadlines Japan ruling Liberal Democratic Party and coalition partner Komeito agree to give 50,000 yen in cash and 50,000 yen in coupons for every child 18 or younger, Kyodo reports, without attribution Boris Johnson is struggling to repress the U.K. backlash over his defense of a ruling party lawmaker who broke lobbying rules, as his government was openly accused of corruption in Parliament and even typically friendly newspapers took aim at his ruling Conservative Party Bitcoin jumped past $68,000 for the first time to a new all-time high, part of a wider recent rally in the cryptocurrency sector. The climb in cryptocurrencies overall has taken their combined value above $3 trillion. Bitcoin hit its October record following the launch of the first Bitcoin-linked exchange-traded fund for U.S. investors A more detailed look at global markets from Newsquawk Asia-Pac stocks traded indecisively as focus centred on earnings and despite the positive handover from Wall St where the S&P 500 notched an 8th consecutive record close amid a lack of catalysts to derail the momentum in stocks. ASX 200 (-0.2%) began marginally higher amid strength in the tech and mining sectors but with upside eventually reversed by losses in the top-weighted financial industry as NAB shares declined despite posting a 77% jump in FY cash earnings and its FY net more than doubled to AUD 6.4bln, although this was still short of some analysts’ forecasts and the Co. also noted that competitive pressures are expected to continue in FY22. Nikkei 225 (-0.7%) was choppy amid a slew of earnings releases with outperformance in SoftBank following its H1 results in which net income declined by more than 80%, but revenue increased and it confirmed a JPY 1tln share buyback. It was also reported that PM Kishida instructed COVID measures to be compiled this week and economic measures by next Friday, while a government panel recommended tax breaks for companies that increase wages, although Tokyo stocks have failed to benefit with early momentum offset by recent flows into the JPY. Hang Seng (-0.1%) and Shanghai Comp. (+0.2%) lacked firm direction amid mixed developer related headlines with Kaisa Group said to be taking several measures to solve liquidity issues and have pleaded for more time and patience from investors, while China Evergrande reportedly scraped together more cash by offloading a 5.7% stake in HengTen Networks for USD 145mln. Furthermore, the PBoC continued with its liquidity efforts but recent source reports noted that chances of a PBoC rate cut looks slim and that the PBoC is expected to be cautious in easing monetary policy amid stagflation concerns. Finally, 10yr JGBs were flat amid the indecisive mood in stocks and was only briefly supported from the improvement across most metrics at the latest 30yr JGB auction. Top Asian News Gold Rally Pauses as Focus Turns to Upcoming Inflation Data Indonesia Bonds Risk Losing Key Support as Outflows Surge Nissan Raises Profit Outlook Despite Supply Disruptions Fed Warns of Woes Spreading as Deadline Looms: Evergrande Update After a soft open, European equities trade in close proximity to the unchanged mark (Eurostoxx 50 +0.1%) with incremental newsflow relatively light thus far with a mixed German ZEW report unable to shift the dial. The handover from the Asia-Pac session was a mixed one with the region unable to benefit from the positive tailwinds on Wall St. Stateside, futures are near-enough unchanged with participants tentative ahead of tomorrow’s US CPI release which is expected to see Y/Y CPI rise to 5.8% from 5.4%. For the Stoxx 600, UBS’ announced today that its end-2022 target is at 520 which would mark around 8% of upside from current levels. In terms of a regional breakdown, UBS upgraded Italy to overweight from underweight whilst holding Germany and the UK as overweight. Sectors in Europe are a mixed bag with Autos outperforming peers as Renault (+4.6%) sits at the top of the CAC in the wake of Nissan earnings, which the Co. says will have a positive impact on its Q3 earnings. Basic Resources, Retail and Media names are also faring well. To the downside, Insurance names are on a softer footing following earnings from Munich Re (-3.4%) with the Co. warning of further COVID-related losses, whilst results have also hampered the performance of Direct Line (-2.6%). Bayer (+2.6%) is one of the better performers in Germany after beating revenue and EBITDA expectations and guiding FY EPS higher. Associated British Foods (+6.5%) is the best performer in the Stoxx 600 after announcing a special dividend alongside results. Finally, other strong stocks in the UK include Rolls Royce (+5.4%) after confirming it has received funding for small modular nuclear reactors, whilst BT (+2.9%) is seen higher after being upgraded to buy from hold at Berenberg. Top European News UniCredit to Take $1.9 Billion Charge From Yapi Kredi Sale Russia’s Gazprom Says Gas Will Flow Into EU Storage This Month European Gas Prices Slide on Some Signs of Higher Russian Flows Polish Key Rate Hikes Past 1.5% May Be Needed, MPC’s Sura Says In FX, the Yen and Dollar are locked around the 113.00 mark after the former extended its mainly technical rally to around 112.73 before running out of steam, and this has given the Greenback in general some breathing space as the index claws back declines from a slightly deeper 93.872 post-NFP low to retest resistance at the psychological 94.000 level. However, Usd/Jpy and Yen crosses are still trending lower following clear breaches of several key chart supports that will now form upside barriers, such as Fibs in the headline pair spanning 113.20-30, while the Buck and DXY retain a bearish tone following their sharp retracement from a new y-t-d high in the case of the former last Friday. Ahead, US PPI data provides a timely inflation gauge for CPI on Wednesday, while there is another array of Fed speakers and more supply to absorb as Usd 39 bn 10 year notes are up for auction. GBP - Sterling continues to regroup in wake of the BoE shock, with Cable cresting 1.3600 and even Eur/Gbp unwinding gains towards 0.8520 amidst ongoing Brexit angst that could reach another critical stage by the end of this week given reports that the EU is formulating a package of short/medium-term retaliatory measures which might be presented by Sefcovic to Frost on Friday, to dissuade the UK from triggering Article 16, according to Eurasia Group's Rahman. Note, however, the cross may be underpinned by decent option expiry interest at the 0.8500 strike (1 bn), if not mere sentimentality. AUD/NZD - Some reasons for the Aussie to reverse recent underperformance vs the Kiwi down under, as NAB business confidence and conditions both improved markedly in October, while consumer sentiment ticked up as a counterweight to an acceleration in NZ electronic card consumption, with Aud/Usd firmly back on the 0.7400 handle, Aud/Nzd rebounding from sub-1.0350 and Nzd/Usd hovering midway between 0.7148-74 parameters. CAD/EUR/CHF - All narrowly divergent vs their US counterpart, as the Loonie gleans traction from a Usd 1/brl rebound in WTI to bounce through 1.2450 and away from 1.1 bn option expiries at 1.2460 in advance of another speech from BoC Governor Macklem, while the Euro is weighing up a mixed ZEW survey against expectations in close proximity to 1.1600 and also ‘comfortably’ above 1.8 bn expiry interest down at 1.1550. Elsewhere, the Franc is keeping its head afloat of 0.9150 and 1.0600 vs the Euro awaiting remarks from the SNB via Maechler and Moser about the changing FX market and implications for the Swiss Central Bank on Thursday. In commodities, WTI and Brent are firmer this morning though the benchmarks have drifted off earlier highs as we approach the entrance of US participants. At best, Brent has surpassed the USD 84.00/bbl mark, a figure which eluded it yesterday, and WTI has been within reach of the USD 83.00/bbl mark. Fresh newsflow explicitly for the complex has been slim but we are, more so than usual, looking to the EIA STEO due at 17:00GMT/12:00EST today. Heightened attention on this stems from US Energy Secretary Granholm commenting earlier in the week that President Biden may make an announcement in relation to crude and the SPR this week; as such, administration officials will be scrutinising the STEO report. For reference, the OPEC+ MOMR and IEA OMR are due on November 11th and 16th respectively. October’s STEO upgraded world 2021 oil demand growth forecasts by 90k but cut the 2022 view by 150k while highlighting that US crude output is to fall 260k vs prev. 200k fall in 2021. As usual, we do have the Private Inventory report due today as well with expectations set for a headline build of 1.9mln. Moving to metals, spot gold and silver are once again lacklustre and remain comfortably within overnight ranges and the upside seen in the metals at the tail-end of last week means we are circa, for spot gold, USD 30/oz from a cluster of DMAs. Elsewhere, base metals are firmer given the support for industrial names on the US infrastructure bill, but the likes of LME copper remain within familiar ranges. US Event Calendar 8:30am: Oct. PPI Ex Food, Energy, Trade MoM, est. 0.3%, prior 0.1% 8:30am: Oct. PPI Ex Food, Energy, Trade YoY, est. 6.2%, prior 5.9% 8:30am: Oct. PPI Ex Food and Energy YoY, est. 6.8%, prior 6.8% 8:30am: Oct. PPI Final Demand YoY, est. 8.6%, prior 8.6% 8:30am: Oct. PPI Ex Food and Energy MoM, est. 0.5%, prior 0.2% 8:30am: Oct. PPI Final Demand MoM, est. 0.6%, prior 0.5% Central Banks 7:50am: Fed’s Bullard Takes Part in Virtual Event 9am: Powell to Speak at Joint Fed, ECB and BoC Diversity Conference 9am: ECB’s Knot, Fed’s Bullard on UBS Panel 11:35am: Fed’s Daly Speaks at NABE Conference 1:30pm: Fed’s Kashkari Takes Part in Moderated Discussion DB's Jim Reid concludes the overnight wrap Thanks for all your well wishes yesterday. It was very kind to have a few hundred take the time to email. If you missed it, see yesterday’s EMR to understand why my responsibilities have mounted this week. The latest is that I’ve now got two perfect night’s sleep while my wife who is sleeping by my daughter’s side at hospital on a camp bed all week got hardly any the first night. Nurses coming in every hour, lots of machines beeping, it being too hot and no privacy. A look at my WhatsApp this morning shows she was last seen at 3.58am, so I’m worried I’m going to hear about a repeat. Although I will want to know who she’s whatsApping at that time of the night! There wasn’t an awful lot of newsflow for investors yesterday as they looked forward to tomorrow’s US CPI release, but the astonishing equity advance showed no signs of relenting just yet, with the S&P 500 (+0.09%) up for an 8th consecutive session to another record high. For reference, that’s the longest winning streak since April 2019, and if we get a 9th day in the green today, that would mark the longest run of consecutive gains since November 2004, back when George W. Bush had just beaten John Kerry to win a second term. It's also 17 out of 19 days up, which hasn’t happened since December 1971. All these records for various equity indices might seem jarring when you consider that there are still strong inflationary pressures in the pipeline, and with them the prospect of a renewed hawkish shift by central banks. However, the prevalent view among economists (which continues to influence investors) remains that those pressures will prove transitory and we’ll see price pressures diminish as we move through next year, hence enabling a steady lift-off in rates from central banks. Obviously it remains to be seen if that proves correct, but that’s still the prevailing view. And even though Covid-19 cases have begun to rise again in many countries, not least in Europe, the positive news from both Merck and Pfizer about a new pill that reduces hospitalisations and deaths offers societies another tool alongside vaccines to help prevent the overwhelming of healthcare systems going forward. And on top of all that, we’ve had a further dose of optimism from the latest payrolls data on Friday, which saw an above-consensus print along with positive revisions to previous months. With that in mind, it was another day of records across the board yesterday, with the NASDAQ (+0.07%), the Dow Jones (+0.29%), and Europe’s STOXX 600 (+0.04%) all ascending to fresh highs of their own. Cyclicals tended to outperform, and the small-cap Russell 2000 (+0.23%) was yet another index that hit an all-time high. Not even Tesla declining -4.84% after Elon Musk’s weekend Twitter poll over whether he should sell 10% of his stake was enough to derail things. Materials led the pack (+1.23%) with energy (+0.88%) close behind thanks to a fresh boost in commodity prices. By the close of trade, Brent Crude was up another +0.83% to $83.43/bbl, so still beneath its peak from a couple of weeks ago, but very much remaining in the range above $80/bbl that we’ve seen since the start of October. For sovereign bonds, however, the rally from late last week reversed, 5yr US Treasuries increased +6.1bps, bringing them back above last Thursday’s close, while yields on 10yr US Treasuries were up +3.8bps to 1.49%. Both were entirely driven by higher inflation breakevens, as 5yr and 10yr breakevens both increased +7.1bps. 10yr real yields sank -3.4bps to -1.13%, putting them less than 10bps away from their intraday low back in August of -1.220%. Over in Europe, it was much the same story of higher nominal yields thanks to rising inflation expectations, with yields on 10yr bunds (+3.7bps), OATs (+3.6bps) and BTPs (+1.7bps) all ending the session higher. Overnight in Asia stocks are trading in the red with the Shanghai Composite (-0.02%), Hang Seng (-0.07%), CSI (-0.30%), KOSPI (-0.29%) and the Nikkei (-0.66%) all down. In Japan, wages grew at +0.2% year-on-year in September (vs +0.6% consensus) and real wages actually fell -0.6% as prices rose faster. The new Prime Minister Kishida is expected to announce a stimulus package to boost Japan's recovery in an effort to shore up wages. Staying in Asia, strains on global supply chains continue with Bangladeshi truckers continuing their strike from Friday over a 23% hike in diesel prices. Protests are intensifying as diesel shortages have already sent prices upwards of 64% this year. Futures are indicating that the winning streak in the US and Europe might be under threat with S&P 500 futures (-0.25%) and DAX futures (-0.28%) both down. With all eyes on when we might get some news about the various Fed positions, another place opened up on the Board yesterday after Randal Quarles said that he would be resigning his position as a Governor at the end of December. Quarles had also been Vice Chair for Supervision, though his four-year term for that post came to an end last month. Quarles’ departure from the Fed Board means that there’s now another position at the Fed for President Biden to fill, with Jay Powell’s term as chair concluding in February, Vice Chair Clarida’s position on the board concluding at the end of January, and an additional vacant post on the Board on top of those. Staying on the Fed, yesterday we had the latest Survey of Consumer Expectations from the new York Fed, which showed that one-year inflation expectations hit a series high of 5.7%, while the 3-year inflation expectations remained at a joint-series high of 4.2%. Separately, we also heard from Vice Chair Clarida, who reiterated his belief that the necessary conditions “for raising the target range for the federal funds rate will have been met by year-end 2022.” The Fed also released its bi-annual Financial Stability Report after the closing bell last night. Timely, considering the record run equities have been on, the report noted that “asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall.” Other key risks the report mentions include stablecoins, retail-fuelled volatility, and structural vulnerabilities in money market funds. While on structural vulnerabilities, the Inter-Agency Working Group, five key US regulators, also released a progress report on potential Treasury market reforms. There are a number of reforms being considered; what is ultimately adopted will have a sizable impact on the shape of the Treasury market and demand for Treasury securities. To the day ahead now, and data releases includethe US PPI reading for October, along with that month’s NFIB small business optimism index. Over in Germany, there’s also the ZEW survey for November and the trade balance for September. Central bank speakers include Fed Chair Powell, ECB President Lagarde, BoE Governor Bailey and PBoC Governor Yi Gang, along with the ECB’s Panetta, Rehn, Knot and Schnabel, the Fed’s Bullard, Daly and Kashkari, and BoE Deputy Governor Broadbent. Tyler Durden Tue, 11/09/2021 - 08:08.....»»

