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Titan International (TWI) Dips More Than Broader Markets: What You Should Know

Titan International (TWI) closed the most recent trading day at $12.57, moving -1.87% from the previous trading session. Titan International (TWI) closed the most recent trading day at $12.57, moving -1.87% from the previous trading session. This change lagged the S&P 500's daily loss of 0.84%. At the same time, the Dow lost 0.36%, and the tech-heavy Nasdaq lost 0.18%.Heading into today, shares of the wheel and tire supplier had lost 19.54% over the past month, lagging the Industrial Products sector's loss of 10.04% and the S&P 500's loss of 10.24% in that time.Investors will be hoping for strength from Titan International as it approaches its next earnings release. On that day, Titan International is projected to report earnings of $0.50 per share, which would represent year-over-year growth of 194.12%. Our most recent consensus estimate is calling for quarterly revenue of $544.35 million, up 20.86% from the year-ago period.For the full year, our Zacks Consensus Estimates are projecting earnings of $2.19 per share and revenue of $2.21 billion, which would represent changes of +157.65% and +24.19%, respectively, from the prior year.It is also important to note the recent changes to analyst estimates for Titan International. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Titan International currently has a Zacks Rank of #3 (Hold).In terms of valuation, Titan International is currently trading at a Forward P/E ratio of 5.86. For comparison, its industry has an average Forward P/E of 13.11, which means Titan International is trading at a discount to the group.The Manufacturing - Farm Equipment industry is part of the Industrial Products sector. This industry currently has a Zacks Industry Rank of 156, which puts it in the bottom 39% of all 250+ industries.The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions. Just Released: Free Report Reveals Little-Known Strategies to Help Profit from the  $30 Trillion Metaverse Boom It's undeniable. The metaverse is gaining steam every day. Just follow the money. Google. Microsoft. Adobe. Nike. Facebook even rebranded itself as Meta because Mark Zuckerberg believes the metaverse is the next iteration of the internet. The inevitable result? Many investors will get rich as the metaverse evolves. What do they know that you don't? They’re aware of the companies best poised to grow as the metaverse does. And in a new FREE report, Zacks is revealing those stocks to you. This week, you can download, The Metaverse - What is it? And How to Profit with These 5 Pioneering Stocks. It reveals specific stocks set to skyrocket as this emerging technology develops and expands. Don't miss your chance to access it for free with no obligation.>>Show me how I could profit from the metaverse!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 Titan International, Inc. (TWI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 22nd, 2022

Global Markets Slump With Terrified Traders Tracking Pelosi"s Next Move

Global Markets Slump With Terrified Traders Tracking Pelosi's Next Move Forget inflation, stagflation, recession, depression, earnings, Biden locked up in the basement with covid, and everything else: today's it all about whether Nancy Pelosi will start World War 3 when she lands in Taiwan in 3 hours. US stocks were set for a second day of declines as investors hunkered down over the imminent (military) response by China to Pelosi's Taiwan planned visit to Taiwan, along with the risks from weakening economic growth amid hawkish central bank policy. Nasdaq 100 contracts were down 0.7% by 7:30a.m. in New York, while S&P 500 futures fell 0.6% having fallen as much as 1% earlier. 10Y yields are down to 2.55% after hitting 2.51% earlier, while both the dollar and gold are higher. Elsewhere around the world, Europe's Stoxx 600 fell 0.6%, with energy among the few industries bucking the trend after BP hiked its dividend and accelerated share buybacks to the fastest pace yet after profits surged. Asian stocks slid the most in three weeks, with some of the steepest falls in Hong Kong, China and Taiwan. Among notable movers in premarket trading, Pinterest shares jumped 19% after the social-media company reported second-quarter sales and user figures that beat analysts’ estimates, and activist investor Elliott Investment Management confirmed a major stake in the company. US-listed Chinese stocks were on track to fall for a fourth day, which would mark the group’s longest streak of losses since late-June, amid the rising geopolitical tensions. In premarket trading, bank stocks are lower amid rising tensions between the US and China. S&P 500 futures are also lower, falling as much as 0.9%, while the 10-year Treasury yield falls to 2.56%. Cowen Inc. shares gained as much as 7.5% after Toronto-Dominion Bank agreed to buy the US brokerage for $1.3 billion in cash. Meanwhile, KKR’s distributable earnings fell 9% during the second quarter as the alternative-asset manager saw fewer deal exits amid tough market conditions. Here are some other notable premarket movers: Activision Blizzard (ATVI US Equity) falls 0.6% though analysts are positive on the company’s plans to roll out new video game titles after it reported adjusted second-quarter revenue that beat expectations. While the $68.7 billion Microsoft takeover deal remains a focus point, the company is building out a “robust” pipeline, Jefferies said. Arista Networks (ANET US) analysts said that the cloud networking company’s results were “impressive,” especially given supply-chain constraints, with a couple of brokers nudging their targets higher. Arista’s shares rose more than 5% in US after-hours trading on Monday after the company’s revenue guidance for the third quarter beat the average analyst estimate. Avis Budget (CAR US) saw a “big beat” on low Americas fleet costs and strong performance for its international segment, Morgan Stanley says. The rental-car firm’s shares rose 5.5% in US after-hours trading on Monday, after second-quarter profit and revenue beat the average analyst estimate. Snowflake (SNOW US) falls 5.3% after being cut at BTIG to neutral from buy, citing field checks that show a potential slowdown in product revenue growth in the coming quarters. Clarus Corp. (CLAR US) should continue to see “outsized demand” from the “mega-trend” of people seeking the great outdoors, Jefferies says, after the sports gear manufacturer reported second-quarter sales that beat estimates. Clarus’s shares climbed 9% in US postmarket trading on Monday. Cryptocurrency-exposed stocks are lower in US premarket trading as Bitcoin falls for the third consecutive session as global markets and cryptocurrencies remain pressured over deepening US-China tension. Coinbase (COIN US) falls 2.3% while Marathon Digital (MARA US) drops 3.3%. Transocean (RIG US) rises 18% in US premarket trading after 2Q Ebitda beat estimates, with other positives including a new contract and a 2-year extension of a revolver. US-listed Chinese stocks are on track to fall for a fourth day, which would mark the group’s longest streak of losses since end-of-June, amid geopolitical tensions related to House Speaker Nancy Pelosi’s expected visit to Taiwan. Alibaba (BABA) falls 2.5% and Baidu (BIDU US) dips 2.7% ZoomInfo Technologies analysts were positive on the software firm’s raised guidance and improved margins, with Piper Sandler saying the firm is “in a class of its own.” The shares rose more than 11% in US after-hours trading, after closing at $37.73. Pelosi is expected to land in Taiwan on Tuesday, the highest-ranking American politician to visit the island in 25 years, a little after 10pm local time evening in defiance of Chinese threats. China, which regards Taiwan as part of its territory, has vowed an unspecified military response to a visit that risks sparking a crisis between the world’s biggest economies. “There is no way people will want to put on risk right now with this potential boiling point,” said Neil Campling, head of tech, media and telecom research at Mirabaud Securities. The potential ramifications of Pelosi’s planned visit “are huge.” The growing tensions are the latest addition to a myriad of challenges facing equity investors going into the second half of the year. Fears of a US recession as the Federal Reserve tightens policy to tame soaring inflation have weighed on risk assets. US manufacturing activity continued to cool in July, with the data highlighting softer demand for merchandise as the economy struggles for momentum. In the off chance we avoid world war, there will be a shallow recession that could start by the end of the year, according to Rupert Thompson, chief investment officer at Kingswood Holdings. Meanwhile, the market is too optimistic about the path of monetary policy and “the risk is the Fed goes further than the markets are building in in terms of hiking,” Thompson said in an interview with Bloomberg Television. Goldman Sachs strategists also said it was too soon for stock markets to fade the risks of a recession on expectations of a pivot in the Fed’s hawkish policy. On the other hand, JPMorgan strategists said the outlook for US equities is improving for the second half of the year on attractive valuations and as the peak in investor hawkishness has likely passed. “Although the activity outlook remains challenging, we believe that the risk-reward for equities is looking more attractive as we move through the second half,” JPMorgan’s Marko Kolanovic wrote in a note dated Aug. 1. “The phase of bad data being interpreted as good is gaining traction, while the call of peak Federal Reserve hawkishness, peak yields and peak inflation is playing out.” Markets are also bracing for commentary on the US interest-rate outlook from Chicago Fed President Charles Evans and St. Louis Fed President James Bullard. In Europe, tech, financial services and travel are the worst-performing sectors. Euro Stoxx 50 falls 0.8%. FTSE 100 is flat but outperforms peers. Here are some of the biggest European movers today: BP shares rise as much as 4.8% on earnings. The oil major’s quarterly results look strong with an earnings beat, dividend hike and increased buyback all positives, analysts say. OCI rises as much as 8.6%, the most since March, on its latest earnings. Analysts say the results are ahead of expectations and the fertilizer firm’s short-term outlook remains robust. Maersk shares rise as much as 3.7% after the Danish shipping giant boosted its underlying Ebit forecast for the full year. Analysts note the boosted guidance is significantly above consensus estimates. Greggs shares rise as much as 4% after the UK bakery chain reported an increase in 1H sales. The 1H results are “solid,” while the start to 2H is “robust,” according to Goodbody. Delivery Hero shares gain as much as 3.8%. The stock is upgraded to overweight from neutral at JPMorgan, which said many of the negatives that have weighed on the firm are starting to turn. Rotork gains as much as 4%, the most since June 24, after beating analyst expectations for 1H 2022. Shore Capital says the company shows “good momentum” in the report. Credit Suisse shares decline as much as 6.4% after its senior debt was downgraded by Moody’s, and its credit outlook cut by S&P, while Vontobel lowered the PT following “disappointing” 2Q earnings. Travis Perkins shares drop as much as 11%, the most since March 2020. Citi says the builders’ merchant’s results are “slightly weaker than expected,” with RBC noting shortfalls in sales and Ebita. DSM shares drop by as much as 4.9% as Citi notes weak free cash flow after company reported adjusted Ebitda for the second quarter up 5.3% with FY22 guidance unchanged. UK homebuilders fall after house prices in the country posted their smallest increase in at least a year, indicating that the property market is starting to cool, with Crest Nichols dropping as much as 5.2%. Wind-turbine stocks fall in Europe after Spain’s Siemens Gamesa cut sales and margin guidance, with Siemens Energy dropping as much as 6.1%, with Vestas Wind Systems down as much as 4.7%. Earlier in the session, Asian stocks fell as traders braced for a potential escalation of US-China tensions given a possible visit by US House Speaker Nancy Pelosi to Taiwan. The MSCI Asia Pacific Index dropped as much as 1.4%, poised for its worst day in five weeks. All sectors, barring real estate, were lower with chipmaker TSMC and China’s tech stocks among the biggest drags on the regional measure. Pelosi is expected to arrive in Taipei late on Tuesday. Beijing regards Taiwan as part of its territory and has promised “grave consequences” for her trip. Benchmarks in Hong Kong, China and Taiwan were among the laggards in Asia, slipping at least 1.4% each. Japan’s Topix declined as the yen received a boost from safe-haven demand.  还没打就见血了。4400个股票受伤。 Chinese stocks collapsed in the shadow of a looming conflict. 4400 of 4800 stocks hurt. pic.twitter.com/zo66di9W7I — Hao HONG 洪灝, CFA (@HAOHONG_CFA) August 2, 2022 “I do expect a negative feedback loop into China-related equities especially those related to the semiconductor and technology sectors as Pelosi’s potential visit to Taiwan is likely to harden the current frosty US-China tech war,” said Kelvin Wong, analyst at CMC Markets (Singapore). Pelosi’s controversial trip is souring a nascent revival in risk appetite in the region that saw the MSCI Asia gauge rise in July to cap its best month this year. China’s economic slowdown continues to weigh on sentiment, as authorities said this year’s economic growth target of “around 5.5%” should serve as a guidance rather than a hard target.  Japanese equities fell as the yen soared to a two month high over concerns of US-China tensions escalating with US House Speaker Nancy Pelosi expected to visit Taiwan on Tuesday.  The Topix fell 1.8% to 1,925.49 as of the market close, while the Nikkei declined 1.4% to 27,594.73. Toyota Motor Corp. contributed the most to the Topix Index decline, decreasing 2.6%. Out of 2,170 shares in the index, 227 rose and 1,903 fell, while 40 were unchanged. Pelosi would become the highest-ranking American politician to visit Taiwan in 25 years. China views the island as its territory and has warned of consequences if the trip takes place. “The relationship between the US and China was just about to enter into a period of review, with a move from the US to reduce China tariffs,” said Ikuo Mitsui a fund manager at Aizawa Securities. That could change now as a result of Pelosi’s visit, he added Meanwhile, Australia’s S&P/ASX 200 index erased an earlier loss of as much as 0.7% to close 0.1% higher after the Reserve Bank’s widely-expected half-percentage point lift of the cash rate to 1.85%. The index wiped out a loss of as much as 0.7% in early trade. The RBA’s statement was “not as hawkish as anticipated and the lower growth forecast suggests the RBA is aware of both the domestic and international drags on the economy,” said Kerry Craig, global market strategist at JPMorgan.  “We expect the RBA will continue to push interest rates back to a neutral level this year given the successive upgrades to the inflation outlook, but 2023 looks to be a much less eventful year for the RBA,” Craig said.  Banks and consumer discretionary advanced to boost the index, while miners and energy shares declined.   In New Zealand, the S&P/NZX 50 index rose less than 0.1% to 11,532.46. Indian stock indexes are on course to claw back this year’s losses on steady buying by foreigners. The S&P BSE Sensex closed little changed at 58,136.36 in Mumbai, after falling as much as 0.6% earlier in the day. The measure is now just 0.2% away from turning positive for the year. The NSE Nifty Index too is a few ticks away from moving into the green. Nine of the BSE Ltd.’s 19 sector sub-indexes advanced on Tuesday, led by power and utilities companies.  Foreigners bought local shares worth $836.2 million in July, after pulling out a record $33 billion from the Indian equity market since October. July was the first month of net equity purchases by foreign institutional investors, after nine months of outflows. Still, “choppiness would remain high due to the upcoming RBI policy meet outcome and prevailing earnings season,” Ajit Mishra, vice-president for research at Religare Broking Ltd. wrote in a note. “Participants should continue with the buy-on-dips approach.” The Reserve Bank of India is widely expected to raise interest rates for a third straight time on Friday. Of the 33 Nifty companies that have reported results so far, 18 have beaten the consensus view while 15 have trailed. Of the 30 shares in the Sensex index, 16 rose, while 14 fell. IndusInd Bank and Asian Paints were among the key gainers on the Sensex, while Tech Mahindra Ltd. and mortgage lender Housing Development Finance Corp were prominent decliners.  In FX, the Bloomberg dollar spot index rises 0.1%. JPY and CAD are the strongest performers in G-10 FX, NOK and AUD underperforms, after Australia’s central bank hiked rates by 50 basis-points for a third straight month and signaled policy flexibility. USD/JPY dropped as much as 0.9% to 130.41, the lowest since June 3, in the longest streak of daily losses since April 2021. Leveraged accounts are adding to short positions on the pair ahead of Pelosi’s visit, Asia-based FX traders said. In rates, treasuries extended Monday’s rally in early Asia session as 10-year yields dropped as low as 2.514% amid escalating US-China tension over Taiwan. Treasury yields were richer by up to 5bp across long-end of the curve, where 20-year sector continues to outperform ahead of Wednesday’s quarterly refunding announcement, expected to make extra cutbacks to the tenor. US 10-year yields off lows of the day around 2.55%, lagging bunds by 4bp and gilts by 4.5bp. US stock futures slumped given risk adverse backdrop, adding support into Treasuries while bunds outperform as traders scale back ECB rate hike expectations. The yield on the two-year German note, among the most sensitive to rate hikes, fell as low as 0.17%, its lowest since May 16. Gilts also gained across the curve. Bund curve bull-steepens with 2s10s widening ~2 bps. Gilt and Treasury curves mostly bull-flatten. Australian bonds soared after RBA delivered a third- straight 50bp rate hike as expected, but gave itself wriggle room to slow the pace of tightening in the coming months. In commodities, WTI trades within Monday’s range, falling 0.6% to trade around $93, while Brent falls below $100. Spot gold is little changed at $1,779/oz. Base metals are mixed; LME nickel falls 2% while LME zinc gains 0.6%. Bitcoin remains under modest pressure and has incrementally lost the USD 23k mark, but remains comfortably above last-week's USD 20.6k trough. Looking to the day ahead now and there is a relatively short list of economic indicators to watch, including June JOLTS report and total vehicle sales (July) for the US, UK’s July Nationwide house price index and July PMI for Canada. Given the apparent uncertainty about the direction of the Fed in markets, many will be awaiting Fed’s Bullard, Mester and Evans, who will speak throughout the day. And in corporate earnings, it will be a busy day featuring results from BP, Caterpillar, Ferrari, Marriott, KKR, Uber, S&P Global, Occidental Petroleum, Electronic Arts, Gilead Sciences, Advanced Micro Devices, Starbucks, Airbnb, PayPal, Marathon Petroleum. Market Snapshot S&P 500 futures down 0.6% to 4,096.50 STOXX Europe 600 down 0.5% to 435.13 MXAP down 1.3% to 159.73 MXAPJ down 1.3% to 516.82 Nikkei down 1.4% to 27,594.73 Topix down 1.8% to 1,925.49 Hang Seng Index down 2.4% to 19,689.21 Shanghai Composite down 2.3% to 3,186.27 Sensex little changed at 58,120.97 Australia S&P/ASX 200 little changed at 6,998.05 Kospi down 0.5% to 2,439.62 German 10Y yield little changed at 0.74% Euro down 0.3% to $1.0231 Brent Futures down 0.6% to $99.44/bbl Gold spot down 0.1% to $1,770.93 U.S. Dollar Index up 0.15% to 105.61 Top Overnight News from Bloomberg Oil Steadies Before OPEC+ as Traders Weigh Up Market Tightness China Slaps Export Ban on 100 Taiwan Brands Before Pelosi Visit Pozsar Says L-Shaped Recession Is Needed to Conquer Inflation Pelosi’s Taiwan Trip Raises Angst in Global Financial Markets Taiwan Risk Joins Long List of Reasons to Shun China Stocks Biden Says Strike in Kabul Killed a Planner of 9/11 Attacks Biden Team Tries to Blunt China Rage as Pelosi Heads for Taiwan The Best and Worst Airlines for Flight Cancellations GOP Plans to Deploy Obscure Rule as Weapon Against Spending Bill US to Stop TSMC, Intel From Adding Advanced Chip Fabs in China US Anti-Terrorism Operation in Afghanistan Kills Al-Qaeda Leader They Quit Goldman’s Star Trading Team, Then It Raised Alarms Sinema’s Silence on Manchin’s Deal Keeps Everyone Guessing Manchin Side-Deal Seeks to Advance Mountain Valley Pipeline A more detailed look at global markets courtesy of Newsquawk APAC stocks followed suit to the weak performance across global counterparts as tensions simmered amid Pelosi's potential visit to Taiwan. ASX 200 was initially pressured ahead of the RBA rate decision where the central bank hiked by 50bp, as expected, although most of the losses in the index were pared amid a lack of any hawkish surprises in the statement and after the central bank noted it was not on a pre-set path. Nikkei 225 declined amid a slew of earnings and continued unwinding of the JPY depreciation. Hang Seng and Shanghai Comp underperformed due to the ongoing US-China tensions after reports that House Speaker Pelosi will arrive in Taiwan late on Tuesday despite the military threats by China, while losses in Hong Kong were exacerbated by weakness in tech and it was also reported that Chinese leaders said the GDP goal is guidance and not a hard target which doesn't provide much confidence in China's economy. Top Asian News Tourism Jump to Power Thai GDP Growth to Five-Year High in 2023 China in Longest Streak of Liquidity Withdrawals Since February Singapore Says Can Tame Wild Power Market Without State Control India’s Zomato Appoints Four CEOs, to Change Name to Eternal Taiwan Tensions Raise Risks in One of Busiest Shipping Lanes Japan Trading Giants Book $1.7 Billion Russian LNG Impairment     Japan Proposes Record Minimum Wage Hike as Inflation Hits European bourses are pressured as the general tone remains tentative ahead of Pelosi's visit to Taiwan, Euro Stoxx 50 -0.9%; note, FTSE 100 -0.1% notably outperforms following earnings from BP +3.0%. As such, the Energy sector bucks the trend which has the majority in the red and a defensive bias in-play. Stateside, futures are similarly downbeat and have been drifting lower amid the incremental updates to Pelosi and her possible Taiwan arrival time of circa. 14:30BST/09:30ET; ES -1.0%. Apple (AAPL) files final pricing term sheet for four-part notes offering of up to USD 5.5bln, according to a filing. Top European News Ukraine Sees Slow Return of Grain Exports as World Watches Ruble Boosts Raiffeisen’s Russian Unit Despite Credit Halt DSM 2Q Adj. Ebitda Up; Jefferies Sees ‘Muted’ Reaction Credit Suisse Hit by More Rating Downgrades After CEO Reboot Man Group Sees Assets Decline for First Time in Two Years Exodus of Young Germans From Family Nest Is Getting Ever Bigger FX Yen extends winning streak through yet more key levels vs Buck and irrespective of general Greenback recovery on heightened US-China tensions over Taiwan USD/JPY breaches support around 131.35 and probes 130.50 before stalling, but remains sub-131.00 even though the DXY hovers above 105.500 within a 105.030-710 range. Aussie undermined by risk aversion and no hawkish shift by RBA after latest 50bp hike; AUD/USD nearer 0.6900 having climbed to within a few pips of 0.7050 on Monday. Kiwi holds up better with AUD/NZD tailwind awaiting NZ jobs data, NZD/USD hovering just under 0.6300 and cross closer to 1.1000 than 1.1100. Euro and Pound wane after falling fractionally short of round number levels vs Dollar, EUR/USD back under 1.0250 vs 1.0294 at best, Cable pivoting 1.2200 from 1.2293 yesterday. Loonie and Franc rangy after return from Canadian and Swiss market holidays, USD/CAD straddling 1.2850 and USD/CHF rotating around 0.9500. Yuan off lows after slightly firmer PBoC midpoint fix, but awaiting repercussions of Pelosi trip given Chinese warnings about strong reprisals, USD/CNH circa 6.7700 and USD/CNY just below 6.7600 vs 6.7950+ and 6.7800+ respectively. South Africa's Eskom says due to a shortage of generation capacity, Stage Two loadshedding could be implemented at short notice between 16:00-00:00 over the next three days. Fixed Income Taiwan-related risk aversion keeps bonds afloat ahead of relatively light pm agenda before a trio of Fed speakers. Bunds hold above 159.00 within 159.70-158.57 range, Gilts around 119.50 between 119.70-20 parameters and T-note nearer 122-02 peak than 121-17+ trough. UK 2032 supply comfortably twice oversubscribed irrespective of little concession. Commodities WTI Sept and Brent Oct futures trade with both contracts under the USD 100/bbl mark as the participants juggle a myriad of major factors, incl. the JTC commencing shortly. Spot gold is stable and just below the 50-DMA at USD 1793/oz while base metals succumb to the broader tone. A source with knowledge of last month's meeting between President Biden and Saudi King Salman said the Saudis will push OPEC+ to increase oil production at their meeting on Wednesday and that the Saudi King made the assurance to President Biden during their face-to-face meeting July 16th, according to Fox Business's Lawrence. US Senator Manchin "secured a commitment" from President Biden, Senate Majority Leader Schumer and House Speaker Pelosi for completion of the Mountain Valley Pipeline, according to 13NEWS. US Event Calendar July Wards Total Vehicle Sales, est. 13.4m, prior 13m 10:00: June JOLTs Job Openings, est. 11m, prior 11.3m 10:00: Fed’s Evans Hosts Media Breakfast 11:00: NY Fed Releases 2Q Household Debt and Credit Report 13:00: Fed’s Mester Takes Part in Washington Post Live Event 18:45: Fed’s Bullard Speaks to the Money Marketeers DB's Jim Reid concludes the overnight wrap In thin markets, US House Speaker Nancy Pelosi's visit to Taiwan today for meetings tomorrow (as part of her tour of Asia) could be the main event. She's scheduled to land tonight local time which will be mid-morning US time. She'll be the highest ranking US politician to visit in 25 years. Expect some reaction from the Chinese and markets to be nervous. Meanwhile to dial back rising tensions, the White House has urged China to refrain from an aggressive response as speaker Pelosi’s visit does not change the US position toward the island. As the headline confirming her visit was going ahead broke, 10 year US Treasuries immediately fell a handful of basis point from 2.69% (opened at 2.665%) and continued falling to around 2.58% as Europe retired for the day, roughly where it closed (-6.8bps). Breakevens led most of the move. 2 year notes actually held in which inverted the curve a further -6.12bps and to the lowest this cycle at -30.84bps. Remember that August is the best month of the year for fixed income (see my CoTD last week here for more on this) so the month has started off in line with the textbook. This morning 10yr USTs yields have dipped another -3bps to 2.55%, some 14bps lower than when Pelosi stopover was first confirmed 18 hours ago. 2yr yields have slightly out-performed with the curve just back below -30bps again. Lower yields initially helped to lift equities yesterday, with the Nasdaq being up more than a percent at one point before falling with the rest of the market and closing -0.18%. The S&P 500 was -0.28% and dragged lower by energy (-2.17%). The latter came as crude prices moved substantially lower, with WTI losing -4.91% and Brent (-3.97%) dipping below $100 per barrel as well. Growth concerns, partly due to the weekend and yesterday’s data from China, and partly due to the US risk off yesterday, were mainly to blame. These worries filtered through other commodities as well, including industrial metals and agriculture. For the latter, Ukraine’s first grain shipment since the war began was a contributing factor. European gas was a standout, notching a +5.2% gain as the relentless march continues. In an overall risk-off market, staples (+1.21%) were the only sector meaningfully advancing on the day, followed by discretionary (+0.51%) stocks. Meanwhile, real estate (-0.90%), financials (-0.89%) and materials (-0.82%) dragged the index lower. Although yesterday’s earnings stack was light, today’s line up includes BP, Starbucks, Airbnb and PayPal. Asian equity markets opened sharply lower this morning on the fresh geopolitical tensions between the US and China over Taiwan. Across the region, the Hang Seng (-2.96%) is leading losses after yesterday’s data showed that Hong Kong slipped into a technical recession as Q2 GDP shrank by -1.4%, contracting for the second consecutive quarter as global headwinds mount. Mainland China stocks are also sliding with the Shanghai Composite (-2.90%) and CSI (-2.33%) trading deep in the red whilst the Nikkei (-1.59%) is also in negative territory. Elsewhere, the Kospi (-0.77%) is also weak in early trade. Outside of Asia, DMs stock futures point to a lower restart with contracts on the S&P 500 (-0.38%), NASDAQ 100 (-0.40%) and DAX (-0.50%) all turning lower. As we go to print, the RBA board has raised rates by another 50 basis points to 1.85%. Their economic forecasts seem to have been lowered and they have now said monetary policy is "not on a pre-set path" which some are already interpreting as possibly meaning 25bps instead of 50bps at the next meeting. Aussie 10yr yields dropped 7-8bps on the announcement and 10bps on the day. Back to yesterday, and the important US ISM index, on balance, painted a slightly more comforting picture than it could have been – although the index slowed to the lowest since June 2020. The headline came in above the median estimate on Bloomberg (52.8 vs 52.0). We did see a second month in a row of below-50 score for new orders, but a fall in prices paid from 78.5 to 60.0, the lowest since August 2020, offered some respite to fears about price pressures. Similarly, a rise in the employment gauge from 47.3 to 49.9, beating estimates, was also a positive. The manufacturing PMI was revised down a tenth from the preliminary reading which didn't move the needle. JOLTS today will be on my radar given it's been the best measure of US labour market tightness over the past year or so. Also Fed hawks Mester (lunchtime US) and Bullard (after the closing bell) will be speaking today. Turning to Europe, price action across sovereign bond markets was driven by dovish repricing of ECB’s monetary policy, in contrast to the US where the front end held up. A cloudier growth outlook from yesterday’s European data releases helped drive yields lower – retail sales in Germany unexpectedly contracted in June (-1.6% vs estimates of +0.3%) and Italy’s manufacturing PMI slipped below 50 (48.5 vs 49.0 expected). So Bund yields fell -3.8bps, similar to OATs (-3.1bps). The decline was more pronounced in peripheral yields and spreads, with BTPs (-12.9bps) in particular dropping below 3% for the first time since May of this year, perhaps on further follow through from last week's story that the far right party leading the polls aren't planning to break EU budget rules. Spreads have recovered the lost ground from Draghi's resignation announcement now. Weaker economic data overpowered the effect of lower yields and sent European stocks faded into the close after being higher most of the day with the STOXX 600 eventually declining -0.19%. The Italian market outperformed (+0.11%) for the reasons discussed above. Early this morning, data showed that South Korea’s July CPI inflation rate rose to +6.3% y/y, hitting its highest level since November 1998 (v/s +6.0% in June), in line with the market consensus. The strong inflation data comes as the Bank of Korea (BOK) mulls further interest rate hikes at its next policy meeting on August 25. To the day ahead now and there is a relatively short list of economic indicators to watch, including June JOLTS report and total vehicle sales (July) for the US, UK’s July Nationwide house price index and July PMI for Canada. Given the apparent uncertainty about the direction of the Fed in markets, many will be awaiting Fed’s Bullard, Mester and Evans, who will speak throughout the day. And in corporate earnings, it will be a busy day featuring results from BP, Caterpillar, Ferrari, Marriott, KKR, Uber, S&P Global, Occidental Petroleum, Electronic Arts, Gilead Sciences, Advanced Micro Devices, Starbucks, Airbnb, PayPal, Marathon Petroleum. Tyler Durden Tue, 08/02/2022 - 08:05.....»»

