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These Are The Ten Best Performing Technology Funds

Technology mutual funds predominantly invest in technology companies. Such funds can invest in both debt and equities of the tech companies, but they usually invest in the equities. Also, these funds prefer investing in new emerging technologies. Let’s take a look at the ten best performing technology funds. Ten Best Performing Technology Funds We have […] Technology mutual funds predominantly invest in technology companies. Such funds can invest in both debt and equities of the tech companies, but they usually invest in the equities. Also, these funds prefer investing in new emerging technologies. Let’s take a look at the ten best performing technology funds. Ten Best Performing Technology Funds We have used the past one-year return data of the technology funds (from money.usnews.com) to rank the ten best performing technology funds. Following are the ten best performing technology funds: if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Red Oak Technology Select Fund (ROGSX, -10%) Red Oak Technology Select Fund (MUTF:ROGSX) primarily invests in the equity securities of companies that operate in the technology sector. It posted a return of almost -14% in the last three months and over 11% in the last three years. ROGSX has more than $35 million in total assets. The top four holdings of the fund are: Apple, Amazon.com, Alphabet (Class C) and Microsoft. Nationwide NYSE Arca Tech100 Idx Fd (NWJCX, -7%) Nationwide NYSE Arca Tech 100 Index Fund (MUTF:NWJCX) mainly invests in the equity securities that are part of the NYSE Arca Tech 100 Index, which consists of at least 100 individual technology-related securities. It posted a return of almost -12% in the last three months and over 11% in the last three years. NWJCX has more than $600 million in total assets. The top four holdings of the fund are: ASML Holding NV (ADR), Broadcom, Thermo Fisher Scientific and Lam Research. Fidelity Advisor® Technology Fund (FADTX, -6%) Fidelity Advisor® Technology Fund (MUTF:FADTX) usually invests in the securities of companies that offer, use or develop products, processes or services that provide or benefit significantly from technological advances and improvements. It posted a return of almost -16% in the last three months and over 23% in the last three years. FADTX has more than $3.90 billion in total assets. The top four holdings of the fund are: Apple, Microsoft, NVIDIA and Marvel Technology. Rydex Electronics Fund (RYELX, -5%) Rydex Electronics Fund (MUTF:RYELX) primarily invests in the equity securities of U.S. electronics companies, as well as in derivatives. It may invest in companies of small to mid-sized capitalizations. It posted a return of over -15% in the last three months and almost 25% in the last three years. RYELX has more than $35 million in total assets. The top four holdings of the fund are: NVIDIA, Broadcom, Intel and Texas Instruments. Columbia Seligman Global Technology Fund (SHGTX, -4%) Columbia Seligman Global Technology Fund (MUTF:SHGTX) normally invests in the equity securities of U.S. and non-U.S. companies that operate in technology and technology-related industries. It posted a return of almost -11% in the last three months and over 23% in the last three years. SHGTX has more than $1.50 billion in total assets. The top four holdings of the fund are: Apple, Lam Research, Alphabet (Class A) and Broadcom. Columbia Seligman Tech & Info Fd (SLMCX, -4%) Columbia Seligman Technology and Information Fund (MUTF:SLMCX) mainly invests in the securities of technology and information companies. It may also invest up to 25% of its net assets in foreign investments. It posted a return of almost -11% in the last three months and almost 23% in the last three years. SLMCX has more than $9 billion in total assets. The top four holdings of the fund are: Apple, Lam Research, Broadcom, and Alphabet (Class A). Towpath Technology Fund (TOWTX, -4%) Towpath Technology Fund (MUTF:TOWTX) usually invests in the common stocks of technology-related companies. It may also invest in the shares of foreign companies either directly or through ADRs. It posted a return of almost -6% in the last three months. TOWTX has more than $3 million in total assets. The top four holdings of the fund are: Alphabet (Class A), Check Point Software Technologies, Meta Platforms (Class A) and CSG Systems International. Vanguard Information Technology Index Fd (VITAX, -2%) Vanguard Information Technology Index Fund (MUTF:VITAX) mainly invests in U.S. and non-U.S. stocks that operate in high tech areas, including semiconductors, software and networking. It posted a return of almost -13% in the last three months and almost 21% in the last three years. VITAX has more than $40 billion in total assets. The top four holdings of the fund are: Apple, Microsoft, NVIDIA and Visa. Fidelity Advisor® Semiconductors Fund (FELAX, 3%) Fidelity Advisor® Semiconductors Fund (MUTF:FELAX) primarily invests in the common stock of companies that design, make and sell semiconductors and semiconductor equipment. It posted a return of almost -16% in the last three months and over 25% in the last three years. FELAX has more than $750 million in total assets. The top four holdings of the fund are: NVIDIA, Marvell Technology, NXP Semiconductors and Microchip Technology. Fidelity® Select Semiconductors Port (FSELX, 4%) Fidelity® Select Semiconductors Portfolio (MUTF:FSELX) invests mainly in the common stocks of companies that design, make and sell semiconductors and semiconductor equipment. It posted a return of -16% in the last three months and almost 26% in the last three years. FSELX has more than $6.5 billion in total assets. The top four holdings of the fund are: NVIDIA, Marvell Technology, NXP Semiconductors and Microchip Technology. (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 22nd, 2022

3 Must-Buy Technology Mutual Funds for Long-Term Gains

Invest in technology mutual funds like FELIX, CCIZX and KTCSX for steady returns in the long run. The technology sector in the United States saw a major reality check in the first quarter of this year, with the NASDAQ 100 Technology Sector Index declining from 9,596.48 on Jan 1, 2022, to 6,358.35 on Jun 29, 2022, after a massive rally last year, especially during the pandemic period. The Federal Reserve’s tightening monetary policy, higher interest rates, a spike in global inflation, and supply-chain disruption across the globe due to the Russia-Ukraine war are the major reasons for a decline in tech stocks.However, the future holds good for tech stocks. Needless to say, the importance of cloud computing and artificial intelligence, including its subset machine learning along with other technologies like the Internet of Things, robotics, and autonomous vehicles, to name a few, has increased by leaps and bounds in recent times. Even though there are many new-age tech companies that are apparently doing well, there is substantially less risk involved in investing in mature tech players like Google, Apple, Microsoft, Lam Research, etc., which have structured business, good revenue models, and cash reserves to withstand economic downturns.Thus, it will be prudent for investors to invest currently in technology mutual funds having matured tech companies as their major holdings for better returns in the long run. Also, due to the current market downturn, individually, the stocks are less pricey and are trading at an attractive valuation.We have thus selected three such mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns, and minimum initial investments within $5000, and carry a low expense ratio. Notably, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).Fidelity Advisor Semiconductors Fund FELIX invests most of its assets in common stocks of both foreign and domestic companies that are primarily engaged in the design, manufacture, or sale of semiconductors and semiconductor equipment. FELIX advisors takes investment decisions based on fundamental analysis factors like financial condition and industry position, as well as market and economic conditions.Adam Benjamin has been the lead manager of FELIX since Mar 16, 2020. Of its net assets, the fund has invested 21.50% in NVIDIA, 8.58% in NXP Semiconductors and 7.93% in Marvell Technology along with various other tech companies as of 1/31/2022.FELIX’s three-year and five-year annualized returns are nearly 36.7% and 24.1%, respectively. FELIX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.75%, which is less than the category average of 1.05%.To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.Columbia Seligman Technology and Information Fund CCIZX invests most of its net assets in securities of domestic information technology and communications services sector companies. CCIZX also invests a small portion of its net assets in foreign-based companies in similar sectors.Paul H. Wick has been the lead manager of CCIZX since Jan 1, 1990. The fund has invested 6.06% in Lam Research, 5.49% in Apple and 4.23% in Synaptics as well as in other tech companies as of 2/28/2022.CCIZX’s three-year and five-year annualized returns are 29.6% and 20.3%, respectively. CCIZXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.92%, which is less than the category average of 1.05%DWS Science and Technology Fund KTCSX seeks capital growth by investing most of its assets along with borrowings, if any, in common stocks of science and technology companies primarily based in the United States, irrespective of its market capitalization. KTCSX invests a small portion of its net assets in an initial public offerings as well as the foreign-based technology sector.Daniel J. Fletcher has been the lead manager of KTCSX since Dec 1, 2017. The fund has invested 9.17% in Microsoft, 7.68%inApple and 7.07% in Alphabet Inc.along with various other tech companies as of 1/31/2022.KTCSX’s three-year and five-year annualized returns are 17.5% and 16.2%, respectively. KTCSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.69%, which is less than the category average of 1.05%.Want key mutual fund info delivered straight to your inbox?Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >> Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (CCIZX): Fund Analysis Report Get Your Free (FELIX): Fund Analysis Report Get Your Free (KTCSX): Fund Analysis Report To read this article on Zacks.com click here. Zacks Investment Research 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.....»»

Category: topSource: zacksJul 1st, 2022

This Small-Cap Innovator is Flying High

We may be turning the page to a new chapter where small-cap stocks re-establish their supremacy. The large and mega-cap technology companies dominated much of the 2010 to 2020 decade in terms of investment returns. As we move further into the current decade, we may be turning the page to a new chapter where small-cap stocks re-establish their supremacy. Small company stocks have produced amazing returns over the course of time.For those that know their market history, can you tell me – during the 2000 to 2010 decade, which asset class outperformed the major asset classes such as the S&P 500, treasury bonds, and home prices? You may not believe it, but the ‘under the radar’ small-cap stocks were the best-performing asset class. Don’t let the name fool you; there is nothing small about their profit-making abilities and historical performance.Image Source: StockChartsSmall-cap companies are largely ignored by analysts and the financial media. In addition, many mutual funds and ETFs are restricted from purchasing stocks that are priced less than a certain amount. With their smaller market capitalizations, small-caps tend to fly under the radar and don’t attract the hype that large-cap companies receive.The lack of attention and awareness brings opportunity. A common misconception is that small-caps are startup companies, but this couldn’t be further from the truth. Many smaller companies are well-established and have great financials like their larger counterparts. Small companies are typically able to grow their earnings much faster than large companies. As a result, they have provided better investment returns over long periods of time, despite periods of temporary large-cap outperformance.The stock we will analyze below is part of the Zacks Medical – Biomedical and Genetics industry, which currently ranks in the top 37% out of more than 250 industry groups. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months.Historical research studies have shown that approximately half of a stock’s price movement can be attributed to its industry group. By targeting stocks within leading industries, we can dramatically improve our odds of success. Today’s spotlight company within this industry has a market capitalization of $1 billion. For reference, the general consensus today is that small-caps fall in the range of $300 million – $2 billion.Bellus Health, Inc. (BLU)Bellus Health is a clinical stage biopharmaceutical company that is focused on the development and commercialization of innovative products that address critical medical needs. A global health company, BLU provides therapeutics for the treatment of refractory chronic cough and other cough-related hypersensitive conditions. Bellus Health was incorporated in 1993 and is based in Laval, Canada.BLU has surpassed earnings estimates twice already this year. The company most recently reported Q1 earnings of $-0.13 per share, a 27.78% surprise over the $-0.18/share consensus estimate. The stock has responded favorably and is up 193% in the last year. It is on pace to set a new 52-week closing high today.Image Source: StockChartsFor the current quarter, analysts have increased their earnings estimates by 15% in the past 60 days. The Q2 Zacks Consensus Estimate is now $-0.17 per share, reflecting growth of 26.09% relative to the same quarter last year.Make sure to keep an eye on BLU as the stock continues to outperform. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bellus Health Inc. (BLU): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 29th, 2022

Wall Street on Track for Worst 1H: 4 Top-Ranked ETFs Win

While there have been losers in many corners of the space, we highlight five ETFs from different industries that have gained in the first half of the year. Wall Street is about to post its worst first half in 50 years, thanks to persistently high inflation and an economic downturn caused by a hawkish Fed. Russia’s invasion of Ukraine added to the chaos. Notably, the S&P 500 is down nearly 18% this year — the worst since 1970 — as tracked by Dow Jones Market Data Group.While there have been losers in many corners of the space, we highlight five ETFs from different industries that have gained in the first half of the year. These have a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy). The funds are, namely, Invesco Dynamic Energy Exploration & Production ETF PXE, Invesco KBW Property & Casualty Insurance ETF KBWP, Morningstar Dividend Leaders Index Fund FDL, and VanEck Vectors Pharmaceutical ETF PPH. These are likely to continue outperforming should the trends prevail.With inflation soaring to a four-decade high, the Fed raised interest rates by 75 bps in its latest FOMC meeting — the biggest interest-rate increase since 1994 — and signaled continued tightening ahead, which could further weigh on stocks. This is because an increase in interest rates means higher loan rates for consumers and businesses, including mortgages, credit cards and auto loans that will likely cut consumer spending, thereby hurting economic growth. The central bank is on pace to hike rates again in July by another 75 basis points, as tracked by the CME's Fed Watch Tool.Additionally, the latest rounds of data suggest a slowdown in economic activity in the key sectors. Mortgage rates reached their highest level in more than 13 years, while retail sales registered a bigger-than-expected drop in May as record gasoline prices prompted households to cut back on spending (read: 5 Undervalued ETFs to Buy for Second Half 2022).Further, as the global economy is struggling with skyrocketing inflation and low growth, the World Bank has warned of a recession.We have profiled the above-mentioned ETFs in detail below:Invesco Dynamic Energy Exploration & Production ETF (PXE) – Up 43.1%Invesco Dynamic Energy Exploration & Production ETF follows the Dynamic Energy Exploration & Production Intellidex Index, which thoroughly evaluates companies involved in the exploration and production of natural resources used to produce energy based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value (read: Top ETF Stories of First-Half 2022 (revised)).Holding 32 stocks in its basket, Invesco Dynamic Energy Exploration & Production ETF has amassed $297.5 million in its asset base and charges 63 bps in annual fees. It has a Zacks ETF Rank #1 with a High risk outlook.Invesco KBW Property & Casualty Insurance ETF (KBWP) – Up 2.3%Invesco KBW Property & Casualty Insurance ETF provides exposure to the 25 leading national money centers and regional banks or thrifts. It follows the KBW Nasdaq Property & Casualty Index. Invesco KBW Property & Casualty Insurance ETF is concentrated on the top five firms that make up for more than 7% share each.Invesco KBW Property & Casualty Insurance ETF has managed $140.5 million in its asset base and expense ratio of 0.35%. KBWP has a Zacks ETF Rank #2 with a Medium risk outlook.First Trust Morningstar Dividend Leaders Index Fund (FDL) – Up 2.3%First Trust Morningstar Dividend Leaders Index Fund offers exposure to stocks that have shown the highest dividend consistency and sustainability by tracking the Morningstar Dividend Leaders Index. It holds 100 stocks in its basket with key holdings in financials, energy,  consumer staples, healthcare and information technology (read: ETF Areas Defying the Bear Market This Year: Can They Rally?).With AUM of $2.9 billion, First Trust Morningstar Dividend Leaders Index Fund charges 45 bps in annual fees from investors and has a Zacks ETF Rank #2 with a Medium risk outlook.VanEck Vectors Pharmaceutical ETF (PPH) – Up 0.6%VanEck Vectors Pharmaceutical ETF offers exposure to the companies involved in pharmaceuticals, including pharmaceutical research and development as well as production, marketing and sales of pharmaceuticals. It follows the MVIS US Listed Pharmaceutical 25 Index and holds 25 stocks in its basket.The product has amassed $545.9 million in its asset base and has expense ratio of 0.35%. VanEck Vectors Pharmaceutical ETF carries a Zacks ETF Rank #2 with a Medium risk outlook. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report VanEck Pharmaceutical ETF (PPH): ETF Research Reports First Trust Morningstar Dividend Leaders ETF (FDL): ETF Research Reports Invesco Dynamic Energy Exploration & Production ETF (PXE): ETF Research Reports Invesco KBW Property & Casualty Insurance ETF (KBWP): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 29th, 2022

