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Solid Start to Q3 Earnings Season

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Category: topSource: redinewsOct 16th, 2019

Futures Jump On Profit Optimism As Oil Tops $85; Bitcoin Nears $60,000

Futures Jump On Profit Optimism As Oil Tops $85; Bitcoin Nears $60,000 One day after the S&P posted its biggest one-day surge since March, index futures extended this week’s gains, helped by a stellar bank earnings, while the latest labor market data and inflation eased stagflation fears for the time being. . The 10-year Treasury yield rose and the dollar was steady. Goldman Sachs reports on Friday. At 715 a.m. ET, Dow e-minis were up 147 points, or 0.42%, S&P 500 e-minis were up 16.5 points, or 0.37%, and Nasdaq 100 e-minis were up 42.75 points, or 0.28%. Oil futures topped $85/bbl, jumping to their highest in three years amid an energy crunch that’s stoking inflationary pressures and prices for raw materials. A gauge of six industrial metals hit a record high on the London Metal Exchange.  Energy firms including Chevron and Exxon gained about half a percent each, tracking Brent crude prices that scaled the 3 year high. Solid earnings in the reporting season are tempering fears that rising costs and supply-chain snarls will hit corporate balance sheets and growth. At the same time, the wider debate about whether a stagflation-like backdrop looms remains unresolved. “We don’t sign up to the stagflation narrative that is doing the rounds,” said Hugh Gimber, global strategist at the perpetually optimistic J.P. Morgan Asset Management. “The economy is being supported by robust consumer balance sheets, rebounding business investment and a healthy labor market.” “After a choppy start to the week, equity markets appear to be leaning towards a narrative that companies can continue to grow profits, despite the combined pressures of higher energy prices and supply chain disruptions,” said Michael Hewson, chief market analyst at CMC Markets in London. Bitcoin and the crypto sector jumped after Bloomberg reported late on Thursday that the Securities and Exchange Commission is poised to allow the first U.S. Bitcoin futures exchange-traded fund to begin trading in a watershed moment for the cryptocurrency industry. Bitcoin traded off session highs having tested $60k during Asian hours, but will likely rise to new all time highs shortly. Also overnight, Joe Biden signed a bill providing a short-term increase in the debt limit, averting the imminent threat of a financial calamity. But it only allows the Treasury Department to meets its financial obligations until roughly Dec. 3, so the can has been kicked for less than two months - brace for more bitter partisan battles in the coming weeks. This week’s move into rate-sensitive FAAMG growth names looked set to continue, with their shares inching up. Moderna rose 3.0% after a U.S. FDA panel voted to recommend booster shots of its COVID-19 vaccine for Americans aged 65 and older and high-risk people. Western Digital slipped 2.5% as Goldman Sachs downgraded the storage hardware maker’s stock to “neutral” from “buy”. Here are some of the key premarket movers on Friday morning: Virgin Galactic (SPCE US) shares slump as much as 23% in U.S. premarket trading as the firm is pushing the start of commercial flights further into next year after rescheduling a test flight, disappointing investors with the unexpected delay to its space tourism business plans Cryptocurrency-exposed stocks rise in U.S. premarket trading after a report that the Securities and Exchange Commission is poised to allow the first U.S. Bitcoin futures exchange-traded fund to begin trading.  Bit Digital (BTBT US) +6.7%, Riot Blockchain (RIOT US) +4.6%, Marathon Digital (MARA US) +3.6% Alcoa (AA US) shares jump 5.6% in thin volumes after co. reported profits that beat the average analyst estimate and said it will be paying a dividend to its shareholders Moderna (MRNA US) extends Thursday’s gains; Piper Sandler recommendation on Moderna Inc. to overweight from neutral, a day after co.’s Covid-19 booster got FDA nod for use in older, high-risk people Duck Creek Technologies (DCT US) shares fell 12% in Thursday postmarket trading after the software company projected 2022 revenue that fell short of the average analyst estimate 23andMe Holdings (ME US) soared 14% in Thursday postmarket trading after EMJ Capital founder Eric Jackson called the genetics testing company “the next Roku” on CNBC Corsair Gaming (CRSR US) shares fell 3.7% in post-market trading after it cut its net revenue forecast for the full year Early on Friday, China's PBOC broke its silence on Evergrande, saying risks to the financial system are controllable and unlikely to spread. Authorities and local governments are resolving the situation, central bank official Zou Lan said. The bank has asked lenders to keep credit to the real estate sector stable and orderly. In Europe, gains for banks, travel companies and carmakers outweighed losses for utilities and telecommunications industries, pushing the Stoxx Europe 600 Index up 0.3%. Telefonica fell 3.3%, the most in more than four months, after Barclays cut the Spanish company to underweight. Temenos and Pearson both slumped more than 10% after their business updates disappointed investors. Here are some of the biggest European movers today: Devoteam shares rise as much as 25% after its controlling shareholder, Castillon, increased its stake in the IT consulting group to 85% and launched an offer for the remaining capital. QinetiQ rises as much as 5.4% following a plunge in the defense tech company’s stock on Thursday. Investec upgraded its recommendation to buy and Berenberg said the shares now look oversold. Hugo Boss climbs as much as 4.4% to the highest level since September 2019 after the German apparel maker reported 3Q results that exceeded expectations. Jefferies (hold) noted the FY guidance hike also was bigger than expected. Mediclinic rises as much as 7.7% to highest since May 26 after 1H results, which Morgan Stanley says showed strong underlying operating performance with “solid metrics.” Temenos sinks as much as 14% after the company delivered a “mixed bag” with its 3Q results, according to Baader (sell). Weakness in Europe raises questions about the firm’s outlook for a recovery in the region, the broker said. Pearson declines as much as 12%, with analysts flagging weaker trading in its U.S. higher education courseware business in its in-line results. Earlier in the session, Asian stocks headed for their best week in more than a month amid a list of positive factors including robust U.S. earnings, strong results at Taiwan Semiconductor Manufacturing Co. and easing home-loan restrictions in China.  The MSCI Asia Pacific Index gained as much as 1.3%, pushing its advance this week to more than 1.5%, the most since the period ended Sept. 3. Technology shares provided much of the boost after chip giant TSMC announced fourth-quarter guidance that beat analysts’ expectations and said it will build a fabrication facility for specialty chips in Japan. Shares in China rose as people familiar with the matter said the nation loosened restrictions on home loans at some of its largest banks.  Conditions are good for tech and growth shares now long-term U.S. yields have fallen following inflation data this week, Shogo Maekawa, a strategist at JPMorgan Asset Management in Tokyo. “If data going forward are able to provide an impression that demand is strong too -- on top of a sense of relief from easing supply chain worries -- it’ll be a reason for share prices to take another leap higher.”  Asia’s benchmark equity gauge is still 10% below its record-high set in February, as analysts stay on the lookout for higher bond yields and the impact of supply-chain issues on profit margins.  Japanese stocks rose, with the Topix halting a three-week losing streak, after Wall Street rallied on robust corporate earnings. The Topix rose 1.9% to close at 2,023.93, while the Nikkei 225 advanced 1.8% to 29,068.63. Keyence Corp. contributed the most to the Topix’s gain, increasing 3.7%. Out of 2,180 shares in the index, 1,986 rose and 155 fell, while 39 were unchanged. For the week, the Topix climbed 3.2% and the Nikkei added 3.6%. Semiconductor equipment and material makers rose after TSMC said it will build a fabrication facility for specialty chips in Japan and plans to begin production there in late 2024.  U.S. index futures held gains during Asia trading hours. The contracts climbed overnight after a report showed applications for state unemployment benefits fell last week to the lowest since March 2020.  “U.S. initial jobless claims fell sharply, and have returned to levels seen before the spread of the coronavirus,” said Nobuhiko Kuramochi, a market strategist at Mizuho Securities in Tokyo. “The fact that more people are returning to their jobs will help ease supply chain problems caused by the lack of workers.” Australian stocks also advanced, posting a second week of gains. The S&P/ASX 200 index rose 0.7% to close at 7,362.00, with most sectors ending higher.  The benchmark added 0.6% since Monday, climbing for a second week. Miners capped their best week since July 16 with a 3% advance. Hub24 jumped on Friday after Evans & Partners upgraded the stock to positive from neutral. Pendal Group tumbled after it reported net outflows for the fourth quarter of A$2.3 billion. In New Zealand, the S&P/NZX 50 index fell 0.3% to 13,012.19 In rates, the U.S. 10-year Treasury yield rose over 3bps to 1.54%. Treasuries traded heavy across long-end of the curve into early U.S. session amid earning-driven gains for U.S. stock futures. Yields are higher by more than 3bp across long-end of the curve, 10- year by 2.8bp at about 1.54%, paring its first weekly decline since August; weekly move has been led by gilts and euro-zone bonds, also under pressure Friday, with U.K. 10-year yields higher by 3.3bp. Today's bear-steepening move pares the weekly bull-flattening trend. U.S. session features a packed economic data slate and speeches by Fed’s Bullard and Williams.   In FX, the Bloomberg Dollar Spot Index was little changed even as the greenback weakened against most of its Group-of-10 peers; the euro hovered around $1.16 while European and U.S. yields rose, led by the long end. Norway’s krone led G-10 gains as oil jumped to $85 a barrel for the first time since late 2018 amid the global energy crunch; the currency rallied by as much as 0.6% to 8.4015 per dollar, the strongest level since June. New Zealand’s dollar advanced to a three-week high as bets on RBNZ’s tightening momentum build ahead of Monday’s inflation data; the currency is outperforming all G-10 peers this week. The yen dropped to a three-year low as rising equities in Asia damped demand for low-yielding haven assets. China’s offshore yuan advanced to its highest in four months while short-term borrowing costs eased after the central bank added enough medium-term funds into the financial system to maintain liquidity at existing levels. In commodities, crude futures trade off best levels. WTI slips back below $82, Brent fades after testing $85. Spot gold slips back through Thursday’s lows near $1,786/oz. Base metals extend the week’s rally with LME nickel and zinc gaining over 2%. Today's retail sales report, due at 08:30 a.m. ET, is expected to show retail sales fell in September amid continued shortages of motor vehicles and other goods. The data will come against the backdrop of climbing oil prices, labor shortages and supply chain disruptions, factors that have rattled investors and have led to recent choppiness in the market. Looking at the day ahead now, and US data releases include September retail sales, the University of Michigan’s preliminary consumer sentiment index for October, and the Empire State manufacturing survey for October. Central bank speakers include the Fed’s Bullard and Williams, and earnings releases include Charles Schwab and Goldman Sachs. Market Snapshot S&P 500 futures up 0.3% to 4,443.75 STOXX Europe 600 up 0.4% to 467.66 German 10Y yield up 2.4 bps to -0.166% Euro little changed at $1.1608 MXAP up 1.3% to 198.33 MXAPJ up 1.2% to 650.02 Nikkei up 1.8% to 29,068.63 Topix up 1.9% to 2,023.93 Hang Seng Index up 1.5% to 25,330.96 Shanghai Composite up 0.4% to 3,572.37 Sensex up 0.9% to 61,305.95 Australia S&P/ASX 200 up 0.7% to 7,361.98 Kospi up 0.9% to 3,015.06 Brent Futures up 1.0% to $84.83/bbl Gold spot down 0.5% to $1,787.54 U.S. Dollar Index little changed at 93.92 Top Overnight News from Bloomberg China’s central bank broke its silence on the crisis at China Evergrande Group, saying risks to the financial system stemming from the developer’s struggles are “controllable” and unlikely to spread The ECB has a good track record when it comes to flexibly deploying its monetary instruments and will continue that approach even after the pandemic crisis, according to policy maker Pierre Wunsch Italian Ministry of Economy and Finance says fourth issuance of BTP Futura to start on Nov. 8 until Nov. 12, according to a statement The world’s largest digital currency rose about 3% to more than $59,000 on Friday -- taking this month’s rally to over 35% -- after Bloomberg News reported the U.S. Securities and Exchange Commission looks poised to allow the country’s first futures-based cryptocurrency ETF Copper inventories available on the London Metal Exchange hit the lowest level since 1974, in a dramatic escalation of a squeeze on global supplies that’s sent spreads spiking and helped drive prices back above $10,000 a ton A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded higher amid tailwinds from the upbeat mood across global peers including the best day for the S&P 500 since March after strong US bank earnings, encouraging data and a decline in yields spurred risk appetite. The ASX 200 (+0.7%) was positive as the tech and mining sectors continued to spearhead the advances in the index in which the former took impetus from Wall St where the softer yield environment was conducive to the outperformance in tech, although mining giant Rio Tinto was among the laggards following weaker quarterly production results. The Nikkei 225 (+1.8%) was buoyed as exporters benefitted from the JPY-risk dynamic but with Fast Retailing failing to join in on the spoils despite an 88% jump in full-year net as its profit guidance underwhelmed with just 3% growth seen for the year ahead, while Taiwan's TAIEX (+2.2%) surged with the spotlight on TSMC earnings which reached a record high amid the chip crunch and with the Co. to also build a factory in Japan that could receive JPY 500bln of support from the Japanese government. The Hang Seng (+1.5%) and Shanghai Comp. (+0.4%) were initially indecisive amid the overhang from lingering developer default concerns although found some mild support from reports that China is to relax banks' mortgage limits through the rest of 2021. Focus was also on the PBoC which announced a CNY 500bln MLF operation, although this just matched the amount maturing this month and there are mixed views regarding prospects of a looming RRR cut with ANZ Bank's senior China strategist recently suggesting the potential for a 50bps cut in RRR or targeted MLF as early as today, although a recent poll showed analysts had pushed back their calls for a RRR cut from Q4 2021 to Q1 2022. Finally, 10yr JGBs marginally pulled back from this week’s advances after hitting resistance at the 151.50 level, with demand hampered amid the firm gains in Japanese stocks and the lack of BoJ purchases in the market today. Top Asian News Hong Kong Probes Going Concern Reporting of Evergrande U.S. Futures Hold Gains as Oil Hits 3-Year High: Markets Wrap Toyota Cuts November Outlook by 15% on Parts Shortage, Covid Yango Group Wires Repayment Fund for Onshore Bond Due Oct. 22 Bourses in Europe have held onto the modest gains seen at the cash open (Euro Stoxx 50 +0.4%; Stoxx 600 +0.3%), but the region is off its best levels with the upside momentum somewhat faded heading into the US open, and amidst a lack of fresh newsflow. US equity futures have remained in positive territory, although the latest leg lower in bonds has further capped the tech-laden NQ (+0.2%), which underperforms vs the ES (+0.3%), YM (+0.3%) and RTY (+0.7%), with traders on the lookout for another set of earnings, headlined by Goldman Sachs at 12:25BST/07:25EDT. Back to Europe, bourses see broad-based gains, whilst sectors are mostly in the green with clear underperformance experienced in defensives, with Telecoms, Utilities, Healthcare and Staples at the foot of the bunch. On the flipside, Banks reap rewards from the uptick in yields, closely followed by Travel & Leisure, Autos & Parts and Retail. Renault (+4%) drives the gains in Autos after unveiling a prototype version of the Renault Master van that will go on sale next year. Travel & Leisure is bolstered by the ongoing reopening trade with potential tailwinds heading into the Christmas period. Retail meanwhile is boosted by Hugo Boss (+1.8%) topping forecasts and upgrading its guidance. Top European News Autumn Heat May Curb European Gas Demand, Prices Next Week Bollore Looking for Buyers for Africa Logistics Ops: Le Monde U.K. Offers Foreign Butchers Visas After 6,000 Pigs Culled Europe’s Car-Sales Crash Points to Worse Year Than Poor 2020 In FX, the Greenback was already losing momentum after a relatively tame bounce on the back of Thursday’s upbeat US initial claims data, and the index failed to sustain its recovery to retest intraday highs or remain above 94.000 on a closing basis. However, the Buck did reclaim some significant and psychological levels against G10, EM currencies and Gold that was relishing the benign yield environment and the last DXY price was marginally better than the 21 DMA from an encouraging technical standpoint. Nevertheless, the Dollar remains weaker vs most majors and in need of further impetus that may come via retail sales, NY Fed manufacturing and/or preliminary Michigan Sentiment before the spotlight switches to today’s Fed speakers featuring arch hawk Bullard and the more neutral Williams. GBP/NZD/NOK - Sterling has refuelled and recharged regardless of the ongoing UK-EU rift over NI Protocol, though perhaps in part due to the fact that concessions from Brussels are believed to have been greeted with welcome surprise by some UK Ministers. Cable has reclaimed 1.3700+ status, breached the 50 DMA (at 1.3716 today) and yesterday’s best to set a marginal new w-t-d peak around 1.3739, while Eur/Gbp is edging closer to 0.8450 having clearly overcome resistance at 1.1800 in the reciprocal cross. Similarly, the Kiwi continues to derive impetus from the softer Greenback and Aud/Nzd flows as Nzd/Usd extends beyond 0.7050 and the Antipodean cross inches nearer 1.0500 from 1.0600+ highs. Elsewhere, the Norwegian Crown is aiming to add 9.7500 to its list of achievements relative to the Euro with a boost from Brent topping Usd 85/brl at one stage and a wider trade surplus. CAD - The Loonie is also profiting from oil as WTI crude rebounds through Usd 82 and pulling further away from 1.5 bn option expiry interest between 1.2415-00 in the process, with Usd/Cad towards the base of 1.2337-82 parameters. EUR/AUD/CHF/SEK - All narrowly mixed and rangy vs the Greenback, or Euro in the case of the latter, as Eur/Usd continues to straddle 1.1600, Aud/Usd churn on the 0.7400 handle, the Franc meander from 0.9219 to 0.9246 and Eur/Sek skirt 10.0000 having dipped below the round number briefly on Thursday. In commodities, WTI and Brent front month futures remain on a firmer footing, aided up the overall constructive risk appetite coupled with some bullish technical developments, as WTI Nov surpassed USD 82/bbl (vs 81.39/bbl low) and Brent Dec briefly topped USD 85/bbl (vs 84.16/bbl low). There has been little in terms of fresh fundamental catalysts to drive the price action, although Russia's Gazprom Neft CEO hit the wires earlier and suggested that reserve production capacity could meet the increase in oil demand, whilst a seasonal decline in oil consumption is possible and the oil market will stabilise in the nearest future. On the Iranian JCPOA front, Iran said it is finalising steps to completing its negotiating team but they are absolutely decided to go back to Vienna discussions and conclude the negotiations, WSJ's Norman. The crude complex seems to have (for now) overlooked reports that the White House is engaged in diplomacy" with OPEC+ members regarding output. UK nat gas prices were higher as European players entered the fray, but prices have since waned off best levels after Russian Deputy PM Novak suggested that gas production in Russia is running at maximum capacity. Elsewhere, spot gold has been trundling amid yield-play despite lower despite the Buck being on the softer side of today’s range. Spot gold failed to hold onto USD 1,800/oz status yesterday and has subsequently retreated below its 200 DMA (1,794/oz) and makes its way towards the 50 DMA (1,776/oz). LME copper prices are on a firmer footing with prices back above USD 10,000/t – supported by technicals and the overall risk tone, although participants are cognizant of potential Chinese state reserves releases. Conversely, Dalian iron ore futures fell for a third straight session, with Rio Tinto also cutting its 2021 iron ore shipment forecasts due to dampened Chinese demand. US Event Calendar 8:30am: Sept. Retail Sales Advance MoM, est. -0.2%, prior 0.7% 8:30am: Sept. Retail Sales Ex Auto MoM, est. 0.5%, prior 1.8% 8:30am: Sept. Retail Sales Control Group, est. 0.5%, prior 2.5% 8:30am: Sept. Retail Sales Ex Auto and Gas, est. 0.3%, prior 2.0% 8:30am: Oct. Empire Manufacturing, est. 25.0, prior 34.3 8:30am: Sept. Import Price Index MoM, est. 0.6%, prior -0.3%; YoY, est. 9.4%, prior 9.0% 8:30am: Sept. Export Price Index MoM, est. 0.7%, prior 0.4%; YoY, prior 16.8% 10am: Aug. Business Inventories, est. 0.6%, prior 0.5% 10am: Oct. U. of Mich. 1 Yr Inflation, est. 4.7%, prior 4.6%; 5-10 Yr Inflation, prior 3.0% 10am: Oct. U. of Mich. Sentiment, est. 73.1, prior 72.8 10am: Oct. U. of Mich. Current Conditions, est. 81.2, prior 80.1 10am: Oct. U. of Mich. Expectations, est. 69.1, prior 68.1 DB's Jim Ried concludes the overnight wrap A few people asked me what I thought of James Bond. I can’t say without spoilers so if anyone wants my two sentence review I will cut and paste it to all who care and reply! At my age I was just impressed I sat for over three hours (including trailers) without needing a comfort break. By the time you email I will have also listened to the new Adele single which dropped at midnight so happy to include that review as well for free. While we’re on the subject of music, risk assets feel a bit like the most famous Chumbawamba song at the moment. They get knocked down and they get up again. Come to think about it that’s like James Bond too. Yesterday was a strong day with the S&P 500 (+1.71%) moving back to within 2.2% of its all-time closing high from last month. If they can survive all that has been thrown at them of late then one wonders where they’d have been without any of it. The strong session came about thanks to decent corporate earnings releases, a mini-collapse in real yields, positive data on US jobless claims, as well as a further fall in global Covid-19 cases that leaves them on track for an 8th consecutive weekly decline. However, inflation remained very much on investors’ radars, with a range of key commodities taking another leg higher, even as US data on producer prices was weaker than expected. Starting with the good news, the equity strength was across the board with the S&P 500 experiencing its best daily performance since March, whilst Europe’s STOXX 600 (+1.20%) also put in solid gains. It was an incredibly broad-based move higher, with every sector group in both indices rising on the day, with a remarkable 479 gainers in the S&P 500, which is the second-highest number we’ve seen over the last 18 months. Every one of the 24 S&P 500 industry groups rose, led by cyclicals such as semiconductors (+3.12%), transportation (+2.51%) and materials (+2.43%). A positive start to the Q3 earnings season buoyed sentiment, as a number of US banks (+1.45%) reported yesterday, all of whom beat analyst estimates. In fact, of the nine S&P 500 firms to report yesterday, eight outperformed analyst expectations. Weighing in on recent macro themes, Bank of America Chief, Brian Moynihan, noted that the current bout of inflation is “clearly not temporary”, but also that he expects consumer demand to remain robust and that supply chains will have to adjust. I’m sure we’ll hear more from executives as earnings season continues today. Alongside those earnings releases, yesterday saw much better than expected data on the US labour market, which makes a change from last week’s underwhelming jobs report that showed the slowest growth in nonfarm payrolls so far this year. In terms of the details, the weekly initial jobless claims for the week through October 9, which is one of the most timely indicators we get, fell to a post-pandemic low of 293k (vs. 320k expected). That also saw the 4-week moving average hit a post-pandemic low of 334.25k, just as the continuing claims number for the week through October 2 hit a post-pandemic low of 2.593m (vs. 2.670m expected). We should get some more data on the state of the US recovery today, including September retail sales, alongside the University of Michigan’s consumer sentiment index for October. That optimism has fed through into Asian markets overnight, with the Nikkei (+1.43%), the Hang Seng (+0.86%), the Shanghai Comp (+0.29%) and the KOSPI (+0.93%) all moving higher. That came as Bloomberg reported that China would loosen restrictions on home loans amidst the concerns about Evergrande. And we also got formal confirmation that President Biden had signed the debt-limit increase that the House had passed on Tuesday, which extends the ceiling until around December 3. Equity futures are pointing to further advances in the US and Europe later on, with those on the S&P 500 (+0.30%) and the STOXX 50 (+0.35%) both moving higher. Even with the brighter news, inflation concerns are still very much with us however, and yesterday in fact saw Bloomberg’s Commodity Spot Index (+1.16%) advance to yet another record high, exceeding the previous peak from early last week. That was partly down to the continued rise in oil prices, with WTI (+1.08%) closing at $81.31/bbl, its highest level since 2014, just as Brent Crude (+0.99%) hit a post-2018 high of $84.00/bbl. Both have posted further gains this morning of +0.58% and +0.61% respectively. Those moves went alongside further rises in natural gas prices, which rose for a 3rd consecutive session, albeit they’re still beneath their peak from earlier in the month, as futures in Europe (+9.14%), the US (+1.74%) and the UK (+9.26%) all moved higher. And that rise in Chinese coal futures we’ve been mentioning also continued, with their rise today currently standing at +13.86%, which brings their gains over the week as a whole to +39.02% so far. As well as energy, industrial metals were another segment where the recent rally showed no sign of abating yesterday. On the London metal exchange, a number of multi-year milestones were achieved, with aluminum prices (+1.60%) up to their highest levels since 2008, just as zinc prices (+3.73%) closed at their highest level since 2018. Separately, copper prices (+2.56%) hit a 4-month high, and other winners yesterday included iron ore futures in Singapore (+1.16%), as well as nickel (+1.99%) and lead (+2.43%) prices in London. With all this momentum behind commodities, inflation expectations posted further advances yesterday. Indeed, the 10yr US Breakeven closed +1.0bps higher at 2.536%, which is just 3bps shy of its closing peak back in May that marked its highest level since 2013. And those moves came in spite of US producer price data that came in weaker than expected, with the monthly increase in September at +0.5% (vs. +0.6% expected). That was the smallest rise so far this year, though that still sent the year-on-year number up to +8.6% (vs. +8.7% expected). That rise in inflation expectations was echoed in Europe too, with the 10yr UK breakeven (+5.6bps) closing at its highest level since 2008, whilst its German counterpart also posted a modest +0.7bps rise. In spite of the rise in inflation expectations, sovereign bonds posted gains across the board as the moves were outweighed by the impact of lower real rates. By the end of yesterday’s session, yields on 10yr Treasuries were down -2.6bps to 1.527%, which came as the 10yr real yield moved back beneath -1% for the first time in almost a month. Likewise in Europe, yields pushed lower throughout the session, with those on 10yr bunds (-6.3bps), OATs (-6.2bps) and BTPs (-7.1bps) all moving aggressively lower. To the day ahead now, and US data releases include September retail sales, the University of Michigan’s preliminary consumer sentiment index for October, and the Empire State manufacturing survey for October. Central bank speakers include the Fed’s Bullard and Williams, and earnings releases include Charles Schwab and Goldman Sachs. Tyler Durden Fri, 10/15/2021 - 07:50.....»»