Category: personnelSource: nytAug 2nd, 2022

Futures Surge Propelled By Stellar Tech, Energy Earnings

Futures Surge Propelled By Stellar Tech, Energy Earnings US and European stock were set for their best month since November 2020 following blowout earnings from the likes of Amazon and Apple last night, and record profits from energy giants Exxon and Chevron this morning, boosted by expectations of shallower Federal Reserve monetary tightening now that the US is technically in a recession. S&P futures rose 0.6% following yesterday's meltup while Nasdaq 100 futures rose more than 1% after US stocks hit a seven-week high Thursday, as record underinvested hedge funds are forced to chase the move higher now that most downside catalysts (peak inflation, hawkish Fed, earnings disappointment) have been eliminated. The dollar was flat, and 10Y yields rose slightly to 2.70% after plunging as low as 2.65% yesterday after the Q2 GDP print confirmed news of the unofficial US recession. In premarket trading, Amazon soared as much as 13% in premarket trading on Friday, after the e-commerce giant reported better-than-expected 2Q results and gave an upbeat forecast. Apple rose 2.8% after the iPhone maker reported third-quarter revenue that was stronger than expected. US energy giants Exxon and Chevron both rose sharply higher in premarket trading after reporting record profits for Q2. here are some other notable premarket movers: Roku (ROKU US) tumbles 26% after the video-streaming platform company issued a 3Q revenue forecast and reported 2Q results that were weaker than expected, citing a slowdown in TV advertising spending. Intel (INTC US) slumps 9.4% after the chip manufacturer reported lower-than-expected 2Q earnings and cut its full-year forecasts US-listed Chinese stocks fall in premarket trading, following Asian peers lower, amid a lack of new stimulus policies from China’s top leadership. Avantor Inc. (AVTR US) analysts pointed to several factors weighing on the life sciences firm’s results, including its exposure to the European market, forex and Covid. Avantor’s shares slid 11% in US postmarket trading on Thursday. Dexcom Inc. (DXCM US) shares slumped as much as 18% in premarket trading, with analysts pointing to disappointing US growth and a delay to the US launch of the medical device maker’s G7 glucose- monitoring system used by people with diabetes. Analysts said the reaction was overdone and a buying opportunity given the growth outlook. Edwards Life (EW US) down after posting second- quarter results below analyst expectations, as hospital staff shortages and FX headwinds weigh on the medical technology company’s growth. Global shares are set for a second weekly advance, paring this year’s rout. The risk is that the recent bout of optimism eventually gets a reality check if inflation stays stubbornly elevated, leaving interest rates higher than investors would like amid an economic downturn. “At some point, the Fed will pivot policy and that should be better for risk markets, but in the meantime, they’re so bent on quelling inflation that we prefer not to buy the dip here,” Thomas Taw, head of APAC iShares Investment Strategy at BlackRock Inc., said on Bloomberg Radio. Elsewhere, a call between US President Joe Biden and China’s Xi Jinping underlined bilateral tension even as the leaders sought an in-person meeting. European stocks also rallied into the month-end after positive earnings buoyed sentiment. The Euro Stoxx 600 rose 0.9%, with Italy's. FTSE MIB outperforms peers, adding 1.6%, FTSE 100 lags, adding 0.6%. Construction, retailers and consumer products are the strongest performing sectors. The banking sector outperformed after a slate of better-than-expected results from Banco Bilbao Vizcaya Argentaria SA, Standard Chartered Plc and BNP Paribas SA. Hermes International rose about 6% after joining LVMH and Kering SA in posting strong results, showing the luxury consumer is resilient so far to high inflation and worries over a potential economic downturn. Here are some other notable European movers: NatWest shares surge as much as 9.5% after the UK lender reported second-quarter earnings that beat estimates, also announcing a special dividend with analysts seeing consensus upgrades ahead. Allfunds jumps as much as 14%, most since May, after reporting adjusted Ebitda ahead of Morgan Stanley’s expectations and providing a “reassuring outlook.” Zalando rises as much as 8.7% alongside other European ecommerce stocks following blowout results from US giant Amazon, which sent its shares surging in premarket trading. Hermes climbs as much as 9.6% to an almost 6-month high after the maker of Kelly handbags reported what Bernstein called a “very strong” beat, with 2Q sales almost 9% ahead. L’Oreal jumps as much as 5.2% after it reported 2Q like-for-like sales that beat estimates, with Jefferies calling the performance “another quarter of gravity- defying growth.” Fluidra gains as much as 12%, the most intraday since October 2020, despite a guidance cut as analysts remain optimistic on longer-term prospects. Kion rises as much as 9.6%, the most since March, bouncing after a post-results decline in the prior session. UBS said it’s positive on the forklift maker’s outlook. Signify slumps as much as 11% after reporting 2Q Ebita below consensus and flagging margin headwinds, which Citi expects will lead to low-single-digit downgrades to full-year estimates. AstraZeneca slides as much as 3.1% on its latest earnings, which exceeded estimates. Analysts say the beat, however, was fueled by one-time items. EssilorLuxottica dips as much as 5.1% after the eyewear firm reported interim results. Jefferies noted the “understandably circumspect” tone of the company’s near-term outlook. Fresenius Medical Care declines as much as 5.7%, extending Thursday’s 14% fall, as the market continued to digest the guidance downgrade. JPMorgan cut its price target by more than 50%. AMS-Osram shares fall as much as 9.7% after its new guidance consensus estimates, with the chipmaker saying production volumes were hit by increasingly unfavorable end markets. Euro-zone GDP rose by more than three times the amount economists expected, putting it on a firmer footing as surging inflation and a possible Russian energy cutoff threaten to tip it into a recession. On the other hand, inflation in the region soared to another all-time high, supporting calls for the European Central Bank to follow up its first interest-rate hike since 2011 with another big move. The tone was more somber in Asia, hampered by a tumble in Chinese tech shares that dragged Hong Kong toward a correction of more than 10% from a June high. Asian stocks slumped as losses in Chinese equities offset gains in the rest of the region, after the nation’s Politburo refrained from announcing new stimulus. The MSCI Asia Pacific Index swung between small gains and losses on Friday. Alibaba and Tencent were among the biggest drags, countering gains in heavyweights including TSMC and Reliance Industries. The Hang Seng Index entered a technical correction, while a gauge of Hong Kong’s tech shares tumbled close to 5%. Sentiment was damped by Chinese leaders’ downbeat assessment of growth and the lack of new measures to boost the economy from a highly anticipated Politburo meeting. Shares of Alibaba tumbled after a report said that Jack Ma was planning to give up control of his fintech unit Ant Group, ahead of the tech giant’s earnings report next week. “We were kind of looking for more policy” from the Chinese government before the National Party Congress later this year, Thomas Taw, head of APAC iShares Investment Strategy at BlackRock Inc., said on Bloomberg Radio. “I think the offshore, foreign sentiment towards China is very, very bearish at the moment.” Investors are also monitoring the latest corporate results while keeping an eye on the property crisis and Covid situation in China. Major overseas earnings before the Asian open were a mixed bag, with strong reports from Apple and Amazon while Intel disappointed. The key Asian stock gauge is still on track for its biggest monthly gain so far in 2022. While stocks in Hong Kong and mainland China are set for a monthly loss, the region’s other markets such as India, Japan and South Korea are poised for their best months of the year. Japanese stocks dipped in afternoon trading as the yen resumed strengthening against the dollar. The Topix fell 0.4% to close at 1,940.31, while the Nikkei was down 0.1% to 27,801.64. Still the Nikkei closed July with a 5.3% gain, its best month since November 2020. The yen rose 0.9% to around 133 per dollar, pushing its three-day advance to 2.8%. Yen Advances to Level That Threatens This Year’s Big FX Short Keyence Corp. contributed the most to the Topix decline, decreasing 2.8% after it missed earnings expectations. Out of 2,170 shares in the index, 601 rose and 1,469 fell, while 100 were unchanged. In FX, the Bloomberg dollar spot index falls 0.3%. GBP and CAD are the weakest performers in G-10 FX, JPY continues to outperform, trading at 133.11/USD.   In fixed income, Treasuries were cheaper across the curve with losses led by the long-end, where yields are higher by around 4bp. Wider losses seen across bunds and gilts, weighing on Treasuries as ECB rate-hike premium is added in after a mix of CPI and GDP data out of Eurozone. US 10-year yields around 2.70%, cheaper by 2bp on the day and outperforming bunds and gilts by 3.5bp and 4.5bp in the sector; long-end led losses steepens 2s10s, 5s30s spreads each by around 2bp on the day. IG issuance slate empty so far; four names priced $5.1b Thursday, paying 15bp in concessions on order books that were 3 times oversubscribed.  WTI trades within Thursday’s range, adding 2.1% to trade around $98. Spot gold rises roughly $8 to trade close to $1,765/oz. Most base metals trade in the green; LME zinc rises 3.9%, outperforming peers. Looking to the day ahead, data includes the employment cost index, PCE, income, and spending data in the US, Tokyo CPI, consumer confidence, jobless rate, retail sales, industrial production, and starts in Japan, CPI and GDP in France, GDP in Germany, and GDP in Canada. It’s another full slate of earnings which will include Sony, Exxon, Procter & Gamble, Chevron, AbbVie, AstraZeneca, Colgate-Palmolive, BNP Paribas, Eni, Intesa Sanpaolo, LyondellBasell, Engie, BBVA, NatWest, and Citrix. Market Snapshot S&P 500 futures up 0.7% to 4,103.00 Gold spot up 0.4% to $1,763.27 U.S. Dollar Index down 0.36% to 105.97   Top Overnight News from Bloomberg Euro-zone inflation climbed to another all-time high, supporting calls for the European Central Bank to follow up its first interest-rate hike since 2011 with another big move The euro-zone economy expanded by more than three times the amount economists expected, putting it on a firmer footing as surging inflation and a possible Russian energy cutoff threaten to tip it into a recession Stocks in Europe and the US are set for their biggest monthly advance since November 2020 on positive earnings and expectations of shallower Federal Reserve monetary tightening China’s top leadership is committing to ample liquidity as the nation contends with a slowdown. So far, a lot of that cash is sitting in the financial system instead of being transmitted to the real economy Biden, Xi Plan In-Person Meet as Taiwan Tensions Intensify Amazon, Apple Poised to Add $230 Billion After Resilient Results Citigroup Drops Some Clients to Boost Trading Returns Credit Suisse Woes Spread to Singapore With $800 Million Trial Bitcoin and Ether Are on Track for Their Best Month Since 2021 Russia Is Wiring Dollars to Turkey for $20 Billion Nuclear Plant Alibaba Slumps as Traders Assess Earnings Risk, Ant Report BofA Says Too Soon for Bull Rally as Investors Pile Into Stocks Singapore, New York Tie for Highest First Half Rental Growth Morgan Stanley Hires Shen as Head of China Onshore Equities Alito Mocks Foreign Leaders Who Attacked His Abortion Opinion A more detailed look at global markets courtesy of Newsquawk APAC stocks traded mixed despite the positive lead from Wall Street, with Chinese markets lagging. ASX 200 was lifted by gold names amid the recent rise in the precious metal. Nikkei 225 saw mild gains throughout the session but eventually fell into the red amid notable JPY strength, whilst Nissan shares fell over 4% at one point after earnings. KOSPI was propelled by its Telecom sector, with Financials and Industrials also aiding. Hang Seng slipped over 2% with Alibaba shedding 6% after WSJ reported that Jack Ma intends to relinquish control of Ant Group. Headlines pointed out the Hang Seng index has fallen 10% from its June peak. Shanghai Comp held a negative bias as traders reacted to the Biden-Xi call, which included no rollback of Trump-era tariffs. Selling thereafter resumed following downbeat commentary from China's MOFCOM, suggesting the outlook for H2 trade growth is not optimistic. Top Asian News China's Commerce Ministry said China's foreign trade faces higher risks; the outlook for China's H2 trade growth is not optimistic, via Bloomberg. MOFCOM said they will study targeted measures for foreign trade, and will step up support for export credit insurance in H2 and expand imports actively and ensure domestic commodity supply, via Reuters. China's Commerce Ministry official said foundation for consumption recovery is not solid yet, more efforts needed to boost consumption, via Reuters. Japanese government decided to tap JPY 257bln in budget reserves to help with rising oil and broader inflation, according to the MoF. PBoC injected CNY 2bln via 7-day reverse repos with the maintained rate of 2.10% for a net drain of CNY 1bln and for a weekly drain of CNY 12bln PBoC set USD/CNY mid-point at 6.7437 vs exp. 6.7414 (prev. 6.7411) Japan's Finance Minister Suzuki provides no comment on day-to-day FX moves, closely watching moves with a sense of urgency while working with the BoJ; Japan's MOF said it did not intervene in FX in the June 29th to July 27th period. European bourses are firmer across the board, Euro Stoxx 50 +0.9%, and are set to post their best monthly performance since Nov'20. Stateside, the NQ continues to outperform, +1.2%, amid after-market earnings from AMZN and AAPL; US PCE Price Index ahead. Top European News Germany Stagnates as Rest of Europe Beats Estimates: GDP Update UK June Mortgage Approvals Fall to 24-Month Low of 63.7k Ukraine Latest: Lavrov in No Rush to Respond to Blinken Request Amundi Defies Gloom Among Managers With $1.8-Billion Inflows Biden, Xi Plan In-Person Meet as Taiwan Tensions Intensify FX Yen recovery momentum gathers pace and extends beyond Dollar pairing to JPY crosses, USD/JPY slides over 2 big figures to test 132.50, EUR/JPY down to 137.56 from 137.32. DXY loses grip of 106.000 post-negative US GDP print and looking for support from PCE, ECI and/or Chicago PMI. Euro fades again irrespective of some encouraging Eurozone data and option expiry interest may be capping, EUR/USD tops out just over 1.0250 yet again and circa 3bln rolling off between 1.2045-50. Rand underpinned by Gold gains and Lira holds above 18.0000 as Turkish trade deficit narrows and Russia transfers funds for a nuclear facility. Sterling fades amidst mixed BoE consumer credit and housing metrics, Cable sub-1.2150 vs 1.2245 at best and EUR/GBP probing 0.8400 vs low around 0.8346 yesterday. Fixed Income Marked debt retracement following run of even more pronounced recovery gains. Bunds fade just shy of 158.00 again and retreat to 156.21, Gilts reverse around 100 ticks from 118.36 and T-note to 120-21+ from 121-08 at best. Stronger than expected Eurozone data also in the mix along with buoyant risk sentiment and firm oil. Bonds braced for busy pm agenda comprising US PCE, ECI and Chicago PMI. Commodities WTI Sep’22 and Brent Oct’22 are posting gains in excess of 2.0% on the session but remain capped by USD 100/bbl and 105/bbl respectively. Dutch TTF Sep’22 has pulled back to modestly below the EUR 200/mWh mark, but remains bid after several sessions of pronounced price action. Spot gold is relatively contained and resides just above the unchanged mark but continues to be dictated by the USD with the JPY-induced pressure lifting the yellow metal briefly overnight. Saudi Energy Minister and Russian Deputy PM Novak met in Riyadh and discussion cooperation between the two nations, according to Twitter, via Reuters. Biden-Xi Call Senior US admin official said US President Biden and China's President Xi discussed face-to-face meeting and directed teams to follow up; did not discuss any potential lifting of US tariffs on Chinese products. White House said presidents Biden and Xi discussed a range of issues important to bilateral relationship and other regional/global issues. Senior US admin official said Biden and Xi had a 'direct and honest' discussion on Taiwan. They discussed areas of cooperation including climate change, health security and counter-narcotics. Biden brought up the long-standing concerns on human rights. Macroeconomic coordination between China and US is of great importance. Biden explained to Xi his core concerns about China's economic practices. China President Xi told US President Biden that the US should abide by the One China principle, and act in line with its words, according to State Media. On the Taiwan issue, Xi told Biden that 'those who play with fire will get burned'. Xi told Biden that China fiercely opposes Taiwan independence and the interference of external forces US President Biden told China President Xi that the US stance on One China policy remains unchanged, according to China's Global Times. Central Banks BoJ Summary of Opinions (Jul meeting): achieving the price stability target in a stable manner is difficult given developments in the output gap and inflation expectations. The recent resurgence of COVID-19 is extremely rapid, and it is necessary to examine how this will affect financial positions, mainly of small and medium-sized firms. The Bank needs to closely monitor the impact that the recent increase in its Japanese government bond (JGB) purchases to contain upward pressure on interest rates has on the functioning of the JGB market. ECB's de Guindos says EUR depreciation has been one of the factors behind high inflation, main factor that guides decisions is the evolution of inflation. HKMA buys around HKD 9.656bln from the market to defend the peg.   US Event Calendar 08:30: 2Q Employment Cost Index, est. 1.2%, prior 1.4% 08:30: June Personal Income, est. 0.5%, prior 0.5% June Personal Spending, est. 0.9%, prior 0.2% June Real Personal Spending, est. 0%, prior -0.4% June PCE Deflator MoM, est. 0.9%, prior 0.6%; PCE Deflator YoY, est. 6.8%, prior 6.3% June PCE Core Deflator MoM, est. 0.5%, prior 0.3%; Core Deflator YoY, est. 4.7%, prior 4.7% 09:45: July MNI Chicago PMI, est. 55.0, prior 56.0 10:00: July U. of Mich. Sentiment, est. 51.1, prior 51.1; Expectations, est. 47.5, prior 47.3 Current Conditions, est. 57.1, prior 57.1 1 Yr Inflation, est. 5.2%, prior 5.2%; 5-10 Yr Inflation, est. 2.8%, prior 2.8% DB's Jim Reid concludes the overnight wrap Morning from sunny Frankfurt. Today we wave goodbye to July which after the worst first half returns since 1788 in treasuries and 1962 for the S&P 500, is set to launch us into a very strong start to H2. A reminder that in a chart of the day I did back in June, it showed that the worst 5 H1s for equities all saw a big H2 rebound. However there are five long months to go before we can relax. The key questions from the last 24 hours were 1) Did the Fed pivot on Wednesday? And 2) Is the US in a recession? Treasury markets continued to think the answer to both was yes, which boosted risk sentiment by further capping how far the market thinks the Fed can go. Meanwhile, Presidents Biden and Xi held a phone call, the markets continued to digest the Inflation Reduction Act, the US did see it's second successive quarter of negative growth, German CPI beat expectations and Amazon and Apple impressed the market with earnings after the bell. The main macro driver continued to be the interpretation of the July FOMC. Specifically, that the Chair said at some point in the future it may be appropriate to slow the pace of tightening and that he and the Committee paid heed to slowing activity data (more below). The current interpretation being that factors other than inflation were seeping into the Fed’s reaction function. Global yields rallied hard yesterday. 2yr yields were -13.6bps lower at 2.86% while 10yr Treasuries were -10.9bps lower at 2.68%, their lowest since early April. Notably, real yields drove the decline, falling -13.1bps (-26.2bps lower over the last two days, their largest two-day decline since the invasion in early March), suggesting easier expected policy without an impact on inflation, with breakevens up a modest +2.1bps. This is a market believing the Fed will be forced into a pivot, and that slowing activity figures will soon translate into lower inflation. This morning in Asia, yields on 10yr USTs (-1.80 bps) are extending their decline, trading at 2.66% as I type. Europe outpaced the US with 2yr bunds -18.7bps lower at 0.22%, their lowest since mid-May. 10yr bunds were -11.8bps lower and OATs fell -13.4bps. 10yr BTPs outperformed on the perceived shift in policy tone, down -14.9bps. Regular readers will know we are skeptical things will work out as the market is increasingly pricing in. Real policy rates remain deeply in negative territory despite the Fed believing they are at neutral. Furthermore, policy works on long and variable lags, not only is 5 months (the amount of time until the market is pricing cuts) a very short amount of time for today’s tightening to bring inflation back from 9%, but the very reaction we’re witnessing in markets means financial conditions have actually eased since the June FOMC meeting. So the Fed has instituted back-to-back 75bp hikes and financial conditions haven’t gotten any tighter. DB research has been putting out a number of pieces addressing this of late. Matt Luzzetti and Peter Hooper put out a piece yesterday showing that the Fed is historically more cautious about cutting rates when core PCE is above 4% (see here), while Tim Wessel on my team showed that markets overestimate how large those cuts will be ahead of time when inflation is that high (see here). However, one needs to be wary of summer seasonals, where August is usually the strongest month of the year, when deciding whether to fight the move now or wait until September. Adding to the yield rally justification, advanced US GDP came in at -0.9% in 2Q, that is in negative territory for a second straight quarter. This has driven much hand-wringing about whether or not the US is currently in a recession. We won’t know for a while if the NBER officially calls this a recession, as the growth data will undergo plenty of revisions before we have a final number. Further, the NBER actually doesn’t use GDP as one of their indicators for defining recessions, funnily enough, instead amalgamating personal income, payrolls, real PCE, retail sales, household survey employment, and industrial production (which eventually wind up looking a whole lot like GDP). Some of those underlying figures still look quite strong even if the headline GDP figure is not. In the end, whether or not the NBER decides in the future that we are in recession today is almost beside the point: markets will continue to trade based on their perception of the Fed’s responsiveness to slowing activity weighed against runaway inflation. On that note, the overwhelming perception over the last two days is that slowing activity, will become increasingly more important for policy going forward. This drove risk assets higher for a second straight day across the Atlantic. The S&P 500 increased +1.21% with all but one sector higher, while the NASDAQ was up +1.08%, bringing them +11.06% and +14.24% higher since terminal rates first fell from above 4% in mid-June. In Europe, the STOXX 600 climbed +1.09%, while the DAX and CAC increased +0.88% and +1.30%, respectively. On the earnings front, Mastercard said that card spending and use of its payments infrastructure have picked up in a big way amidst runaway inflation, pushing the company’s revenue forecast for the year higher. Hard to see how inflation slows if consumers are spending like that. After the close Apple and Amazon reported earnings on the stronger side of what we’ve seen for mega-caps so far, with both releases containing optimism around supply chains and consumer spending. Apple’s revenues and earnings figures beat street estimates, despite supply chain disruptions from China covid lockdowns, on the back of stronger-than-expected iPhone and iPad sales, with shares rising around +3% after hours. Amazon shares rose more than +12% in after hours trading after beating revenue estimates and revising forecasts higher. While hiring appears to be slowing, Amazon also looks to be unwinding storage capacity, again another sign that supply chain pressures may be easing, while cutting costs. We got more international data on the great slower activity versus high inflation dichotomy, with German CPI increasing +0.9% MoM versus expectations of +0.6%, bringing YoY to +7.5% versus +7.4% expectations. The EU harmonised measures also beat expectations, climbing +0.8% MoM versus +0.4% expectations while YoY ticked up to +8.5% versus +8.1% expectations. Asian equity markets are mixed this morning with the Hang Seng (-2.19%) sharply lower and with the Shanghai Composite (-0.71%) and CSI (-1.02%) also slipping on rising expectations of China's economic growth outlook remaining subdued in H2 after yesterday’s high-level Communist Party meeting omitted its full-year GDP growth target and will instead strive to achieve the best results for the economy this year. Elsewhere, the Nikkei (+0.46%) and the Kospi (+0.43%) are trading in positive territory and more matching western markets. Talking of which, stock futures in the US are pointing to a strong start with contracts on the S&P 500 (+0.57%) and NASDAQ 100 (+1.21%) both higher on the positive earnings from Amazon and Apple. Early morning data showed that Japan’s industrial output jumped +8.9% m/m in June (v/s +4.2% expected) posting the biggest one-month gain in nine years as disruptions due to China's COVID-19 curbs eased. It followed a -7.5% drop last month. But retail sales (-1.4% m/m) unexpectedly contracted in June (v/s +0.2% expected) after an upwardly revised +0.7% increase in May. Separately, July Tokyo CPI advanced to +2.5% y/y in July (v/s +2.4% expected, +2.3% in June) on the back of a hike in utility prices. Meanwhile, labour market conditions in the nation remained relatively healthy as the jobless rate stayed at 2.6% in June (v/s 2.5% market consensus) albeit the job-to-applicants ratio improved to 1.27 in June (v/s 1.25 expected) from 1.24 in May. Elsewhere, Presidents Biden and Xi had a two-hour phone call. The call covered foreign policy issues surrounding Taiwan and Ukraine. The two leaders reportedly covered areas of mutual cooperation, as well, including using their economic might to prevent a global recession and tasking aides to follow up on climate and healthy security issues. Aides have been tasked with setting up a face to face meeting which seems an impressive development even with the tensions there obviously are between the two sides. To the day ahead, data includes the employment cost index, PCE, income, and spending data in the US, Tokyo CPI, consumer confidence, jobless rate, retail sales, industrial production, and starts in Japan, CPI and GDP in France, GDP in Germany, and GDP in Canada. It’s another full slate of earnings which will include Sony, Exxon, Procter & Gamble, Chevron, AbbVie, AstraZeneca, Colgate-Palmolive, BNP Paribas, Eni, Intesa Sanpaolo, LyondellBasell, Engie, BBVA, NatWest, and Citrix. Tyler Durden Fri, 07/29/2022 - 08:16.....»»