5 Undervalued ETFs to Buy for Second Half 2022

Persistent high inflation and an economic downturn caused by a hawkish Fed continued to weigh on investor sentiment. This has made the stocks cheaper, compelling investors to buy the dip. U.S. stocks are on track for the worst first half of the year in more than 50 years. Persistent high inflation and an economic downturn caused by a hawkish Fed continued to weigh on investor sentiment. This has made the stocks cheaper, compelling investors to buy the dip.Using our database, first we have selected ETFs with a Zacks Rank #1 (Strong Buy) or 2 (Buy). This is because these ranks suggest strengthening fundamentals and superior weighting methodologies that could allow them to lead higher than their cousins in a booming market. Then, we narrowed down the list to funds having a lower P/E ratio than 21.7 for the broad market fund SPY.We have highlighted five ETFs from different zones of the market that are currently undervalued and could generate solid returns in a rising stock market. These are Invesco S&P SmallCap Energy ETF PSCE, U.S. Global Jets ETF JETS, First Trust Financials AlphaDEX Fund FXO, Invesco DWA Healthcare Momentum ETF PTH and Invesco S&P MidCap Value with Momentum ETF XMVM.With a few trading days left to end the first half, the S&P 500 is down about 18% as the Fed tightens monetary policy in its fight against the highest inflation in decades. An increase in interest rates means higher loan rates for consumers and businesses, including mortgages, credit cards and auto loans that will likely cut consumer spending, thereby hurting economic growth (read: Long/Short ETFs to Consider Amid Market Turmoil).However, many market researchers project a strong recovery in the stock market based on historical data. Per LPL Financial, sharp falls in stocks have often been followed by steep rebounds. The past years in which the S&P 500 was down at least 15% at the midway point saw the final six months higher every single time, with an average return of nearly 24%.The trend might come true as the S&P 500 jumped more than 6% last week, its first weekly advance since late May and its second-best week of 2022 to date. The latest comments from Fed officials buoyed up the sentiment on the economy, and a reading on inflation expectations eased. Federal Reserve Chair Jerome Powell, in his testimony, has committed to bringing inflation down. He said that economic conditions are generally favorable, pointing to a strong labor market and high demand (read: S&P 500's Second-Best Week in 2022: Best Leveraged ETFs).Additionally, the initial phase of the rate increase will be good for stocks as it will reflect an improving economy, thereby benefiting cyclical sectors like financials, technology, industrials and consumer discretionary.ETFs to BuyInvesco S&P SmallCap Energy ETF (PSCE) – P/E Ratio: 3.72Invesco S&P SmallCap Energy ETF offers exposure to the companies that are principally engaged in producing, distributing or servicing energy-related products, including oil and gas exploration and production, refining, oil services and pipelines. It tracks the S&P Small Cap 600 Capped Energy Index, holding 29 stocks in its basket (read: Energy ETFs Scaling 52-Week Highs: Will This Continue?).Invesco S&P SmallCap Energy ETF has accumulated $140 million in its asset base and charges 29 bps in annual fees. It trades in an average daily volume of 476,000 shares and gas a Zacks ETF Rank #2.U.S. Global Jets ETF (JETS) – P/E Ratio: 4.32U.S. Global Jets ETF provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. The product holds 51 securities and charges 60 bps in annual fees.U.S. Global Jets ETF has gathered $2.6 billion in its asset base while seeing a heavy trading volume of nearly 6 million shares a day. JETS has a Zacks ETF Rank #2.First Trust Financials AlphaDEX Fund (FXO) – P/E Ratio: 8.01First Trust Financials AlphaDEX Fund targets the broad financials sector and follows the StrataQuant Financials Index, which employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index. Holding 100 stocks in its basket, the ETF has amassed $1.1 billion and charges 61bps in annual fees (read: Fed Raises Rates by 75 bps: ETFs Set to Surge).First Trust Financials AlphaDEX Fund trades in an average daily volume of 275,000 shares and has a Zacks ETF Rank #2.Invesco DWA Healthcare Momentum ETF (PTH) – P/E Ratio: 8.86Invesco DWA Healthcare Momentum ETF follows the Dorsey Wright Healthcare Technical Leaders Index and holds a basket of 43 U.S. companies. It has AUM of $234.7 million and charges 60 bps in annual fees. Healthcare providers and services takes the largest share at 30.7%, while biotechnology and pharmaceuticals round off the next two with double-digit exposure each.Invesco DWA Healthcare Momentum ETF trades in a light average daily volume of 16,000 shares and has a Zacks ETF Rank #2.Invesco S&P MidCap Value with Momentum ETF (XMVM) – P/E Ratio: 10.77Invesco S&P MidCap Value with Momentum ETF follows the S&P MidCap 400 High Momentum Value Index, which is composed of securities in the S&P MidCap 400 Index having both the highest value scores and momentum scores. It holds 80 stocks in its basket with key holdings in financials, consumer discretionary, industrials and materials.Invesco S&P MidCap Value with Momentum ETF has accumulated $218.6 million in its asset base while trades in a volume of 45,000 shares per day, on average. The fund charges 39 bps in annual fees and has a Zacks ETF Rank #2. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco S&P SmallCap Energy ETF (PSCE): ETF Research Reports U.S. Global Jets ETF (JETS): ETF Research Reports Invesco DWA Healthcare Momentum ETF (PTH): ETF Research Reports First Trust Financials AlphaDEX ETF (FXO): ETF Research Reports Invesco S&P MidCap Value with Momentum ETF (XMVM): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 28th, 2022

Futures, Commodities Jump After China Cuts Quarantine

Futures, Commodities Jump After China Cuts Quarantine US stock futures rebounded from Monday's modest losses and traded near session highs after China reduced quarantine times for inbound travelers by half - to seven days of centralized quarantine and three days of health monitoring at home -  the biggest shift yet in a Covid-19 policy that has left the world’s second-largest economy isolated as it continues to try and eliminate the virus. The move, which fueled optimism about stronger economic growth and boosted appetite for both commodities and risk assets, sent S&P 500 futures and Nasdaq 100 contracts higher by 0.6% each at 7:15 a.m. in New York, setting up heavyweight technology stocks for a rebound. Mining and energy shares led gains in Europe’s Stoxx 600 and an Asian equity index erased losses to climb for a fourth session. 10Y TSY yields extended their move higher rising to 3.25% or about +5bps on the session, while the dollar and bitcoin were flat, and oil and commodity-linked currencies strengthened. In premarket trading, the biggest mover was Kezar Life Sciences which soared 85% after reporting positive results for its lupus drug. On the other end, Robinhood shares fell 3.2%, paring a rally yesterday sparked by news that FTX is exploring whether to buy the company. In a statement, FTX head Sam Bankman-Fried said he is excited about the firm’s business prospects, but “there are no active M&A conversations with Robinhood." Here are some of the other most notable premarket movers" Playtika (PLTK US) shares rallied 11% in premarket trading after a report that private equity firm Joffre Capital agreed to acquire a majority stake in the gaming company from a Chinese investment group for $21 a share. Nike (NKE US) shares fell 2.3% in US premarket trading, with analysts reducing their price targets after the company gave a downbeat forecast for gross margin and said it was being cautious in its outlook for the China market. Spirit Airlines (SAVE US) shares rise as much as 5% in US premarket trading after JetBlue boosted its all-cash bid in response to an increased offer by rival suitor Frontier in the days before a crucial shareholder vote. Snowflake (SNOW US) rises 3.3% in US premarket trading after Jefferies upgraded the stock to buy from hold, saying its valuation is now “back to reality” and offers a good entry point given the software firm’s long-term targets. Sutro Biopharma (STRO US) shares rise 34% in US premarket trading after the company and Astellas said they will collaborate to advance development of immunostimulatory antibody-drug conjugates, which are a modality for treating tumors and designed to boost anti-cancer activity. State Street (STT US) shares could be in focus after Deutsche Bank downgraded the stock to hold, while lowering EPS estimates and price targets across interest rate sensitive coverage of trust banks and online brokers. US bank stocks may be volatile during Tuesday’s trading session after the lenders announced a wave of dividend increases following last week’s successful stress test results. Stock rallies have proved fleeting this year as higher borrowing costs to fight inflation restrain economic activity in a range of nations. European Central Bank President Christine Lagarde affirmed plans for an initial quarter-point increase in interest rates in July, but said policy makers are ready to step up action to tackle record inflation if warranted. Some analysts also argue still-bullish earnings estimates are too optimistic. Earnings revisions are a risk with the US economy set to slow next year, though China emerging from Covid strictures could act as a global buffer, according to Lorraine Tan, Morningstar director of equity research. “You got a US slowdown in 2023 in terms of growth, but you have China hopefully coming out of its lockdowns,” Tan said on Bloomberg Radio. In Europe, stocks are well bid with most European indexes up over 1%. Euro Stoxx 50 rose as much as 1.2% before drifting off the highs. Miners, energy and auto names outperform. The Stoxx 600 Basic Resources sub-index rises as much as 3.5% led by heavyweights Rio Tinto and Anglo American, as well as Polish copper producer KGHM and Finnish forestry companies Stora Enso and UPM- Kymmene. Iron ore and copper reversed losses after China eased its quarantine rules for new arrivals, while oil gained for a third session amid risks of supply disruptions. Iron ore in Singapore rose more than 4% after being firmly lower earlier in the session, while copper and other base metals also turned higher. Here are the biggest European movers: Luxury stocks climb boosted by an easing of Covid-19 quarantine rules in the key market of China. LVMH shares rise as much as 2.5%, Richemont +3.1%, Kering +3%, Moncler +3% Energy and mining stocks are the best-performing groups in the rising Stoxx Europe 600 index amid commodity gains. Shell shares rise as much as 3.8%, TotalEnergies +2.7%, BP +3.4%, Rio Tinto +4.6%, Glencore +3.9% Banco Santander shares rise as much as 1.8% after a report that the Spanish bank has hired Credit Suisse and Goldman Sachs for its bid to buy Mexico’s Banamex. GN Store Nord shares gain as much as 4.2% after Nordea resumes coverage on the hearing devices company with a buy rating. Swedish Match shares rise as much as 4% as Philip Morris International’s offer document regarding its bid for the company has been approved and registered by the Swedish FSA. Wise shares decline as much as 15%, erasing earlier gains after the fintech firm reported full- year earnings. Citi said the results were “mixed,” with strong revenue growth being offset by lower profitability. UK water stocks decline as JPMorgan says it is turning cautious on the sector on the view that future regulated returns could surprise to the downside, in a note cutting Severn Trent to underweight. Severn Trent shares fall as much as 6%, Pennon -7.7%, United Utilities -2.3% Akzo Nobel falls as much as 4.5% in Amsterdam trading after the paint maker announced the appointment of former Sulzer leader Greg Poux-Guillaumeas chief executive officer, succeeding Thierry Vanlancker. Danske Bank shares fall as much as 4%, as JPMorgan cut its rating on the stock to underweight, saying in a note that risks related to Swedish property will likely create some “speed bumps” for Nordic banks though should be manageable. In the Bavarian Alps, limiting Russia’s profits from rising energy prices that fuel its war in Ukraine have been among the main topics of discussion at a Group of Seven summit. G-7 leaders agreed that they want ministers to urgently discuss and evaluate how the prices of Russian oil and gas can be curbed. Earlier in the session, Asian stocks erased earlier losses as China’s move to ease quarantine rules for inbound travelers bolstered sentiment. The MSCI Asia Pacific Index rose as much as 0.6% after falling by a similar magnitude. The benchmark is set for a fourth day of gains, led by the energy and utilities sectors. BHP and Toyota contributed the most to the gauge’s advance, while China’s technology firms were among the biggest losers as a plan by Tencent’s major backer to further cut its stake fueled concern of more profit-taking following a strong rally.   A move by Beijing to cut quarantine times for inbound travelers by half is helping cement gains which have made Chinese shares the world’s best-performing major equity market this month. The nation’s stocks are approaching a bull market even as their recent rise pushes them to overbought levels. Still, the threat of a sharp slowdown in the world’s largest economy may pose a threat to the outlook. “US recession risk is still there and I think that’ll obviously have impact on global sectors,” Lorraine Tan, director of equity research at Morningstar, said on Bloomberg TV. “Even if we do get some China recovery in 2023, which could be a buffer for this region, it’s not going to offset the US or global recession.”  Most stock benchmarks in the region finished higher following China’s move to ease its travel rules. Main equity measures in Japan, Hong Kong, South Korea and Australia rose while those in Taiwan and India fell. Overall, Asian stocks are on course to complete a monthly decline of about 4%.    Meanwhile, the People’s Bank of China pledged to keep monetary policy supportive to help the nation’s economy. It signaled that stimulus would likely focus on boosting credit rather than lowering interest rates. Japanese stocks gained as investors adjusted positions heading into the end of the quarter.  The Topix Index rose 1.1% to 1,907.38 as of the market close in Tokyo, while the Nikkei 225 advanced 0.7% to 27,049.47. Toyota Motor contributed most to the Topix’s gain, increasing 2.2%. Out of 2,170 shares in the index, 1,736 rose and 374 fell, while 60 were unchanged. “As the end of the April-June quarter approaches, there is a tendency for institutional investors to rebalance,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley. “It will be easier to buy into cheap stocks, which is a factor that will support the market in terms of supply and demand.” India’s benchmark stock gauge ended flat after trading lower for most of the session as investors booked some profits after a three-day rally.  The S&P BSE Sensex closed little changed at 53,177.45 in Mumbai, while the NSE Nifty 50 Index gained 0.1%.  Six of the the 19 sector sub-gauges compiled by BSE Ltd. dropped, led by consumer durables companies, while oil & gas firms were top performers.  