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The Zacks Analyst Blog Highlights: CF Industries, Exxon Mobil, Tesla, Centene Corp. and Southwest Airlines

The Zacks Analyst Blog Highlights: CF Industries, Exxon Mobil, Tesla, Centene Corp. and Southwest Airlines.....»»

Category: topSource: zacksJan 14th, 2022

Omicron Absenteeism Poses Fresh Test to U.S. Economic Strength

Several economists began the new year by downgrading their first-quarter forecasts With the omicron wave of the pandemic rapidly spreading across the U.S., the robust economic recovery is facing a new threat that policymakers have little control over: people calling in sick. What started as a series of holiday flight cancellations as pilots and other staff fell ill or were forced into quarantine is becoming a reality in factories, grocery stores and ports and again testing supply chains. The widespread absenteeism is already constraining output, and several economists began the new year by downgrading their first-quarter forecasts. Even if the hit is temporary, as most anticipate, the disruptions and closures are likely to slow the fragile rebound in some sectors and weigh on businesses’ future plans. [time-brightcove not-tgx=”true”] “You just don’t know when it’s going to hit you,” said James Beall, chief executive officer of the Washington, D.C.-area Ledo Pizza chain. On any given day last week, at least three of the company’s 110 locations were closed and as many as five were operating on reduced hours. “Our new normal is turning into another new normal.” Just how bad or enduring the omicron toll will be may take weeks to determine. The December jobs report released Friday, showing an unemployment rate at a fresh pandemic low of 3.9%, relied on data gathered mostly before the variant spread. Even the January numbers, due Feb. 4, are unlikely to reflect the entirety of the impact, which is more likely to be measured in lost output due to sick days than lost jobs. Nick Bunker, chief economist at online job-listing firm Indeed Inc., likens the impact of omicron to the blizzard of 1978, which dumped as much as four feet of snow on his native New England in less than 36 hours and yielded weeks of disruption but also a rapid recovery. Only unlike the blizzard and even previous waves of Covid-19, the variant has quickly become a national event, with new cases reaching as many as 1 million a day last week. That means “this big, very, very large sharp shock to the economy and the labor market specifically. But then the hope is that, like a storm, it ends and then there’s a return to prior trends,” Bunker said. “Things are only likely to get worse in the near term,” he wrote in a note to clients. Moreover, “the conventional wisdom that omicron presents no threat to the economy may prove too sanguine.” ‘Unprecedented’ Sick Days Staff shortages have continued to disrupt airlines, with Alaska Airlines saying that an “unprecedented” number of workers calling in sick caused it to cancel 10% of its flights for the rest of January. The real question for the industry is whether it will cause carriers to slow planned 2022 growth if it continues into February and beyond, said Conor Cunningham, an analyst with MKM Partners. “My expectation has been that other airlines will need to slow growth,” Cunningham said. Some hospitals are at a breaking point, dealing with more sick or exposed workers than at the worst of the pandemic. “We’ve had more staff out because they’ve tested positive and have contracted Covid than we did at the very beginning,” said Lynda Shrock, vice president of human resources at Logansport Memorial Hospital in Logansport, Indiana. Store Closures On Rodeo Drive in Beverly Hills, luxury retailers Gucci, Hermes, and Louis Vuitton have all reported cases among staff, according to Los Angeles County’s public list of workplace outbreaks. Walmart Inc. has closed at least 60 of its U.S. stores for deep cleanings. Apple Inc. locations have been shut temporarily in dozens of places from Alabama to Florida and New York. At West Coast ports, already facing logjams of imports, 160 longshoremen tested positive on Wednesday alone, said James McKenna, president of the Pacific Maritime Association, which negotiates labor agreements for 70 companies at 29 ports on the coast. That number understates the disruption. Hundreds more dock workers are staying home due to contact tracing, or awaiting tests, McKenna said. The backlogs of ships off the ports of Los Angeles and Long Beach, the nation’s busiest, are growing again, McKenna said. “This new variant is so transmittable that it has changed the game,” he said. In the auto sector, union officials and company representatives said the increase in sick days hasn’t affected production at General Motors Co., Ford Motor Co. and Stellantis NV, owner of the Jeep and Ram brands. It may just be a matter time. In a call with reporters on Friday, Scott Keogh, chief executive officer of Volkswagen AG’s U.S. unit, said he was “100%” certain that the industry was about to face production disruptions due to omicron. “There is no flexible new normal” for assembling a car. While economists and investors expect the impact to be short-lived, its magnitude may be sizable. Mark Zandi, chief economist for Moody’s Analytics, cut his first-quarter prediction for annualized gross domestic production to close to 2%, down from about 5%. But he also raised his forecast for the second quarter, saying businesses and the economy are better prepared to face this new wave. “I don’t expect the virus to sustainably subtract from economic growth on net this year,” Zandi said. Though omicron could, he said, affect how the Federal Reserve views the recovery and when it acts to raise rates. Restaurants Struggle The variant is another blow to industries like hospitality that were struggling to come back to pre-pandemic employment levels, said Jerry Nickelsburg, faculty director of UCLA Anderson Forecast. That in turn will have a longer effect on growth because “those sectors will not recover as fast as we previously thought”. Marshall Weston, president and chief executive officer of the Restaurant Association of Maryland, said he had spent the week fielding calls from members who were closing their doors for good. “The recovery for restaurants appears to be going in reverse rather than moving forward,” Weston said. At Ledo Pizza in the D.C. area, CEO Beall is determined to keep a company his grandfather started in 1955 alive. He employs 1,300 fewer people than before Covid-19 and has adapted by using more automated online systems to field takeout orders and by simplifying the menu to ease the burden of kitchen staff. He’s also dealing with staff shortages at suppliers that have only gotten worse with omicron. That means getting smaller amounts of ingredients like mozzarella sticks and waiting longer to get them. “We’ve seen a lot of in 66 years,” Beall said. “But this is definitely different.” –With assistance from Joe Deaux, Leslie Patton, Gabrielle Coppola, Deena Shanker, Carey Goldberg, Justin Bachman, John Tozzi, David Welch, Keith Naughton and Augusta Saraiva......»»

Category: topSource: timeJan 13th, 2022

FactSet Reports Results for First Quarter 2022

Q1 revenues of $424.7 million, up 9.4% from Q1 2021 Q1 ASV plus professional services of $1.7 billion, up 9.2% year over year GAAP operating margin of 28.9% and adjusted operating margin of 33.6% Diluted GAAP EPS of $2.79, up 6.5% from the prior year; adjusted diluted EPS of $3.25, a 12.8% increase from the prior year FactSet joined the S&P 500 on December 20, 2021 NORWALK, Conn., Dec. 21, 2021 (GLOBE NEWSWIRE) -- FactSet ("FactSet" or the "Company") (NYSE:FDS) (NASDAQ:FDS), a global provider of integrated financial information, analytical applications, and industry-leading service, today announced results for its first quarter ended November 30, 2021. First Quarter Fiscal 2022 Highlights Revenues increased 9.4%, or $36.5 million, to $424.7 million for the first quarter of fiscal 2022 compared with $388.2 million for the same period in fiscal 2021. The increase was primarily due to higher sales of analytics and research and advisory solutions. Organic revenues, which excludes the effects of acquisitions and dispositions completed within the last 12 months and foreign currency movements, grew 9.1% to $423.2 million during the first quarter of fiscal 2022 from the prior year period. Annual Subscription Value (ASV) plus professional services was $1.7 billion at November 30, 2021, compared with $1.6 billion at November 30, 2020. Organic ASV plus professional services, which excludes the effects of acquisitions and dispositions completed within the last 12 months and foreign currency movements, was also $1.7 billion at November 30, 2021, up $142.3 million from the prior year at a growth rate of 8.9%. Organic ASV plus professional services increased $16.9 million over the last three months. The primary contributors to this growth were higher sales of analytics and research and advisory solutions. Please see the "ASV + Professional Services" section of this press release for details. GAAP operating margin decreased to 28.9% compared with 31.2% for the same period last year, mainly driven by restructuring costs and real estate exit costs. Adjusted operating margin decreased to 33.6% compared with 34.3% in the prior year period, primarily as a result of increased infrastructure expenses and data costs, partially offset by lower compensation expenses. Diluted GAAP earnings per share (EPS) increased 6.5% to $2.79 compared with $2.62 for the same period in fiscal 2021. Adjusted diluted EPS increased 12.8% to $3.25 compared with the prior year period, primarily due to higher revenues and a decreased tax rate. The Company's effective tax rate for the first quarter decreased to 10.2% compared with 15.8% a year ago, primarily due to higher than expected tax benefit associated with the exercise of stock options in the current quarter compared with the three months ended November 30, 2020. FactSet acquired Cobalt Software, Inc., a leading portfolio monitoring solutions provider for the private capital industry, in October 2021. FactSet reaffirms its annual outlook for fiscal 2022 as provided in September 2021. Please see the "Annual Business Outlook" section of this press release for details. "I'm pleased to report that FactSet once again delivered impressive quarterly results, reflecting the continuing momentum in our business," said Phil Snow, CEO, FactSet. "It is clear that the investments we have made in our business are paying off in top line growth. Demand for differentiated content remains strong, which we intend to capitalize on with our leading open content and analytics platform." Key Financial Measures* (Condensed and Unaudited) Three Months Ended       November 30,     (In thousands, except per share data) 2021 2020 Change   GAAP revenues $ 424,725    $ 388,206    9.4  %   Organic revenues $ 423,153    $ 387,891    9.1  %   Operating income $ 122,661    $ 121,031    1.3  %   Adjusted operating income $ 142,710    $ 133,003    7.3  %   Operating margin 28.9  % 31.2  %     Adjusted operating margin 33.6  % 34.3  %     Net income $ 107,647    $ 101,206    6.4  %   Adjusted net income $ 125,341    $ 111,283    12.6  %   Diluted EPS $ 2.79    $ 2.62    6.5  %   Adjusted diluted EPS $ 3.25    $ 2.88    12.8  %   * See reconciliation of U.S. GAAP to adjusted key financial measures in the back of this press release. "Underpinning our accelerating top-line growth is our ongoing dedication to cost discipline, productivity, and focused execution," said Linda Huber, CFO, FactSet. "This allowed us to deliver a 28.9% GAAP operating margin and a 33.6% operating margin on an adjusted basis, which exceeds our fiscal 2022 adjusted operating margin guidance of 32.5% to 33.5%." Annual Subscription Value (ASV) + Professional Services ASV at any given point in time represents the forward-looking revenues for the next twelve months from all subscription services currently supplied to clients. Professional services is revenue derived from project-based consulting and implementation. ASV plus professional services was $1,706 million at November 30, 2021 compared with $1,562 million at November 30, 2020. Organic ASV plus professional services was $1,701 million at November 30, 2021, up $142.3 million from the prior year at a growth rate of 8.9%. Organic ASV, which excludes the effects of acquisitions and dispositions completed within the last 12 months and foreign currency movements, plus professional services, increased $16.9 million over the last three months. Buy-side and sell-side ASV growth rates for the first quarter of fiscal 2022 were 8.5% and 13.2%, respectively. Buy-side clients, who primarily include asset managers, asset owners, wealth managers, hedge funds, corporations, and channel partners, accounted for approximately 83% of organic ASV while the remainder came from sell-side firms that include broker-dealers, banking and advisory, private equity and venture capital firms. Supplementary tables covering organic buy-side and sell-side ASV growth rates may be found on the last page of this press release. Segment Revenues and ASV ASV from the Americas region was $1,054.9 million compared with ASV in the prior year period of $958.5 million. Organic ASV increased 9.4% to $1,048.2 million. Americas revenues for the quarter increased to $266.9 million compared with $244.3 million in the first quarter last year. Excluding the effects of acquisitions and dispositions completed in the last 12 months, the Americas region organic revenues growth rate was 8.5%. ASV from the EMEA region was $452.0 million compared with ASV in the prior year period of $422.0 million. Organic ASV increased 7.2% to $453.4 million. EMEA revenues were $115.0 million compared with $105.8 million in the first quarter of fiscal 2021. Excluding the effects of acquisitions and dispositions completed in the last 12 months and foreign currency impacts, the EMEA region organic revenues growth rate was 8.8%. ASV from the Asia Pacific region was $175.4 million compared with ASV in the prior year period of $156.5 million. Organic ASV increased 13.6% to $176.2 million. Asia Pacific revenues were $42.8 million compared with $38.1 million in the first quarter of fiscal 2021. Excluding the effects of acquisitions and dispositions completed in the last 12 months and foreign currency impacts, the Asia Pacific region organic revenues growth rate was 13.7%. Segment ASV does not include professional services, which totaled $24.0 million at November 30, 2021. Operational Highlights – First Quarter Fiscal 2022 Client count as of November 30, 2021 was 6,759, a net increase of 306 clients in the past three months, primarily driven by an increase in corporate clients. The count includes clients with ASV of $10,000 and more. User count increased by 1,229 to 162,161 in the past three months, primarily driven by an increase in research and advisory users. Annual ASV retention was greater than 95%. When expressed as a percentage of clients, annual retention was 92%. Expense highlights include a restructuring charge of $9 million to drive organizational realignment. Ongoing savings from this realignment primarily will be used for product reinvestment and key talent retention. In addition, the Company recognized $4 million of expense related to vacating certain office space in New York City. The Company recently polled FactSet employees on optimal work arrangements and, consistent with what the Company has seen in the market, the majority of the Company's employees have indicated that they will work in a hybrid or a remote environment. Accordingly, FactSet is reassessing its real estate footprint to better reflect these new work arrangements. Employee count was 10,898 as of November 30, 2021, up 2.6% over the last twelve months. Excluding acquisitions made over the last twelve months, headcount grew by 1.8% year over year, primarily driven by increased hiring in the Company's content and technology organizations. Net cash provided by operating activities decreased to $72.9 million compared with $89.3 million for the first quarter of fiscal 2021, primarily due to the timing of tax payments in the UK and higher year-over-year employee bonus payments. Quarterly free cash flow decreased to $64.3 million compared with $70.9 million a year ago, a decrease of 9.3%, primarily due to the timing of tax payments in the UK, higher year-over-year employee bonus payments and a $9.7 million reduction in capital expenditures related to facilities build-outs completed in fiscal 2021. A quarterly dividend of $31.0 million, or $0.82 per share, was paid on December 16, 2021 to holders of record of FactSet's common stock at the close of business on November 30, 2021. FactSet had the distinction of being added to the S&P 500 Index on December 20, 2021. FactSet incorporated the FactSet Charitable Foundation as a nonprofit corporation in November 2021 to facilitate our corporate social responsibility goals. FactSet announced the appointment of Kendra Brown as Global Head of Investor Relations. Ms. Brown has over 20 years of product development experience, including a focus on financial applications and content, as well as market analysis. She most recently held the position of Chief of Staff to the FactSet CEO. FactSet acquired Cobalt Software, Inc., a leading portfolio monitoring solutions provider for the private capital industry. This acquisition advances FactSet's strategy to scale its data and workflow solutions through targeted investments as part of its multi-year investment plan and expands its private markets offering. FactSet launched its Technology, Media, and Telecoms (TMT) content offering. This furthers FactSet's strategy to bring more industry-specific, or "deep sector," data to clients alongside analytic tools to drive improved access and workflow efficiency. FactSet also launched fixed income trading capabilities for its leading execution management system (EMS). With the introduction of fixed income trading, Portware now enables clients to trade more efficiently across more asset classes. FactSet worked with longtime client GIC to build out these new capabilities, which now operates in parallel with the other asset classes already supporting GIC's global trading desks. FactSet joined Amazon Web Services (AWS) Data Exchange, with a comprehensive financial data and analytics offering. FactSet will deploy over 30 proprietary datasets available within the FactSet ecosystem on AWS Data Exchange, which will allow clients to leverage FactSet's leading content for faster, more efficient decision-making. Share Repurchase Program FactSet repurchased 46,200 shares of its common stock for $18.6 million at an average price of $403.44 during the first quarter under the Company's existing share repurchase program. As of December 21, 2021, $181.3 million is available for share repurchases under this program. Annual Business Outlook FactSet provided its outlook for fiscal 2022 on September 28, 2021. The following forward-looking statements reflect FactSet's expectations as of today's date. Given the risk factors, uncertainties, and assumptions discussed below, actual results may differ materially, particularly with the ongoing uncertainty surrounding the duration, magnitude, and impact of the novel coronavirus pandemic. FactSet does not intend to update its forward-looking statements prior to its next quarterly results announcement. Fiscal 2022 Expectations Organic ASV plus professional services is expected to increase in the range of $105 million to $135 million over fiscal 2021. GAAP revenues is expected to be in the range of $1,705 million to $1,720 million. GAAP operating margin is expected to be in the range of 31% to 32%. Adjusted operating margin is expected to be in the range of 32.5% to 33.5%. FactSet's annual effective tax rate is expected to be in the range of 14.5% to 15.5%. GAAP diluted EPS is expected to be in the range of $11.60 to $11.90. Adjusted diluted EPS is expected to be in the range of $12.00 to $12.30. Both GAAP operating margin and GAAP diluted EPS guidance do not include certain effects of any non-recurring benefits or charges that may arise in fiscal 2022. Please see the back of this press release for a reconciliation of GAAP to adjusted metrics. Conference Call The Company will host a conference call today, December 21, 2021, at 11:00 a.m. Eastern Time to discuss its first quarter results. The call will be webcast live at FactSet Investor Relations. The following information is provided for those who would like to participate: U.S. Participants: 833.726.6487 International Participants: 830.213.7677 Passcode: 9771799 An archived webcast with the accompanying slides will be available at FactSet Investor Relations for one year after the conclusion of the live event. The earnings call transcript will also be available via the FactSet workstation or web. An audio replay of this conference will also be available until December 28, 2021 via the following telephone numbers: 855.859.2056 in the U.S. and 404.537.3406 internationally using passcode 9771799. Forward-looking Statements This news release contains forward-looking statements based on management's current expectations, estimates, forecasts and projections about industries in which FactSet operates and the beliefs and assumptions of management. All statements that address expectations, guidance, outlook or projections about the future, including statements about the Company's strategy for growth, product development, revenues, future financial results, anticipated growth, market position, subscriptions, expected expenditures, trends in FactSet's business and financial results, are forward-looking statements. Forward-looking statements may be identified by words like "expects," "believes, " "anticipates," "plans," "intends, " "estimates, " "projects," "should," "indicates," "continues," "may" and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in FactSet's filings with the Securities and Exchange Commission, particularly its latest annual report on Form 10-K and quarterly reports on Form 10-Q, as well as others, could cause results to differ materially from those stated. Forward-looking statements speak only as of the date they are made, and FactSet assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance. About Non-GAAP Financial Measures Financial measures in accordance with U.S. GAAP including revenues, operating income and margin, net income, diluted earnings per share and cash provided by operating activities have been adjusted. FactSet uses these adjusted financial measures both in presenting its results to stockholders and the investment community and in its internal evaluation and management of the business. The Company believes that these adjusted financial measures and the information they provide are useful to investors because they permit investors to view the Company's performance using the same tools that management uses to gauge progress in achieving its goals. Investors may benefit from referring to these adjusted financial measures in assessing the Company's performance and when planning, forecasting and analyzing future periods and may also facilitate comparisons to its historical performance. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Adjusted revenues exclude the impact of the fair value of deferred revenues acquired in a business combination. Organic revenues further excludes the effects of acquisitions and dispositions completed in the last 12 months and foreign currency movements in all periods presented. Adjusted operating income and margin, adjusted net income and adjusted diluted earnings per share exclude intangible asset amortization, the impact of the fair valuing of deferred revenues acquired in a business combination and non-recurring items. The Company believes that these adjusted financial measures better reflect the underlying economic performance of FactSet. The GAAP financial measure, cash flows provided by operating activities, has been reduced by capital expenditures to report non-GAAP free cash flow. FactSet uses this financial measure both in presenting its results to stockholders and the investment community and in the Company's internal evaluation and management of the business. Management believes that this financial measure is useful to investors because it permits investors to view the Company's performance using the same metric that management uses to gauge progress in achieving its goals and is an indication of cash flow that may be available to fund further investments in future growth initiatives. About FactSet FactSet (NYSE:FDS, NASDAQ:FDS) delivers superior content, analytics, and flexible technology to help more than 162,000 users see and seize opportunity sooner. We give investment professionals the edge to outperform with informed insights, workflow solutions across the portfolio lifecycle, and industry-leading support from dedicated specialists. We're proud to have been recognized with multiple awards for our analytical and data-driven solutions and repeatedly scored 100 by the Human Rights Campaign® Corporate Equality Index for our LGBTQ+ inclusive policies and practices. Subscribe to our thought leadership blog to get fresh insight delivered daily at insight.factset.com. Learn more at www.factset.com and follow us on Twitter: www.twitter.com/factset. FactSet Investor Relations Contact:                         Kendra Brown                                        +1.203.810.2684                                kbrown@factset.com Media Contact:                         Lisa Knoll                                        +1.203.810.1327                                lknoll@factset.com                                 Consolidated Statements of Income (Unaudited)     Three Months Ended   November 30, (In thousands, except per share data) 2021   2020 Revenues $ 424,725     $ 388,206   Operating expenses       Cost of services 207,149     188,088   Selling, general and administrative 94,915     79,087   Total operating expenses 302,064     267,175           Operating income 122,661     121,031           Other income (expense)       Interest expense, net (1,494 )   (1,029 ) Other (expense) income, net (1,237 )   230   Income before income taxes 119,930     120,232           Provision for income taxes 12,283     19,026   Net income $ 107,647     $ 101,206           Diluted earnings per common share $ 2.79     $ 2.62   Diluted weighted average common shares 38,641     38,697   Consolidated Balance Sheets (Unaudited)         (In thousands) November 30, 2021 August 31, 2021 ASSETS     Cash and cash equivalents $ 673,900 .....»»

Category: earningsSource: benzingaDec 21st, 2021

Couchbase Announces Third Quarter Fiscal 2022 Financial Results

SANTA CLARA, Calif., Dec. 7, 2021 /PRNewswire/ -- Couchbase, Inc. (NASDAQ:BASE), provider of a leading modern database for enterprise applications, today announced financial results for its third quarter ended October 31, 2021. "Our strong third quarter performance was driven by ongoing large deal momentum, including some significant expansions, as well as acceleration of our cloud business. We also delivered solid top line growth with ARR up 21% and revenue up 20% year over year," said Matt Cain, President and CEO of Couchbase. "We continue to see demand for our modern database as digital transformation remains a priority across industries, and are excited about the market opportunity for Capella which makes it faster and easier to consume Couchbase in the cloud." Third Quarter Fiscal 2022 Financial Highlights: Revenue: Total revenue for the quarter was $30.8 million, an increase of 20% year-over-year. Subscription revenue was $29.0 million, an increase of 20% year-over-year. Annual recurring revenue (ARR): Total ARR for the quarter was $122.3 million, an increase of 21% year-over-year. See the section titled "Key Business Metrics" below for details. Gross margin: Gross margin for the quarter was 87.9%, compared to 87.8% for the third quarter of fiscal 2021. Non-GAAP gross margin for the quarter was 88.3%, compared to 87.9% for the third quarter of fiscal 2021. See the section titled "Use of Non-GAAP Financial Measures" and the tables entitled "Reconciliation of GAAP to Non-GAAP Results" below for details. Loss from operations: Loss from operations for the quarter was $15.5 million, compared to $9.1 million for the third quarter of fiscal 2021. Non-GAAP operating loss for the quarter was $12.1 million, compared to $7.9 million for the third quarter of fiscal 2021. Cash flow: Cash flows used in operating activities for the quarter were $19.7 million, compared to $13.1 million in the third quarter of fiscal 2021. Capital expenditures were $0.6 million during the quarter, leading to negative free cash flow of $20.3 million, compared to negative free cash flow of $13.3 million in the third quarter of fiscal 2021. Remaining performance obligations (RPO): RPO as of October 31, 2021 was $124.3 million, up 41% year-over-year. Recent Business Highlights: Launched Couchbase Capella hosted Database-as-a-Service (DBaaS) offering on Amazon Web Services (AWS). Capella delivers database flexibility for developers and performance at scale for enterprise applications. Because Capella is fully managed and automated, customers can focus on development, improving their applications and reducing time to market, instead of worrying about operational database management efforts. Achieved SOC 2 Type 1 Compliance Certification for Capella, thereby extending its security credentials. Hosted annual user conference Couchbase ConnectONLINE, consisting of more than 100 sessions that brought together over 5,200 developer, architect, business user and community member registrants to learn more about Couchbase's modern database for enterprise applications. Announced the winners of the annual Couchbase Community Awards, honoring customers Amadeus, Citigroup, Emirates, Northwestern University, BroadJump, Cvent and Molo17 and partners AWS, Red Hat, Infosys and DigitalRoute for accelerating modernization initiatives and enabling innovation for enterprise-critical applications. Named to Inc. Magazine's Top 250 Best-Led Mid-Market Companies in America list and earned Great Place to Work Certification. Appointed Alvina Antar, Chief Information Officer of Okta, to Couchbase's Board of Directors. Financial Outlook: For the fourth quarter of fiscal 2022, Couchbase expects: Total revenue between $33.9 million and $34.1 million Total ARR between $129 million and $130 million Non-GAAP operating loss between $10.6 million and $10.2 million For the full fiscal year 2022, Couchbase expects: Total revenue between $122.4 million and $122.6 million Total ARR between $129 million and $130 million Non-GAAP operating loss between $47.0 million and $46.6 million The guidance provided above is based on several assumptions that are subject to change and many of which are outside our control. If actual results vary from these assumptions, our expectations may change. There can be no assurance that we will achieve these results. Couchbase is not able, at this time, to provide GAAP targets for operating income for the fourth quarter or full year of fiscal 2022 because of the difficulty of estimating certain items excluded from non-GAAP operating loss that cannot be reasonably predicted, such as charges related to stock-based compensation expense. The effect of these excluded items may be significant. Conference Call Information Couchbase will host a conference call and webcast at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on Tuesday, December 7, 2021 to discuss its financial results and business highlights. To access this conference call, dial (888) 660-1027 from the United States and Canada or (409) 231-2719 internationally with conference ID: 2318369. The live webcast and a webcast replay of the conference call can be accessed from the investor relations page of Couchbase's website at investors.couchbase.com. Upcoming Conference Participation Couchbase management will participate in the following investor conferences during the fourth quarter of fiscal 2022. Webcasts of company presentations can be found on Couchbase's Investor Relations website at investors.couchbase.com. Barclays Global Technology, Media and Telecommunications Conference on December 8, 2021 at 9:40 a.m. PT (12:40 p.m. ET) 24th Annual Needham Virtual Growth Conference on January 12, 2022 at 11:45 a.m. PT (2:45 p.m. ET) About Couchbase At Couchbase, we believe data is at the heart of the enterprise. We empower developers and architects to build, deploy, and run their most mission-critical applications. Couchbase delivers a high-performance, flexible and scalable modern database that runs across the data center and any cloud. Many of the world's largest enterprises rely on Couchbase to power the core applications their businesses depend on. For more information, visit www.couchbase.com. Couchbase has used, and intends to continue using, its investor relations website and the corporate blog at blog.couchbase.com to disclose material non-public information and to comply with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website and the corporate blog in addition to following our press releases, SEC filings and public conference calls and webcasts. Use of Non-GAAP Financial Measures In addition to our financial information presented in accordance with GAAP, we believe certain non-GAAP financial measures are useful to investors in evaluating our operating performance. We use certain non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, may be helpful to investors because they provide consistency and comparability with past financial performance and meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook. Non-GAAP financial measures are presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP financial measures used by other companies. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures (provided in the financial statement tables included in this press release), and not to rely on any single financial measure to evaluate our business. Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss attributable to common stockholders and non-GAAP net loss per share attributable to common stockholders: We define these non-GAAP financial measures as their respective GAAP measures, excluding expenses related to stock-based compensation expense and litigation-related expenses. We use these non-GAAP financial measures in conjunction with GAAP measures to assess our performance, including in the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. Free cash flows: We define free cash flow as cash used in operating activities less purchases of property and equipment, which includes capitalized internal-use software costs. We believe free cash flow is a useful indicator of liquidity that provides our management, board of directors and investors with information about our future ability to generate or use cash to enhance the strength of our balance sheet and further invest in our business and pursue potential strategic initiatives.  Please see the reconciliation tables at the end of this release for the reconciliation of GAAP and non-GAAP results. Key Business Metrics We review a number of operating and financial metrics, including Annual Recurring Revenue (ARR), to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. We define ARR as of a given date as the annualized recurring revenue that we would contractually receive from our customers in the month ending 12 months following such date. Based on historical experience with customers, we assume all contracts will be automatically renewed at the same levels unless we receive notification of non-renewal and are no longer in negotiations prior to the measurement date. ARR excludes revenue from on-demand arrangements. Although we seek to increase ARR as part of our strategy of targeting large enterprise customers, this metric may fluctuate from period to period based on our ability to acquire new customers and expand within our existing customers. We believe that our ARR is an important indicator of the growth and performance of our business. Forward-Looking Statements This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include, but are not limited to, quotations of management, the "Financial Outlook" section, and statements about Couchbase's market position, strategies, and potential market opportunities, including its positioning in the market. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as "anticipate," "expect," "intend," "plan," "believe," "continue," "could," "potential," "remain," "may," "might," "will," "would" or similar expressions and the negatives of those terms. However, not all forward-looking statements contain these identifying words. Forward-looking statements involve known and unknown risks, uncertainties, and other factors, including factors beyond our control, which may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to: our history of net losses and ability to achieve or maintain profitability in the future; our ability to continue to grow on pace with historical rates; our ability to manage our growth effectively; intense competition and our ability to compete effectively; cost-effectively acquiring new customers or obtaining renewals, upgrades or expansions from our existing customers; the market for our products and services being relatively new and evolving, and our future success depending on the growth and expansion of this market; our ability to innovate in response to changing customer needs, new technologies or other market requirements; our limited operating history, which makes it difficult to predict our future results of operations; the significant fluctuation of our future results of operations and ability to meet the expectations of analysts or investors; our significant reliance on revenue from subscriptions, which may decline and, the recognition of a significant portion of revenue from subscriptions over the term of the relevant subscription period, which means downturns or upturns in sales are not immediately reflected in full in our results of operations; and the impact of the COVID-19 pandemic. Further information on risks that could cause actual results to differ materially from forecasted results are included in our filings with the SEC that we may file from time to time, including those more fully described in our Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2021. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended October 31, 2021 that will be filed with the SEC, which should be read in conjunction with this press release and the financial results included herein. Any forward-looking statements contained in this press release are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.     Couchbase, Inc.Condensed Consolidated Statements of Operations(in thousands, except per share data)(unaudited) Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 2021 2020 Revenue: License $ 3,774 $ 3,010 $ 12,468 $ 8,550 Support and other 25,234 21,078 71,034 60,347 Total subscription revenue 29,008 24,088 83,502 68,897 Services 1,816 1,565 4,976 4,961 Total revenue 30,824 25,653 88,478 73,858 Cost of revenue: Subscription(1) 2,094 1,840 6,218 4,113 Services(1) 1,642 1,296 4,435 4,383 Total cost of revenue 3,736 3,136 10,653 8,496 Gross profit 27,088 22,517 77,825 65,362 Operating expenses: Research and development(1) 13,103 10,109 38,267 28,388 Sales and marketing(1) 22,817 17,443 65,714 51,145 General and administrative(1) 6,659 4,044 17,434 10,905 Total operating expenses 42,579 31,596 121,415 90,438 Loss from operations (15,491) (9,079) (43,590) (25,076) Interest expense (133) (746) (630) (4,762) Other income (expense), net (51) (86) (44) 221 Loss before income taxes (15,675) (9,911) (44,264) (29,617) Provision for income taxes 249 237 729 719 Net loss $ (15,924) $ (10,148) $ (44,993) $ (30,336) Cumulative dividends on Series G redeemable convertible preferred stock — (1,446) (2,917) (2,596) Net loss attributable to common stockholders $ (15,924) $ (11,594) $ (47,910) $ (32,932) Net loss per share attributable to common stockholders, basic and diluted $ (0.37) $ (2.04) $ (2.43) $ (5.81) Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 43,440.....»»