Category: worldSource: nytJul 29th, 2022

Futures Reverse Losses, Rise To Session Highs Ahead Of Data, Fed Juggernaut

Futures Reverse Losses, Rise To Session Highs Ahead Of Data, Fed Juggernaut Whether it's because Goldman forecast over $11 billion in "forced" buying every day this week between the end of the buyback blackout period and systematic purchases amid the sliding VIX, or because hopes of an imminent recession prompted more expectations of a Fed pivot after Friday's drop led to oversold conditions amid record bearishness, but this morning US equity futures have moved higher ahead of what will be an extremely busy week with 30% of the S&P reporting earnings including big tech, the US revealing if Q2 GDP was negative thus pushing the US into a recession, and the Fed hiking another whopping 75bps. Or perhaps the optimistic sentiment came out of China where Chinese property stocks rallied after a reported move by Beijing to establish a fund to support developers fueled optimism about a turnaround for the struggling sector.  Whatever the reason, stocks and US equity futures reversed earlier declines on Monday and traded near session highs with S&P 500 and Nasdaq 100 futures rising 0.6% and 0.5% respectively, while European stocks extended gains after their best week since May, rising 0.5%. Treasury yields advanced and a dollar gauge slipped. Oil also reversed earlier losses and last traded 0.9% higher. The S&P 500 posted its biggest weekly gain in a month last week and is on a pace for its largest monthly increase since October. Stocks have gotten a lift as the corporate earnings season began with better-than-feared reports and as investors bet that a lot of the negative economic news was priced in. Among notable movers in premarket trading, shares in companies that focus on antivirals and vaccines jumped after the head of the World Health Organization said the monkeypox outbreak is a public health emergency of international concern. Cryptocurrency-exposed stocks, on the other hand, fell as Bitcoin slipped back under $22,000 amid a wider cryptocurrency selloff.  Here are some other notable premarket movers: Watch Amazon (AMZN US) stock as its price target was trimmed at Oppenheimer (outperform), with the brokerage “conservatively” reducing its second-half 2021 e- commerce estimates as consumer spending slows after stable summer trends. Keep an eye on Integra LifeSciences (IART US) as Morgan Stanley initiated coverage of the stock with a recommendation of equal-weight, saying “visibility into pipeline-driven growth remains in the early stages.” Watch Ivanhoe Electric (IE US) as its shares were initiated with an outperform rating at BMO, with the broker touting the mining firm’s “notable” portfolio of copper exploration assets and technology. Keep an eye on Snap (SNAP US) as Morgan Stanley cut the recommendation on the stock to underweight from overweight, saying that the social media platform’s “ad business is less developed” than previously thought. Focus this week is on reports from the giga tech companies including Google parent Alphabet Inc., Apple., Meta Platforms Inc. and Amazon.com Inc. Stock prices already reflect a lot of bad news, with the Nasdaq 100 down 24% this year. While earnings season got under way with several companies citing high inflation and a strong dollar as the reason for cutting full-year profit forecasts, UBS Global Wealth Management strategists said the results are turning out to be better than feared as consumer spending remains resilient. Goldman Sachs strategists agreed with UBS that S&P 500 revenues would be pressured by a stronger greenback in this season. There are also plenty of skeptics about the market’s recent strength. Strategists at BlackRock Inc. and Morgan Stanley warned that challenging economic data suggests stocks could see more declines. “For as long as central banks don’t acknowledge any impact on growth from their aggressive rate hike, we don’t want to chase any bear market rebound,” said Wei Li, global chief investment strategist at BlackRock Investment Institute. Fresh economic statistics could point to “ever-tightening policy and rate-hiking signals,” she said on Bloomberg TV. Meanwhile, Wall Street's uber-bear, Morgan Stanley strategist Michael Wilson said it was too early for stocks to price in a pause in the Fed’s policy even as recession fears grow. His counterpart Mislav Matejka at JPMorgan Chase on the other hand, said bets of peaking inflation could lead to a pivot in the Fed’s policy and improve the outlook for equities in the second half of the year. Besides earnings, all eyes this week will be on the Fed’s two-day policy meeting, with a decision on interest rates on Wednesday. Economists predict the central bank will hike rates by another 75 basis points after last month delivering its biggest increase since 1994. The Fed's decision this week, along with earnings from the likes of Google’s Alphabet Inc. and technology titan Apple Inc., will help to clarify the outlook for a one-month-old rebound in stocks. Prices already reflect a lot of bad news, with the Nasdaq 100 down 24% this year. “We still see further downside for risky assets as recession fears accumulate and central banks remain committed to fighting inflation at the expense of growth,” wrote Eric Robertsen, chief strategist at Standard Chartered Bank Plc. In Europe, the Euro Stoxx 600 rose 0.2% with Spain's IBEX outperforming peers, adding 0.5%. Banks, telecoms and insurance are the strongest-performing sectors. German business confidence deteriorated to the worst level since the early months of the pandemic on growing concerns that record inflation and limited energy supplies from Russia will throw Europe’s biggest economy into a downturn. Here are the other notable European movers: Ryanair shares fluctuated between gains and losses as the budget airline reported a quarterly earnings beat but analysts flagged ongoing uncertainty in its outlook. Faurecia jumps as much as 8.3% after Forvia, the auto-supplier formed out of the French company and Germany’s Hella, reported first-half results and confirmed full-year guidance. Bechtle shares jump as much as 6.4% after the IT services firm reported preliminary second-quarter revenue that beat consensus estimates. Oddo BHF says the results were “impressive” in the face of a weakening macro environment. Verbund climbs as much as 3.3% and hits a record high of EUR109.70 after the Austrian power company was upgraded to overweight from equal-weight at Barclays. The bank analysts view company share price as unreflective of power-price rally. Richemont shares climb as much as 2.5%, outperforming other luxury stocks, after Miss Tweed reports that the Cartier owner is getting closer to a deal with Farfetch on the online fashion retailer YNAP. Volkswagen preference shares drop as much as 4.6% in Frankfurt after Porsche AG boss Oliver Blume was named CEO of the German carmaker. Bernstein and Jefferies are divided on what Blume’s appointment means for the company. Philips shares fall as much as 12% after the Dutch medtech firm published earnings which Jefferies says were “significantly below” consensus estimates and cut its guidance. Uniper falls as much as 11% as JPMorgan cut the stock to underweight. The downgrade leaves the stocks with six sell ratings, one buy and nine analysts advising to hold. Majority- owner Fortum’s shares were down as much as 8.4%. Kuehne + Nagel shares fall as much as 5.4% despite results beat, with analysts saying lower volumes across air and sea as well as a pricing decline is negative for sentiment and expecting past quarters’ momentum to slow. Earlier in the session, equities across Asia Pacific fell Monday, as investors took a risk-off approach ahead of the Federal Reserve’s monetary-policy decision later this week.  The MSCI Asia Pacific Index slipped as much as 0.8%, poised to snap a five-day winning streak, as energy and consumer-discretionary shares declined the most. Chinese tech stocks slid even as the State Council reiterated a call for measures to support healthy development of the Internet platform economy.  Benchmarks in the Philippines, Japan and China led declines, while measures for Thailand and South Korea bucked the downtrend. Risk appetite has soured as investors await another Fed interest-rate hike of at least 75 basis points this week. Earnings releases of US big-tech companies will also be closely analyzed to gauge global growth momentum. Data released on Friday showed a contraction in US business activity for the first time since 2020, escalating fears the economy is headed into a recession. “Big week ahead with the Fed likely to go ahead with another jumbo rate hike and 30% of S&P 500 companies reporting earnings this week -- including the big tech,” said Charu Chanana, market strategist at Saxo Capital Markets. “Investors are being cautious and closing their positions ahead of the slew of risk events.” China’s economic slowdown and a stronger dollar remain key overhangs for Asian corporates. The MSCI Asia gauge is still nearly 30% lower from a 2021 peak, even as some money managers consider the recent selloff in Chinese stocks as a blip.   Japanese stocks declined, with the Nikkei 225 ending a seven-day winning streak, after US stocks fell on disappointing earnings from social-media firms and as concerns of a global slowdown continue to weigh on investor sentiment. The Topix Index fell 0.7% to 1,943.21 as of market close Tokyo time, while the Nikkei declined 0.8% to 27,699.25. Sony Group Corp. contributed the most to the Topix Index decline, decreasing 2.7%. Out of 2,170 shares in the index, 836 rose and 1,224 fell, while 110 were unchanged. “Stocks were soaring for seven straight days last week as well, so there could be a fair amount of selling,” said Naoki Fujiwara chief fund manager at Shinkin Asset Management.  In Australia, the S&P/ASX 200 index was little changed to close at 6,789.90 after a volatile session. Gains in materials and industrials stocks were offset by declines in healthcare and technology shares. EML Payments was the worst performer after the Irish Central Bank said it identified shortcomings in components of the remediation program of EML’s Irish subsidiary PFS Card Services. Insurance Australia Group was the best performer, rising the most since August.  In New Zealand, the S&P/NZX 50 index fell 0.6% to 11,198.68 In FX, the Bloomberg dollar spot index fell 0.2%, sliding against most of its Group-of-10 peers. Investors are monitoring weaker economic data amid expectations the Federal Reserve will inflict more pain on the economy to get inflation under control. It’s set to raise rates for a fourth straight meeting this week. JPY and NZD are the weakest performers in G-10 FX, SEK and NOK outperform. TRY lags EMFX, weakens 0.6%.  “We are not yet ready to change our strong dollar call” as the Fed is likely to continue hiking in the second half, Win Thin, global head of currency strategy at Brown Brothers Harriman & Co. in New York, wrote in a note to clients. “US economic data have been weakening but we do not think a recession is imminent. We believe the US economy remains the most resilient” In rates, the US Treasury curve steepened as long-end leads yields were cheaper on the day: US yields were cheaper by more than 7bp across long-end of the curve, steepening 5s30s by ~4bp, 2s10s by ~3bp on the day; 10-year yields around 2.81%, cheaper by more than 5bp vs Friday’s close and underperforming bunds by 3bp in the sector. Recession fears ratcheted higher Friday after US data showed business activity contracted in July for the first time in more than two years. Final coupon auctions of May-July quarter begin with $45b 2-year note sale at 1pm ET, followed by 5-year notes Tuesday and 7-year sale on Thursday. Preliminary estimates for corporate supply this week are $15b to $20b, expected to be front-loaded before Wednesday’s Fed policy announcement. Focal points of US session include 2-year note auction, while new activity may be sidelined before Wednesday’s Fed decision. Bunds, gilts both outperform Treasuries over European morning. Bunds bear-flatten. Gilts bear- steepen. Peripheral spreads are mixed to Germany; Italy widens, Spain tightens and Portugal tightens. In commodities, WTI rose 0.9% higher to trade near $94.76, after sliding at the open. Brent also rose near $104.51. Base metals are mixed; LME tin falls 1.8% while LME copper gains 0.2%. Spot gold rises roughly $2 to trade near $1,729/oz. Wheat climbed as commodity markets evaluated a Russian missile strike on Odesa’s sea port that threatened to test a fledgling agreement to unblock Ukrainian grain exports from the Black Sea. Bitcoin remains under pressure and is yet to convincingly reclaims the USD 22k mark, after slipping to USD 21.75k overnight. The busy economic data slate this week includes June Chicago Fed national activity index (8:30am) and July Dallas Fed manufacturing activity (10:30am); this week also includes consumer confidence, new home sales, durable goods orders, 2Q GDP, personal income/spending (includes PCE deflator), MNI Chicago PMI and University of Michigan sentiment Market Snapshot S&P 500 futures little changed at 3,967.25 STOXX Europe 600 down 0.1% to 425.16 MXAP down 0.5% to 158.83 MXAPJ down 0.3% to 519.58 Nikkei down 0.8% to 27,699.25 Topix down 0.7% to 1,943.21 Hang Seng Index down 0.2% to 20,562.94 Shanghai Composite down 0.6% to 3,250.39 Sensex down 0.5% to 55,771.23 Australia S&P/ASX 200 little changed at 6,789.90 Kospi up 0.4% to 2,403.69 German 10Y yield little changed at 1.04% Euro little changed at $1.0207 Gold spot up 0.1% to $1,728.88 U.S. Dollar Index down 0.11% to 106.62 Top Overnight News from Bloomberg Markets are looking tentative at the start of a busy week that includes a Fed policy meeting and much data. The dollar faded earlier gains and stocks traded softly in the green The Federal Reserve will most likely fail to tame inflation without driving the economy into a ditch, according to the results of the latest MLIV Pulse survey Stocks and US equity futures wavered Monday amid concerns about a dimming economic outlook and possible recession While last week’s price action suggests that earnings downgrades have been well-priced, a more hawkish than expected Fed could spill the apple cart. Inflation data, European gas and Chinese Covid-19 developments are also a source of risk The pound’s woes run deep, and whoever becomes 10 Downing Street’s newest resident will inherit a maelstrom of economic problems A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mostly lower with the tech sector in the region hit following the Stateside sectoral performance.    ASX 200 saw the gains in its Metals & Mining sector offset by a selloff in Tech. Nikkei 225 underperformed following the JPY strength seen on Friday, whilst the KOSPI outpaced peers. Hang Seng was lower following reports China is said to be mulling categorising US-listed Chinese firms into three groups based on the sensitivity of data held by the firms, but the property sector outperformed amid reports that China is planning to set up a real estate fund. Shanghai Comp was also softer but monkeypox-related stocks soared after the WHO declared monkeypox a global health emergency. Top Asian News China is reportedly imposing COVID "closed loops" on major Shenzhen companies which include Foxconn (2354 TW), BYD (1211 HK), CNOOC (0833 HK) and Huawei (002502 SZ), via Bloomberg. China is said to be mulling categorising US-listed Chinese firms into three groups based on the sensitivity of data held by the firms, according to FT sources. Neither the EU nor China believes that conditions are ripe for the implementation of the China-EU Comprehensive Investment Agreement, according to Chinese sources cited by SGH Macro. China reportedly plans to set up a real estate fund worth up to USD 44bln, according to REDD cited by Reuters. Hong Kong is reportedly planning to cut hotel quarantine times, according to Sing Tao Daily. The Sakurajima volcano on Japan's western major island of Kyushu has erupted with the alert level raised to 5 - the highest, according to Sky News. No damage has been reported but volcanic stones could be seen raining down up to 1.5 miles away from the site, according to NHK. China’s securities regulator said in a statement it has not researched a plan for a three-tiered system to help Chinese companies avoid US delisting, according to CNBC. European bourses are firmer across the board as the initially cautious tone amid soft-Ifo and weekend developments dissipated amid USD-downside and constructive Kremlin remarks; Euro Stoxx 50 +0.3%. US futures are modestly firmer, ES +0.5%, as we kick off the busiest week of earnings for Q2 and in the run-up to the FOMC. Tesla (TSLA) discloses a USD 170mln impairment loss resulting from changes to the carrying value of Bitcoin during H1 (ending June 30th). Increases FY22-24 CapEx to USD 6-8bln/yr (prev. 5-7bln). Top European News Italy's far-right Brothers of Italy party is reportedly struggling to find ministerial candidates, according to The Times. A survey by DIHK of 3,500 firms in Germany found that 16% are scaling back production or partially pausing business operations amid high energy prices, via Reuters. Fitch affirmed Hungary at "BBB"; outlook Stable; affirmed Ireland at "AA"; outlook stable. Central Banks ECB's Lagarde said the ECB will raise rates for as long as it takes to bring inflation back to target, according to an interview via Funke Mediengruppe. ECB's Nagel said it is better to start with a bigger hike and is confident that ECB's TPI would survive legal challenges, according to Handelsblatt. He added that future rate hikes are to depend on data, and we still see positive growth in 2022 and 2023. He said TPI is to be used in exceptional circumstances. ECB's Holzmann said the ECB may accept a "light recession" if the outlook for CPI rises, according to an interview via ORF. Holzmann said the ECB is to consider the economic situation before another big hike and said economic growth is slowing and that has brought in caution. ECB's Kazaks says large interest rate hikes may not be over; too weak EUR is a "problem". The hike in September needs to be quite "significant" and should be open to larger hikes. BoJ's Takata (new member) says the BoJ is able to keep monetary policy easy, but are facing new challenges such as dwindling bank margin and impact on market function. BoJ's Tamura (new member) says Japan may soon see positive cycle commence, with wages increasing with inflation. If this occurred, exit from easy policy would become focus of discussions. FX DXY down again ahead of the Fed on Wednesday as risk appetite recovers broadly, index slips further from 107.00 to 106.240. Euro underpinned by hawkish ECB commentary and supportive Russian gas supply vibe to the extent that bleak German Ifo survey findings are shrugged off, USD/USD probes 1.0250 where hefty option expiry interest sits (1.86bln). Aussie derives traction from spike in iron ore prices, AUD/USD through 0.6950 and towards circa 1bln option expiries at 0.7000 strike. Franc and Yen underperform as bond yields rebound firmly from recent lows, USD/CHF around 0.9625 and USD/JPY 136.00+ vs Friday lows of 0.9600 and 135.57. Yuan welcomes PBoC notice of recovery in support of cultural and tourism sectors plus reports of Chinese real estate fund, USD/CNH and USD/CNY both sub-6.7500 compared to highs at 7.7667 and 6.7577 respectively. Lira laments deterioration in Turkish manufacturing confidence, USD/TRY just shy of 17.8400. AUD/USD -- Although spot rally stalled at 50-DMA, additional attempts can’t be ruled out amid bullish momentum. That said, further resistance at 0.6996, June 20 high should be respected EUR/USD -- Needs to close above 38.2% Fibonacci to put in a short-term low. Otherwise further visits below parity remain in play USD/JPY -- Close below ascending channel support speaks to further losses, which look to be corrective in nature NZD/USD -- A relief rally from this point would be limited to the 50% level of the June/July range, which comes in near the 0.6316, 50-day moving average Fixed Income Debt futures flip then flop in choppy fashion amidst hawkish ECB rhetoric and encouraging news from Russia on EU gas supplies. Bunds rebound to 154.86 before retreat to 153.78, Gilts recoil from 117.48 to 117.02 and 10 year T-note within a 120-02+/119-21 range Downbeat German Ifo survey and mixed UK CBI industrial orders vs business optimism largely ignored 2 year note supply looms and may be interesting as a gauge of investor demand ahead of the Fed Commodities Crude benchmarks began the session on the back foot, amidst the generally cautious APAC mode where participants were digesting multiple updates including Russia/Ukraine, Nord Stream, China/US and reiterations from Biden. However, a seeming USD-driven move lifted the benchmarks back towards session highs amid a concerted risk move following Kremlin commentary. US President Biden said gasoline prices are still too high and is working to make sure gasoline prices move with oil prices and said companies should use profits to boost output, according to Reuters. LME will not ban Nornickel's metal as the Russian firm is not under UK sanctions, according to Reuters sources. Chicago wheat, corn and soybean futures rose at the open, possibly on the back of reports that the Ukrainian port of Odessa was hit by Russian missiles less than 24 hours after the signing of the grains agreement in Turkey. Malaysia's Commodities Minister said crude palm oil prices are likely to remain weak for most of Q3 2022 as Jakarta lifts the exports levy; but prices are expected to be higher in Q4 amid the resumption of Indonesia's palm oil export levy, via Reuters. Spot gold has found support from the declining USD, lifting to USD 1733.70/oz, though upside is capped by the broader risk tone with the yellow metal yet to test Friday’s USD 1738.99/oz best. US Event Calendar 08:30: June Chicago Fed Nat Activity Index, est. -0.03, prior 0.01, revised -0.19 10:30: July Dallas Fed Manf. Activity, est. -22.0, prior -17.7 DB's Jim Reid concludes the overnight wrap I've never been to a wedding before where there is not a nervous bride or groom worried about what scandal might be dredged up about the groom in the speeches. However that changed at my colleague Henry's wedding on Saturday as I couldn't find anything incriminating about him from anyone. And boy did I ask. The nearest I got was that maybe he may have hit someone with a cricket bat once and it might have been an accident. Overall, a wonderful and wholesome wedding. Congratulations to my co-author Henry and his lovely wife Beth. If last week was all things European (Gas, Italy and the ECB), this week mostly belongs to the US with the highlight being the FOMC concluding on Wednesday. Unless we hear otherwise in a newspaper, they are expected to raise rates 75bps, but we’ll go through some of the nuances below. An important US Q2 GDP number on Thursday will tell us whether we’re in a technical recession or not (DB at -0.6%, Atlanta Fed tracker -1.6%). Expect lots and lots of headlines if we are. In case you thought it was safe to take your eye off Europe though, be warned that Thursday and Friday sees multiple Q2 GDP and CPI releases. Don’t forget as well that Putin has suggested that if the turbine is not back early this week then gas flow may fall to 20% capacity even though originally this turbine wasn’t expected to be needed until September. So watch out for gas politics. Elsewhere we have US durable goods (Wednesday), consumer confidence numbers (tomorrow), spending and income data (including the important core PCE deflator), and final consumer confidence numbers with the important revisions to inflation expectations to round out a big macro week on Friday. The micro will also be significant with 166 S&P 500 and 197 Stoxx 600 companies reporting. The full day by day calendar will appear at the end as per usual for a Monday but we’ll spend most of time previewing the Fed before we briefly review Asia and last week. Our economics team expect +75bps this week (to 2.375%) followed by +50bps hikes in September and November, with a further +25bps in December until a terminal rate of 4.1% is reached which is notably above ever lower market pricing of 3.3%. There won’t be new economic projections in this meeting so all focus will be on how the Fed guides us in a world where no-one should really believe central bank forward guidance anymore as it’s proved very unreliable over the last year. However the market will still devour clues as to whether the committee are leaning towards 50 or 75 for September. To be fair there are two CPIs before then so it’s likely the Fed don’t really know at the moment. In terms of the press conference, it will be interesting to see how Powell navigates the line between tackling inflation and supporting growth. The market is increasingly pricing a more dovish pivot at some point early in 2023 so all eyes on how firm Powell is that inflation is the number one priority or whether he looks set to blink on growth weakness. Turning to corporate earnings, it will be a busy week filled with results from the BigTech, oil majors and key consumer-focussed companies. Starting with the former, Microsoft, Alphabet (tomorrow), Meta (Wednesday), Apple and Amazon (Thursday) all report. Notable hardware tech firms reporting include NXP Semiconductors (today), Texas Instruments (tomorrow), SK Hynix, Qualcomm, Lam Research (Wednesday), Samsung, Intel (Thursday) and Sony (Friday). In commodities, oil majors Shell, Total Energies (Thursday), Exxon and Chevron (Friday) will be among the largest companies reporting. Utilities will be in focus too amid energy concerns in Europe, with results due from Iberdrola (Wednesday), Enel, EDF and EDP (Thursday). Finally, key players in materials like Rio Tinto (Wednesday), Vale and Anglo American (Thursday) will also report. Industrial highlights include Raytheon Technologies (tomorrow) and Honeywell (Thursday). In healthcare, Pfizer, Merck and Sanofi (Thursday) will release. Major automakers releasing include General Motors (tomorrow), Mercedes-Benz, Ford (Wednesday) and Volkswagen (Thursday). In staples and food, the spotlight will be on Coca-Cola, McDonald's, Unilever and Mondelez (tomorrow), Kraft Heinz (Wednesday), Nestle and AB InBev on Thursday and Procter & Gamble and Colgate-Palmolive on Friday. Asian equity markets are slipping at the start of a key week as concerns about a global economic slowdown is sapping risk appetite in the region. The Hang Seng (-0.97%) is the largest underperformer amid a drop in Chinese listed technology stocks with the Nikkei (-0.77%), Shanghai Composite (-0.71%) and CSI (-0.63%) also trading in negative territory. Elsewhere, the Kospi (+0.50%) is bucking the trend. Outside of Asia, stock futures in the DM world are edging lower in the US with contracts on the S&P 500 (-0.15%) and NASDAQ 100 (-0.15%) slightly weaker. DAX futures (-0.87%) are catching down to a weaker US close on Friday. Elsewhere, Oil prices gave up earlier gains with Brent futures now -0.54% down at $102.64/bbl and WTI futures (-0.63%) at $94.10/bbl as I type. Recapping last week now and we saw another major week for news-flow and volatility. The ECB surprised markets with a 50bp hike only for lacklustre data and political risks to send yields lower over the course of the week. The +50bps from the ECB came alongside their new anti-fragmentation tool, the Transmission Protection Instrument (TPI). One wonders whether central banks will eventually run out of letters for all their bailout vehicles and have to create a new alphabet. In terms of the TPI, markets were skeptical about its parameters, ultimately leaving 10yr BTP spreads +13.9bps wider to German bunds over the week. However maybe it would have been hard to rally in a week where the resignation of Prime Minister Draghi eventually proved irreversible thus exposing the country, and Europe, to fresh elections and the prospects of populists in power again. The turn in growth and political sentiment left year-end 2022 ECB policy pricing only +3.0bps higher over the week. Most of that action took place on Friday after poor PMIs, when 2yr bunds fell -22.3bps, bringing them -1.4bps lower on the week. The declines were larger further out the curve, driving a recessionary signaling flattening, with 10yr bunds -10.2bps lower on the week, and -19.2bps on Friday alone. The back-and-forth energy brinksmanship left European natural gas futures a marginal +0.99% higher on the week, with some larger intraweek swings. The fact that gas went back to pre maintenance 40% capacity was a positive but Germany (and much of Europe) lives day-by-day to see what Putin does next on gas supplies. The US certainly saw a rolling over of growth expectations towards the end of last week, where a combination of poor business optimism, increasing jobless claims, and a large services PMI miss (47.0 versus expectations of 52.7) drove yields lower as investors priced in an easier Fed policy path. 2yr Treasuries fell -15.2bps (-11.7bps Friday) while 10yrs were -16.5bps lower (-12.bps Friday), driven by a -14.7bp decline in real yields given the easier Fed policy path (-16.7bps Friday). The parallel shock left 2s10s little changed, but still deeply inverted at -22.bps, closing inverted for its 14th day in a row. Terminal fed funds retreated to around 3.3% from 3.5% the week before, all setting the stage for a big FOMC this week when inflation is still raging. This morning in Asia, yields on 10yr USTs have edged +2.91bps higher to 2.78% as I type. This is after touching 3.08% immediately after the ECB less than 48 business hours ago. Easier expected policy proved a boon to equity prices, where the STOXX 600, DAX, and CAC climbed +2.88% (+0.31% Friday), +3.02% (+0.05% Friday), and +3.00% (+0.25% Friday), respectively. In the US, easier policy pushed equities higher as well, through a back-and-forth positive/negative packed earnings schedule, ultimately bringing the S&P 500 +2.55% higher (-0.93% Friday). Given the easier policy path, tech and mega-caps outperformed over the week, with the NASDAQ up +3.33% (-1.87% Friday) and the FANG+ up +5.02% despite a large -2.94% drawdown Friday. After all that no rest this week in a busy week with holidays likely to reduce liquidity.   Tyler Durden Mon, 07/25/2022 - 08:01.....»»