ICICI Bank was among the prominent decliners on the Sensex, falling 1%. Out of 30 shares in the Sensex index, 17 rose and 13 fell. In rates, fixed income sold off as treasuries remained under pressure with the 10Y yield rising as high as 3.26%, following steeper declines for euro-zone and UK bond markets for second straight day and after two ugly US auctions on Monday. Yields across the curve are higher by 2bp-5bp led by the 7-year ahead of the $40 billion auction. In Europe, several 10-year yields are 10bp higher on the day after comments by an ECB official spurred money markets to price in more policy tightening. WI 7Y yield at around 3.32% exceeds 7-year auction stops since March 2010 and compares with 2.777% last month. Monday’s 5-year auction drew a yield more than 3bp higher than its yield in pre-auction trading just before the bidding deadline, a sign dealers underestimated demand. Traders attributed the poor results to factors including short base eroded by last week’s rally, recently elevated market volatility discouraging market-making, and sub-par participation during what is a popular vacation week in the US. Focal points for US session include 7-year note auction at 1pm ET; a 5-year auction Monday produced notably weak demand metrics. The belly of the German curve underperformed as markets focus  on hawkish comments from ECB officials: 5y bobl yields rose 10 bps near 1.46%, red pack euribors dropped 10-13 ticks and ECB-dated OIS rates priced in 163 basis points of tightening by year end. In FX, Bloomberg dollar spot index is near flat as the greenback reversed earlier losses versus all of its Group-of-10 peers apart from the yen while commodity currencies were the best performers. The euro rose above $1.06 before paring gains after ECB Governing Council member Martins Kazaks said the central bank should consider a first rate hike of more than a quarter-point if there are signs that high inflation readings are feeding expectations. Money markets ECB raised tightening wagers after his remarks. ECB President Lagarde later affirmed plans for an initial quarter-point increase in interest rates in July but said policy makers are ready to step up action to tackle record inflation if warranted. The ECB is likely to drain cash from the banking system to offset any bond purchases made to restrain borrowing costs for indebted euro-area members, Reuters reported, citing two sources it didn’t identify. Elsewhere, the pound drifted against the dollar and euro after underperforming Monday, with focus on quarter-end flows, lingering Brexit risks and the UK economic outlook. Scottish First Minister Nicola Sturgeon due to speak later on how she plans to hold a second referendum on Scottish independence by the end of next year. The yen gave up an Asia session gain versus the dollar as US equity futures reversed losses. The Australian dollar rose after China cut its mandatory quarantine period to 10 days from three weeks for inbound visitors in its latest Covid-19 guidance. JPY was the weakest in G-10, drifting below 136 to the USD. In commodities, oil rose for a third day with global output threats compounding already red-hot markets for physical supplies and as broader financial sentiment improved. Brent crude breached $117 a barrel on Tuesday, but some of the most notable moves in recent days have been in more specialist market gauges. A contract known as the Dated-to-Frontline swap -- an indicator of the strength in the key North Sea market underpinning much of the world’s crude pricing -- hit a record of more than $5 a barrel. The rally comes amid growing supply outages in Libya and Ecuador, exacerbating ongoing market tightness. Oil prices also rose Tuesday as broader sentiment was boosted by China’s move to cut in half the time new arrivals must spend in isolation, the biggest shift yet in its pandemic policy. Meanwhile, the G-7 tasked ministers to urgently discuss an oil price cap on Russia.  Finally, the prospect of additional supply from two of OPEC’s key producers also looks limited. On Monday Reuters reported that French President Emmanuel Macron told his US counterpart Joe Biden that the United Arab Emirates and Saudi Arabia are already pumping almost as much as they can. In the battered metals space, LME nickel rose 2.7%, outperforming peers and leading broad-based gains in the base-metals complex. Spot gold rises roughly $3 to trade near $1,826/oz Looking to the day ahead now, data releases include the FHFA house price index for April, the advance goods trade balance and preliminary wholesale inventories for May, as well as the Conference Board’s consumer confidence for June and the Richmond Fed’s manufacturing index. From central banks, we’ll hear from ECB President Lagarde, the ECB’s Lane, Elderson and Panetta, the Fed’s Daly, and BoE Deputy Governor Cunliffe. Finally, NATO leaders will be meeting in Madrid. Market Snapshot S&P 500 futures up 0.5% to 3,922.50 STOXX Europe 600 up 0.6% to 417.65 MXAP up 0.4% to 162.36 MXAPJ up 0.4% to 539.85 Nikkei up 0.7% to 27,049.47 Topix up 1.1% to 1,907.38 Hang Seng Index up 0.9% to 22,418.97 Shanghai Composite up 0.9% to 3,409.21 Sensex down 0.3% to 52,990.39 Australia S&P/ASX 200 up 0.9% to 6,763.64 Kospi up 0.8% to 2,422.09 German 10Y yield little changed at 1.62% Euro little changed at $1.0587 Brent Futures up 1.4% to $116.65/bbl Gold spot up 0.3% to $1,828.78 U.S. Dollar Index little changed at 103.89 Top Overnight News from Bloomberg In Tokyo’s financial circles, the trade is known as the widow- maker. The bet is simple: that the Bank of Japan, under growing pressure to stabilize the yen as it sinks to a 24-year low, will have to abandon its 0.25% cap on benchmark bond yields and let them soar, just as they already have in the US, Canada, Europe and across much of the developing world Bank of Italy Governor Ignazio Visco may leave his post in October, paving the way for the appointment of a high profile executive close to Premier Mario Draghi, daily Il Foglio reported NATO is set to label China a “systemic challenge” when it outlines its new policy guidelines this week, while also highlighting Beijing’s deepening partnership with Russia, according to people familiar with the matter The PBOC pledged to keep monetary policy supportive to aid the economy’s recovery, while signaling that stimulus would likely focus on boosting credit rather than lowering interest rates A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were mixed with the region partially shrugging off the lacklustre handover from the US. ASX 200 was kept afloat with energy leading the gains amongst the commodity-related sectors. Nikkei 225 swung between gains and losses with upside capped by resistance above the 27K level. Hang Seng and Shanghai Comp. were pressured amid weakness in tech and lingering default concerns as Sunac plans discussions on extending a CNY bond and with Evergrande facing a wind-up petition. Top Asian News China is to cut quarantine time for international travellers, according to state media cited by Reuters. Shanghai Disneyland (DIS) will reopen on June 30th, according to Reuters. PBoC injected CNY 110bln via 7-day reverse repos with the rate at 2.10% for a CNY 100bln net daily injection. China's state planner official said China faces new challenges in stabilising jobs and prices due to COVID and risks from the Ukraine crisis, while the NDRC added they will not resort to flood-like stimulus but will roll out tools in its policy reserve in a timely way to cope with challenges, according to Reuters. China's state planner NDRC says China is to cut gasoline and diesel retail prices by CNY 320/tonne and CNY 310/tonne respectively from June 29th. BoJ may have been saddled with as much as JPY 600bln in unrealised losses on its JGB holdings earlier this month, as a widening gap between domestic and overseas monetary policy pushed yields higher and prices lower, according to Nikkei. European bourses are firmer as sentiment picked up heading into the cash open amid encouraging Chinese COVID headlines. Sectors are mostly in the green with no clear theme. Base metals and Energy reside as the current winners and commodities feel a boost from China’s COVID updates. Stateside, US equity futures saw a leg higher in tandem with global counterparts, with the RTY narrowly outperforming. Twitter (TWTR) in recent weeks provided Tesla (TSLA) CEO Musk with historical tweet data and access to its so-called fire hose of tweets, according to WSJ sources. Top European News UK lawmakers voted 295-221 to support the Northern Ireland Protocol bill in the first of many parliamentary tests it will face during the months ahead, according to Reuters. Scotland's First Minister Sturgeon will set out a plan today for holding a second Scottish Independence Referendum, according to BBC News. ECB’s Kazaks Says Worth Looking at Larger Rate Hike in July G-7 Latest: Leaders Want Urgent Evaluation of Energy Price Caps Ex- UBS Staffer Wants Payout for Exposing $10 Billion Swiss Stash SocGen Blames Clifford Chance in $483 Million Gold Suit GSK’s £40 Billion Consumer Arm Picks Citi, UBS as Brokers Russian Industry Faces Code Crisis as Critical Software Pulled ECB ECB's Lagarde said inflation in the euro area is undesirably high and it is projected to stay that way for some time to comeFragmentation tool, via the ECB. ECB's Kazaks said 25bps in July and 50bps in September is the base case, via Bloomberg TV. Kazaks said it is worth looking at a 50bps hike in July and front-loading hikes might be reasonable. Fragmentation risks should not stand in the way of monetary policy normalisation. If necessary, the ECB will come up with tools to address fragmentation. ECB's Wunsch said he is comfortable with a 50bps hike in September; adds that 200bps of hikes are needed relatively fast, and anti-fragmentation tool should have no limits if market moves are unwarranted, via Reuters. Bank of Italy said Governor Visco's resignation is not on the table, according to a spokesperson cited by Reuters. Fixed Income Bond reversal continues amidst buoyant risk sentiment, hawkish ECB commentary and supply. Bunds lose two more big figures between 146.80 peak and 144.85 trough, Gilts down to 112.06 from 112.86 at best and 10 year T-note retreats within 117-01/116-14 range FX DXY regroups on spot month end as yields rally and rebalancing factors offer support - index within 103.750-104.020 range vs Monday's 103.660 low. Euro continues to encounter resistance above 1.0600 via 55 DMA (1.0614 today); Yen undermined by latest bond retreat and renewed risk appetite - Usd/Jpy eyes 136.00 from low 135.00 area and close to 134.50 yesterday. Aussie breaches technical and psychological resistance with encouragement from China lifting or easing more Covid restrictions - Aud/Usd through 10 DMA at 0.6954. Loonie and Norwegian Krona boosted by firm rebound in oil as France fans supply concerns due to limited Saudi and UAE production capacity - Usd/Cad sub-1.2850 and Eur/Nok under 10.3500. Yuan receives another PBoC liquidity boost to compliment positive developments on the pandemic front, but Rand hampered by latest power cut warning issued by SA’s Eskom Commodities WTI and Brent futures were bolstered in early European hours amid encouragement seen from China's loosening of COVID restrictions. Spot gold is uneventful, around USD 1,825/oz in what has been a sideways session for the bullion since the reopening overnight. Base metals are posting broad gains across the complex - with LME copper back above USD 8,500/t amid China-related optimism. US Event Calendar 08:30: May Advance Goods Trade Balance, est. -$105b, prior -$105.9b, revised -$106.7b 08:30: May Wholesale Inventories MoM, est. 2.1%, prior 2.2% May Retail Inventories MoM, est. 1.6%, prior 0.7% 09:00: April S&P CS Composite-20 YoY, est. 21.15%, prior 21.17% 09:00: April S&P/CS 20 City MoM SA, est. 1.95%, prior 2.42% 09:00: April FHFA House Price Index MoM, est. 1.4%, prior 1.5% 10:00: June Conf. Board Consumer Confidenc, est. 100.0, prior 106.4 Conf. Board Expectations, prior 77.5; Present Situation, prior 149.6 10:00: June Richmond Fed Index, est. -5, prior -9 DB's Jim Reid concludes the overnight wrap It's been a landmark night in our household as last night was the first time the 4-year-old twins slept without night nappies. So my task this morning after I send this to the publishers is to leave for the office before they all wake up so that any accidents are not my responsibility. Its hopefully the end of a near 7-year stretch of nappies being constantly around in their many different guises and states of unpleasantness. Maybe give it another 30-40 years and they'll be back. Talking of unpleasantness, as we near the end of what’s generally been an awful H1 for markets, yesterday saw the relief rally from last week stall out, with another bond selloff and an equity performance that fluctuated between gains and losses before the S&P 500 (-0.30%) ended in negative territory. In terms of the specific moves, sovereign bonds lost ground on both sides of the Atlantic, with yields on 10yr Treasuries up by +7.0bps following their -9.6bps decline from the previous week. That advance was led by real rates (+9.6bps), which look to have been supported by some decent second-tier data releases from the US during May yesterday. The preliminary reading for US durable goods orders surprised on the upside with a +0.7% gain (vs. +0.1% expected). Core capital goods orders also surprised on the upside with a +0.8% advance (vs. +0.2% expected). And pending home sales were unexpectedly up by +0.7% (vs. -4.0% expected). Collectively that gave investors a bit more confidence that growth was still in decent shape last month, which is something that will also offer the Fed more space to continue their campaign of rate hikes into H2. This morning 10yr USTs yields have eased -2.45 bps to 3.17% while 2yr yields (-4 bps) have also moved lower to 3.08%, as we go to press. Staying at the front end, when it comes to those rate hikes, if you look at Fed funds futures they show that investors are still only expecting them to continue for another 9 months, with the peak rate in March or April 2023 before markets are pricing in at least a full 25bps rate cut by end-2023 from that point. I pointed out in my chart of the day yesterday (link here) that the median time historically from the last hike of the cycle to the first cut was only 4 months, and last time it was only 7 months between the final hike in December 2018 and the next cut in July 2019. So it wouldn’t be historically unusual if Fed funds did follow that pattern whether that fits my view or not. Over in Europe yesterday there was an even more aggressive rise in yields, with those on 10yr bunds (+10.9bps), OATs (+11.0bps) and BTPs (+9.1bps) all rising on the day as they bounced back from their even larger declines over the previous week. That came as investors pared back their bets on a more dovish ECB that they’d made following the more negative tone last week, and the rate priced in by the December ECB meeting rose by +8.5bps on the day. For equities, the major indices generally fluctuated between gains and losses through the day. The S&P 500 followed that pattern and ultimately fell -0.30%, which follows its best daily performance in over 2 years on Friday Quarter-end rebalancing flows seem set to drive markets back-and-forth price this week. Even with the decline yesterday, the index is +6.36% higher since its closing low less than a couple of weeks ago. And over in Europe, the STOXX 600 (+0.52%) posted a decent advance, although that masked regional divergences, including losses for the CAC 40 (-0.43%) and the FTSE MIB (-0.86%). Energy stocks strongly outperformed in the index, supported by a further rise in oil prices that left both Brent crude (+1.74%) and WTI (+1.81%) higher on the day. G7 ministers reportedly agreed to explore a cap on Russian gas and oil exports, with the official mandate expected to be announced today, but it would take time for any mechanism to be developed. The impact on global oil supply is not clear: if Russia retaliates supply could go down, if this enables other third parties to import more Russian oil supply could go up. Elsewhere, political unrest in Libya and Ecuador could simultaneously hit oil supply. In early Asian trading, oil prices continue to move higher, with Brent futures up +1.13% at $116.39/bbl and WTI futures gaining +1% to just above the $110/bbl level. Asian equity markets are struggling a bit this morning. The Hang Seng (-1.00%) is the largest underperformer amid a weakening in Chinese tech stocks whilst the Nikkei (-0.15%), Shanghai Composite (-0.15%) and CSI (-0.19%) are trading in negative territory in early trade. Elsewhere, the Kospi (-0.05%) is just below the flatline. US stock futures are slipping with contracts on the S&P 500 (-0.12%) and NASDAQ 100 (-0.18%) both slightly lower. In central bank news, the People’s Bank of China (PBOC) Governor Yi Gang pledged to provide additional monetary support to the economy to recover from Covid outbreaks and lockdowns and other stresses. In a rare interview conducted in English, the central bank chief did caution though that the real interest rate is low thereby indicating limited room for large-scale monetary easing. Turning to geopolitical developments, the G7 summit continued in Germany yesterday, and in a statement it said they would “further intensify our economic measures against Russia”. Separately, NATO announced that it will increase the number of high readiness forces to over 300,000, with the alliance’s leaders set to gather in Madrid from today. And we’re also expecting a new round of nuclear talks with Iran to take place at some point this week, something Henry mentioned in his latest Mapping Markets out yesterday (link here), which if successful could in time pave the way for Iranian oil to return to the global market. Finally, whilst there were some decent May data releases from the US, the Dallas Fed’s manufacturing activity index for June fell to a 2-year low of -17.7 (vs. -6.5 expected). To the day ahead now, and data releases include Germany’s GfK consumer confidence for July, French consumer confidence for June, whilst in the US there’s the FHFA house price index for April, the advance goods trade balance and preliminary wholesale inventories for May, as well as the Conference Board’s consumer confidence for June and the Richmond Fed’s manufacturing index. From central banks, we’ll hear from ECB President Lagarde, the ECB’s Lane, Elderson and Panetta, the Fed’s Daly, and BoE Deputy Governor Cunliffe. Finally, NATO leaders will be meeting in Madrid. Tyler Durden Tue, 06/28/2022 - 08:00.....»»