Category: personnelSource: nytNov 9th, 2021

ETF Strategies to Ride the Market Optimism in November

Here we discuss certain ETF strategies to help investors gain from the optimism surrounding the upbeat earnings season and a strong jobs report amid recovering U.S. economy from the pandemic-led slump. Investors seem to be enjoying the impressive Wall Street rally triggered by a strong third-quarter earnings season, an encouraging jobs report and the Federal Reserve’s moves that were on-par with expectations. The three major U.S. stock exchanges closed at record highs on Nov 5 to finish off a strong week. The Dow Jones Industrial Average increased about 0.6%, witnessing its sixth-straight position trading session. The S&P 500 also jumped 0.4% for its seventh consecutive positive session. The Nasdaq Composite also rose 0.2% to witness its tenth straight winning session.The impressive third-quarter earnings results have been keeping investors busy. The earnings results have also eased investors' worries surrounding the rising supply-chain disturbances eroding corporate profit margins. The upside in the market has also been driven by the much-anticipated announcements from the Federal Reserve. The central bank has informed about its plan to initiate the tapering of bond purchases “later this month” (as stated in a CNBC article).In another positive development, the U.S. jobs report for November seemed very impressive. The nonfarm payrolls rose by 531,000 in October, surpassing the estimate of 450,000, per a CNBC article. Also, beating expectations, the unemployment rate declined to 4.6%, hitting a new pandemic low level (according to a CNBC article).In this regard, JPMorgan’s David Lebovitz has commented that “The economy is certainly picking up some momentum. We are expecting economic growth to accelerate here into the end of 2021 and the beginning of 2022,” as mentioned in a CNBC article.Wall Street has another reason to cheer as the U.S. House of Representatives has passed the more than $1-trillion infrastructure bill on Nov 5. The bill has now moved to President Biden for his signature. The legislation was approved in a 228-206 vote.Going on, consumer confidence in the United States rose in October primarily on the heels of easing Delta variant concerns, improving labor market conditions, rebounding U.S. economy from the pandemic-led slump and accelerated coronavirus vaccine rollouts. The Conference Board's measure of consumer confidence index stands at 113.8 in comparison to 109.8 in September. The metric has finally broken the streak of three consecutive monthly declines. October’s reading also beat the consensus estimate of the metric, coming in at 108.3, per a Reuters’ poll. The metric continues to be below the pre-pandemic level of 132.6 in February 2020.Consumers seem to be looking to buy homes, motor vehicles and major household durables. In fact, the buying attitude for vehicles and homes is expanding. The survey also showed that the proportion of the population planning to go on vacation has shot up to the highest level since February 2020, as mentioned in a Reuters article.ETF Strategies to FollowHere we discuss certain ETF strategies to help investors gain from optimism surrounding the upbeat earnings season and strong jobs report amid recovering U.S. economy from the pandemic-led slump:Play the Momentum ETFsWhile the broader stock market is expected to gain on optimism surrounding the rebounding U.S. economy and accelerated distribution of coronavirus vaccine, momentum investing will likely take centerstage as investors seek greater returns in the short term. Momentum investing looks to fetch profits from hot stocks that have shown an uptrend over the past few weeks or months. Investors can consider iShares MSCI USA Momentum Factor ETF MTUM, Invesco DWA Momentum ETF PDP, Invesco S&P MidCap Momentum ETF (XMMO), VictoryShares USAA MSCI USA Value Momentum ETF (ULVM) and SPDR Russell 1000 Momentum Focus ETF (ONEO) (read: Join the Stupendous Wall Street Rally With These ETFs).Growth ETFs to Ride the OptimismThe value trade has powered the stock bulls for most of this year. Investors have rotated back into growth-oriented market areas in recent weeks on optimism surrounding the economic recovery. In particular, big tech companies have rebounded strongly after being hit by inflation fears and lofty valuation concerns.Given the bullishness, investors seeking to capitalize on the strong trends should consider growth ETFs. However, it is worth noting that these funds offer exposure to stocks with growth characteristics that have comparatively higher P/B, P/S and P/E ratios and exhibit a higher degree of volatility when compared to value stocks. Here, we highlight a few growth ETFs like Invesco Dynamic Large Cap Growth ETF PWB, SPDR Portfolio S&P 500 Growth ETF SPYG, iShares S&P 500 Growth ETF (IVW), Schwab U.S. Large-Cap Growth ETF (SCHG) and Vanguard S&P 500 Growth ETF (VOOG) (read: Here's Why Growth ETFs Are Attractive Bets Right Now).Try the ETFs to Gain From the Cyclical SectorsThe coronavirus vaccine rollout is gradually containing the spread of the outbreak across the globe. Accordingly, global demand and economic growth levels are on the mend from the pandemic-led slump. The optimism surrounding the gradual reopening of global economies and increasing demand is painting a rosy picture for the cyclical sectors.Stocks within the cyclical sectors like industrial, financial, energy and consumer discretionary mostly move in tandem with the prevailing economic conditions, and when growth returns to normalcy, these sectors will automatically perform well. Cyclical sectors outperform the defensive ones when rates normalize. In a growing economy, most sectors surge on a wealth effect, with a few more cyclical corners making the most of the rally.Let’s look at how some popular ETFs belonging to the cyclical sector will benefit from the current scenario. These are, namely, The Industrial Select Sector SPDR Fund XLI, Energy Select Sector SPDR XLE, Fidelity MSCI Materials Index ETF (FMAT), Invesco KBW Bank ETF (KBWB) and Fidelity MSCI Consumer Discretionary Index ETF (FDIS) (read: 4 Sector ETFs & Stocks for Bountiful Returns in November).Small-Cap ETFs to Watch Out ForAs indicated by the Russell 2000 Index, small-cap stocks have been performing impressively so far in 2021. This upside is being mainly led by small-cap companies closely tied to the U.S. economy and are thus well-positioned to outperform when the economy improves. The latest release of economic data is also indicating toward an improving economy. Therefore, investors can consider Schwab U.S. Small-Cap ETF SCHA, SPDR S&P 600 Small Cap ETF SLY, Vanguard S&P Small-Cap 600 ETF (VIOO) and John Hancock Multifactor Small Cap ETF (JHSC) (read: A Quick Guide to the 25 Cheapest ETFs). 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 Energy Select Sector SPDR ETF (XLE): ETF Research Reports Industrial Select Sector SPDR ETF (XLI): ETF Research Reports iShares MSCI USA Momentum Factor ETF (MTUM): ETF Research Reports SPDR S&P 600 Small Cap ETF (SLY): ETF Research Reports Schwab U.S. SmallCap ETF (SCHA): ETF Research Reports Invesco Dynamic Large Cap Growth ETF (PWB): ETF Research Reports SPDR Portfolio S&P 500 Growth ETF (SPYG): ETF Research Reports Invesco DWA Momentum ETF (PDP): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 8th, 2021