Category: personnelSource: nytJul 25th, 2022

Futures Flat As Traders Brace For Latest FOMC Minutes

Futures Flat As Traders Brace For Latest FOMC Minutes After yesterday's remarkable U-turn in US stocks which tumbled at the open only to recover all losses by EOD (except the energy sector which suffered a furious rout), overnight futures traded subdued, fluctuating between gains and losses ahead of today's FOMC minutes as traders debate whether the coming recession is good news (more stimulus from the Fed) or bad news (stagflationary, tying the Fed's hands). S&P futures were down 0.1% last, having traded on both sides of the unchanged line for much of the past 12 hours while Europe’s Stoxx 600 was much more excited and climbed the most since June 24. The two- and 10-year US yield curve remained inverted as investors awaited the minutes of the Federal Reserve’s last meeting; the 10-year Treasury yield held steady around 2.81%. The dollar rose for a fourth day as the Euro tumbled while bitcoin traded at $20,000. In China, Shanghai launched mass testing for Covid in nine districts after detecting cases the past two days, fueling concerns that the financial hub may once again find itself locked down in pursuit of Covid Zero. The Shanghai Composite Index slid the most since May 24. In thin premarket trading, bank stocks were lower as investors await the release of the Federal Reserve’s meeting minutes. In corporate news, crypto broker Voyager Digital filed for Chapter 11 bankruptcy protection. Meanwhile, HSBC is in talks to sell its Russia unit to local lender Expobank, according to people familiar with the matter. Stocks related to cryptocurrencies fell in US premarket trading as Bitcoin fell amid mounting concerns of a global recession. Here are some of the most notable premarket movers: Kornit (KRNT US) shares plunged 23% in US premarket trading after the inkjet printer manufacturer issued disappointing preliminary second-quarter results. Stifel cut its recommendation to hold from buy. Chip and chip equipment stocks could be active on Wednesday after Bloomberg reported that the US is pushing the Netherlands to ban ASML from selling some chipmaking tools to China. Watch shares including Applied Materials (AMAT US), Lam Research (LRCX US) and KLA (KLAC US), as well as Nvidia (NVDA US), Qualcomm (QCOM US), Intel (INTC US), Advanced Micro Devices (AMD US) Stocks related to cryptocurrencies decline as Bitcoin drop amid mounting concerns of a global recession. Riot Blockchain (RIOT US) -4.2%, Coinbase (COIN US) -3.3%, Ebang (EBON US) -5.5%, Marathon Digital (MARA US) -1.8%, BitNile -5.2% (NILE US) Shopify (SHOP US) shares slide 0.9% as The Globe and Mail reports, citing people familiar, that the company is delaying a compensation overhaul that would give its employees flexibility on how their salary is paid in stock and cash. Cazoo (CZOO US) and Carvana (CVNA US) fall as Davy cuts earnings estimates and price targets for online auto stocks, citing inflation, higher interest rates and weakening consumer sentiment as threats to operational execution. RADA Electronic Industries (RADA US) sinks 11%, after the Israeli defense firm said that it’s withdrawing its full-year 2022 revenue guidance in light of its pending merger with Leonardo DRS. Watch cybersecurity companies like Palo Alto Networks (PANW US), CrowdStrike Holdings (CRWD US) and Okta (OKTA US) as Morgan Stanley analysts said they expect durable security spending environment in the second half of 2022 against an uncertain macro backdrop. With energy names plunging on expectations of a recession, bargain hunters chased technology stocks boosting US equity indexes on Tuesday, helping mask a deepening slump in stocks linked to economic activity, such as energy, commodity and industrial names. A renewed spike in China’s Covid cases and a worsening gas crisis in Europe signaled that a worldwide slowdown is coming even as central banks tighten monetary policy to contain consumer prices. “Markets are caught between two opposing forces and that’s the place we are going to be in for the next few months,” Diana Amoa, chief investment officer for long-biased strategies at Kirkoswald Asset Management, said on Bloomberg Television. “We go from trading lower growth to trading high inflation.” Today's 2 p.m. release of the June FOMC minutes will provide one of the session highlights. European stocks gave back over half of their opening gains with the Euro Stoxx 50 up 1.25% as of 7:30 a.m. ET having added as much as 2.3% in early trade, clawing back roughly half of Tuesday’s sharp losses. CAC 40 and FTSE 100 outperform. Retail, tech and media names are the best performers among broad-based sectoral gains within the Stoxx 600. European semiconductor stocks bounced back on Wednesday, following heavy selling in the past three sessions spurred by concerns over cooling chip demand. ASML shares rise 3.2% as of 9:39am CET, halting a seven-day losing streak, despite news that the US is pushing the Netherlands to stop the chip tool maker from selling deep ultraviolet lithography systems to China. Banks remain the only European industry group in the red on Wednesday, with the Stoxx 600 Bank Index. Here are the most notable European movers: Just Eat Takeaway shares surge over 20% after the meal delivery firm struck a deal with Amazon for the e-commerce giant to take up to a 15% stake in its US unit Grubhub. Abrdn shares jump as much as 8.8% after the UK asset management firm said it will commence a return of £300m through the repurchase of its shares, with a first phase of up to £150m being undertaken by Goldman Sachs, according to a filing. Atos shares climb as much as 8.1% after a filing shows Bank of America holding a 7.77% stake in the French tech services company. Meanwhile, governance remains in focus amid a fresh news report of shareholder unrest. Airlines rise on Wednesday amid a rebound in the broader European market. Ryanair shares rally as much as 5.1%, EasyJet +4.2%, Wizz Air +4.5%. Shop Apotheke shares gain as much as 13% after jumping 12% yesterday when the online pharmacy reported preliminary 2Q results. Baader notes that e-scripts will be mandatory in all German states by January 2023, further pushing the company’s sales prospects in the country. Trainline stock surges as much as 24% as its new FY23 guidance implies a 27% upgrade to consensus, Morgan Stanley writes in note following trading update. Fresnillo stocks fall as much as 4.2%, while Endeavour rises as much as 4% after Credit Suisse starts coverage of the former with an underperform recommendation and initiates UK-listed shares of the latter at outperform. TotalEnergies and Engie fall in Paris, underperforming peers, as President Emmanuel Macron comes under increasing pressure to introduce a windfall tax on energy and transport giants to fund his bill aimed at protecting consumer purchasing power. Adidas shares fall as much as 5.4% after Hauck & Aufhaeuser double downgrades to sell from buy, also setting a Street low price target for the sports-apparel maker, whose FY22 targets are likely at risk due to a 2Q margin squeeze. Earlier in the session, Asian stocks slipped as fears of a global economic recession and fresh Covid-19 outbreaks in China weighed on sentiment. The MSCI Asia Pacific Index fell as much as 1.3%, led by energy-related shares as oil traded below $100 per barrel, while investors snapped up defensive shares. Stocks in China declined as Shanghai ramped up mass testing in nine districts after detecting cases the past two days, fueling concerns that the financial hub may once again find itself locked down in pursuit of Covid Zero. The Shanghai Composite Index slid the most since May 24. Benchmarks in the tech-heavy markets of Taiwan and South Korea also dropped. In China, Shanghai launched mass testing for Covid The fall in Asia shares came despite US stocks recouping most of their losses in a volatile session overnight. Traders are turning their attention to the minutes of the most-recent Federal Reserve meeting, which will be released later today, for a sense of policy makers’ debate about the near-term path for interest rates.   Asian equities have been stuck in range-bound trading in recent months as investors weigh higher interest rates and the prospect of an economic downturn driven by elevated inflation. Still, narratives of peak inflation are building up as the Fed ramps up its policy-tightening campaign. It’s “much too early, in our view, to think that inflation trades are over,” Frank Benzimra, head of Asia equity strategy at Societe Generale, said in a Bloomberg TV interview. For emerging-market assets, “you also have some valuation buffer, some levels of yields which are becoming interesting. So this is where we are seeing that we may be close to the peak of pain.” Equity measures in the Philippines and New Zealand bucked the regional trend to each rise more than 1.6%. Japanese stocks declined as oil tumbled and concerns of a global economic downturn damped sentiment.  The Topix Index fell 1.2% to 1,855.97 at the market close in Tokyo, while the Nikkei 225 declined 1.2% to 26,107.65. Toyota Motor Corp. contributed the most to the Topix’s loss, decreasing 2.8%. Out of 2,170 shares in the index, 572 rose and 1,520 fell, while 78 were unchanged. “Japanese stocks are seen as representative of the global cyclical economy, so when concerns about recession appear, not only in the US but globally as well, stocks overall are likely to be sold off,” said Yasuhiko Hirakawa, head of an investment department at Rakuten Investment Management.  Oil Steadies Above $100 After Plunging on Recession Concerns Key equity gauges in India rallied as commodity prices eased while a recovery in monsoon rainfall buoyed sentiment. The S&P BSE Sensex Index rose 1.2% to 53,750.97 in Mumbai, while the NSE Nifty 50 Index advanced 1.1%. Hindustan Unilever was the biggest boost to the Sensex, increasing 4%. Out of 30 shares in the index, 25 rose and five fell. Seventeen of the 19 sectoral indexes compiled by BSE Ltd. gained, led by automobile and consumer goods companies. Asia’s biggest software exporter Tata Consultancy Services will kickoff the April-June earnings season for companies on Friday. Australia's S&P/ASX 200 index fell 0.5% to close at 6,594.50, as fears of a global economic recession as well as tumbling commodity prices hit market sentiment.  The benchmark was dragged by a group of mining shares that fell to the lowest level since Nov. 2, and energy stocks that fell the most in over two years. In New Zealand, the S&P/NZX 50 index rose 1.6% to 11,141.07 Fixed income was comparatively quiet. Bunds and USTs bear-steepened as 2y Bunds outperformed. Treasuries are flat in early US trading Wednesday with front end underperforming, pushing 2s10s yield curve into deeper inversion. Yields are mostly lower led by 2-year, at 2.82%; the 10Y yield was trading just south of 2.80% last; 5- to 30-year yields hold increases of less than 2bp after touching lowest levels since late May on Tuesday amid a slump in commodity prices led by oil. 2s10s curve inverted as much as 3.6bp; maximum inversion this year was 9.5bp on April 4, reached as futures markets began to price in bigger Fed rate increases in response to persistently high inflation readings, pushing 2- year yields higher. Latest inversion, by contrast, occurred as 10- year yield declined more than 2-year, with expectations for Fed rate path in broad decline on economic-slowdown concerns. UK Gilts bear-flattened, erasing an initial decline after comments from BOE’s Pill. Peripheral spreads are marginally wider to Germany. In FX, Bloomberg dollar spot index rises 0.2%. JPY is the strongest in G-10, trading near 135.30/USD. EUR sits at the bottom of the scoreboard with EUR/USD trading through Tuesday’s lows. In commodities, crude futures drift off Asia’s best levels. WTI slips below $100, Brent trades on a $104 handle, with Goldman Sachs arguing that a plunge driven by fears a recession will hurt demand was overdone. Today’s gains were small compared to Brent’s decline of more than $10 on Tuesday, its third largest ever in dollar terms. Investors have been pricing in the consequences of a slowdown even as physical crude markets continue to show signs of vigor and the war in Ukraine drags on. Copper dropped as fears of a global economic slowdown piled pressure on industrial metals.. Spot gold holds a narrow range near $1,765/oz. Base metals are mixed; LME tin falls 1.5% while LME lead gains 1.7%. Looking to the day ahead now, today's 2 p.m. release of the June FOMC minutes will provide one of the session highlights. Prior to that, economic data will include the weekly MBA Mortgage Applications release at 7 a.m., the final June Services PMI data at 9:45 a.m. and June's ISM Services Index and the May JOLTS Job Openings at 10 a.m. Elsewhere on the central bank front, the Riksbank's Cecilia Skingsley and BOE's Jon Cunliffe will speak on central bank digital currencies. Fed's John Williams is scheduled to deliver comments at a virtual event on banking culture at 9 a.m. Otherwise from central banks, we’ll get the minutes from the June FOMC meeting, and also hear from the Fed’s Williams, the ECB’s Rehn and the BoE’s Cunliffe and Pill. Market Snapshot S&P 500 futures down 0.2% to 3,825.75 MXAP down 0.8% to 156.29 MXAPJ down 0.9% to 516.65 Nikkei down 1.2% to 26,107.65 Topix down 1.2% to 1,855.97 Hang Seng Index down 1.2% to 21,586.66 Shanghai Composite down 1.4% to 3,355.35 Sensex up 0.8% to 53,570.29 Australia S&P/ASX 200 down 0.5% to 6,594.48 Kospi down 2.1% to 2,292.01 STOXX Europe 600 up 1.4% to 406.26 German 10Y yield little changed at 1.24% Euro little changed at $1.0259 Brent Futures up 1.3% to $104.15/bbl Gold spot up 0.2% to $1,769.16 U.S. Dollar Index little changed at 106.46 Top Overnight News from Bloomberg With the European economy lurching toward a recession, traders are growing more convinced that the euro breaking parity with the dollar is imminent “If the fragmentation in bond markets is unwarranted then we should be as unlimited as possible,” European Central Bank Governing Council member Pierre Wunsch tells the Financial Times. “The case to act is strong when faced with unwarranted fragmentation” German factory orders unexpectedly rose in May, even as global momentum was affected by rampant inflation and uncertainty stoked by Russia’s war in Ukraine. Demand increased 0.1% compared to the previous month, compared to an economist estimate of -0.5% Britain’s new Chancellor of the Exchequer, Nadhim Zahawi, signaled he wants to cut taxes faster than his predecessor Rishi Sunak, as he set out plans to boost the UK’s struggling economy British Prime Minister Boris Johnson is on red alert for signs of a coordinated plot from his ministers to bring him down, according to a senior government official China’s central bank looks set to withdraw cash from its financial system in a sign that it’s moving toward normalizing monetary policy as major global peers are forcefully raising interest rates A combination of the recent bond rebound and the spiraling cost to hedge the volatile yen has wiped out the yield premium a Japanese investor once enjoyed from US debt. The yen-hedged yield on 10-year Treasuries collapsed to 0.24% Tuesday from almost 1.7% in April, just above the 0.22% yield on comparable Japanese debt Emerging-market currencies are tumbling as the twin threats of rising US interest rates and a global recession send traders scurrying to the safety of the dollar. The MSCI Emerging Markets Currency Index dropped for a second day, extending this year’s slide to 4.4%, heading for the steepest annual drop since 2015 A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks were mostly negative with risk appetite sapped by headwinds from the global growth concerns and US recession fears. ASX 200 was marginally lower with energy leading the descent in the commodity-related sectors, although the downside in the index was stemmed by tech strength following the duration-sensitive bias stateside and lower yield environment. Nikkei 225 weakened alongside a firmer currency and with Japan said to delay the call on the start of the nationwide travel support.Hang Seng and Shanghai Comp. conformed to the downbeat mood after the PBoC continued to drain liquidity and with reports noting that US President Biden could lift tariffs on just USD 10bln of Chinese goods, while the US was also said to pressure ASML to stop selling key chipmaking equipment to China. In addition, COVID-19 concerns persisted after China’s Xi’an city entered a 7-day period of ‘temporary control measures’ and with Macau officials locking down the Grand Lisboa hotel and casino due to a cluster of infections. Top Asian News PBoC injected CNY 3bln via 7-day reverse repos with the rate at 2.10% for a CNY 97bln net drain. Shanghai suspended the operation of KTV venues due to COVID-19 but other entertainment venues can remain open, while the gradual reopening of cinemas and concert venues will go ahead from July 8th, according to Reuters. US top diplomat for East Asia Kritenbrink said the top priority for US Secretary of State Blinken's meeting with Chinese Foreign Minister Wang is to underscore US commitment to diplomacy and maintaining open lines of communication, while he expects Blinken to raise human rights in the meeting with China's Foreign Minister, according to Reuters. Two US senators called for the FTC to investigate TikTok after the disclosure about Chinese access to US data, according to Reuters. Chinese Capital Beijing will resume direct international flights in an orderly way, via Reuters. ‘Bad for EM’: Why Funds Are Furiously Selling Risky Currencies SenseTime Plunge Raises Stakes for Slew of China Lockups Lifts Goldman Sachs Sees Kotak Mahindra Bank to Double Market Value Singapore’s Price for Right to Buy a Car Hits All- Time High European bourses are firmer across the board, Euro Stoxx 50 +1.3%, continuing to take impetus from the NDX-led rebound in US hours on Tuesday and shrugging off negative APAC trade. Stateside, futures are mixed/flat at present, but like their European peers have been choppy in overnight ranges awaiting US data and Fed speak; ES -0.1%. Back to Europe, sectors exhibit a pro-cyclical bias that features Tech as the clear outperformer. China's CPCA says prelim figures show China sold 1.926mln cars in June, +22% Y/Y. Prelim. figures indicate Tesla (TSLA) sold 78k (prev. 32.1k MM) China-made vehicles in June, via Reuters. Top European News Latest British Political Drama Proves ‘Sideshow’ for Investors French Rail Strike Adds to European Summer Travel Havoc Russia Slams Macron for Breaching Diplomatic Confidentiality Bulgaria’s Gerb Holds Narrow Lead Over Ruling PP Party: Poll BOE Chief Economist Says Fighting UK Inflation Is Priority Italy Five Star Party is leaning on keeping support for PM Draghi, according to ANSA. Central Banks ECB's Wunsch said If the fragmentation in bond markets is unwarranted then we should be as unlimited as possible, via the FT. BoE's Cunliffe said we will act to ensure the inflation shock does not become imbedded. BoE's Pill says the (BoE) statement re. acting forcefully if necessary reflects both my willingness to adopt a faster pace of tightening than implemented thus far in this tightening cycle & emphasis conditionality on data; Pill will be data-dependant. Much remains to be resolved before we vote on our August policy decision. Adds, that there is a case of steady-handed approach; one-off bold moves can be disturbing to markets. FX Dollar dips, but retains firm underlying bid ahead of FOMC minutes, Fed’s Williams and services ISM, DXY holds around 106.500 within 106.760-340 range. Yen outperforms on technical grounds and with JPY crosses maintaining downward momentum; USD/JPY closer to 135.00 than 136.00, but faces stiff support if breached via recent lows . Euro remains pressured after largely weak Eurozone construction PMIs and no real compensation from mixed retail sales data, EUR/USD slips to new 20 year low nearer 1.0200. Pound precarious as more UK Tory Party MPs quit to pile pressure on PM Johnson, Cable back under 1.1950 after brief rebound from low 1.1900 area. Yuan bucks downbeat mood in EM currencies even though China suffers more outbreaks of Covid-19 as it adopts regional safe haven status; USD/CNH and USD/CNY straddle 6.7100. Lira lurches again and Forint falls to fresh all time low; USD/TRY tops 17.2550 and EUR/HUF touches 410.50. Fixed Income Bulls keep debt afloat after retreat from Tuesday peaks. Bunds subsequently breach prior session best by a lone tick, at 151.66 before running into supply issues, as new 10 year German benchmark technically uncovered. Gilts back on 116.00 handle from 115.47 Liffe low and T-note hovers nearer top end of 120-03/119-21 overnight range ahead of Fed's Williams, US services ISM and FOMC minutes. UK debt unruffled by more UK Government resignations and BoE rhetoric awaiting PMQs that will put spotlight on under fire Conservative Party leader Johnson. Commodities Crude benchmarks are firmer and having been moving with the equity space after yesterday's significant crude selloff; however, the 'recovery' is limited with WTI pivoting USD 100/bbl. Goldman Sachs said oil has overshot as the global deficit is unresolved and it is premature for oil to drop on recession concerns OPEC Secretary General Barkindo has passed away, according to Arab News. Note, from an OPEC personnel perspective, Barkindo's term as the OPEC SecGen was due to end on July 31st, after which the Kuwaiti oil executive Haitham Al Ghais was due to replace him as the new secretary-general Tengiz field in Kazakhstan continues operations following a blast, according to a source cited by Reuters. Spot gold is lacklustre after Tuesday's USD-driven downside; notably, the yellow metal has been fairly resilient to fresh advances in the DXY. While base metals continue to falter, LME copper below 7.5k/T at worst. US Event Calendar 07:00: July MBA Mortgage Applications -5.4%, prior 0.7% 09:45: June S&P Global US Services PMI, est. 51.6, prior 51.6 10:00: May JOLTs Job Openings, est. 10.9m, prior 11.4m 10:00: June ISM Services Index, est. 54.0, prior 55.9 14:00: June FOMC Meeting Minutes Central Banks 09:00: Fed’s Williams Makes Remarks at Event on Bank Culture 14:00: June FOMC Meeting Minutes DB's Jim Reid concludes the overnight wrap It's sports day at school today and I'm going to pop in for an hour to watch. However given that my 4yr old twins are the youngest in their year and my daughter is still in a wheelchair I suspect I won’t be building a new trophy cabinet. For those that have asked about Maisie (thanks by the way) she continues to be in great spirits and is exceptional at swimming for her age (6) so she would likely win that if there was such an event. Fingers crossed she'll be able to get out of the wheelchair in a few months after 8 months so far. The next scan is in 3 weeks and we’ll know if the hip ball has finished collapsing and if it is showing any early sign of regrowing. As my kids are unlikely to win a prize they've asked me to ensure I win some for them to make their tears go away. So if you value our research I would appreciate it if you would vote in the Global Institutional Investor FI survey that opened yesterday. You can see the categories I am up for in this (link here) pdf. There are a number but I've listed the priorities. If you could let us know if you voted that would be appreciated unless it is to tell me you voted for one of our competitors! It’s been another tumultuous 24 hours in markets, with a massive risk-off move reversing late in the US session as the S&P (+0.16%) climbed over 2% after Europe closed. We’ll run through the various headlines in a moment, but there was so much going on here’s a quick highlights reel. We’ve seen the euro decline to a 20-year low against the US Dollar, another round of inversions across the Treasury curve, a mammoth rally in bonds, the tightest financial conditions since the initial wave of the Covid pandemic, a market now pricing in at least two full rate cuts by the Fed in 2023, the German government starting work on bailing out the gas sector, near double-digit percentage drops in oil, and a UK Prime Minister who is getting hit with very high profile cabinet resignations. Running through the day, investor fears were evident from the get-go, with European markets swiftly giving up their gains after the open to move progressively lower through the day. An important catalyst for that was the latest bad news on the energy side, where an escalation in the Norwegian gas strike we mentioned yesterday means that nearly 60% of the country’s gas exports could have been affected from Saturday according to the Norwegian Oil and Gas Association. However, there were some optimistic signs overnight, as it appears the Norway labour minister intervened to put an end to the strike by summoning both sides to the table, saying “When the conflict can have such great social consequences for the whole of Europe, I have no choice but to intervene in the conflict”. It goes without saying that this strike would have been coming at a particularly bad time for the European economy, not least with the scheduled maintenance on Nord Stream that’s occurring from July 11-21 and the uncertainty over what happens next. Germany yesterday accelerated legislation that will allow it to rescue energy companies if the need arises with Uniper looking set to be the first to receive state support. Economy Minister Habeck has talked about gas as potentially being a Lehman Brothers moment so the stakes are high. Indeed this is a heavy cloud hanging over European assets at the moment and they were among the worst global performers yesterday as the prospect of a chaotic gas situation and recession came closer into view. Indeed, the euro itself weakened by a massive -1.50% against the US Dollar yesterday, which was its largest daily decline since March 2020, and left the single currency at its lowest level against the dollar since 2002, closing at just $1.0266. It's dipped another -0.2% overnight. Another factor behind the euro’s weakness were growing doubts that the ECB could embark on as aggressive a hiking cycle as initially thought. That expectation of more dovish central banks was present across the world yesterday in light of the recession fears, but it was particularly prevalent in Europe, where the rate priced in by the June 2023 meeting came down by -11.4bps by the close of trade. It was a similar story in the US where the rate priced in by June 2023 came down by -11.4bps, but what’s becoming increasingly apparent is that investors are now expecting that the Fed will shift towards easing policy by mid-2023, with at least a full 25bp cut now priced in between the February and July meetings in 2023, as well as a further one by year-end. Those fears of a recession were manifesting themselves in other asset classes too, with commodities more broadly (European natural gas excepted) having an awful day as the resiliency of global demand was brought into question. For instance, Brent crude oil prices (-9.45%) witnessed their largest daily move lower since March, taking prices down to their lowest level since early May at $102.77/bbl while WTI (-8.24%) broke beneath $100/bbl for the first time since April. The traditional industrial bellwether of copper was another victim of this trend, plummeting by another -5.36% yesterday to a 19-month low of its own, whilst wheat futures (-4.61%) are now trading beneath their levels prior to Russia’s invasion of Ukraine. In Asia, oil futures have pared bigger bounce back gains but are still trading slightly higher with Brent futures +1.05% and WTI futures (+0.72%) just above the $100/bbl level again. Given the rising doubts about future rate hikes and the weakening inflationary pressures from key commodities, sovereign bonds put in a strong performance as they also benefited from their usual appeal as a haven asset. Yields on 10yr Treasuries came down by -7.5bps to 2.81%, and the 10yr breakeven fell -6.2bps to 2.30%, which takes it to a level unseen since September 2021, back before the Fed had even begun to taper their asset purchases. The declines in yields were concentrated at longer maturities, with the 2s10s curve flattening by -6.2bps to -1.9bps, closing inverted for the first time in nearly a month. And speaking of inversions, another milestone was reached yesterday as the 2s5s curve inverted for the first time this cycle in trading, closing -5.0bps lower at -0.9bps. That picture was echoed over in Europe as well, where yields on 10yr bunds (-15.6bps), OATs (-13.8bps) and BTPs (-9.1bps) all moved lower on the day. This morning yields on 10yr USTs (+2.37 bps) are edging higher as I type. For equities, the layer upon layer of bad news resulted in another significant selloff until the Euro close, with the STOXX 600 shedding -2.11%. However the rate rally supported a steady tech-led march higher in the US after opening very weak and trading more than -2% lower. The S&P 500 finished +0.16% higher and the NASDAQ was up +1.75% on the day. Energy stocks led the moves lower on both sides of the Atlantic, and the index-level gains in the US were supported by a narrow subset of large cap stocks sensitive to lower rates, with only 3 S&P sectors – tech, discretionary, communications – in the green, and a massive 667bps differential between the best performing sector (communications +2.66%) and worst (energy -4.01%). Indeed, the even more concentrated mega-cap FANG+ outperformed the rest of the complex, gaining +3.01%. In line with the late US divergence, it was a tale of two credit markets, with HY credit spreads widening in Europe with the iTraxx crossover +27.4bps to 616bps, a level not seen since early April 2020 at the height of the initial lockdowns, while US HY CDX spreads tightened -11.8bps to 565bps after trading as high as 592bps intra-day. On the UK political scene, Prime Minister Johnson’s position is under significant pressure at the minute with two high profile resignations in his cabinet after yet more conduct issues were raised about the PM's leadership. Johnson has indicated he plans to stay on and has appointed replacements for the outgoing ministers, but his position looks increasingly perilous given the lack of party support. The pound was -1.41% lower versus the US dollar, but most of the decline took place before the news of the resignations and the pound was actually in the middle of the pack for G10 currency performance on the day, with the broader risk environment proving more perilous. If the PM can stay on he will likely pivot towards easier fiscal policy now the Chancellor has resigned. However it's tough to price that in as it's not clear whether the PM can survive this episode. Asian equity markets are lagging this morning even with the late US rally. Across the region, the Hang Seng (-1.56%) is the largest underperformer followed by the Kospi (-1.33%) and the Nikkei (-1.26%) in early trade. Markets in mainland China are also sliding with the Shanghai Composite (-1.20%) and CSI (-1.23%) trading in negative territory dragged down by worries about new COVID-19 cases in Shanghai risking fresh restrictions. Moving ahead, stock futures in the DMs indicate a mixed start with contracts on the S&P 500 (-0.12%) and NASDAQ 100 (-0.10%) edging lower albeit with DAX futures bouncing +1.35% after that late US rally. Moving to Covid news, Shanghai reported 24 infections yesterday, its most in three weeks although the overall case load remains small by global standards. To avert a wider spread and huge disruptions, Shanghai’s municipal government said in a statement that there’d be mass PCR testing in 9 districts and partial areas in another 3 districts, with residents required to take 2 tests within 3 days. The measures follow a reported outbreak, which has driven anxiety that the financial capital will be closed back down after just emerging from a two-month long lockdown. On the data side, US factory orders expanded by a stronger-than-expected +1.6% in May (vs. +0.5% expected), whilst the previous month’s growth was revised up four-tenths to +0.7%. Over in Europe, the final composite PMI for the Euro Area in June was revised up from the flash reading to 52 (vs. flash 51.9). To the day ahead now, and data releases from Europe include German factory orders for May, the German and UK construction PMIs for June, and Euro Area retail sales for May. Over in the US, there’s also the final services and composite PMIs for June, the ISM services index for June, and the JOLTS job openings for May. Otherwise from central banks, we’ll get the minutes from the June FOMC meeting, and also hear from the Fed’s Williams, the ECB’s Rehn and the BoE’s Cunliffe and Pill. Tyler Durden Wed, 07/06/2022 - 07:55.....»»