Category: blogSource: zerohedgeJun 28th, 2022

Futures, Global Markets Rally, Bonds Slide As Traders Turn More Bullish

Futures, Global Markets Rally, Bonds Slide As Traders Turn More Bullish Following the best week for stocks in one month, global stocks extended gains on Monday on continued easing of fears for a hawkish Fed; US futures rose, with the Nasdaq 100 advancing 0.5% as by tech giants Amazon, Apple and Microsoft all rose in premarket trading. Tech shares also boosted indexes in Europe and Asia. Treasuries slipped, pushing the rate on the US 10-year note to 3.17%. Yields have retreated from June highs on growth worries, but whether that marks the end of the Treasury bear market is a live debate. The dollar fluctuated while oil and bitcoin rose. In the US premarket, major US technology and internet stocks were higher, poised to extend gains. The tech-heavy Nasdaq 100 closed up 7.5% last week, its best week since March. Among notable movers: Apple +0.6%, Microsoft +0.6%, Amazon.com +1%, Meta +0.8%, Nvidia +1.6% in premarket trading. Other notable premarket movers include: JD.com (JD US) is among the top performers in US-listed Chinese stocks, rising 5% in premarket trading, after tech investor Prosus disposed of its stake in JD.com for about $3.67 billion. Coinbase (COIN US) shares fall 4% in premarket trading as the stock was downgraded to sell from neutral, with a joint Street-low price target of $45 at Goldman Sachs, which cited the “continued downdraft” in crypto prices and drop in industry activity levels. Robinhood (HOOD US) shares rise 3.9% in premarket trading as Goldman Sachs analyst William Nance raised the recommendation on the stock to neutral from sell Epizyme (EPZM US) jumps 64% to $1.56 in US premarket trading after Ipsen announced the acquisition of the US biotech firm for $1.45/share in cash plus a contingent value right of $1/share. Selective Insurance Group (SIGI US) shares may be in focus after Morgan Stanley initiated an overweight rating on the stock, citing a favorable business model that will help the company’s margin to outperform peers. Keep an eye on WEC Energy Group (WEC US) as KeyBanc Capital Markets raised the recommendation on the stock to overweight from sector weight, citing “valuation dislocations” triggered by the recent industry volatility. As Goldman traders speculated over the weekend, Friday's massive Russell rebalance may have helped flush out any leftover liquidation trades, while the upcoming month- and quarter-end portfolio rebalancing by pensions could boost stocks by as much as 7% this week according to JPM's Marko Kolanovic. Further boosting bullish sentiment - if only temporarily - one of Wall Street’s biggest bears sees the rally in US stocks extending, prior to the selloff recommencing. Morgan Stanley's Michael Wilson say the S&P 500 Index may climb another 5% to 7%, before resuming losses. Meanwhile, investors are also parsing incoming data to work out if the highest inflation in a generation is close to topping out as that will give the Fed latitude to ease up on sharp interest-rate hikes, something the market last week aggressively repriced. A more troubling scenario is of lasting price pressures and tighter policy even as the global economy falters. “There’s a feeling that things aren’t as bad as we thought they were going to be,” Carol Pepper, founder of Pepper International, said on Bloomberg Radio. She added “there’s a hope that perhaps we’ve oversold, perhaps there’s not going to be a recession.” Traders are also monitoring a summit of the Group of Seven leaders, who plan to commit to indefinite support for Ukraine in its defense against Russia’s invasion. The G-7 in addition is weighing a price cap on Russian oil. As reported yesterday, the US, UK, Japan and Canada also plan to announce a ban on new gold imports from Russia during the G-7 summit. Prices for the precious metal naturally rose. European equities trade off session highs as an earlier rally in Asian tech stocks buoys sentiment. Miners, tech and autos are the strongest performing sectors in Europe. Euro Stoxx 50 rallies 1%. DAX outperforms peers, adding 1.2%, FTSE MIB lags, dropping 0.2%.  Among notable European stock moves, Prosus NV soared on plans to sell more of its $134 billion stake in Chinese internet giant Tencent Holdings Ltd. to finance a buyback program. Mediobanca SpA fell after the death of Italian entrepreneur Leonardo Del Vecchio, the single largest investor in the bank.  Here are some of the biggest European movers today: Prosus shares surge as much as 17% in Amsterdam after the tech investor said it will sell down its holding in Tencent to finance an open-ended share buyback program, which could help close the gap between the firm’s market value and the value of the Tencent stake, according to analysts. Mining stocks lead gains in the Stoxx 600 Index on Monday as iron ore and base metals recover ground amid signs of improvement in China’s economy. Rio Tinto shares rise as much as 4.4%, Anglo American +4.6%, Glencore +4.2% Nordex shares jump as much as 12% after the firm announced a EU139.2m cash injection from Acciona in a bid to increase liquidity and strengthen its balance sheet to shield itself against the risks of short term headwinds in the industry. Kion shares rise as much as 7.7% after Morgan Stanley upgraded the stock to overweight from underweight, saying that the structural case for warehouse and forklift companies remains intact even amid a de-rating for the stocks. Lundbeck soars as much as 15% after the Danish pharmaceutical company reported positive data in a clinical study of agitation in patients with Alzheimer’s dementia. Ocado shares fall as much as 3.1% after the stock was cut to neutral from outperform and PT slashed to 960p from 1,600p at Credit Suisse, with the broker saying new disclosures from the online grocer indicate that its prior assumptions were “too optimistic.” Ipsen shares drop as much as 5.1% after the pharmaceutical company announced the acquisition of US biotech Epizyme for $1.45/share in cash plus a contingent value right of $1/share. Analyst had mixed reactions to the deal. Mediobanca shares fall as much as 4.4% in Milan after news that Italian entrepreneur Leonardo Del Vecchio, the single largest investor in the bank with a stake of about 19.4%, has died. Wise shares drop as much as 5.3% after the money transfer firm said its CEO is facing a probe by UK regulators. Tecnicas Reunidas shares tumble as much as 17% after the company said it began arbitrage to recover excess costs in a dispute with the Sonatrach-Neptune Energy consortium over a contract for the Touat Gaz Plant in Algeria. Elsewhere, Russia defaulted on its foreign-currency sovereign debt for the first time in a century, the culmination of ever-tougher Western sanctions that shut down payment routes. Earlier in the session, Asian stocks advanced after battered technology shares rebounded as easing recession fears underpinned investor sentiment.  The MSCI Asia Pacific Index rose as much as 2.1%, its biggest intraday gain this month, as chip and internet companies including TSMC and Alibaba climbed. Tech-heavy markets such as Taiwan and South Korea extended gains made Friday, while an index of Asian tech stocks rallied for a second straight session after dropping to the lowest since September 2020.  Asian equities are bouncing back from a two-year low, as US Treasury yields retreat. Almost all markets in the region rose, with Hong Kong’s Hang Seng Index leading gains and China’s benchmark coming closer to a bull market as Shanghai’s leader declared victory in defending the financial hub against Covid. A Chinese tech index in Hong Kong advanced 4.7%. Still, the rally in technology shares may be short-lived, as global demand for consumer electronics remains fragile.  “Korea and Taiwan have high leverage to tech products, and we’ve seen a lot of that come under pressure so the end demand has slowed down,” Ray Sharma-Ong, investment director at Abrdn Asia, said in an interview with Bloomberg TV. “We expect continued outflows post this relief rally.” Japanese equities climbed as the latest comments from Federal Reserve officials buoyed sentiment on the economy and a reading on US inflation expectations eased.  The Topix Index rose 1.1% to 1,887.42 as of market close Tokyo time, while the Nikkei advanced 1.4% to 26,871.27. Sony Group Corp. contributed the most to the Topix’s gain, increasing 2.3%. Out of 2,170 shares in the index, 1,490 rose and 568 fell, while 112 were unchanged. Australia's S&P/ASX 200 index rose 1.9% to close at 6,706, the benchmark’s biggest daily gain since Jan. 28, as investors in Asia assessed whether inflation is bottoming and recession can be averted. The index’s biggest gains were seen in the financial, energy and tech sectors. In New Zealand, the S&P/NZX 50 index closed 1.7% higher at 10,997.92, the benchmark’s best day since March 1 Emerging-market stocks climbed to the highest in more than a week as China’s recovery from its virus-induced slump propels the Asian nation’s equities toward a bull market. Technology stocks led emerging-market equity gains, with China’s economy showing some improvement in June amid a further easing of pandemic curbs in Shanghai. Chinese shares look to be the best home for fresh money in Asia amid a tough investment environment, according to abrdn plc’s regional chairman Hugh Young. China plans to extend the yuan’s trading hours as it seeks to increase global investor participation in onshore currency trading as part of its internationalization push. In FX, the Bloomberg dollar spot index fell 0.2% as the greenback weakened against all of its Group-of-10 peers apart from the Australian dollar.  AUD and CHF are the weakest performers in G-10 FX, SEK and GBP outperform. The volatility term structures for the Group-of-4 currencies focus on the upcoming central bank meetings as there is little demand for long gamma in the front-end. The euro advanced, nearing $1.06 and European bonds fell broadly, with the exeption of Greece and Sweden, as focus turns to ECB President Christine Lagarde’s speech. Sterling rose for a second day, supported by a rally in global stocks that is limiting demand for the dollar. Gilts extended their slide across the curve, while money markets raised BOE tightening bets as haven- buying was unwound amid equity advances. In rates, Treasuries are weaker amid a selloff in core European rates, which extended losses after EU’s sale of EU2.5b four-year bonds. US yields are cheaper by nearly 4bp at long end, steepening 2s10s by ~2.4bp, 5s30s by ~1bp on the day; 10-year is up 3.6bp at ~3.17% with bunds and gilts lagging by additional 8bp and 5bp in the sector.  As Bloomberg notes, the broad risk-asset rally puts added cheapening pressure on Treasury yields with S&P 500 futures and Estoxx50 rising led by big gains for Asia stocks. Two coupon auctions slated for Monday may also weigh: Monday’s auctions include $46b 2- year at 11:30am ET and $47b 5-year notes at 1pm. The WI 2-year yield near 3.07% (vs 2.519% last month) is above auction stops since 2007; WI 5Y near 3.22% (vs 2.736% in May) exceeds results since 2008. IG dollar issuance expectations for the week are around $15b, although remain highly dependent on market conditions. The long- end of the curve may benefit this week from anticipated month- end demand; Bloomberg Indices estimated a 0.07yr Treasury index duration extension for July 1, slightly below 12-month average. In Europe, Gilts underperform Treasuries and bunds, cheaper by about 5-6bps at the long end. In commodities, industrial metals rebounded, while oil rose. Copper steadied and most other base metals rebounded after their worst week in a year as China’s economy showed signs of recovering and Goldman Sachs said global supplies were still constrained. Oil fluctuated near $107 a barrel in New York as investors monitored developments from the gathering of Group of Seven leaders; G7 leaders met to decide on a Russian oil price cap ahead of Iranian nuclear talks and on the week of the OPEC+ meeting. French CGT unions will participate in strikes at LNG terminals and gas storage facilities this week; strike in the energy sector on June 28th. Most base metals trade in the green; LME tin rises 6.8%, outperforming peers. LME zinc lags, dropping 0.9%. Spot gold maintains gains, adding ~$13 to trade near $1,840/oz. as some G-7 nations plan to announce ban on new gold imports from Russia Looking at today's US calendar, we get the May durable goods orders, capital goods orders, pending home sales, and June Dallas Fed manufacturing index. Market Snapshot S&P 500 futures up 0.7% to 3,944.50 STOXX Europe 600 up 1.2% to 417.68 MXAP up 1.6% to 161.83 MXAPJ up 1.8% to 538.51 Nikkei up 1.4% to 26,871.27 Topix up 1.1% to 1,887.42 Hang Seng Index up 2.4% to 22,229.52 Shanghai Composite up 0.9% to 3,379.19 Sensex up 1.2% to 53,368.36 Australia S&P/ASX 200 up 1.9% to 6,705.95 Kospi up 1.5% to 2,401.92 Brent Futures up 0.2% to $113.31/bbl Gold spot up 0.7% to $1,840.40 U.S. Dollar Index down 0.29% to 103.88 German 10Y yield little changed at 1.49% Euro up 0.3% to $1.0580 Top Overnight News from Bloomberg ECB policy makers gather on a Portuguese hillside on Monday with the sinking feeling that their rush to tackle the inflation shock they failed to forecast risks both a recession and echoes of the euro area’s sovereign debt crisis It was while sitting apparently alone in a London hotel basement that Christine Lagarde engineered a fix to the euro zone’s most alarming debt turmoil since the pandemic struck The ECB is pushing back its policy decisions and the timing of the subsequent press conferences by 30 minutes as of July The US, UK, Japan and Canada plan to announce a ban on new gold imports from Russia during a summit of Group of Seven leaders that’s getting underway Sunday. Prices of the precious metal climbed Monday President Joe Biden rebooted his effort to counter China’s flagship trade-and- infrastructure initiative after an earlier campaign faltered, enlisting the support of Group of Seven leaders at their summit in Germany China’s economy showed some improvement in June as Covid restrictions were gradually eased, although the recovery remains muted China plans to extend the yuan’s trading hours as it seeks to increase global investor participation in onshore currency trading as part of its internationalization push Russia defaulted on its foreign-currency sovereign debt for the first time in a century, the culmination of ever-tougher Western sanctions that shut down payment routes to overseas creditors The world economy risks entering a new era of high inflation which central banks need to keep in check, the Bank for International Settlements said Signs of distress flashing in bond markets suggest the world’s poorest nations are set to see a wave of debt restructurings. But a growing cohort of investors say that’s a buying opportunity A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were higher across the board as the region took impetus from last Friday's firm gains on Wall St heading closer into month-end. ASX 200 enjoyed broad gains across its sectors although gold miners lagged as Evolution Mining shares dropped by more than 20% due to a cut in its FY output guidance. Nikkei 225 was lifted after the BoJ’s Summary of Opinions reiterated that they must maintain easy policy and with Tepco among the biggest gainers on tight electricity supply amid the hot weather. Hang Seng and Shanghai Comp. conformed to the upbeat mood as Hong Kong benefitted from a rampant tech sector and with the mainland encouraged by further easing of restrictions in Shanghai and Beijing, while the PBoC also upped its liquidity efforts with a CNY 100bln injection. Top Asian News Beijing will permit schools to resume in-class teaching as soon as Monday, ending one of the last major curbs in the capital, according to Bloomberg. Shanghai is to gradually resume dining-in at restaurants from June 29th, according to an official cited by Reuters. PBoC injected CNY 100bln via 7-day reverse repos with the rate at 2.10% for a CNY 90bln net injection, according to Reuters. China requested that banks make preparations for longer trading hours for the CNY, with trading in the onshore CNY potentially to extend until 03:00 local time the following day (20:00BST/15:00CDT), according to Bloomberg. BoJ Summary of Opinions from the June meeting stated the BoJ must maintain easy policy and keep a close eye out on the market and FX impact on the economy and prices. It also noted the number of goods seeing prices rise is increasing due to higher raw material costs and a weak yen but it is appropriate to keep easy policy as inflation is not driven by a positive economic cycle. Furthermore, it said maintaining ultra-easy policy is effective in sustaining a rise in wages and that a sharp fall in Yen would hurt the economy and heighten uncertainty. Japanese government issued power shortage warnings for Tuesday, for a second straight day, according to Reuters. Japan has proposed removing reference to the goal of 50% zero-emission vehicles by 2030; wants less concrete target, according to a draft cited by Reuters. BoJ's holding of JGBs has reportedly topped 50% of its total, according to Nikkei. European bourses are kicking off the week on the front-foot as global equities see tailwinds from Wall Street’s bounce on Friday. Sectors in Europe are mostly positive – but Utilities and Insurance are subdued, with the overall picture being a cyclical one. Stateside, US equity futures track sentiment higher – with the NQ the current outperformer vs the ES, YM, and RTY. Top European News ECB says as of the July meeting, the policy decisions will be released at 14:15CET and presser at 14:45CET, according to Reuters. ECB’s Pivot Toward Rate Hikes Feeds Fears of New Bond Crisis; ECB to Announce Rate Decisions 30 Minutes Later From July EU Confronts Low Gas Storage Risk in Test of Unity on Russia Gas Jumps as Europe Struggles to Fill Russian Gap UK’s Battered Economy Is Sliding Toward a Breaking Point FX Greenback continues to gravitate as risk sentiment improves, but could get a month end boost given models indicating broad rebalancing requirement - DXY pivots 104.000 within 104.120-103.790 range just shy of last week's low. Yen benefits from all round fix buying ahead of final trading day of June and Q2 on Thursday - Usd/Jpy not far from 134.50 at one stage overnight alongside declined in Yen crosses. Pound perks up as IMM spec accounts trim short positions again and Euro tests technical resistance ahead of 1.0600 vs Buck amidst firmer rebound in EGB yields - Cable probes 1.2300 at best, Eur/Usd touches 21 DMA at 1.0591. Aussie lags on Aud/Nzd headwinds, but Loonie pares losses in tandem with oil - Aud/Usd sub-0.6950, cross under 1.1000, Nzd/Usd hovering over 0.6300 and Usd/Cad back below 1.2900. Yuan underpinned by net PBoC liquidity injection and easing of Covid restrictions in China - Usd/Cnh and Usd/Cny both beneath 6.6900. Lira knee jerks higher after Turkey cuts credit to firms with more than Try 15 mn FX cash assets - Usd/Try down to 16.1040 or so before rebound towards 16.8900. Fixed Income Debt futures unwind more recovery gains with EGBs leading the way. Bunds retreat towards 146.50 vs 149.00 at one stage last Friday. Gilts closer to 113.00 than 114.00 and 10 year T-note near the base of 116-31/117-13 overnight range. US durable goods data ahead and a double dose of issuance comprising Usd 46 bn 2 year and Usd 47 bn 5 year auctions. Commodities WTI and Brent futures consolidate with modest intraday losses as G7 leaders meet to decide on a Russian oil price cap ahead of Iranian nuclear talks and on the week of the OPEC+ meeting. French CGT unions will participate in strikes at LNG terminals and gas storage facilities this week; strike in the energy sector on June 28th. Spot gold piggy-backs off the softer Dollar – with the yellow metal currently eyeing its 21 DMA (1,841.60/oz) and 200 DMA (1,845.20/oz) to the upside Base metals are largely rebounding following the recent rout – also aided by the Buck. US Event Calendar 08:30: May Durable Goods Orders, est. 0.2%, prior 0.5%; -Less Transportation, est. 0.3%, prior 0.4% 08:30: May Cap Goods Orders Nondef Ex Air, est. 0.1%, prior 0.4% 08:30: May Cap Goods Ship Nondef Ex Air, est. 0.2%, prior 0.8% 10:00: May Pending Home Sales YoY, prior -11.5% 10:00: May Pending Home Sales (MoM), est. -3.9%, prior -3.9% 10:30: June Dallas Fed Manf. Activity, est. -6.5, prior -7.3 DB's Jim Reid concludes the overnight wrap This morning we are launching our monthly survey which hopefully comes at an opportune time to assess what you all think about recession risk, whether the next big move in markets will be up or down, whether the BoJ will be able to hold the line on YCC, whether your market view includes the risk of Russian gas being cut off from Europe, and whether you think negative rates will be seen again in the next decade after the ECB likely moves away from it by September. There are a couple of other repeat questions to answer. It should take 2-3 minutes, is all anonymous, with answers likely Thursday morning. The link is here and all help gratefully received. A reminder that my chart book was out last week with lots of charts on one of the worst H1s in history, recession risks and lots more. See here for more. Without having a blockbuster event to look forward to this week there are plenty of things to keep us occupied in what are highly uncertain times. Perhaps the ECB's Forum on Central Banking in Sintra will be the key event to watch, with a policy panel on Wednesday which will bring together Chair Powell, President Lagarde and Governor Bailey together the likely highlight. Staying in Europe, all eyes will be on the June CPI numbers released for Germany (Wednesday), France (Thursday) and Italy and the Eurozone on Friday. Consensus expectations don’t suggest we’re yet at peak headline inflation with CPI expected to pick up a few tenths YoY this week. With commodity prices fading sharply in June the hope is that we will be near the top soon. In fact, our US economists put out an inflationary chart book last week that suggested that the peak will be in September (9.1% headline and 6.3% core). The problem is that even if headline dips because of energy, core won’t necessarily fall as quickly with wages and second round effects in full force. We had a small indicator of that last week as our economists also pointed out that the recent acceleration in US hospital workers’ wage growth from around 2.5% to almost 5% should serve to add an additional 50bps to core PCE inflation next year (link here). On Thursday, we’ll get the latest reading of the US core PCE deflator within the personal income and spending data. Core PCE is the Fed's preferred inflation measure so this and the healthcare news is important. Staying with US data, we have a fair amount to look forward to with the all important ISM on Friday (53.2 expected vs 56.1 last month). We'll also see the Chicago PMI on Thursday and regional Fed's manufacturing indices throughout the week. Durable goods orders (today) and wholesale and retail inventories (tomorrow) will be key to assessing inventory pressures flagged by several firms in recent weeks as well as corporate behaviour amid some easing in supply-chain backlogs. How the consumer is faring under rising rates and stubborn inflation will be another key theme, with the Conference Board’s June consumer confidence index out tomorrow (99.9 expected vs 106.4 last month). Elsewhere, China's industrial data and PMIs (Thursday), as well as key economic indicators from Japan, will be in focus. Even though we at the very back end of Q2 earnings, this week will see some bellwether consumer spending companies such as Nike (Monday), H&M and General Mills (Wednesday) report. Other corporates releasing results will include Prosus (Monday), Micron and Walgreens Boots Alliance (Thursday). Overnight in Asia, equity markets are continuing last week’s rally with the Hang Seng (+2.72%) leading gains thanks to a strong performance in Chinese tech firms. The Kospi (+2.08%), Nikkei (+1.04%), Shanghai Composite (+0.89%) and CSI (+1.24%) are all also up. Outside of Asia, DM equity futures point to further gains with contracts on the S&P 500 (+0.19%), NASDAQ 100 (+0.44%) and DAX (+0.79%) moving higher. Bitcoin is above $21,000 after falling to as low as $17,600 last week for the first time since December 2020, while 10yr US yields are up around +2.5bps. Earlier today, data released showed that China’s industrial profits (-6.5% y/y) contracted at a slower pace in May following a big fall of -8.5% in April as companies resumed their activity in major manufacturing hubs amid easing Covid restrictions. In other overnight news, Russia has defaulted on its foreign-currency sovereign debt ($100 million) for the first time in more than 100 years, after the grace period for the payment deadline expired on Sunday. Recapping last week now, markets grew increasingly concerned about a recession as the week went on, thanks to weak economic data, hawkish central bank rhetoric, and the threat of a Russian gas cut-off in Europe. That led to a significant rally in sovereign bonds as investors sought out safe havens and cast doubt on whether central banks could keep hiking into a downturn. Indeed, yields on 10yr bunds came down by -21.9bps over the week as a whole (+1.0bps Friday), which is their 3rd biggest weekly decline in the last decade. Yields on 10yr Treasuries also saw a similar, albeit less marked decline, with yields down -9.6bps (+4.3bps Friday). That decline in yields came in spite of continued hawkish central bank commentary, and on Friday we saw San Francisco Fed President Daly say that a 75bps hike in July was “where I’m starting”, thus joining a growing number of officials who’ve openly backed a 75bps move again. Bear in mind if the Fed did move by 75bps in July, that would mean the hiking cycle since March would now be at 225bps, which matches the entire hiking cycle we saw in 3 years between 2015 and 2018. Nevertheless, when it came to monetary policy expectations, the growing fears of a recession led investors to take out the probability of more aggressive tightening, with the fed funds rate priced in by December’s meeting down by -16.0bps over the week (-5.0bps Friday). And looking at the entire profile of meetings ahead, futures are now expecting the peak Federal funds rate to come as soon as March 2023, before pricing in cuts after that. With investors expecting somewhat more dovish central banks, global equities rallied strongly last week as they recovered from their worst weekly performance since the pandemic began. The S&P 500 gained +6.45% on the week, and its Friday advance of +3.06% was the best daily performance for the index since May 2020. Europe’s STOXX 600 put in a weaker +2.40% advance (+2.62% Friday), but matters weren’t helped by German equities, with the DAX losing -0.06% (+1.59% Friday) as concerns grew about a potential cut-off in Russian gas. That’s sent natural gas futures in Europe to a 3-month high, with last week seeing a further +9.14% gain (-3.63% Friday). Lastly, after the poor mid-week data including the flash PMIs for June, Friday’s releases did bring some modest respite. First, the final reading of the University of Michigan’s long-term inflation expectations was revised down to 3.1% (vs. 3.3% previously). The unexpected jump in that measure before the Fed’s meeting was said to be a factor in their move to 75bps, as they’re very concerned about the prospect that longer-term inflation expectations could become unanchored, making inflation much harder to control. Furthermore, new home sales for the US in May rose to an annualised rate of 696k (vs. 590k expected), whilst the previous month also saw upward revisions. To be fair though, it wasn’t all positive on Friday, and Germany’s Ifo business climate indicator fell to 92.3 in June (vs. 92.8 expected), which marks an end to two successive monthly increases in April and May. Tyler Durden Mon, 06/27/2022 - 08:06.....»»