Zimmer Biomet (ZBH) Q3 Earnings Top Estimates, View Slashed

Zimmer Biomet (ZBH) Q3 sales soft in Americas whereas EMEA and Asia-Pacific register growth at CER. Zimmer Biomet Holdings, Inc. ZBH posted third-quarter 2021 adjusted earnings per share (EPS) of $1.81, beating the Zacks Consensus Estimate by 3.4%. The figure remained unchanged year over year.The quarter’s adjustments include certain amortization, restructuring, quality remediation, acquisition, integration, and related costs, among others.On a reported basis, the company registered earnings of 69 cents per share down from $1.16 a year ago.Revenue DetailsThird-quarter net sales of $1.92 billion edged down 0.3% (down 0.8% at constant exchange rate or CER) year over year. The figure missed the Zacks Consensus Estimate by 1.6%. However, third-quarter net sales increased 1.7% from the third quarter of 2019 (pre-pandemic) level, up 0.4% at CER.Segmental DetailsDuring the third quarter, sales generated in the Americas totaled $1.18 billion (down 3.2% year over year at CER) while the same in EMEA (Europe, the Middle East and Africa) grossed $393.1 million (up 5.9% year over year at CER). Asia-Pacific registered a 0.5% rise at CER to $350.4 million.SegmentsSales in the Knees unit dropped 0.7% year over year at CER to $647.9 million. Hips recorded a 6.6% decline at CER to $453.8 million. Revenues in the S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic) unit increased 4.2% year over year to $437.6 million.Among rest of the segments, Dental & Spine were down 6.1% at CER to $238.6 million. Other revenues rose 15.4% to $146.1 million.Zimmer Biomet Holdings, Inc. Price, Consensus and EPS Surprise Zimmer Biomet Holdings, Inc. price-consensus-eps-surprise-chart | Zimmer Biomet Holdings, Inc. QuoteCMFT (Craniomaxillofacial and Thoracic) products, previously reported in the Dental, Spine & CMFT category, are now included in the S.E.T. category. Meanwhile, the company is progressing with the planned spin-off procedure of the dental & spine arm.MarginsGross margin, after excluding intangible asset amortization, was 69.8%, reflecting a contraction of 71 basis points (bps) in the third quarter. Selling, general and administrative expenses were up 1.6% to $802.4 million. Research and development expenses rose 26.8% to $108.9 million. Adjusted operating margin contracted 268 bps to 22.4% during the quarter.Cash PositionZimmer Biomet exited the third quarter of 2021 with cash and cash equivalents of $919.6 million compared with $1.04 billion at second-quarter end. Long-term debt at the end of the reported quarter totaled $6.46 billion compared with $7.85 billion at the end of the sequentially-last quarter.Cumulative net cash provided by operating activities at the end of the third quarter was $1.13 billion compared with $779.4 million in the year-ago period.2021 GuidanceThis time, on a dismal quarterly performance, the company slashed its financial guidance for 2021.Reported revenue growth is expected in the range of 11.3% to 12.5% (from the earlier expectation of 14.5% to 16.5%) compared with the last year.Adjusted EPS for the full year is expected in the range of $7.32 to $7.47 ($7.65 to $7.95).The Zacks Consensus Estimate for 2021 adjusted earnings is pegged at $7.72 on revenues of $8.07 billion.Our TakeZimmer Biomet ended the third quarter with better-than-expected earnings but missed on the revenue front. The year-over-year decline in reported and constant currency revenues was concerning. Sales were soft in the Americas whereas EMEA and Asia-Pacific registered growth at CER. In terms of operating segments, apart from the S.E.T. and Others segments, the rest of the company’s core divisions, Knees, Hips, and Dental & Spine, registered significant year-over-year declines in revenues at CER. In the quarter, Zimmer Biomet continued to face COVID-induced challenges and market pressure.Significant margin contractions and a slashed 2021 guidance are concerns too.Zacks Rank and Key PicksZimmer Biomet currently carries a Zacks Rank #4 (Sell).Some better-ranked stocks in the broader medical space that have announced quarterly results are Thermo Fisher Scientific Inc. TMO, Omnicell, Inc. OMCL and West Pharmaceutical Services, Inc. WST.Thermo Fisher, carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2021 adjusted EPS of $5.76, which beat the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the consensus mark by 12%. You can see the complete list of today’s Zacks #1 Rank stocks here.Omnicell reported third-quarter 2021 adjusted EPS of $1.08, surpassing the Zacks Consensus Estimate by 18.7%. Revenues of $296.5 million surpassed the Zacks Consensus Estimate by 4.4%. It currently carries a Zacks Rank #2 (Buy).West Pharmaceutical reported third-quarter 2021 adjusted EPS of $2.06, which surpassed the Zacks Consensus Estimate by 13.2%. Revenues of $706.5 million outpaced the Zacks Consensus Estimate by 3.2%. It currently carries a Zacks Rank #2. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Thermo Fisher Scientific Inc. (TMO): Free Stock Analysis Report Omnicell, Inc. (OMCL): Free Stock Analysis Report West Pharmaceutical Services, Inc. (WST): Free Stock Analysis Report Zimmer Biomet Holdings, Inc. (ZBH): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 4th, 2021

Nu Skin (NUS) Q3 Earnings Beat Estimates, Revenues Down

Nu Skin's (NUS) third-quarter 2021 earnings and revenues decline year over year on disruptions caused by the Delta variant. Also, management lowered 2021 revenue guidance. Nu Skin Enterprises, Inc. NUS delivered third-quarter 2021 results, with the top and the bottom line beating the Zacks Consensus Estimate. However, revenues and earnings declined year over year. Quarterly performance was hurt by disruptions caused by the COVID delta variant. Based on the third-quarter results, management revised its 2021 guidance downward.The company is optimistic about the ongoing launch of Collagen+ and ageLOC Meta products during the fourth quarter. Management is on track to introduce EmpowerMe, a personalized beauty and wellness strategy with connected beauty devices. Nu Skin is also committed to improve the adoption of its affiliate-powered social commerce business model, while expanding its digital presence.Q3 HighlightsNu Skin reported quarterly earnings of 97 cents a share, which beat the Zacks Consensus Estimate of 86 cents. However, the metric declined 10% from $1.08 per share reported in the year-ago quarter.Revenues of $641.2 million fell 9% year over year on a reported basis. Revenues included a positive impact of 2% from foreign-currency fluctuations. On a constant-currency (cc) basis, revenues declined 11%. Management highlighted that revenues were lower than anticipated owing to the disruptions caused by the spread of the COVID delta variant. This led to unexpected government restrictions hindering selling as well as promotional activities across various markets, especially Mainland China and Southeast Asia. That said, the company was impressed by continued growth in the United States on the back of the Beauty Focus Collagen+ launch. Also, double-digit growth in Korea driven by product promotions and sales leader initiatives were a breather. The top line surpassed the Zacks Consensus Estimate of $639.2 million.Nu Skin Enterprises, Inc. Price, Consensus and EPS Surprise  Nu Skin Enterprises, Inc. price-consensus-eps-surprise-chart | Nu Skin Enterprises, Inc. QuoteSales leaders were down 15% year over year to 58,565. Nu Skin’s customer base dropped 9% to 1,395,271.Gross profit of $482.2 million decreased from almost $520 million reported in the year-ago quarter. Gross margin expanded year over year from 73.9% to 75.2%. Nu Skin business’ gross margin expanded to 78.6% from 76.3% driven by favorable product mix, product cost declines as well as supply chain efficiencies.Selling expenses declined from $280.7 million in the prior-year quarter to $255.7 million. As a percentage of sales, the metric came in at 39.9% and remained flat year over year. Nu Skin business’ selling expenses were 42.7% of sales, up from 42.4% in the year-ago quarter.General and administrative expenses of $161.1 million decreased from $165.1 million in the year-ago quarter. The company’s effective expenses management contributed to the upside. As a percentage of sales, general and administrative expenses expanded from 23.5% to 25.1%.Operating income of $65.4 million declined from $74.2 million in the year-ago quarter. Further, operating margin was 10.2%, down from 10.6% reported in the year-ago quarter.Segmental ResultsSegment-wise, revenues (at cc) declined 26% in Mainland China, 2% in Americas, 23% in Southeast Asia/Pacific, 11% in EMEA, 5% in Japan and 8% in Hong Kong/Taiwan. The same increased 8% in South Korea at cc. Total Nu Skin revenues of $598.6 million fell 11% at cc from the prior-year quarter’s figure of $662.4 million.The company benefited from impressive revenue growth in the Grow Tech business at cc. Revenues in the Manufacturing business increased 2% at cc.Other Financial DetailsNu Skin ended the quarter with cash and cash equivalents of $282.4 million, long-term debt of $278.6 million and total stockholders' equity of $936.5 million.During the reported quarter, the company paid out dividends of $19 million and repurchased $10 million worth of shares. With this, it currently has $255.4 million remaining under the current share repurchase authorization.In a separate press release, Nu Skin announced a dividend of 38 cents per share payable on Dec 8, 2021, to shareholders of record as of Nov 26.Image Source: Zacks Investment ResearchGuidanceBased on the third-quarter results, management adjusted its 2021 guidance downward. The company now anticipates 2021 revenues in the range of $2.67-$2.70 billion, which calls for an increase of 3-5% year over year. The metric was previously expected in the range of $2.81-$2.87 billion, suggesting an increase of 9-11% year over year. The company envisions a favorable currency impact of 2-3% on 2021 revenues.Management now expects 2021 earnings per share (EPS) in the range of $3.93-$4.03, indicating an increase of 8-11%. Earlier, the company had projected EPS within $4.30-$4.50, suggesting a rise of 18-14%.For the fourth quarter of 2021, the company projects revenues of $645-$675 million that includes unfavorable currency impacts of nearly 1%. The projection suggests a decline of 10-14% from the year-ago quarter’s level. Quarterly EPS is anticipated between 90 cents and $1.00, indicating 29-36% slump from the year-ago quarter’s levels.The Zacks Rank #5 (Strong Sell) stock has slumped 25.5% in the past three months compared with the industry’s 18.2% decline.Top 3 PicksInter Parfums, Inc. IPAR, currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 25.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.e.l.f. Beauty ELF, currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 48.9%, on average.Helen of Troy HELE, currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 19.8%, on average. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Helen of Troy Limited (HELE): Free Stock Analysis Report Inter Parfums, Inc. (IPAR): Free Stock Analysis Report Nu Skin Enterprises, Inc. (NUS): Free Stock Analysis Report e.l.f. Beauty (ELF): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 4th, 2021