Category: personnelSource: nytJul 6th, 2022

Key Events This Week: All Eyes On Payrolls

Key Events This Week: All Eyes On Payrolls It was another rollercoaster week - the 11th drop in the past 13 - which however ended with a monster rally in bonds and stocks as markets priced in the coming Fed rate cuts, and although it'll likely be on the quieter side in markets today, we won't be able to escape the near-term recession risks for very long. As we noted last week, the Atlanta Fed Q2 tracker is now at -2.08% after slumping into negative territory at the end of last week, and if this is close to the mark that would mean two negative quarters and a technical recession. The official definition is owned by the NBER and they will likely need more evidence (and a political green light or three) before they would declare it as they look at a broader range of indicators than just headline growth. However we'll likely know we're in it before it's declared so it'll be crucial to work out if this is the start to a descent into bigger problems or if that's still some months away. Note, as Deutsche Bank's Jim Reid notes, it continues to be "when not if". A big swing factor here could be employment and this week is jam packed with US labor data. Payrolls (Friday) will be the headliner but JOLTS (Wednesday), ADP and claims (Thursday) will also be very important. As Jim Reid notes, labor markets remain strong around the world and although this is a generally a lagging indicator, some kind of turn should occur before we can declare what is absolutely the inevitable dive into recession (there is an outside chance of a negative print as soon as this Friday). For what it's worth, DB economists expect payrolls to slow (+225k forecast vs. +390k previously) but with unemployment falling a tenth to 3.5%. In many ways JOLTS (Wednesday) is the preferred employment measure although it has the disadvantage of being even more delayed as it is a month behind so we'll only get May's data this week. In the report, job openings have remained roughly 4.5mn above where they were prior to the pandemic so unless this dips there will still be a lot of demand for labor and the tightness will continue, leaving the Fed with a huge dilemma as growth slows. June's US services ISM on Wednesday will be watched for the headline growth implications and also the employment component which has been 'only' hovering around 50 in recent months. It's worth noting, as DB's Reid does, that the increased growth pessimism towards the end of last week stabilized equities as a big rally in bonds and a more dovish repricing of the Fed kicked in. 10yr Treasuries rallied -25.0bps last week (-13.3bps Friday), their largest weekly decline since March 2020, and although the S&P 500 finished -2.21% lower, it did rally +1.06% on Friday on lower yields as Fed expectations kicked in. Back to the week ahead and we'll see how central banks were thinking about this weak growth vs labor tightness dilemma in the minutes from the Fed's (Wednesday) and ECB's (Thursday) June meetings but this will be slightly dated in light of how rapidly the macro is evolving. Elsewhere, trade and industrial data will be due from key economies globally. May trade data will be out for the US (Thursday), Germany (today), Japan and France (Friday). For the US, May factory orders will be released tomorrow, followed by June's ISM services index on Wednesday. In Europe, the Eurozone's PPI for May is due today, followed by May industrial production for Germany (Thursday) and France, June PMIs for Italy (Tuesday), and Germany's May factory orders (Wednesday). In Asia, the highlight will perhaps be the Caixin services and composite PMIs for China and the RBA meeting taking place tomorrow. Our economists expect the central bank to hike by +50bp. Courtesy of DB, here is the full week ahead calendar day-by-day Monday July 4 Data: Japan June monetary base, Germany May trade balance, Eurozone May PPI, Canada June PMI Central banks: ECB's Nagel and Guindos speak, BoC's Business Outlook Tuesday July 5 Data: US May factory orders, China June services and composite Caixin PMIs, Japan May labour cash earnings, France May industrial and manufacturing production, Italy June services and composite PMI, deficit to GDP Q1, UK June new car registrations, official reserves changes, Canada May building permits Central banks: BoE's financial stability report, BoE's Tenreyro speaks. RBA meeting. Wednesday July 6 Data: US June ISM services index, May JOLTS report, China June foreign reserves, Germany May factory orders, June construction PMI, UK June construction PMI, Eurozone May retail sales Central banks: FOMC June meeting minutes, ECB's Rehn speaks, BoE's Pill and Cunliffe speak Thursday July 7 Data: US May trade balance, June ADP employment change, initial jobless claims, Japan May leading and coincident index, Germany May industrial production, Canada May international merchandise trade Central banks: ECB's account of June meeting, Fed's Waller and Bullard speak, BoE's decision maker survey, BoE's Mann speaks, ECB's Lane, Stournaras, Centeno and Herodotou speak Friday July 8 Data: US June nonfarm payrolls report, unemployment rate, participation rate, average hourly earnings, May wholesale trade sales, consumer credit, Japan June Economy Watcher survey, bank lending, bankruptcies, May household spending, trade balance, France May trade balance, Italy May industrial production, Canada June net change in employment, unemployment rate, hourly wage rate, participation rate Central banks: Fed's Williams speaks, ECB's Lagarde and Villeroy speak * * * Finally, looking at the US, Goldman notes that the key economic data releases this week are the JOLTS job openings and ISM services reports on Wednesday, and the employment situation report on Friday. The minutes from the June FOMC meeting will be released on Wednesday and there are several speaking engagements from Fed officials, including Governor Waller and presidents Williams and Bullard. Monday, July 4 There are no major economic data releases scheduled. Tuesday, July 5 10:00 AM Factory orders, May (GS +0.6%, consensus +0.5%, last +0.3%); Durable goods orders, May final (last +0.7%); Durable goods orders ex-transportation, May final (last +0.7%); Core capital goods orders, May final (last +0.5%); Core capital goods shipments, May final (last +0.8%): We estimate that factory orders increased 0.6% in May following a 0.3% increase in April. Durable goods orders increased 0.7% in the May advance report, and core capital goods orders increased 0.5%. Wednesday, July 6 09:00 AM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will make remarks at a virtual event on bank culture hosted by the New York Fed. On June 28, President Williams said, “In terms of our next meeting, I think 50 to 75 [basis points] is clearly going to be the debate. He added, “We’re far from where we need to be [regarding the federal funds rate]. My own baseline projection is we do need to get into somewhat restrictive territory next year given the high inflation...” He also indicated his growth forecast falls on the lower range among Fed officials: “I am expecting growth to slow this year, quite a bit, relative to what we had last year, and actually to slow to probably 1% to 1.5% GDP growth.” 09:45 AM S&P Global US services PMI, June final (consensus 51.6, last 51.6) 10:00 AM ISM services index, June (GS 54.4, consensus 54.0, last 55.9): We estimate that the ISM services index declined 1.5pt to 54.4 in June. Our forecast reflects sequential weakness in construction and real estate activity and the decline in our services tracker (-2.6pt to 53.9). 10:00 AM JOLTS job openings, May (consensus 11,000k, last 11,400k) 02:00 PM FOMC meeting minutes, June 14-15 meeting: The FOMC increased the federal funds rate target range by 75bp to 1.5%-1.75% at its June meeting. The median dot in the Summary of Economic Projections (SEP) showed a funds rate midpoint of 3.375% at end-2022. The statement dropped the expectation of a strong labor market, instead emphasizing that the Committee is “strongly committed” to returning inflation to target. The SEP showed a 0.5pp increase in the unemployment rate by end-2024 and below-potential GDP growth in 2022 and 2023. On June 22, Chair Powell reiterated that the Fed will make “continued expeditious progress toward higher rates,” and noted “financial conditions have already priced in additional rate increases, but we need to go ahead and have them.” Chair Powell also noted that the Fed would not engage in active sales of mortgage-backed securities anytime soon. He emphasized that while the FOMC is “not trying to provoke and do not think we will need to provoke a recession,” it remained “absolutely essential” for the Fed to restore price stability, and noted that it would be “very challenging” for the Fed to achieve a soft landing. Thursday, July 7 08:30 AM Trade Balance, May (GS -$84.7bn, consensus -$84.9bn, last -$87.1bn): We estimate that the trade deficit decreased by $2.4bn to -$84.7bn in May, reflecting an increase in exports in the advanced goods report. 08:30 AM Initial jobless claims, week ended July 2 (GS 225k, consensus 230k, last 231k); Continuing jobless claims, week ended June 25 (consensus 1,330k, last 1,328k); We estimate initial jobless claims ticked down to 225k in the week ended July 2:  01:00 PM Fed Governor Waller (FOMC voter) speaks: Fed Governor Christopher Waller will participate in an interview during a virtual National Association for Business Economics (NABE) event. A moderated Q&A is expected. On June 18, Governor Waller said, “This week, the FOMC took another significant step toward achieving our inflation objective by raising the Federal Funds rate target by 75 basis points. In my view, and I speak only for myself, if the data comes in as I expect I will support a similar-sized move at our July meeting.” He added, “The Fed is ‘all in’ on re-establishing price stability.” 01:00 PM St. Louis Fed President Bullard (FOMC voter) speaks: St. Louis Fed President James Bullard will discuss the economic outlook and monetary policy at an event hosted by the Little Rock Regional Chamber. A Q&A with media and audience is expected. When discussing the US economy on June 24, President Bullard said, “I actually think we will be fine. It is a little early to have this debate about recession probabilities in the US” and reiterated his call for “front-loading” rate hikes. He noted, “this is in the early stages of the US recovery – or US expansion, we are beyond recovery. It would be unusual to go back into recession at this stage. Interest-rate increases will slow down the economy, but will probably slow down to more of a trend pace of growth as opposed to going below trend. I don’t think this is a huge slowing. I think it is a moderate slowing in the economy.” On June 28, he published an essay on lessons from the 1974 and 1983 US policy responses to inflation. Friday, July 8 08:30 AM Nonfarm payroll employment, June (GS +250k, consensus +273k, last +390k); Private payroll employment, June (GS +200k, consensus +240k, last +333k); Average hourly earnings (mom), June (GS +0.3%, consensus +0.3%, last +0.3%); Average hourly earnings (yoy), June (GS +5.0%, consensus +5.0%, last +5.2%); Unemployment rate, June (GS 3.6%, consensus 3.6%, last 3.6%): We estimate nonfarm payrolls rose by 250k in June (mom sa), a slowdown from the +390k pace in May. Job growth tends to be strong in June when the labor market is tight as firms aggressively hire youth summer workers. However, the June seasonal factors have evolved significantly more restrictive—perhaps overfitting to the reopening-related job surges in June 2020 and June 2021—and represent a headwind of roughly 200k in our view. Additionally, Big Data employment indicators were generally weaker in the month, consistent with a possible drag from tighter financial conditions and modestly higher layoffs in the retail and tech sectors. We estimate an unchanged unemployment rate at 3.6%, reflecting a solid rise in household employment offset by a 0.1pp rise in labor force participation to 62.4%. We estimate a 0.3% rise in average hourly earnings (mom sa) that lowers the year-on-year rate by two tenths to 5.0%. The arrival of the youth labor force may have eased some of the upward pressure on wages, but we see scope for supervisory earnings to rebound after two weak months (we assume neutral calendar effects). 10:00 AM Wholesale inventories, May final (consensus +2.0%, last +2.0%) 11:00 AM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will make remarks at an event hosted by the University of Puerto Rico. A Q&A with media and audience is expected. Source: DB, BofA, Goldman Sachs Tyler Durden Mon, 07/04/2022 - 11:10.....»»

Category: blogSource: zerohedgeJul 4th, 2022

US stock sell-off deepens as the S&P 500 dips below 4,000 for the first time in a year and the Nasdaq falls over 4%

Stocks plunged again on Monday, extending steep losses for the Nasdaq even as bond yields edged lower. Investors have to brace for more market volatility thanks to the new Omicron variant.Xinhua News Agency/Getty Images US stocks plunged Monday, with the S&P 500 dipping below 4,000 for the first time since April 2021.  The tech-heavy Nasdaq dipped more than 4%, and the stock market's "fear gauge" jumped. Stocks and bonds are in a simultaneous correction for the first time in over 50 years. The brutal market sell-off continued Monday, with each of the three major indexes ending lower to begin the week. The S&P 500 sunk below 4,000 for the first time since April 2021 and the tech-heavy Nasdaq lost more than 4%.The Cboe Volatility Index, the so-called fear gauge of the stock market, surged to 34.66 Monday. The sell-off in stocks came even as the yield on the 10-year Treasury note edged lower to about 3.04%, down from Friday's 3.1%, as investors look to escape the carnage in equities. So far in 2022, there's been nowhere to hide in markets as stocks, bonds, and crypto have all been getting crushed, and stocks and bonds are in a simultaneous correction for the first time in over 50 years.  "In my opinion, investors have turned too pessimistic about the outlook for the US economy and stock market," veteran stock market bull Edward Yardeni told the Financial Times Monday. "I don't recall so much stock bearishness in a very long time." Here's where US indexes stood as the market closed 4:00 p.m. on Monday: S&P 500: 3,991.36, down 3.2% Dow Jones Industrial Average: 32,245.57, down 1.99% (653.80 points)Nasdaq Composite: 11,623.25, down 4.29% Morgan Stanley analysts said in a Monday note that retail traders have now lost all the money they gained during the pandemic.Twitter stock fell in Monday's session. Short seller Hindenburg Research published a report saying the company's implied price would be 37% lower in the absence of Elon Musk's takeover bid. The Tesla chief, the analysts wrote, holds all the leverage in the deal, and it is possible he reprices his bid. On Wall Street, Goldman Sachs is set to stop doing work with most SPACs due to liability concerns amid tighter regulation in the space, Bloomberg reported. But the investment bank may change course if the SEC scales back its SPAC oversight guidelines. In commodities, lumber prices fell to their lowest level of the year Monday, as the highest mortgage rates in 13 years dent housing demand. Overseas, China's yuan hit an 18-month low against the dollar, with Beijing's Covid lockdowns dragging down the economy and as US bond yields remain elevated. Meanwhile, the three biggest cryptocurrencies by market cap — bitcoin, ether, and solana — all tumbled Monday. Shares of Coinbase and Silvergate Capital tanked with the broader token selloff.Oil moved lower, with West Texas Intermediate down 6.7% to $102.39 a barrel. Brent crude, the international benchmark, moved down 6.4% to $105.20 a barrel. Gold edged lower 1.53% to 1,853.20 per ounce. The 10-year yield dipped 8.4 basis points to 3.04%.Bitcoin plunged 11.64% to $30.569.95.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 9th, 2022