Category: earningsSource: benzingaDec 7th, 2021

From dedicated check-in desks to chauffeured cars, here are the perks Big Tech enjoys for spending hundreds of millions on air travel each year

Big Tech spends hundreds of millions of dollars on air travel each year and airlines use every tool in their belt to keep them happy and loyal. Delta Air Lines check-in for Amazon and Microsoft employees in Seattle.Alexei Oreskovic/Insider Companies that spend millions of dollars on air travel are given incredible perks from airlines. One such perk is top-tier frequent flyer status that comes with free upgrades, lounge access, and chauffeurs. Amazon and Microsoft even have dedicated check-in counters at Seattle-Tacoma International Airport.  Loyalty has its perks, especially when loyalty means spending hundreds of millions of dollars on airline tickets every year.Business travel is a leading revenue source for airlines and the top corporate spenders are frequently given extra benefits in exchange for their continued business. Some of the perks go way beyond what even the most frequent individual traveler could ever hope to receive.Tech companies are among the top spenders on airline travel given as Big Tech giants have offices and facilities around the world. China, for example, is a top destination for Silicon Valley-based firms like Apple.United Airlines, in 2018, revealed that Apple was buying 50 business class seats every day on flights to Shanghai, China. Apple's business with United at the time was worth more than $150 million in revenue.Airlines, however, lost a big chunk of that revenue during the pandemic as international borders started to close in January 2020. Cost-minded leisure travelers tend not to spend as much as business flyers and are less likely to pay for premium cabin travel or costly last-minute fares when vacationing. When big business does return to the skies, these are the perks that will likely await them.Expedited access to elite statusWelcome email for Delta Silver Medallion status.Thomas Pallini/Business InsiderEmployees that travel enough will often earn elite status with an airline that gives them extra privileges when flying. "The basic idea is you get to bypass a lot of the hassles," Brett Snyder, founder of the aviation blog CrankyFlyer, told Insider. Acquiring elite status requires loyalty to a particular airline to the tune of a few thousand dollars in purchased tickets and tens of thousands of miles flown. But airlines can also offer elite status memberships to corporate travelers as a "sweetener" in a contract even before the first flight, Snyder said.Most of the perks will come from having that elite status but airlines can still go above and beyond for top corporate clients. Dedicated check-in lanesDelta's Sky Priority check-in area at New York's John F. Kennedy International Airport.Thomas Pallini/Business InsiderFor some companies, spending millions of dollars on travel means never having to wait in line at certain airports. At Seattle-Tacoma International Airport, for example, Delta Air Lines has dedicated check-in desks for Amazon and Microsoft employees. While check-in counters are becoming obsolete given improvements to self-serve kiosks and airline mobile applications, employees can use them to quickly check their bags or have airline staff assist with any flight issues. The scheme isn't replicated at every Delta airport for Microsoft and Amazon employees but they will still likely have access to priority check-in areas. Business travelers often earn elite status on the airlines they frequent and can often use priority check-in lanes as a result, especially when traveling in a premium cabin, as Insider found when testing out the lowest tier of Delta's elite status. Some US airlines have private check-in areas altogether for elite status holders and premium cabin travelers, away from the main check-in desks, such as Delta's Sky Priority check-in area at New York's John F. Kennedy International Airport.Access to invite-only programsAmerican Airlines' first class check-in at New York's John F. Kennedy International Airport.Thomas Pallini/Business InsiderWhile elite status is a common perk of frequent business travel, the highest echelons of those programs are reserved for an airline's top spenders. Attaining membership in the unlisted programs is the dream of any frequent traveler and top corporate clients may be given an allotment of memberships for their top travelers. American Airlines has ConciergeKey, United Airlines has Global Services, and Delta Air Lines has 360°."These are highly coveted programs, there's a mystery to them," Henry Harteveldt, a travel analyst and president of Atmosphere Research Group, told Insider.Even if a member of these programs purchases the cheapest economy ticket on a given flight, they will still reap the benefits of complimentary lounge access, priority check-in lanes, early boarding, and a host of other secretive amenities that airlines won't discuss publicly. Airlines have different requirements for who is invited into their programs and limits on the number of memberships they can distribute each year, according to Harteveldt. Companies seeking to get memberships for their flyers would have to spend a significant amount on yearly air travel, with spend requirements varying from city to city. "Delta 360° is an annual, invitation-only program for our top SkyMiles Members, offering an exclusive suite of benefits and services even beyond Diamond Medallion Status," Delta writes on its website. "An invitation into Delta 360° is based on your overall investment with Delta. If you're selected to join, we'll contact you directly."A certain number of memberships are then given to corporate travel managers to distribute to employees, Harteveldt explained, with airlines being incredibly mindful of how many are allocated.Lounge accessAmerican Airlines' Admirals Club at New York's John F. Kennedy International Airport.Thomas Pallini/Business InsiderAirline lounges are exclusive hideaways that offer private and comfortable seating when waiting for a flight, as well as complimentary snacks, beverages, and food items. Corporate customers flying internationally in business class will often have access to these lounges included in their tickets. Airlines will also give complimentary lounge memberships to their most frequent flyers. On American, for example, executive platinum status holders can choose to receive an Admirals Club membership as one of their free perks.ConciergeKey, Global Services, and Delta 360° members also receive complimentary lounge access for their respective airlines, according to, Harteveldt, Upgraded Points, and SFGate. Airside transfers in a luxury Porsche, General Motors, or Mercedes Benz vehiclesAn American Airlines Cadillac for ConciergeKey members.First Class Photography/Shutterstock.comMembers of the ConciergeKey, Global Services, and Delta 360° programs need not worry about running from one flight to another when passing through an airline hub with a tight connection. Rather, they'll be escorted down to the ramp and driven to their next flight in a luxury vehicle.American will chauffeur passengers in a luxury General Motors vehicle while United transfers its passengers in a Mercedes-Benz and Delta in a Porsche, according to Upgraded Points. [not sure this blog is reputable enough to cite on its own] Cadillac was formerly American's vehicle manufacturer of choice for airside transfers until the switch was made to GM, the airline confirmed to View from the Wing. [caddy is owned by GM — so need different wording here]It's a "surprise and delight" perk, Snyder said, that isn't guaranteed for everyone with a short layover. Airlines may also be more accommodating to passengers on delayed flights by holding their connections, Harteveldt said, depending on the customer and corporate client. Priority BoardingFlying on American Airlines during the pandemic.Thomas Pallini/InsiderElite status holders are often among the first passengers to board a flight, whether they're seated in a premium cabin or not. ConciergeKey members, for example, can board ahead of first class customers and active duty military members even if they've booked a basic economy ticket, according to American's boarding priority list.Early boarding gives flyers first pick at overhead bin space and more time to get settled before the rest of the plane boards.  Better opportunities for first class upgradesFlying Delta One on a Delta Air Lines Boeing 767-400.Thomas Pallini/InsiderComplimentary upgrades to first class are among the most valuable perks for an elite status holder. A single upgrade can be worth more than the price of a ticket and instantly elevate a travel experience, especially on longer flights. In many frequent flyer programs, any elite status holder can request an upgrade and they'll accommodate if there is a seat available. But oftentimes, there ends up being people that don't make the cut because there aren't enough seats available for all elite status holders. Corporate travelers, however, have a better shot at upgrades because airlines consider a variety of factors when determining who to upgrade. The level of elite status and how much a traveler's company spends with the airline in a given year are also taken into consideration. "Generally, if you have all things being equal, the person who works for a large corporate account that may have a major business relationship with an airline would likely get the nod for the upgrade ahead of the person who is an individual traveler," Harteveldt said. An airline also might give a certain number of upgrade coupons to a corporate client that can be used to get a premium cabin seat, Harteveldt added. Drink coupons and free snacksFlying Delta One on a Delta Air Lines Boeing 767-400.Thomas Pallini/InsiderNot all of what corporate clients get are grand gestures, however, and sometimes a free drink can make the difference. Coupons for a complimentary alcoholic beverage are sometimes included in a corporate contract, according to Harteveldt, and offered on certain fares geared towards business travelers.Airlines like Delta and American also offer complimentary alcoholic beverages in their extra legroom sections, which companies may be willing to purchase for their employees. Southwest Airlines' "Business Select" fare also comes with a free drink coupon.Some US airlines aren't currently offering alcohol in regular economy sections until the pandemic subsides but the perk will likely return. Some airlines also might offer complimentary meals or snacks to corporate flyers even if they're sitting in economy on domestic flights. American offers Executive Platinum status holders a complimentary snack and an alcoholic drink in economy, Snyder said. Dedicated reservation linesA Delta Air Lines employee.ReutersAirline hold times have markedly increased as airlines sought to shed their staff during the pandemic. Travelers can find themselves waiting on hold for hours.Elite status holders, however, have special phone numbers to use when calling the reservations desk with shorter hold times, and corporate travelers with elite status can also use them. Some companies were so important to airlines, however, that special phone lines were created just for their employees. "In the past, some airlines would create basically special toll-free numbers for their largest corporate accounts where the employees would call in and get a dedicated sub-group of agents within a reservations office so that they were served faster," Harteveldt said. Harteveldt noted that the perk likely doesn't exist anymore and those phone lines have been merged into the dedicated lines for top frequent flyers. "If you put somebody into the higher tiers of a frequent flyer program, they're going to get expedited service anyway," he said. Travel agents, however, including those with corporate accounts, still have lines to many airline reservation desks, Snyder said. "It's for the travel planners, the people that are doing the work," he said. Free or discounted extra legroom seatsA Delta Comfort+ seat.Thomas Pallini/Business InsiderNot all companies pay to fly their employees in a premium cabin on every flight but airlines can help make the economy experience more enjoyable by offering favorable rates on extra legroom seats, according to Harteveldt. Delta's "Comfort+" seats, for example, offer extra legroom as well as complimentary alcohol and premium snacks. Some airlines also offer complimentary upgrades into extra legroom sections for their elite status holders. Airlines also block certain regular economy seats that don't offer extra legroom but have a more preferable location in the cabin. Snyder says that corporate clients may be given advance access to those seats ahead of the public. Waived checked bag feesA United Airlines check-in counter.United Media LibraryA basic perk of earning elite status is getting a complimentary checked baggage allowance, which can save travelers and their companies money when a trip requires checked baggage. Companies may also be able to negotiate lower fees for checked baggage, Harteveldt said. More flexibility for corporate travelersFlying home from Bogota, Colombia on American Airlines.Thomas Pallini/InsiderMany US airlines have abandoned change fees for domestic flights but tickets can still be restrictive. The nature of corporate travel, however, requires additional leeway that airlines are willing to give to high-spending clients. "You get much more flexibility as a corporate [client]," Snyder said, noting that some airlines have a system for clients where points can be redeemed for perks. Common perks include things like name changes on tickets, flight changes, and converting non-refundable tickets into refundable tickets. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 4th, 2021

Stockman: A (Bad) Tale Of Two Inflations

Stockman: A (Bad) Tale Of Two Inflations Authored by David Stockman via Contra Corner blog, Our paint by the numbers central bankers have given the notion of being literalistic a bad name. For years they pumped money like mad all the while insisting that the bogus “lowflation” numbers were making them do it. Now with the lagging measures of inflation north of 5% and the leading edge above 10%, they have insisted loudly that it’s all “transitory”. Well, until today when Powell pulled a U-turn that would have made even Tricky Dick envious. That is, he simply declared “transitory” to be “inoperative”. Or in the context of the Watergate scandal of the time, “This is the operative statement. The others are inoperative.” This 1973 announcement by Richard Nixon’s press secretary, Ron Ziegler, effectively admitted to the mendacity of all previous statements issued by the White House on the Watergate scandal. Still, we won’t believe the Fed heads have given up their lying ways until we see the whites of their eyes. What Powell actually said is they might move forward their taper end from June by a few month, implying that interest rates might then be let up off the mat thereafter. But in the meanwhile, there is at least six month for the Fed to come up with excuses to keep on pumping money at insane rates still longer, while defaulting to one of the stupidest rationalizations for inflation to ever come down the Keynesian pike: Namely, that since the American economy was purportedly harmed badly, and presumably consumers too, with the lowflation between 2012 and 2019, current elevated readings are perforce a “catch-up” boon. That is, more inflation is good for one and all out there on the highways and byways of main street America! You literally can’t make up such rank humbug. Even then, what the hell are they talking about? The shortest inflation measuring stick in town is the Fed’s (naturally) preferred PCE deflator, but here it is since the year 2000. The 21 years gain is 1.93% per annum; and the 9-year gain since inflation targeting became official in January 2012 is 1.73%. Given that the PCE deflator is not a true fixed basket inflation index and that these reading are close enough to target for government work anyway, even the “catch-up” canard fails. That’s especially true because given the virtual certainty of another year or two of 4-6% CPI inflation, even the cumulative measures of inflation will register well above the Fed’s sacrosanct 2.00% target. Moreover, importantly, pray tell what did this really accomplish for the main street economy? On the one hand, savers and fixed income retirees have seen their purchasing power drop by 39% since 2000 and 18% since 2012. At the same time, wage workers in the tradable goods and services sectors got modest wage gains with uniformly bad spill-over effects. To wit, millions lost their jobs to China, India and Mexico etc. because their nominal wages were no longer competitive in the global supply base, while those that hung on to their domestic jobs often lost purchasing ground to domestic inflation. Consequently, the chart below is an unequivocal bad. It is the smoking gun that proves the Fed’s pro-inflation policies and idiotic 2.00% target is wreaking havoc on the main street economy and middle class living standards. Loss of Consumer Purchasing Power, 2000-2021 In short. the group-think intoxicated Fed heads, and their Wall Street and Washington acolytes, are hair-splitting inherently unreliable and misleading numbers as if the BLS inflation data was handed down on stone tablets from financial heaven itself. At the same time, the rampant speculative manias in the financial markets that their oceans of liquidity have actually generated is assiduously ignored or denied. We call this a tale of two inflations because the disaster of today’s rampant financial asset bubbles is rooted in pro-inflation monetary policies which are belied by both theoretical and empirical realities, which we address below. First, however, consider still another aspect of the inflationary asset bubble which is utterly ignored by the Fed. In this case, the group think scribes of the Wall Street Journal inadvertently hit the nail on the head, albeit without the slightest recognition of the financial metastasis they have exposed. We are referring to a recent piece heralding that private-equity firms have announced a record $944.4 billion worth of buyouts in the U.S. so far this year. That 250% of last year’s volume and more than double that of the previous peak in 2007, according to Dealogic. As the WSJ further observed, Driving the urge to go big are the billions of dollars flowing into private-equity coffers as institutions such as pension funds seek higher returns in an era of low interest rates. Buyout firms have raised $314.8 billion in capital to invest in North America so far in 2021, pushing available cash earmarked for the region to a record $755.6 billion, according to data from Preqin. As the end of the year approaches, big buyouts are coming fast and furious. A week ago , private-equity firms Bain Capital and Hellman & Friedman LLC agreed to buy healthcare-technology company Athenahealth Inc. for $17 billion including debt. A week earlier, KKR and Global Infrastructure Partners LLC said they would buy data-center operator CyrusOne Inc. for nearly $12 billion. And the week before that, Advent International Corp. and Permira signed an $11.8 billion deal for cybersecurity-software firm McAfee Corp. The recent string of big LBOs followed the $30 billion-plus deal for medicalsupply company Medline Industries Inc. that H&F, Blackstone Inc. and Carlyle struck in June in the largest buyout since the 2007-08 financial crisis. Needless to say, these LBOs were not done on the cheap, as was the case, oh, 40 years ago. In the case of AthenaHealth, in fact, you have a typical instance of over-the-top “sloppy seconds”. That is, it was taken private by Veritas Capital and Elliott Management three years ago at a fulsome price of $5.7 billion, which is now being topped way up by Bain Capital and Hellman & Friedman LLC in the form of an LBO of an LBO. According to Fitch, AthenaHealth had EBITDA of about $800 million in 2020, which was offset by about $200 million of CapEx or more.That means that at the $17 billion deal value (total enterprise value or TEV), the transaction was being priced at 28X free cash flow to TEV. That’s insane under any circumstances, but when more than half of the purchase price consists of junk debt ($10 billion out of $17 billion), it’s flat out absurd. The reason it is happening is the Fed’s massive financial market distortion: Bain Capital and Hellman & Friedman are so flush with capital that it is burning a hole in their pocket, while the junk debt is notionally so “cheap” that it makes a Hail Mary plausible. But here’s the thing. This is a generic case: the Fed’s radical low interest rate policy is systematically driving the allocation of capital to less and less productive uses. And clearly private equity sponsored LBOs are the poster boy, owing to the inherent double whammy of misallocation described by the WSJ above. On the one hand, capital that should be going to corporate blue chip bonds is ending up on the margin in private equity pools as pension funds, insurance companies and other asset managers struggle to boost returns toward exaggerated benchmarks inherent in their liabilities. At the same time, private equity operators are engaged primarily in the systematic swap of equity for debt in LBO capital structures, such debt taking the form of soaring amounts of junk bonds and loans. The higher coupons on junk debt, in turn, attract more misallocation of capital in the debt markets, while at the same time grinding down the productivity and efficiency of the LBO issuers. That because the hidden truth of LBOs is that on the margin they are nothing more than a financial engineering device that strip-mines cash flows that would ordinarily go into CapEx, R&D, work-force training, marketing, customer development and operational efficiency investments and reallocates these flows to interest payments on onerous levels of the junk debt, instead. That’s the essence of private equity. The underlying false proposition is that 29-year old spread-sheet jockeys at private equity shops tweaking budgets downward for all of these “reinvestment” items—whether on the CapEx or OpEx side of the ledger—know more about these matters than the industry lifetime veterans who typically man either public companies, divested divisions or pre-buyout private companies—before they are treated to the alleged magic of being “LBO’d.” In fact, there is no magic to it, notwithstanding that some LBO’s generate fulsome returns to their private equity owners. But more often than not that’s a function of: Short-term EBITDA gains that are hiding severe underling competitive erosion owing to systematic under-investment; The steady rise of market PE multiples fueled by Fed policies, which policies have drastically inflated LBO “exit” values in the SPAC and IPO markets. So at the end of the day, the Fed’s egregious money-pumping is fueling a massively bloated LBO/junk bond complex that is systematically curtailing productive main street investment and therefore longer-term productivity and economic growth. And, of course, the proceeds of buyouts and junk bonds end up inflating the risk assets, which are mostly held at the tippy top of the economic ladder. And that’s a condition which has gotten far worse since the on-set of Greenspanian “wealth effects” policy in the late 1980s. As shown below, between Q4 1989 and Q2 2021: Top 1%: Share of financial assets rose from 21.0% to 29.2%; Bottom 50%: Share of financial assets fell from 7.2% to 5.6% Meanwhile, the good folks are WSJ saw fit to provide a parallel analysis that further knocks the Fed’s lowflation thesis into a cocked hat. In this case, the authors looked at the average domestic airline ticket price and found that it is about the same today as 25 years ago, $260 today versus $284 in 1996. And that’s before adjusting for cost inflation. So the question recurs: How is it possible that the airline industry hasn’t increased ticket prices in over two decades while its fuel and labor costs, among others, have been marching steadily higher? As the WSJ noted, It isn’t possible really. Most of us are paying a lot more to fly today, thanks to a combination of three covert price increases. First, airlines have unbundled services so that fliers pay extra for checking luggage, boarding early, selecting a seat, having a meal and so on. The charges for these services don’t show up on the ticket price, but they are substantial. Second, the airplane seat’s quality, as measured by its pitch, width, seat material and heft, has declined considerably, meaning customers are getting far less value for the ticket price. And third, many airlines have steadily eroded the value of frequentflier miles, increasing costs for today’s heavy fliers relative to those in 1996. Now, did the hedonics mavens at the BLS capture all these negative quality adjustment in airline ticket prices? They most decidedly did not. As shown below, the BLS says ticket prices have only risen by 5.6% during the same 24 year period or 0.23% per annum. But you wonder with jet fuel costs up by 294% during that period and airline wages higher by 75%—why aren’t they all bankrupt and liquidated? The answer, of course, is that the BLS numbers are a bunch of tommy rot. Adjusted for all the qualitative factors listed above, airline tickets are up by a hell of a lot more than 0.23% per year. Yet the fools in the Eccles Building keep pumping pro-inflation money— so that the private equity game of scalping main street cash flows thrives and middle class living standards continue to fall. CPI for Airline Fares, 1996-2021 Moreover, the backdoor prices increase embedded in airline fares are not unique. These practices are also common in other industries, whether it’s resort fees in hotels, cheaper raw materials in garments and appliances, or more-stringent restaurant and credit-card rewards programs. As the WSJ further queried, Consider the following comparison: Which one is cheaper, a 64-ounce container of mayonnaise at a warehouse club that costs $7.99, or a 48-ounce bottle of the same brand at a supermarket for $5.94? Most people will guess the warehouse club because of its low-price image. If you do the math, the price per ounce is roughly the same. But if you consider that the warehouse club requires a separate mandatory membership fee, the customer is actually paying more per ounce at the warehouse club. Known as two-part pricing, the membership fee camouflages the actual price paid by customers—and is behind the success of Costco,Amazon and likely your neighborhood gym. (A gym’s initiation fee, a landlord’s application or administrative fee, and an online ticket seller’s per-transaction processing fee all serve the same purpose.) Yet this is just a tiny sampling of the complexity of providing apples-to-apples pricing trends at the item level over time—to saying nothing of proper weighting of all the items that go into the index market basket. The implication is crystal clear. As per Powell’s belated recant on the “transitory” matter, the Fed doesn’t know where true inflation has been or have the slightest idea of where it is going. So the idea of inflation targeting against an arbitrary basket of goods and services embodied in the PCE deflator, much of which consists of “imputations” and wildly arbitrary hedonic adjustments, is just plan nuts. They only “inflation” measure that is in the proper remit of the Fed is monetary inflation—-something at least crudely measured by its own balance sheet. On that score the Fed is a infernal inflation machine like no other. And for want of doubt that the resulting massive asset inflation and rampant financial engineering on Wall Street that flows from Fed policies is wreaking havoc on the main street economy, note this insight from the always perceptive Bill Cohan: AT&T bought TimeWarner for a total of $108 billion, including debt assumed, and three years later agreed to spin it off it to Discovery for—what?— $43 billion in stock, cash and assumed debt. By my calculation, that’s a $65 billion destruction of value in three years. That’s not easy to do. He got that right. At the end of the day these massive accounting write-offs are just a proxy for the underlying economic destruction. As we said, a tale of two inflations. And neither of them imply anything good. Tyler Durden Fri, 12/03/2021 - 14:00.....»»

Category: blogSource: zerohedgeDec 3rd, 2021

How ‘Subscribe to Me’ Became the Future of Work

Creators are bumping up against the limits of the platforms they use In August, Savannah’s entire monthly income was at stake. OnlyFans, the social media platform where she built her career, making an average of $2,000 a month from subscribers, had just announced it would be removing content like hers from the site. But there was little she could do about it. She remembers thinking: “OK, well, this is another Thursday, I might as well finish my Chick-Fil-A, and I’m just gonna chill here and wait for us to get some sort of response.” Savannah, 24, is part of a vibrant, supportive community of online sex workers that underwrite OnlyFans’s considerable financial success; it’s now valued at over $1 billion. But in a move that may foreshadow changes to come, that community was shaken when OnlyFans announced it would be banning explicit content on the site. “The sky falls on OnlyFans, like, every three or four months,” Savannah says, wryly. [time-brightcove not-tgx=”true”] She could’ve gotten a more standard job when she graduated from college in 2020 with a business degree—maybe at a bank, as a mortgage loan officer. But while career-hunting, she was working three part-time jobs and her boyfriend at the time suggested trying out OnlyFans. She opened an account in January 2020, posting sassy videos and photos that showed off her passion for Star Wars cosplay and her cheeky sense of humor to attract subscribers. “It was nerve-wracking,” Savannah admits. At first, the subscribers just trickled in; she made $80 that month. Then the pandemic lockdowns started, and Savannah’s online star began to rise. “It was an extreme case of right place, right time,” she says. “Everyone was suddenly locked inside. And they were horny. And it just all came together.” By September 2020, she had earned enough money to buy her own house—a goal that had always seemed elusive with a traditional career path. “I never, ever thought that I would be stable enough to buy a house, period, in my lifetime,” she says. That sense of stability was put to the test by the new August policy—briefly. OnlyFans backtracked just days later. For many, online sex work is easy to ignore or view as the internet’s titillating sideshow. Historically, though, the conditions of sex work serve as an indicator of the health of a society, and the inconclusive OnlyFans incident could predict the future of the growing digital creator economy and its workers. Annie Flanagan for TIME“Not only has it absolutely changed the trajectory of my life forever, but I have fun, I’m my own boss,” says Savannah. Savannah considers herself half sex worker and half “online creator,” a burgeoning and nebulous category of workers who have turned to online platforms to profit off their talents and speak to niche audiences. But the creator economy that took off around 2011 with YouTube has evolved as creators seek autonomy over their intellectual property and freedom from brand sponsorships and social media restrictions. Writers, gamers, academics, sex workers, chefs, athletes, artists: anyone with a point of view, or a video to share, has flocked to sites like Twitch, OnlyFans, Patreon and Substack in hopes of selling their skills directly to their fans. A September study from the Influencer Marketing Factory estimates some 50 million people around the world participate in this economy, broadly—that’s a third the size of the entire U.S. workforce. The study valued the creator market north of $100 billion in 2021. Direct subscription creators are a fraction of that, but a rapidly growing one. There are over a million creators on OnlyFans; streaming platform Twitch boasts over 8 million active streamers; Patreon, which hosts pay-to-view visual and written content, says it has over 200,000 active accounts. And the money generated by this new class keep going up, with OnlyFans announcing it has facilitated over $3 billion in payouts to accounts since their founding five years ago. Patreon says its creator accounts have racked up over $2 billion. Twitch’s in-app purchases neared $200 million in the first half of 2021 alone. Creators skew Millennial and Gen Z; digital natives are, after all, more prepared to capitalize on and take risks online. One study from research firm PSFK suggested that over 50% of Gen Z Americans are interested in becoming an “influencer” as a career. But some of the most successful subscription creators—historian Heather Cox Richardson, musician Amanda Palmer, photographer Brandon Stanton, and model Blac Chyna—are in their 30s or older, and were well established in their careers before selling their skills online, a fact that lends the subscription creator economy more credence. These days, Savannah—who goes by Savannah Solo on her Twitter, Instagram, TikTok and OnlyFans pages—counts hundreds of thousands of subscribers to her public profiles, and 6,500 paying subscribers to her more risqué content on OnlyFans. She doesn’t want to stop. “Not only has it absolutely changed the trajectory of my life forever, but I have fun, I’m my own boss, I wake up and I put on makeup and I wear a stupid costume and make fun content. You can decide if you want to be a persona—or if you just want to be yourself,” she says. But, as she has learned in August, the reality of a creator career is more complicated. Annie Flanagan for TIMESavannah looks through OnlyFans messages while laying at home on Oct. 18. The problem with platforms The job title “creator” is a new invention, born in the past decade thanks to the rise of self-publishing opportunities. First there was YouTube, the ür-influencer platform. Then came Facebook, Twitter and Instagram. These web2 behemoths offered anyone the ability to build a fanbase with little more than an internet connection (and, for the most successful, access to a way to photograph or video themselves). At first, little money was transferred into the hands of the creators; success in the form of wide viewership was a badge of honor, not a moneymaking scheme. That changed with the rise of models in which creators received a cut of advertising associated with their content (like pre-roll video ads on YouTube) and sponsored content and ambassadorship programs (like many of Instagram’s influencer programs). This kept content free for fans while still paying the creators—and it’s the model that still dominates the market. But positioning image-conscious brands in between fans and creators who value authenticity is not always a natural fit. Brands drop creators when they post something the brand doesn’t like. Creators lose autonomy when they spend all their time crafting sponsored content. Enter the paid social media model, in which audiences can contribute directly to their favorite creators. “From the creators’ point of view, it gives them more control and empowerment,” says OnlyFans CEO and founder Tim Stokely, about the potential for direct-to-creator paid social media to be the economic engine of the online future. The company is famous for featuring sex worker creators like Savannah, but Stokely is pushing the platform’s PG accounts, where users can subscribe to a chef’s cooking videos or a trainer’s workouts. Read More: Why OnlyFans Suddenly Reversed its Decision to Ban Sexual Content Twitch was early to this game, launching in 2011. “The digital patronage model we see popping up today in other iterations exists because of Twitch’s early entry in and focus on the creator economy,” says Mike Minton, Vice President of Monetization at Twitch. Twitch prefers to consider itself a “service” rather than a platform: it serves creators with access to audiences and monetizes their viewership, and serves fans by making it easy to watch and contribute. But it’s not all profit for creators. Hidden in the slick appeal of be-your-own-boss social media entrepreneurialism is the role of the platforms themselves, and sticky questions of ownership. Twitch, for instance, provides the necessary infrastructure for popular gamers to stream hours of high-resolution content to mass audiences of live viewers. But it also takes a 50% cut of any subscriptions. OnlyFans says the 30% it takes helps offset the costs of the security and privacy features that adult content in particular requires. Patreon takes from 5 to 12%, depending on your plan; Substack takes 10%, minus processing fees. Consummate middlemen, these companies have created low barriers to entry while still gatekeeping, at least financially. “There’s a history of artists being taken advantage of, and artists have to keep criticizing and keep skepticism at a high level,” says Jack Conte, CEO of Patreon. “I think that’s mission critical. Artists have to be educated, and choose wisely and watch platforms carefully.” Patreon, for its part, offers its users full access to their email lists in an attempt to offer greater control over their audience relationships. Patreon has had its share of controversy: a 2018 kerfuffle surrounded their choice to ban certain politically-extreme voices from the platform; payment snafus and hikes in processing fees have ruffled feathers; and their current content policies exclude sexually explicit work, to the frustration of some. The company is eager to try to keep up with creator-favored trends, however, announcing plans to integrate crypto payments and considering developing “creator coins,” and developing a native video player to more directly compete with YouTube. Stokely doesn’t try to promise financial stability or freedom to OnlyFans’ million-plus creators, especially given the complications of banking regulations (on which the company blamed the brief August ban of sexual content). He knows that change is inevitable, but he does promise one thing: OnlyFans will not become “littered with paid posts and adverts” like the free platforms. Annie Flanagan for TIME“I wake up and I put on makeup and I wear a stupid costume and make fun content. You can decide if you want to be a persona—or if you just want to be yourself,” Savannah says. Navigating an unsteady landscape Writer and musician Amanda Palmer, 45, is intimately acquainted with the challenges of creative autonomy. Palmer, the frontwoman of indie rock duo the Dresden Dolls, extricated herself from an album deal a decade ago, choosing to embrace independence—with all its financial risks—and gather income from her fans directly. “There’s been a general shift in consciousness, that people are no longer scratching their heads when an artist or a creator comes to you directly and says, Hey, I need 10 bucks,” she says. “You’re seeing it in right wing podcasting. And you’re seeing it in feminist journalism on Substack. And you’re seeing it with musicians and gamers on Patreon, and you’re seeing it with porn stars on OnlyFans.” Palmer started a Patreon in 2015, where she now posts bits of music, videos and blog posts to 12,000 paying subscribers. The direct, monetized line of communication with her fans has meant she could weather the pandemic storm—when she couldn’t play live concerts—using honesty and openness in the content she shares as bartering coin for their cash. She says she has made over $5 million in subscriptions to support her creative endeavors, although her net profit mostly just pays rent and living expenses. Still, it has been an effective solution to the conundrum of monetizing fame and artwork for a niche audience. Read More: The Livestream Show Will Go On. How COVID Has Changed Live Music—Forever Palmer’s experience with Patreon is a prime use-case for the company: a non-major artist finds financial freedom through direct-to-consumer content sharing. “Because of what’s happened over the last 10 years, there’s now hundreds of millions of creative people who identify as creators, putting their work online and already making a lot of money and want to be paid and want to build businesses,” Conte says. “Patreon is tiny; compared to the amount of creators in the world, we’re a speck.” But with $2 billion in payouts over the years, it’s proved to be a meaningful speck for a collection of creators. Conte says that about half the money that Patreon processes goes to creators who are making between $1,000 and $10,000 per month. “It’s not Taylor Swift rich, it’s not Rihanna rich. It’s a middle class of creativity: a whole new world of creators that are being enabled by this,” he says. It’s a group like Palmer: people who have a specific viewpoint, a built-in audience and an effective grasp on how to optimize their dynamic with fans. Still, even Palmer, who has “very warm feelings” about Patreon, recognizes that it can’t be trusted forever. “I’ve been ringing the warning bells for years about how dangerous it is to get into bed with a for profit company, and use them as the only avenue to reach your audience, right? Because it is dangerous, because at any moment, Facebook can take that away from you, at any moment, Patreon could sell up to Facebook and decide to change all of the rules of engagement. I really hope that doesn’t happen. But there are no guarantees in this dog eat dog tech world,” she says. “In order to protect myself, I always keep a lot of phone lines open with my community.” Annie Flanagan for TIMESavannah looks through photos with her assistant Cay. Healthy skepticism, and solidarity In her Instagram photos, Jahara Jayde doesn’t look real: technicolor eyes, luminous, airbrushed skin, ears elongated into elven tips. In her five-plus-hour Twitch streams every evening, though, she’s a bit more human, video chatting in real time with her thousand-plus viewers and slurping noodles from an unseen bowl as she plays Final Fantasy XIV through her dinnertime. When she streams, it’s just her and her subscribers. But she has discovered how vital it is to have a community of creators in this business, too. Twitch averages nearly 3 million concurrent viewers; in 2020, people watched nearly 20 billion hours of content on the site. By nature of its freewheeling live video DNA, it’s a place that is hard to regulate and populated by a wide array of characters. “I deal with racism on all of the platforms,” says Jahara, a 30-year-old BIPOC woman, citing in particular a recent influx of “hate raids” targeting BIPOC and LGBTQ+ creators on Twitch. Some creators even led a day-long streaming boycott to draw attention to the issue. Twitch has had to regulate the use of certain words and emotes (their version of custom emojis) in user chats in order to limit problematic language and content. Because of—and despite—that, Jahara has built a keenly supportive, tight-knit community that is expanding the definition of what it means to be a gamer or a creator, and who gets rewarded for the work. She’s a member of The Noir Network, a collective of Black femmes who work in content creation and help each other navigate the often-confusing Wild West of digital work, one that she is committed to continuing with. She loves the work, she just wants to make it better. Read More: The Metaverse Has Already Arrived. Here’s What That Actually Means Jahara didn’t mean to become a full-time gaming streamer when she first tried out Twitch in August 2020; she was already a business analyst with a side gig as a Japanese tutor, making use of her college degree. But soon she was gaining steam with eager subscribers: she got 300 in a month, more than enough to start monetizing her streams. “I was like, Oh, maybe I could be good at this,” she says over the phone from her home in Arizona. After just four months on Twitch, Jahara quit her day job. These days, thanks to Twitch’s subscription system, she brings in about $2,000 a month. With her tutoring clients, who she picked up because of her Twitch, she’s now matching her prior income. “And it’s awesome, because it’s doing the two things that I absolutely adore,” she says. “Ever since I was a little kid, my dad used to bring me into his room and talk to me about how I should work for myself, and the entrepreneurial spirit,” she says. She surprised herself by being able to take his advice. She has the freedom to be herself professionally, the flexibility to take care of her four-year-old daughter in the mornings before preschool, and the hope that her fiancé will eventually be able to leave his job as a manual laborer to support her online presence full time. (He already takes and edits all her photos, and does her marketing.) To her, it feels good to be a part of something. “I get a lot of messages, parents and teens and kids that tell me, like, ‘My daughter saw your photos, and her friends told her that she couldn’t copy that character because it’s not the same color as her, but now she’s excited to do it,” Jahara says. “People tell me that they feel more comfortable, they feel represented and they feel seen just by being able to see my face in the space. It wasn’t something that I expected when I set out for it. But it’s something that definitely keeps me going every day.” It’s networks like that one that have helped organize and provide a modicum of power to creators who are learning as they go. Longtime adult performer Alana Evans, 45, has an inside view of how this works; as president of the Adult Performance Artists Guild, she has helped hundreds of performers navigate issues with tech platforms including Instagram, Tiktok, and, of course, OnlyFans. “I was seeing hundreds of performers lose their pages, for very obscure reasons; you would be given an email that had vague reasons as to why maybe you were deleted, and they were absorbing all of their money,” she says. She and her organization have been able to help many rehabilitate their accounts. But these days she preaches the gospel of diversification, and of making sure that performers do their due diligence about who owns and profits from the platforms they share on. Beyond that, Evans has her sights set on the big picture: working through legal avenues to classify anti-sex-work restrictions, like those set by payment companies, as “occupational discrimination.” It’s only once they deal with the banking side of things, Evans explains, that online sex workers will be able to participate in the creator economy fully and safely. Read More: U.S. Workers Are Realizing It’s the Perfect Time to Go on Strike Creators in the music industry are trying to find power by banding together, too. By day, David Turner, 29, is a program manager at the music streaming service SoundCloud. By night, he publishes a weekly newsletter, called Penny Fractions, that goes into the nitty-gritty of the streaming industry; it’s been his pet project for over four years now. After publishing with Patreon for a few years, Turner realized only a small segment of the most popular creators were truly generating the income the platform touted. “They don’t care about me,” he says over the phone from Brooklyn. Now, Turner hosts his newsletter on an independent service and serves on the board of Ampled, a music services co-op whose tagline is “Own Your Creative Freedom.” Collectivization, as Turner sees it, is the safest way for this next generation to protect themselves from the predations of the market. Other decentralized social platforms like Mastodon and Diaspora, music streaming services like Corite and Resonate and sex-worker-backed sites like PocketStars have popped up to provide alternatives to the more mainstream options. Their selling point: bigger payouts to creators, and opportunities for creators to invest in the platforms themselves. But mass adoption has been slow. If the calling card of the independent platform is their bottom-up approach, that is also their limiting factor. By nature, they are scrappier, less funded and less likely to be able to reach the wide audiences that the top user-friendly sites have already monopolized. Annie Flanagan for TIMESavannah dresses up in Star Wars cosplay as Padmé. The future for creators When OnlyFans made its policy change in August, collectivization is what got sex workers through. Alana Evans helped lead the charge. To Evans, who has been in the industry for decades, it was just the latest iteration of exploitation from more powerful overlords. She saw her community speaking up against the change—particularly on Twitter, where sex workers and performers quickly renounced the policy and began proactively publicizing their accounts on other, friendlier platforms. To her surprise, their vocal opposition worked and OnlyFans moved quickly to find a solution. But Evans knows that this latest golden era of online work is already ending. “The writing is on the wall,” she says. Even successful creators like Savannah have begun actively promoting accounts on alternate platforms like PocketStars and Fansly. They know no solution, and no single site, will be forever. “The advice I’ve been given is to expect it all to crumble, and to have to rebuild again,” Savannah says. That advice isn’t specific to OnlyFans; it’s echoed by Amanda Palmer about Patreon, and Jahara about Twitch. As platforms inevitably seek a better bottom line, the creator workforce has no choice but to trust the tech companies will do right by them. In the meantime, they’re taking a note from the labor movement that has risen up in other industries this year: solidarity works......»»

Category: topSource: timeDec 1st, 2021

Should You Buy the Dip on the Omicron Scare?