Category: personnelSource: nytOct 15th, 2021

S&P, NASDAQ Snap 3-Day Skids Amid CPI and Earnings Reports

S&P, NASDAQ Snap 3-Day Skids Amid CPI and Earnings Reports SPECIAL ALERT: Remember, the October episode of the Zacks Ultimate Strategy Session is now available for viewing! Don’t miss your chance to hear: ▪ Sheraz Mian and Jeremy Mullin Agree to Disagree on whether the market top is in or has further to go   ▪ Kevin answers questions covering the recent pullback, and where we go from here in Zacks Mailbag ▪ Sheraz and Jeremy choose one portfolio to give feedback for improvement ▪ Market conditions from both fundamental and technical views ▪ The full list of top-performing stocks over the past 30 days ▪ New stocks added to the Zacks Ultimate portfolio ▪ And much more Simply log on to Zacks.com and view the October episode here. And please let us know what you think of these monthly episodes. Email all feedback to mailbag@zacks.com. The market had a lot of stuff to process on Wednesday from hot-button issues like inflation and the tapering timeline, but the S&P and NASDAQ still managed to snap their three-day losing streaks. Meanwhile, the country’s largest bank provided a solid start to earnings season.   The CPI report was the big news of the day, especially as global supply chain issues exacerbate the inflation problem and threaten to limit the economic recovery. Consumer prices jumped 0.4% in September and surged 5.4% year-over-year. These results are abnormally high, but they’re only slightly worse than expected by about 0.1% for each time frame. So we were spared the super spicy number that could have wreaked havoc in an already skittish market. In fact, one of our editors called this a “goldilocks” result.   Meanwhile, the Fed minutes from the September meeting were released, which showed the Committee getting more comfortable with tapering. In fact, it could begin as soon as mid-November and end in mid-2022. As with the CPI number, there was really no eye-bulging surprises here. Investors already knew that inflation is on the rise (but hopefully transitory) and that a taper is right around the corner. As a result, the market fought back from some early sluggishness. The S&P rose 0.30% to 4363.80, while the NASDAQ was the big winner with an advance of 0.73% (or about 105 points) to 14,571.63. Both of these indices ended three-day skids that began on Friday with that disappointing jobs report. And then there’s the Dow. The index recovered from an approximately 250-point deficit early Wednesday, but doesn’t get to join its counterparts on the plus side. It ended the day at 34,377.81, which means it was down by less than a point! Technically, it’s now on a four-day losing streak. The CPI and Fed minutes overshadowed the start of earnings season on Wednesday, but we’re just getting started with these reports. And it was a pretty good start with JPMorgan (JPM) announcing a solid quarter that included a positive earnings surprise of nearly 25%. As you might expect though, shares of the banking giant were down 2.6% in the session. Our Director of Research Sheraz Mian made JPM a focus in his latest Earnings Trends piece entitled “Solid Start to Q3 Earnings Season”. Tomorrow’s major reports among the financial giants include Bank of America (BAC), Wells Fargo (WFC), Morgan Stanley (MS) and Citigroup (C) all before the market open. Other noteworthy reports include Taiwan Semiconductor (TSM) and UnitedHealth (UNH), among several others. In addition to the earnings reports, Thursday will also include the weekly jobless claims number and the PPI report. So get ready for another day of inflation and earnings. Today's Portfolio Highlights: Home Run Investor: Energy prices are soaring these days, so Brian thought this was a good time to add exposure to the oil & gas E&P space. On Wednesday, the portfolio picked up Northern Oil and Gas (NOG), a company based in Minnesota that should capitalize on plunging winter temperatures in the Midwest. NOG topped the Zacks Consensus Estimate in three of the past four quarters... and still managed an average surprise of 19% in that time. In other words, the beats are big and the earnings estimates are rising, which explains its status as a Zacks Rank #2 (Buy). The complete commentary has a lot more on the addition of NOG, as well as the subtractions of Stride (LRN) and Euroseas (ESEA).     Surprise Trader: Sometimes the lower expectations of a Zacks Rank #3 (Hold) can “catch the market off guard with a good earnings number”, especially if it has a positive Earnings ESP. That’s what Dave was thinking when he added Heartland Express (HTLD) on Wednesday. The company is part of the Transportation – Truck space, which is in the Top 10% of the Zacks Industry Rank. HTLD doesn’t announce the date of its earnings report, but it usually comes around the second week of October. Therefore, the editor is expecting it very soon. The stock has come down considerably off the 52-week highs and is now near support in this $16 area. Dave added HTLD today with a 12.5% allocation, while also selling Costco (COST) after failing to get a post earnings drift higher. The complete commentary has more on all of today’s moves.   Stocks Under $10: Given the surge in oil of late, Brian wouldn’t be surprised if we see $100 per barrel or more soon. If that were to happen, it would be bad news for the portfolio’s transportation names. Therefore, the editor eliminated the service’s exposure to the space on Wednesday by selling Diana Shipping (DSX), Corporacion America Airports S.A. (CAAP) and Pangaea Logistics (PANL). DSX was the big winner with a 14% return in about four months, while CAAP brought a little over 5% in just under six months. Value Investor: It was another good session for InMode (INMD), as this radio-frequency medical technologies company gained 13.8% on Wednesday after providing a third-quarter outlook that was ahead of Wall Street expectations. INMD has actually been on a tear ever since Tracey added the name back in April 2020. The stock is currently the best performer in the portfolio by a wide margin with a surge of more than 600% since inception! INMD is also one of the biggest winners over the past 30 days by rising 39.4%. All the Best, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksOct 14th, 2021