Futures Recover Losses After Netflix Disaster; 10Y Real Yields Turn Positive

Futures Recover Losses After Netflix Disaster; 10Y Real Yields Turn Positive US index futures were little changed, trading in a narrow, 20-point range, and erasing earlier declines as a selloff in bonds reversed with investors also focusing on the catastrophic Q1 earnings report from Netflix. Nasdaq 100 Index futures slipped 0.2% by 7:15 a.m. in New York, recovering from an earlier drop of as much as 1.2%; the Nasdaq 100 has erased $1.3 trillion in market value since April 4 as bond yields have been surging on fears of rate hikes. S&P 500 futures also recouped losses to trade little changed around 4,460. Treasuries rallied and 10Y yields dropped to 2.86% after hitting 2.98% yesterday. The dollar dropped for the first time in 4 days after hitting the highest level since July 2020, and gold was flat while bitcoin rose again, hitting $42K. In perhaps the most notable move overnight, US 10-year real yields turned positive for the first time since March 2020, signaling a potential return to the pre-pandemic normal. But that was quickly followed by a global drop in bond yields as investors assessed growth challenges from the Ukraine war and the potential for a peak in inflation. “Real yields matter for equities,” Esty Dwek, chief investment officer at Flowbank SA, said in an interview with Bloomberg Television. “It’s another aspect for the valuation picture that isn’t helping. It shouldn’t be that much of a surprise to see real yields are back closer to zero again. We’re pricing in so much bad news already between inflation and the hikes and war and supply chains.” 10-year Treasurys yield shed 7 basis points in choppy session after as money managers from Bank of America to Nomura indicated the panic over inflation has gone too far: “Our forecasts point to inflation peaking this quarter and falling steadily into 2023,” BofA analysts including Ralph Axel wrote in a note. “We believe this will reduce the panic level around inflation and allow rates to decline.”  Bank of America also said it has turned long on 10-year Treasuries. Elsewhere, Japan's 10-year yield holds at 0.25%, the top of Bank of Japan’s trading band as the central bank resumes massive intervention. Despite the BOJ's dovish commitment to keep rates low, the Japanese yen rebounded from a 13-day slump and gold extended its decline. Going back to stocks, Netflix shares which have a 1.2% weighting in the Nasdaq, sank 27% in premarket trading after the streaming service said it lost customers for the first time in a decade and forecast that the decline will continue. The shares were downgraded at many firms including UBS Group AG, KGI Securities and Piper Sandler. Other streaming stocks including Walt Disney and Roku also slipped. IBM, on the other hand, rose 2.5% after reporting revenue that beat the average analyst estimate on demand for its hybrid-cloud offerings. Analysts acknowledged the strong quarter of revenue performance. A dimmer outlook for corporate earnings as well as the rise in yields have dented demand for risk assets, with investors preferring defensive stocks such as healthcare to growth-linked stocks, which come under greater pressure from higher interest rates. Some other notable premarket movers: Interactive Brokers (IBKR US) shares fell 1.1% in after-market trading as net income missed analysts’ consensus estimates. Still, analysts at Piper Sandler and Jefferies are positive. Omnicom (OMC US) shares jumped 3.7% in postmarket. Its cautious outlook for the rest of the year could bring some positive surprises, according to analysts, after the company’s 1Q revenue beat estimates In Europe, the Stoxx 600 rose 0.8%, led by banking and technology shares while miners underperformed as metals fell, as investors assessed a mixed bag of corporate results and the outlook for France’s presidential-election runoff on Sunday.  There’s a divergence in performance of European stocks; Euro Stoxx 50 rallies 1.2%. FTSE 100 lags, adding 0.4%. Danone SA rose after reporting its fastest sales growth in seven years, and Heineken NV advanced after sales climbed. Here are some of the biggest European movers today: ASML shares rise as much as 8% with analysts saying the semiconductor-equipment group’s earnings show demand remains strong, even if a timing issue meant its outlook missed expectations. Danone shares gain as much as 9% following a French financial newsletter report that rival Lactalis may be interested in buying its businesses and after the producer of Evian reported a surge in bottled water revenue. Just Eat Takeaway shares rise as much as 7.7% after the company gave mixed guidance and said it is considering selling Grubhub. While analysts note the growth looks weak, they highlight the focus on profitability and the strategic review of Grubhub are positives. Vopak shares rise as much as 7.2%, most since March 2020, after the tank terminal operator reported higher revenues and Ebitda for the first quarter. Heineken shares rise as much as 5% after the Dutch brewer reported 1Q organic beer volume that beat analyst expectations and said net revenue (beia) per hectolitre grew 18.3%. Analysts were impressed by the company’s price-mix during the period. Rio Tinto shares fall as much as 3.9%. A production miss for 1Q could prevent the miner’s shares from recovering after recent underperformance, RBC Capital Markets says. Credit Suisse declines as much as 2.8% after the bank said it anticipates a first-quarter loss owing to a hit to revenue from Russia invading Ukraine and an increase in legal provisions. Oxford Biomedica drops as much as 10% after reporting full-year revenue that was below consensus. RBC Capital said reasons for the revenue miss were “unclear,” adding that there was no new business development news. Asian stocks rose as Japanese equities rallied on the back of a weaker yen, which will support exports. Shares in China fell as investors were disappointed by the decision among banks to keep borrowing rates there unchanged. The MSCI Asia Pacific Index gained as much as 0.9% and was poised to snap a three-day losing streak. Japanese exporters including Toyota and Sony helped lead the way, with shares also stronger in Singapore, Malaysia and the Philippines.  “It looks like the cheap yen may continue for a longer period than originally expected,” said Bloomberg Intelligence auto analyst Tatsuo Yoshida. “The weaker yen is good for all Japanese automakers.” China’s benchmarks bucked the uptrend and dipped more than 1%, as lenders maintained their loan rates for a third month despite the central bank’s call for lower borrowing costs to help an economy hurt by Covid-19 and geopolitical headwinds.  China’s rate stall, together with last week’s smaller-than-expected cut in the reserve requirement, has led some investors to believe broad and significant policy easing is unlikely. “Doubts about access to easier funding remain a bugbear despite headline easing,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, wrote in a note. “Inadvertent restraints on actual lending may mute intended stimulus, revealing risks of ‘too little too late’ stimulus.” In positive news, daily covid cases in Shanghai were in downtrend in recent days and number of communities with more than 100 daily infections fell for three consecutive days, Wu Qianyu, an official with Shanghai’s health commission, says at a briefing. Financial stocks outside of China gained after U.S. 10-year Treasury real yields turned positive for the first time since 2020 as traders continue to bet on a series of aggressive Federal Reserve rate hikes. This may pose more headwinds for Asian tech stocks, which have dragged the broader market lower this year. Japanese equities rose for a second day after the yen weakened against the dollar for a record 13 straight days. Automakers were the biggest boost to the Topix, which climbed 1%. Financials advanced as yields gained. Fast Retailing and SoftBank Group were the largest contributors to a 0.9% gain in the Nikkei 225. The yen strengthened slightly after shedding nearly 6% against the dollar since the start of the month. “It looks like the cheap yen may continue for a longer period than originally expected,” said Bloomberg Intelligence auto analyst Tatsuo Yoshida. “The weaker yen is good for all Japaneseautomakers, “no one loses,” he added. Indian equities snapped their five-day drop as energy companies advanced on expectations of blockbuster earnings, driven by wider refining margins. Software exporters Infosys, Tata Consultancy and lender HDFC Bank bounced back from a slump, triggered by weaker results.  The S&P BSE Sensex gained 1% to 57,037.50 in Mumbai, while the NSE Nifty 50 Index rose 1.1%. The two gauges posted their biggest surge since April 4. Thirteen of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a gauge of automobile companies. “A series of sharp negative reactions to minor misses in earnings from large caps points to a precarious state of positioning among investors,” according to S. Hariharan, head of sales trading at Emkay Global Financial. He expects corporate commentary on the margin outlook for FY23 to be key to investors’ reaction to other quarterly results, which will be released over the next couple of weeks. The benchmark Sensex lost about 5% in the five sessions through Tuesday, dragged lower by a selloff in software makers, a slump in HDFC Bank and its parent Housing Development Finance Corp. Foreign investors, who have been net sellers of Indian stocks since the start of October, have withdrawn $1.7 billion from local equities this month through April 18. The IMF slashed its world growth forecast by the most since the early months of the Covid-19 pandemic and projected even faster inflation. It expects India’s economy to grow by 8.2% in fiscal 2023 compared with an earlier estimate of 9%. Reliance Industries contributed the most to the Sensex’s gain, increasing 3%. Out of 30 shares in the Sensex index, 20 rose, while 10 fell. In FX, the Bloomberg Dollar Spot Index fell 0.4%, its first drop in four days, after yesterday reaching its highest level since July 2020, as the greenback weakened against all Group-of-10 peers. Scandinavian and Antipodean currencies led gains followed by the yen, which halted a 13-day rout. The euro advanced a second day and bunds extended gains, underperforming euro-area peers as money markets pared ECB tightening wagers. The yen snapped a historic declining streak amid short covering after the currency approached a key level of 130 per dollar. The Bank of Japan stepped in to cap 10-year yields for the first time since late March as it reiterated its ultra loose monetary policy with four days of unscheduled bond buying. The Australian and New Zealand dollars gained as risk sentiment improved after a selloff in Treasuries paused. The Aussie was supported by offshore funds buying into contracting yield spreads with the U.S. and on demand from exporters for hedging at the week’s low, according to FX traders. The pound edged higher against a broadly weaker dollar, but lagged behind the rest of its Group-of-10 peers, with focus on the risks to the U.K. economy. In rates, Treasuries advanced, reversing a portion of Tuesday’s sharp selloff which pushed the 10Y as high as 2.98%, with gains led by belly of the curve amid bull-flattening in core Focal points of U.S. session include Fed speakers and $16b 20-year bond reopening. US yields were richer by ~7bp across belly of the curve, 10-year yields around 2.87% keeping pace with gilts while outperforming bunds, Fed-dated OIS contracts price in around 222bp of rate hikes for the December FOMC meeting vs 213bp priced at Monday’s close; 49bp of hikes remain priced in for the May policy meeting. Japan 10-year yields held at 0.25%, the top of Bank of Japan’s trading band as the central bank resumes massive intervention. Australian and New Zealand bonds post back-to-back declines. Coupon issuance resumes with $16b 20-year bond sale at 1pm New York time; WI yield at around 3.10% sits ~45bp cheaper than March result, which stopped 1.4bp through.  IG dollar issuance slate includes Development Bank of Japan 5Y SOFR, Canada 3Y and ADB 3Y/10Y SOFR; six deals priced almost $19b Tuesday, headlined by financials including JPMorgan and Bank. In commodities, crude futures advance. WTI trades within Tuesday’s range, adding 1.1% to around $103. Brent rises 0.9% to around $108. Most base metals trade in the red; LME lead falls 1.6%, underperforming peers. Spot gold falls roughly $4 to trade near $1,946/oz. Looking at the day ahead now, and data releases include German PPI for March, Euro Area industrial production for February, US existing home sales for march, and Canadian CPI for March. From central banks, we’ll hear from the Fed’s Bostic, Evans and Daly, as well as the ECB’s Rehn and Nagel, whilst the Federal Reserve will be releasing their Beige Book. Earnings releases include Tesla, Procter & Gamble, and Abbott Laboratories. Finally, French President Macron and Marine Le Pen will debate tonight ahead of Sunday’s presidential election. Market Snapshot S&P 500 futures down 0.4% to 4,443.50 STOXX Europe 600 up 0.4% to 458.21 MXAP up 0.5% to 171.88 MXAPJ up 0.2% to 570.00 Nikkei up 0.9% to 27,217.85 Topix up 1.0% to 1,915.15 Hang Seng Index down 0.4% to 20,944.67 Shanghai Composite down 1.3% to 3,151.05 Sensex up 0.9% to 56,945.14 Australia S&P/ASX 200 little changed at 7,569.23 Kospi little changed at 2,718.69 German 10Y yield little changed at 0.88% Euro up 0.3% to $1.0823 Brent Futures up 1.0% to $108.27/bbl Brent Futures up 1.0% to $108.27/bbl Gold spot down 0.3% to $1,943.30 U.S. Dollar Index down 0.28% to 100.67 Top Overnight News from Bloomberg On the surface the yen looks like the perfect well for carry traders to dip into, under pressure from a Bank of Japan determined to keep local yields anchored to the floor even as interest rates around the world push higher. But despite consensus building for further losses -- peers look like better funding options on certain key metrics Almost eight weeks after Vladimir Putin sent troops into Ukraine, with military losses mounting and Russia facing unprecedented international isolation, a small but growing number of senior Kremlin insiders are quietly questioning his decision to go to war French President Emmanuel Macron and nationalist leader Marine le Pen are gearing up for their only live TV debate on Wednesday evening, a high-stakes event just days before the final ballot of the presidential election this weekend China will continue strengthening strategic ties with Russia, a senior diplomat said, showing the relationship remains solid despite growing concerns over war crimes in Vladimir Putin’s war in Ukraine A more detailed look at global markets courtesy of Newsquawk APAC stocks eventually traded mostly positive after the firm handover from the US despite continued upside in yields. ASX 200 was led by the healthcare sector as shares in Ramsay Health Care surged due to a takeover proposal from a KKR-led consortium, but with gains capped by miners after Rio Tinto's lower quarterly iron ore production and shipments. Nikkei 225 was underpinned by the initial currency depreciation and with the BoJ defending its yield cap. Hang Seng and Shanghai Comp were mixed with the mainland subdued after the PBoC defied expectations for a cut to its benchmark lending rates and instead maintained the 1yr and 5yr Loan Prime Rates at 3.70% and 4.60%, respectively. Top Asian News Fed’s Aggressive Rate Hike Plans Jolt Policy in China and Japan BOJ Further Boosts Bond Buying as Yields Advance to Policy Limit Sunac Bondholders Say They Haven’t Received Interest Due Tuesday Regulators Under Pressure to Ease Loan Curbs: Evergrande Update China Buys Cheap Russian Coal as World Shuns Moscow European bourses and US futures were choppy at the commencement of the European session, but, have since derived impetus in relatively quiet newsflow amid multiple earnings and as yields continue to ease; ES Unch. Currently, Euro Stoxx 50 +1.8%, while US futures are little changed on the session but rapidly approaching positive territory ahead of key earnings incl. TSLA. Netflix Inc (NFLX) - Q1 2022 (USD): EPS 3.53 (exp. 2.89), Revenue 7.87bln (exp. 7.93bln), Net Subscriber Additions: -0.2mln (exp. +2.5mln). Q1 UCAN streaming paid net change -640k (exp.+87.5k). Co. lost 640k subscribers in US/Canada, 300k in EMEA, and 350k in LatAm. Co. Said macro factors, including sluggish economic growth, increasing inflation, geopolitical events such as Russia’s invasion of Ukraine, and some continued disruption from COVID are likely having an impact, via PR Newswire. Click here for the full breakdown. -26% in the pre-market. Chinese Civil Aviation publishes prelim report looking into the China Eastern Airline crash; still recovering and analysing damaged black boxes from the plane: there was no abnormal communication between air crew and air controllers before the aircraft deviated from cruising altitude; no dangerous weather, goods or overdue maintenance. Top European News Le Pen Upset Would Be as Big a Shock to Markets as Brexit Macron and Le Pen Set for High Stakes French Debate Riksbank Governor Leaves Door Open for String of Rate Hikes Danone Gains on Lactalis Takeover Speculation, Evian Rebound Heineken Rises; MS Says Results Were Widely Expected FX: Buck concedes ground to recovering Yen as US Treasury yields recede, USD/JPY over 150 pips below new 20 year high circa 129.42. Yuan on the rocks after PBoC set a soft onshore reference rate and regardless of unchanged LPRs, USD/CNH eyes 6.4500 after breach of 200 DMA. Aussie back in pole position as high betas benefit from Greenback retreat and Kiwi in second spot ahead of NZ CPI data; AUD/USD rebounds through 0.7400 and NZD/USD from under 0.6750. Loonie also bouncing before Canadian inflation metrics, with Usd/Cad closer to 1.2550 than 1.2625, while Euro and Pound are both firmer on 1.0800 and 1.3000 handles respectively as DXY dips below 100.500. Rand shrugs aside mixed SA CPI prints as correction from bull run continues and Gold slips under Usd 1950/oz, USD/ZAR holds above 15.0000. ECB's Kazaks says a rate hike is possible as soon as July this year; ending APP early in Q3 is possible and appropriate; zero is not an a cap for the deposit rate, via Bloomberg. Adds, a gradual approach does not mean a slow approach, do not need to wait for stronger wage growth. Fixed Income: Debt redemption, as futures retrace following tests/probes of cycle lows. Lack of concession not really evident at longer-dated German and UK bond sales, but 20 year US supply may be a separate issue. BoJ ramps up intervention and aims to anchor rather than cap 10 year JGB yield around zero percent, while BoA suggests contra-trend position in 10 year UST to target 2.25% from current levels close to 3.0%. Commodities: Crude benchmarks are firmer on the session in what is more of a consolidation from yesterday's pressured settlement than a concerted effort to move higher, also benefitting from broader equity action. Currently, WTI and Brent reside at the top-end of USD 2/bbl parameters; focus very much on China-COVID, Iran, Libyan supply and Ukraine-Russia developments. US Private Energy Inventory Data (bbls): Crude -4.5mln (exp. +2.5mln), Cushing +0.1mln, Gasoline +2.9mln (exp. -1.0mln), Distillate -1.7mln (exp. -0.8mln). Spot gold/silver are contained at present but have seen bouts of modest pressure, including the loss of the USD 1946.45/oz 21-DMA at worst. US Event Calendar 07:00: April MBA Mortgage Applications, prior -1.3% 10:00: March Existing Home Sales MoM, est. -4.1%, prior -7.2% 10:00: March Home Resales with Condos, est. 5.77m, prior 6.02m 14:00: U.S. Federal Reserve Releases Beige Book Central Bank Speakers 11:25: Fed’s Daly Discusses the Outlook 11:30: Fed’s Evans Discusses the Economic and Policy Outlook 13:00: Fed’s Bostic Discusses Equity in Urban Development DB's Jim Reid concludes the overnight wrap It took me a while to adjust to being back to the office yesterday after two and a half weeks off. No screaming kids, no stealing half their food as I made their meals, and no stepping on endless lego and screaming myself. My team at work are much better behaved, protect their food, and clear up after playing with their toys. Talking of lego, the first day of the holiday was spent in a snow blizzard at LEGOLAND and the last day in shorts and t-shirt on a family bike ride on the Thames. No I haven't been off for that long just a typical April in the UK. When I left you, I was in constant agony due to sciatica in my back and a knee that was very fragile post surgery. On my last day I had a back injection that I wasn't that hopeful about as three previous ones hadn't done anything. However after a second opinion and a new consultant, this injection hit the spot and my sciatica has completely gone and I'm just back to the long-standing normal wear and tear related back stiffness. The consultant can't tell me how long it'll last so Reformer Pilates starts next week. My knee is slowly getting better via some overuse flare ups. So until the next time, I'm in as good a shape as I have been for quite some time! It's hard to guage how good a shape the market is in at the moment as there are lots of conflicting forces. Since I've been off global yields have exploded higher, the US yield curve has resteepened notably and risk is a bit softer. As regular readers know I think a late 2023/early 2024 US recession is likely in this first proper boom and bust cycle for over 40 years. However we're still in some kind of boom phase and I've been trying not to get too bearish too early. While I was off, I published our latest credit spread forecasts and having met our earlier year widening targets, we've moved more neutral for the rest of the year. However into year end 2023, we now have a very big widening of spreads in the forecasts to reflect the likely recession. See the report here. Also while I've been off, the House View is now also that we'll get a US recession at a similar point which as far as I can see is the first Wall Street bank to officially predict this. See the World Outlook here for more. On the steepening I don't have a strong view but ultimately I think 2 year yields will probably have to rise again at some point after a recent pause as the risks are skewed to the Fed having to move faster than the market expects. The long end is complicated by QT but generally I suspect the curve will be fairly flat or inverted for most of the next few months. Coming back after my holidays and the long Easter weekend, the bond market sell-off resumed yesterday with yields climbing to fresh highs. In fact, the losses for Treasuries so far in April now stand at -2.95% on a total return basis, just outperforming the -3.04% decline in March that itself was the worst monthly performance since January 2009, back when the US economy started emerging from the worst phase of the GFC. Elsewhere the US yield curve flattened for the first time in six sessions, with 2yr yields climbing +14.4bps to 2.59%, their highest level since early 2019. Yields on 10yr Treasuries rose +8.3bps to 2.94%, a level unseen since late 2018, on another day marked by heightened rates volatility. Meanwhile 30yr yields breached 3.00% intraday for the first time since early 2019, climbing +5.4bps. And what was also noticeable was the continued rise in real yields, with the 10yr real yield closing at -0.009% yesterday, and briefly trading in positive territory for the first time since March 2020 in early trading this morning. Bear in mind that the 10yr real yield has surged roughly 110bps in around 6 weeks, and since we’ve been able to calculate real yields using TIPS, the only faster moves over such a short time period have been during the GFC and a remarkable 2-week period in March 2020 around the initial Covid-19 wave. On the other hand, as I pointed out in my CoTD yesterday (link here), the 10yr real yield based on spot inflation is currently around -5.6%, so still incredibly negative. The latest moves come ahead of the Fed’s next decision two weeks from now, where futures are placing the odds of a 50bp hike at over 100% now. We’ve been talking about 50bps for some time, and we’d probably have had one last month had it not been for Russia’s invasion of Ukraine, but it would still be a historic moment if it happens, since the last 50bp hike was all the way back in 2000. Nevertheless, we could be about to see a whole run of them, with our economists pencilling in 50bp hikes at the next 3 meetings, whilst St Louis Fed President Bullard (the only dissenting vote at the last meeting who wanted 50bps) said on Monday night that he wouldn’t even rule out a 75bps hike, which probably gave some fuel to the subsequent front end selloff. The bond selloff also took hold in Europe yesterday, where yields on 10yr bunds (+6.9ps), 10yr OATs (+5.0bps) and BTPs (+6.2bps) all hit fresh multi-year highs. Indeed, those on 10yr bunds (0.91%) were at their highest level since 2015, having staged an astonishing turnaround since they closed in negative territory as recently as March 7. Rising inflation expectations have been a driving theme behind this, and yesterday we saw the 5y5y forward inflation swap for the Euro Area close above 2.4%, which is the first time that’s happened in almost a decade, and just shows how investor confidence in the idea of “transitory” inflation is becoming increasingly subdued given that metric is looking at the 5-10 year horizon. Those moves higher in inflation expectations came in spite of the fact that European natural gas prices fell to their lowest level since Russia’s invasion of Ukraine began yesterday. By the close, they’d fallen -1.94% to €93.77/MWh, whilst Brent crude oil prices were down -5.22% to $107.25/bbl. In Asia, oil prices are a touch higher, with Brent futures +0.82% higher as we go to press. Whilst bonds sold off significantly on both sides of the Atlantic, equities put in a much more divergent performance, with the US seeing significant advances just as Europe sold off. By the close of trade, the S&P 500 (+1.61%) had posted its best day in more than a month, as part of a broad-based advance that left 446 companies in the index higher on the day, the most gainers in a month. Tech stocks outperformed in spite of the rise in yields, with the NASDAQ (+2.15%) and the FANG+ index (+1.81%) posting solid advances, and the small-cap Russell 2000 (+2.04%) also outperformed. In Europe however, the STOXX 600 shed -0.77%, with others including the DAX (-0.07%), the CAC 40 (-0.83%) and the FTSE 100 (-0.20%) also losing ground. The S&P was higher despite a day of mixed earnings. Of the ten companies reporting during trading yesterday, only 4 beat both sales and earnings expectations. After hours, Netflix was the main story, losing subscribers for the first quarter in over a decade and forecasting further declines this quarter, which sent the stock as much as -24% lower in after hours trading. It’s 2 bad earnings releases in a row for the world’s largest streaming service, who saw their stock dip -21.79% the day after their fourth quarter earnings in January. Asian equity markets are mixed this morning as the People’s Bank of China (PBOC) defied market expectations by keeping its benchmark lending rates steady. In mainland China, the Shanghai Composite (-0.21%) and the CSI (-0.43%) are lagging on the news. Bucking the trend is the Nikkei (+0.57%) and the Hang Seng (+0.66%). Outside of Asia, stock futures are indicating a negative start in the US with contracts on the S&P 500 (-0.35%) and Nasdaq (-0.75%) both trading in the red partly due to the Netflix earnings miss. Separately, the Bank of Japan (BOJ) reiterated its commitment to purchase an unlimited amount of 10-yr Japanese Government Bonds (JGBs) at 0.25% to contain yields, underscoring its desire for ultra-loose monetary settings, in contrast to the global move in a more hawkish direction. The yen has moved slightly higher (+0.3%) after depreciating for 13 straight days, a streak which hasn’t been matched since the US left the gold standard in the early 70s and effectively brought the global free floating exchange rate regime into being. The pace and magnitude of the depreciation has brought some expressions of consternation from Japanese officials, but no official intervention. The reality is, it would be extraordinarily difficult to credibly support the currency at the same time as maintaining strict control of the yield curve. 10yr JGBs continue to trade just beneath the important 0.25% level. Over in France, we’re now just 4 days away from the French presidential election run-off on Sunday, and tonight will see President Macron face off against Marine Le Pen in a live TV debate. Whilst that will be an important moment, recent days have seen a slight widening in Macron’s poll lead that has also coincided with signs of an easing in market stress, with the spread of French 10yr yields over bunds coming down to its lowest level since the start of the month yesterday, at 46.7bps. In terms of yesterday’s polls, Macron was ahead of Le Pen by 56-44 (Opinionway), 56.5-43.5 (Ipsos), and 55-54 (Ifop), putting his lead beyond the margin of error in all of them. Elsewhere, the IMF released their latest World Economic Outlook yesterday, in which they downgraded their estimates for global growth in light of Russia’s invasion of Ukraine. They now see global growth in both 2022 and 2023 at +3.6%, down from estimates in January of +4.4% in 2022 and +3.8% in 2023. Unsurprisingly it was Russia that saw the biggest downgrades, but they were broadly shared across the advanced and emerging market economies, whilst inflation was revised up at the same time. Otherwise on the data side, US housing starts grew at an annualised rate of 1.793m in March (vs. 1.74m expected), which is their highest level since 2006. Building permits also rose to an annualised rate of 1.873m (vs. 1.82m expected), albeit this was still beneath its post-GFC high reached in January. To the day ahead now, and data releases include German PPI for March, Euro Area industrial production for February, US existing home sales for march, and Canadian CPI for March. From central banks, we’ll hear from the Fed’s Bostic, Evans and Daly, as well as the ECB’s Rehn and Nagel, whilst the Federal Reserve will be releasing their Beige Book. Earnings releases include Tesla, Procter & Gamble, and Abbott Laboratories. Finally, French President Macron and Marine Le Pen will debate tonight ahead of Sunday’s presidential election. Tyler Durden Wed, 04/20/2022 - 08:02.....»»

Category: blogSource: zerohedgeApr 20th, 2022

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

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

Category: blogSource: zerohedgeNov 10th, 2021

Top Research Reports for Walt Disney, Kimberly-Clark & Barrick Gold

Today's Research Daily features new research reports on 12 major stocks, including The Walt Disney Company (DIS), Kimberly-Clark Corporation (KMB) and Barrick Gold Corporation (GOLD). Monday, October 3, 2022 The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including The Walt Disney Company (DIS), Kimberly-Clark Corporation (KMB) and Barrick Gold Corporation (GOLD). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. You can see all of today’s research reports here >>> Walt Disney shares have underperformed the broader market this year (-39.1% vs. -24.8%) on the back of sentiment shift about the streaming business that had earlier helped the stock move higher. Other issues in the Disney story have been the adverse impact of coronavirus on theme park business, higher programming and production costs at Linear Networks, heavy investments on Disney+, and a leveraged balance sheet. However, the company is benefitting from the growing popularity of Disney+, owing to a strong content portfolio and a cheaper bundle offering. Availability in the Nordics, Latin America and other Asian territories is helping it expand its user base. Theme Park business is likely to gain from strong demand across both the domestic and international parks. (You can read the full research report on Walt Disney here >>>) Kimberly-Clark’s shares have declined -10.0% over the past six-month period against the Zacks Consumer Products – Staples industry’s decline of -28.0%. The Zacks analyst believes that Kimberly-Clark has been battling high input costs for a while now. The same persisted in the second quarter of 2022, with operating profit declining due to a rise in input costs to the tune of $405 million. Management expects adjusted operating profit to be down mid-single digit percent during 2022. Key input costs are estimated to escalate $1.4-$1.6 billion in 2022. Nonetheless, the company has been benefiting from its three growth pillars. These include focus on improving its core business in the developed markets, speeding up growth in the Personal Care segment in developing and emerging markets and enhancing digital and e-commerce capacities. Apart from this, the company’s pricing and saving initiatives have been aiding amid a rising cost environment. (You can read the full research report on Kimberly-Clark here >>>) Barrick Gold shares have underperformed the Zacks Mining – Gold industry over the past year (-15.0% vs. -8.6%). The Zacks analyst believes that the company’s higher costs might dent its margins in 2022. Uncertainties surrounding the pandemic may impact demand for gold over the short term. Gold prices are also expected to remain volatile over the near term and are likely to be affected by interest rate hikes in 2022. Weaker copper prices are another concern. However, the company is expected to gain from progress in key growth projects that are likely to contribute to production. Barrick’s debt-reduction actions are also expected to lower interest expenses. It has a strong liquidity position and is focused on boosting shareholders’ returns by leveraging solid cash flows. Moreover, Barrick’s merger with Randgold and joint venture with Newmont provides additional upsides. (You can read the full research report on Barrick Gold here >>>) Other noteworthy reports we are featuring today include Teck Resources Limited (TECK), FactSet Research Systems Inc. (FDS), and American Financial Group, Inc. (AFG). Sheraz Mian Director of Research Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>> Today's Must ReadDisney+ Growth & Revival of Parks Business Aids Disney (DIS)Kimberly-Clark (KMB) Benefits From Solid Cost-Saving EffortsDebt Reductions, Growth Projects Aid Barrick (GOLD)Featured ReportsNovavax's (NVAX) Dependence on COVID-19 Vaccine Sales A WoeWhile Novavax's COVID-19 vaccine exhibits superior immune protection against the virus, the Zacks analyst believes that the delayed commercial launch has severely impacted the vaccine's sales.CUSIP Global Buyout Aids FactSet (FDS), Low Liquidity AilsPer the Zacks analyst, CUSIP Global Services' acquisition will enhance FactSet's position in the global capital markets. However, its decreasing current ratio (a measure of liquidity) is a headwind.Solid Expansion Projects to Aid Teck (TECK) Amid High CostsPer the Zacks analyst, Teck Resources is poised well to gain its ongoing expansion projects project pipeline and innovation-driven efficiency program RACE21 despite the inflationary cost pressures.High Demand & Online Strength Aids Nordstrom's (JWN) Top LinePer the Zacks analyst, Nordstrom has been gaining from solid demand for apparel and footwear as well as robust digital traffic in both Nordstrom and Nordstrom Rack. As a result, sales grew 12% in Q2.F5 Networks (FFIV) Rides on Firm Growth in Software BusinessPer the Zacks analyst, F5 is benefiting from strong growth in software, driven by security offerings, such as web application firewall, bot defense and mitigation products.New UpgradesSprouts Farmers' (SFM) Omnichannel Offering to Propel SalesPer the Zacks analyst, Sprouts Farmers' assortment of better-for-you products, and focus on providing hassle-free shopping through omnichannel offering bode well.Solid Top Line, Strong Cash Flows Aid American Financial (AFG)Per the Zacks analyst, its strong revenues driven by higher net investment income, net earned premiums have led to significant growth. Moreover, its healthy balance sheet should drive long-term growthNew DowngradesCost Inflation, Operating Inefficiencies Hurt Gentex (GNTX)Per the Zacks analyst, manufacturing bottlenecks from soaring costs of raw materials are likely to mar Gentex's near-term margins. Also, operational inefficiencies ail the firm.Low Volumes & High Costs to Hurt Packaging Corporation (PKG)The Zacks analyst is concerned that lower sales volumes at the Paper segment due to scheduled outages at its mills along with increased input costs will dent Packaging Corporation's results. 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 +24.8% 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 KimberlyClark Corporation (KMB): Free Stock Analysis Report The Walt Disney Company (DIS): Free Stock Analysis Report FactSet Research Systems Inc. (FDS): Free Stock Analysis Report American Financial Group, Inc. (AFG): Free Stock Analysis Report Barrick Gold Corporation (GOLD): Free Stock Analysis Report Teck Resources Ltd (TECK): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks12 hr. 4 min. ago