DXC Technology"s (DXC) Q2 Earnings Top, Revenues Miss Estimates

DXC Technology's (DXC) Q2 earnings increased 41%, year over year, highlighting benefits from its cost-optimization initiatives, along with lower interest expenses and tax rate. DXC Technology’s DXC reported second-quarter fiscal 2022 non-GAAP earnings of 90 cents per share, beating the Zacks Consensus Estimate of 84 cents. The bottom line also surged approximately 41% from the prior-year quarter’s earnings of 64 cents per share, mainly on expanding margins and lower interest expenses and tax rate, which more than offset the negative impact of reduced revenues.Revenues of $4.03 billion missed the consensus mark of $4.12 billion and declined 11.6% year over year. The unfavorable year-over-year comparison might be due to the spin-off and sale of its U.S. State and Local Health and Human Services business to Veritas in October 2020, as well as the sale of the healthcare software business to Dedalus Group in April 2021. Also, a negative impact of $59 million from unfavorable exchange rate hurt quarterly revenue growth.Quarter in DetailSegment wise, revenues from Global Business Services (“GBS”) slid 16.5% on a year-over-year basis to $1.87 billion. The HHS business’ divestiture last October affected this segment’s top line. On an organic basis, the division’s revenues increased 3.4%, year over year, primarily aided by the strong performance of Analytics and Engineering, and Applications offerings.DXC Technology Company. Price, Consensus and EPS Surprise DXC Technology Company. price-consensus-eps-surprise-chart | DXC Technology Company. QuoteGlobal Infrastructure Services (“GIS”) revenues came in at $2.15 billion during the fiscal second quarter, down 6.8% year over year, reflecting declines in IT Outsourcing, Business Process Servicesand Modern Workplace. However, growth in Cloud and Security was a positive.The adjusted EBIT margin was 8.6%, expanding 240 basis points (bps) year over year and 60 bps, sequentially. Margins were primarily supported by the company’s ongoing cost-optimization initiatives under which it is focusing on four cost levers — contractor conversion, scaling its GIDCs,real estate and automation through Platform X.Balance Sheet and Other Financial MetricsThe company exited the fiscal second quarter with $2.70 billion in cash and cash equivalents compared with the $2.46 billion witnessed in the previous quarter. The long-term debt balance (net of current maturities) decreased to $4.36 billion as of Jun 30 from $4.12 billion as of Jun 30, 2021.During the reported quarter, the company recorded operating and adjusted free cash outflows of $563 million and $404 million, respectively. In the first-half of fiscal 2022, the company generated operating and adjusted free cash outflows of $534 million and $100 million, respectively.OutlookFor the third quarter of fiscal 2022, the company anticipates revenues to lie between $4.08 billion and $4.13 billion. The adjusted EBIT margin is expected in the range of 8.6-8.9%. DXC projects adjusted earnings per share in the band of 88-93 cents.For fiscal 2022,the company lowered its revenue guidance range to $16.4-$16.6 billion from $16.6-$16.8 billion. However, it raised the adjusted earnings outlook to $3.52-$3.72 per share from $3.45-$3.65 per share.Zacks Rank & Other Stocks to ConsiderDXC currently carries a Zacks Rank #2 (Buy).Other similarly-ranked stocks in the broader technology sector include Applied Materials AMAT, Advanced Micro Devices AMD and Perficient PRFT. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The long-term earnings growth rate for Applied Materials, Advanced Micro Devices and Perficient is currently pegged at 19.4%, 44.6% and 18%, respectively. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report Applied Materials, Inc. (AMAT): Free Stock Analysis Report Perficient, Inc. (PRFT): Free Stock Analysis Report DXC Technology Company. (DXC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 4th, 2021

Lumen (LUMN) Q3 Earnings Top Estimates, Revenues Down Y/Y

Lower revenues in each of the business units amid a challenging macroeconomic environment along with soft demand for IP and Data services hurt Lumen's (LUMN) third-quarter 2021 performance. Lumen Technologies, Inc. LUMN reported mixed third-quarter 2021 results, with the bottom line beating the Zacks Consensus Estimate but the top line missing the same. Lower revenues in the Business and Mass Markets segments owing to the COVID-19 turmoil along with weak demand for IP and Data services led to year-over-year top-line deterioration.Bottom LineNet income in the September quarter was $544 million or 51 cents per share compared with $366 million or 34 cents per share in the year-ago quarter. The year-over-year improvement, despite top-line contraction, was mainly driven by lower operating expenses.Excluding special items, adjusted net income came in at $521 million or 49 cents per share compared with $384 million or 35 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 11 cents.Lumen Technologies, Inc. Price, Consensus and EPS Surprise Lumen Technologies, Inc. price-consensus-eps-surprise-chart | Lumen Technologies, Inc. QuoteTop LineQuarterly total revenues slipped 5.4% year over year to $4,887 million owing to a challenging macroeconomic environment. The top line missed the consensus estimate of $4,920 million.By segment, Business revenues fell 5.1% to $3,508 million due to lower sales in the Large Enterprise, Mid-Market Enterprise, and Wholesale markets. Soft demand for IP and Data services due to declines in new VPN Hybrid Network deployments with a reduction in voice revenues acted as major headwinds as well. Revenues from Mass Markets decreased to $1,379 million from $1,469 million in the year-earlier quarter, led by a decline in voice revenues.IGAM revenues grew 0.6% year over year to $1,019 million as a result of higher demand for wavelengths and dark fiber within Fiber Infrastructure Services. Revenues from Large Enterprise declined 5.9% to $932 million due to COVID-19-led lower sales. Mid-Market Enterprise revenues fell to $666 million from $737 million in the year-ago quarter. Revenues in Wholesale tumbled 7% to $891 million.Lumen anticipates witnessing healthy momentum in Quantum investments and fiber to the home investment strategy to bolster the growth of consumer and small business markets in the upcoming quarters. The company tapped 774,000 quantum fiber subscribers in the reported quarter.Other Quarterly DetailsTotal operating expenses decreased 12.2% year over year to $3,756 million, primarily due to lower depreciation and amortization expense. Operating income was $1,131 million compared with $888 million in the prior-year quarter. Adjusted EBITDA (excluding special items) slipped to $2,078 million from $2,132 million for respective margins of 42.5% and 41.3%.Cash Flow & LiquidityIn the first nine months of 2021, Lumen generated $4,894 million of net cash from operations compared with $4,842 million in the year-ago period. Free cash flow (excluding cash special items) in the quarter was $1,072 million compared with $879 million in the prior-year quarter. As of Sep 30, 2021, the company had $635 million in cash and cash equivalents with $27,260 million of long-term debt. The company completed its $1 billion stock repurchase program in October 2021.2021 OutlookFor 2021, Lumen expects adjusted EBITDA in the range of $8.4-$8.6 billion. Adjusted free cash flow is projected between $3.6 billion and $3.8 billion, up from $3.1-$3.3 billion expected earlier. Capital expenditures are estimated between $2.8 billion and $3 billion compared with prior expectations of $3.2-$3.5 billion.Moving AheadDespite soft revenues, Lumen ended the quarter with solid free cash flow generation driven by effective capital allocation priorities. Strategic partnerships and incremental investments in platform capabilities make it well-positioned to deliver an enhanced customer experience. Based on these focused endeavors, Lumen expects to achieve its financial targets in the long run. The Monroe, LA-based company’s Quantum Fiber platform and IP-based network capacity also position it well to support customers and deliver long-term shareholders’ value.Zacks Rank & Stocks to ConsiderLumen currently has a Zacks Rank #3 (Hold).Few better-ranked stocks in the industry are Riot Blockchain, Inc. RIOT, AstroNova, Inc. ALOT, and Coursera, Inc. COUR. While Riot Blockchain sports a Zacks Rank #1 (Strong Buy), AstroNova and Coursera carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Riot Blockchain delivered a trailing four-quarter earnings surprise of 113.8%, on average.AstroNova delivered a trailing four-quarter earnings surprise of 79.2%, on average.Coursera delivered a trailing four-quarter earnings surprise of 32.2%, on average. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AstroNova, Inc. (ALOT): Free Stock Analysis Report Riot Blockchain, Inc. (RIOT): Free Stock Analysis Report Lumen Technologies, Inc. (LUMN): Free Stock Analysis Report Coursera, Inc. (COUR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 4th, 2021