Futures Surge As Banks Report Stellar Earnings; PPI On Deck

Futures Surge As Banks Report Stellar Earnings; PPI On Deck US equity futures, already sharply higher overnight, jumped this morning as a risk-on mood inspired by stellar bank earnings, overshadowed concern that supply snarls. a China property crunch, a tapering Fed and stagflation will weigh on the global recovery. Nasdaq futures jumped 1%, just ahead of the S&P 500 which was up 0.9%. 10-year Treasury yields ticked lower to about 1.5%, and with the dollar lower as well, oil jumped. Bitcoin and the broader crypto space continued to rise. Shares in Morgan Stanley, Citi and Bank of America jumped as their deal-making units rode a record wave of M&A. On the other end, Boeing shares fell more than 1% after a Dow Jones report said the plane maker is dealing with a new defect on its 787 Dreamliner. Here are some of the biggest other U.S. movers today: Occidental (OXY US) rises 1.6% in U.S. premarket trading after it agreed to sell its interests in two Ghana offshore fields for $750m to Kosmos Energy and Ghana National Petroleum Plug Power (PLUG US) rises 3.3% premarket, extending gains from Wednesday, when it announced partnership with Airbus SE and Phillips 66 to find ways to harness hydrogen to power airplanes, vehicles and industry Esports Entertainment (GMBL US) shares rise 16% in U.S. premarket trading after the online gambling company reported its FY21 results and reaffirmed its FY22 guidance Perrigo  (PRGO US) gains 2.8% in premarket trading after Raymond James upgrades to outperform following acquisition of HRA Pharma and recent settlement of Irish tax dispute AT&T (T US) ticks higher in premarket trading after KeyBanc writes upgrades to sector weight from underweight, saying it seems harder to justify further downside from here Avis Budget (CAR US) may be active after getting its only negative rating among analysts as Morgan Stanley cuts to underweight with risk/reward seen pointing toward downside OrthoPediatrics (KIDS US) dipped 2% Wednesday postmarket after it said 3Q revenue was hurt by the surge in cases of Covid-19 delta variant and RSV within children’s hospitals combined with staff shortage Investors continue to evaluate the resilience of economic reopening to supply chain disruptions, a jump in energy prices and the prospect of reduced central bank support. In the earnings season so far, executives at S&P 500 companies mentioned the phrase “supply chain” about 3,000 times on investor calls as of Tuesday -- far higher than last year’s then-record figure. “Our constructive outlook for growth means that our asset allocation remains broadly pro-risk and we continue to be modestly overweight global equities,” according to Michael Grady, head of investment strategy and chief economist at Aviva Investors. “However, we have scaled back that position marginally because of growing pains which could impact sales and margins.” Europe's Stoxx 600 index reached its highest level in almost three weeks, boosted by gains in tech shares and miners. The Euro Stoxx 50 rose over 1% to best levels for the week. FTSE 100 rises 0.75%, underperforming at the margin. Miners and tech names are the strongest sectors with only healthcare stocks in small negative territory. Here are some of the biggest European movers today: THG shares advance as much as 10%, snapping a four-day losing streak, after a non-executive director bought stock while analysts at Goldman Sachs and Liberum defended their buy recommendations. Steico gains as much as 9.9%, the most since Jan., after the insulation manufacturer reported record quarterly revenue, which Warburg says “leaves no doubt” about underlying market momentum. Banco BPM climbs as much as 3.6% and is the day’s best performer on the FTSE MIB benchmark index; bank initiated at buy at Jefferies as broker says opportunity to internalize insurance business offers 9%-16% possible upside to 2023 consensus EPS and is not priced in by the market. Hays rises as much as 4.3% after the recruiter posted a jump in comparable net fees for the first quarter. Publicis jumps as much as 3.7%, the stock’s best day since July, with JPMorgan saying the advertising company’s results show a “strong” third quarter, though there are risks ahead. Kesko shares rise as much as 6.1%. The timing of this year’s third guidance upgrade was a surprise, Inderes says. Ubisoft shares fall as much as 5.5% after JPMorgan Cazenove (overweight) opened a negative catalyst watch, citing short-term downside risk to earnings ahead of results. Earlier in the session, Asian stocks advanced, boosted by a rebound in technology shares as traders focused on the ongoing earnings season and assessed economic-reopening prospects in the region. The MSCI Asia Pacific Index gained as much as 0.7%, as a sub-gauge of tech stocks rose, halting a three-day slide. Tokyo Electron contributed the most to the measure’s climb, while Taiwan Semiconductor Manufacturing Co. closed up 0.4% ahead of its earnings release. India’s tech stocks rose following better-than-expected earnings for three leading firms in the sector. Philippine stocks were among Asia’s best performers as Manila began easing virus restrictions, which will allow more businesses in the capital to reopen this weekend. Indonesia’s stock benchmark rallied for a third-straight day, as the government prepared to reopen Bali to tourists. READ: Commodities Boom, Tourism Hopes Fuel Southeast Asia Stock Rally Ilya Spivak, head of Greater Asia at DailyFX, said FOMC minutes released overnight provided Asian markets with little direction, which may offer some opportunity for recouping recent losses. The report showed officials broadly agreed last month they should start reducing pandemic-era stimulus in mid-November or mid-December. U.S. 10-year Treasury yields stayed below 1.6%, providing support for tech stocks.  “Markets seemed to conclude the near-term narrative is on pause until further evidence,” Spivak said. Shares in mainland China fell as the country reported factory-gate prices grew at the fastest pace in almost 26 years in September. Singapore’s stock benchmark pared initial losses as the country’s central bank unexpectedly tightened policy. Hong Kong’s equity market was closed for a holiday In rates, Treasuries were steady to a tad higher, underperforming Bunds which advanced, led by the long end.  Fixed income is mixed: gilts bull steepen with short dates richening ~2.5bps, offering only a muted reaction to dovish commentary from BOE’s Tenreyro. Bunds rise with 10y futures breaching 169. USTs are relatively quiet with 5s30s unable to crack 100bps to the upside. Peripheral spreads widen slightly. In FX, the Turkish lira was again the overnight standout as it weakened to a record low after President Recep Tayyip Erdogan fired three central bankers. The Bloomberg Dollar Spot Index fell and the greenback slipped against all of its Group-of-10 peers apart from the yen, with risk-sensitive and resource-based currencies leading gains; the euro rose to trade above $1.16 for the first time in a week.  The pound rose to more than a two-week high amid dollar weakness as traders wait for a raft of Bank of England policy makers to speak. Sweden’s krona temporarily came off an almost eight-month high against the euro after inflation fell short of estimates. The euro dropped to the lowest since November against the Swiss franc as banks targeted large option barriers and leveraged sell-stops under 1.0700, traders said; Currency traders are responding to stagflation risks by turning to the Swiss franc. The Aussie advanced to a five-week high versus the greenback even as a monthly jobs report showed employment fell in September; the jobless rate rose less than economists forecast. The kiwi was a among the top performers; RBNZ Deputy Governor Geoff Bascand said inflation pressures were becoming more persistent China’s yuan declined from a four-month high after the central bank signaled discomfort with recent gains by setting a weaker-than-expected reference rate. In commodities, crude futures extend Asia’s gains with WTI up ~$1 before stalling near $81.50. Brent regains a $84-handle. Spot gold drifts through Wednesday’s highs, adding $4 to print just shy of the $1,800/oz mark. Base metals are well bid with LME copper and aluminum gaining as much as 3%.  Looking at the day ahead, we’ve got central bank speakers including the Fed’s Bullard, Bostic, Barkin, Daly and Harker, the ECB’s Elderson and Knot, along with the BoE’s Deputy Governor Cunliffe, Tenreyro and Mann. Data releases from the US include the September PPI reading along with the weekly initial jobless claims. Lastly, earnings releases will include UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Citigroup, US Bancorp and Walgreens Boots Alliance. Market Snapshot S&P 500 futures up 0.6% to 4,382.50 STOXX Europe 600 up 0.9% to 464.38 MXAP up 0.7% to 196.12 MXAPJ up 0.6% to 642.66 Nikkei up 1.5% to 28,550.93 Topix up 0.7% to 1,986.97 Hang Seng Index down 1.4% to 24,962.59 Shanghai Composite little changed at 3,558.28 Sensex up 0.7% to 61,190.63 Australia S&P/ASX 200 up 0.5% to 7,311.73 Kospi up 1.5% to 2,988.64 Brent Futures up 1.0% to $83.98/bbl Gold spot up 0.2% to $1,796.13 U.S. Dollar Index down 0.25% to 93.84 German 10Y yield fell 1.5 bps to -0.143% Euro little changed at $1.1615 Brent Futures up 1.0% to $84.13/bbl Top Overnight News from Bloomberg A flattening Treasury yield curve signals increasing concern Federal Reserve efforts to keep inflation in check will derail the recovery in the world’s largest economy China’s factory-gate prices grew at the fastest pace in almost 26 years in September, potentially adding to global inflation pressure if local businesses start passing on higher costs to consumers. Turkish President Recep Tayyip Erdogan fired monetary policy makers wary of cutting interest rates further, driving the lira to record lows against the dollar with his midnight decree Singapore’s central bank unexpectedly tightened its monetary policy settings, strengthening the local dollar, as the city-state joins policymakers globally concerned about risks of persistent inflation Shortages of natural gas in Europe and Asia are boosting demand for oil, deepening what was already a sizable supply deficit in crude markets, the International Energy Agency said A tropical storm that’s lashing southern China mixed with Covid-related supply chain snarls is causing a ship backlog from Shenzhen to Singapore, intensifying fears retail shelves may look rather empty come Christmas A more detailed look at global markets courtesy of Newsquawk A constructive mood was seen across Asia-Pac stocks with the region building on the mild positive bias stateside where the Nasdaq outperformed as tech and growth stocks benefitted from the curve flattening, with global risk appetite unfazed by the firmer US CPI data and FOMC Minutes that suggested the start of tapering in either mid-November of mid-December. The ASX 200 (+0.5%) traded higher as tech stocks found inspiration from the outperformance of US counterparts and with the mining sector buoyed by gains in underlying commodity prices. The Nikkei 225 (+1.5%) was the biggest gainer amid currency-related tailwinds and with the latest securities flow data showing a substantial shift by foreign investors to net purchases of Japanese stocks during the prior week. The KOSPI (+1.5%) conformed to the brightening picture amid signs of a slowdown in weekly infections, while the Singapore’s Straits Times Index (+0.3%) lagged for most of the session following weaker than expected Q3 GDP data, and after the MAS surprisingly tightened its FX-based policy by slightly raising the slope of the SGD nominal effective exchange rate (NEER). The Shanghai Comp. (U/C) was initially kept afloat but with gains capped after slightly softer than expected loans and financing data from China and with participants digesting mixed inflation numbers in which CPI printed below estimates but PPI topped forecasts for a record increase in factory gate prices, while there was also an absence of Stock Connect flows with participants in Hong Kong away for holiday. Finally, 10yr JGBs were higher after the recent curve flattening stateside and rebound in T-notes with the US longer-end also helped by a solid 30yr auction, although gains for JGBs were capped amid the outperformance in Tokyo stocks and mostly weaker metrics at the 5yr JGB auction. Top Asian News Chinese Developer Shares Fall on Debt Crisis: Evergrande Update Japan’s Yamagiwa Says Abenomics Fell Short at Spreading Wealth China Seen Rolling Over Policy Loans to Keep Liquidity Abundant Malaysia’s 2020 Fertility Rate Falls to Lowest in Four Decades Bourses in Europe have modestly extended on the upside seen at the European cash open (Euro Stoxx 50 +1.1%; Stoxx 600 +0.9%) in a continuation of the firm sentiment experienced overnight. US equity futures have also conformed to the broader upbeat tone, with gains seen across the ES (+0.7%), NQ (+0.8%), RTY (+0.8%) and YM (+0.7%). The upside comes despite a lack of overly pertinent newsflow, with participants looking ahead to a plethora of central bank speakers. The major indices in Europe also see a broad-based performance, but the periphery narrowly outperforms, whilst the SMI (Unch) lags amid the sectorial underperformance seen in Healthcare. Overall, the sectors portray somewhat of a cyclical tilt. The Basic Resources sector is the clear winner and is closely followed by Tech and Financial Services. Individual moves are scarce as price action is largely dictated by the macro picture, but the tech sector is led higher by gains in chip names after the world's largest contract chipmaker TSMC (+3.1% pre-market) reported strong earnings and upgraded its revenue guidance. Top European News German 2021 Economic Growth Forecast Slashed on Supply Crunch U.K. Gas Shipper Stops Supplies in Another Blow to Power Firms Christmas Toy Shortages Loom as Cargo Clogs a Major U.K. Port Putin Is Back to Building Financial Fortress as Reserves Grow In FX, the Dollar and index by default have retreated further from Tuesday’s 2021 peak for the latter as US Treasury yields continue to soften and the curve realign in wake of yesterday’s broadly in line CPI data and FOMC minutes that set the schedule for tapering, but maintained a clear differential between scaling down the pace of asset purchases and the timing of rate normalisation. Hence, the Buck is losing bullish momentum with the DXY now eying bids and downside technical support under 94.000 having slipped beneath an early October low (93.804 from the 5th of the month vs 93.675 a day earlier) and the 21 DMA that comes in at 93.770 today between 94.090-93.754 parameters before the next IJC update, PPI data and a heavy slate of Fed speakers. NZD/AUD - No real surprise that the Kiwi has been given a new lease of life given that the RBNZ has already taken its first tightening step and put physical distance between the OCR and the US FFR, not to mention that the move sparked a major ‘sell fact’ after ‘buy rumour’ reaction. However, Nzd/Usd is back on the 0.7000 handle with additional impetus via favourable tailwinds down under as the Aud/Nzd cross is now nearer 1.0550 than 1.0600 even though the Aussie is also taking advantage of the Greenback’s fall from grace to reclaim 0.7400+ status. Note, Aud/Usd may be lagging somewhat on the back of a somewhat labour report overnight as the employment tally fell slightly short of expectations and participation dipped, but the jobless rate fell and full time jobs rose. Moreover, RBA Deputy Governor Debelle repeated that circumstances are different for Australia compared to countries where policy is tightening, adding that employment is positive overall, but there is not much improvement on the wage front. CAD/GBP/CHF - The next best majors in terms of reclaiming losses vs their US counterpart, with the Loonie also encouraged by a firm bounce in oil prices and other commodities in keeping with a general recovery in risk appetite. Usd/Cad is under 1.2400, while Cable is now over 1.3700 having clearly breached Fib resistance around 1.3663 and the Franc is probing 0.9200 for a big figure-plus turnaround from recent lows irrespective of mixed Swiss import and producer prices. EUR/JPY - Relative laggards, but the Euro has finally hurdled chart obstacles standing in the way of 1.1600 and gradually gathering impetus to pull away from decent option expiry interest at the round number and just above (1.5 bn and 1 bn 1.1610-20), and the Yen regrouping around the 113.50 axis regardless of dovish BoJ rhetoric. In short, board member Noguchi conceded that the Bank may have little choice but to extend pandemic relief support unless it becomes clear that the economy has returned to a pre-pandemic state, adding that more easing may be necessary if the jobs market does not improve from pent-up demand, though he doesn't see and immediate need to top up stimulus or big stagflation risk. In commodities, WTI and Brent front month futures are continuing the grind higher seen since the European close yesterday as the risk tone remains supportive and in the aftermath of an overall bullish IEA oil market report. The IEA upgraded its 2021 and 2022 oil demand forecasts by 170k and 210k BPD respectively, which contrasts the EIA STEO and the OPEC MOMR – with the former upping its 2021 but cutting 2022 forecast, whilst the OPEC MOMR saw the 2021 demand forecast cut and 2022 was maintained. The IEA report however noted that the ongoing energy crisis could boost oil demand by 500k BPD, and oil demand could exceed pre-pandemic levels in 2022. On this, China has asked Russia to double electricity supply between November-December. The morning saw commentary from various energy ministers, but perhaps the most telling from the Russian Deputy PM Novak who suggested Russia will produce 9.9mln BPD of oil in October (in-line with the quota), but that Russia has no problem in increasing oil output which can go to 11.3mln BPD (Russia’s capacity) and even more than that, but output will depend on market situation. Long story short, Russia can ramp up output but is currently caged by the OPEC+ pact. WTI Nov extended on gain about USD 81/bbl to a current high of USD 81.41/bbl (vs 80.41/bbl low) while its Brent counter topped USD 84.00/bbl to a USD 84.24/bbl high (vs 83.18/bbl low). As a reminder, the weekly DoEs will be released at 16:00BST/11:00EDT on account of the Columbus Day holiday. Gas prices have also moved higher in intraday, with the UK Nat Gas future +5.5% at the time of writing. Returning to the Russian Deputy PM Novak who noted that Nord Stream 2 will be ready for work in the next few days, still expects certification to occur and commercial supplies of gas via Nord Stream 2 could start following certification. Elsewhere, spot gold and silver have been drifting higher as the Buck wanes, with spot gold topping its 200 DMA (1,7995/oz) and in striking distance of its 100 DMA (1,799/oz) ahead of the USD 1,800/oz mark. Over to base metals, LME copper is again on a firmer footing, owing to the overall constructive tone across the market. Dalian iron ore meanwhile fell for a second straight day in a continuation of the downside seen as Beijing imposed tougher steel output controls for winter. World Steel Association also cut its global steel demand forecast to +4.5% in 2021 (prev. forecast +5.8%); +2.2% in 2022 (prev. forecast 2.7%). US Event Calendar 8:30am: Sept. PPI Final Demand MoM, est. 0.6%, prior 0.7%; YoY, est. 8.6%, prior 8.3% 8:30am: Sept. PPI Ex Food and Energy MoM, est. 0.5%, prior 0.6%; YoY, est. 7.1%, prior 6.7% 8:30am: Sept. PPI Ex Food, Energy, Trade MoM, est. 0.4%, prior 0.3%; YoY, est. 6.5%, prior 6.3% 8:30am: Oct. Initial Jobless Claims, est. 320,000, prior 326,000; Continuing Claims, est. 2.67m, prior 2.71m 9:45am: Oct. Langer Consumer Comfort, prior 53.4 Central Banks 8:35am: Fed’s Bullard Takes Part in Virtual Discussion 9:45am: Fed’s Bostic Takes Part in Panel on Inclusive Growth 12pm: New York Fed’s Logan Gives Speech on Policy Implementation 1pm: Fed’s Barkin Gives Speech 1pm: Fed’s Daly Speaks at Conference on Small Business Credit 6pm: Fed’s Harker Discusses the Economic Outlook DB's Jim Reid concludes the overnight wrap Inflation dominated the conversation yet again for markets yesterday, after another upside surprise from the US CPI data led to the increasing realisation that we’ll still be talking about the topic for some time yet. Equities were pretty subdued as they looked forward to the upcoming earnings season, but investor jitters were evident as the classic inflation hedge of gold (+1.87%) posted its strongest daily performance since March, whilst the US dollar (-0.46%) ended the session as the worst performer among the G10 currencies. Running through the details of that release, headline US consumer prices were up by +0.4% on a monthly basis in September (vs. +0.3% expected), marking the 5th time in the last 7 months that the figure has come in above the median estimate on Bloomberg, though core prices were in line with consensus at +0.2% month-over-month. There were a number of drivers behind the faster pace, but food inflation (+0.93%) saw its biggest monthly increase since April 2020. Whilst some pandemic-sensitive sectors registered soft readings, housing-related prices were much firmer. Rent of primary residence grew +0.45%, its fastest pace since May 2001 and owners’ equivalent rent increased +0.43%, its strongest since June 2006. These housing gauges are something that Fed officials have signposted as having the potential to provide more durable upward pressure on inflation. The CPI release only added to speculation that the Fed would be forced to hike rates earlier than previously anticipated, and investors are now pricing in almost 4 hikes by the end of 2023, which is over a full hike more than they were pricing in just a month earlier. In response, the Treasury yield curve continued the previous day’s flattening, with the prospect of tighter monetary policy seeing the 2yr yield up +2.0bps to a post-pandemic high of 0.358%, whilst the 10yr decreased -4.0bps to 1.537%. That move lower in the 10yr yield was entirely down to lower real rates, however, which were down -7.4bps, suggesting investors were increasingly concerned about long-term growth prospects, whereas the 10yr inflation breakeven was up +3.3bps to 2.525%, its highest level since May. Meanwhile in Europe, 10yr sovereign bond yields took a turn lower alongside Treasuries, with those on bunds (-4.2bps), OATs (-4.0bps) and BTPs (-2.3bps) all falling. Recent inflation dynamics and issues on the supply-side are something that politicians have become increasingly attuned to, and President Biden gave remarks last night where he outlined efforts to address the supply-chain bottlenecks. This followed headlines earlier in the session that major ports in southern California would move to a 24/7 schedule to unclog delivery backlogs, and Mr. Biden also used the opportunity to push for the passage of the infrastructure plan. That comes as it’s also been reported by Reuters that the White House has been speaking with US oil and gas producers to see how prices can be brought lower. We should hear from Mr. Biden again today, who’s due to give an update on the Covid-19 response. On the topic of institutions that care about inflation, the September FOMC minutes suggested staff still remained optimistic that inflationary pressures would prove transitory, although Committee members themselves were predictably more split on the matter. Several participants pointed out that pandemic-sensitive prices were driving most of the gains, while some expressed concerns that high rates of inflation would feed into longer-term inflation expectations. Otherwise, the minutes all but confirmed DB’s US economists’ call for a November taper announcement, with monthly reductions in the pace of asset purchases of $10 billion for Treasuries and $5 billion for MBS. Markets took the news in their stride immediately following the release, reflecting how the build-up to this move has been gradually telegraphed through the year. Turning to equities, the S&P 500 managed to end its 3-day losing streak, gaining +0.30% by the close. Megacap technology stocks led the way, with the FANG+ index up +1.13% as the NASDAQ added +0.73%. On the other hand, cyclicals such as financials (-0.64%) lagged behind the broader index following flatter yield curve, and JPMorgan Chase (-2.64%) sold off as the company’s Q3 earnings release showed muted loan growth. Separately, Delta Air Lines (-5.76%) also sold off along with the broader S&P 500 airlines index (-3.51%), as they warned that rising fuel costs would threaten earnings over the current quarter. European indices posted a more solid performance than the US, with the STOXX 600 up +0.71%, though the sectoral balance was similar with tech stocks outperforming whilst the STOXX Banks index (-2.05%) fell back from its 2-year high the previous session. Overnight in Asia equities have put in a mixed performance, with the KOSPI (+1.17%) and the Nikkei (+1.01%) moving higher whilst the Shanghai Composite (-0.25%) and the CSI (-0.62%) have lost ground. Those moves follow the release of Chinese inflation data for September, which showed producer price inflation hit its highest in nearly 26 years, at +10.7% (vs. +10.5% expected), driven mostly by higher coal prices and energy-sensitive categories. On the other hand, the CPI measure for September came in slightly below consensus at +0.7% (vs. +0.8% expected), indicating that higher factory gate prices have not yet translated into consumer prices. Meanwhile, equity markets in the US are pointing to a positive start later on with S&P 500 futures up +0.32%. Of course, one of the drivers behind the renewal of inflation jitters has been the recent surge in commodity prices across the board, and we’ve seen further gains yesterday and this morning that will only add to the concerns about inflation readings yet to come. Oil prices have advanced yet again, with Brent Crude up +0.69% this morning to be on track to close at a 3-year high as it stands. That comes in spite of OPEC’s monthly oil market report revising down their forecast for world oil demand this year to 5.8mb/d, having been at 5.96mb/d last month. Elsewhere, European natural gas prices were up +9.24% as they continued to pare back some of the declines from last week, and a further two energy suppliers in the UK collapsed, Pure Planet and Colorado Energy, who supply quarter of a million customers between them. Otherwise, copper (+4.4x%) hit a 2-month high yesterday, and it up a further +1.01% this morning, Turning to Brexit, yesterday saw the European Commission put forward a set of adjustments to the Northern Ireland Protocol, which is a part of the Brexit deal that’s caused a significant dispute between the UK and the EU. The proposals from Commission Vice President Šefčovič would see an 80% reduction in checks on animal and plant-based products, as well as a 50% reduction in paperwork by reducing the documentation needed for goods moving between Great Britain and Northern Ireland. It follows a speech by the UK’s David Frost on Tuesday, in which he said that Article 16 of the Protocol, which allows either side to take unilateral safeguard measures, could be used “if necessary”. Mr. Frost is due to meet with Šefčovič in Brussels tomorrow. Running through yesterday’s other data, UK GDP grew by +0.4% in August (vs. +0.5% expected), and the July number was revised down to show a -0.1% contraction (vs. +0.1% growth previously). The release means that GDP in August was still -0.8% beneath its pre-pandemic level back in February 2020. To the day ahead now, and on the calendar we’ve got central bank speakers including the Fed’s Bullard, Bostic, Barkin, Daly and Harker, the ECB’s Elderson and Knot, along with the BoE’s Deputy Governor Cunliffe, Tenreyro and Mann. Data releases from the US include the September PPI reading along with the weekly initial jobless claims. Lastly, earnings releases will include UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Citigroup, US Bancorp and Walgreens Boots Alliance. Tyler Durden Thu, 10/14/2021 - 08:29.....»»

Category: blogSource: zerohedgeOct 14th, 2021

Solid Start to Q3 Earnings Season

For the 26 S&P 500 members that have reported Q3 results through Wednesday, October 13th, total earnings and revenues are up +32.6% and +17.6%, respectively... Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>Here are the key points: For the 26 S&P 500 members that have reported Q3 results through Wednesday, October 13th, total earnings and revenues are up +32.6% and +17.6%, respectively from the same period last year, with 80.8% beating EPS estimates and 65.4% beating revenue estimates. The proportion of these 26 index members beating both EPS and revenue estimates is 53.8%.  This is a solid start to the Q3 earnings season, with the EPS beats percentage tracking in-line with historical trends while a relatively smaller proportion of the companies have been able to beat revenue estimates. Looking at Q3 as a whole, total S&P 500 earnings are expected to be up +27.0% from the same period last year on +14.0% higher revenues. This would follow the +95.0% earnings growth on +25.3% higher revenues in Q2. Rising cost pressures amid supply-chain disruptions and labor/material shortages will keep the spotlight on margins, which are expected to be up year-over-year as well as sequentially in Q3. The margins trajectory over the coming periods is a key source of uncertainty in the earnings outlook given the lack of visibility with respect to the duration of inflationary pressures.  Looking at the calendar-year picture for the S&P 500 index, earnings are projected to climb +42.8% on +13.5% higher revenues in 2021 and increase +9.4% on +6.6% higher revenues in 2022. This would follow the -13.0% earnings decline on -1.7% lower revenues in 2020. For the small-cap S&P 600 index, total Q3 earnings are expected to be up +43.5% on +15.6% higher revenues, which would follow the +281.5% earnings growth on +34.5% higher revenues in 2021 Q2. The implied ‘EPS’ for the S&P 500 index, calculated using the current 2021 P/E of 22.5X and index close, as of October 12th, is $193.70, up from $135.66 in 2020. Using the same methodology, the index ‘EPS’ works out to $211.92 for 2022 (P/E of 20.5X) and $233.23 in 2023 (P/E of 18.7X). The multiples have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year. The fact that JPMorgan JPM shares lost ground following the Q3 earnings release on October 13th is not because of the revenue ‘miss’ but rather how this stock responds to quarterly releases. The stock responded positively to quarterly results only once out of the last seven quarterly releases (July 14th, 2020), with the stock losing ground the other six times in response to otherwise strong results.In other words, the market’s reaction to the JPMorgan report offers limited insight into how good or otherwise the bank’s quarterly results have been.There were no major surprises in the JPMorgan report, though management’s comments about signs of stabilization in loan demand and the temporary nature of the ongoing supply-chain overhang were positive and reassuring. As expected, strength in investment banking helped offset continued softness in the core banking business, helping the bank earn +23.8% more in earnings on a +1.7% gain in revenues.The JPMorgan report has favorable read-throughs for Goldman Sachs GS and Morgan Stanley MS, the pure-play investment banks, while Bank of America BAC and Citigroup C will likely show the same type of business mix in their quarterly reports.We expect most companies to mention supply-chain issues in their commentaries, with the tone and substance of guidance turning negative, at least for the current period (2021 Q4). This will cause estimates for the December quarter to come down from the current expected +20.4% growth pace. We experienced something similar with respect to Q3 earnings estimates, which modestly went up earlier but lost ground modestly towards the end of the quarter.These near-term headwinds notwithstanding, the long-term earnings outlook should remain favorable and reassuring if JPMorgan’s transitory view of the gonging supply-chain issues comes to fruition.The chart below provides a big-picture view of earnings on a quarterly basis.Image Source: Zacks Investment ResearchThe chart below shows the overall earnings picture on an annual basis, with the growth momentum expected to continue.Image Source: Zacks Investment ResearchWe remain positive in our earnings outlook, as we see the overall growth picture steadily improving, as the near-term logistical issues get addressed. 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 The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report Bank of America Corporation (BAC): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Morgan Stanley (MS): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 13th, 2021

Solid Start to Q3 Earnings Season

For the 26 S&P 500 members that have reported Q3 results through Wednesday, October 13th, total earnings and revenues are up +32.6% and +17.6%, respectively... Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>Here are the key points: For the 26 S&P 500 members that have reported Q3 results through Wednesday, October 13th, total earnings and revenues are up +32.6% and +17.6%, respectively from the same period last year, with 80.8% beating EPS estimates and 65.4% beating revenue estimates. The proportion of these 26 index members beating both EPS and revenue estimates is 53.8%.  This is a solid start to the Q3 earnings season, with the EPS beats percentage tracking in-line with historical trends while a relatively smaller proportion of the companies have been able to beat revenue estimates. Looking at Q3 as a whole, total S&P 500 earnings are expected to be up +27.0% from the same period last year on +14.0% higher revenues. This would follow the +95.0% earnings growth on +25.3% higher revenues in Q2. Rising cost pressures amid supply-chain disruptions and labor/material shortages will keep the spotlight on margins, which are expected to be up year-over-year as well as sequentially in Q3. The margins trajectory over the coming periods is a key source of uncertainty in the earnings outlook given the lack of visibility with respect to the duration of inflationary pressures.  Looking at the calendar-year picture for the S&P 500 index, earnings are projected to climb +42.8% on +13.5% higher revenues in 2021 and increase +9.4% on +6.6% higher revenues in 2022. This would follow the -13.0% earnings decline on -1.7% lower revenues in 2020. For the small-cap S&P 600 index, total Q3 earnings are expected to be up +43.5% on +15.6% higher revenues, which would follow the +281.5% earnings growth on +34.5% higher revenues in 2021 Q2. The implied ‘EPS’ for the S&P 500 index, calculated using the current 2021 P/E of 22.5X and index close, as of October 12th, is $193.70, up from $135.66 in 2020. Using the same methodology, the index ‘EPS’ works out to $211.92 for 2022 (P/E of 20.5X) and $233.23 in 2023 (P/E of 18.7X). The multiples have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year. The fact that JPMorgan JPM shares lost ground following the Q3 earnings release on October 13th is not because of the revenue ‘miss’ but rather how this stock responds to quarterly releases. The stock responded positively to quarterly results only once out of the last seven quarterly releases (July 14th, 2020), with the stock losing ground the other six times in response to otherwise strong results.In other words, the market’s reaction to the JPMorgan report offers limited insight into how good or otherwise the bank’s quarterly results have been.There were no major surprises in the JPMorgan report, though management’s comments about signs of stabilization in loan demand and the temporary nature of the ongoing supply-chain overhang were positive and reassuring. As expected, strength in investment banking helped offset continued softness in the core banking business, helping the bank earn +23.8% more in earnings on a +1.7% gain in revenues.The JPMorgan report has favorable read-throughs for Goldman Sachs GS and Morgan Stanley MS, the pure-play investment banks, while Bank of America BAC and Citigroup C will likely show the same type of business mix in their quarterly reports.We expect most companies to mention supply-chain issues in their commentaries, with the tone and substance of guidance turning negative, at least for the current period (2021 Q4). This will cause estimates for the December quarter to come down from the current expected +20.4% growth pace. We experienced something similar with respect to Q3 earnings estimates, which modestly went up earlier but lost ground modestly towards the end of the quarter.These near-term headwinds notwithstanding, the long-term earnings outlook should remain favorable and reassuring if JPMorgan’s transitory view of the gonging supply-chain issues comes to fruition.The chart below provides a big-picture view of earnings on a quarterly basis.Image Source: Zacks Investment ResearchThe chart below shows the overall earnings picture on an annual basis, with the growth momentum expected to continue.Image Source: Zacks Investment ResearchWe remain positive in our earnings outlook, as we see the overall growth picture steadily improving, as the near-term logistical issues get addressed. 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 The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report Bank of America Corporation (BAC): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Morgan Stanley (MS): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 13th, 2021