Category: blogSource: zerohedgeJun 27th, 2022

3 Must-Buy Non-US Mutual Funds to Diversify Your Portfolio

Invest in non-U.S. mutual funds like TPAIX, WAESX and DGIEX to diversify your portfolio and earn steady returns in the long run. Investors may find non-U.S. mutual funds more attractive than those having significant domestic exposure in the current backdrop of the Federal Reserve’s overnight interest rate hike, record-high inflation rates, and soaring crude oil prices. Moreover, the strengthening of the U.S. dollar due to Fed policy tightening has also put foreign mutual funds in a favorable position. Moreover, an indication of a possible recession has also created a negative impact on investor sentiment. In this environment, investing in non-U.S. mutual funds may prove profitable for investors.   International Monetary Fund’s (IMF) World Economic Outlook report published in April 2022 has outlined the Russia-Ukraine war as the significant reason for the slowdown in global growth and high inflation. Real GDP is estimated to grow at 3.3% and 2.4% for advanced economies in 2022 and 2023. However, it is projected to increase at 3.8% and 4.4%, respectively, for Emerging Markets and developing economies during the said period. Thus, emerging countries like Israel, India and China are good alternative destinations for investors who wish to diversify their portfolios and earn a good return. IMF projected Israel’s economy to grow at 5.0% for 2022 and 3.5% for 2023, India at 8.2% and 6.9%, and China at 4.4% and 5.1%.Israel invests the most in research and development in the world. It has an entrepreneurial-mind and skilled workforce, especially in the field of engineering and technology. India is among the fastest-growing counties in the world and home to the largest youth population in the world. The country offers abundant investment opportunities in different sectors like consumer goods, information technology, infrastructure and agriculture. The government of India has an accommodative policy for foreign investment. China is the most populated country in the world and gives tremendous growth opportunities for businesses; it has a highly skilled labor force and is the manufacturing base for major global brands. The Chinese government’s investment in infrastructure is unparallel.Thus, investing in non-U.S. mutual funds primarily having companies as its major holdings that operate in the aforesaid countries may prove more profitable than funds investing in companies having significant domestic exposure.We have thus selected three such non-U.S. mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).Timothy Plan Israel Common Values Fund TPAIX invests most of its assets in common stocks of companies that are headquartered or have a significant amount of business in Israel irrespective of their market capitalization through American Depositary Receipts (ADRs) and direct investments in such companies on foreign stock exchanges. TPAIX advisors invest in growth stocks that have above-average growth potential in revenue, earnings, cash flow, or other similar criteria.Edward R. Allen has been the lead manager of TPAIX since Oct 12, 2011. The fund has 62.17% of its net assets invested in various companies in Israel as of 5/31/2022.TPAIX’s three-year and five-year annualized returns are nearly 14.3% and 11.3%, respectively. TPAIX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.72%,To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.Wasatch Emerging Markets Select Fund WAESX invests most of its assets along with borrowings, if any, in equity securities of companies that have significant exposure in emerging market countries, irrespective of their market capitalization. WAESX advisors invest mostly in sectors like communication services, consumer discretionary, consumer staples, financials, health care, industrials, and information technology.Ajay Krishnan has been the lead manager of WAESX since Dec 13, 2012. The fund has 31.66% of its net assets invested in various companies in India as of 5/31/2022.WAESX’s three-year and five-year annualized returns are 13.3% and 9.1%, respectively. WAESX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.37%.BNY Mellon Global Emerging Markets Fund DGIEX invests most of its assets along with borrowings if any, in common stocks like equity, derivatives other strategic instruments with similar economic characteristics of companies their principal place of business, or headquartered, in emerging market countries. DGIEX advisors consider emerging market countries that are part of the Morgan Stanley Capital International Emerging Markets Index (MSCI EM Index).Paul Birchenough has been the lead manager of DGIEX since Dec 10, 2020, the fund has 26.57% of its net assets invested in various companies in China as of 5/31/2022.DGIEX’s three-year and five-year annualized returns are 12.4% and 6.5%, respectively. DGIEX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.99%.Want key mutual fund info delivered straight to your inbox?Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >> 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (TPAIX): Fund Analysis Report Get Your Free (WAESX): Fund Analysis Report Get Your Free (DGIEX): Fund Analysis Report To read this article on Zacks.com click here. Zacks Investment Research 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.....»»

Category: topSource: zacksJun 24th, 2022

4 Reasons for Investors to Add KBR Stock to Portfolio

KBR's focus on government business, technology solutions and inorganic actions will continue to drive growth. KBR, Inc. KBR has been gaining from broad-based growth across its business segments, courtesy of its high-end and differentiated government business work, strong margin performance, and technology and consulting services. The increasing platform of long-term, buoyant, mission-critical programs provides strong visibility in volatile times.This engineering, construction and services firm’s determination to lower emissions, product diversification, energy efficiency, and more sustainable technologies and solutions have been driving its performance. Shares of KBR have risen 17.8% over the past year, against the Zacks Engineering - R and D Services industry’s 10% decline.The 2022 earnings estimate for this Zacks Rank #2 (Buy) company has moved upward to $2.61 per share from $2.54 over the past 60 days. This positive trend reflects bullish analyst sentiment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Image Source: Zacks Investment ResearchLet’s delve deeper and find out the factors that should drive growth further.Government Solutions Business – Growth DriverThe company’s Government Solutions unit (accounting for almost 84% of revenues) has been performing well, courtesy of on-contract growth in logistics and engineering, take-away wins along with new work awarded under the company’s portfolio of well-positioned contracting vehicles and increased outsourcing of sustainment activities by the military. KBR is a leader in advancing air, space, cyber and missile defense systems for the U.S. military. KBR expects growth across all its key markets in the United States, the UK and Australia, driven by continued opportunities across the lifecycle of projects. Revenues in the Government Solutions segment increased 25.3% year over year to $1,459 million in first-quarter 2022. This business booked $11.57 billion of backlog at first-quarter end, thereby signaling strong visibility.Robust Technology SupportFor more than five decades, KBR has been leading the process technology development, commercialization and the plant design solutions industry. Its best-in-class technologies have been designing and building end-to-end sophisticated digitization solutions and services for clients worldwide. Overall, it has been driving growth by focusing on lowering carbon emissions, product diversification, energy efficiency, and more sustainable technologies and solutions.These digitized technologies and solutions help companies increase efficiency and productivity, reduce costs and create opportunities to generate higher revenues and profitability.The company’s adjusted earnings of 62 cents per share in the first quarter increased 29% from a year ago due to the above-mentioned tailwinds.Systematic Inorganic MovesKBR has a penchant for acquisitions and strategic alliances for bolstering its inorganic growth and expanding market share. Recently, KBR has agreed to acquire a UK-based digital transformation company, VIMA Group, for up to £75 million. This addition would strengthen KBR’s offerings in digital and information technology services for defense sector clients. VIMA Group offers solutions across a number of large-scale, high-priority digital transformation programs to support its clients, including defense and other public sector firms. It ensures the availability of effective digital and information technology services as guided by UK's Digital Strategy for Defence.In October 2021, KBR acquired a leading provider of high-end systems engineering, assurance and technology advisory services, Frazer-Nash. The addition of Frazer-Nash, which serves across the defense, renewable energy and critical infrastructure sectors, primarily in the U.K. and Australia, will complement KBR's global priorities with minimal overlap because of its geographic footprint.The company’s adjusted EBITDA increased 14.1% year over year to $154 million in the first quarter, driven by a strong performance of the Government Solutions business, acquisitions and solid project execution.Solid ROEKBR’s superior return on equity (ROE) is also indicative of its growth potential. The company’s ROE currently stands at 23.1%, which is higher than the industry’s 10.7%. This indicates efficiency in using shareholders’ funds and the ability to generate profit with minimum capital usage.3 Other Top-Ranked Construction Stocks to BuyMeritage Homes Corporation MTH, sporting a Zacks Rank #1, is one of the leading designers and builders of single-family homes.Earnings are expected to grow 42.7% in 2022. Earnings estimates have moved north to $27.52 per share from $24.49 for 2022 over the past 30 days.AECOM ACM — carrying a Zacks Rank #2 (Buy) — is a leading solutions provider for supporting professional, technical and management solutions for diverse industries across end markets like transportation, facilities, government and in environmental, energy and water businesses.AECOM’s expected earnings growth rate for 2022 is 21.6%. The consensus mark for its 2022 earnings has moved up to $3.43 per share from $3.40 in the past 60 days.Sterling Construction Co., Inc. STRL, a Zacks Rank #2 company, has been benefiting from broad-based growth across the E-Infrastructure, Building and Transportation solutions segments.The consensus mark for Sterling’s 2022 earnings rose to $2.88 per share from $2.80 in the past 60 days. This suggests 34% year-over-year growth.KBR, Inc. KBR, a Zacks Rank #2 company, is a global engineering, construction and services firm, supporting the market segments of global energy and international government services.KBR has seen an upward estimate revision from $2.54 to $2.61 per share for the 2022 bottom line in the past 60 days. This suggests 7.9% year-over-year growth. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AECOM (ACM): Free Stock Analysis Report KBR, Inc. (KBR): Free Stock Analysis Report Meritage Homes Corporation (MTH): Free Stock Analysis Report Sterling Infrastructure, Inc. (STRL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 24th, 2022

Tech stocks could drive a 10% relief rally in the S&P 500 this summer as investors anticipate the Fed to end rate hikes in December, Stifel says

A further decline in oil prices is possible as Ukraine could reach a ceasefire deal with Russia by the end of the year, Stifel said. Drew Angerer/Getty ImagesTech stocks are poised to drive a 10% rally in the stock market this summer, according to Stifel's Barry Bannister.The rally would come as investors anticipate the Fed to end its interest rate hiking cycle in December, and as a recession is avoided."The S&P 500 has removed all COVID froth, but we see no U.S. recession in 6 months and a summer rally," Bannister said.Technology stocks are poised to drive a 10% rally in the stock market this summer as investors begin to anticipate a pause to the Federal Reserve's rate hike cycle by the end of the year, Stifel's Barry Bannister said in a Thursday note.The potential upside move would send the S&P 500 to 4,150 and help it claw back some of this year's bear market losses, which have been driven by high inflation, rising interest rates, and growing fears of an economic recession.But Bannister believes that while the stock market is currently pricing in an economic recession, the US will ultimately avoid such a downturn over the next six months, and that disconnect leaves upside potential for the stock market's current valuation multiple. "The S&P 500 has removed all COVID froth, but we see no US recession in 6 months and a summer rally," Bannister said. "The S&P 500 already reflects a steep EPS recession, but our earnings estimates do not, for now, corroborate that fear." Additionally, falling oil prices and budding investor anticipation that the Fed will end its interest rate hikes by the end of the year should translate into some buying pressure for equities, according to the note.Bannister expects oil prices to fall to $85 per barrel by the end of the year on the potential for a ceasefire between Russia and Ukraine by year-end. "Ukraine's cost to the West has become untenable as GDP slows with inflation," Bannister said. While falling oil prices would help tame inflation and give the Fed flexibility in its tightening cycle, falling interest rates would be a boon for technology stocks, which have been the worst performing sector of the year, falling nearly 30% year-to-date.Higher interest rates have cut into the valuations of fast growing technology stocks that rely on raising capital to fuel their growth. As Fed chair Jerome Powell raised interest rates by 75 basis points in June, by 50 basis points in May, and by 25 basis points in April, the cost for a company to raise capital rose significantly, cutting into valuation multiples for the sector."Our 10Y Treasury yield view versus fed funds futures points to 10Y-3M inversion 1Q23, supportive of a Dec-2022 Fed pause," Bannister explained. The 10-year US Treasury yield has dropped by about 40 basis points from its cycle high of 3.5%. While Bannister sees a rally in the short-term, the equity strategist is still bearish over the long-term, calling the potential rally a cyclical bull within a secular bear. "The S&P 500 in 2022 likely entered a 'secular bear market' although the process is not linear... A secular bear market entails a wide trading range of the entire 2020s decade, compression of the P/E ratio with reflation, and a bias toward Value stocks," Bannister said. Read the original article on Business Insider.....»»

Category: personnelSource: nytJun 24th, 2022

10 Most-Heavily Traded ETFs of Q2

The ETF industry is seeing explosive growth, piling up huge assets amid the stock market turmoil. This has resulted in enough liquidity in the ETF world, with most of the ETFs trading at extremely higher volumes. The ETF industry is seeing explosive growth, piling up huge assets amid the stock market turmoil. This has resulted in enough liquidity in the ETF world, with most of the ETFs trading at extremely higher volumes.Volume can be determined by the number of shares traded in a particular period. A higher number of shares provides easy access to move in and out of a product, keeping the bid/ask spreads tight.In fact, greater volume ensures easy creation and redemption of shares in the fund basket, which is a regular and vital mechanism in ETFs. This is especially true as authorized participants (AP) have the ability to create new baskets of ETF shares for underlying securities or redeem them when required. This phenomenon allows ETFs to trade in line with their net asset value (NAV).That said, we have highlighted 10 ETFs that have seen higher average volumes over the past three months and are thus the top 10 funds by trading volume, per etfdb.com (see: all the Category ETFs here).  ProShares UltraPro QQQ TQQQ – Average Daily Volume: 154.1 million sharesProShares UltraPro QQQ seeks to deliver three times the return of the daily performance of the NASDAQ-100 Index, charging investors 0.95% in expense ratio. The index measures the performance of the 100 largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization.ProShares UltraPro QQQ is the most-popular and liquid ETF in the leveraged space, with AUM of $10.3 billion.ProShares UltraPro Short QQQ SQQQ – Average Daily Volume: 117.7 million sharesProShares UltraPro Short QQQ provides three times inverse exposure to the daily performance of the Nasdaq-100 Index, charging 95 bps in annual fees. The index measures the performance of the 100 largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization.ProShares UltraPro Short QQQ has AUM of $3.5 billion.SPDR S&P 500 ETF SPY – Average Daily Volume: 99.6 million sharesSPDR S&P 500 ETF tracks the S&P 500 Index and holds 504 stocks in its basket, with information technology, healthcare, financials and consumer discretionary being the top five, with a double-digit allocation each. SPDR S&P 500 ETF charges investors 9 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.Invesco QQQ QQQ – Average Daily Volume: 77.4 million sharesInvesco QQQ provides exposure to the 102 largest domestic and international companies, excluding financial stocks, by tracking the Nasdaq-100 Index. It has AUM of $149.7 billion and charges 20 bps in annual fees. Information technology takes the largest share at 50.1%, while communication services and consumer discretionary round off the next two spots. Invesco QQQ has a Zacks ETF Rank #3 with a Medium risk outlook.ProShares Ultra VIX Short-Term Futures ETF UVXY – Average Daily Volume: 77.4 million sharesProShares Ultra VIX Short-Term Futures ETF offers exposure to one and one-half times (1.5X) the daily performance of the S&P 500 VIX Short-Term Futures Index. It seeks to profit from increases in the expected volatility of the S&P 500, as measured by the prices of VIX futures contracts.ProShares Ultra VIX Short-Term Futures ETF has accumulated $942.8 million and charges 95 bps in annual fees.Financial Select Sector SPDR Fund XLF – Average Daily Volume: 68.2 million sharesFinancial Select Sector SPDR Fund seeks to provide exposure to 66 companies in the diversified financial services, insurance, banks, capital markets, mortgage real estate investment trusts, consumer finance, and thrifts and mortgage finance industries (read: Yield Curve Inverts: 4 Value Sector ETFs to Play).Financial Select Sector SPDR Fund is the ultra-popular financial ETF with AUM of $29.2 billion. It charges 10 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.Direxion Daily Semiconductor Bull 3x Shares SOXL – Average Daily Volume: 55.8 million sharesDirexion Daily Semiconductor Bull 3x Shares targets the semiconductor corner of the technology sector with three times leveraged exposure to the ICE Semiconductor Index. Direxion Daily Semiconductor Bull 3x Shares has amassed about $3.6 billion in its asset base while charging 89 bps in fees per year.iShares MSCI Emerging Markets ETF EEM – Average Daily Volume: 52.9 million sharesiShares MSCI Emerging Markets ETF offers exposure to large and mid-sized companies in emerging markets. It follows the MSCI Emerging Markets Index and holds 1,235 securities. Among the emerging countries, China takes the top spot at 34.2%, while Taiwan and India round off the next two spots with a double-digit exposure each.iShares MSCI Emerging Markets ETF has AUM of $26 billion and charges 68 bps in annual fees. It has a Zacks ETF Rank #3 with a Medium risk outlook.iShares iBoxx $ High Yield Corporate Bond ETF HYG – Average Daily Volume: 44.9 million sharesiShares iBoxx $ High Yield Corporate Bond ETF is the largest and most-liquid fund in the high-yield bond space, with AUM of $13.3 billion and an expense ratio of 0.48%.iShares iBoxx $ High Yield Corporate Bond ETF tracks the Markit iBoxx USD Liquid High Yield Index and holds 1,274 securities in the basket. It has a Zacks ETF Rank #4 (Sell) with a High risk outlook.iShares China Large-Cap ETF FXI – Average Daily Volume: 42.3 million sharesiShares China Large-Cap ETF offers exposure to large companies in China by tracking the FTSE China 50 Index. It holds 50 stocks in its basket with a slight tilt toward the top three firms. iShares China Large-Cap ETF has key holdings in the consumer discretionary sector with 34.7% share, while financials (28.3%) and communication (18.6%) round off the next two spots (read: Will China ETFs Gain on Strong Q1 GDP Data?).iShares China Large-Cap ETF has AUM of $5.7 billion and an expense ratio of 0.74%. It has a Zacks ETF Rank #5 (Strong Sell) with a Medium risk outlook. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco QQQ (QQQ): ETF Research Reports SPDR S&P 500 ETF (SPY): ETF Research Reports iShares iBoxx High Yield Corporate Bond ETF (HYG): ETF Research Reports Financial Select Sector SPDR ETF (XLF): ETF Research Reports ProShares Ultra VIX ShortTerm Futures ETF (UVXY): ETF Research Reports iShares MSCI Emerging Markets ETF (EEM): ETF Research Reports iShares China LargeCap ETF (FXI): ETF Research Reports ProShares UltraPro QQQ (TQQQ): ETF Research Reports Direxion Daily Semiconductor Bull 3X Shares (SOXL): ETF Research Reports ProShares UltraPro Short QQQ (SQQQ): ETF Research Reports To read this article on Zacks.com click here......»»