We can make the most of the current volatility in the market to load up on some shares. The stock markets went into a bit of a tizzy Friday, as fears of a new variant of the coronavirus hit the markets. Omicron, as it’s being called, appears to have originated in South Africa and has now been detected in a number of European countries, as well as Canada, Israel, Hong Kong and Australia. A number of countries have imposed travel restrictions from South African countries.Early reports do, however, indicate that the variant while being more contagious, is doing less damage than Delta. But who knows how things will finally play out?So yes, people are scared. They are not rushing outdoors and thinking that maybe there will be lockdowns or partial lockdowns all over again.In response to the uncertainties, investors piled into bonds on Friday, ditching stocks, especially the reopening plays like airlines, restaurants and retail. As may be expected, the vaccine makers were more in demand, especially Moderna, which was quick to say that it would have a vaccine for Omicron in early 2022.But investors returned to the market by Monday to take advantage of the dip. So major indexes are again in the green. What’s more, the volatility index (VIX) is down over 12% as of this writing, indicating that investors are back in action.  So there’s a narrow window of opportunity for those still hoping to buy the dip. And SNDR, ARCB, ARW, CC and CLS could help you do just that-Schneider National Inc. SNDRSchneider is a leading transportation and logistics services company offering premier truckload, intermodal, dry van, bulk transport and supply chain management. It has one of the largest for-hire truck fleets in North America.Reopening encourages people to use more services while the virus pushes people back indoors, making it more of a goods economy. So any virus scare is generally advantageous for companies that deal in goods. Plus truckers are currently in huge demand because of supply chain issues.Analysts are optimistic about Schneider’s growth prospects in 2022 and think that its revenue and earnings will be up 6.5% and 4.1%, on top of the very strong double-digit growth this year. The estimate revisions trend is also encouraging, with the 2022 estimate climbing 13.2% in the last 90 days.That’s why Schneider’s 1.4% dip over the past week does not make much sense and may be considered an opportunity to buy.Supporting that thesis is the valuaton. Schneider trades at 11.4X 2022 earnings (P/E), 0.85X sales (P/S) and 0.66X earnings growth (PEG).The shares carry a Zacks Rank #1 (Strong Buy).ArcBest Corporation ARCBArcbest offers freight transportation services and solutions for road, air and ocean transportation of goods, as well as customizable supply chain solutions and integrated warehousing services in the U.S. and internationally.So the factors helping Schneider at the moment also apply to Arcbest.Additionally, analysts are extremely optimistic about the company’s growth in 2022. Even coming off the strong double-digit growth this year, they expect the company to grow its earnings by 15.2% on revenue that’s expected to grow 18.7%. The estimate revisions trend is positive with the 2022 earnings estimates having jumped 41.3% over the past 90 days.Therefore, the 4.0% decline in its share prices over the past week doesn’t make much sense. But it does help the valuation, which is attractive to say the least. Arcbest shares currently trade at a P/E multiple of 12.0X, a P/S multiple of 0.75X and a PEG ratio of 0.30X.The shares carry a Zacks Rank #1.Arrow Electronics Inc. ARWArrow Electronics is one of the world’s largest distributors of electronic components and enterprise computing products. It also offers value-added-services.Being an enabler of the digital economy, Arrow stands to gain from the growing volumes of online sales, remote working and other digitally dependent activity. And as we all know, digitization has accelerated over the past year because of the pandemic.So Arrow has seen good growth over the past year and analysts expect more to follow this year. They currently see earnings growing 6.5% in 2022 on revenue growth of 1.5%. The estimate revisions trend (up 9.0% in the last 90 days) indicates that final growth numbers could be considerably stronger.So the 1.8% decline in Arrow’s share prices is an invitation to buy. Especially because its valuation based on P/E of 8.0X, P/S of 0.25X and PEG of 0.31 makes it really cheap at these levels.The shares carry a Zacks Rank #2 (Buy).The Chemours Company CCChemours is a leading provider of performance chemicals that are key ingredients in end-products and processes across a host of industries including plastics and coatings, refrigeration and air conditioning, mining and general industrial manufacturing and electronics.Industrial production and manufacturing activity has picked up as far as possible given materials and labor constraints. And tightness in the supply chain is allowing Chemours to pass on raw material cost inflation to customers.The possibility of a slowdown in the economy, or of a slowdown in manufacturing and industrial operations, is therefore a bit of a concern for Chemours and explains the 2.8% decline in its share prices over the past week.But the estimate revisions trend remains positive as of now with the 2022 earnings estimate up 10.6% in the last 90 days. Moreover, analysts are looking for 8.2% earnings growth in 2022 on top of the 105.5% growth this year. The revenue growth estimate of 6.4% is also encouraging.Chemours’ valuation is also attractive with P/E, P/S and PEG at 7.03X, 0.83X and 0.22, respectively.The shares carry a Zacks Rank #1.Celestica Inc. CLSCelestica is one of the largest electronics manufacturing services companies in the world, serving the computer, and communications sectors. The company provides competitive manufacturing technology and service solutions for printed circuit assembly and system assembly, as well as post-manufacturing support to many of the world's leading original equipment manufacturers.Given the nature of its business, Celestica is a beneficiary of the increased digitization over the past year and a half. Coronavirus-related shutdowns/restrictions would increase our digital dependency, which would be positive for a company like Celestica. But there are many other reasons for increased digitization, which is the way the world is moving. One concern is related to infection rates, which if they hit the electronics supply chain can be a big impediment for the company. That’s probably why we’ve seen its shares retreat 3.9% over the past week.The lone analyst providing estimates on Celestica sees revenue and earnings growth of 12.4% and 19.8%, respectively in 2022. And he appears to have erred on the side of caution for the most part, in the past. The 2022 estimate is up 17.3% over the past 90 days.Celestica’s valuation is also attractive, as seen from its P/E multiple of 7.3X, P/S of 0.25X and PEG of 0.86.Celestica shares carry a Zacks Rank #2.3 Month Price MovementImage Source: Zacks Investment Research Investor Alert: Legal Marijuana Looking for big gains? Now is the time to get in on a young industry primed to skyrocket from $13.5 billion in 2021 to an expected $70.6 billion by 2028. After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could kick start an even greater bonanza for investors. Zacks Investment Research has recently closed pot stocks that have shot up as high as +147.0% You’re invited to immediately check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.Today, Download Marijuana Moneymakers FREE >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Arrow Electronics, Inc. (ARW): Free Stock Analysis Report Celestica, Inc. (CLS): Free Stock Analysis Report ArcBest Corporation (ARCB): Free Stock Analysis Report The Chemours Company (CC): Free Stock Analysis Report Schneider National, Inc. (SNDR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 29th, 2021

Futures Tumble, Oil And Treasury Yields Plunge As Lockdowns Return

Futures Tumble, Oil And Treasury Yields Plunge As Lockdowns Return Having briefly touched new all time highs of 4,723.5 overnight, S&P futures tumbled shortly after Europe opened as a fourth wave of the pandemic in Europe resulted in a new lockdown in Austria and the prospect of similar action in Germany wiped out earlier gains and forced stock markets down close to 1% as it overshadowed optimism about corporate earnings and the economic recovery. Friday is also a major options-expiry day, which could trigger volatility in equities. Two progressive Democratic senators said they oppose the renomination of Federal Reserve Chair Jerome Powell to a second term, because he "refuses to recognize climate change" joining Elizabeth Warren in urging President Joe Biden to choose someone else. S&P and Dow futures fell tracking losses in banks, airlines, and other economically sensitive sectors. Uncertainty over rising inflation and the Federal Reserve's tightening also kept demand for value stocks low. At 745am Dow e-minis were down 218 points, or 0.609%. S&P 500 e-minis were down 12.25 points, or 0.26% and Nasdaq 100 e-minis were up 68 points, or 0.41%. With the lockdown trade storming back, Nasdaq futures hit a record high on Friday as investors sought economically stable sectors after a small delay in voting on President Joe Biden's $1.75 trillion spending bill, while fears of Europe-wide lockdowns sent yields plunging. The U.S. House of Representatives early on Friday delayed an anticipated vote on passage of Biden's social programs and climate change investment bill, and will instead reconvene at 8 a.m. EST (1300 GMT) to complete the legislation “Everyone is holding his and her breath to find out who will be the next Fed Chair,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “More or less dovish, will it really matter? The one that will take or keep the helm of the Fed will need to hike rates at some point.” Among major premarket movers, Intuit Inc jumped 10.3% as brokerages raised their price targets on the income tax software company after it beat quarterly estimates and raised forecast. The stock was the top S&P 500 gainer in premarket trade. Chipmaker Nvidia also boosted Nasdaq futures, rising 1.7% in heavy trade after posting strong quarterly results late Wednesday. On the other end, Applied Materials dropped 5.7% after the chipmaker forecast first-quarter sales and profit below market estimates on supply chain woes. Oil firms Exxon and Chevron slipped 2.1% and 1.8% as crude prices sank, while big banks including JPMorgan and Bank of America were down between 0.9% and 1.1%, tracking a fall in U.S. Treasury yields. Carriers Delta Air Lines, United Airlines and American Airlines and cruiseliners Norwegian Cruise Line and Carnival Corp fell between 1.4% and 2.3%. Here are all the other notable movers: Farfetch (FTCH US) shares drop 23% after the online apparel retailer reported 3Q revenue that missed estimates and trimmed its FY forecast for digital platform gross merchandise value growth. Analysts see scope for the shares to stay in the “penalty box” in the near term, but recommend buying on weakness. Workday (WDAY US) analysts say that the software firm’s strong quarterly results and guidance were not quite enough to meet high expectations. The stock dropped as much as 11% in extended trading on Thursday. Intuit (INTU US) climbed 9.7% in premarket as analysts said the tax software company posted strong results that were ahead of expectations and raised its outlook. Several increased their price targets for the stock, including a new Street high at Barclays. Palo Alto Networks (PANW US) shares rise 2.8% in U.S. premarket trading after the cyber- security firm reports results and hikes full-year sales guidance, with RBC saying co. saw a strong quarter. Tesla (TSLA US) shares dip 0.5% in premarket trading. The EV maker’s price target is raised to a joint Street-high at Wedbush, with the broker saying that the EV “revolution” presents a $5t market opportunity over the next decade. Datadog (DDOG US) rises 1.8% after it is upgraded to outperform from sector perform at RBC, with the broker saying that it has more conviction on the software firm following its TMIT conference. Mammoth Energy (TUSK US) jumps as much as 34% in U.S. premarket trading after the energy-services company said a subsidiary has been awarded a contract by a major utility to help build electric-vehicle charging station infrastructure. Ross Stores (ROST US) shares dropped 2.2% in postmarket trading on Thursday after its profit outlook for fourth quarter missed the average analyst estimate. In Europe, banks and carmakers led the Stoxx Europe 600 Index down 0.3%, reversing early gains. Fears of fresh lockdowns have hit travel stocks, but boosted the delivery sector and other pandemic winners, with German meal-kit company HelloFresh jumping as much as 7.1% to a record. Stoxx Europe 600 index tumbled after Germany’s health minister said he couldn’t rule out a lockdown as infections surge relentlessly in the region’s largest economy. That came after Austria said it would enter a nationwide lockdown from Monday. Here are some of the biggest European movers today: Ocado shares jump as much as 8.4%, the most intraday since November 2020, after a Deutsche Bank note on joint venture partner Marks & Spencer highlighted scope for a potential transaction. VGP shares gain as much as 7.7% to a record after KBC raised its rating to accumulate from hold, based on a “strong” 10-month trading update. HelloFresh shares surge as much as 7.1% and other lockdown beneficiaries including Delivery Hero, Logitech and Zalando gain after the German health minister says a lockdown can’t be ruled out. Mall landlords Unibail and Klepierre and duty-free retailer Dufry drop. Truecaller shares rise as much as 14% after it received its first analyst initiations after last month’s IPO. Analysts highlighted the company’s potential for continued strong growth. JPMorgan called current growth momentum “unparalleled.” Hermes shares jump as much as 5.2% to a fresh record, rising for a seventh day, amid optimism that the stock may be added to the Euro Stoxx 50 Index as soon as next month. Shares also rise after bullish current- trading comments of peer Prada. Kingfisher shares drop as much as 5.8%, even after the home-improvement retailer said it expects profit to be toward the higher end of its forecast. Investor focus has probably shifted to 2022, and Friday’s update doesn’t have any guidance for next year, according to Berenberg. GB Group shares tumble as much as 18%, the most since October 2016, after the identity-verification software company raised about GBP300m in a placing of new shares at a discount. Mode Global shares sink as much as 19%, reversing most of this week’s gains, after it said some brands had withdrawn the company as an affiliate. In Fx, the Bloomberg Dollar Spot Index jumped at the London open and the greenback was higher versus all of its Group-of-10 fears apart from yen. Norway’s krone was the biggest loser as energy prices prices dropped after Austria announced a nationwide lockdown starting on Monday, while Germany’s health minister refused to rule out closures in the country.  The pound fell on the back of a stronger dollar; data showed U.K. retail sales rose for the first time in six months as consumers snapped up toys, sports equipment and clothing, while the cost of servicing U.K. government debt more than tripled in October from a year earlier due to surging inflation The euro plunged by 1% to a new YTD low of $1.1255 as the repricing in the front-end of euro options suggests the common currency is settling within a new range. The euro is also falling at the end of the week following the announcement that Austria will begin a 20-day full Covid-19 lockdown from Monday in response to surging case numbers which have far surpassed last year's peak. While fatalities remains well below the peak, they are accelerating and the government is clearly keen to arrest it before the situation potentially becomes much worse. With Germany seeing a similar trend, the question now becomes whether the regions largest economy will follow the same path. Its Health Minister, Jens Spahn, today suggested nothing can be ruled out and that they are in a national emergency. In rates, Treasury yields fell by around 4bps across the board and the bunds yield curve bull flattened, with money markets pushing back bets on a 10bps ECB rate hike further into 2023. Treasury 10-year yields richer by 4.5bp on the day at around 1.54% and toward lows of the weekly range -- bunds, gilts outperform Treasuries by 1bp and 1.5bp in the sector as traders reassess impact of future ECB rate hikes. Treasuries rally across the curve, following wider gains across EGB’s and gilts as investors weigh the impact of further European lockdowns amid a fourth wave of Covid-19. Flight-to-quality pushes Treasury yields lower by up to 5bp across front- and belly of the curve, which slightly outperform.  Bunds and Treasury swap spreads widen, while gilts move tighter as risk assets mostly trade to the downside and demand for havens increases on news regarding coronavirus restrictions. German 10-year swap spreads climbed above 50bps for the first time since March 2020. In commodities, spot gold is little changed around $1,860/oz, while base metals are in the green, with LME copper and aluminum leading peers. Oil tumbled with WTI and Brent contracts down well over 2%.  Brent crudes brief dip below $80 was short-lived on Thursday and prices were continuing to recover on the final trading day of the week until Austria announced its lockdown. Brent crude quickly reversed course and trades almost 2% lower on the day as it takes another run at $80. Oil has been declining over the last week as demand forecasts have been pared back, OPEC and the IEA have warned of oversupply in the coming months and the US has attempted to coordinate an SPR release with China and others. The market still remains fundamentally in a good position but lockdowns are now an obvious risk to this if other countries follow Austria's lead. A move below $80 could deepen the correction, perhaps pulling the price back towards the mid-$70 region. This looks more likely now than it did a day ago and if Germany announces similar measures, it could be the catalyst for such a move. Perhaps OPEC+ knows what it's talking about after all. Looking at To the day ahead now, there is no macro news; central bank speakers include ECB President Lagarde, Bundesbank President Weidmann, Fed Vice Chair Clarida, the Fed’s Waller and BoE Chief Economist Pill. Separately, data highlights include UK retail sales and German PPI for October. Market Snapshot S&P 500 futures down 0.09% to 4,696.25 STOXX Europe 600 up 0.2% to 488.66 MXAP little changed at 199.11 MXAPJ down 0.2% to 648.18 Nikkei up 0.5% to 29,745.87 Topix up 0.4% to 2,044.53 Hang Seng Index down 1.1% to 25,049.97 Shanghai Composite up 1.1% to 3,560.37 Sensex down 0.6% to 59,636.01 Australia S&P/ASX 200 up 0.2% to 7,396.55 Kospi up 0.8% to 2,971.02 Brent Futures little changed at $81.17/bbl Gold spot up 0.1% to $1,860.34 U.S. Dollar Index up 0.43% to 95.96 German 10Y yield little changed at -0.32% Euro down 0.6% to $1.1304 Top Overnight News from Bloomberg Germany’s Covid crisis is about to go from bad to worse, setting the stage for a grim Christmas in Europe. With infections surging relentlessly and authorities slow to act amid a change in power, experts warn that serious cases and deaths will keep climbing Austria will enter a nationwide lockdown from Monday as a record spike in coronavirus cases threatens to overwhelm the country’s health care system The pundits are coming for the Fed and Chair Jerome Powell. Mohamed El-Erian, chief economic adviser to Allianz SE and a Bloomberg Opinion columnist, recently said the central bank has made one of the worst inflation calls in its history. Writing in the Financial Times, the economist Willem Buiter called on the Fed to abandon the more flexible inflation target it established last year Bitcoin continued its slide Thursday, falling for a fifth consecutive day as it slipped below $57,000 for the first time since October, in a retreat from record highs. The world’s largest cryptocurrency hasn’t slumped that long since the five days that ended May 16 House Democrats pushed expected passage of President Joe Biden’s $1.64 trillion economic agenda to Friday as Republican leader Kevin McCarthy delayed a vote with a lengthy floor speech that lasted into the early morning hours ECB President Christine Lagarde said policy makers “must not rush into a premature tightening when faced with passing or supply- driven inflation shocks” Markets are increasingly nervous about the common currency with the pandemic resurgent, geopolitical tensions rising and gas supply issues mounting A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mostly positive after the mixed performance stateside where the S&P 500 and Nasdaq notched fresh record closes, but cyclicals lagged as comments from Senator Manchin cast some uncertainty on the Build Back Better bill. The ASX 200 (+0.2%) was rangebound with upside in healthcare and consumer stocks offset by weakness in tech and a lacklustre mining sector. Crown Resorts (CWN AT) was the stellar performer after it received an unsolicited, non-binding takeover proposal from Blackstone (BX) valued at AUD 12.50/shr which boosted its shares by around 16%, although gains in the broader market were limited as COVID-19 concerns lingered following a further jump of cases in Victoria state. The Nikkei 225 (+0.5%) benefitted from a mostly weaker currency and after PM Kishida confirmed the details of the incoming stimulus package valued at a total JPY 79tln including JPY 56tln in fiscal spending. The KOSPI (+0.8%) was also positive but with gains initially capped as South Korean wholesale inflation surged to a 13-year high and further added to the case for the BoK to hike rates for the second time this year at next week’s meeting. The Hang Seng (-1.1%) and Shanghai Comp. (+1.1%) were mixed with the mainland kept afloat amid press reports that China is considering measures to reduce taxes and fees by up to CNY 500bln, although the mainland was initially slow to start after another liquidity drain by the PBoC and with stocks in Hong Kong spooked amid substantial losses in Alibaba following a miss on its earnings and Country Garden Services suffered on reopening from the announcement of a 150mln-share placement. Finally, 10yr JGBs were rangebound with mild gains seen after the modest bull flattening stateside, but with upside restricted amid the gains in Japanese stocks and lack of BoJ purchases, as well as the incoming fiscal spending and extra budget from the Kishida government. Top Asian News Bitcoin Falls Almost 20% Since Record as Crypto Bulls Retreat Singapore’s Insignia Ventures Intensifies Push Into Healthtech Binance Chief Zhao Buys His First Home in ‘Pro-Crypto’ Dubai Property Stocks Surge; Land Sale Rules Eased: Evergrande Update The earlier positive sentiment in Europe dissipated amid a string of back-to-back downbeat COVID updates – with Austria now resorting to a full-scale lockdown and Germany sounding alarms over their domestic COVID situation and not ruling out its own lockdown. European bourses flipped from the mostly positive trade at the open to a negative picture (Euro Stoxx 50 -0.5%; Stoxx 600 Unch), with headlines also flagging the European stock market volatility gauge jumping to three-week highs. It is also worth noting the monthly option expiries for stocks today, with desks pointing to the second-largest expiry day on record. US equity futures have also seen headwinds from the pullback in Europe, but US futures are mixed with the NQ (+0.4%) benefitting from the slide in yields. Back to Europe, Austria’s ATX (-1.0%) sit as the laggard after the Austrian Chancellor said a full domestic COVID lockdown will be imposed as of Monday for a maximum of 20 days with compulsory vaccination from 1st February 2022. Switzerland’s SMI (+0.2%) owes its gains to the defensive flows into healthcare propping up heavyweights Novartis (+0.5%) and Roche (+0.7%). Sectors overall are mostly negative with Healthcare the current winner, whilst Tech benefits from the yield slump and Basic Resources recover from yesterday’s slide as base metals rebound. The downside sees Banks on yield dynamics, whilst Oil & Gas lost the ranks as crude prices were spooked by the COVID headlines emanating from Europe. In terms of individual movers, Ocado (+6%) resides at the top of the FTSE 100 – with some citing a Deutsche Bank note which suggested shareholder Marks & Spencer could be mulling a buyout, although the note is seemingly speculation as opposed to chatter. Top European News Ryanair Drops London Listing Over Brexit Compliance Hassles ECB Mustn’t Tighten Despite ‘Painful’ Inflation, Lagarde Says Austria to Lock Down, Impose Compulsory Covid Vaccinations German Covid Measures May Bolster ECB Stimulus Stance: El-Erian In FX, it remains to be seen whether the Dollar can continue to climb having descended from the summit, and with no obvious fundamental drivers on the agenda in terms of US data that has been instrumental, if not quite wholly responsible for the recent bull run. However, external and technical factors may provide the Greenback and index with enough momentum to rebound further, as the COVID-19 situation continues to deteriorate in certain parts of Europe especially. Meanwhile, the mere fact that the DXY bounced off a shallower low and appears to have formed a base above 95.500 is encouraging from a chart perspective, and only the Yen as a safer haven is arguably capping the index ahead of the aforementioned w-t-d peak within 95.554-96.090 extremes. Ahead, more Fed rhetoric and this time via Waller and Clarida. EUR - The Euro has been hit hardest by the Greenback revival, but also the latest pandemic waves that have forced Austria into total lockdown and are threatening to see Germany follow suit. Moreover, EGBs are front-running the latest squeeze amidst risk-off trade in stocks, oil and other commodities to widen spreads vs Treasuries and the divergence between the ECB/Fed and other more hawkishly or less dovishly positioned. Hence, Eur/Usd has reversed further from circa 1.1374 through 1.1350 and 1.1300, while Eur/Yen is eyeing 128.50 vs almost 130.00 at one stage and Eur/Chf is probing fresh multi-year lows around 1.0450. NZD/GBP/AUD/CAD - All catching contagion due to their high beta, cyclical or activity currency stature, with the Kiwi back under 0.7000, Pound hovering fractionally above 1.3400, Aussie beneath 0.7250 and Loonie striving to contain declines beyond 1.2650 pre-Canadian retail sales against the backdrop of collapsing crude prices. JPY/CHF - As noted above, the Yen is offering a bit more protection than its US counterpart and clearly benefiting from the weakness in global bond yields until JGBs catch up, with Usd/Jpy down from 114.50+ towards 113.80, but the Franc is showing its allure as a port in the storm via the Euro cross rather than vs the Buck as Usd/Chf holds above 0.9250. In commodities, WTI and Brent front month futures retreated with the trigger point being back-to-back COVID updates – with Austria confirming a full-scale lockdown from Monday and Germany not ruling out its own lockdown. Crude futures reacted to the prospect of a slowdown in activity translating to softer demand. That being said, COVID only represents one factor in the supply/demand equation. Oil consuming nations are ramping up rhetoric and are urging OPEC+ to release oil. The White House confirmed the US discussed a possible joint release of oil from reserves with China and other countries, while it reiterated that it has raised the need for available oil supply in the market with OPEC. Meanwhile, the Japanese Cabinet said it will urge oil-producing nations to increase output and work closely with the IEA amid risks from energy costs. Further, energy journalists have also been flagging jitters of Chinese crude demand amid the likelihood of another tax probe into independent refiners. All in all, a day of compounding bearish updates (thus far) has prompted the contracts to erase all of their APAC gains, with WTI Dec just above USD 76/bbl (76.06-79.33/bbl range) and Brent Jan back under USD 79/bbl (78.75-82.24/bbl range). Elsewhere, spot gold saw a pop higher around the flurry of European COVID updates and despite a firmer Buck – pointing to haven flows into the yellow metal – which is nonetheless struggling to convincingly sustain a breach its overnight highs around USD 1,860/oz and we are attentive to a key fib at USD 1876/oz. Base metals prices are relatively mixed but have waned off best levels amid the risk aversion that crept into the markets, but LME copper holds onto a USD 9,500+/t status. US Event Calendar Nothing major scheduled Central Banks 10:45am: Fed’s Waller Discusses the Economic Outlook 12:15pm: Fed’s Clarida Discusses Global Monetary Policy Coordination DB's Jim Reid concludes the overnight wrap It was another mixed session for markets yesterday, with equities and other assets continuing to trade around their recent highs even as a number of risk factors were increasingly piling up on the horizon. By the close of trade, the S&P 500 had advanced +0.34% to put the index at its all-time high, whilst oil prices pared back their losses from earlier in the day to move higher. That said, there was more of a risk-off tone in Europe as the latest Covid wave continues to gather pace, with the STOXX 600 (-0.46%) snapping a run of 6 successive gains and being up on 17 out of the previous 19 days as it fell back from its all-time high the previous day, as haven assets including sovereign bonds were the beneficiaries. Starting with those equity moves, it was difficult to characterise yesterday’s session in some ways, since although the S&P advanced +0.34%, it was driven by a relatively narrow group of sectors, with only a third of the index’s components actually moving higher on the day. Indeed, to find a bigger increase in the S&P 500 on fewer advancing companies, one needs to go back to March 2000 (though it came close one day in August 2020, when the index advanced +0.32% on 153 advancing companies). Consumer discretionary (+1.49%) and tech (+1.02%) stocks were the only sectors to materially advance. Nvidia (+8.25%), the world’s largest chipmaker, was a key outperformer, and posted very strong third quarter earnings and revised higher fourth quarter guidance. Following the strong day, Nvidia jumped into the top ten S&P 500 companies by market cap, ending yesterday at number eight. The S&P gain may have been so narrow due to some negative chatter about President Biden’s build back better package, with CNN’s Manu Raju tweeting that Senator Joe Manchin “just told me he has NOT decided on whether to vote to proceed to the Build Back Better bill.” Manchin’s position in a 50-50 senate has given him an enormous amount of influence, and separate comments created another set of headlines yesterday on the Fed Chair decision, after The Hill reported Manchin saying that he’s “looking very favourably” at supporting Chair Powell if he were re-nominated, following a chat between the two about inflation. Mr Manchin is seemingly one of the most powerful people in the world at the moment. While the Senate still presents a hurdle for the President’s build back better bill, House Democrats are close to voting on the bill but couldn’t last night due to a three hour speech by House Republican leader McCarthy. It will probably happen this morning. This follows the Congressional Budget Office’s ‘score’ of the bill, which suggested the deficit would increase by $367bn as a result of the bill, higher figures than the White House suggested, but low enough to garner support from moderate House Democrats. Over in Europe there was a much weaker session yesterday, with the major equity indices falling across the continent amidst mounting concern over the Covid-19 pandemic. Germany is making another forceful push to combat the recent increase in cases, including expanded vaccination efforts, encouraging work from home, and restricting public transportation for unvaccinated individuals. Elsewhere, the Czech Republic’s government said that certain activities will be limited to those who’ve been vaccinated or had the virus in the last six months, including access to restaurants and hairdressers. Slovakia also agreed a similar move to prevent the unvaccinated accessing shopping malls, whilst Hungary is expanding its mask mandate to indoor spaces from Monday. Greece imposed further restrictions for its unvaccinated population. So a theme of placing more of the restrictions in Europe on the unvaccinated at the moment and trying to protect the freedoms of those jabbed for as long as possible. That risk-off tone supported sovereign bonds in Europe, with yields on 10yr bunds (-3.0bps), OATs (-4.1bps) and BTPs (-5.5bps) all moving lower. That was a larger decline relative to the US, where yields on 10yr Treasuries were only down -0.3bps to 1.59%, with lower real yields driving the decline. One asset class with some pretty sizeable moves yesterday was FX, where a bunch of separate headlines led to various currencies hitting multi-year records. Among the G10 currencies, the Swiss Franc hit its strongest level against the euro in over 6 years yesterday on an intraday basis. That came as the Covid wave has strengthened demand for haven assets, though it went on to weaken later in the day to close down -0.15%. Meanwhile, the Norwegian Krone was the weakest G10 performer (-0.72% vs USD) after the Norges Bank said it would be stopping its daily foreign exchange sales on behalf of the government for the rest of the month. Finally in EM there were some even bigger shifts, with the Turkish Lira falling to a record low against the US dollar, which follows the central bank’s decision to cut interest rates by 100bps, in line with expectations. And then in South Africa, the Rand also fell to its weakest in over a year, in spite of the central bank’s decision to hike rates, after the decision was interpreted dovishly. Overnight in Asia stocks are trading mostly higher led by the Nikkei (+0.45%), KOSPI (+0.43%), Shanghai Composite (+0.34%) and CSI (+0.18%). The Hang Seng (-1.76%) is sharply lower and fairly broad based but is being especially dragged down by Alibaba which dived -11% after it downgraded its outlook for fiscal year 2022 and missed sales estimate for the second quarter. Elsewhere in Japan headline CPI for October came in at +0.1% year-on-year (+0.2% consensus & +0.2% previous) while core CPI matched expectations at +0.1% year-on-year. The numbers reflect plunging mobile phone fees offsetting a 21% surge in gas prices. If the low mobile phone costs are stripped out, core inflation would be at 1.7% according to a Bloomberg calculation. Prime Minister Fumio Kishida is expected to deliver a bigger than expected stimulus package worth YEN 78.9 trillion ($690 bn) according to Bloomberg. We should know more tomorrow. Moving on futures are pointing to a positive start in US and Europe with S&P 500 (+0.42%) and DAX (+0.39%) futures both up. Turning to commodities, oil prices had been on track to move lower before paring back those losses, with Brent Crude (+1.20%) and WTI (+0.83%) both up by the close and edging up around half this amount again in Asia. That comes amidst continued chatter regarding strategic oil releases, and follows comments from a spokeswoman from China’s National Food and Strategic Reserves Administration, who Reuters reported as saying that they were releasing crude oil reserves. New York Fed President, and Vice Chair of the FOMC, John Williams, upgraded his assessment of inflation in public remarks yesterday. A heretofore stalwart member of team transitory, he noted that they wouldn’t want to see inflation expectations move much higher from here, and that recent price pressures have been broad-based, driving underlying inflation higher. Williams is one of the so-called core members of FOMC leadership, so his view carries some weight and is a useful barometer of momentum within the FOMC. Indeed, Chicago Fed President Evans, one of the most resolutely dovish Fed Presidents, expressed similar sentiment, recognising that rate hikes may need to come as early as 2022 given the circumstances. There wasn’t much in the way of data yesterday, though the weekly initial jobless claims from the US for the week through November 13 came in higher than expected at 268k (vs. 260k expected), and the previous week’s reading was also revised up +2k. That said, the 4-week moving average now stands at a post-pandemic low of 272.75k. Otherwise, the Philadelphia Fed’s manufacturing business outlook survey surprised to the upside at 39.0 in November (vs. 24.0 expected), the highest since April. That had signs of price pressures persisting, with prices paid up to 80.0, the highest since June, and prices received up to 62.9, the highest since June 1974. Finally, the Kansas City Fed’s manufacturing index for November fell to 24 (vs. 28 expected). To the day ahead now, and central bank speakers include ECB President Lagarde, Bundesbank President Weidmann, Fed Vice Chair Clarida, the Fed’s Waller and BoE Chief Economist Pill. Separately, data highlights include UK retail sales and German PPI for October. Tyler Durden Fri, 11/19/2021 - 08:11.....»»

Category: personnelSource: nytNov 19th, 2021

Airbnb reveals international bookings are up 44% after the US reopened its borders to foreign travelers, as pent-up demand fuels travel recovery

The return of global travelers is expected to be a major economic boost for industries like tourism and hospitality that suffered during the pandemic. izusek/Getty Images Airbnb is expected to make significant gains from increased travel demand after the US loosened international travel restrictions. Recent data from Airbnb shows that foreign bookings increased 44% after the US announced it was reopening to foreign travelers. A travel expert told Insider this is just the start of a steady incline the travel industry will begin to see in the coming year. The reopening of US borders to international visitors revealed a pent-up demand for travel that is already prompting a boom in bookings for hospitality companies like Airbnb.According to recent data from Airbnb, bookings from foreign guests rose 44% immediately following the initial announcement that the US would relax international travel restrictions to 33 countries beginning November 8. In a report shared on Tuesday, the company said it's seen a rise in cross-border traveling, with an uptick of guests booking trips over 3,000 miles from home.Many of these trips are to the US, which "historically is the largest inbound travel market in the world," Airbnb wrote in the report. "As countries around the world start to loosen their travel restrictions, we've been seeing sudden increases in interest in these countries."Henry Harteveldt, a travel industry analyst at Atmosphere Research, told Insider that he anticipates the pace of recovery will be a "bit of a rollercoaster" in the coming months. "We're probably are going to see a surge of demand now and possibly another surge around Christmas," Harteveldt said. "I really anticipate 2022 will be a year of steady, progressive improvement in business, with more people coming from abroad."Domestic bookings are also on the rise, the report found, with a 40% increase in bookings for Thanksgiving week alone as Americans look to spend time with family during the holidays amid increased national vaccination rates. As demand for travel increases, cumulative TSA checkpoint travel numbers are approaching levels reported at this time in 2019, and more than double the numbers from 2020. Though air travel dipped at the end of the summer, Harteveldt said airlines are pleased with the advanced bookings they're seeing from international points of sale outside the US.The arrival of international visitors is expected to be a major boost for local economies and industries including tourism, retail, and hospitality which largely suffered during the pandemic. According to Harteveldt, global travelers are likely to bring an influx of spending ahead of the holiday season, as international travelers "tend to spend money in the neighborhood where they stay."And while Airbnb was able to attract travelers looking for a change of scenery or a fresh place to work from home during the pandemic, Harteveldt said the company still faces several challenges as it continues to recuperate from pandemic-era losses.One such challenge is meeting booking demand as the company rebuilds relationships with hosts after it unilaterally returned travel deposits from hosts to customers at the start of pandemic lockdowns. Additionally, some consumers are wary of a possible COVID-19 winter surge, which could add another obstacle for the travel industry's recovery if restrictions are possibly reimposed in the future."There's still some challenges out there that Airbnb people face and it won't be all entirely smooth-sailing for the category," Harteveldt said. "But I think Airbnb is prepared financially from a marketing standpoint to compete for business, and I think will be successful in attracting customers."Read the original article on Business Insider.....»»