Market Slips for Third Day While Waiting for CPI

Market Slips for Third Day While Waiting for CPI SPECIAL ALERT: The October episode of the Zacks Ultimate Strategy Session is now available for viewing! Tune in to this “must-see” event when Kevin Matras, Jeremy Mullin and Sheraz Mian discuss the investment landscape from several angles. Don’t miss your chance to hear: ▪ Sheraz and Jeremy Agree to Disagree on whether the market top is in or has further to go   ▪ Kevin answers questions covering the recent pullback, and where we go from here in Zacks Mailbag ▪ Sheraz and Jeremy choose one portfolio to give feedback for improvement ▪ And much more Simply log on to Zacks.com and view the October episode here. And please let us know what you think of this format. Email all feedback to mailbag@zacks.com. The market wasn’t in the mood to do much on Tuesday ahead of an eventful session tomorrow, which will include the CPI report and the unofficial start to earnings season. And for good measure, we’ll also be getting the Fed minutes from the September policy meeting. Given all this uncertainty (and let’s not forget a disappointing jobs report on Friday); stocks have now slipped for three straight days. On Tuesday, the Dow was off 0.34% (or about 117 points) to 34,378.34. The S&P slipped 0.24% to 4350.65, while the NASDAQ declined 0.14% (or around 20 points) to 14,465.92. Most of the market’s attention right now is on Wednesday’s CPI report. The economy’s main inflation indicator is expected to rise 0.3% from the previous month and over 5% year over year. “We have a huge economic number tomorrow that could move markets in a big way. The CPI data will be out an hour before the bell and I would expect a big move if the number strays from what’s expected,” said Jeremy Mullin in Counterstrike. “If we get something over 0.5%, that will simply be bad news as it would signal the Fed needs to take action soon.”   The CPI report may be the biggest story tomorrow given how nervous investors are about inflation… but its far from the only news. In fact, a new earnings season is about to begin with reports from big banks like JPMorgan (JPM) and Goldman Sachs (GS). BlackRock (BLK) also goes to the plate on Wednesday. You probably remember the last Fed meeting from September as the time when Chair Jerome Powell stated that scaling back on asset purchases “may soon be warranted”. Well, tomorrow we’ll be getting the minutes from that get-together. A lot has happened since then, but investors will still be quite interested to find out what the Committee was thinking before the big jobs miss and whatever the CPI has in store for us. Today's Portfolio Highlights: Stocks Under $10: The portfolio is fully invested again with 15 names after today’s addition of Falcon Minerals Corp. (FLMN), which will capitalize on soaring energy prices and the recent strength in oil & gas names. The company is a Zacks Rank #2 (Buy), as this year’s earnings expectations rose by a penny and next year’s advanced by three cents. The valuation may seem a bit stiff (especially 23x forward earnings), but FLMN showed topline growth of 164% in its most recent quarter and operating margins are moving in the right direction. Learn more about this new addition in the complete commentary. In other news, this service had a top performer on Tuesday as VirTra (VTSI) rose 7%. The stock also cracked the top 5 over the past 30 days by climbing 28.2%. Surprise Trader: The early days of earnings season are dominated by banks, so that’s where Dave headed for Tuesday’s addition. He likes to pick up a handful of smaller banks since they have a “good risk versus reward early on”. That’s the idea behind buying Fulton Financial (FULT), which is part of the Banks – Northeast space in the top 29% of the Zacks Industry Rank. This Zacks Rank #2 (Buy) eclipsed the Zacks Consensus Estimate for two consecutive quarters, and seems on its way to another beat when it reports again on Tuesday, October 19 after the bell. FULT has a positive Earnings ESP of 4.29% for that release. Dave added the stock with a 12.5% allocation today, while also selling Levi Strauss (LEVI) as the iconic jeans maker didn’t have much of a post earnings drift higher after its solid results. Read the full write-up for more on these moves. By the way, this service had top performer today as Covenant Logistics (CVLG) rose 4.9%. Zacks Short Sell List: This week's adjustment included four changes to the portfolio. The stocks that were short-covered include: • Certara (CERT) • WillScot Mobile Mini (WSC) • Nike (NKE) • TripAdvisor (TRIP) The new buys that filled these spots were: • AppLovin (APP) • Enphase Energy (ENPH) • GoodRx (GDRX) • JOYY (YY)   Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide. Until Tomorrow, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksOct 13th, 2021

Third Quarter Earnings Season Begins Tomorrow: It Could Be Ugly

Third Quarter Earnings Season Begins Tomorrow: It Could Be Ugly As the following chart from Bloomberg shows, for six consecutive quarters, earnings season provided the antidote to all the stock market ills (if not on fundamentals but because stock stubbornly tracked the relentless growth of the Fed's balance sheet which rose by $120BN every month like clockwork). But that perfect record is about to get its biggest test yet at a time when uncertainty is swirling among equity investors, and not just because a potentially ugly earnings season is on deck but because the Fed's liquidity cannon is about to see its first "tapering" since the covid pandemic unleashed trillions and trillions in liquidity. Looking back, the large and persistent earnings beats over the last 5 quarters... ... prompted record upgrades to forward earnings estimates. The market has moved higher in lockstep with these upgrades... ... leaving the forward multiple remarkably flat at very elevated levels since May of last year. And as Deutsche Bank's Binky Chadha warns, "the market is priced for these large beats and upgrades to continue" but can Q3 earnings season deliver? And so, as jittery investors brace to comb through the corporate tea leaves for clarity on everything from the impact of rising rates and commodity inflation to broken supply chains, setting the stage for a particularly dramatic serving of results, below we take a loot at what Wall Street expects as 3Q earnings kick off tomorrow when JPM reports bright and early. Following another huge beat in 2Q, 3Q EPS has risen 3% over the past three months to $49.06 (+27% YoY), down from an eye-popping 94% Y/Y surge in Q2; typically this estimate falls by 4% into the quarter. According to BofA, consensus forecasts imply the 2-year growth rate falling sharply to +16% vs. +27% in 2Q amid supply chain issues and the delta variant-driven slowdown (the just released news about Apple slashing its iPhone production due to chip shortages being the latest case in point). In a conspicuous break from the last 4 quarters which saw upgrades, DB notes that Q3 consensus estimates are being downgraded ahead of the earnings season, marking a return to what has been the historical norm. Downgrades have largely been driven by the pandemic-loser group on delta variant concerns, and by insurers following the impacts of hurricane Ida. But even excluding these lumpy impacts, estimates have stayed flat in contrast to the upgrades of recent quarters. As is typical, the consensus sees a drop in earnings sequentially (-4.5% qoq excluding loan loss provisions)... ... with nearly all sector groups seeing declines. But that's usually the case and in the end, earnings growth usually comes in positive. Cutting to the chase, DB notes that amidst a macro backdrop that is a little less supportive than over the last 4 quarters, the bank sees earnings continuing to rise but only modestly so (+1.5% qoq), beating consensus by 6%, far lower than the 14-20% range of the last 5 quarters and closer to the historical average beat of 5% Expect no beat this quarter In Q2, S&P500 companies delivered another monstrous beat topping consensus by 17%. With the strong beat, 3Q EPS estimates have risen 3% over the past three months, but BofA sees increased headwinds heading into 3Q, primarily driven by supply chain issues, delta-driven slowdown, and continued inflationary pressure. That said, while there are reasons to be cautious, earnings misses are extremely rare: since 2009, there have been only two quarters (out of 50) when earnings missed consensus (2Q11 & 1Q20). And with consensus expecting a meaningful moderation in the 2-year growth rate to 16% from 27%, BofA's 3Q EPS estimate is in line with consensus, representing the worst earnings season since COVID and below the historical median beat of 3.5%. BofA generally agrees with DB, and expects earnings to come in in-line with consensus and revises its 3Q EPS down by $2 (to $49) and 4Q by $1. But, as has been the case for much of the past year, one of the top questions will be around guidance (which started to soften) and 2022 EPS will be revised lower. Another core question: who is best positioned to weather the surging input costs: “What we are going to be laser-focused on in this earnings season is pricing power,” said Giorgio Caputo, senior portfolio manager at J O Hambro Capital Management. “What we’re seeing is that getting the machine back up and running -- those who thought it would be an easy quick fix are being disappointed now.” Which leads us to the most important variable of Q3 season: profit margins. As we noted at the time, although margins expanded to record highs in 2Q, companies highlighted increasing difficulties passing through cost inflation. Since then, issues have worsened: supply chain news stories increased 74% and freight rates from China rose 20%... ... with record backlogs at the West Coast Ports. In 3Q, we also saw a near-record number of profit warnings stories (third highest since 2011), only after 4Q15 and 1Q19. In those quarters, earnings beat consensus by 0.6% and 4.9%, respectively, but subsequent quarter earnings were revised down by 9.3% and 2.2% mostly due to supply issues.Incidentally, we predicted that this would happen. If MS and BofA are right on slumping consumer demand and margin contraction we should start seeing Q3 earnings warnings in the next 2 weeks. — zerohedge (@zerohedge) August 30, 2021 To be sure, consumer demand remains robust but soaring inflation poses downside risks. While analysts have baked in margin  contraction this quarter (non-Financials net margins -70bps QoQ), both BofA and Morgan Stanley see big risks to 2022 numbers, where analysts expect record margins, an outcome which is virtually impossible unless all the input cost inflation is passed through to consumers. It's not just broken supply chains: wages are surging too; indeed as BofA writes, "wage inflation is just as big of a headwind (if not bigger)" than supply chains. The BEA estimates wages are as much as 40% of total private sector costs. At the same time, slowing China and its property sector issues also pose risks to US multinationals. And while higher oil prices have historically been positive for S&P earnings (every 100bps move up in WTI added 50bps to S&P earnings growth), but Energy companies’ capital discipline could translate to a lower earnings multiplier (i.e. less revenue for energy capex beneficiaries). Soaring gas prices also add pressure to Chemicals and Utilities. In other words, higher oil could be a headwind rather than a tailwind this time. Mentions of “inflation” on 2Q earnings calls topped 1Q levels and jumped to a record high, based on BofA's Predictive Analytics team’s analysis. On a YoY basis, inflation mentions rose more than 900% YoY, in line with the increase we saw last quarter. Notably, supply chain mentions rose the most among inflation categories tracked in 2Q, more than doubling YoY (along with labor mentions). Since then, supply chain issues have worsened: news stories on “supply chain” increased 74% since the 2Q earnings season according to Bloomberg, and freight rates from China also rose 20% (Exhibit 10) And yet, amid all these rising margin risks, analysts are expecting margins to hit a new peak in 2022! Consistent with recent developments, consensus does point to a 70bps drop in net margins (ex-Fins) to 12.0% in 3Q, which does reflect some conservatism. However, they then expect the margin compression to stop there – with flattish margins in 4Q21, and expanding margins in 2022 to new record highs (above 2018 peaks). Analysts expect margins to hit new highs in 4 of 10 sectors, excluding Financials (Exhibit 14). BofA disagrees and expects current headwinds to last well into 2022, and sees risk to consensus numbers. As the bank cautions, "analysts have consistently underestimated margins over the past five quarters, but given the worsened macro environment for corporate profits (more below), we do not expect those big margin beats to repeat in 3Q." And with good reason: the early reporters have shared mixed data at best. So far, 21 companies (primarily “early reporters” with August quarter-end) have reported 3Q results. Early reporters are concentrated in Consumer, Tech and Industrials, but can often give a read on the full quarter’s results: BofA has found a 71% correlation between the proportion of early reporter beats on EPS and sales and the proportion of full-quarter beats on EPS and sales. So far, 67% have beaten on EPS, 76% on sales and 57% on both. This is weaker than last quarter (67%/94%/67%), but still above the historical average (since 2012) of 70%  EPS beats, 63% sales beats and 49% both beats. The median EPS beat so far has been 4.0%. More ominously, BofA's 3-month guidance ratio (# of above- vs. below-consensus guidance instances) sharply fell from a record high to 2.6x in September, albeit it remains well above the historical average of 0.8x. The more volatile 1-mo. guidance ratio also fell to 1.2x, representing the lowest level since Jun 2020, as companies warned about rising inflationary pressure. Meanwhile, guidance instances have picked up to the highest level in a decade in September. But perhaps the most troubling indication of what to expect comes from companies themselves after what BofA notes was peak corporate sentiment. According to BofA’s Predictive Analytics team overall, corporate sentiment dipped from a record high, potentially indicating peak corporate sentiment amid inflation concerns and the Delta variant. Consumer sectors had the weakest sentiment compared to their own history, while Materials and Real Estate had the worst sentiment on an absolute basis. Similarly, companies' mentions of business conditions (ratio of mentions of "better" or "stronger" vs. "worse" or "weaker") indicate slightly weaker business conditions vs. the peak level last quarter. Mentions of optimism also plummeted from record highs in the prior two quarters. Putting it all together, below is a handy list of what to expect courtesy of Deutsche Bank: The macro backdrop is a little less supportive. After having been strongly positive for over a year, data surprises turned negative in late-July. Earnings estimate revisions have historically been tied to data surprises. Consensus Q3 GDP estimates have also been revised downwards from over 7% at the end of Jul to 5% now. DB economists also cut their Q3 GDP forecast for growth from 8.9% to 4.7% in early September. The sales-weighted G4 manufacturing PMI, a preferred measure of global growth, rose sharply from its trough of 42.4 in Q2 2020 to 59.3 in Q2 2021. In Q3 so far, it has stayed flat (Jul-Aug average of 59.4). The US dollar is also up slightly in Q3 after 4 quarters of declines. Secular growers (MCG+ Tech) earnings likely to flatten at an elevated level. Earnings for MCG+ Tech have been boosted well above trend by a broad cyclical lift as well as from being direct beneficiaries given the realities of the pandemic. The cyclical component which is tied to global growth and the US dollar is likely to stay flat. With re-opening having gathered steam through the quarter, the idiosyncratic pandemic-related benefit should arguably start to wane, but even if the full benefit were to remain intact, it would still point to earnings overall staying largely flat (0.4%). With consensus seeing a drop (-4.5%), DB sees a beat of about 5.2%, a sharp slowdown from the 10-17% beats they posted over the last 5 quarters, but in line with the historical average of 6%. Notably, earnings remaining flat would also mean a modest move back towards their historical trend with the gap shrinking from a record +25% in Q2 to +22% in Q3. Cyclicals earnings almost back to trend. The consensus sees losses for the pandemic losers diminishing in Q3 (-$6.6bn to -$2.4bn) as mobility rose albeit not as quickly as initially expected. Outside of the direct pandemic losers, the rest of the cyclicals in our view should continue to post modest growth (+1.7% qoq sa) as activity levels remain robust at elevated levels. Consensus sees earnings for cyclicals declining modestly (-0.4%), implying a beat of 8%, a sharp slowdown from the 14-38% range seen in the past four quarters, but ahead of the historic average level of 5.2%. If realized, cyclicals earnings would be almost back to their pre-pandemic trend, a strong and fast recovery after being over 70% below in Q2 last year Defensives earnings likely to move back down towards trend. Earnings for the defensives were significantly above trend in Q2 (+7%), as they continued to benefit from a pandemic boost. We see earnings retrace halfway back to trend in Q3 implying a modest  (-1.5% qoq sa) decline, while the consensus sees a larger -6.3% drop, pointing to a potential 5.1% beat in the quarter. If realized, this would be the weakest aggregate beat since the start of the pandemic, which has seen surprises in the 7-18% range, but at about the average level of pre-pandemic beats (historical average of 4.4%). Financials to continue posting outsized beats as benign credit costs remain a tailwind. Banks released large amounts from loan loss reserves in the past two quarters ($13.8bn in Q1 and $9.5bn in Q2), boosting earnings, and that is expected to continue given benign credit conditions. However, the consensus sees banks adding to reserves in Q3 ($3.8bn). Moreover, excluding loan-loss provisions the consensus sees earnings fall to the bottom of their 2013-19 trend channel. Together this points to a massive 29% beat again this quarter, in line with the 13-36% range of the last five quarters and way ahead of the typical +4.2% average. Energy. Oil prices have risen from $69/bbl in Q2 to $73/bbl in Q3 on average. The consensus forecasts Energy sector earnings to grow 22.5% (qoq) in Q3, which is somewhat ahead of what is implied by the increase in oil prices. DB sees lower earnings growth of 12.8% qoq, which could see the sector miss (-8%) in the quarter, in contrast with the solid double digit beats of the past four quarters and a historic average beat of 6.4%. Energy earnings beats historically have tended to be extremely volatile. Overall beats to remain robust but returning towards the historical norm. DB sees earnings for the S&P 500 rising modestly by +0.8% and EPS coming in at $53.6/share in Q3 2021. This compares with the consensus at $49.2/share, or a beat of 9%, significantly lower than the 14-21% range of the last 5 quarters. Excluding the outsized contribution from lumpy loan-loss reserve changes, DB expects a beat of 6.3%, close to the historical average of 5% and compares to the 10-21% range of the last 5 quarters In conclusion, and as noted earlier, huge beats and upward revisions kept the forward consensus rising steeply over the last 15 months according to DB's Chadha. Since then, consensus estimates for 2021 have edged slightly lower over the last few weeks (-0.2%), while 2022 estimates have flat-lined. The 4 quarter ahead growth rate of consensus estimates has now fallen to the steady pre-pandemic average (around 14%). In the absence of upgrades, current forecasts point to the growth rate falling well below (11%) over the next 2-3 quarters. As beats and forward earnings look to be returning to historical norms, will forward valuations follow? Tyler Durden Tue, 10/12/2021 - 18:55.....»»

Category: blogSource: zerohedgeOct 12th, 2021

Buy These 2 Tech Stocks Before Q3 Earnings for Long-Term Growth?