Oil & Gas Stock Roundup: A Whole Lot of Big Oil Earnings

Energy supermajors ExxonMobil (XOM), Chevron (CVX), TotalEnergies (TTE) and Eni (E) turned in a better-than-expected third-quarter earnings helped by higher commodity prices. The only exception was Royal Dutch Shell (RDS.A), which reported an underwhelming bottom line. It was a week when both oil and natural gas prices registered small declines.On the news front, integrated supermajors ExxonMobil XOM, Chevron CVX, Royal Dutch Shell (RDS.A), TotalEnergies TTE and Eni E reported September-quarter earnings.Overall, it was a bearish seven-day period for the sector. West Texas Intermediate (WTI) crude futures lost 0.2% to close at $83.57 per barrel, while natural gas prices fell 0.6% to end at $5.426 per million British thermal units (MMBtu). In particular, the oil market was down slightly after rising for nine weeks in a row.Coming back to the week ended Oct 29, the oil rally took a break after a report from the Energy Information Administration ("EIA") showed a surprise addition to crude stockpiles. The commodity’s negative price reaction was also blamed on an increased probability of talks aimed at reviving the Iranian nuclear deal that could eventually increase the nation’s oil exports.Natural gas finished down too despite a lower-than-expected increase in supplies. A bearish turn in weather forecasts primarily sparked off a pullback in the fuel’s price.Recap of the Week’s Most-Important Stories1.  Energy major ExxonMobil’s third-quarter 2021 earnings per share of $1.58 — excluding identified items — beat the Zacks Consensus Estimate by a penny. The better-than-expected earnings were due to improved realized oil and natural gas prices, and higher refining and chemical margins. The company also informed that it will launch up to a $10-billion share repurchase program next year. ExxonMobil will conduct the stock buyback program over 12 to 24 months.The Zacks Rank #1 (Strong Buy) company’s upstream segment reported quarterly earnings of $4 billion against a loss of $383 million in the year-ago comparable quarter. Meanwhile, the downstream unit recorded a profit of $1.3 billion against a loss of $231 million a year ago. ExxonMobil’s chemical business recorded a $2.1-billion profit, skyrocketing from earnings of $661 million in the year-ago quarter.You can see the complete list of today’s Zacks #1 Rank stocks here.Ahead of the earnings release, the company announced its fourth-quarter dividend of 88 cents per share, reflecting an increase from 87 cents in the third quarter of this year. Following the increase, the integrated energy giant’s annual dividend for 2021 is $3.49 per share, higher than $3.48 in 2020. (ExxonMobil Tops Q3 Earnings Estimates, Plans $10B Buyback)2.   Smaller rival Chevron reported adjusted third-quarter earnings per share of $2.96, comfortably beating the Zacks Consensus Estimate of $2.21. The company’s impressive earnings reflects higher commodity prices and production, plus an increase in refined products’ sales.The company recorded $8.6 billion in cash flow from operations, more than doubling from $3.5 billion a year ago. The soaring cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was a record $6.7 billion.In the third quarter, Chevron paid $2.6 billion in dividends and bought back $625 million worth of its shares. The company spent $2.8 billion in capital and exploratory expenditures during the quarter compared to the year-ago period’s $2.6 billion. Some 84% of the total outlays pertained to upstream projects. As of Sep 30, the San Ramon, CA-based company had $6 billion in cash and cash equivalents and total debt of $37.3 billion with a debt-to-total capitalization of about 21.6%. (Chevron Q3 Earnings Top, Sets Free Cash Flow Record)3   Europe’s largest oil company Royal Dutch Shell reported third-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $1.06. The bottom line came in below the Zacks Consensus Estimate of $1.41 due to lower production.As of Sep 30, 2021, the company, which upped its carbon reduction target, had $38.1 billion in cash and $95.4 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 25.6%, down from 31.4% a year ago. Shell’s cash flow from operations increased 54% from the year-earlier level. Meanwhile, the group raked in $12.2 billion in free cash flow during the third quarter, up from $7.6 billion a year ago.Meanwhile, Third Point, Daniel Loeb’s activist hedge fund, which has a $500 million stake in the company, is pursuing a breakup of Shell into multiple businesses, arguing that this could unlock significant value. (Shell Misses on Q3 Earnings, Targeted by Hedge Fund)4.   French multinational TotalEnergies reported third-quarter 2021 operating earnings of $1.76 (€1.49) per share, beating the Zacks Consensus Estimate of $1.56 by 12.8%. The outperformance stems from an increase in commodity prices and global economic recovery.Operating income was $5,374 million, up 268.3% from the year-ago period due to higher commodity prices. Interest expenses for the reported quarter were $454 million, down 17.3% from $549 million in the year-ago period. In third-quarter 2021, TotalEnergies acquired $126 million worth of assets and sold assets valued at $1,084 million. During the quarter, it acquired a 10% interest in the Lapa block in Brazil.Cash and cash equivalents as of Sep 30, 2021 were $28.9 billion compared with $30.6 billion in the corresponding period of 2020. Net debt to capital was 22.1% at quarter-end, down from 26.1% at third-quarter 2020 end. Cash flow from operating activities at second-quarter end was $5,640 million, up 29.6% year over year. (TotalEnergies Q3 Earnings Beat Estimates, Sales Up Y/Y)5.  Eni reported third-quarter 2021 adjusted earnings from continuing operations of 93 cents per American Depository Receipt (ADR), beating the Zacks Consensus Estimate of 81 cents. The strong quarterly results were attributed to higher realizations of average liquids and natural gas prices. Improved refinery throughputs also backed the outperformance.As of Sep 30, Eni had long-term debt of €21,369 million and cash and cash equivalents of €7,364 million. Its debt to capitalization was 39.3%. For the reported quarter, net cash generated by operating activities amounted to €2,933 million. Capital expenditure totaled €1,232 million.The company projects its 2021 cash flow from operations, before changes in working capital at replacement cost, to grow to approximately €12 billion. The Italy-based integrated energy player reaffirmed its hydrocarbon production target for 2021 at 1.7 million oil-equivalent barrels per day (MMBOE/d). For the December quarter, the energy giant projects hydrocarbon production at 1.76 MMBOE/d. The company continues to project organic capital expenditure for this year at €6 billion. (Eni Q3 Earnings Beat Estimates on Refinery Throughputs)Price PerformanceThe following table shows the price movement of some major oil and gas players over the past week and during the last six months.Company    Last Week    Last 6 MonthsXOM                 +2.1%             +14.7%CVX                  +1.5%             +11.1%COP                  -1%                +45.9%OXY                   -1.2%             +37.3%SLB                   -4.9%             +23.1%RIG                    -9.5%             +9.6%VLO                    -4.5%             +5.5%MPC                   -2.4%             +20.9%The Energy Select Sector SPDR — a popular way to track energy companies — edged down 0.8% last week. The worst performer was offshore driller Transocean RIG whose stock lost 9.5%.But over the past six months, the sector tracker has increased 18.4%. Upstream biggie ConocoPhillips COP was the major gainer during the period, experiencing a 45.9% price appreciation.What’s Next in the Energy World?As the global oil consumption outlook strengthens amid tightening fundamentals, market participants will closely track the regular releases to watch for signs that could further validate the upward momentum. In this context, the U.S. government’s statistics on oil and natural gas — one of the few solid indicators that come out regularly — will be on energy traders' radar.Data on rig count from the oilfield service firm Baker Hughes, which is a pointer to trends in U.S. crude production, is closely followed too. News related to coronavirus vaccine approval/rollout/distribution will be of utmost importance. Finally, there will be 2021 Q3 earnings, with a host of S&P 500 names coming up with quarterly results. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chevron Corporation (CVX): Free Stock Analysis Report Exxon Mobil Corporation (XOM): Free Stock Analysis Report Transocean Ltd. (RIG): Free Stock Analysis Report ConocoPhillips (COP): Free Stock Analysis Report Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report Eni SpA (E): Free Stock Analysis Report TotalEnergies SE Sponsored ADR (TTE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 3rd, 2021

Verisk"s (VRSK) Q3 Earnings & Revenues Surpass Estimates

Verisk's (VRSK) third-quarter 2021 earnings and revenues increase year over year. Verisk Analytics, Inc.VRSK reported solid third-quarter 2021 results, with earnings and revenues beating the Zacks Consensus Estimate.Adjusted earnings per share of $1.44 outpaced the consensus mark by 5.1% and grew 9.1% on a year-over-year basis. The upside was backed by organic growth within the business, lower interest expense, and lower average share count.Revenues of $759 million beat the consensus estimate by 0.6% and increased 8% year over year on a reported basis and 5.1% on an organic constant-currency (cc) basis.Over the past six months, shares of Verisk have improved 11% compared with 9.1% growth of the industry it belongs to and 11.2% increase of the Zacks S&P 500 composite.Image Source: Zacks Investment ResearchSegmental PerformanceInsurance segment revenues totaled $557.9 million, up 10.6% year over year on a reported basis and 7.4% on an organic cc basis.Within the segment, underwriting and rating revenues of $390.5 million rose 10.4% on a reported basis and 7% on an organic cc basis. The upside was primarily driven by an annual increase in prices derived from continued enhancements of the solutions’ contents within the industry-standard insurance programs, sale of expanded solutions to existing customers in commercial and personal lines, and contributions from catastrophe-modeling services and international software solutions.Claims revenues amounted to $167.4 million, improving 11.1% on a reported basis and 8.2% on an organic cc basis. The top line was positively impacted by repair cost estimating solutions revenues and claims analytics revenues. Energy and Specialized Markets segment revenues of $165.9 million increased 5% year over year on a reported basis and 2.5% on an organic cc basis. The uptick can be attributed to contributions from consulting, and environmental health and safety service revenues.Financial Services segment revenues of $35.2 million declined 12.7% year over year on a reported basis and 13.5% on an organic cc basis. The segment was weighed down by certain contract transitions, projects that did not reoccur and lower bankruptcy volumes. These declines more than offset the solid growth in spend informed analytics revenues.Operating ResultsAdjusted EBITDA of $378.8 million increased 3.5% on a reported basis and 2.1% on an organic cc basis. Adjusted EBITDA margin fell to 49.9% from 52.1% in the prior-year quarter.Verisk Analytics, Inc. Price, Consensus and EPS Surprise Verisk Analytics, Inc. price-consensus-eps-surprise-chart | Verisk Analytics, Inc. QuoteCash FlowVerisk generated $285.2 million of cash from operating activities and capex was $61.4 million. Free cash flow was $223.8 million.Share Repurchases & Dividend PayoutVerisk paid out a cash dividend of 29 cents per share on Sep 30. On Oct 27, the company's board of directors approved a quarterly cash dividend of 29 cents, payable on Dec 31, 2021, to holders of record as of Dec 15, 2021.During the reported quarter, the company repurchased almost 798,000 shares at an average price of $187.91 per share, for a total cost of $150 million. As of Sep 30, 2021, the company had $678.8 million available under its share repurchase authorization.Currently, Verisk carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other Business Services CompaniesEquifax’s EFX third-quarter 2021 adjusted earnings of $1.85 per share beat the Zacks Consensus Estimate by 7.6% but declined on a year-over-year basis. Revenues of $1.22 billion outpaced the consensus estimate by 3.6% and improved 14.5% year over year on a reported basis and 14% on a local-currency basis.IQVIA’s IQV third-quarter 2021 adjusted earnings per share of $2.17 beat the consensus mark by 1.9% and improved 33.1% on a year-over-year basis. Total revenues of $3.39 billion outpaced the consensus estimate by 1% and increased 21.7% year over year on a reported basis and 21.1% on constant-currency basis.Omnicom’s OMC third-quarter 2021 adjusted earnings of $1.65 per share beat the consensus mark by 20.4% and increased 36.4% year over year. Total revenues of $3.4 billion surpassed the consensus estimate by 0.6% and increased 7.1% year over year. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Omnicom Group Inc. (OMC): Free Stock Analysis Report Equifax, Inc. (EFX): Free Stock Analysis Report Verisk Analytics, Inc. (VRSK): Free Stock Analysis Report IQVIA Holdings Inc. (IQV): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 3rd, 2021

Futures Flat Ahead Of Historic Taper Announcement, China Warns Of "Downward Pressure" On Economy