Category: topSource: zacksJun 23rd, 2022

3 Technology Mutual Funds for Spectacular Returns

Below, we share with you three Technology mutual funds. Each has a Zacks Mutual Fund Rank #1 (Strong Buy). Risk lovers seeking healthy returns over a fairly long investment horizon may opt for technology mutual funds. It is believed that the technology sector is poised for a brighter earnings performance than others owing to innovation and greater demand. Improving industry fundamentals and emerging technologies — such as wearables, VR headsets, drones, virtual reality devices and artificial intelligence — are the key catalysts for the sector.Meanwhile, most mutual funds investing in securities from these sectors prefer a growth-oriented approach, focusing on companies with strong fundamentals and a relatively higher investment prospect. Technology now has broader coverage than just hardware and software companies. Social media and Internet companies are also part of the technology landscape today.Below we share with you three top-ranked Technology mutual funds, namely Columbia Seligman Technology and Information Fund Class A SLMCX, Fidelity Select Technology Portfolio FSPTX and T. Rowe Price Communications & Technology Fund Investor Class PRMTX. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.Columbia Seligman Technology and Information Fund Class A seeks capital gains by investing the majority of its net assets, including borrowings in securities of companies operating in information technology and communications services. SLMCX, a non-diversified fund, also invests a small portion of its net assets in foreign investments.Columbia Seligman Technology and Information Fund Class A has three-year annualized returns of 29.3%. As of February 2022, SLMCX held 72 issues, with 6.06% of its assets invested in Lam Research Corp.Fidelity Select Technology Portfolio aims for capital appreciation by investing the majority of its net assets in common stocks of domestic and foreign companies that benefit significantly from technology advances and improvement. FSPTX uses fundamental analysis like financial condition, industry position, and market conditions to select investments.Fidelity Select Technology Portfolio has three-year annualized returns of 23.2%. FSPTX has an expense ratio of 0.67% compared with the category average of 1.05%.T. Rowe Price Communications & Technology Fund Investor Class seeks long-term capital growth by investing the majority of its net assets and in securities of US or Non-US technology and communication companies. PRMTX uses both growth and value approaches for investment.T. Rowe Price Communications & Technology Fund Investor Class has three-year annualized returns of 10.3%. James Stillwagon has been the fund manager of PRMTX since 2019.To view the Zacks Rank and the past performance of all Technology mutual funds, investors can click here to see the complete list of Technology mutual funds.Want key mutual fund info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >> Zacks' Top Picks to Cash in on Electric Vehicles Big money has already been made in the Electric Vehicle (EV) industry. But, the EV revolution has not hit full throttle yet. There is a lot of money to be made as the next push for future technologies ramps up. Zacks’ Special Report reveals 5 picks investorsSee 5 EV Stocks With Extreme Upside Potential >>View All Zacks #1 Ranked Mutual FundsWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (PRMTX): Fund Analysis Report Get Your Free (SLMCX): Fund Analysis Report Get Your Free (FSPTX): Fund Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 23rd, 2022

The Golden Era of Value Investing is Back

Tracey Ryniec outlines three reasons why the 2020s will be a big decade for value investing, and how you can take advantage of the limitless opportunities. Is Warren Buffett feeling deja vu in 2022?In the 1960s, growth stocks staged a big rally, with 50 of the top growth companies in cutting edge industries like technology and pharmaceuticals, becoming so popular they were called the “Nifty 50.”The Nifty 50 were considered “sure things” with investors willing to pay as high as 50x earnings to own the stocks under the belief that those innovative companies would keep growing at a fast pace forever.By 1969, Buffett found nothing of value to buy, so he dissolved his investing fund and moved to the sidelines.But the party finally ended in 1973, as the Arab Oil Embargo, a recession and the inflation that followed, rippled through the world’s global stock markets.When the sell-off was over, the Dow had fallen 45% in 2 years.Suddenly, there was value again in many stocks and Warren Buffett came back into the game, this time as CEO of Berkshire Hathaway.In a now infamous 1974 interview with Forbes Magazine, Buffett could barely contain his giddiness.Forbes asked how he felt about the market opportunities after the big sell-off and he replied “Like an oversexed guy in a harem. This is the time to start investing.”Buffett Spends $51 Billion Diving Back In In the Forbes interview, Buffett talked about how 1974 reminded him of the early 1950s, when the Great Depression bear market finally ended and stocks were cheap.“Look, I can’t construct a disaster-proof portfolio. But if you’re only worried about corporate profits, panic or depression, these things don’t bother me at these prices,” he said in 1974.Sound familiar?Buffett has been mostly on the sidelines for most of the prior decade, building a massive $144 billion cash position in Berkshire Hathaway. His last mega-deal was when he spent $26 billion to buy Burlington Northern railroad in 2009. He famously didn’t even buy any new stocks in the March 2020 coronavirus crash.But suddenly, in 2022, with stocks off their highs by double digits, Buffett’s Berkshire Hathaway deployed $51 billion of the cash hoard into energy stocks.Energy was the best performing sector in 2021 but, in another tie-in to the 1970s, it was also one of the top performers of the 1970s.Continued . . .------------------------------------------------------------------------------------------------------Investor Alert: Quality Stocks on SaleYou have a rare opportunity to grab strong value stocks at deep "discounts." This could be a better buying opportunity than the pandemic pullback.Warren Buffett couldn’t resist spending billions in this market. And with Zacks Rank timing to catch the best entry points, you could be riding these stocks to bigger profits for months and even years. Recent value stock picks have climbed as much as +186.9%... +312.7%... even +348.7%.¹Special opportunity ends at midnight Thursday, June 23.See Zacks' latest value recommendations >>------------------------------------------------------------------------------------------------------3 Signs the Golden Era is Returning Buffett may have been giddy over the buying opportunities in stocks in 1974, but it turned out that the rest of the decade was a golden era for value investors too.There are 3 signs that US stocks could be returning to another golden era for value investors in this decade.1) P/E Ratios are Dropping After topping out above 20 in 2021, the S&P 500 is now trading at 16.2x. That’s still well above the single digit P/Es of the late 1970s.But forward earnings for individual industries have plunged into the single digits. For example, the companies that are drilling and producing oil and natural gas are trading at just 4.65x forward earnings as an industry. That’s dirt cheap.2) Dividend Yields are RisingAlong with cheap valuations usually comes rising dividend yields. The dividend aristocrats, those companies that have raised their dividend payouts for over 20 years, get cheaper than ever in a stock market sell-off. So not only are they raising their dividend but the yield rises as the stock gets cheaper.It was easy to get juicy dividends in the 1970s as those valuations dropped – and we see a similar opportunity today.3) Dollar Cost Averaging Works In Berkshire Hathaway’s 1978 letter to shareholders, Warren Buffett discussed their strategy of adding to their stock positions in their insurance portfolio as the bear market continued to rage on.“We are not concerned with whether the market quickly revalues upward securities that we believe are selling at bargain prices. In fact, we prefer just the opposite since, in most years, we expect to have funds available to be net buyers of securities,” Buffett wrote.Dollar cost averaging works for value stock bulls because the Street is always late to the party in value stocks so valuations remain depressed for some time. It’s easy to add to your position and still get in at an attractive price.Buffett Gets Out the 1970s Playbook We’re already seeing Buffett, and Berkshire Hathaway, mimicking the strategy of the 1970s.Berkshire has started deploying its cash hoard into cheap companies that have record free cash flows.If stocks continue to get cheaper in the second half of this year, we’ll likely see Berkshire dollar cost average into what it considers to be the most attractive companies.While the overall stock market lagged until 1981, the top value managers like Buffett and Fidelity’s Peter Lynch became investing legends as value investing saw great success.There will be new investing legends created in this decade’s value stock rally as well.Are you ready to take advantage of the value stock opportunities?How to Profit From the Return of Value Investing The pullback has given investors a chance to scoop up strong stocks with irresistible entry points. But which companies are most likely to produce big profits over the coming months and years?The easiest way to find top value buys in this market is to see the recommendations in our Value Investor portfolio.We use the same investing criteria Buffett relied on to build his fortune – with one significant advantage. With Zacks Rank to help us time our entries, we’re targeting true value stocks positioned to begin soaring sooner than other stocks. Then we ride them to their full gain potential. Recent closed positions in the portfolio have surged as much as +186.9%... +312.7%... even +348.7%¹Now is a great time to look into Value Investor. On Friday morning I’m adding a brand-new pick to the portfolio and you can be among the select few to see it first.Get started today and you are also invited to download our just-released Special Report, 5 Stocks Set to Double.  "It reveals 5 stocks our experts believe will generate gains of +100% or more in the coming year."I encourage you to look into this right away. The unique opportunity ends Thursday, June 23.Check out Value Investor and Download 5 Stocks Set to Double Today >>All the Best,TraceyTracey Ryniec, as Zacks Value Stock Strategist, directs our Value Investor portfolio. 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: zacksJun 22nd, 2022

Futures, Oil Tumble As Attention Turns To Coming Recession, Powell Senate Testimony