Is it time to buy Netflix (NFLX) and Snap (SNAP) stock ahead of their Q3 financial results next week... Today’s episode of Full Court Finance at Zacks takes a look at where the broader market stands as Wall Street prepares to enter the busy portion of the third quarter earnings season during the week of October 11. The episode then dives into two technology and modern entertainment companies, Netflix NFLX and Snap SNAP, ahead of their Q3 financial results next week to see if investors might want to buy either stock.Last week marked another up and down stretch for the market, with a big drop followed by a quick rebound. The S&P 500 currently sits around 3.5% below its early September records, while the Nasdaq is roughly 5% under its peaks. Both these major indexes sit below their 50-day moving averages, but well above their 200-day as the bulls jump in seemingly every time stocks come close to some oversold technical levels.The positivity that popped up later last week stemmed from debt ceiling progress and some solid unemployment figures. September’s jobs report, which came out Friday, then came well under expectations amid supply chain setbacks and delta variant worries.There are multiple reasons for the setback, but the market didn’t react in any significant way to September’s report. This could signal Wall Street is sanguine about the U.S. economy as we enter the holiday shopping season that impacts everyone from Target TGT to Apple AAPL.On top of that, the S&P 500 earnings and margins picture for Q3 and beyond remains strong despite a recent slowdown in positive revisions. Plus, the overall interest rate environment will keep investors chasing returns in equities for the foreseeable future (also read: What Will Q3 Bank Earnings Show).The big Wall Street banks such as JPMorgan JPM and Bank of America BAC unofficially kick off Q3 earnings season this week, with reports from tech giants set to slowly start coming out next week. Two of the first notable technology names set to report during the busy stretch of corporate earnings are Netflix and Snap.Netflix stock has surged to new highs in the past few months, after lagging far behind the market and fellow big tech names throughout 2021 and the last year. The streaming TV company continues to expand within a growth market despite competition from Disney DIS, Amazon AMZN, and many others. And some of NFLX’s other fundamentals make it a potentially attractive buy with it set to report its Q3 earnings results on Oct. 19.   Snap trades at a roughly 10% discount to its records at the moment, heading into quarterly financial release on Oct. 21. The company has expanded its offerings to include entrainment far beyond disappearing photos and videos and it’s become a hit with advertisers for its ability to reach large chunks of the U.S. population within key younger age groups. Tech IPOs With Massive Profit Potential In the past few years, many popular platforms and like Uber and Airbnb finally made their way to the public markets. But the biggest paydays came from lesser-known names. For example, electric carmaker X Peng shot up +299.4% in just 2 months. Think of it this way… If you had put $5,000 into XPEV at its IPO in September 2020, you could have cashed out with $19,970 in November. With record amounts of cash flooding into IPOs and a record-setting stock market, this year’s lineup 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 Amazon.com, Inc. (AMZN): Free Stock Analysis Report Bank of America Corporation (BAC): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Apple Inc. (AAPL): Free Stock Analysis Report Netflix, Inc. (NFLX): Free Stock Analysis Report Target Corporation (TGT): Free Stock Analysis Report The Walt Disney Company (DIS): Free Stock Analysis Report Snap Inc. (SNAP): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 12th, 2021

Zumiez (ZUMZ) Looks Good on Its Customer-Centric Efforts

Zumiez's (ZUMZ) one-channel approach to retail is appreciative. Also, the company is focused on advanced in-store fulfillment capabilities including Zumiez Delivery. The fashion and apparel space looks quite upbeat, thanks to the mass inoculation and relaxation in the pandemic-led restrictions. The renowned apparel and accessories retailer Zumiez Inc. ZUMZ seems well poised to capitalize on the trends in the apparel space on the back of its one-channel concept and advanced in-store fulfillment capabilities. The company is strongly focused on building a customer-centric business model apart from offering differentiated assortments. Its store-expansion effort to tap higher sales also seems commendable.Concerted EffortsZumiez’s one-channel approach to retail is effectively catering to changing consumer needs. This includes ideas, such as the company’s in-store fulfillment capabilities including Zumiez delivery. The implementation of advanced technology helped it enrich customers’ shopping experience across diverse channels. Further, the company is boosting competitive advantage by investments in logistics, planning and allocation and omni-channel capabilities, which position it well for growth. Zumiez, which shares space with Abercrombie ANF, Boot Barn BOOT and Gap GPS, is constantly making investments to boost localized merchandising assortments. The company’s solid efforts to meet robust demand with respect to the distinct merchandise offering continue to significantly contribute to its performance. The men’s accessories and footwear categories are performing outstandingly.In addition, Zumiez looks forward to expanding in the underpenetrated markets. It allocates a major portion of its capital expenditure to store remodeling and opening projects. In fiscal 2021, management intends to open 22 stores comprising about five stores in North America, 12 in Europe and five in Australia. Simultaneously, it plans to close five to six stores during the current fiscal year. For fiscal 2021, management expects to incur capital expenditures in the band of $20-$22 million, indicating a rise from $9.1 million spent in fiscal 2020.What’s Ahead?On its last earnings call on Sep 9, management informed that third-quarter fiscal 2021 is off to a strong start on the back of a more normalized back-to-school shopping season. It also expects to retain a strong momentum heading into the holidays, given the flexibility of its business model.For the second half of fiscal 2021, Zumiez anticipated surpassing the fiscal 2020 sales levels. For fiscal 2021, management projected net sales to increase between high teens and above 20% from the fiscal 2020 level and in low-mid teens from the fiscal 2019 reading.For the back half, it guided sales growth above the 2020 levels. For both the third and the fourth quarters, management forecasts sales growth in the mid- to high-single digit range from the fiscal 2020 tally. The fiscal 2021 gross margin is likely to grow year over year on leveraged occupancy costs stemming from higher sales and lower shipping costs as web revenues normalize with opened stores and expanded product margins.Wrapping up, the company’s robust strategies to offer customers the best coupled with a healthy balance sheet, sturdy business model and a strong brand presence position Zumiez well for long-term success. Time to Invest in Legal Marijuana If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027. After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%. You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.Today, Download Marijuana Moneymakers FREE >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Zumiez Inc. (ZUMZ): Free Stock Analysis Report Abercrombie & Fitch Company (ANF): Free Stock Analysis Report The Gap, Inc. (GPS): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 12th, 2021

Futures Slide As Soaring Oil Nears $85

Futures Slide As Soaring Oil Nears $85 While cash bonds may be closed today for Columbus Day, which may or may not be a holiday - it's difficult to know anymore with SJW snowflakes opinions changing by the day - US equity futures are open and they are sliding as soaring oil prices add to worries over growing stagflation (Goldman and Morgan Stanley both slashed their GDP estimates over the weekend even as they both see rising inflation), fueling concern that a spreading energy crisis could hamper economic recovery (as a reminder, yesterday we had one, two, three posts on stagflation, showing just how freaked out Wall Street suddenly is). Rising raw material costs, labor shortages and other supply chain bottlenecks have raised concerns of elevated prices hammering corporate profits while rising rates are suggesting that a tidal wave of inflation is coming. And while cash bonds may be closed, one can easily extrapolate where they would be trading based on TSY futures which are currently trading at a 1.65% equivalent. But while cash bonds may be closed, the big mover on Monday was oil, with WTI surging nearly 3% and touched a seven-year high as an energy crisis gripping the major economies showed no sign of easing. Meanwhile, Brent rose just shy of $85, rising to the highest since late 2018 when the Fed abruptly reversed tightening course. Over in China, coal futures reached a record as flooding shuttered mines. The surge in oil lifted shares of Chevron Corp, Exxon Mobil Corp and APA Corp between 1.2% and 3% in premarket trading. At the same time, rising rates hit FAAMGs, with Apple, Microsoft and Amazon all falling between 0.6% and 0.8%. The surge above 1.6% for 10-year Treasury yields is intensifying debate among strategists over how to position investor portfolios amid anxiety over whether transitory inflation is transitioning into stagflation. Lucid Group rose 2.2% and Occidental Petroleum climbed 3.1%, leading gains in the U.S. premarket session. Here are some of the biggest movers and stocks to watch today: U.S.-listed Chinese tech stocks soar 2% to 5% in premarket trading, extending their recent rebound. Rally supported by Beijing slapping a smaller-than-expected fine on food delivery giant Meituan and last week’s news that U.S. President Joe Biden was planning to meet with Xi Jinping before the end of the year. Alibaba (BABA US +5%) leads gains, while JD.com (JD US) and Baidu (BIDU US) rise 2% apiece Watch U.S. energy stocks as oil surges past $80 a barrel as the global power crunch rattled a market in which OPEC+ has only been restoring output at a modest pace. Exxon Mobil (XOM US +1.1%), Chevron (CVX US +1%) and Occidental (OXY US +3.1%) among top risers in premarket trading. Robinhood (HOOD US) dropped 2%; the company was under pressure in U.S. premarket trading as a looming share sale by early investors and a toughening regulatory environment for cryptocurrencies are adding to the headwinds in the stock market for the darling of the U.S. retail trading mania. ChemoCentryx (CCXI US) up 2% in U.S. premarket trading, adding to Friday’s massive gains after the drug developer won U.S. approval for Tavneos as a treatment for a rare autoimmune disorder Cloudflare (NET US) slides 1.8% in U.S. premarket trading after Piper Sandler downgraded stock to neutral Akerna Corp. (KERN US) gained in Friday postmarket trading after Matthew Ryan Kane, a board member, bought $346,032 of shares, according to a filing with the U.S. Securities & Exchange Commission. “We see rising risks to global growth and evidence of more persistent inflation, which makes us more cautious on the outlook for global markets overall,” Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, wrote in a note to clients. In Europe, the Stoxx 600 Index fell 0.2%, led by declines in travel and property firms. Miners and energy stocks were the two strongest-performing sectors in Europe on Monday on rising prices for iron ore and oil. The Stoxx 600 Basic Resources Index climbed as much as 2.4%, while the Energy Index gains as much as 1.5% to the highest since Feb. 24, 2020. European banking stocks also advanced on Monday, following four weeks of gains, and traded about 1.3% below pre-pandemic high. The sector has gained 36% ytd, is the best performer among 20 European sectors in 2021. Up 0.7% today, outperforming a slightly weaker broader Stoxx 600 Index and as investors tilt toward cyclical sectors. Earlier in the session, Asian stocks jumped, buoyed by Hong Kong-listed technology shares including Meituan, which was consigned a lower-than-expected regulatory fine. The MSCI Asia Pacific Index climbed as much as 0.9%, driven by the consumer-discretionary and communication sectors. Alibaba and Meituan were the top contributors to the gauge, each surging about 8% in the first trading in Hong Kong after the food-delivery giant was handed a $533 million fine for violating anti-monopolistic practices.  The result of the investigation into Meituan is “a relief and likely to provide closure to the share price overhang,” Citigroup analysts wrote in a note Friday, when the penalty was announced.  Hong Kong’s stock gauge was among the top performing in the region. Japan’s benchmarks also climbed as the yen weakened to an almost three-year low against the dollar and new Prime Minister Fumio Kishida said he’s not considering changes to the country’s capital-gains tax at present. Improved sentiment in China is providing much-needed support to Asian equities, which declined for four straight weeks amid uncertainty circling global markets. Power shortages in China and India, supply-chain woes, inflation risks and rising bond yields are all on the radar as the earnings season kicks off. “We are still in a market that is very, very concerned about the growth outlook,” said Kyle Rodda, market analyst at IG Markets. These sort of rallies that appear almost inexplicable are “symptomatic of the market still trying to piece together all pieces of the puzzle,” he added. Australia The S&P/ASX 200 index fell 0.3% to close at 7,299.80, with most subgauges taking a hit. Miners advanced, posting gains for a third session, offsetting losses in healthcare and consumer discretionary stocks.  Star Entertainment was the worst performer after a report saying the company had enabled suspected money laundering, organized crime and fraud at its Australian casinos for years. Fortescue surged after the company said it plans to build a green energy factory to rival China.  In New Zealand, the S&P/NZX 50 index dropped 0.5% to 13,019.37. In FX, the pound crept higher to touch an almost 2-week high versus the dollar and the Gilt curve shifted higher, led by the front-end, after the Bank of England’s Michael Saunders, one of the most hawkish members of the Monetary Policy Committee, suggested in remarks published Saturday that investors were right to bring forward bets on rate hikes. Hours earlier, Governor Andrew Bailey warned of a potentially “very damaging” period of inflation unless policy makers take action. Australia’s dollar led gains among G-10 currencies on the back of increases in oil, natural gas and iron ore prices and as Sydney emerges from a 15- week lockdown on Monday. Iron ore futures extended gains as improved rebar margins at Chinese steel mills buoyed demand prospects. The yen dropped against the dollar, with analysts forecasting more weakness ahead as the nation’s yield differentials widen. As noted above, treasury futures slumped in U.S. trading Monday, with the cash market closed for Columbus Day; they implied a yield of 1.65% on the 10Y. 10-year note futures price is down 8+/32, a price change equivalent to a yield increase of about 3bp. Benchmark 10-year yield ended Friday at 1.615%, its highest closing level since June, as investors focused on the inflationary aspects in mixed September employment data. China's10-year government bond futures declined to a three-month low while the yuan advanced as the central bank’s latest liquidity draining weakened expectations of fresh monetary policy easing. Futures contracts on 10-year notes fall 0.4% to 99.14, the lowest level since July 12. It dropped 0.4% on Friday. 10-year sovereign bond yields rose 5bps, the biggest gains in two months, to 2.96%. Looking ahead, upcoming reports on third-quarter company profits which start this week are seen as the next potential pressure point in a market already under siege from slowing global growth, sticky inflation and tighter monetary policies. Global earnings revisions are sliding - an omen for U.S. stocks that have taken their cue from rising earnings estimates all year. “The coming earnings’ season in the U.S. will be heavily scrutinized for pricing power, margins and clues on the shortage situation, as well as wage pressures,” according to Geraldine Sundstrom, a portfolio manager at  Pacific Investment Management Co. in London. “Already a number of large multinationals have issued warnings about production cuts and downgraded their Q3 outlook due to supply chain and labor shortages.” Market Snapshot S&P 500 futures down 0.3% to 4,371.25 STOXX Europe 600 down 0.2% to 456.41 German 10Y yield up 1.5 bps to -0.135% Euro little changed at $1.1568 MXAP up 0.8% to 196.45 MXAPJ up 0.7% to 642.13 Nikkei up 1.6% to 28,498.20 Topix up 1.8% to 1,996.58 Hang Seng Index up 2.0% to 25,325.09 Shanghai Composite little changed at 3,591.71 Sensex up 0.5% to 60,358.30 Australia S&P/ASX 200 down 0.3% to 7,299.79 Kospi down 0.1% to 2,956.30 Brent Futures up 1.9% to $83.98/bbl Gold spot down 0.1% to $1,755.02 U.S. Dollar Index up 0.11% to 94.17 Top Overnight News from Bloomberg The U.S. labor market will see “ups and downs” as the pandemic lingers, but it’s premature to judge that the recovery is in peril, said San Francisco Federal Reserve President Mary Daly Treasury Secretary Janet Yellen said she expects Congress to take action soon to bring the U.S. into line with a global minimum tax agreed on last week by 136 countries Chinese builders are looking to payment extensions or debt exchanges to avoid default on imminent bond obligations as liquidity conditions tighten for the real estate sector Austria will get a new chancellor, though the career diplomat stepping into Sebastian Kurz’s shoes is a close ally of the departing conservative leader who resigned over a corruption scandal Just because pandemic inflation is transitory doesn’t mean it’s going away anytime soon. That’s the awkward conclusion that policy makers and investors are arriving at, as prices accelerate all over the world. European natural gas has climbed 25% in two weeks, and oil topped $80 for the first time since 2014. Fertilizers hit a record on Friday, which means food prices -- already at a 10- year peak -- will likely rise even higher A more detailed summary of overnight news from Newsquawk Asia-Pac stocks traded mostly positive but ended the day somewhat mixed after having shrugged off the early weakness stemming from last Friday’s lacklustre performance stateside and disappointing NFP jobs data. Note, markets in Taiwan and South Korea were closed. ASX 200 (-0.3%) was the laggard with underperformance in tech, consumer stocks and defensives overshadowing the gains in commodities and with Star Entertainment the worst hit with losses of more than 20% after media outlets alleged that it enabled suspected money laundering, organised crime, fraud and foreign interference which the Co. said were misleading reports. However, downside for the index was limited as New South Wales businesses reopened from the lockdown that lasted for over three months. Nikkei 225 (+1.6%) reversed opening losses as exporters cheered a weaker currency and with the government mulling over JPY 100bln financial support for chip factory construction. Hang Seng (+2.0%) and Shanghai Comp. (Unch) were both positive following talks between China's Vice Premier Liu He and USTR Tai on Saturday in which China was said to be negotiating for a cancellation of tariffs and sanctions. The advances in Hong Kong were led by tech stocks including Meituan despite the Co. being fined CNY 3.4bln by China’s market regulator for monopolistic behaviour, as the amount was seen to be a slap on the wrist, while the gains in the mainland were only mild as participants also reflected on the substantial liquidity drains by the PBoC totalling a net CNY 510bln since Saturday. Finally, 10yr JGBs were pressured amid the gains in Japanese stocks and lack of BoJ purchases in the market, while price action was also not helped by the continued weakness in T-note futures amid the semi-holiday conditions in US for Columbus Day in which the NYSE and the Nasdaq will open but bonds trading will remain shut. Top Asian News Australian IPOs Heading for Biggest Haul Since 2014: ECM Watch Syngenta’s Shanghai IPO Proposal Suspended For Earnings Update China Junk-Rated Dollar Bond Rout Deepens Amid Builder Worries China’s 10-Year Bond Yield Jumps By The Most Since August Bourses in Europe are mostly but modestly lower (Euro Stoxx 50 -0.1%, Stoxx 600 -0.2%) whilst the FTSE 100 (+0.2%) bucks the trend, owing to firm performances in its heavyweight sectors. US equity futures meanwhile trade within tight ranges with broad-based losses of some 0.3-0.4%. Fresh fundamental catalysts have remained light, although inflation and stagflation remain on traders' minds heading into this week's US and Chinese inflation metrics and against the backdrop of rising energy prices. Thus, the sector configuration sees Basic Resources, Oil & Gas and Banks at the top of the bunch, whilst the downside sees Travel & Leisure, Real Estate and Retail, with no overarching theme to be derived. Basic Resources is the marked outperformer as base metals are bolstered in what seems to be a function of the coal shortage in Asia, with iron ore contracts also surging overnight and copper following suit, in turn boosting the likes of Rio Tino (+3.2%), Antofagasta (+3.1%), Glencore (+3.1%), BHP (+2.8%). The top of the Stoxx 600 is dominated by metal names. In terms of individual movers, Carrefour (-2.2%) is softer after sources stated that exploratory talks over a Carrefour-Auchan tie-up ended due to the complexity of the deal. Evotec (+0.7%) holds onto gains as it seeks a Nasdaq listing. Roche (+0.6%) and Morphosys (+3.7%) underpin the health sector after the Cos received Breakthrough Therapy Designation from the US FDA for gantenerumab for the treatment of Alzheimer's disease. Top European News BOE Officials Double Down on Signals of Imminent Rate Hike Brexit Clash on Northern Ireland Means Headaches for Johnson Asos CEO Beighton Steps Down as Sales Growth Slows Adler Shares Flounder After Asset Disposal Plan, Past M&A Report In FX, the Aussie has secured a considerably firmer grip of the 0.7300 handle vs its US rival as COVID-19 restrictions are relaxed in NSW and base metals tread water after a mostly positive APAC equity session overnight. However, Aud/Usd is also firmer on the back of ongoing Greenback weakness and long liquidation from what some are calling ‘stretched’ levels of IMM positioning going in to Friday’s NFP release, while the Aud/Nzd cross has rebounded further above 1.0550 in wake of a rise in NZ virus cases that has prompted the PM to keep Auckland on level 3 alert for another week pending review. Hence, Nzd/Usd is capped around 0.6950 and continues to lag on the unwinding of Kiwi longs built up in advance of last week’s universally anticipated 25 bp RBNZ hike. Back to the Buck, but looking at the index in relation to where it was before and after the latest BLS report, 94.000 is providing some underlying support on Columbus Day that is not a full US market holiday, but will see cash Treasuries remain closed. Moreover, the DXY is gleaning momentum within a narrow 94.028-214 range via marked Yen underperformance amidst the latest rout in bonds and more pronounced technical impulses as Usd/Jpy extends beyond 112.50 and sets yet another 2021 peak around 112.95. GBP - Sterling is taking up post-payrolls Dollar slack as well, but firmer in its own right too as comments from BoE Governor Bailey and MPC member Saunders add to the growing expectation that rate hikes may be delivered sooner than had been expected before the former revealed that policy-setters were evenly divided at 4-4 in August on the subject of minimum criteria being achieved for tightening. Cable is hovering under 1.3650 and Eur/Gbp is sub-0.8500 in response, with the latter not really fazed by the UK-EU rift on NI protocol. CAD/NOK - The Loonie remains firm against its US peer after the stellar Canadian jobs data and Usd/Cad continues to probe support/bids at 1.2450 against the backdrop of strength in oil prices that is also keeping the Norwegian Krona afloat and Eur/Nok eyeing deeper sub-10.0000 lows irrespective of marginally mixed vs consensus inflation metrics. CHF/EUR/SEK - All rather rangy, aimless and looking for inspiration or clearer direction as the Franc straddles 0.9275 vs the Greenback, but remains firmer against the Euro above 1.0750 following only a faint rise in Swiss domestic bank sight deposits. Meanwhile, the Euro is pivoting 1.1575 vs the Buck and looks hemmed in by decent option expiry interest just outside the range given.1 bn rolling off between 1.1540-50 and 1.6 bn from 1.1590-1.1600 at the NY cut. Elsewhere, the Swedish Crown is slipping on risk-off grounds towards 10.1250 having tested resistance circa 10.1000. In commodities, WTI and Brent front-month futures continue the upward trajectory seen during the APAC session, with the complex underpinned heading into the winter period and against the backdrop of higher gas prices. The gains have been more pronounced in the US counterpart vs the global benchmark with no clear catalysts behind the outperformance, although this may be a continuation of the unwind seen after reports suggested a release of the US SPR (Strategic Petroleum Reserve) is unlikely. For context, reports of such a release last week took the WTI-Brent arb to almost USD 4.2/bbl vs USD 2.7/bbl at the time of writing. Furthermore, there have also been reports of lower US production under President Biden's "build back better" initiative, which puts more weight on renewable energy, with some energy analysts also suggesting that OPEC+ sees less of a threat from a "shale boom" as a result. Back to price action, WTI has been in the limelight after topping the USD 80/bbl overnight and extending gains to levels north of USD 81.50/bbl (vs low 79.55/bbl), whilst the Brent Dec contract topped USD 84.00/bbl (vs low USD 82.50/bbl). In terms of other news flow, sources suggested the fire at Lebanon's Zahrani fuel tank has been put out after the energy minister suggested the fire was contained – the cause of the fire is not yet known. Gas prices also remain elevated with UK nat gas futures relatively flat on the day but still north of GBP 2/Thm vs GBP 1/Thm mid-August and vs GBP 4/Thm last week, whilst the Qatari Energy Minister said he is unhappy about gas prices being high amid negative follow-through to customers. Over to metals, spot gold and silver are somewhat lacklustre, but with magnitudes of price action contained, with the former meandering just north of USD 1,750/oz and the latter above USD 22.50/oz heading into this week's key risk events. Overnight, iron ore futures were bolstered some 10% in Dalian and Singapore Exchanges amid fears of coking coal supply shortages - coking coal is an essential input to produce iron and steel. Traders should also be cognizant of the Chinese metrics released this week as another elevated PPI metric could see the release of more state reserves, as had been the case over the recent months. Using the Caixin PMIs as a proxy for the release, the PMI suggested sharp increases in both input costs and output prices – largely owed to supply chain delays, with the "rate of inflation was the quickest seen for four months, amid reports of greater energy and raw material costs. This, in turn, led to a solid increase in prices charged". The measure for output prices its highest in three months, whilst "the pressure of rising costs was partly transmitted downstream to consumers, as the demand was not weak." US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap A reminder that it’s Columbus Day today where US bond markets are closed. Equity markets are open but expect it to be quiet. Ahead of this, this morning we have published our latest monthly survey results covering over 600 global market participants. See here for more. For the first time since June, the biggest perceived risk to markets is now higher yields and inflation, whilst direct Covid-19 risks are out of the top 3 for the first time. A further equity correction before YE remains the consensus now. 71% expect at least another 5% off equities at some point before YE (68% correctly suggested that last month). A very overwhelming 84% thought the next 25bps move in 10yr US Treasury yields would be up. Of some additional interest is that the definition of stagflation is varied but that the majority think it’s a high or very high risk for the next 12 months. The extreme of this view surprised me. While I’ve long thought the market has underestimated the inflation risks I would still say there is enough of a growth cushion for 2022. However it’s clear the risks have built. Anyway, lots more in the survey. Thanks for filling it in and see the results for details. The week ahead will centre around the US CPI release on Wednesday but it might be a touch backward looking given that energy has spiked more recently and that used car prices are again on the march after a late summer fall that will likely be captured in this week’s release. Elsewhere, we’ve got a potentially more challenging US earnings season than that seen over the last year will commence with the big financials from Wednesday. In addition minutes from the last FOMC will give clues to the latest taper thinking on Wednesday as well. The IMF/World Bank meetings will generate plenty of headlines this week with their latest world outlook update tomorrow the highlight. The best of the rest data wise consists of JOLTS (Tuesday),which we think is a better labour market indicator than payrolls albeit a month behind, US PPI (Thursday) which will give a scale of building pipeline price pressures, US retail sales and UoM consumer sentiment (Friday), and China’s CPI and PPI (Thursday). With all that to look forward to, markets have started the week on a strong note, with equity indices including the Hang Seng (+2.02%), Nikkei (+1.57%), CSI (+0.32%) and Shanghai Composite (+0.32%) all moving higher, whilst the Kospi (-0.11%) has seen a slight decline. Japanese stocks have been buoyed by comments from new PM Kishida over the weekend that he isn’t currently considering changes to the country’s capital-gains tax. That comes with just 20 days remaining until the country’s general election. Separately in China, the country’s energy woes continue with 60 of 682 coal mines closed in the Shanxi province due to heavy floods, with Chinese coal futures up +8.00% this morning. And the property market issues are continuing to persist, with a new Chinese developer Modern Land seeking a 3 month extension to a $250 million dollar bond due to mature on October 25. By the end of last week, a Bloomberg index of Chinese junk-rated dollar bonds had seen yields climb to a decade-high above 17%, so clearly one to still look out for. Unlike in Asia, equity futures are pointing lower in the US and Europe this morning, with those on the S&P 500 down -0.21%. In terms of the main highlight it’s clearly US CPI mid-week. Given my views that inflation risks have been massively understated this year I’ve been saying for months that these reports have potentially been the most important monthly data we have seen for years. But since they mostly come and go with a “meh… mostly transitory” and a relative whimper, I’ve clearly been wrong to over hype them. So ignore me when I say that this month’s report might not be that interesting. With energy soaring over the last month and signs of inflation pressures continuing to build elsewhere then I’m not sure we can read too much into this month’s figures. Take used cars. Given the 2-3 month lag between actual prices and their CPI impact, this month will more than likely reflect a softening of prices in the summer. However September saw prices rise +5.4% so this will probably show up towards the end of the year along with the recent rise in energy costs. Our economists expect a +0.41% headline (vs. +0.27% previously) and +0.27% core (vs. +0.10%) mom rate. This is a bit above consensus and would take the yoy rate to 5.4% (up a tenth) and 4.1% (unch) respectively. Speaking of inflationary pressures, this morning has seen energy prices take a further leg higher, with WTI oil (+1.90%) moving back above $80/bbl for the first time since late 2014, whilst Brent crude (+1.42%) has moved above $83/bbl. European natural gas prices will continue to be an important one to follow amidst the astonishing price surge there, but the declines at the end of last week mean prices finished the week down by more than -45% since their intraday peak on Wednesday, before the comments from Russian President Putin that brought down prices. The rest of the day-by-day calendar is at the end as usual but although it’s a second tier release normally, tomorrow’s JOLTS will be interesting in as far as it might confirm that the main labour problems in August were a lack of supply rather than demand. The report’s full value is reduced by it being a number of weeks out of date but there’s a reasonable argument for saying that this is a better gauge of the state of the labour market than the payroll release. We go through Friday’s mixed report at the end when looking back at last week. Outside of data, it’s that time again as earnings season gets going, with a number of US financials kicking things off from mid-week. In terms of the highlights, we’ll hear from JPMorgan Chase, BlackRock and Delta Air Lines on Wednesday. Then on Thursday, we’ll get UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Citigroup, US Bancorp and Walgreens Boots Alliance. Finally on Friday, we’ll hear from Charles Schwab and Goldman Sachs. For more info on the upcoming earnings season, you can read DB’s equity strategists Q3 S&P 500 preview here. Back to markets, it was interesting over the weekend that the BoE’s Saunders chose to endorse market expectation of an earlier start to the hiking cycle in the UK rather than push back against it. He is on the more hawkish end of the spectrum but it was an important statement. Earlier, Governor Bailey suggested that there could potentially be a very damaging period of higher inflation ahead if policy makers didn’t react. Interestingly our survey showed that the market thinks the BoE is likely to make a policy error by being too hawkish so a battle seems likely to commence over policy here in the UK over the coming weeks and months. The November meeting appears live. Those comments have helped to support the pound this morning, which is up by +0.16% against the US Dollar. Looking back to last week now, risk sentiment was supported in the first full week of Q4 by easing European energy prices and a cease fire on the debt ceiling that avoided disaster and bought Washington lawmakers 8 weeks to find a more permanent solution. Global equity indices thus gained on the week: the S&P 500 picked up +0.79%, with a slight -0.19% pullback on Friday, and European equities kept pace with the STOXX 600 rallying +0.97% (-0.28% on Friday). Cyclical stocks led the way on both sides of the Atlantic; energy stocks were among the best performers whist financials benefitted from higher yields and a steeper curve. Speaking of which, US 10yr Treasury yields gained a punchy +14.1bps to close the week at 1.603%, their highest levels since early June. The benchmark gradually increased 3.0bps after Friday’s employment data. Inflation compensation continued to drive rate increases, as US 10yr breakevens gained +13.5 bps to finish the week at 2.515%. We need to go back to May to find higher levels. The sovereign yield increases were global in nature, with German bunds gaining +7.3bps and UK gilts +15.6bps higher. German 10yr breakevens gained +3.9bps while UK breakevens were +12.0bps higher. US nonfarm payrolls increased +194k in September, well below consensus expectations of a +500k gain, though private payrolls increased +317k and net two month revisions were up +169k. The unemployment rate ticked down to a post-pandemic low of 4.8% on the back of a declining labour force participation rate. Average hourly earnings were robust, increasing +0.6% mom (+0.4% expected). Taken in concert, the print likely cleared the (admittedly low) bar to enable the FOMC to announce tapering at the November meeting, whilst also feeding the creeping stagflation narrative (see survey results). Elsewhere, building on a preliminary July deal, the OECD said 136 nations have signed up to implement a 15% minimum global tax rate to address adequate taxation of multinational tech firms. As part of the deal, countries agreed not to impose any additional digital services taxes.       Tyler Durden Mon, 10/11/2021 - 08:12.....»»