Futures Flat Ahead Of Historic Taper Announcement, China Warns Of "Downward Pressure" On Economy US stock futures were flat ahead of today's Fed meeting, where the central bank is widely expected to announce the reduction of asset purchases with a majority of analysts expecting the Fed reducing its monthly purchases of Treasuries by $10 billion and mortgage- backed securities by $5 billion. Nasdaq 100 futures climbed 0.1% while S&P 500 and Dow Jones futures were little changed. Oil fell as the U.S. ramped up pressure on OPEC+ to boost supplies (which will bear zero results). The two-year Treasury yield was steady, while the 30-year rate shed two basis points. European stocks struggled for direction and the dollar fell less than 0.1%.   Despite turmoil in the bond market which sent the MOVE (or bond VIX) index to post-covid highs... ... stocks remain complacent and are likely not under stress “because we all think we know what will come out from today’s meeting: a gradual start of the tapering of the bond purchases program,” said Ipek Ozkardeskaya, senior analyst at Swissquote. A "taper announcement will likely be seamless, what may be less seamless is the rate discussion," she wrote in a note.  In recent weeks, policy makers have come under pressure to reassess their assessment of inflation being transitory, with bond and currency markets pricing in faster-than-expected rate hikes. “The big question will be whether they will signal anything about when the rate hikes will start,” Jeanette Garretty, chief economist at Robertson Stephens Wealth Management, said on Bloomberg Television. “I think they are going to try and avoid that.” Wall Street has also largely shrugged off concerns around rising price pressures and mixed economic growth, boosted by a stellar third-quarter earnings season and an upbeat commentary about growth going forward. In fact, there is absolutely nothing that can dent the ongoing market meltup which according to Morgan Stanley will continue until just around Thanksgiving. "Anything suggesting that the Fed is confident to keep withdrawing monetary policy support following a start today may allow equity investors to buy more," said Charalambos Pissouros, head of research at JFD group. "After all, they may have already digested the idea that interest rates will start rising at some point soon." Meanwhile, Chinese equities drifted lower after what Bloomberg called was a "dour warning" from Premier Li who cautioned about “downward pressure” for the economy. Hang Seng falls as much as 1.2% after tech shares resume slide. Here are some of the most notable premarket moves: Lyft rose after its third-quarter results showed a continued improvement in key metrics for the ride-sharing company. Zillow dropped as the decision to shut its home-flipping business raised questions about its ability to deliver growth. Shale oil producer Devon Energy rose 4.8% in premarket trading on topping earnings estimates as oil prices hit multi-year highs. Mondelez International added 1.9% after the Oreo maker raised its annual sales forecast, helped by price increases and strong demand from emerging markets. T-Mobile gained 3.4% after the U.S. wireless carrier beat third-quarter estimates for adding monthly bill paying phone subscribers. Activision Blizzard tumbled 12.0% after the videogame publisher delayed the launch of two much-awaited titles, as its co-leader Jen Oneal decided to step down from her role On the economic data front, October readings on ADP private payrolls, IHS Markit composite PMI and ISM non-manufacturing activity is due later in the day. Meanwhile, European stocks were flat as losses in energy stocks offset gains in basic resources shares.  Italy's FTSE MIB outperforms, rising as much as 0.3% while Spain's IBEX underperforms. Oil & gas, retail and utilities are the weakest Stoxx 600 sectors; miners and autos outperform. Asia’s equity benchmark was little changed as traders await the outcome of the U.S. Federal Reserve’s policy meeting, with an announcement expected on tapering amid concerns about elevated inflation. The MSCI Asia Pacific Index traded in a narrow range, with Alibaba Group, AIA Group and Samsung Electronics the biggest drags and Tencent among the winners. South Korea’s Kospi tumbled 1.3% on mounting selling by foreign funds. Hong Kong’s benchmark Hang Seng Index declined for a seventh day, extending its longest losing streak since July. The earnings season has failed to boost Asian shares, with the regional benchmark down more than 10% from a February peak as supply-chain and inflation worries persist. Traders will focus on the Fed’s policy move on Wednesday for cues at a time volatility in the bond market has heightened. “U.S. monetary policy has a very direct impact on the Asian market, especially with their plethora of dirty U.S. dollar pegs,” Jeffrey Halley, senior market analyst at Oanda, wrote in a note. Philippine stocks were among the top gainers, advancing for a second day after local Covid-19 cases fell to fewest since March. Stocks in Australia also rose after the country’s central bank scrapped a bond-yield target on Tuesday and said there’s still some time to go for rate hikes. Iron ore’s rebound on Wednesday also bolstered the mining sector. Japan’s equity market was closed for a holiday. Chinese stocks dripped after Premier Li Keqiang said China’s economy faces new downward pressures and has to cut taxes and fees to address the problems faced by small and medium-sized companies. Li did not specify the extent of the new “downward pressure” or its cause, but the phrase is generally used by Chinese officials to refer to a slowing economy. He has used the phrase before, including several times in 2019. The economy needs “cross-cyclical adjustments” to continue in a proper range, Li said during a visit to China’s top market regulator, state broadcaster CCTV reported. That phrase is associated with a more conservative fiscal and monetary approach that focuses more on the long-term outlook instead of immediate economic performance. “There are no obvious growth drivers now, so the government is looking for one,” said Bruce Pang, head of macro and strategy research at China Renaissance Securities Hong Kong Ltd. “Small businesses’ investment can provide a source of healthier, longer-term growth, compared with government or property investment.” In rates, 10-year Treasury note futures are at the top of Tuesday’s range, gaining over Asia session while eurodollar futures are up 1-2 ticks in red and green packs as shares declined in China and Hong Kong ahead of today’s FOMC decision and after Premier Li’s warning of downward pressures to the economy. Treasury 10-year yields richer by 1.8bp on the day, flattening 2s10s spread with front-end yields unchanged -- bunds and gilts trade slightly cheaper vs. Treasuries. Cash Treasuries resumed trading in London after being closed in Tokyo for a Japanese holiday --curve has flattened with long-end yields richer by as much as 2bp. Focus on U.S. session includes ADP employment and durable goods data, refunding announcement before 2pm ET Fed rate decision. In Europe, Bunds bull flattened, helped in part by dovish comments from ECB’s Lagarde and Muller while peripheral spreads tightened with 10y Bund/BTP narrowing 3bps near 120bps. In FX, the Bloomberg Dollar Spot Index inched lower as the dollar fell versus most of its Group-of-10 peers and Treasury yields fell by up to 3 basis points, led by the long end of the curve. The euro gradually climbed toward the $1.16 handle while European government bonds yields fell and curves flattened. New Zealand’s dollar was among the top G-10 performers, and rose from a two- week low after the unemployment rate dropped more than economists predicted; the Kiwi and Aussie were also boosted by leveraged short covering. The pound inched up from a three-week low against the dollar before a speech by Bank of England Governor Andrew Bailey. Hedging the pound on an overnight basis is the costliest since March as traders focus on the upcoming meetings by the Federal Reserve and the BOE. In commodities, crude futures extend Asia’s softness; WTI drops over 2%, stalling near $82, Brent drops a similar magnitude to trade near $83. Spot gold drifts around Asia’s worst levels near $1,783/oz. Most base metals are up over 1% with LME aluminum and tin outperforming Looking at the day ahead the highlight will be the aforementioned Fed's policy decision along with Chair Powell’s subsequent press conference. Other central bank speakers include ECB President Lagarde, alongside the ECB’s Elderson, Centeno, de Cos and Villeroy. Data releases include the final October services and composite PMIs from the UK and the US, and other US data includes the ISM services index for October, the ADP’s report of private payrolls for October and factory orders for September. Finally, earnings today include Qualcomm, Booking Holdings, Fox Corp and Marriott International. Market Snapshot S&P 500 futures little changed at 4,622.00 STOXX Europe 600 little changed at 479.79 MXAP little changed at 197.87 MXAPJ little changed at 645.10 Nikkei down 0.4% to 29,520.90 Topix down 0.6% to 2,031.67 Hang Seng Index down 0.3% to 25,024.75 Shanghai Composite down 0.2% to 3,498.54 Sensex little changed at 59,993.78 Australia S&P/ASX 200 up 0.9% to 7,392.73 Kospi down 1.3% to 2,975.71 German 10Y yield little changed at -0.18% Euro little changed at $1.1587 Brent Futures down 1.8% to $83.23/bbl Gold spot down 0.3% to $1,782.83 U.S. Dollar Index little changed at 94.05 Top Overnight News from Bloomberg The Federal Reserve is widely expected to announce the reduction of asset purchases at the conclusion of its policy meeting Wednesday, which Chair Jerome Powell will likely say is not a step toward raising interest rates any time soon Traders have had a mixed view for most of this year about when emerging-Asia central banks will begin to normalize policy. Suddenly though, they are rushing to price in rate-hike bets across the region. The hawkish shift is most evident in South Korea and India, where markets are now anticipating at least a quarter-point increase in the next three months, while they are also building in Malaysia and Thailand over a two-year horizon China’s economy faces new downward pressures and has to cut taxes and fees to address the problems faced by small and medium-sized companies, according to the country’s Premier Li Keqiang More provinces in China are fighting Covid-19 than at any time since the deadly pathogen first emerged in Wuhan in 2019 The likelihood that elevated inflation will become entrenched is increasing, according to European Central Bank Governing Council member Bostjan Vasle A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mixed despite another encouraging handover from Wall Street where all major indices notched fresh record closing highs for the third consecutive day, and the DJIA breached the 36k level amid a slew of earnings and absence of any significant catalysts to derail the recent uptrend. Gains in APAC were also capped by holiday-thinned conditions with Japan away for Culture Day and as the FOMC announcement draws closer (full Newsquawk preview available in the Research Suite). The ASX 200 (+0.9%) outperformed amid a resurgence in the top-weighted financials sector as AMP shares were boosted after it announced to divest a 19.1% stake in Resolution Life Australasia for AUD 524mln and with CBA also higher as Australia’s largest bank is to offer customers the ability to conduct crypto transactions via its app. Conversely, the KOSPI (-1.3%) lagged after its automakers posted weak October sales stateside and following comments from South Korean PM Lee that they cannot afford additional cash handouts right now, while there was also attention on Kakao Pay which more than doubled from the IPO price on its debut. The Hang Seng (-0.3%) and Shanghai Comp. (-0.2%) were lacklustre and failed to benefit from the improvement in Chinese Caixin Services and Composite PMI data, amid ongoing concerns related to the energy crunch and with tech subdued after Yahoo pulled out of China due to a challenging business and legal environment. Furthermore, reports also noted that the Chinese version of Fortnite will close in mid-November, while a slightly firmer PBoC liquidity operation failed to spur Chinese markets as its efforts still resulted in a substantial net drain. Aussie yields continued to soften after the RBA affirmed its dovish tone at yesterday’s meeting and with the central bank also present in the market today for AUD 800mln in semi-government bonds which is in line with its regular weekly purchases, while a softer b/c at the 10yr Australian bond auction failed to unnerve domestic bonds and T-notes futures were steady overnight amid the looming FOMC. Top Asian News State Bank of India Profit Tops Estimates on Lower Provisions Chinese Copper Smelters Boost Exports to Ease Historic Squeeze China’s PBOC Says Digital Yuan Users Have Surged to 140 Million Malaysia Holds Rates on Recovery, ‘Benign’ Inflation Outlook European majors have adopted a similarly mixed performance (Euro Stoxx 50 -0.1%; Stoxx 600 Unch) as seen during the APAC session, as markets and participants count down to the FOMC policy decision, with the BoE and NFPs also on the docket for the rest of the week. US equity futures are also mixed but have been drifting mildly higher in European trade thus far, vs a flat overnight session. Back to Europe, there isn’t anything major to report in terms of under/outperformers among European majors, although Spain’s IBEX (-0.7%) lags in the periphery amidst losses in sector heavyweights. Sectors in Europe are mixed with no overarching theme. Basic Resources top the charts in a slight reversal of yesterday’s underperformance and amid a bounce in base metal prices. Travel & Leisure is propped up by Deutsche Lufthansa (+5.0%) post-earnings. Oil & Gas names are pressured by the decline across the crude