Futures, Oil Tumble As Attention Turns To Coming Recession, Powell Senate Testimony Tuesday's euphoric market mood has U-turned into sheer despair with most of yesterday's gains gone overnight as attention turns to the coming US recession (now made official by Bill "The Fed Should Crush Donald Trump" Dudley who just published an Op-Ed "The US Economy Is Headed for a Hard Landing") and as traders await Jerome Powell before Senate testimony. S&P 500 futures declined 1.2%, down 45 points to 3,722 while Nasdaq 100 futures were down 1.5% by 715 a.m. in New York, indicating more declines for heavyweight technology stocks, which have already been hammered by rising rates.  Treasury yields and oil both slumped while the broader commodity sector tipped back toward pre-war levels, as traders increasingly price in a recession. Optimism evaporated that policy makers can achieve a soft landing as they navigate a course of aggressive monetary tightening to tame inflation. Fed Chair Jerome Powell is expected to reinforce the commitment to fighting price pressures when he speaks in front of US lawmakers Wednesday even as a growing number of banks warn that the Fed chair is pushing Biden's economy into a recession. Previewing Powell's appearance before the Senate Banking Committee as part of the Fed’s semiannual Monetary Policy Report, DB economists write that they expect him to reiterate the same themes he gave at his post-meeting press conference last week, where he signaled that they’d likely be deciding between 50bps and 75bps at the July meeting. Fed funds futures are currently implying that another 75bps move is more likely, with +71.8bps currently priced in, but don’t forget that there’s still plenty yet to happen ahead of that meeting in just over a month, including the subsequent CPI release and jobs report for June, and as we found out at the last meeting, it’s not implausible that unexpected data releases throw the previous guidance off course. “Overall, we have a very cautious outlook for equity markets and we would be sellers of all rallies,” said Marija Veitmane, senior strategist at State Street Global Markets. “We continue to see strong inflation and central banks determined to crush it, even if the price for that is economic slowdown.” Meanwhile, fears about the economy spread to commodities, putting oil in line for a monthly loss: “Markets are flip-flopping between recession fears and inflation fears,” UBS Wealth Mgmt chief economist Paul Donovan said in a note. “Today it is recession fears.” In premarket trading, major US technology and internet stocks were lower in premarket trading, poised to snap the two-session rising streak amid mounting concerns of a global recession. Stocks related to cryptocurrencies fell as the price of Bitcoin briefly slipped below $20,000 after rebounding strongly on Tuesday. Alibaba and other US-listed Chinese stocks pare losses in premarket trading after a Bloomberg News report that Jack Ma’s Ant may apply to become a financial holding company as soon as this month. Other notable premarket movers: La-Z-Boy’s (LZB US) shares jumped as much as 8.9% with KeyBanc saying that the furniture maker’s sales and EPS remain strong. The company reported adjusted earnings per share for the fourth quarter that beat the average analyst estimate. Precision BioSciences (DTIL US) shares jump as much as 40% in US premarket trading amid a collaboration and license agreement with Novartis effective June 15. Ormat Technologies (ORA US) shares fell 4.6% in postmarket trading on Tuesday after the company said it will offer $350 million aggregate principal amount of Green Convertible Senior Notes due 2027 in a private offering to institutional buyers. Equity Residential (EQR US) stock may be in focus as it was raised to outperform from sector perform at RBC on the view that the apartment owner is well placed to weather a downturn. Keep an eye on Cigna (CI US) shares as Morgan Stanley upgraded the stock to overweight from equal-weight. The brokerage also downgraded Anthem to equal-weight from overweight. Watch Scotts Miracle-Gro (SMG US) shares as they were downgraded to equal-weight from overweight at Wells Fargo, which said there’s “just not much to get excited about” for the stock in the second half of the year. US equities have been roiled in the past few months amid worries that aggressive monetary tightening by the Fed would spark an economic recession. The S&P 500 is in a bear market after a rout that erased almost $2 trillion from the benchmark last week, and is tracking declines of nearly 9% in June alone. Fed Bank of Richmond President Thomas Barkin said the central bank should raise rates as fast as it can without causing undue harm to financial markets or the economy.  Elsewhere, Joe Biden plans call on Congress to enact a gasoline tax holiday to cool soaring pump prices and alleviate the pressure on consumers. The move is expected to do nothing at all for gas prices. In Europe, the Stoxx 600 Index was down 1.6% after rallying for three days in a row; the Euro Stoxx 50 dropped as much as 2.3%, Italy’s FTSE MIB underperforms.  The FTSE 100 outperformed as the pound weakened after UK inflation rose to a fresh four-decade high in May after broad increases in the cost of everything from fuel and electricity to food and beverages. Risk assets slumped with most European cash equity indexes erasing the week’s gains as recession fears, hot inflation data and energy concerns weigh on sentiment. Miners, energy and autos lead broad losses across all Stoxx 600 sectors. Here are the biggest European movers: European mining stocks sink as a selloff in iron ore worsened amid signs of weakening global demand, while steel shares were pressured by downgrades from JPMorgan. Rio Tinto dropped as much as 3.6%, Glencore -6.1%, Salzgitter -15%, ArcelorMittal -8.2%, Voestalpine -11% Umicore shares plunged as much as 17% after the materials technology company announced plans to spend EU5b by 2026, “meaningfully” higher capital expenditure than Jefferies had expected. Saipem shares tumble as much as 19% after the company set terms for a EU2b capital hike, offering about 2 billion new shares at EU1.013. The subscription period will run from June 27 through July 11, with the final results to be announced on July 15, according to terms seen by Bloomberg. Samhallsbyggnadsbolaget i Norden and Swedish real estate peers added to months of declines as European equities resumed their selloff, with fresh concerns about the possibility of recession. SBB falls as much as 13%, Sagax -6%, Fabege -4%, Castellum -3.7% Kone shares drop as much as 7.5% after the Finnish elevator manufacturer was downgraded at Goldman Sachs and Berenberg, which both cited headwinds from China and the impact of slowing economic growth. Energy stocks are among the worst-performing sectors as oil slumps amid concerns about the US economy, while the Biden administration is set to step up its fight against higher gasoline prices. Shell declines as much as 4.6%, TotalEnergies -4.6%, Repsol -5.1% Accor shares drop as much as 3.8% after the hospitality company said it entered into exclusive negotiations to sell a 10.8% stake in Ennismore for EU185m. JD Sports shares gain as much as 5.2%. The company reported FY results that are in line overall with consensus expectations, and the market should be reassured that the sneaker seller’s recent performance is still on track, according to RBC. NatWest shares gain as much as 4% after the stock was raised to buy from hold at Jefferies, which said its re-rating potential is now more obvious. The UK government also extended its plan to sell more of its stake in the group by a year. Earlier in the session, Asian stocks resumed their slide Wednesday as renewed fears of a crackdown hit Chinese technology shares. The MSCI Asia Pacific Index slipped as much as 1.7%, cutting short a rebound in the previous session. TSMC, Alibaba and Tencent were the biggest drags, with a gauge of Chinese tech firms in Hong Kong falling more than 4%. Shares of online drug sellers slumped on a report that Beijing may ban third-party platforms from offering medicines over the internet. Elsewhere, a sub-gauge on the region’s information tech companies headed for the lowest close since September 2020 amid growing worries over a global recession. South Korea’s benchmark slumped 2.7% as the tech-heavy market continued to face selling pressure amid foreign outflows. The Asian stock benchmark is hovering near a two-year low as the prospect of a slowdown in the US driven by aggressive interest-rate hikes unsettle investors. Tesla Inc. Chief Executive Officer Elon Musk said Tuesday that a recession in the US looks likely in the near future, adding to the growing drumbeat of warnings. “Markets are still looking for the catalyst for a more sustained rebound as headwinds surrounding tightening financial conditions,” said Jun Rong Yeap, a market strategist at IG Asia Pte, adding that gains from any technical rebound may be capped by some wait-and-see sentiments. After falling more than 18% this year, a technical indicator is suggesting the MSCI’s Asian benchmark has reached oversold levels and may be poised for a reprieve. Investors will now shift their focus to Federal Reserve Chair Jerome Powell’s testimony on monetary policy to Congress later Wednesday, which may provide further clues on inflation and rates outlook.  Indian markets snapped a two-day advance as growing concerns of slowing global growth potentially leading to a recession dragged down world equity markets.  The S&P BSE Sensex dropped 1.4% to 51,822.53 in Mumbai, while NSE Nifty 50 Index fell by an equal measure. Reliance Industries, a major drag on both the key gauges, declined 3%, its biggest plunge since May 9.  All of the 19 sectoral indexes compiled by BSE Ltd. slipped, led by a measure of metal companies. All but four of 30 companies in the Sensex declined.  All major stock markets, including Asia, traded lower as investors fear that aggressive monetary tightening moves by global central banks could lead to an economic downturn. “Traders are advised to keep a hedge position, while investors should focus on stock selection,” according to Religare Broking analyst Ajit Mishra. The monsoon’s progress, a correction in oil prices and currency movements will be important factors to watch for the Indian stock market’s outlook, he said.  In rates, havens were re underpinned with major yield curves bull-steepening. A Treasury rally was led by the front-end of the curve, following wider gains across gilts after UK May inflation matches median estimates, trimming expectations for more aggressive BOE rate hikes. US yields richer by 10bp-6bp across the curve with front-end-led advance steepening 2s10s by ~2bp, 5s30s by ~4bp; 10-year yields around 3.20%, richer by nearly 8bp on the day, while gilts outperform by additional 6bp in the sector. Short-dated gilts outperform, richening ~13bps in 2s after another hot inflation print. Gilts lead bunds, Treasuries higher, with traders pulling back from wagers on three 50 basis-points hikes by year end after UK inflation accelerated in line with estimates in May. MPC-dated OIS rates pare back some of the more aggressive pricing seen in recent days. German 10y yields fall 10bps to near 1.67%, Treasury 10-year yield eases ~6bps to near 3.22% ahead of Fed Chair Powell’s semi-annual testimony on monetary policy. Peripheral spreads widen, with long-dated BTPs underperforming.  In FX, early in the session we saw a push toward the dollar, which subsequently was partly faded, but in any case it snapped two days of losses to rise by around 0.2% and the greenback advanced versus all of its Group-of-10 peers apart from the yen. JPY and CHF were the strongest performers in G-10 FX, NZD and AUD underperform. Antipodean currencies and the Norwegian krone were the worst performers and each of them fell by more than 1% against the greenback. The euro traded near $1.05 after dropping to a day low of 1.0469 in early European trading. The yen rebounded after making a fresh multi-decade low versus the greenback. The yen not only held the lead in short-term realized volatility, but traders also bet that it won’t lose its crown any time soon. Demand for low-delta exposure in the Japanese currency is by far the highest among the Group-of-10 peers, with Antipodean and Scandinavian currencies trailing. In commodities, West Texas Intermediate tumbled to $104 a barrel, with prices falling alongside other raw materials including copper. WTI sunk as much as 5.7% before recovering back above $104. Base metals trade poorly; LME tin falls 4.9%, underperforming peers. Spot gold falls roughly $8 to trade near $1,825/oz. Concerns about a broad economic slowdown are eclipsing the fallout from the war in Ukraine and signs of still-tight supply.  Bitcoin is pressured and briefly dipped again below the USD 20k mark, to a trough of USD 19.95k. Though, it remains someway from last week's USD 17.5k low. Looking at the day ahead now, and the main highlight will be Fed Chair Powell’s testimony before the Senate Banking Committee. Other central bank speakers include the Fed’s Barkin, Evans and Harker, as well as BoE Deputy Governor Cunliffe. Otherwise, data releases include UK and Canadian CPI for May, as well as the European Commission’s preliminary consumer confidence indicator for the Euro Area in June. Market Snapshot S&P 500 futures down 1.7% to 3,702.50 STOXX Europe 600 down 1.6% to 401.86 MXAP down 1.7% to 156.08 MXAPJ down 2.3% to 517.35 Nikkei down 0.4% to 26,149.55 Topix down 0.2% to 1,852.65 Hang Seng Index down 2.6% to 21,008.34 Shanghai Composite down 1.2% to 3,267.20 Sensex down 1.2% to 51,918.86 Australia S&P/ASX 200 down 0.2% to 6,508.54 Kospi down 2.7% to 2,342.81 German 10Y yield little changed at 1.69% Euro down 0.2% to $1.0509 Brent Futures down 3.8% to $110.24/bbl Brent Futures down 3.9% to $110.18/bbl Gold spot down 0.4% to $1,825.23 U.S. Dollar Index up 0.23% to 104.67 Top Overnight News from Bloomberg   A more detailed summary of Global Markets courtesy of Newsquawk Asia-Pac stocks were subdued after the risk-on mood from Wall Street waned overnight amid pressure in commodities and with global markets lacking any fresh macro catalysts. ASX 200 pared early gains as resilience in energy and defensives was offset by losses in tech and financials. Nikkei 225 was indecisive after the Japanese currency bounced off its weakest level since 1998. Hang Seng and Shanghai Comp. were subdued amid ongoing COVID woes as Macau closed most public services through to Friday and with the Chinese city of Zhuhai also shutting entertainment venues in some areas, while there was some encouragement for the property sector with Chinese property developers planning to meet with banks regarding relief measures in July. Top Asian News Chinese property developers are planning to meet with banks regarding relief measures in July, according to Shanghai Securities News. Chinese Premier Li Keqiang’s struggle to revive China’s economy under the zero-Covid policy championed by President Xi Jinping has spurred rumours of rifts between the country’s top two leaders and considerable speculation over succession plans, according to SGH Macro Advisors. BoJ April meeting minutes stated board members agreed on no change in the BoJ's stance of taking additional easing steps as needed and a member noted that rising raw material costs would hurt the economy so they must keep powerful monetary easing. Furthermore, it was stated that Japan's monetary policy challenge is to address too-low inflation, unlike in western economies, while a member said it is inappropriate to change the monetary policy stance as Russia's invasion of Ukraine added to the downside risks for Japan's economy. European bourses are subdued, Euro Stoxx 50 -1.9%, as Tuesday's positivity waned in the APAC session as commodities slipped in relatively limited newsflow. Unsurprisingly given this dynamic, the Basic Resources and Energy sectors are the European laggards, amid broader cyclical pressure. Stateside, futures are in-fitting with the above action, ES -1.4%, where participants are awaiting the first session of testimony from Chair Powell, newsquawk primer available here. Ant Group is reportedly to apply, as soon as this month, for a key financial license, via Bloomberg citing sources. Toyota (7203 JT) expects global vehicle production in July to be around 800k. China's CPCA says domestic car rales rose 39% in the week to June 13th Y/Y, +55% M/M, via Reuters. Top European News UK PM Johnson is of the view that the government must win its battle with the rail unions and is prepared for the stand-off to last months, according to The Times. Italy is reportedly preparing EUR 3bln of aid to curb energy bills, according to la Repubblica Italian Foreign Minister Di Maio quit the 5-Star Movement (5SM) to set up a new group, according to Reuters. FX Dollar regains bullish momentum on risk dynamics ahead of Fed testimony; DXY on a firmer footing, but capped ahead of 105.000 within 104.950-430 range. Yen also in demand as a safe haven as sentiment sours, USD/JPY reverses course from around 136.71 to sub-136.00 at one stage. Kiwi and Aussie undermined by risk-off mood, with latter also hampered by heavy decline in iron ore; NZD/USD hovers above 0.6250 and well below 1bln option expiries at 0.6300, AUD/USD capped around 0.6900. Loonie, Nokkie and Peso ruffled by collapse in WTI and Brent crude, USD/CAD rebounds towards 1.3000, EUR/NOK tests 10.5000 and USD/MXN straddles 20.1800. Euro holds around 1.0500 and 10 DMA close by amidst hawkish ECB vibe, Pound pivots 1.2200 after somewhat mixed UK inflation data. Central Banks ECB's de Guindos says he expects inflation to ease after the summer but stay near current levels in the coming months; Governing Council is yet to discuss details of the anti-fragmentation tool. New tool should be different from the prior OMT tool as the circumstances are different, will also differ from APP and PEPP. Norwegian Gov't names Paal Longva as Deputy Norges Bank chief. Fixed Income Bonds bounce firmly as risk sentiment turns bearish again on global inflation and recession concerns. Bunds up to 144.87 before fading after a reasonable 2038 German auction. Gilts top out at 111.89 and largely ignored mixed UK inflation metrics vs consensus. 10 year T-note hovers closer to 116-19 overnight peak than 115-28+ trough pre-Fed chair Powell and 20 year supply plus other Fed speakers. Commodities WTI and Brent are, alongside broader commodities, pressured with fresh catalysts somewhat thin and focused on known themes. Currently, they are lower by over 4% on the session and ahead of Biden's announcement on gas prices; though, if implemented, such measures could serve to push demand and ultimately prices higher. US President Biden will deliver remarks on gas prices at around 14:00EDT/19:00BST on Wednesday and will call on Congress to implement a suspension to the federal fuel tax. Subsequently, multiple Democratic sources said that the effort to to suspend the federal gas tax for three months stands almost no chance of passing, according to Politico. IEA warns Europe to prepare for a complete shutdown of Russian gas exports and that governments should keep ageing nuclear plants open and take other contingency measures, according to FT. World Steel says global steel output -3.5% Y/Y in May at 162.7mln tonnes (prev. -5.1% Y/Y in April); China crude steel output -3.5% Y/Y to 96.6mln tonnes (prev. -5.2% Y/Y in April). Spot gold is softer in-line with other metals, though the magnitude is more contained given its haven allure; broader action that sees LME Copper clipped despite the expected commencement of Chile strike action. US Event Calendar 07:00: June MBA Mortgage Applications, prior 6.6% Central Bank Speakers 09:00: Fed’s Barkin Speaks to West Virginia Chamber of Commerce 09:30: Powell Delivers Semi-Annual Testimony Before Senate Panel 12:00: Fed’s Barkin Speaks to the Federal City Council 12:50: Fed’s Evans Discusses Economic Outlook 13:30: Fed’s Harker and Barkin Discuss the Economic Outlook DB's Jim Reid concludes the overnight wrap Whilst the question of whether we’re about to face a recession is still dominating markets, risk assets posted a sharp rebound yesterday as the US got back from holiday. In fact by the close of trade, the S&P 500 (+2.45%) had put in its strongest daily performance in nearly a month, with every sector higher on the day and energy (+5.13%) doing most of the legwork. Even though the chart book showed that before yesterday the S&P was on course for the worst H1 since 1932 we did show in the CoTD (link here) that the top 5 H1 declines over the last 90 years were all followed by strong H2 performance. Before you think it's safe to come out from behind the sofa, S&P futures are around -1% lower this morning as the recession narrative makes a bit of a comeback. European futures are indicating that yesterday's gains (STOXX 600 +0.35%) will be eradicated which could end a three day winning streak. Oil prices are lower overnight with Brent Crude futures weakening -3.23% to $110.95/bbl while WTI futures are down -4.69% at $105.46/bbl amid a push by US President Joe Biden to bring down soaring fuel costs by calling for a temporary suspension of the 18.4-cents a gallon federal tax on gasoline. The demand destruction narrative is making a comeback in Asia as well. Today's big event is Fed Chair Powell's appearance before the Senate Banking Committee as part of the Fed’s semiannual Monetary Policy Report that they deliver to Congress. According to our US economists, they expect him to reiterate the same themes he gave at his post-meeting press conference last week, where he signalled that they’d likely be deciding between 50bps and 75bps at the July meeting. Fed funds futures are currently implying that another 75bps move is more likely, with +71.8bps currently priced in, but don’t forget that there’s still plenty yet to happen ahead of that meeting in just over a month, including the subsequent CPI release and jobs report for June, and as we found out at the last meeting, it’s not implausible that unexpected data releases throw the previous guidance off course. With all that to look forward to, Treasuries built on their selloff from last week, with the 10yr yield up +4.9bps to 3.27% as it echoed the higher yields we’d seen in Europe the previous day. In Asia, US 10yr yields (-1.89 bps) have dipped back down to 3.25%. They haven't had much in the way of Fedspeak to go off over the last 24 hours, although Richmond Fed President Barkin (a non-voter this year) said he “didn’t have a problem” with Powell’s guidance for the decision next month, and that he was in favour of the 75bps hike they did. Those moves in Treasuries also led to a steepening in the curve, with the 2s10s slope up +3.4bps to 7.2bps as they edged slightly further away from the inversion territory that they’ve briefly fallen into twice this year now. In Europe there was more of a divergence between core and peripheral yields however, and those on 10yr bunds (+2.2bps) closing at a post-2014 high, just as those on BTPs fell by -1.2bps. Some of the most significant news over the last 24 hours has been on the FX front, where the Japanese Yen fell to a fresh low for the 21st century of 136.71 per US Dollar this morning before bouncing back to 136.20 as I type. You’ve got to go all the way back to 1998 for the last time the currency was trading at a weaker level though. Prime Minister Fumio Kishida did not seem too concerned about BoJ monetary policy divergence and the impact on weakening the yen, saying in a debate policy needed to remain easy, perhaps lending more political support to the BoJ’s policies. Stocks across Asian markets are trading lower this morning, with the Kospi (-1.89%) the largest underperformer followed by the Hang Seng (-1.26%) after a two-day winning streak earlier this week. Markets in mainland China are also sliding with the Shanghai Composite (-0.33%) and CSI (-0.62%) both weak. Elsewhere, the Nikkei (+0.04%) gave up its early gains, hovering just above the flatline as I type. Bitcoin is at $20,332 in Asian trading. Here in the UK, gilts underperformed their counterparts elsewhere in Europe following remarks from BoE Chief Economist Pill that they would act “more aggressively” if required. In response, 10yr gilt yields rose +5.0bps to reach a fresh post-2014 high of 2.65%. Overnight index swaps are continuing to price in 50bp moves by the BoE at the next 3 meetings, with a path that would leave Bank Rate above 3% by year-end. There were also reports that former Italian Prime Minister Giuseppe Conte was considering leaving Mario Draghi’s coalition. While Draghi’s party would still likely retain a majority in both chambers of Parliament, it would leave a very narrow path to push through legislation to fix the economy or to resist dissent from coalition members – a theme all too familiar to Senate Democrats in the US. There wasn’t much in the way of data yesterday, although US existing home sales fell broadly as expected to an annualised rate of 5.41m in May (vs. 5.40m expected), which is their lowest level since June 2020 as the numbers were recovering after the initial wave of the pandemic. To the day ahead now, and the main highlight will be Fed Chair Powell’s testimony before the Senate Banking Committee. Other central bank speakers include the Fed’s Barkin, Evans and Harker, as well as BoE Deputy Governor Cunliffe. Otherwise, data releases include UK and Canadian CPI for May, as well as the European Commission’s preliminary consumer confidence indicator for the Euro Area in June. Tyler Durden Wed, 06/22/2022 - 07:52.....»»

Category: worldSource: nytJun 22nd, 2022

Inverse or Leveraged ETFs That More Than Doubled This Year

The year 2022 has been brutal so far for the stock market, with the S&P 500 Index plunging in bear-market territory. The year 2022 has been brutal so far for the stock market, with the S&P 500 Index plunging in bear-market territory. Russia’s invasion of Ukraine, tightening monetary policy and surging prices continue to weigh on investor sentiment.While most of the sectors have been in the red this year, with technology being the hardest hit, energy has remained the outperformer. This has led to higher demand for leveraged and inverse-leveraged ETFs as these have fetched outsized returns on quick market turns in a short span. We highlight a bunch of the best-performing leveraged or inverse leveraged equity ETFs that have more than doubled in the first half of 2022.These include Daily Dow Jones Internet Bear 3X Shares WEBS, MicroSectors FANG & Innovation -3x Inverse Leveraged ETN BERZ, MicroSectors U.S. Big Oil Index 3X Leveraged ETN NRGU, ProShares UltraPro Short QQQ SQQQ and Direxion Daily S&P Biotech Bear 3x Shares LABD and will remain investors’ darlings, provided the sentiments remain bullish.Investors should note that the S&P 500 is down about 22% this year. If the year ends with this loss, the S&P 500 would register its worst annual decline since 2008 and its second-worst annual decline since 1974. On a total return basis, the index lost 37% in 2008 and 26.5% in 1974 (read: Winning Inverse ETFs in S&P 500's Worst Week Since 2020).With inflation soaring to a four-decade high, the Fed raised interest rates by 75 bps in its latest FOMC meeting — the biggest interest-rate increase since 1994 — and signaled continued tightening ahead, which could further weigh on stocks. Fed Chair Jerome Powell said another hike of 50 or 75 bps at the next meeting in July is likely.The latest rounds of data suggest a slowdown in economic activity in the key sectors. Mortgage rates reached their highest level in more than 13 years, while retail sales registered a bigger-than-expected drop in May as record gasoline prices prompted households to cut back on spending.As the global economy is struggling with skyrocketing inflation and low growth, the World Bank has warned of a recession. The war in Ukraine, lockdowns in China, supply-chain disruptions, and the risk of stagflation are hurting growth. Additionally, energy and food bills have been rising around the world. The World Bank expects growth in the United States to hit 2.5% in 2022, down from 5.7% in 2021 (read: 5 Safe ETFs to Play Amid Recession Fears).Leveraged and Inverse-Leveraged ETFsLeveraged and inverse-leveraged ETFs either create a leveraged long/short position, an inverse long/short position, or a leveraged inverse long/short position in the underlying index through the use of swaps, options, futures contracts and other financial instruments. Due to their compounding effect, investors can enjoy higher returns in a short period, provided the trend remains a friend.However, these funds run the risk of huge losses compared to traditional funds in fluctuating or seesawing markets. Further, their performance could vary significantly from the actual performance of their underlying index over a longer period when compared to a shorter period (such as weeks or months).Investors should note that these products are suitable only for short-term traders as these are rebalanced on a daily basis. Further, liquidity can be a big problem as it can make the products more expensive than they appear (see: all the Inverse Equity ETFs here).Daily Dow Jones Internet Bear 3X Shares (WEBS) – Up 227.3%Daily Dow Jones Internet Bear 3X Shares provides three times inverse play on the Internet corner of the broad technology sector by tracking the Dow Jones Internet Composite Index.Daily Dow Jones Internet Bear 3X Shares has attracted $61.5 million in its asset base and charges 95 bps in annual fees. The ETF sees an average daily volume of about 338,000 shares.MicroSectors FANG & Innovation -3x Inverse Leveraged ETN (BERZ) – Up 153%MicroSectors FANG & Innovation -3x Inverse Leveraged ETN is linked to the three times leveraged inverse performance of the Solactive FANG Innovation Index. The index tracks the stock prices of 15 large-capitalization, highly liquid U.S. technology stocks (read: 5 Inverse ETFs Rallying This Year With Tech Meltdown).With AUM of $14 million, MicroSectors FANG & Innovation -3x Inverse Leveraged ETN has an expense ratio of 0.95% and trades in an average daily volume of 92,000 shares.MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU) – Up 121.7%MicroSectors U.S. Big Oil Index 3X Leveraged ETN provides three times (3X or 300%) leveraged exposure to the Solactive MicroSectors U.S. Big Oil Index, which is equal-dollar weighted and provides exposure to the 10 largest U.S. energy and oil companies.MicroSectors U.S. Big Oil Index 3X Leveraged ETN has been able to manage $1.7 billion in its asset base, while trading in an average daily volume of 136,000 shares. The expense ratio comes in at 0.95%.ProShares UltraPro Short QQQ (SQQQ) - Up 115.3%ProShares UltraPro Short QQQ provides three times inverse exposure to the daily performance of the Nasdaq-100 Index, charging 95 bps in annual fees. The index measures the performance of the 100 largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization.ProShares UltraPro Short QQQ has AUM of $3.4 billion and trades in an average daily volume of about 118 million shares.Direxion Daily S&P Biotech Bear 3x Shares (LABD) – Up 14.8%Direxion Daily S&P Biotech Bear 3x Shares seeks to deliver three times the inverse daily performance of the S&P Biotechnology Select Industry Index, which includes the domestic companies from the biotechnology industry.Direxion Daily S&P Biotech Bear 3x Shares has amassed $105.1 million in its asset base and has an average daily volume of around 4 million shares. LABD charges investors 94 bps in annual fees. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Direxion Daily S&P Biotech Bear 3X Shares (LABD): ETF Research Reports ProShares UltraPro Short QQQ (SQQQ): ETF Research Reports MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU): ETF Research Reports Direxion Daily Dow Jones Internet Bear 3X Shares (WEBS): ETF Research Reports MicroSectors FANG & Innovation 3X Inverse Leveraged ETN (BERZ): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 21st, 2022