Category: smallbizSource: nytNov 11th, 2021

Frenzied Futures Rally Fizzles As All Eyes Turn To Fed"s Taper Announcement

Frenzied Futures Rally Fizzles As All Eyes Turn To Fed's Taper Announcement US futures and European bourses retreated slightly from record highs as investors weighed the ever worsening supply crunch and virus curbs in China against strong earnings with all eyes turning to the conclusion of the Fed's 2-day meeting tomorrow, when Powell will announce the launch of a $15BN/month taper. At 7:20 a.m. ET, Dow e-minis were up 7 points, or 0.02%, S&P 500 e-minis were down 0.50 points, or 0.01%, and Nasdaq 100 e-minis were down 28.75 points, or 0.18%. Iron-ore futures tumbled on shrinking steal output in China. Tesla led premarket losses in New York. Investors paused to reflect on a rally that’s taken U.S. and European stocks to record highs. With a post-pandemic supply crunch stoking inflation and pushing central banks to tighten monetary policy, they have begun to question valuations. Economic recovery is also under strain as countries from China to Bulgaria report rising Covid cases. Both the S&P 500 Index and the Dow have been scaling new peaks as U.S. companies post another stellar quarter for earnings. Of the 295 companies in the equity benchmark that have reported results, 87% have either met or surpassed estimates. Dow futures slipped after the underlying gauge briefly surged past the 36,000 mark on Monday. Russell 2000 contracts rose. Bonds from Europe to the U.S. jumped after Australia signaled patience with rate increases despite abandoning Yield Curve Control due to "economic improvement." Yields on the two-year and five-year Treasuries fell as the RBA joined global central banks inching closer to policy tightening. However, the central bank’s insistence on remaining patient with rate hikes pushed traders to pare back hawkish bets in Australia as well as in global bond markets during European hours. “The Fed meeting could still shake the markets, because even though we know the concrete outcome of the meeting, which is the opening bell of the QE tapering, the risks remain tilted to the hawkish side,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “Still, investors prefer seeing the glass half full.” In early trading, Tesla tumbled 5%, retreating from a gamma-squeeze record on Monday after Elon Musk said the carmaker hasn’t yet signed a contract with Hertz Global for Model 3 sedans. Chegg slumped 32% after the online-education company cut revenue forecasts and its results missed estimates, prompting a raft of downgrades. Clorox rose 1.6% after the bleach maker posted upbeat first-quarter results. Simon Property Group added 4.2% after the mall operator raised its 2021 forecast for profit and quarterly dividend. Pfizer gained 2.4% after the drugmaker boosted (get it "boosted"?) its full-year sales forecast for the company’s COVID-19 vaccine to $36 billion. Here are some of the biggest U.S. movers today: Tesla drops as much as 6.9% in premarket trading after closing at a record on Monday after Elon Musk said the electric vehicle-maker hasn’t yet signed a contract with Hertz Global. Chegg slumps 31% after the online education company slashed revenue forecasts and posted quarterly results that missed estimates. Novavax gains 5.3%, signaling an extension of Monday’s 16% rally, amid optimism over Covid vaccine approvals. Triterras tumbles as much as 20% after the short seller target said it encountered an “unanticipated delay in the finalization” of an independent audit of its financial statements. Teva Pharmaceutical Industries depositary receipts rise 7.7% and Endo International (ENDP US) gains 6.3% after the firms joined other former opioid makers in scoring a litigation win. Geron gains 4.5% and and SAB Bio (SABS US) soars 39% after Baird starts coverage of both with outperform ratings. Cryptocurrency-related stocks gained in premarket trading on Tuesday, as Bitcoin climbed and Etherium hit a record high.    NXT-ID up 38.18% premarket, Marathon Digital +4.0%, Riot Blockchain +2.9%, Bit Digital +2.5%, Canaan +3.2%, Coinbase +2.0%, MicroStrategy +1.5% While stocks continue to trade in a world of their own, just shy of all time highs, bond and currency markets are bracing for the Fed to announce a tapering of asset purchases as an initial step to eventually raising interest rates to contain inflation. Equity markets, on the other hand, are focusing on earnings growth and valuations. Meanwhile, mixed data on the global economic revival is further clouding the picture as the pandemic is making a comeback in parts of the world. “We expect volatility in financial markets to remain high as not only the Fed, but other central banks around the world, extract liquidity to combat the rise in inflation,” Lon Erickson, portfolio manager at Thornburg Investment Management, wrote in a note. Despite Fed rhetoric, “we’ve started to see the market price in earlier policy rate moves, perhaps losing confidence in the ‘transitory’ nature of inflation.” In Europe, the Stoxx Europe 600 Index slid 0.1% from a record reached on Monday, led lower by miners and travel companies. Spain's IBEX and the UK FTSE 100 dropped 0.6%. DAX outperforms. BP dropped 2.8% in London even as the oil giant announced an additional $1.25 billion buyback. HelloFresh jumped 14%, the most this year, after the German meal-kit company raised its full-year outlook. Basic-materials stocks were the weakest of 20 sector indexes in Europe as falling iron ore and steel prices weigh on miners and steel producers. Here are some of the biggest European movers today: HelloFresh shares surge as much as 16%, their best day since Dec. 2020, with analysts positive on the meal-kit maker’s guidance hike. Jefferies says that the company’s 3Q results included “little not to like.” Demant shares rise as much as 6.5%, the most intraday since March 23, after the hearing-aid maker raised its earnings forecast and topped estimates. Fresenius SE shares gain as much as 6.5% after reporting 3Q earnings slightly ahead of analyst estimates, with Jefferies saying the focus lies on the company’s cost-savings efforts and future plans for Kabi. Fresenius Medical shares up as much as 4.5% after posting 3Q earnings. Company’s FY22 recovery is “key to share price development from here,” according to Jefferies. Sinch shares drop as much as 17%, the most on record, after reporting 3Q results which showed organic growth slowing down, a trend Handelsbanken expects to worsen. Standard Chartered shares fall as much as 9.5%, the most since March 2020, as the lender’s third-quarter margins disappointed amid suppressed Asia rates and analysts flagged weakness in its retail operations. Flutter shares drop as much as 9% in London, the most intraday since March 2020, after the gaming company cut its profit outlook on unfavorable sporting results and a regulatory change in the Netherlands. Analysts expect ex-U.S. earnings consensus to fall. Steel makers underperform, with Kloeckner -5.3%, ArcelorMittal -2.9%, ThyssenKrupp -2.5%, Salzgitter -2.5% Asian stocks dipped, led by Chinese shares on concerns about the impact of measures to curb Covid-19 infections, while financials underperformed ahead of key central bank decisions this week. The MSCI Asia Pacific Index erased earlier gains of as much as 0.4% to fall 0.2% in afternoon trading. Blue-chip financial stocks including China Merchants Bank and Westpac Banking were among the biggest drags. Traders are focused on this week’s U.S. Federal Reserve meeting amid concerns about elevated inflation. Sentiment turned sour after authorities in Beijing halted classes at 18 schools amid Covid-19 resurgence. China’s benchmark CSI 300 Index fell 1%, while Hong Kong’s Hang Seng Index reversed an earlier gain of 1.9% to close in negative territory.  China’s CSI 300 Index falls by as much as 1.9% after Beijing’s suspension of classes across 18 schools heightened concerns over the impact of the recent Covid-19 outbreak. China Tourism Group Duty Free slumped as much as 9.8%, the worst performer in the benchmark and one of its biggest drags. The Shanghai Composite Index also extends decline to 1.9% while the ChiNext Index pares a 1.2% gain to trade little changed. “Investors are worried that Beijing’s virus measures may cool down China’s economic activities and hamper its recovery,” said Steven Leung, executive director at UOB Kay Hian in Hong Kong. Asian stocks rose on Monday, a turnaround after a drop of 1.5% during last week, the worst such performance since early October. Shares have been whipsawed by ongoing concern over supply-chain constraints impacting industries such as technology and auto making. Investors are also parsing through earnings data, with more than half of the companies on MSCI’s Asia gauge having reported results.  “At this level, it can be said that investors are no longer pessimistic but are not yet hopeful either,” Olivier d’Assier, head of APAC applied research at Qontigo, wrote in a note.  Japanese stocks fell, halting a two-day rally, as some investors adjusted positions after the market jumped yesterday.  The Topix index slid 0.6% to 2,031.67 at the 3 p.m. close in Tokyo, while the Nikkei 225 declined 0.4% to 29,520.90.  Mitsui & Co. contributed most to the Topix’s loss, decreasing 4%. Out of 2,181 shares in the index, 538 rose and 1,583 fell, while 60 were unchanged. Both the Topix and Nikkei 225 gained more than 2% on Monday after the ruling coalition secured an election victory that was better than many had expected. Japan’s stock market will be closed Wednesday for a national holiday. Australian stocks slide, with the S&P/ASX 200 index falling 0.6% to close at 7,324.30, after the Reserve Bank of Australia abandoned a bond-yield target, following an acceleration in inflation that spurred traders to price in higher borrowing costs. Banks and miners slumped, while real estate and consumer discretionary stocks climbed. Goodman Group was the biggest gainer after the company raised its full-year guidance. Insurance Australia Group tumbled after the firm cut its reported insurance margin forecast for the full year.  In New Zealand, the S&P/NZX 50 index fell 0.3% to 12,992.50. In rates, Treasuries were higher across both the front-end and belly of the curve, led by bull-steepening gains across European bonds with peripherals outperforming. Treasury yields were lower by 2bp-3bp across front-end of the curve, steepening 2s10s by that amount with 10-year little changed around 1.55%; German 10-year is lower by ~4bp, U.K. by ~1bp. Aussie front-end rallied during Asia session after the RBA abandoned its yield target but maintained its bond buying pace; euro-zone money markets subsequently pared the amount of ECB policy tightening that’s priced in. European fixed income rallied with curves bull steepening. Belly of the German curve outperforms, trading ~2-3bps richer to gilts and USTs respectively. Peripheral spreads tighten; long-end Italy outperforms, narrowing ~6bps near 170bps. In FX, the Bloomberg Dollar Spot Index inched up and the greenback advanced versus all its Group-of-10 peers apart from the yen; Treasury yields fell by up to 3bps as the curve bull- steepened. The euro hovered around $1.16 while Italian bonds and bunds jumped, snapping three days of declines and tracking short-end Australian debt. The Australian dollar declined against all Group-of-10 peers and Australian short-end bond yields fell after the central bank dispensed with its bond-yield target and damped expectations of interest-rate hikes.  One-week volatility in the Australian dollar dropped a second day as spot pulls back from its 200-DMA of 0.7556 after the central bank’s policy decision. The pound fell for a third day, to nearly a three-week low, as investors weighed up the possibilities for the Bank of England’s policy meeting on Thursday. The yen strengthened ahead of a local holiday in Japan and amid souring market sentiment. In commodities, crude futures hold a narrow range with WTI near $84 and Brent stalling near $85. Spot gold drift close to $1,795/oz. The base and ferrous metals complex remains under pressure: LME nickel and zinc drop ~1%, iron ore down over 6%. Looking at the day ahead now, and the data highlights include the October manufacturing PMIs for the Euro Area, Germany, France and Italy. Central bank speakers will include the ECB’s Elderson and de Cos, whilst today’s earnings releases include Pfizer, T-Mobile, Estee Lauder and Amgen. Finally, there are US gubernatorial elections in Virginia and New Jersey. Virginia is the more interesting race from a macro perspective: a big, diverse state that has bounced between Democratic and Republican candidates on the national stage. So it could provide the first read of American voter sentiment heading into next year’s mid-terms. Market Snapshot S&P 500 futures little changed at 4,605.25 STOXX Europe 600 down 0.2% to 477.90 MXAP down 0.2% to 198.29 MXAPJ down 0.2% to 646.50 Nikkei down 0.4% to 29,520.90 Topix down 0.6% to 2,031.67 Hang Seng Index down 0.2% to 25,099.67 Shanghai Composite down 1.1% to 3,505.63 Sensex down 0.3% to 59,984.88 Australia S&P/ASX 200 down 0.6% to 7,324.32 Kospi up 1.2% to 3,013.49 German 10Y yield little changed at -0.14% Euro little changed at $1.1603 Brent Futures up 0.5% to $85.17/bbl Gold spot down 0.1% to $1,791.04 U.S. Dollar Index little changed at 93.89 Top Overnight News from Bloomberg Federal Reserve policy makers are expected to announce this week that they will start scaling back their massive asset-purchase program amid greater concern over inflation, economists surveyed by Bloomberg said President Emmanuel Macron backed away from his imminent threat to punish the U.K. for restricting the access of French fishing boats to British waters, saying he would give negotiations more time The Reserve Bank of Australia’s dovish policy statement and downplaying of the inflation threat is likely to reignite a steepening of the yield curve from near the flattest in a year. The spread between three- and 10-year yields jumped as much as 10 basis points on Tuesday after central bank Governor Philip Lowe cooled expectations for any near-term interest-rate increase even though the RBA scrapped its yield- curve control policy A more detailed look at global markets courtesy of Newsquawk Asian equities traded mixed as upcoming risk events kept participants cautious and offset the momentum from the US, where stocks began the month on the front foot in a continuation of recent advances to lift the major indices to fresh record highs. Nonetheless, ASX 200 (-0.6%) was pressured by underperformance in the top-weighted financials sector and notable weakness in mining names, while quasi holiday conditions due to the Melbourne Cup in Australia’s second most populous state of Victoria and the crucial RBA policy announcement in which it maintained the Cash Rate Target at 0.10% but dropped the April 2024 government bond yield target and tweaked its guidance, further added to the cautious mood. Nikkei 225 (-0.4%) was lacklustre as it took a breather from the prior day’s surge after stalling just shy of the 29,600 level and with the index not helped by a slight reversal of the recent beneficial currency flows. Hang Seng (-0.3%) and Shanghai Comp. (-1.4%) were varied as the former initially atoned for yesterday’s losses led by strength in tech and biotech including Alibaba shares with its Singles Day sales event underway. In addition, Hong Kong participants were seemingly unfazed by the recent weaker than expected GDP for Q3 as the data showed it narrowly averted a technical recession, although the gains were later wiped out and the mainland suffered following another substantial liquidity drain and with Chinese commodity prices pressured including iron futures which hit limit down. Finally, 10yr JGBs were flat with price action muted despite the subdued mood for Tokyo stocks and with the presence of the BoJ in the market for over JPY 1tln of JGBs in mostly 1yr-5yr maturities, doing little to spur demand. Top Asian News Bank of Korea Minutes Show Majority Sees Need for Rate Hike China’s Gas Prices Are Surging Just as Coal Market Cools Off China Shares Fall as Shut Schools Spark Concern on Virus Curbs SMBC Nikko Is Working With Securities Watchdog on Investigation Bourses in Europe have now adopted more of a mixed picture (Euro Stoxx 50 +0.1%; Stoxx 600 -0.2%) Stoxx 600 following the lacklustre cash open and downbeat APAC handover. US equity futures meanwhile are somewhat mixed with the RTY (+0.2%) narrowly outperforming the ES (-0.1%), YM (Unch), and NQ (-0.2%) – with the latter also seeing some pressure from Tesla (-6.0% pre-market) after CEO Musk said no deal was signed yet with Hertz and that a deal would have zero impact on Tesla's economics. Back to Europe, a divergence is evident with the DAX 40 (+0.4%) outpacing amid post-earnings gains from HelloFresh (+14%), Fresenius SE (+4.6%) and Fresenius Medical Care (+2.0%). The FTSE 100 (-0.5%) meanwhile lags with the Dec futures and cash both under 7,250 – with the index pressured by heft losses in some of its heaviest sectors. Basic resources sit at the foot of the bunch due to softer base metal prices across the board, which saw Dalian iron ore futures hit limit down at least twice in the overnight session. Travel & Leisure closely follows as sector heavyweight Flutter Entertainment (~23% weighting) slipped after cutting guidance. Oil & Gas and Banks closely follow due to the recent declines in crude (and BP post-earnings) and yields respectively. On the flip side, some of the more defensive sectors stand at the top of the leader board with Healthcare and Food & Beverages the current winners. In terms of other individual movers, THG (-6.1%) resides near the bottom of the Stoxx 600 second-largest shareholder BlackRock (9.5% stake) is reportedly planning to sell 55mln shares equating to around 4% of its holding. It’s also worth noting Apple (-0.1% pre-market) has reportedly reduced iPad production to feed chips to the iPhone 13, according to Nikkei sources; iPad production was reportedly -50% from Apple's original plans, sources added. In terms of broad equity commentary, Credit Suisse remains overweight value in Europe, whilst raising US small caps to overnight and reducing the UK to underweight. Looking at the rationale, CS notes that European value tend to outperform while inflation expectations or Bund yields rise. US small caps meanwhile have underperformed almost all macro drivers, whilst earnings momentum takes a turn for the better. Finally, CS argues UK small caps are much more cyclical than large caps and could face further tailwinds from UK’s macro landscape and with some tightening potentially on the table this week. Top European News BP Grows Buyback as Profit Rises on Higher Prices, Trading Ferrexpo Drops as Credit Suisse Downgrades on Lower Pricing OPEC+ Gets a Warning From Japan Before Key Supply Meeting THG Extends Decline as Key Shareholder BlackRock Reduces Stake In FX, the Aussie has reversed even more sharply from its recent core inflation and yield induced highs in wake of the RBA policy meeting overnight and confirmation of the moves/tweaks most were expecting. To recap, YCT was officially withdrawn after the Bank allowed the 3 year target rate to soar through the 0.1% ceiling and guidance on rates being held at the same level until 2024, at the earliest, was also withdrawn and replaced by a more flexible or conditional timeframe when inflation is sustainably in the 2-3% remit range. However, Governor Lowe retained a decidedly dovish tone in the aftermath, pushing back against more aggressive market pricing for tightening and stressing that it is entirely plausible that the first increase in the Cash Rate will not be before the maturity of the current April 2024 target bond, though it is also plausible that a hike could be appropriate in 2023 and there is genuine uncertainty as to the timing of future adjustments in the Cash Rate. Aud/Usd is now closer to 0.7450 than 0.7550 and the Aud/Nzd cross nearer 1.0400 than the round number above with added weight applied by weakness in copper and iron ore prices especially (latter hit limit down on China’s Dallian exchange). Meanwhile, the Kiwi also felt some contagion after a drop in NZ building consents and as attention turns to the Q3 HLFS report, with Nzd/Usd eyeing 0.7150 having got to within pips of 0.7200 only yesterday. EUR/DXY - Technical forces seem to be having an influence on direction in Eur/Usd amidst somewhat mixed Eurozone manufacturing PMIs as the headline pair topped out precisely or pretty much bang on a 50% retracement of the reversal from 1.1692 to 1.1535 at 1.1613 and subsequently probed the 21 DMA that comes in at 1.1598 today. Moreover, the Euro appears reliant on hefty option expiry interest for support given 1.9 bn rolling off at 1.1585 if it cannot reclaim 1.1600+ status, as the Dollar regroups and trades firmer against most majors, bar the Yen. Indeed, in stark contrast to Monday, the index has bounced off a marginally deeper sub-94.000 low between tight 93.818-985 confines, albeit in cautious, choppy pre-FOMC mood. CHF/CAD/GBP - No traction for the Franc via firmer than forecast Swiss CPI or a faster pace of consumption, while the Loonie is on the defensive ahead of Canadian building permits and Sterling is still on a softer footing awaiting the BoE on Thursday alongside what could be a make or break meeting in France where UK Brexit Minister Frost is due to tackle the fishing dispute face-to-face with Secretary of State for European Affairs Beaune. Usd/Chf is straddling 0.9100, Usd/Cad is hovering around 1.2400, Cable pivots 1.3650 and Eur/Gbp is probing 0.8500. JPY - As noted above, the Yen is bucking the broad G10 trend with gains vs the Greenback amidst appreciably softer US Treasury and global bond yields, as Usd/Jpy retreats from 114.00+ peaks to test support circa 113.50. In commodities, WTI and Brent front-month futures are moving sideways ahead of the OPEC+ meeting on Thursday, whereby expectations are skewed towards an unwind of current curbs by 400k BPD despite outside pressure for the group to further open the taps. Ministers, including de-facto heads Russia and Saudi, have been vocal in their support towards a maintained pace of production hikes. There have also been reports of Angola and Nigeria struggling to keep up with the output hikes, which may further dissuade the producer to further ramp up output. The morning also saw macro commentary from BP, whereby the CFO suggested global oil demand has returned to levels above 100mln BPD. The Co. expects oil prices to be supported by continued inventory draw-down, with the potential for additional demand from gas to oil switching. OPEC+ decision making on production levels continues to be a key factor in oil prices and market rebalancing. Gas markets were very strong in the quarter and BP expect the market to remain tight during the period of peak winter demand. In the fourth quarter industry refining margins are expected to be lower compared to the third quarter driven by seasonal demand. WTI Dec trades on either side of USD 84/bbl and Brent on either side of USD 85/bbl. Elsewhere, spot gold and silver are relatively flat with the former in close proximity to its 200 DMA (1,790/oz), 100 DMA (1,785/oz), 50 DMA (1,780/oz) and 21 DMA (1,778/oz). Over to base metals, Dalian iron ore futures were in focus overnight after prices hit limit down at least twice and nearly hit 1yr lows amid high supply and lower demand, with the latter namely a function of China cutting steel output forecasts. LME copper meanwhile has clambered off worst levels (USD 9,430/t) but remains just under USD 9,500/t as prices track sentiment. US Event Calendar Oct. Wards Total Vehicle Sales, est. 12.5mm, prior 12.2mm DB's Jim Reid concludes the overnight wrap The RBA press conference is still going onas we type this but the key outcome has been that they’ve abandoned the 0.1% target for the April 2024 bond. However they seem to be making it clear in the presser that their expectation is only that rate hikes might creep into 2023 rather than 2024 previously. The governor has said that market expectations of hikes in 2022 are “a complete overreaction to recent inflation data”. So they are trying to pull back the market expectations that ran away from them last week. The reality is that they’ll now be hostage to the data. They don’t expect inflation to be a big problem going forward but time will tell. Yield moves have been relatively subdued but are generally lower with a small steepening seen. 2y (-0.2bps), 3y (-4.5bps) and 5y (-3.3bps) are falling but with the 10y (+0.3bps) steadier. Ahead of the RBA, risk assets got the month off to a strong start as investors awaited tomorrow’s all-important Federal Reserve meeting conclusion. However there was little sign of caution in equities as a range of global indices advanced to all-time records yesterday, including the S&P 500 (+0.18%), the NASDAQ (+0.63%), the STOXX 600 (+0.71%), and the MSCI World Index (+0.50%). Energy (+1.59%) and consumer discretionary (+1.46%) were the clear outperformers in the S&P, with Tesla (+8.49%) doing a lot of the work of boosting the latter sector. While it’s a busy week for earnings, only 2 S&P companies reported during trading hours yesterday, so it didn’t materially drive sentiment. 11 more companies reported after hours, with 7 beating earnings estimates. Elsewhere, the Dow Jones actually crossed the 36,000 mark in trading for the first time. Readers of a certain age may remember an infamous book published in 1999 called “Dow 36,000” during the dot com bubble, which predicted the Dow would more than triple over the next 3-5 years to that level. In reality, even the half way mark of 18k wasn’t reached until late-2014, and of course it took 22 years to get to yesterday’s 36k milestone. So a good case study of the heady optimism many had back then. We’ll see if yesterday’s milestones are the first step on the path to Dow 100k, but one asset inching its way to $100 in oil, with yesterday seeing a fresh recovery in many commodity prices after their declines last week. Both WTI (+0.57%) and Brent crude (+0.39%) posted gains, with copper (+0.58%) also seeing a modest advance. Agricultural prices set fresh records, with wheat prices (+3.17%) climbing above $8/bushel in intraday trading for the first time since 2012. It may be a pretty busy macro week with the Fed, BoE and the US jobs report, but the OPEC+ meeting on output this Thursday could also be a vital one for the global economy in light of the resurgence in energy prices lately. We’ve already heard some frustration at the group from a number of countries, with President Biden saying this Sunday at the G20 that “I do think that the idea that Russia and Saudi Arabia and other major producers are not gonna pump more oil so people can have gasoline to get to and from work for example, is … not right”. So one to keep an eye on, with potentially big implications for inflation and hence central banks. Staying on an inflation theme, investors got a further glimpse of ongoing supply chain issues from the ISM manufacturing print as well yesterday. The overall reading for October actually came in slightly above expectations at 60.8 (vs. 60.5 expected), but the prices paid order similarly rose to 85.7 (vs. 82.0 expected) in its second successive monthly increase. Bear in mind it’s been above the 80 mark for all but one month so far this year, and there were further signs of supply-chain issues from the supplier delivery time measure, which hit a 5-month high of 75.6. With markets attuned to inflation and the potential for plenty of central bank action this week, sovereign bonds came under further pressure yesterday on both sides of the Atlantic, even if they finished well off the yield highs. Yields on 10yr Treasuries ended the session up +0.7 bps to 1.56%, which comes as markets are almost pricing an initial full hike from the Fed by the time of their June 2022 meeting. However we were off the day’s high of 1.60%. Meanwhile in Europe, yields on 10yr bunds (+0.4 bps), OATs (+0.3 bps) and gilts (+2.8 bps) moved higher as well, but interestingly we also saw peripheral sovereign bond spreads closing in on their highest levels for some time. Indeed by the close of trade yesterday, the gap between Italian (+4.4 bps) and Spanish (+2.2 bps) 10yr yields over bunds had widened to their biggest level in almost a year. Meanwhile, 10yr breakevens widened +4.5 bps in the UK and +2.0 bps in Germany. US breakevens were the outlier, narrowing -7.5 bps to 2.51% and now -18.0 bps below the highs reached just a week ago. In Asia, the Nikkei 225 (-0.56%) and the Shanghai Composite (-0.62%) are trading lower, while the Hang Seng (+0.74%) and the KOSPI (+1.36%) are edging higher. Some of the news weighing on Chinese stocks are surging gas prices, which reached a record high today. Elsewhere, the S&P 500 futures (-0.22%) is down this morning and the 10y US Treasury is at 1.55% (-0.9bps). Heads of state gave their opening salvos at COP26 yesterday. The biggest commitment came from Indian Prime Minister Narendra Modi, who said the world’s third-biggest emitter will have zero net pollution by 2070, while also making more near-term commitments to increase reliance on non-fossil fuel energy sources. Looking at yesterday’s other data, German retail sales unexpectedly fell by -2.5% in September (vs. +0.4% expected). However, the final UK manufacturing PMI for October was revised up a tenth from the flash reading to 57.8. Over in the US though, there was a downward revision to 58.4 (vs. flash 59.2). To the day ahead now, and the data highlights include the October manufacturing PMIs for the Euro Area, Germany, France and Italy. Central bank speakers will include the ECB’s Elderson and de Cos, whilst today’s earnings releases include Pfizer, T-Mobile, Estee Lauder and Amgen. Finally, there are US gubernatorial elections in Virginia and New Jersey. Virginia is the more interesting race from a macro perspective: a big, diverse state that has bounced between Democratic and Republican candidates on the national stage. So it could provide the first read of American voter sentiment heading into next year’s mid-terms. Tyler Durden Tue, 11/02/2021 - 07:52.....»»

Category: dealsSource: nytNov 2nd, 2021

Northrim BanCorp Earns $8.9 Million, or $1.42 Per Diluted Share, in Third Quarter 2021, and $29.4 Million, or $4.69 Per Diluted Share, in First Nine Months of 2021