Category: blogSource: zerohedgeOct 11th, 2021

Bank Stock Roundup: Expansion Plans of RF, USB, BK & Dividend Hike of OZK in Focus

Business expansion initiatives, steepening of the yield curve, and solid economic growth will keep aiding major banks. So, banks like Regions (RF), U.S. Bancorp (USB), BNY Mello (BK), and Bank OZK (OZK) will gain from such favorable developments. Over the past five trading sessions, the performance of major bank stocks depicted an optimistic stance. The continued market optimism on the back of the Federal Reserve’s slightly hawkish stance on monetary policy is driving the bank stocks.Thus, yields on both 10-year and 30-year Treasury bonds have risen over the past week despite concerns related to the debt ceiling and continued inflationary pressure. The rate on the 10-year Treasury bond stands at 1.58% while that for the 30-year Treasury bond is 2.14%.The steepening yield curve, as well as the expectation of solid economic growth, will benefit major banks’ net interest margins amid a low interest rate environment. This, in turn, will support major banks’ top-line growth. With banks’ financials directly tied to the health of the economy, investors are now expecting improved profitability for major banks in the quarters ahead.Now talking about bank-specific developments, the key theme during the past five trading sessions was business expansion efforts. As major banks face revenue growth challenges, they are constantly undertaking measures to further diversify operations and fuel top-line growth. Image Source: Zacks Investment Research(Read: Bank Stock Roundup for the Week Ending Sep 24, 2021) Important Developments of the Week1. Regions Financial RF is on an expansion spree. The company’s subsidiary, Regions Bank, completed the deal (announced in June) to acquire the specialized home improvement lender, EnerBank USA, from CMS Energy Corporation. Estimated transaction proceeds (including customary adjustments at closing) for CMS Energy are $1 billion.   Additionally, Regions Financial’s subsidiary, Regions Bank, has inked a transaction to acquire Sabal Capital Partners, LLC, a diversified financial services firm leveraging tech-driven origination and servicing platform for the small-balance commercial real estate market. While the financial terms of the transaction, expected to close in the fourth quarter of 2021, have not been disclosed, the acquisition of Sabal is likely to expand Regions’ real estate solutions across the full gamut of agency offerings.2. U.S. Bancorp’s USB primary subsidiary, U.S. Bank, which is foraying into the cryptocurrency arena, is garnering custody access to its Global Fund Services clients. It has launched a cryptocurrency custody service for institutional investment managers having private funds in the Cayman Islands and the United States, who would fancy a safe solution for their Bitcoins.3. BNY Mellon BK is strengthening its transactional & custody foreign exchange (FX) offerings. Effective immediately, the company is adding new trading capabilities, which will turn it into “a transparent open architecture that can be leveraged by a variety of client types for their rules-based, end-to-end transaction needs.”Driven by the changes, the clients in the company’s FX trading programs will now be able to personalize how they trade currencies through it. This will lead to more transparency and provide increased flexibility for participants.Through the enhancement of FX offerings, clients will be able to “design elements of their standing orders.” This will also help in portfolio customization as well as upgrade “trade micro-timestamping facilitates” and offer more clarity as to how the instructions are being executed.BNY Mellon’s new offerings will help upgrade Asia’s capabilities. Specifically, it will enhance offering across the APAC markets and at the same time broaden the client coverage team across the region.This new development will complement BNY Mellon’s launch of an API FX solution in July last year, which lowered “confirmation times for restricted emerging market currencies from hours to seconds.” Also, the company’s expanded FX capabilities in Singapore, which started in June 2020, will capitalize on these new offerings.4. Bank OZK OZK has yet again announced a dividend hike. The company declared a quarterly cash dividend of 29 cents per share, reflecting a rise of 1.8% from the prior payout. This marks the 45th consecutive quarter of dividend hike by the company.Price PerformanceHere is how the seven major stocks performed: Image Source: Zacks Investment ResearchOver the past five trading days, both JPMorgan and Bank of America recorded maximum gains, with their shares rallying 2.4% each. Also, shares of both U.S. Bancorp and PNC Financial have gained 1.8% during the same period.Over the past six months, shares of Capital One and Wells Fargo have jumped 27.5% and 20.2%, respectively, while PNC Financial has gained 14.7%.What’s Next?Over the next five trading days, third-quarter earnings for banks will begin in full swing. Like always, the Wall Street giant JPMorgan will kick start the banking earnings season, reporting on Oct 13. Other big names – Bank of America, Citigroup, and PNC Financial – are scheduled to announce quarterly numbers on Oct 14. 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 Regions Financial Corporation (RF): Free Stock Analysis Report The Bank of New York Mellon Corporation (BK): Free Stock Analysis Report U.S. Bancorp (USB): Free Stock Analysis Report Bank OZK (OZK): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 8th, 2021

7 Long-Term Bets That Are Strong Buys Today

There is lot of uncertainty in the short term, which could be reason to invest for the long term. The final quarter of the year is usually an exciting one because of the holidays. And every year, we typically don’t have a whole lot of other things disturbing the view. But this year is a little different and there are way too many unknowns at this point. Everything may still turn out great, but there are chances that it won’t be so great either. So this seems like a good time as any to stretch out the investment horizon and take stock of the longer-term potential. That’s what I’m attempting here with stocks that are great buys today based on their long-term potential.But first, a brief recap of the current situation-    What Could Go WrongEarnings Season: We already know that this earnings season is not going to be as eye-popping as the last (when S&P 500 earnings grew 95.3% on revenue growth of 25.3%!), although they’re expected to be pretty good in their own right. From what we know so far, earnings growth for the S&P 500 is expected to be 26.1% on revenue growth of 13.8%. What’s more, margins are still expected to be up both sequentially and year over year. But investors have been selling the strong earnings news of late, and we don’t know if they’ll go that way this time as well. And just in case there are disappointments, which could very well happen, given the extent of the supply chain issues that are impacting both availability and prices of inputs. So there are big ifs and buts to those strong expectations.Energy Crisis: The second big headwind is the energy crisis. WTI Crude prices are approaching the $80 level, while the Brent usually trades a bit higher is above that mark. If the U.S. doesn’t release some of its strategic reserves (some media outlets are saying that it will while others are saying that it won’t), we will see these prices march higher. Which is going to be bad for inflation and also for the consumer (that has been pretty strong so far, and needs to stay that way in the crucial fourth quarter).But going by media reports and analyst speak, the energy crunch is partly driven by a secular move away from fossil fuels, i.e. we are curtailing production when we haven’t dealt with the issue of demand that continues to increase. And this year it is exacerbated by the pent-up demand situation created by the pandemic.Oil’s substitutability is also a factor to consider. Natural gas prices have been soaring this year because of higher consumption at power generation as a result of a hotter summer leading to historically low inventories. Since natural gas prices are particularly high in Asia, some industries are switching to oil. And of course, Europe is in particular crisis because of lower production from wind. Russia may help alleviate the situation, but again it may not. So until there’s more clarity on that, it’s safe to assume that the pressure on oil remains.Softer Holiday: The consumer has been relatively strong this year and that’s partly why this holiday season is expected to be a good one. But availability of holiday items could become a major issue because of supply chain problems. Most companies want the buying to start soon and spread out through the quarter, so there’s better planning and distribution of constrained resources. And promos and discounts in the early days may help this happen to a certain extent. But not everyone will start early. So some of the year-end rush will definitely be there. Whether the supply chain can handle it, given the way it’s struggling right now, is a big unknown. And this could lead to lost sales.What Could Go RightIf the above negatives don’t happen, everything could be hunky dory.Earnings Season: So investors could reverse trends this quarter and buy companies that report solid beats. They could punish the negative surprisers less because demand is not going away but simply getting pushed out because supply can’t keep up.  Energy Crisis: While this won’t go away entirely, the U.S. and Russia could step in to help the situation.Debt Ceiling: There could be a relief rally when the ceiling is finally raised, possibly close to the Oct 18 deadline. Some experts think that this ritual needs to be done away with completely. But we’ll see in the following days.Robust Holiday: There’s an equal chance that consumers are wise to the situation this holiday season and that they will start early to grab the discounts. So sales wont be lost and instead, there will be stronger profitability because of lower discounts as we move through the quarter.There has also been a lot of talk about passing on rising input costs to consumers. This, of course, means that people will be paying more for whatever they buy. This year, they are likely to go along given that household savings remain robust and the desire to indulge is high. With that backdrop, let’s jump to stocks. I’m seeing that the auto dealers are still worth buying, as are some retailers and transporters.AutoNation, Inc. ANAutoNation is one of the nation’s largest dealers of new and used vehicles, as well as financing and maintenance and repair services, vehicle parts, extended service contracts, vehicle protection products, and other aftermarket products.The Zacks Rank #1 (Strong Buy) stock with A grades for Value, Growth and Momentum, has grown its earnings 17.6% over the last five years. Growth in the current year is expected to be 123.5% and in the long term, 19.1%.With a P/E multiple of 7.2X (the average for our coverage universe is at 16X), a P/S multiple of 0.34X (indicating that the share price is just a fraction of the sales value generated) and a PEG of 0.38 (meaning that its earnings growth potential is not fully valued), the shares look really cheap.Group 1 Automotive, Inc. GPIGroup 1 is one of the leading automotive retailers of new and used cars, and light trucks in the world, with operations primarily located in the U.S., UK and Brazil. It also offers vehicle financing and insurance, maintenance and repair services, as well as replacement parts and aftermarket automotive products.The Zacks Rank #1 stock also has Value Growth and Momentum Scores of A. In the last five years, its earnings have growth 26.9% and it is expected to grow 83.5% this year. Its long-term growth is expected to be 13.2%.It has an attractive valuation with a P/E multiple of 5.7X, P/S multiple of 0.27X and a PEG of 0.43.Lithia Motors, Inc. LADOne of the leading automotive retailers of new and used vehicles, and related services in the United States, Lithia Motors has the largest online inventory in the country with competitive pricing on vehicles and services. It introduced its e-commerce platform Driveway in July 2020.Another Zacks Rank #1 stock with a triple A for Value, Growth and Momentum, it has a solid growth profile. It has grown earnings at an average rate of 26.1% in the last five years, it is expected to grow 93.0% this year and 21.9% in the long term.At 8.8X earnings, 0.52X sales and 0.40X earnings growth, the shares are worth snapping up today.Penske Automotive Group, Inc. PAGThe company has an automotive and commercial truck dealership business in the United States, Canada and Western Europe through which it offers new and used vehicles, finance, insurance and vehicle service contracts; maintenance repair services; replacement parts and aftermarket automotive products. It also deals in commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand.This Zacks Rank #1 stock also has an A for Value and Growth but a B for Momentum. It has grown earnings 14.7% in the last five years. It is currently expected to grow 101.3% in 2021 and 14.8% over the long term.It is trading at 7.6X earnings, 0.33X sales and 0.51X earnings growth.Abercrombie & Fitch Company ANFAbercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel for men, women, and kids through a network of approximately 850 stores across North America, Europe, Asia and the Middle East.The Zacks Rank #1 stock has a Value Score of A, Growth Score of A and Momentum Score of C. Its stellar earnings growth in the last five years of 73.9% is expected to be followed up with 702.7% growth this year and 18.0% growth in the long term.The shares trade at 8.6X earnings, 0.62X sales and 0.48X earnings growth. So they are definitely worth picking up today.Hibbett, Inc. HIBBHibbet has evolved its offerings from sports goods to an athletic-inspired fashion focused assortment, including clothes, shoes and accessories. It also offers products for individual and team sports.The Zacks Rank #1 stock has Value and Growth Scores of A and a Momentum Score of D. After growing earnings at 28.5% over the last five years, the company is expected to grow 84.6% in 2021. In the long term, it’s expected to grow 22.4%.Its valuation also supports accumulation of the shares: P/E of 6.6X, P/S of 0.67X and PEG of 0.29.ArcBest Corp. ARCBArcBest Corporation provides road, air and ocean freight transportation services, integrated warehousing services and supply chain solutions. It also offers premium, expedited services to government and commercial customers.The Zacks Rank #1 stock has Value and Growth Scores of B and a Momentum Score of A. In the last five years, the company has grown 16.2%. In 2021, its expected growth rate is 113%. Analysts expect it to grow 29.7% over the next five years.Its current valuation represents a P/E multiple of 13.0X, a P/S multiple of 0.67X and a PEG ratio of 0.44X.One-Month Price MovementImage Source: Zacks Investment Research 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 Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Penske Automotive Group, Inc. (PAG): Free Stock Analysis Report AutoNation, Inc. (AN): Free Stock Analysis Report Hibbett, Inc. (HIBB): Free Stock Analysis Report Group 1 Automotive, Inc. (GPI): Free Stock Analysis Report Lithia Motors, Inc. (LAD): Free Stock Analysis Report ArcBest Corporation (ARCB): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 8th, 2021