5 Stocks in S&P 500 ETF That Gained Last Week

The S&P 500 wrapped up its worst week since March 2020, tumbling 5.8%. Despite the massive decline, some of the stocks in SPY???s portfolio have risen. The S&P 500 wrapped up its worst week since March 2020, tumbling 5.8%. All 11 S&P 500 sectors are down more than 15% from their recent highs. SPDR S&P 500 ETF Trust SPY, the proxy version of the S&P 500 Index, has plunged about 6% last week.Despite the massive decline, some of the stocks in SPY’s portfolio have risen. These are FedEx Corporation FDX, Duke Realty Corporation DRE, Vertex Pharmaceuticals Incorporated VRTX, Biogen Inc. BIIB and Monster Beverage Corporation MNST.Decades-high inflation has made investors jittery. U.S. consumer prices accelerated at the fastest rate in May since 1981, as Americans grapple with a surge in the cost of gas, food and shelter. Additionally, concerns over slowing economic growth and a more aggressive Federal Reserve continued to weigh.Fed Chair Jerome Powell raised interest rates by 75 bps in its latest FOMC meeting, pushing the federal funds rate between 1.5% and 1.75%, to quell inflation through a tighter monetary policy. This marked the biggest interest-rate increase since 1994. The Fed could raise rates by 50 or 75 basis points at the July Fed meeting and stressed that policy will be "sensitive and flexible,” as per Powell (read: Fed Raises Rates by 75 bps: ETFs Set to Surge).Overall, an increase in interest rates means higher loan rates for consumers and businesses, including mortgages, credit cards and auto loans. The Fed signaled that it would continue lifting rates at the most rapid pace in decades, which could further weigh on stocks. All the Fed officials see rates rising to at least 3% by the year-end, with a median estimate of 3.4%. They expect rates to rise to 3.8% by the end of 2023.Further, the rounds of data suggest a slowdown in economic activity in the key sectors. Mortgage rates reached their highest level in more than 13 years, while retail sales registered a bigger-than-expected drop in May as record gasoline prices prompted households to cut back on spending.Let’s take a closer look at the fundamentals of SPY.SPY in FocusSPDR S&P 500 ETF Trust holds 505 stocks in its basket, with each accounting for no more than 6.5% of assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, healthcare, financials and consumer discretionary accounting for a double-digit allocation each.SPDR S&P 500 ETF Trust has AUM of $345 billion and charges 9 bps in fees per year. The product trades in a heavy volume of around 90 million shares a day on average, ensuring higher liquidity with a tight bid/ask spread, leading to lower trading costs for investors. SPY has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see: all the Large Cap Blend ETFs here).Below we have highlighted the above-mentioned five best-performing stocks in the ETF.Best-Performing Stocks of SPYFedEx is the leader in global express delivery services. The company provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand. The stock soared 11% last week and accounts for a 0.2% share in the ETF.FedEx has an estimated earnings growth rate of 9.8% for the fiscal year (ending May 2023). It has a Zacks Rank #2 (Buy) and VGM Score of A. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.Duke Realty is a domestic pure-play industrial real estate investment trust in the United States, engaged in owning, managing and developing industrial properties across the nation. It makes up for a 0.06% share in the fund’s basket and gained 3.3% last week.Duke Realty’s earnings are expected to grow a massive 11% for this year. The stock carries a Zacks Rank #3.Vertex Pharmaceuticals is focused on the discovery, development, and commercialization of small molecule drugs targeting serious diseases. The company’s main area of focus is cystic fibrosis (CF). The stock climbed 3.2% last week and accounts for 0.2% in the fund’s basket.Vertex Pharmaceuticals has an expected earnings growth rate of 8.5% for this year and a Zacks Rank #3. It carries a solid VGM Score of B (read: Yield Curve Inverts: 4 Value Sector ETFs to Play).Biogen is one of the world’s leading biotechnology companies, which focuses on developing innovative therapies for treating serious neurological and neurodegenerative diseases, including its core growth areas of multiple sclerosis and neuroimmunology, Alzheimer’s disease and dementia, movement disorders including Parkinson's disease, neuromuscular disorders, including spinal muscular atrophy and amyotrophic lateral sclerosis and ophthalmology. The stock gained 2.1% last week and accounted for 0.09% in the fund’s basket.Biogen saw positive earnings estimate revision of 4 cents for this year and has a Zacks Rank #3. It has a solid VGM Score of B.Monster Beverage is a marketer and distributor of energy drinks and alternative beverages. It has gained 1.2% and its earnings are expected to increase 4.3% for this year. Monster Beverage makes up for 0.1% of assets in SPY and has a Zacks Rank #3. 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 Biogen Inc. (BIIB): Free Stock Analysis Report Vertex Pharmaceuticals Incorporated (VRTX): Free Stock Analysis Report Duke Realty Corporation (DRE): Free Stock Analysis Report FedEx Corporation (FDX): Free Stock Analysis Report SPDR S&P 500 ETF (SPY): ETF Research Reports Monster Beverage Corporation (MNST): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 20th, 2022

Buy These 3 Goldman Sachs Mutual Funds for Steady Gains

Below, we share three Goldman Sachs mutual funds. Each has a Zacks Mutual Fund Rank #1 (Strong Buy). Goldman Sachs Asset Management (GSAM) is a world-renowned company that has been providing investment management, portfolio design and advisory services to individual and institutional investors worldwide since 1988. Its strategies span asset classes, industries and geographies. As of Dec 31, 2021, GSAM has $2 trillion in assets under supervision worldwide.The fund has more than 2,000 professionals across 31 offices worldwide. The company has a team of more than 800 investment professionals who capitalize on Goldman Sachs technology, risk-management skills and market insights. It offers investment solutions including fixed income, money markets, public equity, commodities, hedge funds, private equity, and real estate through proprietary strategies, strategic partnerships and open architecture programs.Below we share with you three top-ranked Goldman Sachs mutual funds, namely Goldman Sachs Large Cap Growth Insights Fund Investor Class GLCTX, Goldman Sachs Flexible Cap Fund Class R6 GFCUX and Goldman Sachs Mid Cap Value Fund Class C GCMCX. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.Goldman Sachs Large Cap Growth Insights Fund Investor Class seeks long-term capital growth along with dividend income, by investing most of its net assets in issues of large-cap domestic or foreign stocks that are traded in the United States. GLCTX may also invest in fixed-income securities that are cash equivalents.Goldman Sachs Large Cap Growth Insights Fund Investor Class has three-year annualized returns of 16.3%. As of January 2022, GLCTX held 96 issues, with 11.6% of its assets invested in Apple Inc.Goldman Sachs Flexible Cap Fund Class R6 seeks long-term capital appreciation by investing the majority of its net assets for investment in equities of small, mid, or large-cap publicly traded securities in the United States. GFCUX can also invest a small portion of its assets in foreign or emerging market securities quoted in foreign currencies.Goldman Sachs Flexible Cap Fund Class R6 has three-year annualized returns of 16.1%. GFCUX has an expense ratio of 0.58% compared with the category average of 0.99%.Goldman Sachs Mid Cap Value Fund Class C seeks long-term capital appreciation by investing the majority of its net assets in a diversified portfolio of mid-cap securities, with market cap similar to the Russell Midcap Value Index at the time of investment. GCMCX generally invests in publicly traded U.S. securities.Goldman Sachs Mid Cap Value Fund Class C has three-year annualized returns of 13.5%. Sung Cho has been the fund manager of GCMCX since 2015.To view the Zacks Rank and the past performance of all Goldman Sachs mutual funds, investors can click here to see the complete list of Goldman Sachs mutual funds.Want key mutual fund info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>View All Zacks #1 Ranked Mutual FundsWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (GCMCX): Fund Analysis Report Get Your Free (GLCTX): Fund Analysis Report Get Your Free (GFCUX): Fund Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 20th, 2022

Buy These 3 MFS Mutual Funds for Fantastic Returns

Below we share with you three top-ranked MFS mutual funds. Each has a Zacks Mutual Fund Rank #1 (Strong Buy). Renowned global asset manager, MFS, provides an array of financial products and services to fulfill the needs of its investors as well as 10,000 investment professionals. Based on assets raised in the country or region, the company managed assets worth more than $597.5 billion as of May 31, 2022.The company has 1,900 employees dedicated to addressing its clients’ needs. MFS deals in more than 80 portfolios investing in domestic and global stocks as well as in fixed-income securities. It has investment offices in Boston, Hong Kong, Sao Paulo, Singapore, Toronto, London, Mexico City, Sydney and Tokyo. The company was founded in 1924 and is headquartered in Boston, MA.Below we share with you three top-ranked MFS mutual funds — MFS Mid Cap Growth Fund OTCAX, MFS New Discovery Value Fund NDVVX and MFS Income Fund Class A MFIOX. Each has a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of MFS mutual funds.MFS Mid Cap Growth Fund seeks long-term growth of capital. OTCAX invests the majority of its net assets in issuers with medium market capitalizations.MFS Mid Cap Growth Fund has three-year annualized returns of 9.2%. As of February 2022, OTCAX held 97 issues with 3.3% of its assets invested in PerkinElmer Inc.MFS New Discovery Value Fund seeks capital appreciation by investing the majority of its net assets in common stock, equity interests in real estate investment trusts, and other instruments that their advisors believe are undervalued. NDVVX management also invests in foreign issues.MFS New Discovery Value Fund has three-year annualized returns of 16.1%. Kevin Schmitz has been one of the fund managers of NDVVX since 2012.MFS Income Fund Class A seeks capital appreciation and total return, with focus on high current income. MFIOX invests the majority of its net assets in debt instruments issued by U.S. and foreign entities, including instruments below investment-grade, and of issuers located in emerging markets.MFS Income Fund Class A has three-year annualized returns of 1.1%. MFIOX has an expense ratio of 0.73% compared with the category average of 0.75%.To view the Zacks Rank and the past performance of all MFS mutual funds, investors can click here to see the complete list of MFS mutual funds.Want key mutual fund info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >> Free: Top Stocks for the $30 Trillion Metaverse Boom The metaverse is a quantum leap for the internet as we currently know it - and it will make some investors rich. Just like the internet, the metaverse is expected to transform how we live, work and play. Zacks has put together a new special report to help readers like you target big profits. The Metaverse - What is it? And How to Profit with These 5 Pioneering Stocks reveals specific stocks set to skyrocket as this emerging technology develops and expands.Download Zacks’ Metaverse Report now >>View All Zacks #1 Ranked Mutual FundsWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (OTCAX): Fund Analysis Report Get Your Free (MFIOX): Fund Analysis Report Get Your Free (NDVVX): Fund Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 17th, 2022

Biggest U.S. Rate Hike Since 1994 in June: 4 ETFs to Win

In line with the market expectations, the Federal Reserve increased its benchmark interest rate by 75 bps yesterday. Wall Street has been on a choppy ride since the start of 2022 due to rising rate worries. The S&P 500 entered a bear market on Jun 13. The bets of a 75-bp Fed rate hike this week amid sky-high inflation, the ECB’s looming hawkish stance, the Russia-Ukraine war, soaring energy prices and a renewed surge in COVID cases in countries like the United Kingdom and China have sent stocks into the bear market this time around.In line with the market expectations, the Federal Reserve increased its benchmark interest rate by 75 bps yesterday. This marked the biggest hike since 1994 in the United States. The Fed signaled it will keep hiking rates aggressively this year to restrain the red-hot inflation.The evident outcome is a slowdown in economic growth. The Fed downgraded its forecast for 2022 median real GDP growth from 2.8% in March to 1.7% for 2022. It also lowered the growth rate expectations to 1.7% (from 2.2% in March) for 2023 and 1.9% (from 2% in March) for 2024. Unemployment rate is projected to rise from 3.5% to 3.7% for 2022, 3.5% to 3.9% for 2023 and from 3.6% to 4.1% for 2024.The inflation projection is upped for this year, while the Fed expects inflation to cool off in 2023 and 2024. The federal funds rate is projected to be 3.4% for 2022 from 1.9% in March, 3.8% for 2023 from 2.8% and 3.4% for 2024 from 2.8%.Recession Down the Line?All of these sparked a safe-haven rally and led the benchmark 10-year U.S. Treasury yield to fall to 3.33% on Jun 15 from 3.49% on Jun 14. Yields fell across the yield curve except for one-month and two-month timeframes. Of late, the yield curve has also inverted.Notably, if the growth slowdown remains rife, there must be a safe-haven rally and long-term bond yields would be subdued. In that case, beaten-down stocks will see a reason to rally. CNBC’s Jim Cramer recently said that in 1994 when the Fed doubled rates, stocks rallied. In the recent past, we have seen stocks withstanding even the 3%+ benchmark yield.ETFs to TapAgainst this backdrop, below we highlight a few top-ranked ETFs [Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy)] that could soar higher in the current backdrop.Vanguard Dividend Appreciation ETF VIG – Zacks Rank #1Dividend aristocrats are blue-chip dividend-paying companies with a long track record of increasing dividend payments year over year. As a result, these stocks offer a safer exposure.Technology Select Sector SPDR ETF XLK – Zacks Rank #1It is the most battered area and hence is likely to bounce back faster amid a market recovery. Historically, the 10-3 tends to compress when the Fed hikes rates. The latest fear of recession will also keep the surge in long-term bond yields in check, a plus for growth sectors like technology.Financials – SPDR S&P Bank ETF KBE – Zacks Rank #1Amid a rising rate environment, banking stocks may gain. However, if the yield flattens, then banking stocks may not gain much, but the steepening yield curve is a plus for the segment.Health Care Select Sector SPDR ETF XLV – Zacks Rank: #1The healthcare sector is a good defensive investment option. Currently, the Russia-Ukraine war crisis and the Fed’s hawkish stance on rate hikes as well as the pandemic triggered a race to introduce vaccines, tests and treatment options, placing the healthcare sector in a sweet spot. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Technology Select Sector SPDR ETF (XLK): ETF Research Reports Health Care Select Sector SPDR ETF (XLV): ETF Research Reports SPDR S&P Bank ETF (KBE): ETF Research Reports Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 16th, 2022

Fed Raises Rates by 75 bps: ETFs Set to Surge

The Federal Reserve announced the biggest interest-rate increase since 1994 to quell four-decade high inflation. In its FOMC meeting concluded yesterday, the Federal Reserve announced the biggest interest-rate increase since 1994 to quell four-decade high inflation. Fed Chair Jerome Powell raised interest rates by 75 bps, pushing the federal funds rate between 1.5% and 1.75%. The move has rekindled investors’ interest in the stock market as the Fed’s move restored confidence that it is serious about fighting inflation.Amid this backdrop, investors should consider products that could prove extremely beneficial in a rising rate environment. Some of these ETFs like SPDR S&P Regional Banking ETF KRE, Vanguard Consumer Discretionary ETF VCR, iShares US Technology ETF IYW and iShares Core S&P U.S. Value ETF IUSV from different corners of the market seem compelling picks.The central bank seeks to fight rising inflation without sparking a recession. Traders pared bets for tightening next month and are no longer fully pricing a three-quarter point move. Barclays Plc, which was among the first major banks to shift its Fed prediction for June to a 75-basis-point hike, said it anticipates the central bank will return to the 50-bps hike pace in July.Overall, an increase in interest rates means higher loan rates for consumers and businesses, including mortgages, credit cards and auto loans. The central bank hopes that higher borrowing costs will slow spending enough to tame inflation but will not cause a recession (read: 5 ETFs Surge As S&P 500 Slips to Bear Market).The initial phase of the rate increase will be good for stocks as it will reflect an improving economy, thereby benefiting cyclical sectors like financials, technology, industrials and consumer discretionary. Banks are in the most advantageous position as they seek to borrow money at short-term rates and lend at long-term rates. If interest rates rise, banks would earn more on lending and pay less on deposits. This would expand net margins and bolster banks’ profits. Also, insurance companies will be able to earn higher returns on their investment portfolio of longer-duration bonds.Higher interest rates usually indicate a healthy economy, leading to greater consumer power and increased IT spending. An improving economy coupled with higher consumer confidence will make the consumer discretionary sector tempting to investors amid higher yields. Further, technology seems one of the safest sectors in a tight policy era as most companies are sitting on a huge cash pile. The cash reserves will ensure that these companies are not plagued by any financial trouble, even in a rising interest rate environment.We have detailed four of the ETFs below:SPDR S&P Regional Banking ETF (KRE)SPDR S&P Regional Banking ETF provides exposure to the regional banks’ segment by tracking the S&P Regional Banks Select Industry Index. It holds 138 stocks in its basket, with each accounting for no more than 2% of the assets.SPDR S&P Regional Banking ETF has AUM of $3 billion and charges 35 bps in annual fees. It trades in an average daily volume of 10.8 million shares and has a Zacks ETF Rank #1 (Strong Buy) with a High-risk outlook.   Vanguard Consumer Discretionary ETF (VCR)Vanguard Consumer Discretionary ETF follows the MSCI U.S. Investable Market Consumer Discretionary 25/50 Index and holds 324 stocks in its basket. In terms of industrial exposure, Internet & direct marketing retail and automobile manufacturers occupy the top spots with double-digit exposure each (read: US Consumer Sentiment Dips in June: Will ETFs Suffer?).Vanguard Consumer Discretionary ETF is the low-cost choice in the space, charging investors only 10 bps in annual fees while volume is good at nearly 172,000 shares a day. The fund has managed $4.2 billion in its asset base so far. Vanguard Consumer Discretionary ETF has a Zacks ETF Rank #1 with a Medium risk outlook.iShares US Technology ETF (IYW)iShares Dow Jones US Technology ETF tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, giving investors exposure to 151 U.S. electronics, computer software and hardware, and informational technology companies.iShares Dow Jones US Technology ETF has AUM of $6.3 billion and charges 41 bps in fees and expenses. Volume is good as it exchanges nearly 656,000 shares a day. IYW has a  Zacks ETF Rank #2 (Buy) with a Medium risk outlook.iShares Core S&P U.S. Value ETF (IUSV)iShares Core S&P U.S. Value ETF offers exposure to large- and mid-cap U.S. equities that exhibit value characteristics by tracking the S&P 900 Value Index. It holds 742 stocks in its basket, with each accounting for no more than a 3% share. iShares Core S&P U.S. Value ETF is widely spread across sectors with health care, financials, industrials, information technology and consumer staples occupying double-digit exposure each (read: 5 Value ETFs to Buy Now for Outperformance).iShares Core S&P U.S. Value ETF has AUM of $11 billion and trades in an average daily volume of 651,000 shares. It charges 4 bps in annual fees and has a Zacks ETF Rank #1 with a Medium risk outlook. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SPDR S&P Regional Banking ETF (KRE): ETF Research Reports Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports iShares U.S. Technology ETF (IYW): ETF Research Reports iShares Core S&P U.S. Value ETF (IUSV): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 16th, 2022

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

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

Category: topSource: zacksJun 16th, 2022