ANCHORAGE, Alaska, Oct. 29, 2021 (GLOBE NEWSWIRE) -- Northrim BanCorp, Inc. (NASDAQ:NRIM) ("Northrim" or the "Company") today reported net income of $8.88 million, or $1.42 per diluted share, in the third quarter of 2021, compared to $8.35 million, or $1.33 per diluted share, in the second quarter of 2021, and $11.86 million, or $1.84 per diluted share, in the third quarter a year ago. Third quarter 2021 profitability was fueled by fee and interest income from the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP") loans, continued high levels of production in the Home Mortgage Lending segment, and strong core loan growth. Also benefiting third quarter 2021 results was a $1.1 million benefit to the provision for credit losses. This compares to a $427,000 benefit to the provision for credit losses in the preceding quarter and a $567,000 provision for credit losses in the third quarter of 2020. The benefit to the provision for credit losses for the current quarter was recorded under ASU 2016-13, which is also commonly referred to as the Current Expected Credit Loss ("CECL") methodology that Northrim implemented on January 1, 2021, and includes a benefit to the provision for credit losses on loans and unfunded commitments. Net income for the first nine months of 2021 increased 29% to $29.40 million, or $4.69 per diluted share, compared to $22.79 million, or $3.52 per diluted share, in the first nine months of 2020. The benefit to the provision for credit losses totaled $3.0 million in the first nine months of 2021, compared to a $3.0 million provision for credit losses in the first nine months of 2020. An increase in net interest income and continued strong mortgage banking revenue also contributed to the increase in net income during the first nine months of 2021 compared to the same period in 2020. "Northrim's third quarter operating results continue to reflect the effort put forth by all of our employees to meet the needs of our community," said Joe Schierhorn, President and CEO. "Strong residential mortgage business along with the continued success of our outreach to new and existing customers during the quarter generated increased income and had a meaningful impact on core loan and deposit growth." "We chose to be active participants in the SBA's PPP lending programs from the onset of the pandemic, helping our new and existing business customers sustain their business operations. Under the initial PPP program, we helped approximately 2,900 businesses receive $375.6 million in PPP loans, and during the second PPP program we helped approximately 2,870 businesses receive $237.0 million in PPP loans, making Northrim the largest originator of PPP loans in Alaska. As a result of this growth, Northrim was recently recognized as the SBA's 2020 Top Lender of the Year for the state of Alaska. We brought over 2,300 new customers to the bank, and we are working hard to develop a full banking relationship with them." COVID-19 Issues: "Our team is generating success in spite of strong headwinds in our local economy. The pandemic has been extremely challenging for the Alaskan economy, especially in the tourism and hospitality sector," Schierhorn added. Industry Exposure: Northrim has identified various industries that may be adversely impacted by the COVID-19 pandemic and the volatility in oil prices that has occurred over the last year and a half, although oil prices have rebounded recently. Though the industries affected may change through the progression of the pandemic, the following sectors for which Northrim has exposure, as a percent of the total loan portfolio, excluding SBA PPP loans as of September 30, 2021, are: Healthcare (8%), Tourism (7%), Oil and Gas (5%), Aviation (non-tourism) (5%), Fishing (5%), Accommodations (4%), Retail (3%), and Restaurants (3%). Customer Accommodations: The Company has implemented assistance to help its customers experiencing financial challenges as a result of COVID-19 in addition to participation in PPP lending. These accommodations include interest only and deferral options on loan payments, as well as the waiver of various fees related to loans, deposits and other services. The number of loans with modifications has decreased significantly since September 30, 2020, with approximately 82% of the modifications at September 30, 2021, representing three relationships. The total outstanding principal balance of loan modifications due to the impacts of COVID-19 as of September 30, 2021, June 30, 2021, and September 30, 2020 were as follows: Loan Modifications due to COVID-19 as of September 30, 2021 (Dollars in thousands) Interest Only Full Payment Deferral Total Portfolio loans $ 49,888    $ 7,533    $ 57,421    Number of modifications   21      3      24    Loan Modifications due to COVID-19 as of June 30, 2021 (Dollars in thousands) Interest Only Full Payment Deferral Total Portfolio loans $ 75,613    $ 7,440    $ 83,053    Number of modifications   23      1      24    Loan Modifications due to COVID-19 as of September 30, 2020 (Dollars in thousands) Interest Only Full Payment Deferral Total Portfolio loans $ 46,056   $ 74,337   $ 120,393   Number of modifications   16     59     75   All 24 loan modifications totaling $57.4 million as of September 30, 2021, have entered into more than one modification. Provision for Credit Losses: Northrim booked a benefit for credit loss provisions of $1.1 million for the quarter ended September 30, 2021. This compares to a benefit for credit loss provisions of $427,000 during the previous quarter and a $567,000 provision for credit losses in the third quarter a year ago. The provision for the current quarter was recorded using the CECL methodology and reflects expected lifetime credit losses on loans and off-balance sheet unfunded loan commitments. The decrease in the provision for credit loss in the third quarter of 2021 is primarily the result of the improvement in economic assumptions used to estimate lifetime credit losses, which have improved but are not yet at pre-pandemic levels, and a decrease in unfunded commitments, off-set partially by a growth in core loans. Credit Quality: Nonaccrual loans, net of government guarantees decreased to $11.5 million at September 30, 2021, compared to $12.0 million in the previous quarter. Net adversely classified loans increased to $17.4 million at September 30, 2021, compared to $14.5 million in the third quarter a year ago. Net loan recoveries were $39,000 in the third quarter of 2021, compared to net loan recoveries of $463,000 in the third quarter of 2020. Branch Operations: Branch operations have returned to pre-pandemic levels, while a number of customer and employee safety measures continue to be implemented. Growth and Paycheck Protection Program: Over the last eighteen months, Northrim funded a total of nearly 5,800 PPP loans totaling $612.6 million to both existing and new customers. Of this amount, 745 loans totaling $33 million were originated during the second quarter of 2021 and 2,125 loans totaling $204.0 million were originated during the first quarter of 2021, through the second round of PPP funding. No new PPP loans were originated during the third quarter of 2021. As of September 30, 2021, PPP has resulted in 2,341 new customers totaling $68.0 million in non-PPP loans, and $125.6 million in new deposit balances. Management estimates that Northrim funded approximately 24% of the number and 32% of the value of all Alaska PPP second round loans. As of September 30, 2021, Northrim customers had received forgiveness through the SBA on 3,439 PPP loans totaling $405.8 million, of which 1,118 PPP loans totaling $102.4 million were forgiven in the third quarter of 2021, and 617 PPP loans totaling $133 million were forgiven in the second quarter of 2021. Of the PPP loans forgiven in the third quarter of 2021, 578 loans totaling $35.2 million related to PPP round two. As of September 30, 2021, approximately 98% of PPP round one and 16% of PPP round two loans have been forgiven. The Company initially utilized the Federal Reserve Bank's Paycheck Protection Program Liquidity Facility to fund PPP loans, but paid back those funds in full during the second quarter of 2020 and has since funded the SBA PPP loans through core deposits and maturity of long-term investments. Capital Management: At September 30, 2021, the Company's tangible common equity to tangible assets* ratio was 8.73% and the capital of Northrim Bank (the "Bank") was well in excess of all regulatory requirements. During the third quarter of 2021, the Company repurchased 29,613 shares of common stock under the previously announced share repurchase program, with 221,988 shares remaining of the 313,000 shares authorized for repurchase. Third Quarter 2021 Highlights: For the third quarter of 2021, total revenue was $33.1 million, compared to $39.9 million in the third quarter of 2020, and $33.3 million in the second quarter of 2021. Community Banking provided 68% of total revenues and 77% of earnings in the third quarter of 2021. Home Mortgage Lending provided 32% of total revenue and 23% of earnings in the third quarter of 2021. Net interest income in the third quarter of 2021 was $20.4 million, up 6% from $19.2 million in the preceding quarter and up 12% from $18.3 million in the third quarter a year ago. Net interest margin on a tax equivalent basis ("NIMTE")* was 3.47% in the third quarter of 2021, a 3 bps decrease compared to the preceding quarter, and a 46 bps decrease compared to the third quarter a year ago. Return on average assets ("ROAA") was 1.40% and return on average equity ("ROAE") was 14.47% for the third quarter of 2021 compared to ROAA of 2.31% and ROAE of 22.10% for the third quarter of 2020. Net loans decreased to $1.44 billion at September 30, 2021, compared to $1.47 billion at both September 30, 2020 and at June 30, 2021, as a result of PPP forgiveness. Core loans increased to $1.25 billion at September 30, 2021, compared to $1.13 billion at September 30, 2020. Total deposits increased 27% to $2.30 billion at September 30, 2021, compared to $1.81 billion at September 30, 2020, and increased 7% compared to $2.15 billion at June 30, 2021. The mortgage servicing right asset increased by $1.2 million for the quarter ended September 30, 2021, compared to an increase of $1.2 million for the preceding quarter and an increase of $567,000 for the third quarter a year ago. Financial Highlights Three Months Ended (Dollars in thousands, except per share data) September 30,2021 June 30,2021 March 31,2021 December 31,2020 September 30,2020 Total assets $ 2,609,946     $ 2,453,567     $ 2,351,243     $ 2,121,798     $ 2,097,738   Total portfolio loans $ 1,450,657     $ 1,487,968     $ 1,548,924     $ 1,444,050     $ 1,492,720   Average portfolio loans $ 1,469,072     $ 1,541,701     $ 1,492,906     $ 1,489,029     $ 1,465,839   Total deposits $ 2,296,541     $ 2,146,438     $ 2,051,317     $ 1,824,981     $ 1,806,133   Average deposits $ 2,207,402     $ 2,082,983     $ 1,894,868     $ 1,820,251     $ 1,750,167   Total shareholders' equity $ 242,474     $ 237,218     $ 231,452     $ 221,575     $ 214,616   Net income $ 8,877     $ 8,345     $ 12,181     $ 10,100     $ 11,855   Diluted earnings per share $ 1.42     $ 1.33     $ 1.94     $ 1.59     $ 1.84   Return on average assets   1.40 %     1.42 %     2.25 %     1.90 %     2.31 % Return on average shareholders' equity   14.47 %     14.26 %     21.40 %     18.22 %     22.10 % NIM   3.45 %     3.48 %     3.90 %     3.94 %     3.90 % NIMTE*   3.47 %     3.50 %     3.92 %     3.96 %     3.93 % Efficiency ratio   68.07 %     67.00 %     60.24 %     65.31 %     58.85 % Total shareholders' equity/total assets   9.29 %     9.67 %     9.84 %     10.44 %     10.23 % Tangible common equity/tangible assets*   8.73 %     9.07 %     9.22 %     9.76 %     9.54 % Book value per share $ 39.25     $ 38.22     $ 37.29     $ 35.45     $ 34.18   Tangible book value per share* $ 36.66     $ 35.64     $ 34.71     $ 32.88     $ 31.62   Dividends per share $ 0.38     $ 0.37     $ 0.37     $ 0.35     $ 0.35     * References to NIMTE, tangible book value per share, and tangible common equity to tangible assets (all of which exclude intangible assets) represent non-GAAP financial measures. Management has presented these non-GAAP measurements in this earnings release, because it believes these measures are useful to investors. See the end of this release for reconciliations of these non-GAAP financial measures to GAAP financial measures. Alaska Economic Update(Note: sources for information included in this section are included on page 14.) The Alaska economy is slowly recovering in 2021 from the effect of the global pandemic. Mark Edwards, EVP Chief Credit Officer and Bank Economist summarizes, "Rising oil prices, an improvement in tourism, and strong liquidity levels in the private sector from government stimulus programs have helped Alaska rebound from the economic lows seen in 2020. The housing market remains strong with average sales prices and the number of units sold up significantly, while home foreclosure and delinquency rates continue to improve. Rising prices are starting to stress affordability levels for homes and supply chain disruptions are expected to moderate construction activity in the short run." The Alaska Department of Labor ("DOL") has released data through August of 2021. They report total payroll jobs in Alaska have grown by 13,600 compared to August of 2020. This is a total of 308,900 jobs or an improvement of 4.4% over the prior 12 months. Tourism related jobs were the hardest hit from travel restrictions and have also been the fastest to recover. According to the DOL, the Leisure and Hospitality sector added 5,600 jobs between August of 2020 and August of 2021, an increase of 19.9%. However, this is still 10,800 jobs less than August of 2019. Trade, Transport, and Utilities have added 14.3% more jobs than August of 2020 and Manufacturing, which is primarily seafood processing, is 11.3% higher over the last 12 months. Oil and Gas direct jobs continued to decline in the last 12 months, down 400 jobs compared to August of 2020 and down 3,300 jobs from August of 2019. Education and Health Care are the only private sector industries to surpass the August 2019 job levels in August of 2021 according to the DOL report. Alaska's revised Gross State Product ("GSP") for 2020 was $49.8 billion, compared to $54.5 billion in 2019, according to the Federal Bureau of Economic Analysis ("BEA"). The national average for the second quarter was a 6.7% increase according to an October 1, 2021 BEA report. Alaska's seasonally adjusted personal income for the second quarter of 2021 was $47.7 billion compared to $48.5 billion for the second quarter of 2020, according to the BEA. There was a tremendous loss of jobs in 2020 that reduced wage earnings last year. This was more than compensated for by a significant amount of government transfer payments. Alaska, like the rest of the U.S., experienced a decline in government transfer payments in the second quarter of 2021. However, wage earnings are growing here and across the country as a recovery in jobs continues in 2021. Alaska North Slope ("ANS") crude oil began 2020 at $65.48 a barrel. Prices fell quickly at the beginning of 2020, responding to fears that COVID-19 would devastate the global economy and reduce the demand for travel. The low month was April of 2020, when ANS averaged $16.54 a barrel. However, by June of last year the oil markets stabilized and for the last six months of 2020 the average monthly price remained between $40.42 and $50.32. ANS prices continued to rise throughout 2021 and averaged over $70 a barrel in June, July and August. The monthly average for September has not yet been posted by the Alaska Department of Revenue, but the daily spot price was $82.94 on October 8, 2021. Alaska's home mortgage delinquency and foreclosure levels continue to be better than most of the nation. According to the Mortgage Bankers Association, Alaska's foreclosure rate improved from 0.63% at the end of 2019 to 0.45% at the end of 2020. In the first quarter of 2021, the foreclosure rate improved slightly to 0.41% and again in the second quarter to 0.36%. The comparable national average rate was higher than Alaska at 0.51% in the second quarter of 2021. We believe that the foreclosure rates are somewhat misleading because the recently ended federal moratorium on foreclosure activity on occupied homes led to declining foreclosure numbers, even though job losses strained the economy and borrowers' ability to pay. The Mortgage Bankers Association survey reported that the percentage of delinquent mortgage loans at the end of 2019 in Alaska was 2.9%. This increased to 6.2% at the end of 2020 after the effects of COVID-19 impacted jobs. In the first quarter of 2021 it improved to 5.4% in Alaska and again in the second quarter to 5.1%. According to the survey, the comparable delinquency rate for the entire country remains higher than Alaska at 5.5% in the second quarter of 2021. According to the Alaska Multiple Listing Services, the average sales price of a single family home in Anchorage rose 5.8% in 2020 to $396,741. In the first nine months of 2021, the average sales price has increased 7.5% to $426,445. Average sales prices in the Matanuska Susitna Borough rose 9.9% in 2020 to $301,049, continuing a decade of consecutive price gains. In the first nine months of 2021 prices have risen 15.1% to $346,353. These two markets represent where the vast majority of the Bank's residential lending activity occurs. The number of units sold in Anchorage was up significantly in 2020 by 19.6%, climbing from 2,719 homes sold in 2019 to 3,251 last year, as reported by the Alaska Multiple Listing Services. The main difference was a record number of sales occurred in the last quarter of the year, when sales activity typically declines in the winter. The Matanuska Susitna Borough also had strong sales activity, up 9.7% in 2020 to 2,135 units sold compared to 1,946 in 2019. The Matanuska Susitna Borough also had stronger than normal sales in the second half of 2020. Through the third quarter of 2021 there have been 2,647 home sales in Anchorage, or 15.9% more than in the first nine months of 2020. The Matanuska Susitna Borough had 1,719 sales through the third quarter of 2021, an increase of 13.2% over the same time period in 2020. We believe that the low interest rate environment has been a major factor. According to the Federal Reserve Bank of St. Louis, the average 30 year fixed rate mortgage in the U.S. hit an all-time record low last year. Rates began 2020 at 3.7% in the first week of January and fell one percent to 2.7% by the end of the year. Rates began to rise slightly in 2021 and finished the third quarter at 3%. Northrim Bank sponsors the Alaskanomics blog to provide news, analysis, and commentary on Alaska's economy. Join the conversation at Alaskanomics.com, or for more information on the Alaska economy, visit: www.northrim.com and click on the "Business Banking" link and then click "Learn." Information from our website is not incorporated into, and does not form, a part of this earnings release. Review of Income Statement Consolidated Income Statement In the third quarter of 2021, Northrim generated a ROAA of 1.40% and a ROAE of 14.47%, compared to 1.42% and 14.26%, respectively, in the second quarter of 2021 and 2.31% and 22.10%, respectively, in the third quarter a year ago. Northrim's ROAE is above peer averages posted by the S&P U.S. Small Cap Bank Index with total market capitalization between $250 million and $1 billion as of June 30, 20211. Net Interest Income/Net Interest Margin Net interest income increased 12% to $20.4 million in the third quarter of 2021 compared to $18.3 million in the third quarter of 2020 and increased 6% compared to $19.2 million in the second quarter of 2021. Interest income benefited from the amortization of PPP loan fees and the full recognition of the deferred PPP loan fees upon forgiveness by the SBA. During the third quarter of 2021, Northrim received $102.4 million in loan forgiveness through the SBA, compared to $133 million in loan forgiveness during the prior quarter, resulting in total net PPP fee income of $3.0 million and $2.6 million, respectively. As of September 30, 2021, there was $196,000 of net PPP fee income from round one remaining and $7.9 million remaining from round two for total net deferred fees on PPP loans of $8.1 million. In the first nine months of 2021, net interest income increased 15% to $59.1 million, compared to $51.4 million in the first nine months of 2020. NIMTE* was 3.47% in the third quarter of 2021 compared to 3.50% in the preceding quarter and 3.93% in the third quarter a year ago. "Our NIMTE* contracted compared to the prior quarter and a year ago due to our increased liquidity, which was partially offset by the recognition of PPP loan fees as loans are forgiven," said Jed Ballard, Chief Financial Officer. "Also notable was the impact of SBA PPP loan fees and interest on net interest income, which increased our NIMTE* by 27 basis points during the third quarter of 2021 compared to what our NIMTE* would have been if we had not made any SBA PPP loans, or 3.20%. The increase from SBA PPP loans this quarter is the result of recognition of fee income on loans that were forgiven." NIMTE* has been impacted by the increased liquidity Northrim has experienced in conjunction with the SBA PPP loans. Northrim continues to remain above the peer average posted by the S&P U.S. Small Cap Bank Index with total market capitalization between $250 million and $1 billion as of June 30, 20211. The yield on interest earning assets in the third quarter of 2021 was 3.62%, down 7 basis points from the second quarter of 2021 and down 63 basis points compared to the third quarter a year ago. The cost of interest-bearing liabilities was 24 basis points in the third quarter of 2021, down 8 basis points compared to the preceding quarter and down 30 basis points compared to the third quarter a year ago.   1As of June 30, 2021, the S&P U.S. Small Cap Bank Index tracked 263 banks with total common market capitalization between $250 million to $1B for the following ratios: NIMTE* of 2.84%. ROAA 1.46%, and ROAE 12.99%. Provision for Credit Losses Northrim recorded a benefit to the provision for credit losses of $1.1 million in the third quarter of 2021, which includes a $345,000 benefit to the provision for credit losses on unfunded commitments and a benefit of $761,000 for credit losses on loans. This compares to a benefit to the provision for credit losses on loans of $427,000 in the second quarter of 2021, and a provision for credit losses on loans of $567,000 in the third quarter a year ago. "The benefit to the provision for credit losses on loans and unfunded commitments during the quarter primarily emulates our current assessment of risks associated with the economy and reflects expected lifetime credit losses based upon the conditions that existed as of quarter-end," said Ballard. "The ongoing impacts of the CECL methodology will be dependent upon changes in economic conditions and forecasts, as well as loan portfolio composition, quality, and portfolio duration." Nonperforming loans, net of government guarantees, decreased during the quarter to $11.5 million at September 30, 2021, compared to $12.0 million at June 30, 2021, and increased compared to $11.0 million at September 30, 2020. The allowance for credit losses was 120% of nonperforming loans, net of government guarantees, at the end of the third quarter of 2021, compared to 121% three months earlier and 196% a year ago. Other Operating Income In addition to home mortgage lending, Northrim has interests in other businesses that complement its core community banking activities, including purchased receivables financing and wealth management. Other operating income contributed $12.7 million, or 38% of total third quarter 2021 revenues, as compared to $14.1 million, or 42% of revenues in the second quarter of 2021, and $21.6 million, or 54% of revenues in the third quarter of 2020. The decrease in other operating income in the third quarter of 2021 as compared to the third quarter a year ago was due primarily to a lower volume of mortgage activity. In the first nine months of 2021, other operating income totaled $42.7 million, or 42% of revenues, compared to $45.6 million, or 47% of revenues in the first nine months of 2020. Other notable changes during the quarter include changes in the fair value mark-to-market of the marketable equity securities portfolio, which decreased other income by $67,000 in the third quarter of 2021, compared to a $178,000 increase in the second quarter of 2021 and a $375,000 increase in the third quarter of 2020. There was $195,000 in interest rate swap income in the third quarter of 2021. This compares to $103,000 in interest rate swap income in the preceding quarter and $726,000 in interest rate swap income in the third quarter of 2020 on the execution of interest rate swaps related to the Company's commercial lending operations. Other Operating Expenses Operating expenses were $22.5 million in the third quarter of 2021, compared to $22.3 million in the second quarter of 2021, and $23.5 million in the third quarter of 2020. The modest quarterly increase in operating expense in the third quarter as compared to the second quarter of 2021 reflects higher salary costs and personnel expenses which were partly offset by a $378,000 reversal of OREO expense during the quarter. In the first nine months of 2021, operating expenses were $66.2 million, up from $65.0 million in the first nine months of 2020. Income Tax Provision In the third quarter of 2021, Northrim recorded $2.8 million in state and federal income tax expense for an effective tax rate of 23.9%, compared to $3.1 million, or 26.9% in the second quarter of 2021 and $4.0 million, or 25.2% in the third quarter a year ago. For the first nine months of 2021, Northrim recorded $9.2 million in state and federal income tax expense, for an effective tax rate of 23.9% compared to $6.3 million and 21.5% for the same period in 2020. Community Banking "We are proud of the work we are doing to address the needs of our customers in our communities, and as a result we are growing our market share across all of our major markets," said Schierhorn. "To better serve our customers, we opened our second Fairbanks branch during the first quarter of 2021 and in March of 2020 we opened a loan production office in Kodiak. We are geographically diversified throughout our markets and feel that by choosing to expand into new markets when other banks in Alaska were contracting was the right choice, as evident by the new deposit market share data that came out in September 2021." In the recent deposit market share data from the FDIC for the period from June 30, 2020 to June 30, 2021, Northrim's deposit market share in Alaska increased to $2.2 billion, or 13.00% of total Alaska deposits as of June 30, 2021 from $1.8 billion, or 12.32% of total Alaska deposits as of June 30, 2020. Northrim's deposits grew 24% during this period while total deposits in Alaska were up 18% during the same period. Net interest income in the Community Banking segment totaled $19.7 million in the third quarter of 2021, compared to $18.5 million in the second quarter and $17.4 million in the third quarter of 2020. Net interest income benefited from $3.7 million of PPP income in the third quarter of 2021, and $3.6 million of PPP income in the second quarter of 2021. As of September 30, 2021, there was $8.1 million of unearned loan fees net of costs related to round one and round two PPP loans. The following tables provide highlights of the Community Banking segment of Northrim:   Three Months Ended (Dollars in thousands, except per share data) September 30,2021 June 30,2021 March 31,2021 December 31,2020 September 30,2020 Net interest income $ 19,728     $ 18,468     $ 18,734     $ 18,349     $ 17,388   (Benefit) provision for credit losses   (1,106 )     (427 )     (1,488 )     (599 )     567   Other operating income   2,765       2,772       2,274       2,921       3,696   Other operating expense   14,849       14,551       13,664       15,536       14,353   Income before provision for income taxes   8,750       7,116       8,832       6,333       6,164   Provision (benefit) for income taxes   1,955       1,850       1,452       1,303       1,249   Net income $ 6,795     $ 5,266     $ 7,380     $ 5,030     $ 4,915   Weighted average shares outstanding, diluted   6,265,602       6,277,265       6,277,177       6,324,461       6,413,221   Diluted earnings per share $ 1.08     $ 0.84     $ 1.18     $ 0.79     $ 0.76     Year-to-date (Dollars in thousands, except per share data) September 30, 2021 September 30, 2020 Net interest income $ 56,930     $ 49,298   (Benefit) provision for credit losses   (3,021 )     3,031   Other operating income   7,811       7,772   Other operating expense   43,064       42,078   Income before provision for income taxes   24,698       11,961   Provision for income taxes   5,257       1,391   Net income $ 19,441     $ 10,570   Weighted average shares outstanding, diluted   6,274,634       6,467,991   Diluted earnings per share $ 3.10     $ 1.63   Home Mortgage Lending "The increased activity in the mortgage market has continued through the third quarter of 2021, although refinance activity has slowed somewhat compared to the record setting pace of the last several quarters," said Ballard. "New home purchase activity continues in our market, with mortgage production commitments remaining significantly higher than normal." During the third quarter of 2021, mortgage loan volume was $283.2 million, of which 77% was for new home purchases, compared to $286.3 million and 69% of loans funded for new home purchases in the second quarter of 2021, and $364.2 million, of which 61% was for new home purchases in the third quarter of 2020. Loan fundings decreased during the third quarter of 2021 as compared to the preceding quarter and year-over-year, driven by lower refinance activity. The net change in fair value of mortgage servicing rights decreased mortgage banking income by $1.5 million during the third quarter of 2021 and by $567,000 during the second quarter of 2021, primarily due to continued refinance of existing mortgages in the servicing portfolio. "Our mortgage servicing business, which we initiated to service loans primarily for the Alaska Housing Finance Corporation, generated continued growth throughout the quarter," said Ballard. As of September 30, 2021, Northrim serviced 3,024 loans in its $750.3 million home-mortgage-servicing portfolio, a 5% increase compared to the $713.9 million serviced for the second quarter of 2021, and a 14% increase from the $655.7 million serviced a year ago. Delinquencies in the loan servicing portfolio totaled $20.9 million at September 30, 2021, compared to $36.9 million at September 30, 2020. Mortgage servicing revenue contributed $2.4 million to revenues in the third quarter of 2021, $2.5 million in the second quarter of 2021, and $2.0 million in the third quarter of 2020. As a result of the COVID-19 pandemic, approximately 3% of mortgages serviced were in forbearance as of September 30, 2021, compared to 3% as of June 30, 2021, and 6% as of September 30, 2020. Total mortgage servicing income fluctuates based on the number of mortgage servicing rights originated during the period and changes in the fair value of those servicing rights. The fair value of mortgage servicing rights is driven by interest rate volatility and the number of serviced mortgages that pay off during the period, as well as fluctuations in estimated prepayment speeds based on published industry metrics. The change in the fair value of mortgage servicing rights was a decrease of $1.5 million for the third quarter of 2021, compared to a decrease of $567,000 for the second quarter of 2021 and a decrease of $1.5 million for the third quarter of 2020. The following tables provide highlights of the Home Mortgage Lending segment of Northrim:   Three Months Ended (Dollars in thousands, except per share data) September 30 2021 June 30,2021 March 31,2021 December 31,2020 September 30,2020 Mortgage commitments $ 169,436     $ 173,994     $ 181,417     $ 150,276     $ 257,304   Mortgage loans funded for sale $ 283,165     $ 286,314     $ 300,963     $ 381,942     $ 364,159   Mortgage loan refinances to total fundings   23 %     31 %     60 %     48 %     39 % Mortgage loans serviced for others $ 750,327     $ 713,926     $ 682,827     $ 683,117     $ 655,733               Net realized gains on mortgage loans sold $ 7,957     $ 9,470     $ 11,795     $ 15,557     $ 14,736   Change in fair value of mortgage loan commitments, net   533       (427 )     98       (2,724 )     1,943   Total production revenue   8,490       9,043       11,893       12,833       16,679   Mortgage servicing revenue   2,449       2,452       2,152       2,510       2,044   Change in fair value of mortgage servicing rights:           Due to changes in model inputs of assumptions1   (928 )     16       (180 )     (410 )     (699 ) Other2   (530 )     (583 )     (829 )     (783 )     (806 ) Total mortgage servicing revenue, net   991       1,885       1,143       1,317       539   Other mortgage banking revenue   412       432       586       661       714   Total mortgage banking income $ 9,893     $ 11,360     $ 13,622     $ 14,811     $ 17,932               Net interest income $ 704     $ 724     $ 759     $ 875     $ 906   Mortgage banking income   9,893       11,360       13,622       14,811       17,932   Other operating expense   7,685       7,785       7,663       8,611       9,153   Income before provision for income taxes   2,912       4,299       6,718       7,075       9,685   Provision for income taxes   830       1,220       1,917       2,005       2,745   Net income $ 2,082     $ 3,079     $ 4,801     $ 5,070     $ 6,940               Weighted average shares outstanding, diluted   6,265,602       6,277,265       6,277,177       6,324,461       6,413,221   Diluted earnings per share $ 0.34     $ 0.49     $ 0.76     $ 0.80     $ 1.08   1Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.2Represents changes due to collection/realization of expected cash flows over time.   Year-to-date (Dollars in thousands, except per share data) September30, 2021 September30, 2020 Mortgage loans funded for sale $ 870,442     $ 913,469   Mortgage loan refinances to total fundings   39 %     51 %       Net realized gains on mortgage loans sold $ 29,222     $ 30,701   Change in fair value of mortgage loan commitments, net   204       4,977   Total production revenue   29,426       35,678   Mortgage servicing revenue   7,053       5,004   Change in fair value of mortgage servicing rights:     Due to changes in model inputs of assumptions1   (1,092 )     (2,291 ) Other2   (1,942 )     (2,072 ) Total mortgage servicing revenue, net   4,019       641   Other mortgage banking revenue   1,430       1,505   Total mortgage banking income $ 34,875     $ 37,824         Net interest income $ 2,187     $ 2,143   Mortgage banking income   34,875       37,824   Other operating expense   23,133       22,889   Income before provision for income taxes   13,929       17,078   Provision for income taxes   3,967       4,860   Net income $ 9,962     $ 12,218         Weighted average shares outstanding, diluted   6,274,634       6,467,991   Diluted earnings per share $ 1.59     $ 1.89   1Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.2Represents changes due to collection/realization of expected cash flows over time. Balance Sheet Review Northrim's total assets increased to $2.61 billion at September 30, 2021, up 6% from the preceding quarter and up 24% from a year ago. Northrim's loan-to-deposit ratio was 63% at September 30, 2021, down from 69% at June 30, 2021, and 83% at September 30, 2020. Liquidity levels are at record highs with interest bearing deposits in other banks at $458.1 million, representing 19% of interest-earning assets as of September 30, 2021, compared to 4% at September 30, 2020. Average interest-earning assets were $2.35 billion in the third quarter of 2021, up 6% from $2.22 billion in the second quarter of 2021 and up 26% from $1.87 billion in the third quarter a year ago. The average yield on interest-earning assets was 3.62% in the third quarter of 2021, down from 3.69% in the preceding quarter and down from 4.25% in the third quarter a year ago. Average investment securities increased to $389.6 million in the third quarter of 2021, compared to $354.3 million in the second quarter of 2021 and $217.6 million in the third quarter a year ago. The average net tax equivalent yield on the securities portfolio was 1.20% for the third quarter of 2021, down from 1.32% in the preceding quarter and down from 2.11% in the year ago quarter. The average estimated duration of the investment portfolio at September 30, 2021, was four and a half years. "The average duration in our investment securities portfolio has increased over the last couple of years as a result of the lower interest rates, however, given our liquidity, we still have flexibility to deploy short-term funds into higher earning assets should rates rise over the next one to two years," said Ballard. "Core loan growth was strong during the quarter, with $60.3 million in new loans, excluding PPP loans. Additionally, new core loan growth was geographically diversified across all of our markets throughout the state. The total loan portfolio balance was reduced due to $102.4 million in PPP loan forgiveness during the quarter," said Ballard. "Much of the loan production during the past several quarters resulted from new customers we obtained through the PPP process." At September 30, 2021, commercial loans represented 33% of total loans, PPP loans represented 14% of total loans, commercial real estate owner occupied loans comprised 14% of total loans, commercial real estate non-owner occupied loans comprised 28% of total loans, and construction loans made up 7% of total loans. Portfolio loans were $1.45 billion at September 30, 2021, down 3% from both the preceding quarter a year ago. Portfolio loans excluding the impact from PPP were $1.25 billion at September 30, 2021, up 4% from the preceding quarter and up 11% from a year ago. Average portfolio loans in the third quarter of 2021 were $1.47 billion, which was down 5% from the preceding quarter and relatively unchanged from a year ago. Yields on average portfolio loans in the third quarter of 2021 increased to 5.19% from 4.75% in the second quarter of 2021 and 4.83% in the third quarter of 2020. Alaskans continue to account for substantially all of Northrim's deposit base, which is primarily made up of low-cost transaction accounts. Total deposits were $2.30 billion at September 30, 2021, up 7% from $2.15 billion at June 30, 2021, and up 27% from $1.81 billion a year ago. Demand deposits increased 25% year-over-year to $868.8 million at September 30, 2021. Average interest-bearing deposits were up 5% to $1.38 billion with an average cost of 0.19% in the third quarter of 2021, compared to $1.32 billion and an average cost of 0.27% in the second quarter of 2021, and up 28% compared to $1.08 billion and an average cost of 0.49% in the third quarter of 2020. "We continue to attract new customers through our outreach in the community, with a large portion of our deposit growth coming from the over 2,300 new customers we gained from helping with PPP lending," said Michael Martin, the Bank's Chief Operating Officer and General Counsel. "The investments in our people, products and services have allowed us to attract a broader customer base and convert new PPP customers into full banking relationships." Shareholders' equity improved to $242.5 million, or $39.25 per share, at September 30, 2021, compared to $237.2 million, or $38.22 per share, at June 30, 2021 and $214.6 million, or $34.18 per share, a year ago. Tangible book value per share* was $36.66 at September 30, 2021, compared to $35.64 at June 30, 2021, and $31.62 per share a year ago. Northrim continues to maintain capital levels in excess of the requirements to be categorized as "well-capitalized" with Tier 1 Capital to Risk Adjusted Assets of 14.17% at September 30, 2021, compared to 14.54% at June 30, 2021, and 14.11% at September 30, 2020. Asset Quality "Credit quality remains solid, with nearly every credit quality metric improving compared to a year ago," said Martin. "Additionally, loan modifications are down 31% from the prior quarter. While we are encouraged with the overall performance in the loan portfolio, we remain cautious. With a few of the industries that have been hardest hit, particularly tourism and hospitality, we continue to maintain elevated credit monitoring structures." Nonperforming assets ("NPAs") net of government guarantees were $16.1 million at September 30, 2021, down from $17.8 million at June 30, 2021 and from $17.9 million a year ago. Of the NPAs at September 30, 2021, $9.3 million, or 82% are nonaccrual loans related to six commercial relationships. One of these relationships, which totaled $1.1 million at September 30, 2021, is a business in the medical industry. Net adversely classified loans were $17.4 million at September 30, 2021, as compared to $14.1 million at June 30, 2021, and $14.5 million a year ago. Net loan recoveries were $39,000 in the third quarter of 2021, compared to net loan charge-offs of $64,000 in the second quarter of 2021, and net loan recoveries of $463,000 in the third quarter of 2020. Adversely classified loans are loans that Northrim has classified as substandard, doubtful, and loss, net of government guarantees. As of September 30, 2021, $14.9 million, or 86% of net adversely classified loans are attributable to 11 relationships with seven loans to commercial businesses, one loan to a medical business, and three loans to oilfield services commercial businesses. Performing restructured loans that were not included in nonaccrual loans at September 30, 2021, net of government guarantees were $796,000, up from $777,000 three months earlier and down from $865,000 a year ago. Borrowers who are in financial difficulty and who have been granted concessions that may include interest rate reductions, term extensions, or payment alterations are categorized as restructured loans, unless it is the result of the COVID-19 global pandemic. The Company presents restructured loans that are performing separately from those that are classified as nonaccrual to provide more information on this category of loans and to differentiate between accruing performing and nonperforming restructured loans. Excluding SBA PPP loans, Northrim had $99.8 million, or 8% of total portfolio loans, in the healthcare sector; $83.4 million, or 7% of portfolio loans, in the tourism sector; $59.5 million, or 5% of portfolio loans, in the aviation (non-tourism) sector; $64.2 million, or 5% in the fishing sector; $52.9 million, or 4% in the accommodations sector; $40.2 million, or 3% in retail loans; and $42.0 million, or 3% in the restaurant sector, as of September 30, 2021. Northrim estimates that $61.6 million, or approximately 5% of portfolio loans excluding SBA PPP loans, had direct exposure to the oil and gas industry in Alaska, as of September 30, 2021, and $5.0 million of these loans are adversely classified. As of September 30, 2021, Northrim has an additional $70.5 million in unfunded commitments to companies with direct exposure to the oil and gas industry in Alaska, and none of these unfunded commitments are considered to be adversely classified loans. Northrim defines direct exposure to the oil and gas sector as loans to borrowers that provide oilfield services and other companies that have been identified as significantly reliant upon activity in Alaska related to the oil and gas industry, such as lodging, equipment rental, transportation and other logistics services specific to this industry. About Northrim BanCorp Northrim BanCorp, Inc. is the parent company of Northrim Bank, an Alaska-based community bank with 17 branches in Anchorage, the Matanuska Valley, Soldotna, Juneau, Fairbanks, Ketchikan, and Sitka, ...Full story available on Benzinga.com.....»»

Category: earningsSource: benzingaOct 30th, 2021

Boeing Rises After Burning Less Cash Than Expected Despite Top & Bottom-Line Loss

Boeing Rises After Burning Less Cash Than Expected Despite Top & Bottom-Line Loss Boeing's 787 woes continued for another quarter, with the aerospace giant reporting that it generated less revenue, operating profit and earnings than expected in Q3, a quarter which again was beset by "one-time" charges including a $185 million accounting charge for the latest delay to its Starliner spacecraft along with about $183 million in costs stemming from disrupted production of its 787 Dreamliner. It anticipates spending about $1 billion in total for troubles with the marquee wide-body jet. The offset: Boeing burned far less cash than expected which is also the reason why its shares are modestly higher in the premarket. Here are the details: Revenue $15.28 billion, -10% q/q, +8.1% y/y, missing the estimate of $16.49 billion Commercial Airplanes revenue $4.46 billion, +24% y/y, missing the estimate $5.30 billion Defense, Space & Security revenue $6.62 billion, -3.4% y/y, missing the estimate $6.92 billion Global Services revenue $4.22 billion, +14% y/y, beating the estimate $3.96 billion Core loss per share shrank to 60c vs. loss/share $1.390 y/y, but also missed the estimate loss/share 17c Some other notable highlights: Backlog $367 billion, -6.6% y/y; the total commercial airplane backlog was 4,163 airplanes valued at $290B Commercial airplanes operating loss $693 million, -49% y/y, missing the estimate loss $346.7 million Defense, space & security oper income $436 million, -31% y/y, missing the estimate $697.1 million Global services oper income $644 million, missing the estimate $487.8 million  Delivered 85 airplanes, including 62 737 MAX And some commentary and context from the press release and investor presentation, courtesy of Bloomberg: Commercial Market Is Showing Improved Signs of Recovery Increasing Freighter Production & Conversion Capacity Boosting Jet Freighter Output & Conversions: CEO Boeing’s 2021 Freighter Sales Highest in History The current 787 production rate is about two airplanes per month and the company expects to continue at this rate until deliveries resume and then return to five per month over time “Going forward, supply chain capacity and global trade will be key drivers of our industry and the broader economy’s recovery,” Boeing President and Chief Executive Officer David Calhoun said “ Commercial market demand continues to gain traction with broad-based vaccine distribution and border protocols beginning to open,” Calhoun said Boeing said it’s continuing to make progress on the global safe return to service of the 737 MAX On 787, low production rates and rework are expected to result in approximately $1 billion of abnormal costs, of which $183 million was recorded in the quarter Since the FAA’s approval to return the 737 MAX to operations in November 2020, Boeing has delivered more than 195 737 MAX aircraft and airlines have returned more than 200 previously grounded airplanes to service The 737 program is currently producing at a rate of 19 per month and continues to progress towards a rate of 31 per month in early 2022, and the company is evaluating the timing of further rate increases Commenting on its flagship Commercial Airplane division, Boeing said reported "continued momentum on safely returning the 737 to service", however this was offset by 787 deliveries which remain impacted amid an ongoing engagement with FAA. The company is currently producing 787s at 2/mo until deliveries resume, returning to 5/mo over time. Continued 787 troubles meant continued charges and in Q3, Boring recorded $183M of abnormal cost in the quarter; and anticipates a $1B total.  Boeing also continues to expect first 777X delivery in late 2023. It wasn't all bad news, however, and Boeing reported negative adjusted free cash flow of $507 million, down 28% q/q, and down 90% y/y; this number was far better than the consensus estimate of negative $1.86 billion. The smaller than expected cash burn meant that net debt was roughly flat, with cash declining by $1.3BN q/q, roughly in line with debt. As Bloomberg summarizes, Boeing continues to work to resolve quality lapses, repair relations with regulators and lighten its debt burden from last year’s travel-market collapse and prolonged grounding of its Max aircraft after two fatal crashes. Restarting Dreamliner deliveries that have been halted for months is key to Boeing’s financial turnaround. But the planemaker must first address quality defects and win regulatory approval. Sanford C. Bernstein analyst Douglas Harned estimated before Boeing’s release that the company has about $9 billion in cash tied up in Dreamliners parked around its factories and in desert storage lots. Investors gave Boeing the benefit of the doubt and ignored the latest top and bottom line misses and instead focused on the cash burn improvement, which helped Boeing shares gain 1.1% to $212.11 before the start of regular trading Wednesday in New York. The stock had declined 2% this year this year through Tuesday while the Dow Jones Industrial Average advanced 17%. Boeing's Q3 investor presentation can be found here. Tyler Durden Wed, 10/27/2021 - 08:28.....»»