Oil & Gas Stock Roundup: Week"s Action Highlighted by Exxon & BP

Apart from ExxonMobil (XOM) and BP plc (BP) there was news from TotalEnergies (TTE), Phillips 66 (PSX) and Eni (E) during the week. It was a week when oil and gas prices eked out fresh multiyear highs.On the news front, U.S. supermajor ExxonMobil XOM issued update on its upcoming Q3 earnings, while London-based peer BP plc BP started oil production at its Thunder Horse South Expansion Phase 2 project in the U.S. Gulf of Mexico.Overall, it was another good week for the sector. West Texas Intermediate (WTI) crude futures gained 2.6% to close at $75.88 per barrel and natural gas prices climbed more than 8% to reach $5.619 per million British thermal units (MMBtu). Overall, both commodities managed to maintain their forward momentum from the previous five weeks.Coming back to the week ended Oct 1, oil prices rose despite a bearish report from the Energy Information Administration ("EIA") that showed a build in crude and fuel inventories. Instead, energy investors chose to concentrate on the market’s robust fundamentals and a supportive macro backdrop.Crude supplies recently fell to their lowest levels since October 2018, with U.S. commercial stockpiles down some 17% since mid-March. There is also a marked improvement in fuel demand on the back of rebounding road and airline travel.Natural gas climbed too, buoyed by off-season cooling demand, the anticipated pre-winter supply crunch, and surging consumption in Europe and Asia.Recap of the Week’s Most-Important Stories1.  ExxonMobil recently expressed optimism over the significantly higher oil and gas prices contributing to its third-quarter 2021 upstream earnings. The integrated energy giant is expecting its upstream business to generate a maximum of $1.5 billion more earnings in the third quarter sequentially. The company also projects a significant sequential improvement in its downstream business – another key operating unit.The company projects operating results in the third quarter from the oil and liquids businesses to improve $200 million to $600 million compared to the June quarter of 2021, thanks to an uptick in oil prices. The improvement in natural gas prices is likely to have contributed another $500 million to $900 million to upstream business profits, as estimated by the energy major. The rolling out of coronavirus vaccines, which led to expectations of a strong rebound in economies, primarily helped commodity prices to move north in the September quarter of 2021.ExxonMobil estimates $500 million to $700 million of sequential improvement in earnings from the downstream business in the September quarter, thanks to improved refining margins. However, the company estimates profits to decrease $200 million to $400 million from the chemical business due to an unhealthy chemicals margin. (ExxonMobil Expects Oil & Gas Price Hike to Aid Q3 Earnings)2.   BP commenced production at its Thunder Horse South Expansion phase 2 project in the deepwater Gulf of Mexico. The Thunder Horse field is one of the largest discoveries of the company in the Gulf of Mexico. BP operates with a 75% working interest in the field, while ExxonMobil owns the rest.In January 2017, the European energy operator announced the commencement of the Thunder Horse South Expansion project to increase production at the Thunder Horse platform by an estimated 50,000 gross barrels of oil equivalent per day. The platform is placed in more than 6,000 feet of water in the Mississippi Canyon Block 822.The Thunder Horse facility commenced production in June 2008 and can manage 250,000 gross barrels of oil and 200 million gross cubic feet per day of natural gas. The field's initial two wells will add an average gross production of 25,000 barrels of oil equivalent per day. The company expects to drill eight wells for the field’s complete development. (BP Commences Production At Gulf's Thunder Horse Oil Platform)3   TotalEnergies TTE reaffirmed its strategy of producing multiple sources of energy, with a primary focus on cutting carbon emissions. TotalEnergies is on course to meet its target of net-zero carbon emission by 2050 and is implementing steps to achieve the same. The Paris-based oil biggie expects to lower scope 1+2+3 net operated oil & gas emissions worldwide by 30% within 2030 from a 2015 base and contribute to lowering greenhouse gas emissions.The company is making systematic investments in its operations to achieve clean energy transition goals. The company will invest $13-15 billion per year for the 2022-2025 period and allocate 50% of these investments to expand its activities and the rest for maintaining operations. Out of the planned growth investment, 50% will be dedicated to the development of new energies, mainly renewables and electricity, and the other half to natural gas, essentially LNG.TotalEnergies is aiming to increase LNG production by 30% and substantially improve biogas production by 2025. The company aims to produce 100 GW of renewable electricity by 2030. Increasing the production of clean sources of fuel and electricity will assist it in lowering global emissions. (TotalEnergies Issues Outlook, Focuses on Clean Energy)4.   Phillips 66 PSX announced that it has set an ambitious goal of reducing greenhouse gas emissions. From its operations, the diversified energy manufacturing and logistics company has set a target of lowering Scope 1 and Scope 2 emissions intensity by 30% by 2030. Over the same time frame, from its energy products, the company has set a goal of lowering Scope 3 emissions intensity by 15%. The comparison is with the 2019-level.The company has set a high priority on combating climate change and has been supporting the Paris Agreement. While addressing the mounting need for affordable energy, which will aid economic growth, Phillips 66 is also aligning its goal with developing climate change solutions.Phillips 66 has an in-house research and development group to support the energy transition, which very few companies have in the downstream space. With a motive to develop and commercialize low-carbon technologies, the company’s Energy Research & Innovation group has been working actively. (Phillips 66 Announces Ambitious Plan of Reducing GHG)5.  Eni SpA E recently commenced production from the Cabaça North development project in deep waters offshore Angola. The project is located in the Eastern area of Block 15/06. The Zacks Rank #1 (Strong Buy) Italian energy major is utilizing the Armada Olombendo Floating Production Storage and Offloading (FPSO) unit at the site.You can see the complete list of today’s Zacks #1 Rank stocks here.Peak production from the Cabaça North development is expected to touch 15,000 barrels of oil per day (bpd). It is likely to boost and sustain the Armada Olombendo FPSO’s production. The vessel has an overall production capacity of 100,000 bpd, with no discharge and process flaring. Commencing output from the development marks Eni’s drive toward infrastructure-led exploration, creating sustainable opportunities from the existing infrastructure.The Cabaça North development project marks the second start-up by Eni’s Angola unit this year, following the Cuica field in the same block. It is using the same FPSO vessel for producing hydrocarbons from the Cuica field. It was a milestone for the energy giant as it took only a little more than four months to bring the discovery into production. Within the next few months, the company expects its third project to come online from the Ndungu Early Production in the western part of the block. (Eni Begins Production From Cabaca North Offshore Angola)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                +5.8%                +9.1%CVX                 +3.7%               +1.3%COP                +7.8%               +37.4%OXY                 +10.9%             +29.5%SLB                 +4.7%                +11%RIG                  +11.7%              +13.5%VLO                 +8.9%                -0.4%MPC                +2.7%                +17.2%The Energy Select Sector SPDR — a popular way to track energy companies — was up 5.8% last week. The best performer was offshore driller Transocean RIG whose stock climbed 11.7%.Over the past six months, the sector tracker has increased 12.1%. Upstream biggie ConocoPhillips COP was the major gainer during the period, experiencing a 37.4% price appreciation.What’s Next in the Energy World?As the global oil consumption outlook strengthens amid tightening fundamentals, market participants will be closely tracking 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. Finally, news related to coronavirus vaccine approval/rollout/distribution will be of utmost importance. 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 BP p.l.c. (BP): 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 Eni SpA (E): Free Stock Analysis Report Phillips 66 (PSX): 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: zacksOct 7th, 2021

Time to Buy Back into the COVID Stocks

The "COVID stocks" may have fallen from their peaks, but they're still fundamentally solid. Jeremy highlights three areas that should continue outperforming in the future despite selling off as the vaccines rolled out. The stock market has experienced some wild rides since the beginning of the COVID-19 pandemic. We saw a crash in 2020 and a subsequent rally that currently puts us just 3% away from all-time highs in the indices. It has been a year and a half since COVID came to America and there are big questions surrounding what stocks will outperform into the end of the year.Life is not 100% back to normal and the market is in a confusing spot. Tech stocks were thriving during the pandemic, but started to see weakness when the vaccines were rolled out. Money then rotated into the reopening stocks like airlines, hotels, restaurants and cruise lines. This created a divergence on some trading days that separated the performance of the Nasdaq and S&P by as much as 1%.Delta Changed Everything The delta variant has unfortunately stopped the momentum reopening stocks saw earlier in the year. While vaccinations are slowing the spread, the world is still having issues fully coming back online.Investors now must look at the staying power of the “COVID stocks”. Many of these names have fallen from their peaks, but continue to perform fundamentally as we drift through the delta stage of this pandemic.The recent divergence has created tons of opportunities as the COVID names continue to see tailwinds from a permanently changed economy. Below we will discuss three areas that were hot during COVID, but have seen sell offs since the vaccines were rolled out. We will then dive into some stocks that reside within these sectors that will continue to outperform in the future.Continued . . .------------------------------------------------------------------------------------------------------Is the Market Rigged?How often have you owned a stock that gets pummeled with no logical explanation? This is often caused by computer-driven High-Frequency Traders (HFT). They fire off massive amounts of short trades to drive stock prices down, then profit from the rebound. Their gains come at the expense of human investors.The good news is that Zacks has mounted a Counterstrike to catch the best of these “manipulated price drops” as they rebound. For example, we recently closed gains of +40.2%, +49.1%, +62.0%, and even one for +252.0% in less than a month.¹Access to these trades must be limited. It closes to new investors Sunday, October 10.See Counterstrike Stocks Now >>------------------------------------------------------------------------------------------------------1) Technology We all know the big names that did well during the pandemic. Companies like Amazon, Microsoft, Netflix, Apple and many more saw record revenues as people were dependent on their technology to continue living life and doing business.Many tech companies saw exponential growth over the last year, growth that they were not expecting for another 10 years. The pandemic accelerated tech into the future and we are now living in a permanently changed environment because of it.The technology ETF XLK took a 33% dip during the COVID crash. However, it quickly bounced back to all-time highs in June of last year and is now up over 135% from those COVID lows.Let’s go over two stocks that became household names over the last year and continue to do well while navigating COVID.ZM- Zoom Video is a communication platform that helped a lot of families and businesses connect during the pandemic. The company saw parabolic growth during COVID, seeing three straight quarters of triple-digit EPS beats in 2020. While growth has slowed, the company continues to beat expectations, with an EPS surprise to the upside of 17% in late August.The stock rose from $65 to $588 in 2021, but started to pull back in November, right when the vaccine news hit. The stock pulled back 53% from highs and has dropped back to the May lows around the $275 level.The company is valued at $82 billion and investors are looking to buy the dip if the current support area can hold.DOCU- DocuSign provides e-signature solutions and has become popular with users in real estate, insurance, healthcare, government and more. When people couldn’t get together to sign documents, they took care of business online with DocuSign.The company saw a breakout quarter last year, beating EPS by 142% back in September. The earnings momentum continued in 2021, as the company has reported two beats on EPS of over 60%. The most recent quarter saw a beat of 20% on earnings, but analyst estimates for the current year and quarter are headed higher.The stock was up almost 200% in 2020, hit new all-time highs in August, but has since pulled back over 15% from highs. The stock is now worth $54 billion as investors seem to be accepting that the company’s momentum is not stopping anytime soon.2) Consumer Staples  This sector is comprised of the goods and service that are necessities, which often do well during recessions. However, the COVID outperformance stemmed from stay-at-home orders, which led to panic buying of food, toilet paper and almost anything in a grocery store.The main ETF for this sector is XLP, which bounced 53% from the March 2020 lows to August highs. The sector has seen some selling of late, but is only 4% off its highs.Let’s go over two leaders in this group:PG- Proctor & Gamble is a household name that sells many of the products in your home. Toilet paper, shampoo, deodorant, razors, toothpaste and diapers are all products we buy from P&G.The company reported a 15% beat on EPS in July of last year, the major COVID quarter when people panic bought everything on the shelves. However, the company is still outperforming, with beats on EPS of at least 4% every quarter since that big July number.The company is valued at $345 billion, pays a 2.4% dividend. The stock is only 2% off its 2021 highs.WMT- Walmart is the popular brick-and-mortar store, but in recent years has expanded into e-commerce, which helped them during the early stages of COVID.The company reported a whopping 28% EPS beat last summer, but topped that with a 38% beat this past May. Their most recent quarter saw a 14% beat, which brought in some selling off all-time highs.While the momentum has cooled a bit, Walmart continues to outperform, beating earnings expectations five out of the last six quarters. The company is almost valued at $400 billion and pays a 1.5% dividend.3) Camping There was a lot of fear surrounding travel at the height of the pandemic. Because the U.S. had one of the highest cases counts, some countries issued quarantine rules for travelers. This wasn’t appealing for someone on vacation so we saw a big uptick in domestic travel. And since all the hotels were closed, the demand for RVs and the desire to camp increased.While America has opened up, the demand for camping is still there as we head through the fall months. We have already seen evidence of this when two of the RV manufacturers recently reported earnings.THO- Thor Industries is the largest manufacturer of RVs in the world. Some popular brand names include Airstream, Jayco and Keystone.The company had a lot of success in 2020, including a 200% beat on EPS in June of last year. More recently, the company is coming off a 39% EPS beat this June, as well as posting an order backlog of $14 billion. The only issue for Thor is making the RVs fast enough, which led to a 30% slide in the stock in Q2 of 2021.The stock went from $32 to $152 last year, so you can’t blame investors for taking profits. However, the demand for RVs is the strongest it has ever been, which has the company valued at $6 billion. Investors can also collect a 1.5% dividend if they jump into the recent sell off.WGO- One of Thor’s biggest competitors is Winnebago. The company is valued at $2.2 billion and has strong brand recognition after being around for sixty years.Winnebago is smaller and only pays a 1.1% dividend, but an EPS beat of 23% in June helped the stock bounce. The stock is now trading sideways, but looks poised to go higher if the company can show investors that earnings momentum will continue when they report in October.In Summary The questions surrounding the “COVID stocks” will lead to continued volatility. This will create opportunities that will allow entry points at discounted prices. If investors focus on the stocks that are both fundamentally and technically strong, they will be rewarded with outsized returns. How to Capitalize  The current atmosphere is not your typical stock trading environment. The Fed is about to start the tapering talk and the reopening trade is largely priced in. This combination could cause outsized earnings moves.The opportunities during this earnings season will be plentiful due to the recent volatility. The mission of our portfolio, Zacks Counterstrike, will be to catch these big moves, playing both the long and short side of the market.I plan to be in before and after earnings depending on the situation and look forward to capturing the big moves that are coming our way. The upcoming quarter will be important for stock prices so join me and let's profit from it!Our goal: Quick and consistent profits.For example, we recently closed gains of +40.2%, +49.1% and +62.0%. One even closed at a remarkable +252.0% in less than a month.¹Look inside our Counterstrike portfolio today and you may also download our Special Report, 7 Best Stocks for the Next 30 Days, absolutely free. These buy-and-holds are the perfect complement to Counterstrike's faster-action trades. Zacks experts reveal stocks believed to have great upside potential over the next 30 days.Important Note: Access to Counterstrike is limited and your chance to look in and claim your free bonus report ends Sunday, October 10.Get exclusive access to Zacks' Counterstrike portfolio now >>Happy trading!Jeremy MullinEditor of Counterstrike Jeremy Mullin is a stock strategist who combines the fundamental power of the Zacks Rank, technical analysis and computer driven trading to find the best trades. Discover all of his current recommendations in Zacks Counterstrike.¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. 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 To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 6th, 2021

Mixed Session While Watching Yields and Washington

Mixed Session While Watching Yields and Washington The NASDAQ made an attempt to recover some of yesterday’s sharp losses this morning, but the rally ultimately failed on Wednesday as Treasury yields steadied but remained high. The other major indices managed slight gains as we move toward the final day of September. The tech-heavy index slipped 0.24% (or about 34 points) to 14,512.44. This decline makes four straight days of losses for the NASDAQ, including yesterday’s 2.8% plunge. The 10-year is still above 1.5%, but remains below its recent high of more than 1.56%. Meanwhile, the Dow rose 0.26% (or about 90 points) to 34,390.72, following a 1.6% plunge on Tuesday that snapped a four-day winning streak. The S&P was up 0.16% to 4359.46 after a 2% dip yesterday. The historically difficult month of September mercifully comes to an end tomorrow. The sharp Tuesday selloff made this already lackluster period look even worse. The NASDAQ is now down more than 5% for the month, while the S&P and Dow are off 3.7% and 2.8%, respectively. However, the S&P and NASDAQ are slightly higher for the quarter, which also ends on Thursday. Congress isn’t helping the situation. Another thing that expires tomorrow is the government’s funding, which means October could begin with a shutdown. A bill that would’ve kept things funded through early December was blocked on Monday and they’re still trying to get something done before the deadline. And then there’s the debt ceiling, which needs to be taken care of sometime in October or risk an unprecedented default of U.S. debt. At the moment, the market is much more concerned about rising yields than anything happening in Washington, though news from the Capitol could certainly impact stocks over the next few sessions. “The good news is that we've been through so many government shutdowns over the last 10 years, that Wall Street doesn't get panicked anymore. But the bigger concern is still the debt ceiling," said Tracey Ryniec in Insider Trader. "So far, Wall Street is still assuming it will get raised by the Oct 18 deadline that Treasury Secretary Yellen says is the absolute last day the US can pay its bills. But the gamesmanship around the debt ceiling isn't healthy either. I would look for further weakness on Wall Street until some of these issues are resolved.” Do you think September 2021 will go out quietly tomorrow? You probably shouldn’t bet on it. Let’s buckle up and see what happens... Today's Portfolio Highlights: Headline Trader: The SPAC (special purpose acquisition company) market came under a lot of pressure earlier this year, but now Dan thinks “this nascent asset class has sunk back below investors’ radars”. Therefore, it looks like a good place to invest again, and the editor sees a fantastic opportunity with G Squared Ascend I (GSQD). This blank check company intends to merge with Transfix, a “revolutionary” digital business-to-business (B2B) freight marketplace powered by AI. The company is still not profitable, but the freight marketplace has tremendous opportunities for margin improvements, especially when using innovative technologies. The editor decided to add GSQD on Wednesday with a 5% allocation due to its potential moving forward and to better diversity the portfolio with a low beta name. Read the full write-up for a lot more on this new addition.   Home Run Investor: That selloff the other day was nothing but a buying opportunity to Brian. And on Wednesday, he followed through by adding a company with tons of potential moving forward. Sumo Logic (SUMO) provides software solutions that it calls “continuous intelligence”. This is a new overlay that works with all the cloud components and helps organize and process the data that is coming in. SUMO hasn’t hit the mainstream yet, but it is already routinely beating the Zacks Consensus Estimate with an average surprise of 36% over the past four quarters. Rising earnings estimates lifted the company to Zacks Rank #2 (Buy) status. Since the portfolio was full, the editor needed to sell a name before making a new addition. He decided to get out of Smith & Wesson Brands (SWBI) for a more than 6% return in about four months. See the complete commentary for more on today’s action. Large-Cap Trader: With the difficult month of September about to end, it’s time for John to make a few changes to the portfolio. This time, he’s only selling one name by getting out of Lattice Semiconductor (LSCC) on fears of a selloff moving forward. The position brings a profit of 23.4% in just two months. The editor is keeping an eye on the holiday shopping season with his three new buys today, which are: • Capri Holdings Ltd. (CPRI) – apparel & accessories • Walmart (WMT) – retail giant • Qualcomm (QCOM) – leader in wireless technologies These new buys are all Zacks Rank #2s (Strong Buys) in highly-ranked spaces (Top 25% or better in the Zacks Industry Rank). Furthermore, their most recent earnings surprises and their four-quarter average surprises are both in the double digits. John believes that these names will perform well in the upcoming holiday shopping season, which means they should have a strong end to 2021 and solid start to 2022. The portfolio weights will be approximately 5.2% for each position. Read the complete commentary for more specifics on all these moves. Have a Good Evening, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 30th, 2021

3 Top Retail Stocks to Buy Ahead of the Holidays and Hold

Let's look at 3 highly-ranked retail stocks that investors might want to consider buying now for the holiday season and holding... Today’s episode of Full Court Finance at Zacks dives into where the market stands heading into the holiday shopping season, following another big pullback Tuesday. The focus then shifts to three highly-ranked retail stocks that investors might want to consider buying now and holding.Stocks tumbled Tuesday, with the S&P 500 down 1.8%, the Nasdaq 2.5% lower, and the Dow off 1.4% through early afternoon trading. The sharp drop marked the S&P 500’s second straight day of losses as Wall Street focuses on what’s next for the Fed. Meanwhile, bond yields have climbed to near three-month highs, with the 10-year U.S. Treasury at around 1.52%, up from the 1.18% it touched in early August—bond yields rise as prices fallThe recent selling comes after the Fed signaled last week that it could start to slowly reverse its pandemic stimulus, or massive bond buying program as soon as November. Meanwhile, the central bank said it could start to raise its interest rates sometime next year—higher yields make growth tech stocks less attractive.Stocks could remain shaky in the fall and winter, and some Wall Street analysts think the U.S. economic comeback already peaked. Others cite cooling earnings revisions, rising prices, and global supply chain setbacks as reasons to worry.But it is worth noting that even when the Fed starts to raise its interest rates, they will likely continue to favor stocks. For example, the 10-year U.S. Treasury yield has rarely and barely moved above 3% in the last decade, and with higher than 2% inflation, Wall Street will likely continue chasing returns in equities.The market was also due for a pullback or even a correction (10% move lower from its highs) given the massive 2021 run. In fact, traders and analysts have been calling for a downturn for months and when it does come it will be healthy.Still, long-term investors should try to stay relatively exposed to the market at all times. And let’s remember the overall earnings picture remains strong and the margins outlook for 2022 and 2023 suggests inflation could be somewhat transitory. On top of that, August retail sales were surprisingly solid, highlighting economic resilience in the face of delta variant worries.Given this backdrop, investors might want to consider adding strong retail stocks poised to benefit from holiday season spending and grow for years, within different aspects of the market. The first stock up is high-end cooler and drinkware giant Yeti YETI that’s carved out a niche within a group of up-and-coming retailers like Lululemon LULU and others.Meanwhile, Best Buy BBY has outpaced Walmart WMT over the last five years and its dividend yield is impressive. And, of course, it’s prepared to gain from the booming consumer electronics space that includes giants like Apple AAPL and new standouts such as Sonos SONO.The last stock up is mattress power Tempur Sealy International, Inc. TPX, which has benefited from the soaring housing market and home improvement-style sales. 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 Apple Inc. (AAPL): Free Stock Analysis Report Walmart Inc. (WMT): Free Stock Analysis Report Best Buy Co., Inc. (BBY): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis Report Tempur Sealy International, Inc. (TPX): Free Stock Analysis Report Sonos, Inc. (SONO): Free Stock Analysis Report YETI Holdings, Inc. (YETI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 29th, 2021

Why Is Dick"s (DKS) Up 0.2% Since Last Earnings Report?