Don"t Panic and Look to These 2 Big Tech Stocks After the Selloff

Warren Buffet's mentor Benjamin Graham is famous for insisting that investors look at large declines in the stock market as a discount or sale, rather than panic. Here's a look at two quality tech stocks that have a chance to go back to their previous highs once macroeconomic conditions stabilize. Investors may be concerned as broader markets continue to plummet with economic uncertainty stemming from rising inflation and higher interest rates. Although there may still be risk ahead, investors might want to begin pondering Warren Buffett’s most famous investment strategy; be greedy when others are fearful.Of course, the other half of this famous quote is to be fearful when others are greedy, but opportunities are starting to brew. In particular, big tech stocks are beginning to present solid opportunities for patient investors to start building positions.Buffet’s mentor Benjamin Graham is famous for insisting that investors look at large declines in the stock market as a discount or sale, rather than panic.Image Source: Zacks Investment ResearchAs we can see from the chart above, the Nasdaq is up +800% over the last 20 years. There is a clear path upward after the financial crisis in 2008. Surely investors were panicking during these times, but it was symbolic of the discount that Graham often referred to.Let’s take a look at two quality tech stocks that have a chance to go back to their previous highs once macroeconomic conditions stabilize.Amazon AMZN After a recent 20-for-1 stock split, Amazon is trading at its most affordable level in over a decade in terms of the face value of its stock price. Amazon’s stock had routinely traded over $2,000 a share. Investors can now buy the stock for $113 a share, which is also 39% beneath its 52-week highs.AMZN currently sports a Zacks Rank #3 (Hold) and inflation may continue taking its toll on consumer e-commerce spending. However, Amazon is still a very viable investment for growth. According to Zacks estimates, Amazon’s earnings are expected to drop -93% this year but fiscal 2023 earnings are expected to rebound and climb an impressive 956% at $2.21 a share.This is also back to its 2020 levels when the company saw a boost in e-commerce spending during Covid-19. Top line growth is expected as well, with sales set to climb 11% this year and another 15% in FY23 to $602.52 billion. Amazon’s top line growth from FY21 to FY23 is more than what many of the largest companies make in a year. In comparison, Amazon's sales growth during this time span is larger than Target's TGT annual sales. Year to date AMZN is down -32% to underperform the S&P 500’s -24%. However, this is on par with the Nasdaq’s -32% drop. Amazon’s peer group has fallen by 40%. With that being said, AMZN has climbed 138% in the last five years.Image Source: Zacks Investment ResearchEven better, over the last 10 years, AMZN is up a staggering +787%, crushing the benchmark’s +167%.Plus, AMZN is trading well off its decade-long highs of 8,055.3X and getting closer to the median of 132.6X. Amazon’s price to sales is currently at 2.4X and getting close to the optimum level of less than 2X. The industry average P/S is 1.2X.However, Amazon’s cloud platform AWS has continued to grow most recently contributing to $5.72 billion in operating income during the second quarter, up 36% year over year. Cloud, along with continued efforts in expanding its streaming services through Amazon Prime has shown the company can make good use of its $60 billion cash on hand. The average Zacks Price Target offers 55% upside from Amazon’s current levels.Microsoft MSFT Microsoft is one of the largest broad-based technology providers in the world. Microsoft’s products include operating systems, cross-device productivity applications, server applications, business solution applications, desktop and server management tools, software development tools, and video games.Microsoft’s growth in the cloud and its savvy acquisitions have helped MSFT maintain its standing as a Computer-Software industry leader. During its fiscal fourth quarter, Microsoft’s Intelligent Cloud revenue climbed 20% to $20.9 billion. This was largely due to its public cloud computing platform Azure. The growth of Azure along with acquiring LinkedIn and countless others, including the possible future acquisition of Activision Blizzard help Microsoft continue growing and innovating through multiple revenue streams. MSFT is down -30% year to date to underperform the S&P 500. This is on par with the Computer-Software Market’s -32% drop. However, over the last five years, Microsoft is up +213%. Even better, over the last decade, MSFT is up an impressive +690% to crush the Computer-Software Market and the benchmark’s +167%.Image Source: Zacks Investment ResearchThe stellar 10-year price performance in the chart above may be a reason for investors to be optimistic about this year’s decline in MSFT. The -30% YTD drop could very well be a healthy correction for the long term and perhaps a chance to start adding positions at a discount. Microsoft is 33% off its 52-week highs, trading around $232 a share. MSFT has a forward P/E of 23.5X, which is near the industry average. This is also lower than its decade high of 37.4X and near the median of 23.7X.According to Zacks estimates, MSFT earnings are expected to rise 9% to $10.09 a share in 2022. Fiscal 2023 earnings are expected to climb another 15%. Microsoft’s sales are projected to be up 11% this year and another 13% in FY23 to $249.93 billion.Microsoft has also flexed its impressive balance sheet with its most recent $60 billion share repurchase program. Such notable buybacks increase the value of remaining shares for investors with MSFT also boosting its dividend six times in the last five years. MSFT’s current annual dividend yield is a modest 1.04% at $2.48 a share.MSFT currently lands a Zacks Rank # 3 (Hold) and its Computer-Software Industry is in the bottom 39% of over 250 Zacks Industries. However, the average Zacks Price target offers 39% upside from current levels.Bottom Line While it may not be time to be greedy, the decline among big tech stocks is creating what could turn out to be a valuable opportunity for investors. It will be important for investors to stay focused and not panic during downturns.There may be more downside risks ahead, however this allows time to start building meaningful positions. Stocks like Amazon and Microsoft have greatly rewarded patient investors over the last decade and after this downcycle, their stellar performances could continue. This Little-Known Semiconductor Stock Could Be Your Portfolio’s Hedge Against Inflation Everyone uses semiconductors. But only a small number of people know what they are and what they do. If you use a smartphone, computer, microwave, digital camera or refrigerator (and that’s just the tip of the iceberg), you have a need for semiconductors. That’s why their importance can’t be overstated and their disruption in the supply chain has such a global effect. But every cloud has a silver lining. Shockwaves to the international supply chain from the global pandemic have unearthed a tremendous opportunity for investors. And today, Zacks' leading stock strategist is revealing the one semiconductor stock that stands to gain the most in a new FREE report. It's yours at no cost and with no obligation.>>Yes, I Want to Help Protect My Portfolio During the RecessionWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Target Corporation (TGT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 30th, 2022

Should You Hold Discover Financial (DFS) Stock for Now?

Discover Financial's (DFS) digital transformation efforts are positioning the company for long-term growth. Discover Financial Services DFS is well poised to grow on the back of digital transformation efforts, global expansions, and higher travel and entertainment spending. Its solid cash flow generating ability also bodes well. However, rising costs can reduce its margin.Discover Financial — with a market cap of $25.6 billion — is a digital banking and payment services company. The company offers credit cards, personal, student and home loans, as well as deposit products. Based in Riverwoods, IL, DFS has a major global presence.Courtesy of solid prospects, this currently Zacks Rank #3 (Hold) stock is worth holding on to at the moment.Trend in EstimatesThe Zacks Consensus Estimate for Discover Financial’s 2022 earnings is pegged at $15.33 per share, which has witnessed two upward revisions in the past 30 days against one in the opposite direction. DFS’ earnings beat estimates in each of the last four quarters, the average being 7%.Discover Financial Services Price and EPS Surprise Discover Financial Services price-eps-surprise | Discover Financial Services QuoteFurthermore, the consensus mark for revenues is $12.9 billion for 2022, indicating a 6.9% rise from the year-ago reported figure.Key DriversDiscover Financial’s digital transformation efforts are praiseworthy. Besides using in-house resources, it frequently resorts to third-party vendors to pursue technology advancements related to cloud, telecommunications, hardware and operating systems. These digital transformation efforts seem to be necessary to stay abreast with the growing digital trend. It launched the new Advanced Analytics Resource Center (AARC@606) program, which is expected to strengthen Discover Financial’s data and analytics wing and boost in-house resources.Improving consumer spending, despite inflationary pressure, will buoy DFS’ payment metrics. With the coming holiday season, payment volumes are expected to go up, leading to increased revenues. A rising net interest income will also keep boosting its Digital Banking Segment results. Net interest income rose 14% year over year to $2,610 million in the second quarter on the back of improved average receivables and expanded net interest margin.Discover Financial’s strong cash flow generating abilities are major positives. In the trailing 12-month period, net cash from operations increased 4.8% to $6.3 billion. It came up with free cash flow of $6.1 billion during this period, indicating a 4.9% jump. Its cash flow enables it to take actions to boost shareholder value. In April 2022, the company increased its quarterly dividend by 20% to 60 cents per share. (Check DFS’ dividend history here.)The company’s return on equity (ROE) indicates its massive growth potential. Its trailing 12-month ROE of 36.4% compares favorably with the industry average of 19.8%. Its 2022 outlook instills investors’ confidence in the stock. DFS expects loan growth to be in the low teens, up from the prior estimate of high single digits.The average net charge-off rate is projected in the range of 1.9-2.1% compared with the prior outlook of 2.2-2.4%. The net interest margin is also estimated to witness improvement within 5-15 bps when compared with the first-quarter 2022 figure.Key ConcernsThere are a few factors that are impeding the stock’s growth lately.Increasing costs are eating into the company’s profits. To compete with other credit card issuers, attract and retain customers and increase card usage, it incurs a considerable amount of expenses. Throughout 2021, total operating expenses jumped 6% to $4,805 million. In the first half of 2022, the metric increased 2% year over year to $1.1 billion. Rising costs can affect its bottom line.The growing competition in the payments market can be troubling for the company. Emerging payment firms with significant growth potential are rapidly capturing markets. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.Stocks to ConsiderSome better-ranked stocks in the broader finance space are CI Financial Corp. CIXX, Owl Rock Capital Corporation ORCC and Primis Financial Corp. FRST, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Based in Toronto, CI Financial is a leading asset management holding company. The Zacks Consensus Estimate for CIXX’s 2022 earnings has increased 1.2% in the past 60 days.Headquartered in New York, Owl Rock Capital is a business development company. The Zacks Consensus Estimate for ORCC’s 2022 earnings indicates a 6.4% year-over-year increase.Based in McLean, VA, Primis Financial offers multiple financial services to businesses and individuals. The Zacks Consensus Estimate for FRST’s 2022 earnings has improved 8.8% in the past 60 days. This Little-Known Semiconductor Stock Could Be Your Portfolio’s Hedge Against Inflation Everyone uses semiconductors. But only a small number of people know what they are and what they do. If you use a smartphone, computer, microwave, digital camera or refrigerator (and that’s just the tip of the iceberg), you have a need for semiconductors. That’s why their importance can’t be overstated and their disruption in the supply chain has such a global effect. But every cloud has a silver lining. Shockwaves to the international supply chain from the global pandemic have unearthed a tremendous opportunity for investors. And today, Zacks' leading stock strategist is revealing the one semiconductor stock that stands to gain the most in a new FREE report. It's yours at no cost and with no obligation.>>Yes, I Want to Help Protect My Portfolio During the RecessionWant 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 Discover Financial Services (DFS): Free Stock Analysis Report Owl Rock Capital Corporation (ORCC): Free Stock Analysis Report Primis Financial Corp. (FRST): Free Stock Analysis Report CI Financial Corp. (CIXX): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 30th, 2022

RPM International (RPM) to Post High Q1 Earnings on Solid Pricing

RPM International's (RPM) fiscal first-quarter earnings to reflect strong pricing actions amid inflationary woes. RPM International Inc. RPM is slated to report first-quarter fiscal 2023 results (ended Aug 31) on Oct 5, before the opening bell.In the last reported quarter, the company’s earnings lagged the Zacks Consensus Estimate by 1.4%, but net sales marginally topped the same. On a year-over-year basis, earnings and net sales increased 10.9% and 13.7%, respectively.The Trend in Estimate RevisionThe Zacks Consensus Estimate for the to-be-reported quarter’s earnings has been unchanged at $1.33 per share over the past 60 days. The estimated value indicates a 23.2% increase from the year-ago earnings of $1.08 per share. The consensus mark for revenues is $1.89 billion, suggesting a 14.5% year-over-year improvement.RPM International Inc. Price and EPS Surprise RPM International Inc. price-eps-surprise | RPM International Inc. Quote Factors to ConsiderRPM’s fiscal first-quarter earnings and revenues are likely to have increased from the prior year’s levels on prudent cost management and solid pricing. Also, improvement in the construction and industrial maintenance activity, a rebound in energy markets and its focus on investments in the fastest-growing areas of its business are likely to have added to the positives.RPM International expects net sales to increase in the mid-teens. It also expects sales growth in the mid-teens across the operating segments. Particularly, the Consumer Group is likely to generate the highest growth of the four segments backed by selling price increases, improved alkyd resin supply and investments in operations.The Zacks Consensus Estimate for Construction Products Group or CPG net sales of $688 million suggests a 6.8% increase from a year ago. The same for Performance Coatings Group or PCG sales are likely to rise 6.8% to $305 million from the previous year’s levels.The consensus estimate for Consumer Group or CG net sales of $579 million suggests a 7.5% increase from a year ago. The same for Specialty Products Group or SPG sales are likely to increase 5.4% to $192 million from a year ago.RPM intends to increase prices for certain raw materials, labor and packaging to forgo unprecedented supply-chain and inflationary woes. Higher costs from unreliable bulk transportation (which creates production inefficiencies) and fuel surcharges (driven by high energy prices) are expected to have affected the CG segment. Also, it anticipates a strengthening U.S. dollar to remain a headwind for the fiscal first quarter.RPM anticipates the fiscal first quarter’s adjusted EBIT to increase 20-25% versus a fall of 23.2% reported in first-quarter fiscal 2022.The consensus mark for CPG’s adjusted EBIT is likely to increase 4.9% year over year. The same for PCG’s adjusted EBIT is likely to improve 8.9% from the prior year’s levels. The consensus estimate for CG’s adjusted EBIT is likely to rise 30.1% and that of SPG is likely to increase 21% from the prior year’s tally.What Our Model IndicatesOur proven model does not conclusively predict an earnings beat for RPM International this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.Earnings ESP: Its earnings ESP is -1.26%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Zacks Rank: The company currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.Stocks With Favorable CombinationAccording to our model, here are some companies in the broader construction sector that have the right combination of elements to post an earnings beat in their respective quarters to be reported.Primoris Services Corporation PRIM has an Earnings ESP of +13.85% and a Zacks Rank #2.PRIM’s earnings topped the consensus mark in two of the last four quarters and missed the other two occasions, with the average being negative 19.6%. Earnings for the to-be-reported quarter are expected to grow 10.1% year over year.Dycom Industries, Inc. DY has an Earnings ESP of +2.34% and a Zacks Rank #1.DY’s earnings topped the consensus mark in all of the trailing four quarters, with the average surprise being 140%. Earnings for the to-be-reported quarter are expected to grow 34.7% year over year.Boise Cascade Company BCC has an Earnings ESP of +3.29% and a Zacks Rank #2.BCC’s earnings topped the consensus mark in all the last four quarters, with the average being 27.1%. Earnings for the to-be-reported quarter are expected to grow 92.6% year over year.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. This Little-Known Semiconductor Stock Could Be Your Portfolio’s Hedge Against Inflation Everyone uses semiconductors. But only a small number of people know what they are and what they do. If you use a smartphone, computer, microwave, digital camera or refrigerator (and that’s just the tip of the iceberg), you have a need for semiconductors. That’s why their importance can’t be overstated and their disruption in the supply chain has such a global effect. But every cloud has a silver lining. Shockwaves to the international supply chain from the global pandemic have unearthed a tremendous opportunity for investors. And today, Zacks' leading stock strategist is revealing the one semiconductor stock that stands to gain the most in a new FREE report. It's yours at no cost and with no obligation.>>Yes, I Want to Help Protect My Portfolio During the RecessionWant 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 Dycom Industries, Inc. (DY): Free Stock Analysis Report Primoris Services Corporation (PRIM): Free Stock Analysis Report RPM International Inc. (RPM): Free Stock Analysis Report Boise Cascade, L.L.C. (BCC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 30th, 2022

Haemonetics (HAE) Hospital Arm Aids, Macro Issues Persist

Robust performance of Haemonetics' (HAE) Hospital business, on continued strength in the Hemostasis Management product line, instills optimism. Haemonetics’ HAE top-line growth rides on drivers like Plasma, TEG, Hemostasis Management as well as the Vascular Closure business. However, weakness in the Blood center franchise significantly affected Haemonetics’ results in the first quarter of fiscal 2023. The stock currently carries a Zacks Rank #3 (Hold).Over the past six months, Haemonetics has outperformed its industry. The stock has gained 13.8% against the industry's 51.5% fall. Haemonetics exited the first quarter of fiscal 2023 with better-than-expected earnings and revenues.The robust performance of the Hospital business, on continued strength in the Hemostasis Management product line, instills optimism. Robust contributions from the Vascular Closure business also seem promising. The expansion of both margins is an added advantage. The company-adjusted gross margin was 54.4%, up 712 basis points (bps) year over year. The primary drivers of this improvement were strong volume growth in Plasma and Hospital and, price and additional savings from the Operational Excellence Program.The adjusted operating margin was 14.9%, up 1314 bps from the year-ago quarter. Haemonetics continued to make additional investments to expand its manufacturing footprint in the reported quarter, including its new facility in Clinton, PA. The raised full-year outlook for revenues and earnings per share indicates continued growth momentum.Haemonetics Corporation Price Haemonetics Corporation price | Haemonetics Corporation QuoteThe fiscal first quarter saw encouraging performance by Haemonetics’ businesses. The Hospital business revenues grew 12.7% (up 14.9% on an organic basis) in the quarter amid staffing shortages and budgetary constraints in U.S hospitals as well as continued lockdowns in China.Under the Hospital segment, revenue growth in the Hemostasis Management and Vascular Closure product lines was 4.1% and 35.9% on a year-over-year basis, respectively. Within Vascular Closure, the company strengthened its leadership in the growing electrophysiology and interventional cardiology markets. Plasma collections also rebounded in the reported quarter, as the company continued to convert its U.S Plasma customers to the Nexus Plasma collection technology. Haemonetics expects to convert all its U.S. customers to the latest Nexus PCS and NexLynk DMS platform by the end of the second quarter of fiscal 2023.Despite sluggish results in the Blood Center business, Whole Blood revenues grew 7%, led by favorable order timing among distributors in the Asia Pacific and EMEA, coupled with additional opportunities in North America.On the flip side, the sluggish performance of the Blood Center business in the first quarter of fiscal 2023 amid blood shortages in a difficult collection environment is concerning. Blood Center revenues declined 7% in the fiscal first quarter. Moreover, Apheresis revenues fell 13% due to unfavorable order timing, lower revenues from convalescent Plasma, collection center staffing shortages in the United States and geopolitical risk.A fall in short-term cash level raises apprehension. Weak solvency and stiff competition remain concerns. The company continues to be challenged by inflationary pressure in the global manufacturing and supply chain, including freight and raw material costs, previous divestitures and price adjustments.Key PicksSome better-ranked stocks in the broader medical space are ShockWave Medical SWAV, AMN Healthcare Services AMN and McKesson MCK. While ShockWave Medical and AMN Healthcare Services sport a Zacks Rank #1 (Strong Buy), McKesson carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Estimates for ShockWave Medical’s earnings per share rose from $2.02 to $2.57 for 2022 and from $2.95 to $3.42 for 2023 in the past 60 days. SWAV has gained 53.4% so far this year.ShockWave Medical delivered an earnings surprise of 180.14%, on average, in the last four quarters.Estimates for AMN Healthcare Services have improved from earnings of $10.41 to $11.26 for 2022 and $7.94 to $8.30 for 2023 in the past 60 days. AMN stock has declined 13.5% so far this year.AMN Healthcare Services delivered an earnings surprise of 15.66%, on average, in the last four quarters.McKesson’s earnings per share estimates increased from $23.27 to $24.42 for fiscal 2023 and $25.41 to $26.04 for fiscal 2024 in the past 60 days. MCK has gained 40.3% so far this year.McKesson delivered an earnings surprise of 13.00%, on average, in the last four quarters. This Little-Known Semiconductor Stock Could Be Your Portfolio’s Hedge Against Inflation Everyone uses semiconductors. But only a small number of people know what they are and what they do. If you use a smartphone, computer, microwave, digital camera or refrigerator (and that’s just the tip of the iceberg), you have a need for semiconductors. That’s why their importance can’t be overstated and their disruption in the supply chain has such a global effect. But every cloud has a silver lining. Shockwaves to the international supply chain from the global pandemic have unearthed a tremendous opportunity for investors. And today, Zacks' leading stock strategist is revealing the one semiconductor stock that stands to gain the most in a new FREE report. It's yours at no cost and with no obligation.>>Yes, I Want to Help Protect My Portfolio During the RecessionWant 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 McKesson Corporation (MCK): Free Stock Analysis Report Haemonetics Corporation (HAE): Free Stock Analysis Report AMN Healthcare Services Inc (AMN): Free Stock Analysis Report ShockWave Medical, Inc. (SWAV): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 30th, 2022

Micron (MU) Q4 Earnings and Revenues Plunge on Weak Demand

Micron Technology's (MU) fourth-quarter fiscal 2022 results reflect the negative impact of weakening consumer demand and substantial customer inventory adjustments across end markets. Micron Technology MU ended fiscal 2022 on a disappointing note as fourth-quarter earnings and revenues declined on a year-over-year basis. The company’s fiscal fourth-quarter non-GAAP earnings per share (EPS) plunged 40% year over year to $1.45. However, the bottom line surpassed the Zacks Consensus Estimate of $1.40 per share.Quarterly revenues decreased 19.7% year over year to $6.64 billion and missed the Zacks Consensus Estimate of $6.88 billion as well. The company blamed rapidly weakening consumer demand and substantial customer inventory adjustments across end markets as the main reason behind the dismal quarterly performance.Q4 Revenue DetailsDynamic random access memory revenues of $4.81 billion, accounting for 72% of the total revenues in the fiscal third quarter, declined 21% year over year and 23% sequentially. Bit shipments decreased approximately 10% sequentially, while the average selling price (ASP) plunged in the low-teens percentage on a quarter-over-quarter basis.NAND revenues of $1.69 billion, representing 25% of the total top line, were down 14% on a year-over-year basis and 26% quarter over quarter. While NAND ASP decreased in the mid-to-high,single-digit percentage sequentially, bit shipments declined in the low-20s percentage range.Micron Technology, Inc. Price, Consensus and EPS Surprise Micron Technology, Inc. price-consensus-eps-surprise-chart | Micron Technology, Inc. QuoteSegment-wise, revenues of $2.93 billion from the computing and networking business unit plunged 23% from the year-ago quarter and 25% sequentially. Revenues of $1.51 billion from the Mobile Business Unit declined 20% on a year-over-year basis and 23% on a quarter-over-quarter basis.Embedded Business Unit’s revenues logged in $1.3 billion, down 4% from the year-ago period and 9% from the previous quarter. Revenues from the Storage Business Unit, comprising solid-state drive (SSD) NAND components, totaled $891 million, down 26% year over year and 34% sequentially.MarginsMicron’s non-GAAP gross profit of $2.68 billion plunged 32.5% year over year and 34.7% sequentially. The non-GAAP gross margin of 40% reflects a significant decline from the year-ago quarter’s 48% and 47% in the third quarter of fiscal 2022.Micron’s non-GAAP operating income of $1.66 billion soared 45.9% year over year and 47.1% sequentially. The non-GAAP operating margin declined to 25% from the year-earlier quarter’s 37% and the previous quarter’s 36%.Non-GAAP operating expenses came in at $1.01 billion compared with the previous quarter’s $953 million and the year-ago quarter’s $891 million.Balance Sheet & Cash FlowMicron exited the reported quarter with cash and investments of $11.1 billion compared with the $11.98 billion recorded at the end of the prior quarter. Furthermore, MU ended the quarter with total liquidity of $13.6 billion compared with the $14.5 billion witnessed at the end of the third quarter of fiscal 2022.Micron’s long-term debt as of Sep 1, 2022 was $6.9 billion compared with the $7 billion witnessed at the end of the third quarter.The company generated an operating cash flow of $3.8 billion during the fiscal third quarter and a free cash flow of $196 million. It repurchased stocks worth $784 million and paid approximately $126 million in dividends.In fiscal 2022, Micron generated operating and free cash flows of $15.2 billion and $3.2 billion, respectively. During the period, it repurchased stocks worth $2.4 billion and paid $461 million in dividends.GuidanceMicron provided guidance for the first quarter of fiscal 2023. The company anticipates revenues of $4.25 billion (+/-$250 million) for the fiscal first quarter, significantly lower than the Zacks Consensus Estimate of $5.90 billion.For the fiscal first quarter, MU projects a non-GAAP gross margin of 26% (+/-200 bps). Operating expenses on a non-GAAP basis are estimated at $1 billion (+/-$25 million).The adjusted EPS is anticipated at 4 cents (+/-10 cents). The consensus mark is pegged at 72 cents per share.Zacks Rank & Stocks to ConsiderCurrently, Micron carries a Zacks Rank #5 (Strong Sell). Shares of MU have decreased 46.3% year to date (YTD).Some better-ranked stocks from the broader Computer and Technology sector are EPAM Systems EPAM, CDW Corporation CDW and Monolithic Power MPWR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for EPAM's third-quarter fiscal 2022 earnings has been revised upward by 7 cents to $2.52 per share over the past 30 days. For fiscal 2022, earnings estimates have moved 17 cents north to $9.96 per share in the past 30 days.EPAM’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 23.1%. Shares of EPAM have plunged 45.8% YTD.The Zacks Consensus Estimate for CDW’s third-quarter 2022 earnings has increased from $2.49 to $2.52 per share over the past 60 days. For 2022, earnings estimates have moved up by 8 cents to $9.66 per share in the past 60 days.CDW’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6.8%. Shares of CDW have decreased 22.3% YTD.The Zacks Consensus Estimate for Monolithic Power's third-quarter 2022 earnings has been revised 34 cents northward to $3.49 per share over the past 60 days. For 2022, earnings estimates have moved 95 cents north to $12.56 per share in the past 60 days.MPWR's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 8.8%. Shares of the company have decreased 25.9% YTD. This Little-Known Semiconductor Stock Could Be Your Portfolio’s Hedge Against Inflation Everyone uses semiconductors. But only a small number of people know what they are and what they do. If you use a smartphone, computer, microwave, digital camera or refrigerator (and that’s just the tip of the iceberg), you have a need for semiconductors. That’s why their importance can’t be overstated and their disruption in the supply chain has such a global effect. But every cloud has a silver lining. Shockwaves to the international supply chain from the global pandemic have unearthed a tremendous opportunity for investors. And today, Zacks' leading stock strategist is revealing the one semiconductor stock that stands to gain the most in a new FREE report. It's yours at no cost and with no obligation.>>Yes, I Want to Help Protect My Portfolio During the RecessionWant 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 Micron Technology, Inc. (MU): Free Stock Analysis Report Monolithic Power Systems, Inc. (MPWR): Free Stock Analysis Report EPAM Systems, Inc. (EPAM): Free Stock Analysis Report CDW Corporation (CDW): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 30th, 2022