Category: blogSource: zerohedgeOct 27th, 2021

Alaska Air Group reports third quarter 2021 results

SEATTLE, Oct. 21, 2021 /PRNewswire/ -- Alaska Air Group (NYSE:ALK) today reported financial results for its third quarter ending Sept. 30, 2021, and provided outlook for the fourth quarter ending Dec. 31, 2021. The third quarter marks a significant stride forward in Alaska Air Group's path to recovery. Alaska's goal from the beginning of the pandemic has been deliberate - scaling the business back up in a measured way, leveraging the company's strong balance sheet, and running a resilient operation, all with the aim of producing consistent industry-leading financial performance. "We are thrilled to return to profitability this quarter, leading the industry with a 12% pretax profit margin," said CEO Ben Minicucci. "Thanks to each one of our employees for running our operation and showing remarkable care for our guests, and credit to the leadership team for laying out a measured plan and executing it with discipline. We're all feeling the momentum and look forward to building on our strong foundation for growth in 2022 and beyond." Financial Results: Reported net income for the third quarter of 2021 under Generally Accepted Accounting Principles (GAAP) of $194 million, or $1.53 per share, compared to a net loss of $431 million, or $3.49 per share in the third quarter of 2020. Reported net income for the third quarter of 2021, excluding special items and mark-to-market fuel hedge accounting adjustments, of $187 million, or $1.47 per share, compared to an adjusted net loss of $399 million or $3.23 per share, in the third quarter of 2020. This quarter's adjusted results compare to the First Call analyst consensus estimate of $1.30 per share. Generated adjusted pre-tax margin for the third quarter of 2021 of 12%. Reported a debt-to-capitalization ratio of 51%, a reduction of 10 points from Dec. 31, 2020. Made a $100 million voluntary contribution to the defined benefit plan for Alaska's pilots in the third quarter, boosting estimated combined funded status of all defined benefit plans to 94%. Held $3.2 billion in unrestricted cash and marketable securities as of Sept. 30, 2021. Prepaid $425 million in debt from the 364-day term loan facility, bringing total debt payments to $1.2 billion for the year. Operational Updates: Exercised options for 12 Boeing 737-9 aircraft slated for delivery in 2023 and 2024, and added options for an additional 25 deliveries, bringing Alaska's total firm commitments for 737-9 aircraft to 93 and available options to 52. Ratified amended wage agreement for Horizon Air pilots, represented by the International Brotherhood of Teamsters.  Opened new San Francisco International Airport Lounge with 9,200 square feet of Bay-Area inspired amenities. Announced new nonstop flights between San Francisco and Loreto and Ixtapa/Zihuatanejo, with service slated to begin Dec. 18. Since the onset of the pandemic, approximately 70 new markets have been announced or commenced operation. Resumed and expanded inflight meals, snacks, and drinks in all classes of service. Continued to exceed internal metrics for guest satisfaction, highlighting our commitment to providing our guests a smooth and safe experience throughout their journey.     Near the top of the industry for on-time arrivals and completion rates in the third quarter. Environmental, Social and Governance Updates: Appointed Adrienne Lofton, vice president of global marketing at Google, to the Company's board of directors. Announced formation of Alaska Star Ventures, an entity created to identify and further technologies that accelerate Alaska Airlines' path to net zero carbon emissions. Supported the Afghan Humanitarian Airlift Mission and the U.S. military by operating Civil Reserve Air Fleet flights in the evacuation of individuals and families from Afghanistan. Awarded $260,000 in LIFT Grants to 25 nonprofits focused on a clear vision to provide the next generation of leaders with the knowledge, skills and providing pathways for success through the Alaska Airlines Foundation. The following table reconciles the company's reported GAAP net income (loss) per share (EPS) for the three and nine months ended Sept. 30, 2021 and 2020 to adjusted amounts. Three Months Ended September 30, 2021 2020 (in millions, except per-share amounts) Dollars Diluted EPS Dollars EPS GAAP net income (loss) per share $ 194 $ 1.53 $ (431) $ (3.49) Payroll support program wage offset — — (398) (3.22) Mark-to-market fuel hedge adjustments — — (3) (0.02) Special items - impairment charges and other (9) (0.07) 121 0.98 Special items - restructuring charges — — 322 2.60 Special items - merger-related costs — — 1 0.01 Income tax effect of reconciling items above 2 0.01 (11) (0.09) Non-GAAP adjusted net income (loss) per share $ 187 $ 1.47 $ (399) $ (3.23) Nine Months Ended September 30, 2021 2020 (in millions, except per-share amounts) Dollars Diluted EPS Dollars Diluted EPS GAAP net income (loss) per share $ 460 $ 3.64 $ (877) $ (7.12) Payroll support program wage offset (914) (7.24) (760) (6.16) Mark-to-market fuel hedge adjustments (68) (0.54) — — Special items - impairment charges and other 5 0.04 350 2.84 Special items - restructuring charges (12) (0.09) 322 2.61 Special items - merger-related costs — — 5 0.04 Income tax effect of reconciling items above 242 1.92 20 0.16 Non-GAAP adjusted net loss per share $ (287) $ (2.27) $ (940) $ (7.63) Statistical data, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables. A glossary of financial terms can be found on the last page of this release. A conference call regarding the third quarter results will be streamed online at 8:30 a.m. PDT on October 21, 2021. It can be accessed at www.alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call. References in this update to "Air Group," "Company," "we," "us," and "our" refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified. This news release may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by any forward-looking statements.  For a comprehensive discussion of potential risk factors, see Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2020. Some of these risks include the risks associated with contagious illnesses and contagion, such as COVID-19, general economic conditions, increases in operating costs including fuel, competition, labor costs and relations, our indebtedness, inability to meet cost reduction goals, seasonal fluctuations in our financial results, an aircraft accident, and changes in laws and regulations. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We expressly disclaim any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance, or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse. Alaska Airlines and its regional partners serve more than 120 destinations across the United States and to Mexico, Canada and Costa Rica. The airline emphasizes Next-Level Care for its guests, along with providing low fares, award-winning customer service and sustainability efforts. Alaska is a member of oneworld. With the global alliance and the airline's additional partners, guests can travel to more than 1,000 destinations on more than 20 airlines while earning and redeeming miles on flights to locations around the world. Learn more about Alaska at newsroom.alaskaair.com and blog.alaskaair.com. Alaska Airlines and Horizon Air are subsidiaries of Alaska Air Group (NYSE:ALK). CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Alaska Air Group, Inc. Three Months Ended September 30, Nine Months Ended September 30, (in millions, except per-share amounts) 2021 2020 Change 2021 2020 Change Operating Revenues: Passenger revenue $ 1,774 $ 572 210 % $ 3,785 $ 2,362 60 % Mileage Plan other revenue 120 84 43 % 332 266 25 % Cargo and other 59 45 31 % 160 130 23 % Total Operating Revenues 1,953 701 179 % 4,277 2,758 55 % Operating Expenses: Wages and benefits 578 495 17 % 1,581 1,579 — % Payroll support program wage offset — (398) (100) % (914) (760) 20 % Variable incentive pay 42 42 — % 109 65 68 % Aircraft fuel, including hedging gains and losses 376 125 201 % 853 568 50 % Aircraft maintenance 89 84 6 % 272 244 11 % Aircraft rent 64 74 (14) % 188 229 (18) % Landing fees and other rentals 141 109 29 % 414 323 28 % Contracted services 62 36 72 % 167 138 21 % Selling expenses 49 24 104 % 123 83 48 % Depreciation and amortization 99 105 (6) % 294 320 (8) % Food and beverage service 39 14 179 % 97 70 39 % Third-party regional carrier expense 39 29 34 % 106 92 15 % Other 126 89 42 % 348 310 12 % Special items - impairment charges and other (9) 121 (107) % 5 350 (99) % Special items - restructuring charges — 322 . (100) % (12) 322 (104) % Special items - merger-related costs — 1 (100) % — 5 (100) % Total Operating Expenses 1,695 1,272 33 % 3,631 3,938 (8) % Operating Income (Expense) 258 (571) (145) % 646 (1,180) (155) % Nonoperating Income (Expense): Interest income 6 7 (14) % 19 23 (17) % Interest expense (30) (34) (12) % (101) (64) 58 % Interest capitalized 3 4 (25) % 9 8 13 % Other - net 8 5 60 % 27 16 69 % Total Nonoperating Expense (13) (18) (28) % (46) (17) 171 % Income (Loss) Before Income Tax 245 (589) 600 (1,197) Income tax expense (benefit) 51 (158) 140 (320) Net Income (Loss) $ 194 $ (431) $ 460 $ (877) Basic Income (Loss) Per Share: $ 1.55 $ (3.49) $ 3.69 $ (7.12) Diluted Income (Loss) Per Share: $ 1.53 $ (3.49) $ 3.64 $ (7.12) Shares Used for Computation: Basic 125.250 123.647 124.846 123.255 Diluted 127.188 123.647 126.325 123.255 Cash dividend declared per share: $ — $ — $ — $ 0.375 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) Alaska Air Group, Inc. (in millions) September 30, 2021 December 31, 2020 ASSETS Current Assets Cash and cash equivalents $ 495 $ 1,370 Marketable securities 2,700 1,976    Total cash and marketable securities 3,195 3,346 Receivables - net 536 480 Inventories and supplies - net 62 57 Prepaid expenses, assets held-for-sale, and other current assets 208 123 Total Current Assets 4,001 4,006 Property and Equipment Aircraft and other flight equipment 8,076 7,761 Other property and equipment 1,446 1,398 Deposits for future flight equipment 378 583 9,900 9,742 Less accumulated depreciation and amortization 3,780 3,531 Total Property and Equipment - Net 6,120 6,211 Operating lease assets 1,370 1,400 Goodwill 1,943 1,943 Intangible assets - net 102 107 Other noncurrent assets 346 379 Other Assets 3,761 3,829 Total Assets $ 13,882 $ 14,046 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in millions, except share amounts) September 30, 2021 December 31, 2020 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $ 181 $ 108 Accrued wages, vacation and payroll taxes 441 527 Air traffic liability 1,225 1,073 Other accrued liabilities 587 424 Deferred revenue 904 733 Current portion of operating lease liabilities 275 290 Current portion of long-term debt 425 1,138 Total Current Liabilities 4,038 4,293 Long-Term Debt, Net of Current Portion 2,225 2,357 Noncurrent Liabilities Long-term operating lease liabilities, net of current portion 1,191 1,268 Deferred income taxes 501.....»»

Category: earningsSource: benzingaOct 21st, 2021

Could This Be A Blow-Off Top For Tyranny?

Could This Be A Blow-Off Top For Tyranny? Submitted by Mark Jeftovic of Bombthrower.com Could This be a Blow-Off Top for Tyranny? King John’s military failure at the Battle of Bouvines triggered the barons’ revolt, but the roots of their discontent lay much deeper. King John ruled England in a ruthless manner at a time when the instruments of government and the practices of the courts were becoming consolidated. Eventually the barons could no longer abide the unpredictable ruling style of their kings. Their discontent came to a head during John’s reign. — Magna Carta, Muse and Mentor   There was a lot of defeatism evident in the comments on my recent series of posts, Why the West can’t ban Bitcoin, How we know Bitcoin is a force for good and No-Coiners don’t get that it’s not up to the government.  The overall timbre being that governments are all-powerful and that they will simply ban or outlaw emergent phenomenon that doesn’t suit their purposes. For awhile this was also my concern. When I wrote Domestic Terror is a Government Without Constraints it was motivated from a place of angst and hopelessness. However as we’ve all been watching events unfold, my mindset around this has been shifting. I have been coming across instance after instance of historical accounts on how seemingly unassailable and despotic regimes were swept away in mere moments of time, when it was least expected, when they seemed to be at the height of their power and poised to consolidate it even more. It is in these inflection points where nobody is aware of their existence, a grain of sand shifts somewhere and suddenly a geopolitical Minsky Moment ensues. Then it’s all over: The fall of the 300-year old Romanov dynasty and 800 year line of Tsars in a weekend over 1917 a few months after an obscure prince named Felix Yusopov murdered a peasant scoundrel named Rasputin The collapse of the Soviet Eastern Bloc in 1989 after gateway between Austria and Hungary was opened one weekend during a Pan-European picnic. It led to the collapse of the USSR after a failed hardliner coup in 1991. In 1945, the government of Haiti was overthrown in an uprising three days after the French writer and revolutionary Andre Breton gave a speech on Surrealism in Port-Au-Prince. Back in the days of William Buckler’s The Privateer newsletter, there was another, lesser known but just good newsletter by Mark Rostenko called The Sovereign Strategist (I have to admit modelling The Crypto Capitalist on both). Rostenko once wrote: “Nothing is bigger than the market. Nothing.” Rostenko quit in disgust and moved to the wilderness, I had brief communications with him over the years including this interview on my old blog. But my last couple emails to him have gone unanswered. What Rostenko may have lost faith in, for the moment, was that “the market” is really another word for The People. Every individual should be free to conduct their daily affairs in a way that serves their rational self-interest. I can hear the collectivists shrieking at that statement. To them I would simply dismiss their claims on everyone else’s autonomy by saying that when particular self-interested behaviours begin to adversely impact on the commons of everybody, then in an undistorted,  free market we would see it in rising costs or other market signals that would change the incentive structure and with it, everybody’s behaviours would adjust. Example: in a truly catastrophic global pandemic with a Black Plague, Ebola or Spanish Flu level of lethality, nobody would have be compelled to wear a mask, stay off the streets or queue up for a vaccine. In my piece that government can’t ban crypto, the naysayers converged around two objections: FDR’s gold ban of 1932 and Communist Centralist China now. FDR’s Gold Ban of 1933 This is one of those episodes in history where people simply don’t look beyond the headline. All they know that is in 1933 a series of executive orders were passed to remove the ability to hold gold privately or specify it as a payment method in contracts and they assume that was it: in a puff of edict, all privately held gold simply disappeared from the public’s hands (“checkmate, Bitcoin cultist”). Everybody is expecting one of these for a specialized area of mathematics called Bitcoin. But that isn’t what happened. In Kenneth R. Ferguson’s “Confiscation: Gold as Contraband 1933-1975” we get a more nuanced look at what the effect and implications of the gold ban were, including the haunting parallels to today’s Lockdown Society and it’s war on small business and the middle class. Our lack of insight into this era… “gives short change to the legitimate concerns of the people who were most opposed to President Roosevelt’s gold policies—farmers, blue collar workers, small business proprietors—and who believed democracy had been circumvented. Just a few years earlier, in the late 1920s, the mere thought of gold confiscation would have been inconceivable to everyone, including those who later supported it.” The gold ban came after FDR and the Democrats ran a campaign premised on a balanced budget and reduced government spending (yes, really). By the time he came into office the Great Depression was in full swing, the S&P had come off 80% from its 1929 high, unemployment was at 25%. England was forced to abandon its gold standard in 1931 and 25 other countries followed suit within the year. The newly elected president came into office facing a wave of  bank runs and took over the entire financial sector on his second day in office, “emergency executive control over all banking and currency transactions.” FDR blamed gold hoarding for the nation’s banking crisis, however: He failed to explain hoarding as a way of protecting a life savings in the face of frequent and increasing bank insolvency coupled with no depositor insurance, or to identify speculative activity abroad as foreigners exchanging their dollar assets for gold in anticipation of dollar devaluation. Most people would understand these choices as rational, but Roosevelt labeled them “unwarranted” and “speculative” in an emotional appeal to wrongdoing. The emphasis is added, because it highlights our main assertion: at some point rational self-interest creates an environment that incentivizes certain behaviours in spite of those that the government is attempting to induce. In fact, the harder the government may try to impose behaviours that are against the rabble’s own interests, the more vigorously they may adapt the discouraged behaviour  (also see: Bitcoin). FDR’s administration escalated the war on savers by ratcheting up the restrictions against gold: “The gold policies of President Roosevelt over a ten-month period provided a classic example of a political slippery slope. On April 5, the President declared “hoarding” to be illegal, and on August 28 the crime was elevated to “holding.” On December 28, 1933, the Secretary of the Treasury finalized the mandate by “requiring the delivery of gold coin, gold bullion, and gold certificates to the Treasurer of the United States” (that is, from the theoretically-temporary hands of the banks into the more permanent possession of the government itself.) This is the definition of confiscation; it merely took ten months to be so stated.” Ferguson’s book does a masterful job detailing the machinations of this chapter in US and economic history, in details far exceeding my available bandwidth here. So what actually did happen? Compliance turned out to be low: it was estimated that $287 million USD of gold was in the public hands at the time of the ban. This excludes gold already exported out of the country by those who saw it coming (Canada was a favourite destination and waypoint) and the wealthy who were speculating against a USD currency devaluation using gold held offshore. Of that remaining stash in US public hands, compliance was estimated to be less than 50% by some tallies. The total face value of all gold coinage surrendered between 1933 and 1965 was less than $12 million USD, or approximately 4% of outstanding gold coinage. China’s Bitcoin Ban From my latest Crypto Capitalist letter, I cover the general situation in China: China’s crypto ban is actually less about crypto and more about state control over everything. There are rumours that China will soon break up Alipay, the overarching pattern is that China perceives Big Tech and decentralized tech as threats to the CCP hegemony, and they are moving to crush all opposition. Only by moving to outlaw entire industries, especially the ones poised to inherit the future, China may be repeating the same error that made over 500 years ago, when they ceded passage over the open seas to Europe, who went on to shape the trajectory of the world while China atrophied into centuries of internal strife and conflict: “More than five centuries ago, three ancient civilizations made three crucial decisions that largely preordained their subsequent collapse. As always, during periods of stress, these choices were not perceived as either critical or damaging. Indeed on the contrary, they were viewed positively as constructive responses to the contemporary problems that helped to strengthen their respective societies. In a matter of several decades between 1433 and 1485, China, Russia and the Ottomans independently decided that interactions with foreigners, trade, innovation, civil and property rights, education, and freedom to exchange views were contrary to the interests of the state and social cohesion” — Victor Shvets, The Great Rupture Is China making the same mistake now? We can already see that an outright ban on Bitcoin and crypto-currencies in China has had no effect on them globally. Zero. Think about that. Also note that reminiscent of how gold was exported from the US ahead of the gold ban in 1932 (not because anybody saw the ban coming per se, but because a devaluation of the USD was seen as likely), the largest Chinese crypto exchanges have been exiting China since 2017. Binance is still operating full-tilt having moved their HQ from Hong Kong to Bahamas, which is quite literally a page from The Sovereign Individual playbook – moving from a jurisdiction hostile to your interests to one accommodating to them.  Binance has its own exchange token (BNB) which at a $64B market cap makes it the 5th largest crypto currency in the world, and a Layer 1 blockchain (Binance Smartchain) that currently has a little under $20B TVL in DeFi, which definitely puts it somewhere on the Network State / Crypto-clave spectrum. Something similar happened with Chinese miners, who are moving to the West or other Asian jurisdictions. Interestingly, most of the crypto entities that arose there and then fled, came up in Hong Kong, which has had a taste of free market capitalism until the big rug pull in that respect in recent years. In mainland China itself, they’ve always been living under totalitarianism and the population is inculcated to it. But even there, how long can the Chinese people, catching glimpses through the Great Firewall of far  more marginally freer people, especially those in Hong Kong, abide by tyranny? How long can that centralized, top-down repression truly continue for? Life in liberal democracies is traditionally supposed to be anything goes except that which is expressly illegal. But we’ve had two years of rule by edict and that which is not explicitly permitted is forbidden. How long can this continue for? On a local level, some restaurants in Toronto are deciding not to enforce vax mandates. The longer the mandates continue, I expect more restaurants to begin eschewing them, because their economic self-interest is served by doing so. Even fully vaxxed people are curbing their outings because dinner and a movie feels more like internment into a gulag than a family night out. Venues that help people regain that sense of normalcy and comfort will attract the business, not the ones who force you to show “your papers please” on the way in. In Australia, the peasants are revolting, and even if the civil aviation authority is trying to ban drones from capturing the footage of these occurrences, they are still occurring and footage is getting out nonetheless. Varying US states ruling against vaccine and mask mandates, people are setting up job boards for those who aren’t vaxxed (or those who are but don’t want to work for companies that require it). The transportation system is grinding to a halt as air traffic controllers, air crew and pilots are calling in sick, resulting in mass flight cancelations, who knows where it will spread next. Why? The MSM is trying hard not to find out, but guys like Ron Paul suspect vaccine mandates. Right now we’re in civil disobedience, nullification and secessionist territory, but when I think about escalation: as the financial crisis that seemed imminent before COVID seems to be edging back into the frame (inflation, energy costs, supply chain constraints, cascading debt collapses: Evergrande and now the entire Chinese bond market) governments who seized on the COVID opportunity to introduce emergency measures may see a need for doubling down. After chasing the goalposts for almost two years now, I’m not sure the rabble is going to take it much longer. And if it doesn’t, what would that mean? #WorldWarWe In a recent podcast I was listening to (I think it was Sahill Bloom on Bankless, but it’s possible I’m misremembering and I’m sorry if so), he said something almost off-handedly: He said, in effect, “the next world war will be unlike anything we’ve ever seen” – and I expected him to talk about non-conventional warfare, such as bio-weapons, information warfare, and economics (“war by other means”), but instead he said “World War III will be everybody against their own governments” When you think about it, one realizes that today’s technology, with decentralization, cryptography, 3-D printing and drones could actually make this a possibility. In David Hambling’s Swarm Troopers: How Small Drones Can Conquer the World, he outlines how governments, whose military used to have technologies 20 years ahead of the general populace, have become so bureaucratized and sclerotic that they now move at a fraction of the pace of the highly competitive private sector: “If a commercial product goes through a generation every two years and the military cycle takes six years per generation, then in twelve years the military product goes from being four times as powerful as the competition to a quarter as powerful.” An example of this dynamic we can already see having played out is the Internet, which came out of the military industrial complex and in its day, was light-years ahead of anything the general public had (Compuserve, GEnie). But the “genie” did indeed get out of the bottle, and once the private sector got onto it and ran with it, it changed the fundamental architecture of power. The groundwork was laid for the evolution of societies in ways that would challenge, and will inevitably overwhelm the nation states that let it out. Say hello to the Network State and crypto claves. So now that we’re here in The Jackpot, do we honestly believe that the slowest, most bureaucratic, rigid an inflexible entities (governments) are actually going to win the race for primacy in a rapidly decentralizing world? When the gargantuan imbalances they created over the last century finally experience their all-encompassing, self-induced Global Minsky Moment? It was under FDR’s gold ban that dissenting Supreme Court Justice McReynolds ruminated that it meant the demise of the US Constitution: It is impossible to fully estimate the result of what has been done. The Constitution as many of us have understood it, the instrument that has meant so much to us, is gone. The guarantees heretofore supposed to protect against arbitrary action have been swept away. The powers of Congress have been so enlarged that now no man can tell their limitations. Guarantees heretofore supposed to prevent arbitrary action are in the discard… Shame and humiliation are upon us now. Moral and financial chaos may confidently be expected. While in those days the ban on gold was ineffective and compliance less than half, it did succeed in stripping the US citizenry of constitutional protections which has only escalated into the present day. We have all been treating what happened under COVID as something unprecedented. But if you think of Lockdown Society and The New Normal not as the implementation of a quasi-one-world government , ushering in a global police state, but instead as the crescendo, of a roughly century long process of creeping tyranny…. one of those infamous blow-off tops that are unrecognizable to us now because we are immersed in it, still experiencing it. Despite the overwhelming arsenals of governments, the militarization of civilian police forces, and near ubiquitous surveillance capabilities, there’s never been a time in history when the people have the means to rebel, both within the system and without. Especially here in North America, where to avoid retyping all this, allow me to simply excerpt a passage from the most recent edition of The Crypto Capitalist letter…. “The Future of Life Institute made docudrama short-film called “Slaughterbots”, it’s 7 minutes long and nothing short of chilling, but we’d be fools to think that if technology has this capability already, it won’t be used. By somebody: Mexican cartels are already using drones to smuggle drugs, not to mention weaponized drones in combat with each other and on at least one occasion used them to attack the police. It’s still under-appreciated how significant a change this is. On par with the gunpowder revolution and aerial warfare, autonomous weapons and drones are yet another technology in the process of changing the rules of the game. This brings us to the important part: we can already see that these technologies won’t just change the nature of conflict between governments. Drones are also accessible to non-state actors, perhaps even more-so. They will alter the relationship of power across society as a whole. When also you factor in their close cousin, 3-D printed weapons, we really begin to understand what a fundamental shift in the landscape decentralization and digital technology really implies. One of the defining characteristics that makes America, and certain other countries so different from, say, China, or even Australia, is the level to which the citizenry is armed. Especially in North America. The US and Mexico are two of the only three countries in world where gun ownership is a Constitutional right (the third is Guatemala) while even here in Canada, where it isn’t, we have one of the higher per-capita levels of gun ownership (somewhere around 34 guns per 100 people). Imagine a future in which all these gun owners have the capability and incentives to print up their own weapons on 3- D printers. Then deploying them via drones, possibly swarms of them, for whatever purpose. There is no technological barrier from them doing so, and doing so right now. What scenarios or conditions would have to exist to galvanize that kind of behaviour en masse? How close are we to those conditions now? Are we moving toward those conditions or away from them? Most importantly, do you think whoever is in government could stop it? If you consider this, then we can get a sense of why governments and policymakers are so eager to assert their authority now and to appear to be unassailable and omnipotent. I think it’s fear.” To be clear: I am not advocating an armed rebellion against incumbent governments. I’m observing how decentralization and cryptography have changed the architecture of power and asking what kind of incentives would have to be in place to make what I describe inevitable. The Bitcoin and the cryptocurrency movements were the second half of the one-two punch that set all this in motion. The Internet freed the flow of information, and in a world where “whosoever controls the monetary system, controls society (Zarlenga)”, cryptos have taken the punch-bowl of monetary control away from the State in a truly Promethean manner, and open-sourced it. Who controls money now? Everybody. There is a point beyond which the citizenry will stop viewing each other as enemies (left vs right) and start viewing their own governments as the enemy (overlords vs rabble). If that happens, then the incentives and conditions will be in place for #WorldWarWe. Coda: As per the comment from Matt below, I am deeply saddened to learn that Mark Rostenko passed away July 26, 2020. We never met, but I considered him an internet friend and I respected him a lot. Tyler Durden Wed, 10/13/2021 - 16:20.....»»