complex in the run-up to tomorrow’s OPEC+ confab, whilst Banks are lacklustre as yields lose ground. In terms of individual movers, Vestas Wind System (-9.0%) is at the bottom of the Stoxx 600 after cutting guidance. BMW (+0.4%) is choppy after-earnings which saw EBIT top forecasts and targets confirmed, although the group noted that the rise in raw material prices have also had an impact on earnings, but they do not expect short-term magnesium shortage to affect production. Finally, Pandora (+0.8%) reported improvements on their metrics but warned that APAC performance, including China, remains weak and heavily impacted by COVID-19, with China expected to remain a drag on performance for the remainder of the year. Top European News BMW Muscles Through Chip Shortage With Profit Jump Nexans Drops as Morgan Stanley Says 3Q Results Were Weak Russia’s Biggest Alcohol Retailer Seeks $1.3 Billion in IPO LSE Boss Expects London Will Keep EU Clearing Role Post-Brexit In FX, far from all change, but the Kiwi has reclaimed 0.7100+ status against the Greenback and a firmer grasp of the handle in wake of significantly stronger than expected NZ labour market metrics via Q3’s HLFS update overnight, including jobs growth coming in five times higher than forecast and the unemployment rate falling sharply irrespective of a rise in participation. Nzd/Usd is hovering around 0.7135 and the Aud/Nzd cross is under 1.0450 even though the Aussie has regained some composure after its post-RBA relapse to retest 0.7450, albeit with assistance from the Buck’s broad pull-back rather than mixed PMIs and much weaker than anticipated building approvals. Indeed, the Franc has also rebounded from circa 0.9150 with no independent incentive and cognisant that the SNB will be monitoring moves as Eur/Chf meanders within its 1.0604-1.0548 w-t-d range. DXY/JPY/EUR/GBP/CAD - The Dollar index has drifted back down from a fractional new high compared to Tuesday’s best between 94.144-93.970 parameters vs a 94.136-93.818 range yesterday, and for little apparent reason aside from pre-FOMC tinkering and fine-tuning of positions it seems. Nevertheless, DXY components are mostly taking advantage of the situation, albeit in typically tight ranges seen on a Fed day, with the Yen holding above 114.00 on Japanese Culture Day, the Euro just under 1.1600 and amidst more decent option expiry interest (1.1 bn from 1.1585 to the round number), Sterling still trying to retain 1.3600+ status and also close to a fairly big option expiry (821 mn at the 1.3615 strike) and the Loonie striving to contain declines beneath 1.2400 against the backdrop of retreating oil prices. Note, some upside in the Pound via upgrades to UK services and composite PMIs, but limited and Eur/Gbp remains over 0.8500 in advance of the showdown between Britain and France on fishing tomorrow when the BoE also delivers its eagerly anticipated November policy verdict. SCANDI/EM - Not much adverse reaction to a slowdown in Sweden’s services PMI for the Sek, while the Nok is taking the latest downturn in Brent crude largely in stride on the eve of the Norges Bank meeting that is widely seen cementing rate hike guidance for next month. However, scant respite or solace for the Try from sub-consensus Turkish CPI as the near 20% y/y print means more divergence relative to the CBRT’s 1 week repo, and PPI accelerated again to heighten the build up of pipeline price pressures. Conversely, the Cnh and Cny are nudging back above 6.4000 after an encouraging Chinese Caixin services PMI and the Zar is on a firm footing awaiting results of SA local elections. RBNZ said the financial system is well placed to support economic recovery despite uncertainty and risks, while the more recent Delta outbreak is creating stress for some industries and regions, particularly in Auckland. RBNZ also noted that with the risk of global inflation heightened, already stretched asset prices are facing headwinds from rising global interest rates and that supply chain bottlenecks and inflation are adding to stresses in some sectors. Furthermore, they intend to increase the minimum CFR requirement to its previous level of 75% on 1st January 2022, subject to no significant worsening in economic condition, while capital requirements for banks are to progressively increase from 1st July 2022 and it is encouraging to see them increasing ahead of these requirements. (Newswires) In commodities, WTI and Brent front month futures are softer and in proximity to USD 82/bbl and USD 83/bbl respectively with losses today also potentially a function of the downbeat China COVID updates seen overnight. As a reminder, China's most recent COVID-19 outbreak is reportedly the most widespread since Wuhan with infection in 19 of 31 provinces, according to a major newswires article. It was also reported that around half the flights to and from Beijing city’s two airports were cancelled Tuesday, according to aviation industry data site VariFlight. Further, yesterday’s Private Inventory data was also bearish, printing a larger-than-expected build of 3.6mln bbl vs exp. +2.2mln, ahead of today’s DoEs which will take place 1hr earlier for those in Europe. Looking ahead to tomorrow’s OPEC+, markets expect a continuation of the current plan to ease output curbs by 400k BPD/m. Outside calls have been getting louder for the producers to open the taps more than planned amid inflationary feed-through to consumers and company margins, although ministers, including de-factor heads Saudi and Russia, have been putting weight behind current plans, with no pushback seen from members within OPEC+ thus far. Further, the COVID situation in China is deteriorating, hence ministers will likely express a cautious approach. Elsewhere, spot gold and silver are flat within overnight ranges, as is usually the case before FOMC. Base metals are staging a recovery with LME copper back above USD 9,500/t, whilst Chinese thermal coal futures rose some 10% following 10 days of declines US Event Calendar 8:15am: Oct. ADP Employment Change, est. 400,000, prior 568,000 9:45am: Oct. Markit US Services PMI, est. 58.2, prior 58.2 Oct. Markit US Composite PMI, prior 57.3 10am: Sept. Durable Goods Orders, est. -0.4%, prior -0.4% Sept. -Less Transportation, est. 0.4%, prior 0.4% Sept. Cap Goods Orders Nondef Ex Air, prior 0.8% Sept. Cap Goods Ship Nondef Ex Air, prior 1.4% 10am: Sept. Factory Orders, est. 0.1%, prior 1.2% Sept. Factory Orders Ex Trans, est. 0%, prior 0.5% 10am: Oct. ISM Services Index, est. 62.0, prior 61.9 2pm: FOMC Rate Decision DB's Jim Reid concludes the overnight wrap So after much anticipation we’ve finally arrived at the Fed’s decision day, where it’s widely anticipated (including by DB’s US economists) that they’ll announce a tapering in their asset purchases. Such a move has been increasingly anticipated over recent months, not least with the repeated upgrades to inflation forecasts over the course of 2021, and the FOMC themselves flagged this at their September meeting, where their statement said that “if progress continues broadly as expected … a moderation in the pace of asset purchases may soon be warranted.” In terms of what our economists are expecting, their view is that the Fed will announce monthly reductions of $10bn and $5bn in the pace of Treasury and MBS purchases respectively, with the first cut to purchases coming in mid-November. They see this bringing the latest round of QE to an end in June 2022, though this would also offer some flexibility to respond to any changes in the economic environment over the coming eight months should they arise. On the question of rate hikes, they think lift-off won’t take place until December 2022, but don’t see Chair Powell actively pushing back on current market pricing (a full hike nearly priced in by mid-year 22) given the elevated uncertainty about the outlook, particularly on inflation. You can see more details in their preview here. Of course since the Fed’s last meeting, many inflationary pressures have only grown, particularly given the fresh surge in energy prices that’s taken WTI oil up to $83/bbl, having been at just $72/bbl at the time of their September meeting. In turn, this has taken market expectations of future inflation up as well, with the 10yr breakeven now standing at 2.52%, up from 2.28% following Powell’s September press conference. And market pricing has also shifted significantly since the last meeting, with investors having gone from expecting less than one full hike by the December 2022 meeting to more than two. Ahead of all that, global risk assets continued to perform strongly and a number of major indices climbed to fresh all-time highs yesterday. The S&P 500 (+0.37%), the NASDAQ (+0.34%), the Dow Jones (+0.39%) and Europe’s STOXX 600 (+0.14%) all hit new records, whilst France’s CAC 40 (+049%) exceeded its previous closing peak made all the way back in 2000. Positive earnings news helped bolster those indices, with 27 of 29 S&P 500 reporters beating earnings estimates during trading, and 16 of 20 after-hours reporters beating earnings estimates. This included Pfizer during the day, which raised its full-year forecasts on the back of strong vaccine demand and noted it had the capacity to produce as much as 4 billion shots next year. However, the big winner yesterday (the biggest in the small-cap Russell 2000 yesterday) was Avis Budget Group (+108.31%) even if its performance actually marked a fall from its intraday high when the share price had more than tripled. Those moves occurred after Avis posted strong earnings driven by better-than-expected demand. Their CEO said they’d add more electric cars, whilst the stock also got attention on the WallStreetBets forum on Reddit, which readers may recall was behind some big moves at the start of the year in various "meme stocks” like GameStop. The banner day added $8.5bn to its market cap, which helped it leap frog fellow meme stock AMC to become the second biggest company in the Russell 2000 from third slot yesterday. In other such popular retail stocks, Tesla retreated -3.03% after Elon Musk cast some doubt the previous evening over the recently announced deal to sell 100,000 cars to rental car company Hertz. That said, the automaker has still added over $300 billion in market cap over the last month. Sovereign bonds were another asset class that put in a decent performance ahead of the Fed, with yields falling throughout the curve across a range of countries following the relatively dovish tone vs heightened expectations from the RBA yesterday morning. By the close, those on 10yr Treasuries were down -1.4bps to 1.54%, whilst their counterparts in Europe saw even steeper declines, including those on 10yr bunds (-6.3bps), OATs (-8.5bps) and BTPs (-14.1bps). BTPs were the biggest story and the move seemed to coincide with a reappraisal of ECB hike expectations, as pricing through December 2022 declined -6.5 bps, down from c.20 bps of expected tightening priced as of Monday. So a big decline. In Asia, the Shanghai Composite (-0.57%), the Hang Seng (-0.93%) and the KOSPI (-1.23%) are all trading lower. Japan’s markets are closed due to the Culture Day, meaning also that cash treasuries are not trading in the region. In data releases, the Caixin Services PMI for China rose to 53.8 versus 53.1 expected. However, Premier Li’s remarks about new “downward pressure” on China’s economy and latest COVID outbreak, which is now the most widespread since the first emergence of the virus, are weighing down on the sentiment. Meanwhile, China and Hong Kong are discussing reopening of the shared border. The S&P 500 futures (-0.01%) is pretty flat this morning. Aussie yields are again lower especially at the front end with the infamous April 24 bond around -7bps as we type. As we go to print the Associated Press have called the Virginia as a victory for the GOP Youngkin with New Jersey equivalent also looking likely to go to the GOP. So a big blow to the Democrats. Of those, Virginia was being more closely watched. As recently as the Obama years it was a fiercely contested battleground, but it’s trended Democratic over the last few cycles, with Biden’s 10 point margin of victory last year well exceeding his 4.4 point margin nationally. So this will not be good news for the Dems ahead of next year’s mid-terms. It will also increase the odds of legislative and fiscal gridlock after that - although the latter has been increasingly expected. Staying with US Politics, President Biden indicated in a news conference that he was getting closer to announcing whether or not he would re-nominate Fed Chair Powell for another term as head of the central bank, or if he would appoint a new Chair. He said an announcement will come “fairly quickly”. In terms of the latest on the pandemic, the US CDC’s advisory committee on immunization practices met and backed the Pfizer vaccine for 5-11 year olds, joining the FDA who gave the vaccine the green light for the same age group. There wasn’t much in the way of data releases yesterday, though we did get the final manufacturing PMIs from Europe, where the Euro Area PMI for October was revised down two-tenths from the flash estimate to 58.3. Germany also saw a downward revision to 57.8 (vs. flash 58.2), but Italy outperformed expectations with a 61.1 reading (vs. 59.6 expected). To the day ahead now, and the highlight will be the aforementioned policy decision from the Fed, along with Chair Powell’s subsequent press conference. Other central bank speakers include ECB President Lagarde, alongside the ECB’s Elderson, Centeno, de Cos and Villeroy. Data releases include the final October services and composite PMIs from the UK and the US, and other US data includes the ISM services index for October, the ADP’s report of private payrolls for October and factory orders for September. Finally, earnings today include Qualcomm, Booking Holdings, Fox Corp and Marriott International. Tyler Durden Wed, 11/03/2021 - 08:13.....»»