Dick's (DKS) 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 Dick's Sporting Goods (DKS). Shares have added about 0.2% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Dick's 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. DICK'S Sporting Tops on Q2 Earnings & Sales, Ups ViewDICK'S Sporting posted better-than-expected second-quarter fiscal 2021 results, wherein both top and bottom lines improved year over year. Results gained from customer demand across all categories and enhanced omni-channel capabilities. Management raised its fiscal 2021 view.Q2 in DetailIn the fiscal second quarter, adjusted earnings were $5.08 per share, up 58% from the prior-year quarter figure of $3.21. The figure surpassed the Zacks Consensus Estimate of $2.80 per share. The uptick can be attributable to solid sales and improved gross margins in the reported quarter. Adjusted earnings also skyrocketed 303% from second-quarter fiscal 2019.Net sales of $3,275 million grew 21% year over year and beat the Zacks Consensus Estimate of $2,834 million. The uptick can be attributable to improved store sales and a robust online show. Net sales rose 45% from second-quarter fiscal 2019.Consolidated same-store sales (comps) advanced 19.2% compared with comps growth of 20.7% and 3.2% in second-quarter fiscal 2020 and second-quarter fiscal 2019, respectively. This can be attributable to double-digit sales growth in its core categories — hardlines, apparel and footwear — along with higher average ticket and transactions.E-commerce sales surged 111% from second-quarter fiscal 2019, while it declined 28% year over year. E-commerce accounted for nearly 18% of net sales in the reported quarter, up from 12% in second-quarter fiscal 2019 but down roughly 30% from second-quarter fiscal 2020. The online unit benefitted from services like in-store and curbside pickup, reduced promotions, faster delivery and a better checkout experience. Its mobile platform also remains a key growth driver, accounting for more than 50% of online sales for the first half of 2021.Gross margin expanded 538 basis points (bps) year over year to 40%, driven by higher sales and improved merchandise margins. Adjusted EBT expanded 562 bps year over year to 20.28% in the reported quarter. SG&A expenses of 19.6%, as a percentage of sales, declined 46 bps year over year and 351 bps from second-quarter fiscal 2019. The company incurred nearly $15 million of COVID-related safety costs for the six months ended Jul 31, 2021.Financial AspectsDICK'S Sporting ended the reported quarter with cash and cash equivalents of $2,236.7 million, no borrowings under its $1.9-billion revolving credit facility, and total stockholders' equity of $3,005.4 million. Total inventory rose 7.2% year over year as of Jul 31, 2021. In the quarter under review, total capital expenditure amounted to $167.7 million. The company now projects capital expenditure of $370-$395 million, on a gross basis, for fiscal 2021.The company has hiked its quarterly dividend to 43.75 cents per share on common stock and Class B common stock, which is likely to be paid out on Sep 24 of shareholder record as of Sep 10. It repurchased 0.8 million shares worth $75.8 million. Following this, the company has roughly $879 million under its existing authorization, which is valid till June 2024. It also projects share repurchase of at least $400 million for fiscal 2021.FY21 GuidanceDriven by the impressive quarterly results along with a solid start to the fiscal third quarter and the back-to-school season, management raised its fiscal 2021 view. Fiscal 2021 sales are expected to be $11,520-$11,720 million, up from the previously mentioned $10,515-$10,806 million. Same-store sales are likely to grow 18-20%, up from the earlier stated 8-11%.Adjusted earnings are now envisioned to be $12.45-$12.95, which reflect a sharp improvement from $8-$8.70 per share mentioned earlier. Adjusted EBT is likely to be $1.61-$1.67, up from the previously stated $1.02-$1.11. Adjusted EBT margin is expected to be 14%. Gross margin is estimated to be higher than fiscal 2020 and fiscal 2019 on the back of improved merchandise margins and lower fixed expenses. SG&A expenses are likely to decline from the figures reported in fiscal 2020 and 2019 due to higher expected sales. However, freight expenses are expected to persist through the rest of fiscal 2021.The company is on track with the plans to open six DICK'S Sporting Goods stores and eight specialty concept stores this year. It anticipates relocating 11 DICK'S Sporting Goods stores and converting two Field & Stream stores into Public Lands stores.Business DevelopmentsIn second-quarter fiscal 2021, the company converted around 25 additional DICK's stores to premium full-service footwear and added 50 elevated soccer shops. Its first two DICK's House of Sport stores in Rochester, NY, and Knoxville, TN, are performing well, with positive customer response.Management remains optimistic about the early performance of VRST, its new premium men's apparel brand. Being one of the leading premium golf retailers in the world, DICK’S Sporting has rolled out the TrackMan technology and revealed plans to expand this in all stores in the fiscal third quarter. The company is also set to launch its first Public Lands store in Pittsburgh and expects Public Lands to serve as a key growth driver in the near term.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 64.6% due to these changes.VGM ScoresAt this time, Dick's has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Dick's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Time to Invest in Legal Marijuana If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027. After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%. You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.Today, Download Marijuana Moneymakers FREE >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report DICKS Sporting Goods, Inc. (DKS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 24th, 2021

Oil & Gas Stock Roundup Headlined by Chevron & Diamondback

Apart from Chevron (CVX) and Diamondback Energy (FANG) there was news from Royal Dutch Shell (RDS.A), Helmerich & Payne (HP) and Suncor Energy (SU) during the week. It was a week when oil prices bounced back above $70 and natural gas futures registered their highest settlement since February 2014.On the news front, American biggie Chevron CVX broke down its future shift toward an environmentally friendly direction, while shale specialist Diamondback Energy FANG approved a new buyback plan.Overall, it was another good week for the sector. West Texas Intermediate (WTI) crude futures moved up 3.2% to close at $71.97 per barrel and natural gas prices gained 3.4% to reach $5.105 per million British thermal units (MMBtu). Overall, both commodities managed to maintain their forward momentum from the previous three weeks.Coming back to the week ended Sep 17, oil prices rose, underpinned by a report from the Energy Information Administration ("EIA") that showed draws in crude and fuel stockpiles. The commodity was also boosted by the major international forecasters’ encouraging view on oil demand growth next year.Natural gas climbed too, buoyed by the slow restoration of hurricane-affected operations, late-season hot weather and strong LNG export demand.Recap of the Week’s Most-Important Stories1.  At its recent environment-themed presentation titled Energy Transition Spotlight, Chevron said that it will invest 200% more in lower-carbon businesses in the next seven years but stopped short of committing any timeline toward achieving net-zero operations.The U.S. oil major set clear targets to ramp up renewable natural gas output to 40,000 million British thermal units (MMBtu) per day by 2030, while growing hydrogen production to 150,000 tons annually. Besides, the company is rapidly expanding its renewable fuels footprint with daily production capacity estimated to reach 100,000 barrels by the end of this decade, in addition to increasing carbon offsets to 25 million tons per year.As part of this plan, the American energy giant will invest $10 billion in clean energy through 2028, more than triple the $3 billion earmarked earlier. Of the total, $3 billion each will be spent on renewable fuels and carbon capture/storage/offsets, $2 billion on hydrogen, while $2 billion is planned to be used to reduce the emissions intensity of the company’s portfolio. (Key Highlights From Chevron's ESG Investor Day)2.   Shares of Diamondback Energy gained more than 3% on Sep 17, a day after the energy player stated that its plans to distribute 50% of free cash flow to investors were expedited. Beginning fourth quarter of this year, this Permian producer’s business will return free cash flow through its basic dividend and additional shareholder return methods.In order to support this return promise, the Midland, TX-headquartered independent energy firm’s board approved a new share repurchase program worth $2 billion, which was implemented with immediate effect. The move underscores the company’s sound financial position and its commitment to reward its shareholders.A much-improved commodity price scenario and the economic recovery contributed to the balance sheet strength of the energy companies like Diamondback. Benefiting from their robust fundamentals, their cash from operations is now covering capital spending. This provides a sustainable financial framework for these firms to increase cash returns to their shareholders. (Diamondback Shares Gain on $2B Buyback Acceleration)3.  Royal Dutch Shell (RDS.A) has made a final investment decision to construct an 820,000-tonne-per-year biofuels facility at the Shell Energy and Chemicals Park Rotterdam in the Netherlands. When completed, the plant will be one of the largest in Europe for producing sustainable aviation fuel (SAF) and renewable diesel from trash.The new plant will help the Netherlands and the rest of Europe in meeting the globally mandated carbon reduction goals. It will also assist the Zacks Rank #2 (Buy) Europe-based energy multinational in meeting its objective of becoming a net-zero emissions energy firm by 2050, in line with society's progress toward the Paris Agreement's climate targets.You can see the complete list of today’s Zacks #1 Rank stocks here.The biofuels plant in Rotterdam is anticipated to start producing in 2024. Using innovative technology created by Shell, it will manufacture low-carbon fuels such as renewable diesel from waste in the form of used cooking oil, waste animal fat, and other agricultural and manufacturing residual items. (Shell to Build Dutch Biofuels Facility to Cut Emissions)4.   Helmerich & Payne HP recently announced a strategic collaboration with The Abu Dhabi National Oil Company (“ADNOC”) and its subsidiary ADNOC Drilling Company wherein ADNOC Drilling will purchase eight FlexRig land rigs from the contract drilling services provider for $86.5 million. Following this buyout, the company will make a $100-million cornerstone investment in ADNOC Drilling's recently announced initial public offering (“IPO”).Earlier, ADNOC expressed its plan to list a 7.5% minority stake in ADNOC Drilling on the Abu Dhabi Securities Exchange in an IPO, reflecting the continuous development, strength and relevance in the Middle Eastern capital city's financial market. ADNOC, a renowned diversified energy and petrochemicals company, and Helmerich & Payne will remain ADNOC Drilling's dedicated, long-term stockholders.The above agreement will help Helmerich & Payne achieve its goal of deploying capital worldwide, especially in the MENA (Middle East and North Africa) area, by boosting its entry into the lucrative and rapidly-rising Abu Dhabi market as a vital platform for further regional expansion. (Helmerich & Payne to Pump $100M Into ADNOC Drilling IPO)5.  Suncor Energy SU recently reached agreements with eight indigenous communities in the Regional Municipality of Wood Buffalo to buy the entire 15% equity stake in Canada's Northern Courier Pipeline Limited Partnership held by TC Energy TRPThe partnership, which comprises Suncor, three First Nations, and five Métis communities will hold a 15% interest in this pipeline asset worth roughly C$1.3 billion, which will generate long- term, consistent earnings that will aid the communities for decades ahead.Suncor will run the pipeline that connects its Fort Hills oil production in Alberta to its East Tank Farm asset after the acquisition is completed. Canada's premier integrated energy company stated that the collaboration is projected to generate gross revenues of around C$16 million per year for its partners and offer stable income. Subject to usual closing conditions and regulatory clearances, the deal is expected to be completed in the fourth quarter of 2021. (Suncor, Indigenous Partners Buy Canadian Pipeline Stake)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              +2.2%                -4.1%CVX               +0.7%               -7.5%COP              +5.7%               +13.6%OXY               +7.8%               -7.4%SLB               +5.7%               -2.6%RIG                -4%                   -11.9%VLO               +3.5%               -12.5%MPC              +3.5%               +8.4%The Energy Select Sector SPDR — a popular way to track energy companies — was up 3.2% last week. The best performer was oil and gas producer Occidental Petroleum OXY whose stock climbed 7.8%.Over the past six months, the sector tracker has inched up 0.6%. Upstream biggie ConocoPhillips (COP) was the major gainer during the period, experiencing a 13.6% price appreciation.What’s Next in the Energy World?As the global oil consumption outlook strengthens amid tightening fundamentals, market participants will be closely tracking 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, investors will be keeping an eye on the health of China’s economy following the Evergrande crisis. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>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 Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report Helmerich & Payne, Inc. (HP): Free Stock Analysis Report Occidental Petroleum Corporation (OXY): Free Stock Analysis Report Suncor Energy Inc. (SU): Free Stock Analysis Report TC Energy Corporation (TRP): 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: zacksSep 23rd, 2021

NASDAQ Rises More Than 2% for Another Record High

NASDAQ Rises More Than 2% for Another Record High SPECIAL ALERT: Remember, the latest episode of the Zacks Ultimate Strategy Session will be available for viewing no later than this Wednesday, July 8. Kevin Matras, Jeremy Mullin, David Borun and Sheraz Mian will cover the investment landscape from several angles in this informative event. Don’t miss your chance to hear: ▪ David and Jeremy Agree to Disagree on whether the equities markets are outpacing the Main Street recovery ▪ Kevin answers whether stocks can keep going up even though Coronavirus cases are back on the rise in Zacks Mailbag ▪ Sheraz and David choose one portfolio to give feedback for improvement ▪ And much more So be sure to mark your calendar then log on to Zacks.com and bookmark this page. The long, July 4th weekend didn’t cool of this market, as the major indices started the week with gains of more than 1.5% each. The biggest winner (of course) was the NASDAQ on a strong day for tech. The index jumped 2.21% (or about 226 points) to 10,433.65. This marked the third straight session with a closing high. The usual suspects led the way with each of the FAANGs rising by more than 2%. The biggest winners were Amazon (AMZN, +5.77%) and Netflix (NFLX, +3.55%). Microsoft (MSFT) also participated with a 2.15% advance. The Dow rose 1.78% (or nearly 460 points) to 26,287.03, while the S&P increased 1.59% to 3179.72. The latter index and the NASDAQ now have five day winning streaks. Stocks are coming off a short but strong week that saw the NASDAQ improve 4.6%, the S&P advance 4% and the Dow rise 3.2%. Last week was punctuated on Friday with a second straight better-than-expected Government Employment Situation report. The economy added 4.8 million jobs last month and the unemployment rate declined to 11.1%. In addition to the strong day for tech, we also got another positive piece of data for this recovering economy. The ISM services index came in at 57.1 in June, which easily surpassed expectations of just about 50. There was a better-than-expected ISM manufacturing report last week as well. (Remember, anything over 50 in these surveys suggest expansion.) Unfortunately, coronavirus cases continued to rise over the weekend, which means the economic recovery remains uncertain. Despite being concerned about this, the market continues to move higher and may keep that upward trajectory as long as the headlines cooperate.  Today's Portfolio Highlights: ETF Investor: The surge in digital transformation during this pandemic has brought an equal surge in the need for cybersecurity solutions. Neena gained exposure to that space on Monday by adding IShares Cybersecurity and Tech ETF (IHAK), which invests in companies that offer the most exposure to the full value chain of cybersecurity software, hardware and related services. It has more than $77 million in assets. Best of all, IHAK is the cheapest product in the space. This new addition makes ETFMG Prime Cyber Security ETF (HACK) expendable, especially since it’s more expensive and embroiled in a legal battle that may result in a management change later this year. The editor sold HACK today for a gain of 16.7%. Read the full write-up for more on today’s moves.  Surprise Trader: Tomorrow’s quarterly report from Levi Strauss (LEVI) will be a good “heat check” for retail in the upcoming earnings season, according to Dave. Therefore, he added this jeans staple with a 12.5% allocation on Monday. The company has a positive Earnings ESP of 16.17% for the report coming after the bell on Tuesday, which means there’s a good chance that LEVI stretches its consecutive surprise streak to five quarters. The editor also sold Walgreens Boots Alliance (WBA) before its report because the drugstore company slipped to a Zacks Rank #4 (Sell). It still managed a gain of 3% in just a few days. The complete commentary has more on today’s moves.  Technology Innovators: The portfolio is looking toward the future with today’s addition of cloud software company Blackbaud (BLKB). This stock is still well below its pre-crash highs, which means there’s lots of running room to get back to that level. And Brian thinks it will make that run as more parts of the country reopen and the economy attempts to get back to normal. Plus, BLKB is a Zacks Rank #2 (Buy) and has beaten the Zacks Consensus Estimate for the past four quarters with a nice double-digit average surprise of 11% in that time. Read the full write-up for more on this new pick. TAZR Trader: You can’t expect to backup the high-powered AI machines with the same old-fashioned disks. Something much more innovative is needed, which is where Pure Storage (PSTG) comes in. Kevin calls this company the “cloud architecture of the future” because its solid-state, software-defined storage puts it on the high-speed, high-margin side of the industry. The editor added this Zacks Rank #2 (Buy) on Monday with a 7% allocation. He also bought Baidu (BIDU), the AI-focused player in Chinese big data. The stock enters with a 5% position this week and will be added to on any pullbacks. The portfolio sold the underperforming Dropbox (DBX) as well. Read the full write-up for more on all of these moves.  Black Box Trader: Well over half the portfolio was refreshed in this week's adjustment. Of the seven stocks that were sold, three were positive... and were also all double-digit returns! Those positions that left the services today included: • BJ's Wholesale Club (BJ, +35%) • Sportman's Warehouse (SPWH, +18.8%) • Sprouts Farmers Market (SFM, +12.6%) • Phillips 66 (PSX) • Dine Brands Global (DIN) • Williams-Sonoma (WSM) • Aercap Holdings (AER) The new buys that replaced these names are: • Cheniere Energy (LNG) • D.R. Horton (DHI) • Lakeland Industries (LAKE) • Lowe's Cos. (LOW) • Patterson Cos. (PDCO) • Principal Financial Group (PFG) • WillScot Corp. (WSC) Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing. Counterstrike: "Some stocks are getting stretched out a bit, but the S&P is about to breakout. This makes it hard to short hot stocks as they could keep going in sympathy. What we will likely see is a break higher in S&P stocks and the tech start to pull in a bit. With that, the market will diverge, but grind its way higher. "I have to say that when a market moves higher into bad news, I always think that somebody knows something. Perhaps, a vaccine success headline is just around the corner. While we aren’t aware of any good news to come, the market sure thinks there is something to be excited about. "Looking to make a couple moves this week. We will be taking profits in some spots and adding new positions. Make sure to keep an eye out for alerts tomorrow." -- Jeremy Mullin Have a Good Evening, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

Dow Jumps 1.4% as Stocks Gain for Second Straight Week

Dow Jumps 1.4% as Stocks Gain for Second Straight Week The Dow needed a really good session on Friday to finish this week in the green… and that’s exactly what it got! Encouraging vaccine news – combined with the market’s overall resilience to rising coronavirus cases – led to solid gains for each of the major indices. The Dow began the day lower by 0.4% for the week, but finished with an ADVANCE of just under 1% for the five days. The index jumped 1.44% (or nearly 370 points) today to 26,075.30. The S&P rose 1.05% to 3185.04 to finish the week with a 1.8% advance. We know how influential the daily headlines can be on this market right now, and luckily we got a positive one today. Gilead’s remdesivir vaccine candidate had some good trial data by showing a reduction in the risk of death for coronavirus patients. The market absolutely LOVES this kind of news because nothing would help the economic recovery more than eradicating this virus once and for all. In fact, stocks that are tied to the reopenings did well today. But don’t feel too bad for the trailblazing tech space, which has been leading the market higher for a while now. The NASDAQ did uncharacteristically underperform its counterparts today, but the index still added 0.66% (or nearly 70 points) to log another record high of 10,617.44. It was up 4% for the week. The indices now have back-to-back winning runs after the NASDAQ and S&P both jumped 4% last week and the Dow advanced 3.2%. We’ll have to deal with all the same challenges and concerns when we get back to work on Monday, especially the rising number of cases and stalled reopening plans. As if that wasn’t enough, we’ll also be watching the beginning of earnings season in the days ahead. Economic data has been pretty good of late and stocks are largely shrugging off the case count, but what will the quarterly results tell us? Let’s enjoy the weekend and get ready for another crazy week in the market. Today's Portfolio Highlights: Surprise Trader: For the second time this week, the portfolio added a name from the highly ranked transportation – truck industry (top 37%). Dave bought Heartland Express (HTLD) on Wednesday and today he picked up Marten Transport (MRTN). This Zacks Rank #2 (Buy) long-haul truckload carrier beat by nearly 4.2% in its last report, and now has a positive Earnings ESP of 4.35% for the one coming after the bell on Thursday, July 16. The editor added MRTN on Friday with a 12.5% allocation. He also sold Franklin Covey (FC), which turned out to be a “total dud from the start”. Read the full write-up for more on today’s moves. By the way, this portfolio had a the best performer of the day among all ZU names as Sleep Number (SNBR) jumped nearly 13.2%. Technology Innovators: It may take a little more intestinal fortitude, but Brian is looking to add stocks that are near their highs right now. On Friday, he picked up PLDT (PHI), a Zacks Rank #1 (Strong Buy) wireless play in the Philippines. The stock bounced higher earlier this month and looks like it will continue to run well into the $30s. And as its high Zacks Rank shows, earnings estimates are moving upward for this year and next. The editor even likes its valuation. PHI may be able to get into the mid-$40s down the road, so Brian is adding it now. Read the full write-up for more. The portfolio also had the second best performer of the session with Tesla (TSLA) gaining 10.8%.  Counterstrike: "The market has no fear of the virus. In fact, it seems to think a vaccine will come soon or the new surge will blow over. Its pretty amazing to get this euphoria in this COVID atmosphere, but the Fed’s easy money policy had sparked the fire. New buys on Monday." -- Jeremy Mullin Have a Great Weekend! Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021