Category: blogSource: zerohedgeOct 13th, 2021

Futures Reverse Losses Ahead Of Key CPI Report

Futures Reverse Losses Ahead Of Key CPI Report For the second day in a row, an overnight slump in equity futures sparked by concerns about iPhone sales (with Bloomberg reporting at the close on Tuesday that iPhone 13 production target may be cut by 10mm units due to chip shortages) and driven be more weakness out of China was rescued thanks to aggressive buying around the European open. At 800 a.m. ET, Dow e-minis were up 35 points, or 0.1%, S&P 500 e-minis were up 10.25 points, or 0.24%, and Nasdaq 100 e-minis were up 58.50 points, or 0.4% ahead of the CPI report due at 830am ET. 10Y yields dipped to 1.566%, the dollar was lower and Brent crude dropped below $83. JPMorgan rose as much as 0.8% in premarket trading after the firm’s merger advisory business reported its best quarterly profit. On the other end, Apple dropped 1% lower in premarket trading, a day after Bloomberg reported that the technology giant is likely to slash its projected iPhone 13 production targets for 2021 by as many as 10 million units due to prolonged chip shortages. Here are some of the biggest U.S. movers today: Suppliers Skyworks Solutions (SWKS US), Qorvo (ORVO) and Cirrus Logic (CRUS US) slipped Tuesday postmarket Koss (KOSS US) shares jump 23% in U.S. premarket trading in an extension of Tuesday’s surge after tech giant Apple was rebuffed in two patent challenges against the headphones and speakers firm Qualcomm (QCOM US) shares were up 2.7% in U.S. premarket trading after it announced a $10.0 billion stock buyback International Paper (IP US) in focus after its board authorized a program to acquire up to $2b of the company’s common stock; cut quarterly dividend by 5c per share Smart Global (SGH US) shares rose 2% Tuesday postmarket after it reported adjusted earnings per share for the fourth quarter that beat the average analyst estimate Wayfair (W US) shares slide 1.8% in thin premarket trading after the stock gets tactical downgrade to hold at Jefferies Plug Power (PLUG US) gains 4.9% in premarket trading after Morgan Stanley upgrades the fuel cell systems company to overweight, saying in note that it’s “particularly well positioned” to be a leader in the hydrogen economy Wall Street ended lower in choppy trading on Tuesday, as investors grew jittery in the run-up to earnings amid worries about supply chain problems and higher prices affecting businesses emerging from the pandemic. As we noted last night, the S&P 500 has gone 27 straight days without rallying to a fresh high, the longest such stretch since last September, signaling some fatigue in the dip-buying that pushed the market up from drops earlier this year. Focus now turn to inflation data, due at 0830 a.m. ET, which will cement the imminent arrival of the Fed's taper.  "A strong inflation will only reinforce the expectation that the Fed would start tapering its bond purchases by next month, that's already priced in," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. "Yet, a too strong figure could boost expectations of an earlier rate hike from the Fed and that is not necessarily fully priced in." The minutes of the Federal Reserve's September policy meeting, due later in the day, will also be scrutinized for signals that the days of crisis-era policy were numbered. Most European equities reverse small opening losses and were last up about 0.5%, as news that German software giant SAP increased its revenue forecast led tech stocks higher. DAX gained 0.7% with tech, retail and travel names leading. FTSE 100, FTSE MIB and IBEX remained in the red. Here are some of the biggest European movers today: Entra shares gain as much as 10% after Balder increases its stake and says it intends to submit a mandatory offer. Spie jumps as much as 10%, the biggest intraday gain in more than a year, after the French company pulled out of the process to buy Engie’s Equans services unit. Man Group rises as much as 8.3% after the world’s largest publicly traded hedge fund announced quarterly record inflows. 3Q21 net inflows were a “clear beat” and confirm pipeline strength, Morgan Stanley said in a note. Barratt Developments climbs as much as 6.3%, with analysts saying the U.K. homebuilder’s update shows current trading is improving. Recticel climbs 15% to its highest level in more than 20 years as the stock resumes trading after the company announced plans to sell its foams unit to Carpenter Co. Bossard Holding rises as much as 9.1% to a record high after the company reported 3Q earnings that ZKB said show strong growth. Sartorius gains as much as 5.9% after Kepler Cheuvreux upgrades to hold from sell and raises its price target, saying it expects “impressive earnings growth” to continue for the lab equipment company. SAP jumps as much as 5% after the German software giant increased its revenue forecast owing to accelerating cloud sales. Just Eat Takeaway slides as much as 5.8% in Amsterdam to the lowest since March 2020 after a 3Q trading update. Analysts flagged disappointing orders as pandemic restrictions eased, and an underwhelming performance in the online food delivery firm’s U.S. market. Earlier in the session, Asian stocks posted a modest advance as investors awaited key inflation data out of the U.S. and Hong Kong closed its equity market because of typhoon Kompasu. The MSCI Asia Pacific Index rose 0.2% after fluctuating between gains and losses, with chip and electronics manufacturers sliding amid concerns over memory chip supply-chain issues and Apple’s iPhone 13 production targets. Hong Kong’s $6.3 trillion market was shut as strong winds and rain hit the financial hub.  “Broader supply tightness continues to be a real issue across a number of end markets,” Morgan Stanley analysts including Katy L. Huberty wrote in a note. The most significant iPhone production bottleneck stems from a “shortage of camera modules for the iPhone 13 Pro/Pro Max due to low utilization rates at a Sharp factory in southern Vietnam,” they added. Wednesday’s direction-less trading illustrated the uncertainty in Asian markets as traders reassess earnings forecasts to factor in inflation and supply chain concerns. U.S. consumer price index figures and FOMC minutes due overnight may move shares. Southeast Asian indexes rose thanks to their cyclical exposure. Singapore’s stock gauge was the top performer in the region, rising to its highest in about two months, before the the nation’s central bank decides on monetary policy on Thursday. Japanese stocks fell for a second day as electronics makers declined amid worries about memory chip supply-chain issues and concerns over Apple’s iPhone 13 production targets.  The Topix index fell 0.4% to 1,973.83 at the 3 p.m. close in Tokyo, while the Nikkei 225 declined 0.3% to 28,140.28. Toyota Motor Corp. contributed the most to the Topix’s loss, decreasing 1.3%. Out of 2,181 shares in the index, 608 rose and 1,489 fell, while 84 were unchanged. Japanese Apple suppliers such as TDK, Murata and Taiyo Yuden slid. The U.S. company is likely to slash its projected iPhone 13 production targets for 2021 by as many as 10 million units as prolonged chip shortages hit its flagship product, according to people with knowledge of the matter Australian stocks closed lower as banks and miners weighed on the index. The S&P/ASX 200 index fell 0.1% to close at 7,272.50, dragged down by banks and miners as iron ore extended its decline. All other subgauges edged higher. a2 Milk surged after its peer Bubs Australia reported growing China sales and pointed to a better outlook for daigou channels. Bank of Queensland tumbled after its earnings release. In New Zealand, the S&P/NZX 50 index rose 0.2% to 13,025.18. In rates, Treasuries extended Tuesday’s bull-flattening gains, led by gilts and, to a lesser extent, bunds. Treasuries were richer by ~2bps across the long-end of the curve, flattening 5s30s by about that much; U.K. 30-year yield is down nearly 7bp, with same curve flatter by ~6bp. Long-end gilts outperform in a broad-based bull flattening move that pushed 30y gilt yields down ~7bps back near 1.38%. Peripheral spreads widen slightly to Germany. Cash USTs bull flatten but trade cheaper by ~2bps across the back end to both bunds and gilt ahead of today’s CPI release. In FX, the Bloomberg Dollar Spot Index fell by as much as 0.2% and the greenback weakened against all of its Group-of-10 peers; the Treasury curve flattened, mainly via falling yields in the long- end, The euro advanced to trade at around $1.1550 and the Bund yield curve flattened, with German bonds outperforming Treasuries. The euro’s volatility skew versus the dollar shows investors remain bearish the common currency as policy divergence between the Federal Reserve and the European Central Bank remains for now. The pound advanced with traders shrugging off the U.K.’s weaker-than-expected economic growth performance in August. Australia’s sovereign yield curve flattened for a second day while the currency underperformed its New Zealand peer amid a drop in iron ore prices. The yen steadied after four days of declines. In commodities, crude futures hold a narrow range with WTI near $80, Brent dipping slightly below $83. Spot gold pops back toward Tuesday’s best levels near $1,770/oz. Base metals are in the green with most of the complex up at least 1%. To the day ahead now, and the main data highlight will be the aforementioned US CPI reading for September, while today will also see the most recent FOMC meeting minutes released. Other data releases include UK GDP for August and Euro Area industrial production for August. Central bank speakers include BoE Deputy Governor Cunliffe, the ECB’s Visco and the Fed’s Brainard. Finally, earnings releases include JPMorgan Chase, BlackRock and Delta Air Lines. Market Snapshot S&P 500 futures up 0.1% to 4,346.25 STOXX Europe 600 up 0.4% to 459.04 MXAP up 0.2% to 194.60 MXAPJ up 0.4% to 638.16 Nikkei down 0.3% to 28,140.28 Topix down 0.4% to 1,973.83 Hang Seng Index down 1.4% to 24,962.59 Shanghai Composite up 0.4% to 3,561.76 Sensex up 0.8% to 60,782.71 Australia S&P/ASX 200 down 0.1% to 7,272.54 Kospi up 1.0% to 2,944.41 Brent Futures down 0.4% to $83.12/bbl Gold spot up 0.5% to $1,768.13 U.S. Dollar Index down 0.23% to 94.30 German 10Y yield fell 4.2 bps to -0.127% Euro little changed at $1.1553 Brent Futures down 0.4% to $83.12/bbl Top Overnight News from Bloomberg Vladimir Putin wants to press the EU to rewrite some of the rules of its gas market after years of ignoring Moscow’s concerns, to tilt them away from spot-pricing toward long-term contracts favored by Russia’s state run Gazprom, according to two people with knowledge of the matter. Russia is also seeking rapid certification of the controversial Nord Stream 2 pipeline to Germany to boost gas deliveries, they said. Federal Reserve Vice Chairman for Supervision Randal Quarles will be removed from his role as the main watchdog of Wall Street lenders after his title officially expires this week. The EU will offer a new package of concessions to the U.K. that would ease trade barriers in Northern Ireland, as the two sides prepare for a new round of contentious Brexit negotiations. U.K. Chancellor of the Exchequer Rishi Sunak is on course to raise taxes and cut spending to control the budget deficit, while BoE Governor Andrew Bailey has warned interest rates are likely to rise in the coming months to curb a rapid surge in prices. Together, those moves would mark a simultaneous major tightening of both policy levers just months after the biggest recession in a century -- an unprecedented move since the BoE gained independence in 1997. Peter Kazimir, a member of the ECB’s Governing Council, was charged with bribery in Slovakia. Kazimir, who heads the country’s central bank, rejected the allegations A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were mixed following the choppy performance stateside with global risk appetite cautious amid the rate hike bets in US and heading into key events including US CPI and FOMC Minutes, while there were also mild headwinds for US equity futures after the closing bell on reports that Apple is set to reduce output of iPhones by 10mln from what was initially planned amid the chip shortage. ASX 200 (unch.) was little changed as gains in gold miners, energy and tech were offset by losses in financials and the broader mining sector, with softer Westpac Consumer Confidence also limiting upside in the index. Nikkei 225 (-0.3%) was pressured at the open as participants digested mixed Machinery Orders data which showed the largest M/M contraction since February 2018 and prompted the government to cut its assessment on machinery orders, although the benchmark index gradually retraced most its losses after finding support around the 28k level and amid the recent favourable currency moves. Shanghai Comp. (+0.4%) also declined as participants digested mixed Chinese trade data in which exports topped estimates but imports disappointed and with Hong Kong markets kept shut due to a typhoon warning. Finally, 10yr JGBs were steady with price action contained after the curve flattening stateside and tentative mood heading to upcoming risk events, although prices were kept afloat amid the BoJ’s purchases in the market for around JPY 1tln of JGBs predominantly focused on 1-3yr and 5-10yr maturities. Top Asian News Gold Edges Higher on Weaker Dollar Before U.S. Inflation Report RBA Rate Hike Expectations Too Aggressive, TD Ameritrade Says LG Electronics Has Series of Stock-Target Cuts After Profit Miss The mood across European stocks has improved from the subdued cash open (Euro Stoxx 50 +0.5%; Stoxx 600 +0.3%) despite a distinct lack of newsflow and heading into the official start of US earnings season, US CPI and FOMC minutes. US equity futures have also nursed earlier losses and trade in modest positive territory across the board, with the NQ (+0.5%) narrowly outperforming owing to the intraday fall in yields, alongside the sectorial outperformance seen in European tech amid tech giant SAP (+4.7%) upgrading its full FY outlook, reflecting the strong business performance which is expected to continue to accelerate cloud revenue growth. As such, the DAX 40 (+0.7%) outperformed since the cash open, whilst the FTSE 100 (-0.2%) is weighed on by underperformance in its heavyweight Banking and Basic Resources sectors amid a decline in yields and hefty losses in iron ore prices. Elsewhere, the CAC 40 (+0.3%) is buoyed by LMVH (+2.0%) after the luxury name topped revenue forecasts and subsequently lifted the Retail sector in tandem. Overall, sectors are mixed with no clear bias. In terms of individual movers, Volkswagen (+3.5%) was bolstered amid Handelsblatt reports in which the Co was said to be cutting some 30k jobs as costs are too high vs competitors, whilst separate sources suggested the automaker is said to be mulling spinning off its Battery Cell and charging unit. Chipmakers meanwhile see mixed fortunes in the aftermath of sources which suggested Apple (-0.7% pre-market) is said to be slashing output amid the chip crunch. Top European News The Hut Shares Swing as Strategy Day Feeds Investor Concern U.K. Economy Grows Less Than Expected as Services Disappoint Man Group Gets $5.3 Billion to Lift Assets to Another Record Jeff Ubben and Singapore’s GIC Back $830 Million Fertiglobe IPO In FX, the Dollar looks somewhat deflated or jaded after yesterday’s exertions when it carved out several fresh 2021 highs against rival currencies and a new record peak vs the increasingly beleaguered Turkish Lira. In index terms, a bout of profit taking, consolidation and position paring seems to have prompted a pull-back from 94.563 into a marginally lower 94.533-246 range awaiting potentially pivotal US inflation data, more Fed rhetoric and FOMC minutes from the last policy meeting that may provide more clues or clarity about prospects for near term tapering. NZD/GBP - Both taking advantage of the Greenback’s aforementioned loss of momentum, but also deriving impetus from favourable crosswinds closer to home as the Kiwi briefly revisited 0.6950+ terrain and Aud/Nzd retreats quite sharply from 1.0600+, while Cable has rebounded through 1.3600 again as Eur/Gbp retests support south of 0.8480 yet again, or 1.1800 as a reciprocal. From a fundamental perspective, Nzd/Usd may also be gleaning leverage from the more forward-looking Activity Outlook component of ANZ’s preliminary business survey for October rather than a decline in sentiment, and Sterling could be content with reported concessions from the EU on NI customs in an effort to resolve the Protocol impasse. EUR/CAD/AUD/CHF - Also reclaiming some lost ground against the Buck, with the Euro rebounding from around 1.1525 to circa 1.1560, though not technically stable until closer to 1.1600 having faded ahead of the round number on several occasions in the last week. Meanwhile, the Loonie is straddling 1.2450 in keeping with WTI crude on the Usd 80/brl handle, the Aussie is pivoting 0.7350, but capped in wake of a dip in Westpac consumer confidence, and the Franc is rotating either side of 0.9300. JPY - The Yen seems rather reluctant to get too carried away by the Dollar’s demise or join the broad retracement given so many false dawns of late before further depreciation and a continuation of its losing streak. Indeed, the latest recovery has stalled around 113.35 and Usd/Jpy appears firmly underpinned following significantly weaker than expected Japanese m/m machinery orders overnight. SCANDI/EM - Not much upside in the Sek via firmer Swedish money market inflation expectations and perhaps due to the fact that actual CPI data preceded the latest survey and topped consensus, but the Cnh and Cny are firmer on the back of China’s much wider than forecast trade surplus that was bloated by exports exceeding estimates by some distance in contrast to imports. Elsewhere, further hawkish guidance for the Czk as CNB’s Benda contends that high inflation warrants relatively rapid tightening, but the Try has not derived a lot of support from reports that Turkey is in talks to secure extra gas supplies to meet demand this winter, according to a Minister, and perhaps due to more sabre-rattling from the Foreign Ministry over Syria with accusations aimed at the US and Russia. In commodities, WTI and Brent front-month futures see another choppy session within recent and elevated levels – with the former around USD 80.50/bbl (80.79-79.87/bbl) and the latter around 83.35/bbl (83.50-82.65/bbl range). The complex saw some downside in conjunction with jawboning from the Iraqi Energy Minster, who state oil price is unlikely to increase further, whilst at the same time, the Gazprom CEO suggested that the oil market is overheated. Nonetheless, prices saw a rebound from those lows heading into the US inflation figure, whilst the OPEC MOMR is scheduled for 12:00BST/07:00EDT. Although the release will not likely sway prices amidst the myriad of risk events on the docket, it will offer a peek into OPEC's current thinking on the market. As a reminder, the weekly Private Inventory report will be released tonight, with the DoE's slated for tomorrow on account of Monday's Columbus Day holiday. Gas prices, meanwhile, are relatively stable. Russia's Kremlin noted gas supplies have increased to their maximum possible levels, whilst Gazprom is sticking to its contractual obligations, and there can be no gas supplies beyond those obligations. Over to metals, spot gold and silver move in tandem with the receding Buck, with spot gold inching closer towards its 50 DMA at 1,776/oz (vs low 1,759.50/oz). In terms of base metals, LME copper has regained a footing above USD 9,500/t as stocks grind higher. Conversely, iron ore and rebar futures overnight fell some 6%, with overnight headlines suggesting that China has required steel mills to cut winter output. Further from the supply side, Nyrstar is to limit European smelter output by up to 50% due to energy costs. Nyrstar has a market-leading position in zinc and lead. LME zinc hit the highest levels since March 2018 following the headlines US Event Calendar 8:30am: Sept. CPI YoY, est. 5.3%, prior 5.3%; MoM, est. 0.3%, prior 0.3% 8:30am: Sept. CPI Ex Food and Energy YoY, est. 4.0%, prior 4.0%; MoM, est. 0.2%, prior 0.1% 8:30am: Sept. Real Avg Weekly Earnings YoY, prior -0.9%, revised -1.4% 2pm: Sept. FOMC Meeting Minutes DB's Jim Reid concludes the overnight wrap So tonight it’s my first ever “live” parents evening and then James Bond via Wagamama. Given my daughter (6) is the eldest in her year and the twins (4) the youngest (plus additional youth for being premature), I’m expecting my daughter to be at least above average but for my boys to only just about be vaguely aware of what’s going on around them. Poor things. For those reading yesterday, the Cameo video of Nadia Comanenci went down a storm, especially when she mentioned our kids’ names, but the fact that there was no birthday cake wasn’t as popular. So I played a very complicated, defence splitting 80 yard through ball but missed an open goal. Anyway ahead of Bond tonight, with all this inflation about I’m half expecting him to be known as 008 going forward. The next installment of the US prices saga will be seen today with US CPI at 13:30 London time. This is an important one, since it’s the last CPI number the Fed will have ahead of their next policy decision just 3 weeks from now, where investors are awaiting a potential announcement on tapering asset purchases. Interestingly the August reading last month was the first time so far this year that the month-on-month measure was actually beneath the consensus expectation on Bloomberg, with the +0.3% growth being the slowest since January. Famous last words but this report might not be the most interesting since it may be a bit backward looking given WTI oil is up c.7.5% in October alone. In addition, used cars were up +5.4% in September after falling in late summer. So given the 2-3 month lag for this to filter through into the CPI we won’t be getting the full picture today. I loved the fact from his speech last night that the Fed’s Bostic has introduced a “transitory” swear jar in his office. More on the Fedspeak later. In terms of what to expect this time around though, our US economists are forecasting month-on-month growth of +0.41% in the headline CPI, and +0.27% for core, which would take the year-on-year rates to +5.4% for headline and +4.1% for core. Ahead of this, inflation expectations softened late in the day as Fed officials were on the hawkish side. The US 10yr breakeven dropped -1.9bps to 2.49% after trading at 2.527% earlier in the session. This is still the 3rd highest closing level since May, and remains only 7bps off its post-2013 closing high. Earlier, inflation expectations continued to climb in Europe, where the 5y5y forward inflation swap hit a post-2015 high of 1.84%. Also on inflation, the New York Fed released their latest Survey of Consumer Expectations later in the European session, which showed that 1-year ahead inflation expectations were now at +5.3%, which is the highest level since the survey began in 2013, whilst 3-year ahead expectations were now at +4.2%, which was also a high for the series. The late rally in US breakevens, coupled with lower real yields (-1.6bps) meant that the 10yr Treasury yield ended the session down -3.5bps at 1.577% - their biggest one day drop in just over 3 weeks. There was a decent flattening of the yield curve, with the 2yr yield up +2.0bps to 0.34%, its highest level since the pandemic began as the market priced in more near-term Fed rate hikes. In the Euro Area it was a very different story however, with 10yr yields rising to their highest level in months, including among bunds (+3.5bps), OATs (+2.9bps) and BTPs (+1.0bps). That rise in the 10yr bund yield left it at -0.09%, taking it above its recent peak earlier this year to its highest closing level since May 2019. Interestingly gilts (-4.0bps) massively out-performed after having aggressively sold off for the last week or so. Against this backdrop, equity markets struggled for direction as they awaited the CPI reading and the start of the US Q3 earnings season today. By the close of trade, the S&P 500 (-0.24%) and the STOXX 600 (-0.07%) had both posted modest losses as they awaited the next catalyst. Defensive sectors were the outperformers on both sides of the Atlantic. Real estate (+1.34%) and utilities (+0.67%) were among the best performing US stocks, though some notable “reopening” industries outperformed as well including airlines (+0.83%), hotels & leisure (+0.51%). News came out after the US close regarding the global chip shortage, with Bloomberg reporting that Apple, who are one of the largest buyers of chips, would revise down their iPhone 13 production targets for 2021 by 10 million units. Recent rumblings from chip producers suggest that the problems are expected to persist, which will make central bank decisions even more complicated over the coming weeks as they grapple with increasing supply-side constraints that push up inflation whilst threatening to undermine the recovery. Speaking of central bankers, Vice Chair Clarida echoed his previous remarks and other communications from the so-called “core” of the FOMC that the current bout of inflation would prove largely transitory and that underlying trend inflation was hovering close to 2%, while admitting that risks were tilted towards higher inflation. Atlanta Fed President Bostic took a much harder line though, noting that price pressures were expanding beyond the pandemic-impacted sectors, and measures of inflation expectations were creeping higher. Specifically, he said, “it is becoming increasingly clear that the feature of this episode that has animated price pressures — mainly the intense and widespread supply-chain disruptions — will not be brief.” His ‘transitory swear word jar’ for his office was considerably more full by the end of his speech. As highlighted above, while President Bostic spoke US 10yr breakevens dropped -2bps and then continued declining through the New York afternoon. In what is likely to be Clarida’s last consequential decision on monetary policy before his term expires, he noted it may soon be time to start a tapering program that ends in the middle of next year, in line with our US economics team’s call for a November taper announcement. In that vein, our US economists have updated their forecasts for rate hikes yesterday, and now see liftoff taking place in December 2022, followed by 3 rate increases in each of 2023 and 2024. That comes in light of supply disruptions lifting inflation, a likely rise in inflation expectations (which are sensitive to oil prices), and measures of labour market slack continuing to outperform. For those interested, you can read a more in-depth discussion of this here. Turning to commodities, yesterday saw a stabilisation in prices after the rapid gains on Monday, with WTI (+0.15%) and Brent Crude (-0.27%) oil prices seeing only modest movements either way, whilst iron ore prices in Singapore were down -3.45%. That said it wasn’t entirely bad news for the asset class, with Chinese coal futures (+4.45%) hitting fresh records, just as aluminium prices on the London Metal Exchange (+0.13%) eked out another gain to hit a new post-2008 high. Overnight in Asia, equity markets are seeing a mixed performance with the KOSPI (+1.24%) posting decent gains, whereas the CSI (-0.06%), Nikkei (-0.22%) and Shanghai Composite (-0.69%) have all lost ground. The KOSPI’s strength came about on the back of a decent jobs report, with South Korea adding +671k relative to a year earlier, the most since March 2014. The Hong Kong Exchange is closed however due to the impact of typhoon Kompasu. Separately, coal futures in China are up another +8.00% this morning, so no sign of those price pressures abating just yet following recent floods. Meanwhile, US equity futures are pointing to little change later on, with those on the S&P 500 down -0.12%. Here in Europe, we had some fresh Brexit headlines after the UK’s Brexit minister, David Frost, said that the Northern Ireland Protocol “is not working” and was not protecting the Good Friday Agreement. He said that he was sharing a new amended Protocol with the EU, which comes ahead of the release of the EU’s own proposals on the issue today. But Frost also said that “if we are going to get a solution we must, collectively, deliver significant change”, and that Article 16 which allows either side to take unilateral safeguard measures could be used “if necessary”. Elsewhere yesterday, the IMF marginally downgraded their global growth forecast for this year, now seeing +5.9% growth in 2021 (vs. +6.0% in July), whilst their 2022 forecast was maintained at +4.9%. This masked some serious differences between countries however, with the US downgraded to +6.0% in 2021 (vs. +7.0% in July), whereas Italy’s was upgraded to +5.8% (vs. +4.9% in July). On inflation they said that risks were skewed to the upside, and upgraded their forecasts for the advanced economies to +2.8% in 2021, and to +2.3% in 2022. Looking at yesterday’s data, US job openings declined in August for the first time this year, falling to 10.439m (vs. 10.954m expected). But the quits rate hit a record of 2.9%, well above its pre-Covid levels of 2.3-2.4%. Here in the UK, data showed the number of payroll employees rose by +207k in September, while the unemployment rate for the three months to August fell to 4.5%, in line with expectations. And in a further sign of supply-side issues, the number of job vacancies in the three months to September hit a record high of 1.102m. Separately in Germany, the ZEW survey results came in beneath expectations, with the current situation declining to 21.6 (vs. 28.0 expected), whilst expectations fell to 22.3 (vs. 23.5 expected), its lowest level since March 2020. To the day ahead now, and the main data highlight will be the aforementioned US CPI reading for September, while today will also see the most recent FOMC meeting minutes released. Other data releases include UK GDP for August and Euro Area industrial production for August. Central bank speakers include BoE Deputy Governor Cunliffe, the ECB’s Visco and the Fed’s Brainard. Finally, earnings releases include JPMorgan Chase, BlackRock and Delta Air Lines. Tyler Durden Wed, 10/13/2021 - 08:13.....»»

Category: blogSource: zerohedgeOct 13th, 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

Futures Fade Rally With Congress Set To Avert Government Shutdown

Futures Fade Rally With Congress Set To Avert Government Shutdown US equity futures faded an overnight rally on the last day of September as lingering global-growth risks underscored by China's official manufacturing PMI contracted for the first time since Feb 2020 as widely expected offset a debt-ceiling deal in Washington and central-bank assurances about transitory inflation. The deal to extend government funding removes one uncertainty from the minds of investors, amid China risks and concerns over Federal Reserve tapering. Comments from Fed Chair Powell and ECB head Christine Lagarde about inflation being transitory rather than permanent also helped sentiment, even if nobody actually believes them any more.In China, authorities told bankers to help local governments support the property market and homebuyers, signaling concern at the economic fallout from the debt crisis at China Evergrande As of 7:15am ET, S&P futures were up 18 points ot 0.44%, trimming an earlier gain of 0.9%. Dow eminis were up 135 or 0.4% and Nasdaq futs rose 0.43%. 10Y TSY yields were higher, rising as high as 1.54% and last seen at 1.5289%; the US Dollar erased earlier losses and was unchanged. All the three major indexes are set for a monthly drop, with the benchmark S&P 500 on track to break its seven-month winning streak as worries about persistent inflation, the fallout from China Evergrande’s potential default and political wrangling over the debt ceiling rattled sentiment. The index was, however, on course to mark its sixth straight quarterly gain, albeit its smallest, since March 2020’s drop. The rate-sensitive FAANG stocks have lost about $415 billion in value this month after the Federal Reserve’s hawkish shift on monetary policy sparked a rally in Treasury yields and prompted investors to move into energy, banks and small-cap sectors that stand to benefit the most from an economic revival. Among individual stocks, oil-and-gas companies APA Corp. and Devon Energy Corp. led premarket gains among S&P 500 members. Virgin Galactic shares surged 9.7% in premarket trading after the U.S. aviation regulator gave the company a green-light to resume flights to the brink of space. Perrigo climbed 14% after reporting a settlement in a tax dispute with Ireland.  U.S.-listed Macau casino operators may get a boost Thursday after Macau Chief Executive Ho Iat Seng said the region will strive to resume quarantine-free travel to Zhuhai by Oct. 1, the start of the Golden Week holiday, if the Covid-19 situation in Macau is stable. Here are some of the other biggest U.S. movers today: Retail investor favorites Farmmi (FAMI US) and Camber Energy (CEI US) both rise in U.S. premarket trading, continuing their strong recent runs on high volumes Virgin Galactic (SPCE US) shares rise 8.9% in U.S. premarket trading after the U.S. aviation regulator gave co. a green-light to resume flights to the brink of space Perrigo (PRGO US) rises 15% in U.S. premarket trading after reporting a settlement in a tax dispute with Ireland. The stock was raised to buy from hold at Jefferies over the “very favorable” resolution Landec (LNDC US) shares fell 17% in Wednesday postmarket trading after fiscal 1Q revenue and adjusted loss per share miss consensus estimates Affimed (AFMD US) rises 4.3% in Wednesday postmarket trading after Stifel analyst Bradley Canino initiates at a buy with a $12 price target, implying the stock may more than double over the next year Herman Miller (MLHR US) up ~2.8% in Wednesday postmarket trading after the office furnishings maker posts fiscal 1Q net sales that beat the consensus estimate Orion Group Holdings (ORN US) shares surged as much as 43% in Wednesday extended trading after the company disclosed two contract awards for its Marine segment totaling nearly $200m Kaival Brands (KAVL US) fell 18% Wednesday postmarket after offering shares, warrants via Maxim An agreement among U.S. lawmakers to extend government funding removes one uncertainty from a litany of risks investors are contenting with, ranging from China’s growth slowdown to Federal Reserve tapering. “Republicans and Democrats showed some compromise by averting a government shutdown,” Sebastien Galy, a senior macro strategist at Nordea Investment Funds. “By removing what felt like a significant risk for a retail audience, it helps sentiment in the equity market.” Still, president Joe Biden’s agenda remains at risk of being derailed by divisions among his own Democrats, as moderates voiced anger on Wednesday at the idea of delaying a $1 trillion infrastructure bill ahead of a critical vote to avert a government shutdown. The big overnight economic news came from China whose September NBS manufacturing PMI fell to 49.6 from 50.1 in August, the first contraction since Feb 2020, likely due to the production cuts caused by energy constraints. Both the output sub-index and the new orders sub-index in the NBS manufacturing PMI survey decreased in September. The NBS non-manufacturing PMI rebounded to 53.2 in September from 47.5 in August on a recovery of services activities as COVID restrictions eased. However, the numbers may not capture full impact of energy restrictions as the NBS survey was taken around 22nd-25th of the month: expect far worse number in the months ahead unless China manages to contain its energy crisis. Europe’s Stoxx 600 Index advanced 0.3%, trimming a monthly loss but fading an earlier gain of 0.9%, led by gains in basic resources companies as iron ore climbed, with the CAC and FTSE 100 outperforming at the margin. Technology stocks, battered earlier this week, also extended their rebound.  Miners, oil & gas and media are the strongest sectors; utility and industrial names lag. European natural gas and power markets hit fresh record highs as supply constraints persist. Perrigo jumped 13.8% after the drugmaker agreed to settle with Irish tax authorities over a 2018 issue by paying $1.90 billion in taxes Asian stocks were poised to cap their first quarterly loss since March 2020 as Chinese technology names fell and as investors remained wary over a recent rise in U.S. Treasury yields.  The MSCI Asia Pacific Index is set to end the September quarter with a loss of more than 5%, snapping a winning streak of five straight quarters. A combination of higher yields, Beijing’s corporate crackdown and worry over slowing economic growth in Asia’s biggest economy have hurt sentiment, bringing the market down following a brief rally in late August.  The Asian benchmark rose less than 0.1% after posting its worst single-day drop in six weeks on Wednesday. Consumer discretionary and communication services groups fell, while financials advanced. The Hang Seng Tech Index ended 1.3% lower as Beijing announced new curbs on the sector, while higher yields hurt sentiment toward growth stocks.  “Because there’s growing worry over U.S. inflation, we need to keep an eye on the potential risks, globally,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. “Also, there’s the Evergrande issue. The market is in a wait-and-see mode now, with a focus on whether the group will be able to make future interest rate payments.”  Benchmarks in Thailand and Malaysia were the biggest losers, while Indonesia and Australia outperformed. Japan’s Topix and the Nikkei 225 Stock Average slipped for a fourth day as investors weighed Fumio Kishida’s election victory as the new ruling party leader. Global stocks are poised to end the quarter with a small loss, after a five-quarter rally, as investors braced for the Fed to wind down its stimulus. They also remain concerned about slowing growth and elevated inflation, supply-chain bottlenecks, an energy crunch and regulatory risks emanating from China. A majority of participants in a Citigroup survey said a 20% pullback in stocks is more likely than a 20% rally. In rates, Treasuries were slightly cheaper across the curve, off session lows as stock futures pare gains. 10-year TSY yields were around 1.53%, cheaper by 1.2bp on the day vs 2.3bp for U.K. 10-year; MPC-dated OIS rates price in ~65bps of BOE hikes by December 2022. Gilts lead the selloff, with U.K. curve bear-steepening as BOE rate-hike expectations continue to ramp up. Host of Fed speakers are in focus during U.S. session, while month-end extension may serve to underpin long-end of the curve.   A gauge of the dollar’s strength headed for its first drop in five days as Treasury yields steadied after a recent rise, and amid quarter-end flows. The Bloomberg Dollar Spot Index fell as the dollar steady or weaker against most of its Group-of-10 peers. The euro hovered around $1.16 and the pound was steady while Gilts inched lower, underperforming Bunds and Treasuries. Money markets now see around 65 basis points of tightening by the BOE’s December 2022 meeting, according to sterling overnight index swaps. That means they’re betting the key rate will rise to 0.75% next year from 0.1% currently. The Australian dollar led gains after it rose off its lowest level since August 23 amid exporter month-end demand and as iron ore buyers locked in purchases ahead of a week-long holiday in China. Norway’s krone was the worst G-10 performer and slipped a fifth day versus the dollar, its longest loosing streak in a year. In commodities, oil surrendered gains, still heading for a monthly gain amid tighter supplies. West Texas Intermediate futures briefly recaptured the level above $75 per barrel, before trading at $74.71. APA and Devon rose at least 1.8% in early New York trading. European gas prices meanwhile hit a new all time high. Looking at the day ahead, one of the highlights will be Fed Chair Powell’s appearance at the House Financial Services Committee, alongside Treasury Secretary Yellen. Other central bank speakers include the Fed’s Williams, Bostic, Harker, Evans, Bullard and Daly, as well as the ECB’s Centeno, Visco and Hernandez de Cos. On the data side, today’s highlights include German, French and Italian CPI for September, while in the US there’s the weekly initial jobless claims, the third estimate of Q2 GDP and the MNI Chicago PMI for September. Market Snapshot S&P 500 futures up 0.7% to 4,379.00 STOXX Europe 600 up 0.6% to 457.59 MXAP little changed at 196.85 MXAPJ up 0.3% to 635.71 Nikkei down 0.3% to 29,452.66 Topix down 0.4% to 2,030.16 Hang Seng Index down 0.4% to 24,575.64 Shanghai Composite up 0.9% to 3,568.17 Sensex down 0.3% to 59,239.76 Australia S&P/ASX 200 up 1.9% to 7,332.16 Kospi up 0.3% to 3,068.82 Brent Futures up 0.4% to $78.98/bbl Gold spot up 0.4% to $1,732.86 U.S. Dollar Index little changed at 94.27 German 10Y yield fell 0.5 bps to -0.212% Euro little changed at $1.1607 Top Overnight News from Bloomberg U.K. gross domestic product rose 5.5% in the second quarter instead of the 4.8% earlier estimated, official figures published Thursday show. The data, which reflected the reopening of stores and the hospitality industry, mean the economy was still 3.3% smaller than it was before the pandemic struck. China has urged financial institutions to help local governments stabilize the rapidly cooling housing market and ease mortgages for some home buyers, another signal that authorities are worried about fallout from the debt crisis at China Evergrande Group. The U.S. currency’s surge is helping the Chinese yuan record its largest gain in eight months on a trade-weighted basis in September. It adds to headwinds for the world’s second- largest economy already slowing due to a resurgence in Covid cases, a power crisis and regulatory curbs. The Swiss National Bank bought foreign exchange worth 5.44 billion francs ($5.8 billion) in the second quarter, part of its long-running policy to alleviate appreciation pressure on the franc   A few members of the Riksbank’s executive board discussed a rate path that could indicate a rate rise at the end of the forecast period, Sweden’s central bank says in minutes from its Sept. 20 meeting French inflation accelerated in September as households in the euro area’s second-largest economy faced a jump in the costs of energy and services. A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded somewhat varied with the region indecisive at quarter-end and as participants digested a slew of data releases including mixed Chinese PMI figures. ASX 200 (+1.7%) was underpinned by broad strength across its industries including the top-weighted financials sector and with the large cap miners lifted as iron ore futures surge by double-digit percentages, while the surprise expansion in Building Approvals also helped markets overlook the 51% spike in daily new infections for Victoria state. Nikkei 225 (+0.1%) was subdued for most of the session after disappointing Industrial Production and Retail Sales data which prompted the government to cut its assessment of industrial output which it stated was stalling. The government also warned that factory output could decline for a third consecutive month in September and that October has large downside risk due to uncertainty from auto manufacturing cuts. However, Nikkei 225 then recovered with the index marginally supported by currency flows. Hang Seng (-1.0%) and Shanghai Comp. (+0.4%) diverged heading into the National Day holidays and week-long closure for the mainland with tech names in Hong Kong pressured by ongoing regulatory concerns as China is to tighten regulation of algorithms related to internet information services. Nonetheless, mainland bourses were kept afloat after a further liquidity injection by the PBoC ahead of the Golden Week celebrations and as markets took the latest PMI figures in their strides whereby the official headline Manufacturing PMI disappointed to print its first contraction since February 2020, although Non-Manufacturing PMI and Composite PMI returned to expansionary territory and Caixin Manufacturing PMI topped estimates to print at the 50-benchmark level. Top Asian News S&P Points to Progress as Bondholders Wait: Evergrande Update Bank Linked to Kazakh Leader Buys Kcell Stake After Share Slump Goldman Sachs Names Andy Tai Head of IBD Southeast Asia: Memo What Japan’s Middle-of-the-Road New Leader Means for Markets The upside momentum seen across US and European equity futures overnight stalled, with European cash also drifting from the best seen at the open (Euro Stoxx 50 +0.1%; Stoxx 600 +0.4%). This follows somewhat mixed APAC handover, and as newsflow remains light on month and quarter-end. US equity futures are firmer across the board, but again off best levels, although the RTY (+0.8%) outperforms the ES (+0.4%), YM (+0.4%) and NQ (+0.5%). Back to Europe, the periphery lags vs core markets, whilst the DAX 40 (-0.3%) underperforms within the core market. Sectors in Europe are mostly in the green but do not portray a particular risk bias. Basic Resources top the chart with aid from overnight action in some base metals, particularly iron, in turn aiding the large iron miners BHP (+2.2%), Rio Tinto (+3.4%) and Anglo American (+2.9%). The bottom of the sectors meanwhile consists of Travel & Leisure, Autos & Parts and Industrial Goods & Services, with the former potentially feeling some headwinds from China’s travel restrictions during its upcoming National Day holiday. In terms of M&A, French press reported that CAC-listed Carrefour (-1.3%) is reportedly looking at options for sector consolidation, and talks are said to have taken place with the chain stores Auchan, with peer Casino (Unch) also initially seeing a leg higher in sympathy amid the prospect of sector consolidation. That being said, Carrefour has now reversed its earlier upside with no particular catalyst for the reversal. It is, however, worth keeping in mind that regulatory/competition hurdles cannot be ruled out – as a reminder, earlier this year, France blocked the takeover of Carrefour by Canada’s Alimentation Couche-Tard. In the case of a successful deal, Carrefour will likely be the acquirer as the largest supermarket in France. Sticking with M&A, Eutelsat (+14%) was bolstered at the open amid source reports that French billionaire Patrick Drahi is said to have made an unsolicited takeover offer of EUR 12.10/shr for Eutelsat (vs EUR 10.35 close on Wednesday), whilst the FT reported that this offer was rejected. Top European News European Banks Dangle $26 Billion in Payouts as ECB Cap Ends U.K. Economy Emerged From Lockdown Stronger Than Expected In a First, Uber Joins Drivers in Strike Against Brussels Rules EU, U.S. Seek to Avert Chip-Subsidy Race, Float Supply Links In FX, The non-US Dollars are taking advantage of the Greenback’s loss of momentum, and the Aussie in particular given an unexpected boost from building approvals completely confounding expectations for a fall, while a spike in iron ore prices overnight provided additional incentive amidst somewhat mixed external impulses via Chinese PMIs. Hence, Aud/Usd is leading the chasing pack and back up around 0.7200, Usd/Cad is retreating through 1.2750 and away from decent option expiry interest at 1.2755 and between 1.2750-40 (in 1.3 bn and 1 bn respectively) with some assistance from the latest bounce in crude benchmarks and Nzd/Usd is still trying to tag along, but capped into 0.6900 as the Aud/Nzd cross continues to grind higher and hamper the Kiwi. DXY/GBP/JPY/EUR/CHF - It’s far too early to call time on the Buck’s impressive rally and revival from recent lows, but it has stalled following a midweek extension that propelled the index to the brink of 94.500, at 94.435. The DXY subsequently slipped back to 94.233 and is now meandering around 94.300 having topped out at 94.401 awaiting residual rebalancing flows for the final day of September, Q3 and the half fy that Citi is still classifying as Dollar positive, albeit with tweaks to sd hedges for certain Usd/major pairings. Also ahead, the last US data and survey releases for the month including final Q2 GDP, IJC and Chicago PMI before another raft of Fed speakers. Meanwhile, Sterling has gleaned some much needed support from upward revisions to Q2 UK GDP, a much narrower than forecast current account deficit and upbeat Lloyds business barometer rather than sub-consensus Nationwide house prices to bounce from the low 1.3600 area vs the Greenback and unwind more of its underperformance against the Euro within a 0.8643-12 range. However, the latter is keeping tabs on 1.1600 vs its US peer in wake of firmer German state CPI prints and with the aforementioned Citi model flagging a sub-1 standard deviation for Eur/Usd in contrast to Usd/Jpy that has been elevated to 1.85 from a prelim 1.12. Nevertheless, the Yen is deriving some traction from the calmer yield backdrop rather than disappointing Japanese data in the form of ip and retail sales to contain losses under 112.00, and the Franc is trying to do the same around 0.9350. SCANDI/EM - The tables have been turning and fortunes changing for the Nok and Sek, but the former has now given up all and more its post-Norges Bank hike gains and more as Brent consolidates beneath Usd 80/brl and the foreign currency purchases have been set at the same level for October as the current month. Conversely, the latter has taken heed of a hawkish hue to the latest set of Riksbank minutes and the fact that a few Board members discussed a rate path that could indicate a rise at the end of the forecast period. Elsewhere, the Zar looks underpinned by marginally firmer than anticipated SA ppi and private sector credit, while the Mxn is treading cautiously ahead of Banxico and a widely touted 25 bp hike. In commodities, WTI and Brent futures are choppy but trade with modest gains heading into the US open and in the run-up to Monday’s OPEC+ meeting. The European session thus far has been quiet from a news flow standpoint, but the contracts saw some fleeting upside after breaking above overnight ranges, albeit the momentum did not last long. Eyes turn to OPEC+ commentary heading into the meeting, which is expected to be another smooth affair, according to Argus sources. As a reminder, the group is expected to stick to its plan to raise output by 400k BPD despite outside pressure to further open the taps in a bid to control prices. Elsewhere, as a mild proxy for Chinese demand, China’s Sinopec noted that all LNG receiving terminals are to be operated at full capacity. WTI trades on either side of USD 75/bbl (vs low USD 74.54/bbl), while its Brent counterpart remains north of USD 78/bbl (vs low USD 77.66/bbl). Turning to metals, spot gold and silver continue to consolidate after yesterday’s Dollar induced losses, with the former finding some support around the USD 1,725/oz mark and the latter establishing a floor around USD 21.50/oz. Over to base metals, Dalian iron ore futures rose to three-week highs amid pre-holiday Chinese demand and after Fortescue Metals Group halted mining operations at a Pilbara project. Conversely, LME copper is on a softer footing as the Buck holds onto recent gains. US Event Calendar 8:30am: 2Q PCE Core QoQ, est. 6.1%, prior 6.1% 8:30am: 2Q GDP Price Index, est. 6.1%, prior 6.1% 8:30am: 2Q Personal Consumption, est. 11.9%, prior 11.9% 8:30am: Sept. Continuing Claims, est. 2.79m, prior 2.85m 8:30am: 2Q GDP Annualized QoQ, est. 6.6%, prior 6.6% 8:30am: Sept. Initial Jobless Claims, est. 330,000, prior 351,000 9:45am: Sept. MNI Chicago PMI, est. 65.0, prior 66.8 Central Bank speakers 10am: Fed’s Williams Discusses the Fed’s Pandemic Response 10am: Powell and Yellen Appear Before House Finance Panel 11am: Fed’s Bostic Discusses Economic Mobility 11:30am: Fed’s Harker Discusses Sustainable Assets and Financial... 12:30pm: Fed’s Evans Discusses Economic Outlook 1:05pm: Fed’s Bullard Makes Opening Remarks at Book Launch 2:30pm: Fed’s Daly Speaks at Women and Leadership Event Government Calendar 10am ET: Treasury Secretary Yellen, Fed Chair Powell appear at a House Financial Services Committee hearing on the Treasury, Fed’s pandemic response 10:30am ET: Senate begins voting process for continuing resolution that extends U.S. government funding to December 3 10:30am ET: Senate Commerce subcommittee holds hearing on Facebook, Instagram’s influence on kids with Antigone Davis, Director, Global Head of Safety, Facebook 10:45am ET: House Speaker Nancy Pelosi holds weekly press briefing DB's Jim Reid concludes the overnight wrap I’ll be getting my stitches out of my knee today and will have a chance to grill the surgeon who I think told me I’ll probably soon need a knee replacement. I say think as it was all a bit of a medicated blur post the operation 2 weeks ago. These have been a painfully slow 2 weeks of no weight bearing with another 4 to go and perhaps all to no avail. As you can imagine I’ve done no housework, can’t fend much for myself, or been able to control the kids much over this period. I’m not sure if having bad knees are grounds for divorce but I’m going to further put it to the test over the next month. In sickness and in health I plea. Like me, markets are hobbling into the end of Q3 today even if they’ve seen some signs of stabilising over the last 24 hours following their latest selloff, with equities bouncing back a bit and sovereign bond yields taking a breather from their recent relentless climb. It did feel that we hit yield levels on Tuesday that started to hurt risk enough that some flight to quality money recycled back into bonds. So the next leg higher in yields (which I think will happen) might be met with more risk off resistance, and counter rallies. The latest moves came amidst relatively dovish and supportive comments from central bank governors at the ECB’s forum yesterday, but sentiment was dampened somewhat as uncertainty abounds over a potential US government shutdown and breaching of the debt ceiling, after both houses of Congress could not agree on a plan to extend government funding. Overnight, there have been signs of progress on the shutdown question, with Majority Leader Schumer saying that senators had reached agreement on a stopgap funding measure that will fund the government through December 3, with the Senate set to vote on the measure this morning.However, we’re still no closer to resolving the debt ceiling issue (where the latest estimates from the Treasury Department point to October 18 as the deadline), and tensions within the Democratic party between moderates and progressives are threatening to sink both the $550bn bipartisan infrastructure bill and the $3.5tn reconciliation package, which together contain much of President Biden’s economic agenda. We could see some developments on that soon however, as Speaker Pelosi said yesterday that the House was set to vote on the infrastructure bill today. Assuming the vote goes ahead later, this will be very interesting since a number of progressive Democrats have said that they don’t want to pass the infrastructure bill without the reconciliation bill (which contains the administration’s other priorities on social programs). This is because they fear that with the infrastructure bill passed (which moderates are keen on), the moderates could then scale back the spending in the reconciliation bill, and by holding out on passing the infrastructure bill, this gives them leverage on reconciliation. House Speaker Pelosi and Majority Leader Schumer were in the Oval Office with President Biden yesterday, and a White House statement said that Biden spoke on the phone with lawmakers and engagement would continue into today. So an important day for Biden’s agenda. Against this backdrop, risk assets made a tentative recovery yesterday, with the S&P 500 up +0.16% and Europe’s STOXX 600 up +0.59%. However, unless we get a big surge in either index today, both indices remain on track for their worst monthly performances so far this year, even if they’re still in positive territory for Q3 as a whole. Looking elsewhere, tech stocks had appeared set to pare back some of the previous day’s losses, but a late fade left the NASDAQ down -0.24% and the FANG+ index down a greater -0.72%. Much of the tech weakness was driven by falling semiconductor shares (-1.53%), as producers have offered investors poor revenue guidance on the heels of the ongoing supply chain issues that are driving chip shortages globally. Outside of tech, US equities broadly did better yesterday with 17 of 24 industry groups gaining, led by utilities (+1.30%), biotech (+1.05%) and food & beverages (+1.00%). Similarly, while they initially staged a recovery, small caps in the Russell 2000 (-0.20%) continued to struggle. One asset that remained on trend was the US dollar. The greenback continued its climb yesterday, with the dollar index increasing +0.61% to close at its highest level in over a year, exceeding its closing high from last November. Over in sovereign bond markets, the partial rebound saw yields on 10yr Treasuries down -2.1bps at 1.517%, marking their first move lower in a week. And there was much the same pattern in Europe as well, where yields on 10yr bunds (-1.4bps), OATs (-1.3bps) and BTPs (-3.1bps) all moved lower as well. One continued underperformer were UK gilts (+0.3bps), and yesterday we saw the spread between 10yr gilt and bund yields widen to its biggest gap in over 2 years, at 120bps. Staying on the UK, the pound (-0.81%) continued to slump yesterday, hitting its lowest level against the dollar since last December, which comes as the country has continued to face major issues over its energy supply. Yesterday actually saw natural gas prices take another leg higher in both the UK (+10.09%) and Europe (+10.24%), and the UK regulator said that three smaller suppliers (who supply fewer than 1% of domestic customers between them) had gone out of business. This energy/inflation/BoE conundrum is confusing the life out of Sterling 10 year breakevens. They rose +18bps from Monday morning to Tuesday lunchtime but then entirely reversed the move into last night’s close. This is an exaggerated version of how the world’s financial markets are puzzling over whether breakevens should go up because of energy or go down because of the demand destruction and central bank response. Central bankers were in no mood to panic yesterday though as we saw Fed Chair Powell, ECB President Lagarde, BoE Governor Bailey and BoJ Governor Kuroda all appear on a policy panel at the ECB’s forum on central banking. There was much to discuss but the central bank heads all maintained that this current inflation spike will relent with Powell saying that it was “really a consequence of supply constraints meeting very strong demand, and that is all associated with the reopening of the economy -- which is a process that will have a beginning, a middle and an end.” ECB President Lagarde shared that sentiment, adding that “we certainly have no reason to believe that these price increases that we are seeing now will not be largely transitory going forward.” Overnight in Asia, equities have seen a mixed performance, with the Nikkei (-0.40%), and the Hang Seng (-1.08%) both losing ground, whereas the Kospi (+0.41%) and the Shanghai Composite (+0.30%) have posted gains. The moves came amidst weak September PMI data from China, which showed the manufacturing PMI fall to 49.6 (vs. 50.0 expected), marking its lowest level since the height of the Covid crisis in February 2020. The non-manufacturing PMI held up better however, at a stronger 53.2 (vs. 49.8 expected), although new orders were beneath 50 for a 4th consecutive month. Elsewhere, futures on the S&P 500 (+0.50%) and those on European indices are pointing to a higher start later on, as markets continue to stabilise after their slump earlier in the week. Staying on Asia, shortly after we went to press yesterday, former Japanese foreign minister Fumio Kishida was elected as leader of the governing Liberal Democratic Party, and is set to become the country’s next Prime Minister. The Japanese Diet will hold a vote on Monday to elect Kishida as the new PM, after which he’ll announce a new cabinet, and attention will very soon turn to the upcoming general election, which is due to take place by the end of November. Our Chief Japan economist has written more on Kishida’s victory and his economic policy (link here), but he notes that on fiscal policy, Kishida’s plans to redistribute income echo the shift towards a greater role for government in the US and elsewhere. There wasn’t a massive amount of data yesterday, though Spain’s CPI reading for September rose to an above-expected +4.0% (vs. 3.5% expected), so it will be interesting to see if something similar happens with today’s releases from Germany, France and Italy, ahead of the Euro Area release tomorrow. Otherwise, UK mortgage approvals came in at 74.5k in August (vs. 73.0k expected), and the European Commission’s economic sentiment indicator for the Euro Area rose to 117.8 in September (vs. 117.0 expected). To the day ahead now, and one of the highlights will be Fed Chair Powell’s appearance at the House Financial Services Committee, alongside Treasury Secretary Yellen. Other central bank speakers include the Fed’s Williams, Bostic, Harker, Evans, Bullard and Daly, as well as the ECB’s Centeno, Visco and Hernandez de Cos. On the data side, today’s highlights include German, French and Italian CPI for September, while in the US there’s the weekly initial jobless claims, the third estimate of Q2 GDP and the MNI Chicago PMI for September. Tyler Durden Thu, 09/30/2021 - 07:49.....»»