Category: blogSource: zerohedgeNov 3rd, 2021

Clorox (CLX) Q1 Earnings and Sales Top Estimates, Decline Y/Y

Clorox (CLX) Q1 results gain from strength across the portfolio and robust demand. Lower volume and unfavorable price mix have been headwinds. The Clorox Company CLX reported mixed results for first-quarter fiscal 2022, wherein the top and bottom lines beat the Zacks Consensus Estimate but declined year over year. Results were impacted by soft sales performance across two of the four segments. Lower shipment volume along with an unfavorable price mix mainly hurt sales. This along with higher manufacturing and logistics costs, and increased commodity costs dented the bottom line and margins.Nonetheless, management is encouraged by the company’s portfolio, which helps it efficiently cater to the consumer demand and position it well for long-term growth. Its IGNITE strategy also appears encouraging.Shares of the Zacks Rank #5 (Strong Sell) company have declined 0.4% in the past three months compared with the industry’s 2.8% fall. Image Source: Zacks Investment Research Q1 HighlightsAdjusted earnings of $1.21 per share decreased 54% year over year but beat the Zacks Consensus Estimate of $1.01. The earnings decline can be attributed to a decrease in sales and a lower gross margin. Adjusted earnings excluded 7 cents related to investments in the company's long-term digital capabilities and productivity enhancements.The company posted net sales of $1,806 million, beating the Zacks Consensus Estimate of $1,703 million. The top line, however, declined 6% from the year-ago quarter, whereas organic sales dipped 5%. Sales were mainly impacted by the decline of volume and unfavorable price mix. The adverse currency also hurt the top line by 1%. The company witnessed a 2% decline in volume and a 3% unfavorable price mix. However, it noted that sales increased 21% on a two-year basis.The Clorox Company Price, Consensus and EPS Surprise  The Clorox Company price-consensus-eps-surprise-chart | The Clorox Company QuoteThe gross margin contracted 1,090 basis points (bps) to 37% in the fiscal first quarter. Elevated manufacturing and logistics costs and higher commodity costs due to significant cost inflation hurt the gross margin.Segmental DiscussionSales of the Health and Wellness segment dropped 8% to $745 million on sales declines in two of the three business units. Lower shipment volume of professional products; vitamins, minerals and supplements; and unfavorable price mix led to the downside.The Household segment’s sales declined 12% to $442 million, driven by sales declines in two of the three business units — Bags & Wraps, and Grilling. Unfavorable price mix; lower shipments in Grilling and Bags & Wraps; and unfavorable price mix were the primary reasons.Sales at the Lifestyle segment improved 4% year over year to $331 million. Growth in two of the three businesses due to higher volume from increased shipments Water Filtration and Natural Personal Care aided the segment’s sales. This was partly negated by the unfavorable price mix.In the International segment, sales rose 1% to $288 million from the year-ago quarter on a favorable price mix, offset by a slight decline in shipment volume and unfavorable currency. Organic sales for the segment improved 3%.FinancialsClorox ended first-quarter fiscal 2022 with cash and cash equivalents of $210 million, and long-term debt of $1,885 million. In the fiscal first quarter, the company generated $41 million of net cash from operations.Fiscal 2022 GuidanceManagement notes that fiscal 2022 started on a strong note. It witnessed a better-than-anticipated demand across its portfolio despite the tough environment. The company reiterated its fiscal 2022 outlook. It envisions a 2-6% sales decline, both on a reported and organic basis, for fiscal 2022.The gross margin is expected to decline 300-400 bps in fiscal 2022 on escalated commodity costs, and manufacturing and logistics expenses, particularly transportation. The company expects to return to gross margin growth in the fourth quarter of fiscal 2022.Selling and administrative expenses, as a percentage of sales, are projected to be 15% of sales. The company anticipates 1% of this to be for planned investments in digital capabilities and productivity enhancements. It expects advertising and sales promotion expenses to be 10% of net sales. The higher spending mainly relates to an increase in brand investments to support its innovation pipeline and customer engagement efforts. The effective tax rate is anticipated at 22-23%.Consequently, adjusted earnings for fiscal 2022 are estimated to be $5.40-$5.70 per share, suggesting a year-over-year decline of 26-21%. On a GAAP basis, earnings per share are anticipated to be $5.05-$5.35, indicating a 9-4% decline from the year-ago period. The company notes that adjusted earnings per share will exclude long-term investments in digital capabilities and productivity enhancements to provide greater visibility to the underlying operating performance.Key Stocks to ConsiderAlbertsons Companies, Inc. ACI has an expected long-term earnings growth rate of 12% and it currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Duckhorn Portfolio NAPA has an expected long-term earnings growth rate of 9.4% and a Zacks Rank #2 (Buy) at present.Helen of Troy HELE, also a Zacks Rank #2 stock, has an expected long-term earnings growth rate of 8%. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Albertsons Companies, Inc. (ACI): Free Stock Analysis Report The Clorox Company (CLX): Free Stock Analysis Report Helen of Troy Limited (HELE): Free Stock Analysis Report The Duckhorn Portfolio, Inc. (NAPA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 2nd, 2021

Esperion (ESPR) Beats on Q3 Earnings, Lowers Expense Guidance

Esperion Therapeutics (ESPR) reports solid third-quarter results, beating estimates for earnings and sales. However, the stock declines in pre-market trading. Esperion Therapeutics, Inc. ESPR incurred a loss per share of $2.62 per share for the third quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $2.86 per share. The company had recorded earnings of $3.07 per share in the year-ago period.The company generated revenues of $14.4 million, beating the Zacks Consensus Estimate of $12.31 million. The company had recorded revenues of $3.8 million in the year-ago quarter.Shares of Esperion were however down 7.4% in pre-market trading on Nov 2. In fact, Esperion’s stock has lost 58.2% so far this year compared with the industry’s 11.1% decrease.Image Source: Zacks Investment ResearchQuarter in DetailsEsperion launched its first commercial drug — Nexletol — in March 2020 followed by Nexlizet in June in the United States. While Nexletol is a bempedoic acid monotherapy tablet, Nexlizet is a combination of bempedoic acid and Merck’s MRK Zetia (ezetimibe) that are approved for treating elevated LDL-C (bad cholesterol).Both these drugs received approval in Europe in April 2020. In Europe, Nexletol is available as Nilemdo and Nexlizet as Nustendi. Daiichi Sankyo, Esperion’s collaboration partner for Europe, launched the drugs in Germany in November 2020. Esperion records royalty on sales of its drugs in Europe.Product revenues, solely from the United States, were $10.9 million in the third quarter compared with $3.3 million in the year-ago quarter and $10.3 million in the previous quarter. The company stated that prescriptions for its drugs were up 10% year over year.The company recorded royalty revenues of $1.2 million during the reported quarter, compared with $1 million in the previous quarter. The drugs continued to show strong momentum in Europe. The item was included in Collaboration revenues, which were $3.5 million during the third quarter, compared with $0.5 million in the year-ago quarter.Research and development (R&D) expenses decreased 28.3% from the year-ago period to $25.3 million due to lower clinical activities.Selling, general and administrative expenses (SG&A) were down 19.5% year over year to $39.3 million.As of Sep 30, 2021, Esperion had cash, cash equivalents and investment securities of $153.7 million compared with $219.2 million as of Jun 30, 2021.Restructuring PlansLast month, Esperion announced a plan to align its operational and expense structure, which will help the company to deliver better growth. The company plans targeted program savings and will reduce 40% of its workforce to lower its operating expense.The company plans to streamline its sales force, and target cardiologists and primary care physicians for the promotion of its marketed drugs. It made the decision after a systematic review and is currently planning to focus on the commercialization of its two drugs as well as on the ongoing CLEAR Outcomes study, a CVOT study, evaluating Nexletol and Nexlizet in patients who have statin intolerability.Guidance for 2021 & 2022Esperion lowered its guidance for R&D and SG&A costs in 2021 and provided a new guidance for 2022. The company anticipates R&D expense for 2021 to be in the range of $110-$115 million compared with $120-$130 million expected previously. SG&A expense is expected to be between $195 million and $200 million, down from the previous expectation of $200-$210 million.The company expects R&D expense for 2022 to be in the range of $100-$110 million, while SG&A expense is expected to be between $120 million and $130 million.Esperion Therapeutics, Inc. Price, Consensus and EPS Surprise Esperion Therapeutics, Inc. price-consensus-eps-surprise-chart | Esperion Therapeutics, Inc. QuoteZacks Rank & Stocks to ConsiderEsperion currently carries a Zacks Rank #3 (Hold).A couple of better-ranked stocks from the same sector include Xencor XNCR and Neurocrine Biosciences NBIX. While Xencor sports a Zacks Rank #1 (Strong Buy), Neurocrine carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Xencor’s loss per share estimates have narrowed from 75 cents to 33 cents for 2021 and from $3.14 to $2.92 for 2022 in the past 30 days. The stock has risen 3.1% so far this year.Neurocrine’s earnings per share estimates have moved north from $1.89 to $1.93 for 2021 and from $3.64 to $3.68 for 2022 in the past 30 days. The stock has risen 10.8% so far this year. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Merck & Co., Inc. (MRK): Free Stock Analysis Report Neurocrine Biosciences, Inc. (NBIX): Free Stock Analysis Report Esperion Therapeutics, Inc. (ESPR): Free Stock Analysis Report Xencor, Inc. (XNCR): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksNov 2nd, 2021