Category: blogSource: zerohedgeSep 30th, 2021

Williams-Sonoma (WSM) Up 112% in Past Year: More Room to Run?

Williams-Sonoma (WSM) rides on digital initiatives, higher e-commerce penetration, investment in merchandising of brands and digital marketing to drive growth. Williams-Sonoma, Inc. WSM is poised to benefit from the continued enhancement of its e-commerce channel and optimization of the supply chain. Also, the transformation of the retail fleet by investing in new and remodeled stores is expected to drive growth.Shares of Williams-Sonoma have gained 112% over the past year compared with Zacks Retail - Home Furnishings industry’s 73.2% rally.The price performance was backed by a solid earnings surprise history, having surpassed the Zacks Consensus Estimate in the trailing 15 quarters. Earnings estimates for fiscal 2021 have moved 0.8% upward over the past 30 days. This signifies bullish analyst sentiments and justifies the company’s Zacks Rank #1 (Strong Buy), indicating robust fundamentals and the expectation of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.Major Growth DriversRobust E-commerce Space: Historically, Williams-Sonoma has been the most profitable e-commerce company and is one of the largest e-commerce retailers in the United States. The company has been witnessing higher-than-expected e-commerce traffic and robust demand from the e-commerce business in Canada. The company has a history of driving market share gains, supported by strong e-commerce websites, direct mail catalogs and retail stores along with shipping fees received for the delivery of merchandise. Moreover, continuous innovation has helped the company drive e-commerce growth.E-commerce penetration accounted for 65% of total revenues for second-quarter fiscal 2021, buoyed by its in-house tech platform, rapid experimentation program, content-rich online experience and marketing strategies. The company is on track to invest nearly $250 million in the business in fiscal 2021, focusing on technology and supply chain initiatives that primarily support e-commerce growth. This highlights the digital-first nature of Williams-Sonoma’s business. Going forward, the company aims to focus more on growth drivers that include West Elm, Business-to-Business offering, its emerging brands Williams-Sonoma Home, Rejuvenation, and Mark and Graham, and its largest brand Pottery Barn and namesake brand Williams-Sonoma. Williams-Sonoma currently anticipates revenue acceleration to $10 billion over the next four years (a year earlier than the previous projection).Digitalization Efforts Driving Sales: Williams-Sonoma is the market leader in-pure-play digital retailer in home furnishing and one of the top 25 retailers in the United States across all industries. Williams-Sonoma continues to acquire new customers through digital channels. The digital-first channel strategy will drive profitable market share gains, thereby bringing its closer to its target of $10 billion in revenues and operating margin growth in the next four years.In a bid to expand its brand and increase its customer engagement as well as cross-selling opportunities, the company shifted its advertising spend toward social media campaigns and cross-brand initiatives. The company is focused on enhancing customer experience through technology innovation and operational improvement. In order to drive brand awareness and increase customer engagement as well as cross-selling opportunities, the company channelized its advertising spend toward social media campaigns and cross-brand initiatives. Cross-brand initiatives such as The Key, Design Crew Room Planner and The One Registry are expected to be incremental growth drivers for all its brands in fiscal 2021 and beyond. Higher digital marketing is driving incremental customer count. Meanwhile, its newest division, Williams-Sonoma Inc. Business-to-Business, has made significant progress during the year.Upbeat View: Williams-Sonoma is optimistic about business strength. For fiscal 2021, Williams-Sonoma now expects revenues to witness high-teens to low-20s net revenue growth versus low double-digit to mid-teen improvement expected earlier. Furthermore, the company now projects revenue acceleration to $10 billion over the next four years (a year earlier than the previous projection).ROE Reflects Strength: Williams-Sonoma has a solid return on equity (ROE), which is indicative of its growth potential. The company’s ROE currently stands at 65.9%. This compares favorably with ROE of 34.3% for the industry it belongs to. This indicates Williams-Sonoma’s ability to use shareholders’ funds and its potential to generate profit with minimum capital utilization. Image Source: Zacks Investment ResearchOther Key Picks From Retail-Wholesale SpaceA few other top-ranked stocks in the Zacks Retail-Wholesale sector include RH RH, Tempur Sealy International, Inc. TPX and The Gap, Inc. GPS, each sporting a Zacks Rank #1.Tempur's earnings for 2021 are expected to rise 69.1%.RH has a three-five-year earnings per share growth rate of 18.8%.The Gap has a trailing four-quarter earnings surprise of 649.9%, on average. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Gap, Inc. (GPS): Free Stock Analysis Report Tempur Sealy International, Inc. (TPX): Free Stock Analysis Report WilliamsSonoma, Inc. (WSM): Free Stock Analysis Report RH (RH): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 29th, 2021

FactSet Reports Strong Growth in Fourth Quarter and Full Year 2021

NORWALK, Conn., Sept. 28, 2021 (GLOBE NEWSWIRE) -- FactSet ("FactSet" or the "Company") (NYSE:FDS) (NASDAQ:FDS), a global provider of integrated financial information, analytical applications, and industry-leading service, today announced results for its fourth quarter ended August 31, 2021. Fourth Quarter Fiscal 2021 Highlights Revenue increased 7.4%, or $28.3 million, to $411.9 million compared with $383.6 million for the same period in fiscal 2020. The increase was primarily due to higher sales of analytics, content and technology solutions (CTS) and research. Organic revenues grew 6.7% to $410.1 million during the fourth quarter of fiscal 2021 from the prior year period. Annual Subscription Value (ASV) plus professional services was $1.7 billion at August 31, 2021, compared with $1.6 billion at August 31, 2020. Organic ASV plus professional services, which excludes the effects of acquisitions and dispositions completed within the last 12 months and foreign currency movements, was also $1.7 billion at August 31, 2021, up $112.1 million from the prior year at a growth rate of 7.2%. The incremental ASV of over $100 million represents a new record for the Company. Organic ASV plus professional services increased $68.4 million over the last three months. The primary contributors to this growth were higher sales of research and CTS solutions. Please see the "ASV + Professional Services" section of this press release for details. Operating margin increased to 28.9% compared with 25.7% for the same period last year. The prior year period included a non-cash expense from the impairment of an investment in a company. Adjusted operating margin decreased to 31.6% compared with 33.2% in the prior year period primarily as a result of higher compensation expense including increased performance-based compensation arising from the acceleration in ASV. Diluted earnings per share (EPS) increased 14.8% to $2.63 compared with $2.29 for the same period in fiscal 2020. Adjusted diluted EPS remained flat at $2.88 compared with the prior year period, primarily due to higher revenues offset by higher operating expenses and an increased tax rate. The Company's effective tax rate for the fourth quarter increased to 14.7% compared with 7.3% a year ago, primarily due to lower tax benefits associated with stock-based compensation in the current quarter and a tax benefit related to finalizing prior year tax returns compared with the three months ended August 31, 2020. FactSet provided its annual outlook for fiscal 2022. Please see the "Annual Business Outlook" section of this press release for details. "We delivered a record fourth quarter, driving 200 bps of ASV growth for the fiscal year," said Phil Snow, CEO, FactSet. "As we planned, two years of accelerated investment in content and technology is paying dividends. We enter next fiscal year with momentum and believe our strategy to scale our content refinery and create personalized workflow solutions will increase our market share." Key Financial Measures* (Condensed and Unaudited) Three Months Ended     Twelve Months Ended   Latest   August 31,     August 31,   FY 2021 (In thousands, except per share data) 2021 2020 Change   2021 2020 Change Guidance GAAP revenues $ 411,894   $ 383,590   7.4 %   $ 1,591,445   $ 1,494,111   6.5 % $1.570 - $1.585b Organic revenues $ 410,133   $ 384,209   6.7 %   $ 1,592,337   $ 1,498,303   6.3 %   Operating income $ 119,176   $ 98,577   20.9 %   $ 474,041   $ 439,660   7.8 %   Adjusted operating income $ 130,384   $ 127,379   2.4 %   $ 517,694   $ 503,403   2.8 %   Operating margin 28.9 % 25.7 %     29.8 % 29.4 %   29.5% - 30.5% Adjusted operating margin 31.6 % 33.2 %     32.5 % 33.6 %   32.0% - 33.0% Net income $ 101,062   $ 89,079   13.5 %   $ 399,590   $ 372,938   7.1 %   Adjusted net income $ 110,874   $ 112,034   (1.0 )%   $ 432,049   $ 420,122   2.8 %   Diluted EPS $ 2.63   $ 2.29   14.8 %   $ 10.36   $ 9.65   7.4 % $10.05 - $10.45 Adjusted diluted EPS $ 2.88   $ 2.88   — %   $ 11.20   $ 10.87   3.0 % $10.75 - $11.15 * See reconciliation of U.S. GAAP to adjusted key financial measures in the back of this press release. "Excellent execution across the entire organization has resulted in record revenue and a strong finish to our fiscal year," said Helen Shan, CFO and Chief Revenue Officer (CRO), FactSet. "We implemented our growth and capital allocation strategy to plan and generated high returns for shareholders. Our guidance reflects our confidence in a solid and varied pipeline, and we believe we can deliver ongoing operational and cost discipline while expanding wallet share with clients." Annual Subscription Value (ASV) + Professional Services ASV at any given point in time represents the forward-looking revenues for the next twelve months from all subscription services currently supplied to clients. Professional services are revenues derived from project-based consulting and implementation. ASV plus professional services was $1,688 million at August 31, 2021 compared with $1,564 million at August 31, 2020. Organic ASV plus professional services was $1,678 million at August 31, 2021, up $112.1 million from the prior year at a growth rate of 7.2%. Organic ASV, which excludes the effects of acquisitions and dispositions completed within the last 12 months and foreign currency movements, plus professional services, increased $68.4 million over the last three months. Buy-side and sell-side ASV growth rates for the fourth quarter of fiscal 2021 were 6.5% and 12.0%, respectively. Buy-side clients, who primarily include asset managers, asset owners, wealth managers, hedge funds and corporate firms, accounted for approximately 83% of organic ASV while the remainder was derived from sell-side firms that primarily include broker-dealers, banking and advisory, private equity and venture capital firms. Supplementary tables covering organic buy-side and sell-side ASV growth rates may be found on the last page of this press release. Organic ASV plus professional services from FactSet's workflow solutions at August 31, 2021 was as follows: Research ASV was $683 million, representing 5.7% growth versus the same period a year ago. Analytics & Trading ASV was $596 million, growing 6.3% year over year. CTS ASV was $218 million, increasing 15.7% year over year. Wealth ASV was $181 million, increasing 6.0% from the prior year. Segment Revenue and ASV ASV from the Americas region was $1,039.4 million compared with ASV in the prior year period of $956.6 million. Organic ASV increased 7.4% to $1,029.2 million. Americas revenues for the quarter increased to $261.9 million compared with $245.4 million in the fourth quarter last year. Excluding the effects of acquisitions and dispositions completed in the last 12 months, the Americas region organic revenue growth rate was 6.0%. ASV from the EMEA region was $450.0 million compared with ASV in the prior year period of $426.0 million. Organic ASV increased 5.6% to $451.3 million. EMEA revenues were $109.6 million compared with $101.8 million in the fourth quarter of fiscal 2020. Excluding the effects of acquisitions and dispositions completed in the last 12 months and foreign currency impacts, the EMEA region organic revenue growth rate was 6.8%. ASV from the Asia Pacific region was $174.7 million compared with ASV in the prior year period of $156.5 million. Organic ASV increased 12.3% to $174.6 million. Asia Pacific revenues were $40.4 million compared with $36.4 million in the fourth quarter of fiscal 2020. Excluding the effects of acquisitions and dispositions completed in the last 12 months and foreign currency impacts, the Asia Pacific region organic revenue growth rate was 11.6%. Segment ASV does not include professional services, which totaled $24.1 million at August 31, 2021. Operational Highlights – Fourth Quarter Fiscal 2021 Client count as of August 31, 2021 was 6,453, a net increase of 281 clients in the past three months, primarily driven by an increase in corporate and wealth management clients as well as third party data providers. The count includes clients with ASV of $10,000 and above. User count increased by 5,928 to 160,932 in the past three months, primarily driven by an increase in research and wealth solutions users. Annual ASV retention was greater than 95%. When expressed as a percentage of clients, annual retention improved to 91% year over year. Employee count was 10,892 as of August 31, 2021, up 3.9% over the last twelve months. Excluding the 2021 acquisitions, headcount grew by 3.3%, primarily driven by increased hiring in the Company's content and product development organizations. Net cash provided by operating activities increased to $185.0 million compared with $159.4 million for the fourth quarter of 2020. Quarterly free cash flow increased to $171.2 million compared with $144.7 million a year ago, an increase of 18.3%, primarily due to higher net income, improved collections and the timing of certain tax items. Capital expenditures decreased to $13.8 million, compared with $14.7 million a year ago, primarily due to a reduction in capitalized labor and benefits associated with the development of internal use software. A quarterly dividend of $30.8 million, or $0.82 per share, was paid on September 16, 2021 to holders of record of FactSet's common stock at the close of business on August 31, 2021. FactSet announced the appointment of Linda Huber as Chief Financial Officer. Huber will join FactSet in early October 2021. Huber brings over 30 years of experience in the financial services industry, including 15 years as a public company CFO. She will lead FactSet's global finance organization and report to FactSet CEO Phil Snow. The Company also named Kristina Karnovsky as Chief Product Officer (CPO). As CPO, Karnovsky will oversee the Company's entire product portfolio, focusing on solutions tailored to client workflows. She has over 20 years' experience at FactSet, most recently as Global Head of Research Solutions. FactSet acquired BTU Analytics, a leading provider of North American renewables, power, oil, and natural gas data and analytics. The acquisition furthers the Company's industry-specific, or deep sector, content strategy and strengthens its position in the energy space. Select BTU content is already available within the FactSet workstation with further integration expected over the coming months. The Company also acquired Cabot Investment Technology, an analytics platform that generates behavior-based insights and skills quantification for asset managers and asset owners. Cabot's proprietary technology helps equity portfolio managers and research analysts better understand their skills, investment processes, and behavioral tendencies so they can refine the ways they buy, sell, and size assets. The Company launched Truvalue Lab's ESG content in the Japanese market by integrating it into Smartplus' Wealth Wing, one of the leading Japanese wealth management platforms. The integration will allow Wealth Wing's retail clients to screen for ESG factors when selecting stocks and build more ESG-conscious portfolios. FactSet furthered its wealth management business with multiple wins, including being selected by Raymond James Ltd. as its market data provider for financial advisors in Canada. FactSet's Wealth Workstation will also be used to integrate Raymond James Ltd.'s internal model portfolios and approved lists, strengthening collaboration with front and middle office teams. The Company furthered its ESG efforts by signing the UN Global Compact and Principles for Responsible Investing. The decision to join the UN Global Compact and PRI follows other actions FactSet has taken, including participating in the World Economic Forum's ‘Measuring Stakeholder Capitalism' initiative; launching the Truvalue Labs® SDG Monitor to help investors and others view the alignment of corporations around the globe to the UN Sustainable Development Goals (SDGs); publishing Company-wide diversity figures in its yearly Corporate Responsibility report and on its website; and joining the Management Leadership for Tomorrow's latest cohort of companies that have committed to becoming MLT Black Equity at Work Certified. Full Year 2021 Highlights Revenues increased 6.5% to $1.59 billion, up 6.3% on an organic basis, marking the 41st consecutive year of revenue increase for the Company. Organic ASV plus professional services rose to $1.68 billion, up 7.2%. Diluted EPS increased 7.4% to $10.36. Adjusted diluted EPS increased 3.0% to $11.20. 2021 marks the 25th consecutive year that FactSet has increased its adjusted diluted EPS. Net cash provided by operating activities totaled $555.2 million. Free cash flow increased 15.3% to $493.9 million. Client count increased by 9.8% or 578 during the year, while users grew by 14.0% or 19,796 from the prior year. In May 2021, FactSet increased its quarterly dividend by $0.05 or 6.5% per share to $0.82, marking the 22nd consecutive year the Company has increased dividends, highlighting its continued commitment to return value to shareholders. The Company returned $382.6 million to shareholders in the form of share repurchases and dividends during the 2021 fiscal year, representing a return of 69% as a percentage of free cash flow and proceeds from employee stock plans. FactSet garnered multiple awards in 2021, with honors spanning multiple workflows, including research, risk, performance, trading, and wealth management. FactSet's expanding suite of datasets stood out, most notably in the ESG and alternative categories, for its depth and innovation in delivery mechanisms. FactSet was recognized by over thirty industry awards and rankings reports, including winning three categories in WatersTechnology's 2021 Inside Market Data & Inside Reference Data awards: best alternative data provider, best ESG data provider, and best overall data or service provider for 2021. FactSet also launched new data and technology solutions, including an integration with Microsoft Teams and the availability of FactSet Concordance Service on Snowflake. Other highlights include the acquisition of ESG data company Truvalue Labs, the appointment of FactSet's first Chief Diversity Equity and Inclusion Officer, and FactSet's selection by the Royal Bank of Canada to be the primary market data and technology provider for its entire wealth management organization. Share Repurchase Program FactSet repurchased 265,526 shares of its common stock for $92.5 million at an average price of $348.34 during the fourth quarter under the Company's existing share repurchase program. As of September 28, 2021, $199.9 million is available for share repurchases under this program. Annual Business Outlook FactSet is providing its outlook for fiscal 2022. The following forward-looking statements reflect FactSet's expectations as of today's date. Given the risk factors, uncertainties, and assumptions discussed below, actual results may differ materially, particularly with the ongoing uncertainty surrounding the duration, magnitude, and impact of the novel coronavirus pandemic. FactSet does not intend to update its forward-looking statements prior to its next quarterly results announcement. Fiscal 2022 Expectations Organic ASV plus professional services is expected to increase in the range of $105 million to $135 million over fiscal 2021. GAAP revenue is expected to be in the range of $1,705 million to $1,720 million. GAAP operating margin is expected to be in the range of 31% to 32%. Adjusted operating margin is expected to be in the range of 32.5% to 33.5%. FactSet's annual effective tax rate is expected to be in the range of 14.5% to 15.5%. GAAP diluted EPS is expected to be in the range of $11.60 to $11.90. Adjusted diluted EPS is expected to be in the range of $12.00 to $12.30. Both GAAP operating margin and GAAP diluted EPS guidance do not include certain effects of any non-recurring benefits or charges that may arise in fiscal 2022. Please see the back of this press release for a reconciliation of GAAP to adjusted metrics.                                                                                                 Conference Call The Company will host a conference call today, September 28, 2021, at 11:00 a.m. Eastern Time to discuss its fourth quarter results. The call will be webcast live at FactSet Investor Relations. The following information is provided for those who would like to participate: U.S. Participants: 833.726.6487       International Participants: 830.213.7677       Passcode: 9771799       An archived webcast with the accompanying slides will be available at FactSet Investor Relations for one year after the conclusion of the live event. The earnings call transcript will also be available via the FactSet workstation or web. An audio replay of this conference will also be available until October 5, 2021 via the following telephone numbers: 855.859.2056 in the U.S. and 404.537.3406 internationally using passcode 9771799. Forward-looking Statements This news release contains forward-looking statements based on management's current expectations, estimates, forecasts and projections about industries in which FactSet operates and the beliefs and assumptions of management. All statements that address expectations, guidance, outlook or projections about the future, including statements about the Company's strategy for growth, product development, revenues, future financial results, anticipated growth, market position, subscriptions, expected expenditures, trends in FactSet's business and financial results, are forward-looking statements. Forward-looking statements may be identified by words like "expects," "believes, " "anticipates," "plans," "intends, " "estimates, " "projects," "should," "indicates," "continues," "may" and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in FactSet's filings with the Securities and Exchange Commission, particularly its latest annual report on Form 10-K and quarterly reports on Form 10-Q, as well as others, could cause results to differ materially from those stated. Forward-looking statements speak only as of the date they are made, and FactSet assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance. About Non-GAAP Financial Measures Financial measures in accordance with U.S. GAAP including revenue, operating income and margin, net income, diluted earnings per share and cash provided by operating activities have been adjusted. FactSet uses these adjusted financial measures both in presenting its results to stockholders and the investment community and in its internal evaluation and management of the business. The Company believes that these adjusted financial measures and the information they provide are useful to investors because they permit investors to view the Company's performance using the same tools that management uses to gauge progress in achieving its goals. Investors may benefit from referring to these adjusted financial measures in assessing the Company's performance and when planning, forecasting and analyzing future periods and may also facilitate comparisons to its historical performance. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Adjusted revenues exclude the impact of the fair value of deferred revenue acquired in a business combination. Organic revenues exclude the effects of acquisitions and dispositions completed in the last 12 months and foreign currency movements in all periods presented. Adjusted operating income and margin, adjusted net income and adjusted diluted earnings per share exclude intangible asset amortization, the impact of the fair valuing of deferred revenue acquired in a business combination and non-recurring items. The Company believes that these adjusted financial measures better reflect the underlying economic performance of FactSet. The GAAP financial measure, cash flows provided by operating activities, has been reduced by capital expenditures to report non-GAAP free cash flow. FactSet uses this financial measure both in presenting its results to stockholders and the investment community and in the Company's internal evaluation and management of the business. Management believes that this financial measure is useful to investors because it permits investors to view the Company's performance using the same metric that management uses to gauge progress in achieving its goals and is an indication of cash flow that may be available to fund further investments in future growth initiatives. About FactSet FactSet (NYSE:FDS, NASDAQ:FDS) delivers superior content, analytics, and flexible technology to help more than 160,000 users see and seize opportunity sooner. We give investment professionals the edge to outperform with informed insights, workflow solutions across the portfolio lifecycle, and industry-leading support from dedicated specialists. We're proud to have been recognized with multiple awards for our analytical and data-driven solutions and repeatedly scored 100 by the Human Rights Campaign® Corporate Equality Index for our LGBTQ+ inclusive policies and practices. Subscribe to our thought leadership blog to get fresh insight delivered daily at insight.factset.com. Learn more at www.factset.com and follow us on Twitter: www.twitter.com/factset. FactSet Media & Investor Relations Contact:                         Rima Hyder                                        +1.857.265.7523                                rima.hyder@factset.com Consolidated Statements of Income (Unaudited)             Three Months Ended   Twelve Months Ended   August 31,   August 31, (In thousands, except per share data) 2021   2020   2021   2020 Revenues $ 411,894     $ 383,590     $ 1,591,445     $ 1,494,111   Operating expenses               Cost of services 197,532     183,568     786,400     695,446   Selling, general and administrative 95,186     101,445     331,004     359,005   Total operating expenses 292,718     285,013     1,117,404     1,054,451                   Operating income 119,176     98,577     474,041     439,660                   Other income (expense)               Interest expense, net (1,712 )   (1,826 )   (6,394 )   (9,829 ) Other income (expense), net 979     (607 )   (30 )   (2,697 ) Income before income taxes 118,443     96,144     467,617     427,134                   Provision for income taxes 17,381     7,065     68,027     54,196   Net income $ 101,062     $ 89,079  .....»»

Category: earningsSource: benzingaSep 28th, 2021

Defense Stock Roundup: LMT Wins Big Order, BA Reveals Solid 10-Year Market View

Over the past five trading sessions, the defense biggies put up a mixed show. While Lockheed and Boeing shares gained, those of General Dynamics and Textron lost. Over the past week, a generous flow of contracts from the Pentagon is likely to have kept major defense contractors buoyant. Moreover, an impressive long-term outlook for the commercial aerospace market released by the aircraft giant, Boeing, must have also added impetus to the aerospace-defense industry’s growth.Consequently, major defense stock indices ended in the green in the trailing five trading sessions. The S&P 500 Aerospace & Defense (Industry) index inched up 1%, while the Dow Jones U.S. Aerospace & Defense index rose 1.2% in the aforementioned time period.Among the past week’s highlights, defense majors namely Lockheed Martin LMT, Raytheon Technologies RTX, Boeing BA, and Curtiss-Wright CW secured a number of notable deals from the Department of Defense’s daily funding session. Moreover, Boeing announced an encouraging outlook for global as well as European aviation industries.Recap of Past Week’s Important Stories1.    Lockheed Martin clinched annualized contracts for fiscal years 2021-2023, involving the sustainment of its global F-35 fleet, from the F-35 Joint Program Office. Successful completion of these contracts will result in further reduction in overall operations and support costs for the F-35 program.Per Reuters, these contracts are valued at a huge $6.6 billion. Per the terms, Lockheed will support operations and sustainment of its global F-35 fleet.  The contract also requires the company to build enterprise capacity for supporting the future fleet of more than 3,000 F-35 jets (read more: Lockheed Wins $6.6B Deal for Sustainment of F-35 Jets).2.    Boeing won a contract worth $1.62 billion involving the Minuteman III Intercontinental Ballistic Missile (ICBM). The Air Force Nuclear Weapons Center, Hill Air Force Base, UT has awarded the agreement. The contract is projected to be completed by Sep 27, 2039. Per the terms, Boeing will conduct repair of the ICBM guidance set.Work related to this deal will be carried out in Newark, OH (read more: Boeing Wins $1.6B Deal to Repair Minuteman III ICBM).In its latest long-term outlook for the global aircraft market, Boeing projects opportunities worth $9 trillion over the next decade. This reflects a solid 5.9% improvement over the prior long-term outlook made by America’s largest jet maker in 2020.  Boeing forecasts global demand for new commercial planes to reach 19,000 by 2030, indicating an improvement of 3.5% from 2020’s figure. Market opportunities for commercial jets are now projected to be worth $3.2 billion over the next decade, which reflects a solid 10.3% hike over the prior 10-year forecast. Through 2040, Boeing projects commercial jet demand to be more than 43,500 new airplanes, reflecting an increase of about 500 planes from last year's forecast (read more: Boeing Upgrades Long-Term Jet Market Outlook: Stocks to Gain).Boeing also revealed its outlook for the European aviation market. Per this report, 3.1% growth is forecast for annual air passenger traffic in Europe through 2040.Per the recent report, European airlines are estimated to acquire more than 8,705 new jets valued at approximately $1.5 trillion over the next 20 years. This implies an improvement of 36.4% over $1.1 trillion worth 20-year market opportunities forecast earlier by Boeing (read more: Jet Stocks to Gain as Boeing Expects Rise in Europe Air Traffic).3.    Raytheon’s business segment, Collins Aerospace, secured a modification contract worth $294 million, under which it will procure 8,085 AN/ARC-210(v) radios. The Naval Air Warfare Center Aircraft Division, Patuxent River, MD has awarded the agreement.The contract is projected to be completed in September 2024. Per the terms, the aforementioned radios will be installed in more than 400 strategic and tactical airborne, seaborne, and land-based (mobile and fixed) platforms (read more: Raytheon Wins $294M Deal for Communications Radios).The company also won a modification contract worth $140 million for supplying 36 AN/APG-79(V)4 radar systems to support radar integration into the C/F-18A aircraft. The Naval Air Systems Command, Patuxent River, MD awarded this agreement.The contract is expected to be completed in March 2024 and will serve the government of Canada. The majority of  the work related to this deal will be executed in Forest, MS, and El Segundo, CA (read more: Raytheon Wins $140M Deal to Supply AN/APG-79 Radars).4.    Curtiss-Wright secured a $100-million contract from Bechtel Plant Machinery, Inc. to supply pumps for the U.S. Navy’s Virginia-class submarine, Columbia-class submarine, and Ford-class aircraft carrier programs. The company will be performing this contracted work at its Cheswick, PA facility (read more: Curtiss-Wright Gets Naval Order to Support U.S. Defense).PerformanceOver the past five trading sessions, the defense biggies put up a mixed show. While Lockheed, Boeing gained, General Dynamics and Textron’s shares lost.In the last six months, the industry's performance was mostly impressive, except that for Lockheed and Boeing. Textron TXT gained the most with a 24.5% surge in share price, followed by L3Harris Technologies.The following table shows the price movement of the major defense players over the past five trading days and during the last six months.CompanyPast WeekLast 6 MonthsLMT0.24%-4.45%BA1.29%-17.00%GD-2.38%9.74%RTX0.47%8.05%NOC-2.03%10.92%TXT-1.14%24.49%LHX-2.61%12.47%      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 The Boeing Company (BA): Free Stock Analysis Report Lockheed Martin Corporation (LMT): Free Stock Analysis Report Textron Inc. (TXT): Free Stock Analysis Report CurtissWright Corporation (CW): Free Stock Analysis Report Raytheon Technologies Corporation (RTX): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 23rd, 2021