Digital Investments & Premiumization to Aid AB InBev (BUD)

AB InBev (BUD) looks well-poised based on a strong brand portfolio and investments in operation excellence. Higher cost of sales and SG&A expenses remain headwinds. Anheuser-Busch InBev SA/NV BUD, alias AB InBev, has been in investors good books thanks to its unique commercial strategy, strong brand portfolio and investments in operation excellence. This has been aiding market share growth across most key markets. The expansion of the Beyond Beer portfolio, and investments in B2B platforms, e-commerce and digital marketing bode well. The premiumization of the beer industry has been a key growth opportunity for AB InBev.Despite strong revenues, investors’ sentiments continue to be hurt by high costs and supply-chain headwinds, affecting margins. The company’s gross and EBIT margins declined in second-quarter 2022, driven by higher cost of sales and SG&A expenses. Higher SG&A expenses resulted from elevated supply-chain costs.Let’s take a sneak peek into the factors positioning BUD for growth.Premiumization & Business MomentumContinued business momentum due to relentless execution, brand investments and accelerated digital transformation aided AB InBev’s second-quarter 2022 performance. The company is anticipated to retain the strong business momentum on continued premiumization efforts and favorable industry trends. The company has been investing in a diverse portfolio of global, international and crafts and specialty premium brands in its markets. Apart from the premium brands, BUD’s global brands lead the way in premiumization.Backed by the continued business momentum, AB InBev retained its upbeat view for 2022. It expects EBITDA growth in line with the medium-term outlook of 4-8%. BUD anticipates revenue growth to be higher than EBITDA growth, driven by strong volume and pricing.Digital ExpansionThe rapid expansion of its digital platform and leveraging of technology such as B2B sales and other e-commerce platforms have been key drivers for BUD. The company has been witnessing an acceleration in the B2B platforms, e-commerce and digital marketing trends, aiding growth for the past few months. The company’s proprietary B2B platform, BEES, is live in 18 markets and has reached 2.9 million monthly active users.In the broader beverage space, Coca-Cola KO has been witnessing a splurge in e-commerce, with the growth rate of the channel doubling in many countries. The company has been accelerating investments to build strong digital capabilities. KO is evolving into an organization that efficiently executes marketing, commercial, sales and distribution, both offline and online.Coca-Cola is strengthening consumer connections and further piloting numerous different digital-enabled initiatives through fulfillment methods, be it B2B to home or B2C platforms in many countries, to capture online demand for at-home consumption. Additionally, the online-to-offline partnerships with multiple food aggregators ensure beverage availability and visibility.Fomento Economico Mexicano FMX, alias FEMSA, is another beverage company focused on offering customers more options to make contactless purchases by intensifying digital and technology-driven initiatives across operations. The company’s Coca-Cola FEMSA KOF is leading the way with its omni-channel business, while FEMSA Comercio is progressing with the adoption of digital initiatives.Within its OXXO store chains, FEMSA is on track with investing in digital offerings, loyalty programs and fintech platforms to evolve stronger after the pandemic and over the long term. In the second quarter, FEMSA made progress on its digital efforts, with customer acquisition surpassing 15 million users. The users are part of the company’s digital ecosystem either through Spin by OXXO, OXXO Premia or both.Coca-Cola FEMSA is the flagship segment engaged in the production and distribution of carbonated beverages. The division is the largest Coca-Cola bottler in Latin America and the second-largest Coca-Cola bottler globally in terms of sales volume.Beyond Beer InvestmentsAB InBev is steadfastly growing its Beyond Beer portfolio, including products like Ready-to-Drink beverages like canned wine and canned cocktails, hard seltzers, cider, and flavored malt beverages. The Beyond Beer trend has been recently gaining popularity due to the rise in demand for low-alcoholic or non-alcoholic drinks.The company remains focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. The Beyond Beer portfolio contributed more than $425 million to revenues in the second quarter. BUD witnessed double-digit growth in Brutal Fruit and Flying Fish in South Africa. In the United States, the company’s portfolio witnessed growth ahead of the industry in the spirits-based ready-to-drink segment, driven by its Cutwater and NUTRL vodka seltzer.Headwinds to OvercomeWhile AB InBev has been gaining from improving trends in key markets and continued premiumization in the majority of its markets, commodity cost inflation and higher supply-chain costs in some markets continue to be major headwinds. Higher commodity costs mainly resulted from increased aluminum and barley prices. Like others in the industry, the company expects higher commodity costs to continue, exerting pressure on input costs. BUD’s presence across various countries exposes it to negative currency translations. The company anticipates foreign currency to remain volatile. FREE Report: The Metaverse is Exploding! Don’t You Want to Cash In? Rising gas prices. The war in Ukraine. America's recession. Inflation. It's no wonder why the metaverse is so popular and growing every day. Becoming Spider Man and fighting Darth Vader is infinitely more appealing than spending over $5 per gallon at the pump. And that appeal is why the metaverse can provide such massive gains for investors. But do you know where to look? Do you know which metaverse stocks to buy and which to avoid? In a new FREE report from Zacks' leading stock specialist, we reveal how you could profit from the internet’s next evolution. Even though the popularity of the metaverse is spreading like wildfire, investors like you can still get in on the ground floor and cash in. Don't miss your chance to get your piece of this innovative $30 trillion opportunity - FREE.>>Yes, I want to know the top metaverse stocks for 2022>>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 CocaCola Company The (KO): Free Stock Analysis Report Fomento Economico Mexicano S.A.B. de C.V. (FMX): Free Stock Analysis Report AnheuserBusch InBev SANV (BUD): Free Stock Analysis Report Coca Cola Femsa S.A.B. de C.V. (KOF): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 29th, 2022

Multipolar World Order – Part 2

Multipolar World Order – Part 2 Authored by Iain Davis via Off-Guardian.org, In Part 1, we discussed the nature of “world order” and global governance. We learned the crucial difference between the Westphalian model of equal, sovereign nation-states—a mythical ideal, never an actuality—and the various attempts to stamp a world order on that template. In particular, we considered how the UN has been the leading organisation promoting global governance and how its founding Charter facilitates the centralisation of global power. We observed that the UN has undergone a “quiet revolution” that has transformed it into a global public-private partnership (UN-G3P). Latterly, we have seen the rise of a prospective multipolar world order that some say opposes the hegemony of its unipolar predecessor. This new model of global governance will apparently be led by allies Russia and China, the two countries that head up the multilateral partnerships of the BRICS (Brazil, Russia, India, China and South Africa). The multipolar world order is predicated upon a more prominent role for the G20 rather than the G7. Thereby strengthening Russia’s and China’s positions as permanent members of the UN Security Council. Whereas the existing unipolar world order established a system of global governance that enables UN-G3P oligarchs to influence policy agendas of nation-states around the world, the new multipolar world order is designed to advance the power of those oligarchs even further - by transforming their influence into absolute control. Look no further than the Russian and Chinese governments, where the marriage between the political and corporate state is complete. We will address this in detail in Part 3. President Vlaidimir Putin (left) and President [Supreme Leader] Xi Jinping (right) WHO WANTS A MULTIPOLAR WORLD ORDER? We ask: who wants a multipolar world order? The short answer: everyone. The longer answer: everyone who has sufficient power and influence to change global governance. The multipolar model isn’t being pushed solely by the Russian and Chinese governments, their oligarchs and their think tanks. It’s also being promoted by the erstwhile “leaders” of the unipolar world order. Consider this remark by German Chancellor Olaf Sholtz. His speech, set within the context of Russia’s military intervention in Ukraine—which every member of the Western establishment lambastes for the cameras—was given at the World Economic Forum’s 2022 Davos gathering: I see another global development that constitutes a watershed. We are experiencing what it means to live in a multipolar world. The bipolarity of the Cold War is just as much part of the past as the relatively brief phase when the United States was the sole remaining global power[.] [. . .] The crucial question is this: how can we ensure that the multipolar world will also be a multilateral world? [. . .] I am convinced that it can succeed – if we explore new paths and fields of cooperation. [. . .] If we notice that our world is becoming multipolar, then that has to spur us on: to even more multilateralism! To even more international cooperation! Western central banks, too, have looked toward the multipolar model. In a 2011 round table discussion at the Banque de France, then-French Finance Minister Christine Lagarde, who subsequently became the head of the International Monetary Fund (IMF) and then was appointed President of the European Central Bank (ECB), said: Our starting point is to create the conditions to achieve two closely intertwined objectives, i.e. strong, sustainable, and balanced growth, on the one hand, and an orderly transition to a world that is multipolar in economic and monetary terms, on the other. [. . .] The G20 reached agreement [to] promote the orderly transition from a world where a small number of economies, with their currencies, represent the bulk of wealth and trade, to a multipolar world where emerging countries and their currencies represent a growing if not predominant share. That same year, Mark Carney, then Governor of the Bank of Canada, delivered a speech to the Canada Club of Ottawa, during which he said: We meet today in the midst of another great transformation—one that is occurring more rapidly than most recognise. The financial crisis has accelerated the shift in the world’s economic centre of gravity. Emerging-market economies now account for almost three-quarters of global growth. [. . .] [W]eakness in advanced economies and strength in emerging economies [. . .] determines the global economic outlook. [. . .] This shift to a multi-polar world is fundamentally positive, [but] it is also disruptive. Still a third speech in 2011, this one by Lorenzo Bini Smaghi, who was representing the Executive Board of the ECB, emphasised the potential of the multipolar world order. Smaghi noted that, in order to move towards the new world order, an economic, financial and policy shift was required. Bemoaning the lack of progress in the financial and policy fields, he suggested: [W]e have a multi-polar economic world, but no multi-polar financial or policy world yet. [. . .] [H]ow can we improve the functioning of the international monetary system? The first avenue is to start building a new institutional framework[.] [This] will have to be designed for this new multi-polar world. [. . .] The second avenue involves implementing policies consistent with the transition to a more complete multi-polar world, in all its dimensions. [. . .] A more balanced multi-polar world also requires deeper financial and economic integration in Europe[.] [. . .] The G20 is thus destined to become an over-arching grouping, capable of tasking institutions like the IMF, World Bank or FSB with specific mandates but also to give guidance on politically sensitive issues, in the way the G7 operated in the past. The World Economic Forum, which describes itself as the international organisation of public-private cooperation, has been advocating the potential of a multipolar world order for some time. For example, in 2019 it published an article by Credit Suisse’s Global Head of Investment Strategy & Research, Nannette Hechler Fayd’herbe, who advocated investment in “emerging markets.” Credit Suisse is one of the nine global investment banking giants that collectively comprise the Bulge Bracket. The opinion of its head of strategic investment is notable: In 2018, we moved closer to the multipolar world that looks set to replace the bipolar US-Russian geopolitical regime that emerged from the Cold War. China’s ascent as a serious economic and geostrategic rival for the US, and its growing assertiveness with programs like “One Belt, One Road” or “Made in China 2025”, has strengthened its influence on the world stage. [. . .] From an investor standpoint, the newly emerged multipolar world brings national champions [—companies in large countries with a sizeable domestic workforce in strategic sectors—] and brands into focus, including emerging market consumers. Even the Council of Foreign Relations (CFR), whose elitist members are ardent pro-NATO US foreign policy supremacists, accepts the imminent arrival of the multipolar world order. Stewart M. Patrick, the CFR senior fellow who defined the International Rules Based Order (IRBO), wrote in 2021: [T]he Western-led order was on its heels well before Trump, knocked off balance by rising geopolitical competition from China and Russia; a shrinking collective share of global GDP among the member states of the high-income Organization for Economic Cooperation and Development; and public disillusionment with globalization, particularly after the financial crisis. These weaknesses remain. [. . .] The Cornwall summit [G7 summit] will also allow observers to gauge the G-7’s political cohesion and global relevance in an ideologically diverse, multipolar world. A final example: Speaking at a White House business convention on 21st March 2022, US President Joe Biden said: We are at an inflection point, I believe, in the world economy[.] [. . .] [I]t occurs every three of four generations. [. . .] Now is a time when things are shifting[.] [T]here’s going to be a new world order out there, and we’ve got to lead it and we’ve got to unite the rest of the free world in doing it. What’s going on? Why would the architects of the unipolar hegemony obligingly accept being replaced by multipolarity—and offer to help make the transition? Why, no matter where you look, even in the most hawkish Western think tanks, is there universal acquiescence to the emergence of a new multipolar world order? You could argue that this is the only realistic perspective. Still, the lack of any resistance at all is conspicuous. It suggests that there is more to this baffling contradiction than meets the eye. Indeed, these statements we have quoted, and many more like them from other Western power brokers, reveal, more than acquiescence to a multipolar world, a clear rationale for the creation of a “new world order.” The point is, if the current holders of global power wish to retain control, then transition to the multipolar world order is required. They understand that the multipolar system is the necessary next step in the evolution of the unipolar order. Christine Lagarde – former French Finance Minister, President of the IMF and now Governor of the ECB. THROWING THE DOLLAR RESERVE CURRENCY AWAY As if to hammer home the fact that the dollar-backed unipolar world order is over, Jerome Powell, Governor of the US Federal Reserve (the Fed), said in April 2022: The US federal budget is on an unsustainable path, meaning simply that the debt is growing meaningfully faster than the economy. And that’s by definition unsustainable over time. He then added a reassuring, but ultimately empty caveat: It’s a different thing to say the current level of the debt is unsustainable. It’s not. The current level of debt is very sustainable. And there’s no question of our ability to service and issue that debt for the foreseeable future. If the gods were perfectly aligned, geopolitics didn’t exist, universal peace and joy sprang forth and the world ran smoothly and predictably, then Powell’s reassurances may have been plausible. But that is not how the world works. Nor are Powell’s imaginary “ifs” any basis for a sound global reserve currency. His admission was the salient point. The US government debt-to-GDP ratio currently stands at an estimated 137.2% of GDP. The cost of the COVID-19 countermeasures and the West’s sanction response to Russia’s military action in Ukraine—including the vast sums the US and some European countries have invested in Ukraine’s supposed militarisation—has only made the situation worse. Spiralling government debt is nearly as bad in every other major Western economy. It stands at 103.7% of UK GDP and in the Euro Monetary Union (Eurozone), it eclipsed 100% of GDP in 2021. The economic, financial and political basis of the unipolar world is rapidly evaporating. As central bankers like Powell (US), Lagarde (EU), Andrew Bailey (UK) Elvira Nabiullina (Russia) and Agustín Carstens (Bank for International Settlements) know, as do all the other major players like Carney (UN), there is every reason to question how long the US can service its debt obligations—that is, repay the minimum required amount. America’s only option is to keep the metaphorical money printing presses running, which can only lead to further inflation and eventual economic ruin. As the US economy sinks, so does the dominant global reserve currency and, apparently, the financial power of the Western-aligned oligarchs. This looks likes deliberate self-destruction. Just two days after the launch of Russia’s so-called “special military operation” in Ukraine, the governments of the US, UK, Canada, and the European Union—the core of the G7—announced that they had decided to freeze the Central Bank of Russia’s $630 billion foreign currency reserves. While the US administration has done this kind of thing before, it did it to Afghanistan two weeks earlier, taking the wealth of a major developed nation and a fellow member of the UN Security Council sent very clear signals to the rest of the world. Countries hold foreign currency reserves for numerous reasons, but chief among them is to hedge against the economic impacts of crises of various kinds. If, for example, the currency of a nation is devalued, holding reserves of a stable foreign currency ensures that it can maintain levels of international trade in the short term. For some markets, notably the global oil market, trade is overwhelmingly conducted in the current leading reserve currency, the US dollar. As there is no single, overarching framework of “international law” adjudicating reserve currency, if ever the concept of an “international rules based order” were applicable it was to the agreed role of the US dollar as a global reserve currency. Regardless of the morality of the Russian government’s military action or its human cost, the Western unipolar clique, in seizing Russia’s reserves based purely upon a foreign policy disagreement, announced to the world that their IRBO was completely meaningless. The only reason nation-states agree to holding a dominant global reserve currency, beyond economic force, is that they trust the stability of that currency. If those currency reserves are seized whenever the issuing state feels like it, then that currency couldn’t be more unstable and has lost credibility as a viable reserve. Despite the claims of the Western politicians and their mainstream media (MSM) propagandists, the whole of the world is not united in its condemnation of Russia’s military action in Ukraine. Beyond North America, Europe and Australasia, censure is notable for its absence. By grabbing Russia’s reserves, the so-called IRBO more or less openly declared to the rest of the world that its US dollar, as a global reserve currency, was dead. Vladimir Putin was apparently right to observe: Imposing sanctions is the logical continuation and the distillation of the irresponsible and short-sighted policy of the US and EU countries’ governments and central banks. [. . . ] The global economy and global trade as a whole have suffered a major blow, as did trust in the US dollar as the main reserve currency. The illegitimate freezing of some of the currency reserves of the Bank of Russia marks the end of the reliability of so-called first-class assets. [. . .] Now everybody knows that financial reserves can simply be stolen. He also dropped in some virtue signalling, praising the Russian private sector for its “sustainable development” efforts: I would like to thank the business community and the teams at companies, banks and organisations, which are not only responding effectively to sanction-related challenges but are also laying the foundation for the continued sustainable development of our economy. The NATO-aligned nation-states behind the sanctions also decided to progressively cut Russian commercial banks out of the Society for Worldwide Interbank Financial Telecommunications (SWIFT) network. This is the international financial communication system that enables banks and financial institutions to notify each other of international fund transfers using a standardised set of codes. Both Russia and China have prospective alternatives to the SWIFT system. Russia developed its System for Transfer of Financial Messages (SPFS) in 2014 and China its Cross-Border Interbank Payment System (CIPS) in 2015. According to the Central Bank of Russia (CBR) SPFS has expanded rapidly in response to the sanctions. Potentially both systems could supplant the West’s, but CIPS appears to be the most likely replacement for SWIFT. The G7’s claimed objective for these sanctions was to sever the Russian Federation’s access to global markets, but the world is a big place. All the sanctions did was curtail Russia’s ability to trade its energy and other key commodities such as grain and palladium—vital for the manufacture of semiconductors, with the West. Primarily at the West’s own expense. Russia and China have long sought to “de-dollarise” their economies and have forged numerous bilateral trade agreements outside of the dollar system. With the sanction, the West handed the Russian Federation one of its major monetary foreign policy objectives on a plate. A strange kind of punishment. This year the IMF reported that countries around the world have increasingly diversified their foreign currency reserves over the past two decades. In the last quarter of 2021, the dollar share of global reserve currencies had already fallen to below 59%. The sanctions against the Russian Federation provided a massive boost to Russian and Chinese ambitions to reset global reserve currencies for the benefit of their own economies. In June 2022, following the sanctions, the BRICS nations announced their plans to establish a new form of global reserve asset based upon a basket of BRICS currencies. This is a direct challenge to the special drawing rights (SDRs) that the IMF allocates to nation-states. Based upon the underlying value of the currencies in the “basket,” they can be exchanged, like any asset, for goods, services, or commodities—or redeemed for currency. Jerome Powell – Chairman of the US Federal Reserve MULTIPOLAR GLOBAL GOVERNANCE IS DIFFERENT BECAUSE REASONS It is easy to believe, as some do, that the Western oligarchs are in danger of losing their power base. Many of the people who hold such views also contend that the current world order is dominated by these same oligarchs. We have to wonder what they think globalist oligarchs do with all that power and authority. Simply sit idle and watch it slip away as the world turns around them? In reality, they haven’t been idle at all. As witnessed by their statements and actions, they have been making preparations to move to the new multipolar system for decades. To illustrate: in 2009, global investor, currency speculator and oligarch George Soros told the Financial Times: [Y]ou really need to bring China into the creation of a new world order, a financial world order. [. . .] I think you need a new world order that China has to be part of the process of creating it and they have to buy in. They have to own it the same way as, let’s say, the United States owns the Washington consensus, the current order[.] [. . .] I think the makings of it are already there because the G20, in agreeing to peer reviews, effectively is moving in that direction. [. . .] As long as the renminbi is tied to the dollar, I don’t see how the decline in the dollar can go too far. [. . .] [A]n orderly decline of the dollar is actually desirable. [. . .] China will emerge as the motor replacing the US consumer and [. . .] China will be the engine driving it [the world economy] forward and the US will be actually a drag that’s being pulled along through a gradual decline in the value of the dollar. According to representatives of the Russian and Chinese governments, the multipolar world order, supposedly led by them, will empower the G20, rather than the G7, to manage “global economic governance.” No surprises there. Further, the stated objective is to supposedly reinstate an “international law-based world order” that will enhance “genuine multipolarity with the United Nations.” The UN Security Council will continue to play “a central and coordinating role,” with the objective of promoting “democratic international relations” and “sustainable development across the world.” This global agenda is virtually indistinguishable from the one promoted by the unipolar IRBO. The claimed difference is that Russia and China will lead a BRICS-centric multipolar order which does more than pay lip service to international law and multilateral agreement. Allegedly, the multipolar model will abide by international law and focus upon collective decision making. The belated pushback by some US states against BlackRock’s investment strategy in US pension funds is only a minor irritation for the global corporate titan. While they have pressured the US economy to “decarbonise” they have not taken the same approach in China. BlackRock, and the Western oligarchs who invest through it, decided to make an enormous investments in China’s “state owned” hydrocarbon giant PetroChina. The China National Petroleum Corporation (CNPC) is among the largest “fossil fuel” energy companies in the world. It deals in both gas and oil and PetroChina is its publicly listed arm. In 2021 BlackRock was the first foreign company “allowed” by the Chinese government to launch a mutual fund in China which aims to achieve “long-term capital growth” for Chinese investors. The capital growth will come from BlackRock’s commitment to “sustainable development.” This was met with consternation by the Western MSM, and disgruntled oligarch George Soros, who claimed this was a huge blunder, adding: The BlackRock initiative imperils the national security interests of the U.S. and other democracies because the money invested in China will help prop up President Xi’s regime. China’s authoritarian style of technocratic government suits BlackRock. Speaking to Bloomberg’s Erik Schatzker in 2011, BlackRock CEO Larry Fink infamously said: Markets don’t like uncertainty. Markets like, actually, totalitarian governments where you have an understanding of what’s out there and, obviously, the whole dimension is changing now. [. . . ] with the democratisation of countries. And democracies are very messy, as we know in the United States[.] This followed the 2010 comment of George Soros that “today China has not only a more vigorous economy, but actually a better functioning government than the United States.” So perhaps his little spat with BlackRock is surprising. As mentioned in Part 1, oligarchs are not a homogenous group of automatons that all think with one mind. They are collectively committed to long-term goals but often disagree on how to achieve them. While BlackRock’s investors apparently see China’s technate as advantageous, Soros has always sought to destabalise nation from within, through various revolutionary means, and then use his wealth to instal the system he wants. His apparent backing for violent revolt in Hong Kong and his financial crimes, directed against Chinese companies, hasn’t endeared him to China’s oligarchy. But upsetting your partners is no reason to loose sight of the long game. Having publicly slated the Chinese government, calling Xi Jinping “the most dangerous enemy” of democracy in 2019, Soros backed NGO’s like the Sunrise Movement and ActionAid USA wrote an open letter to the US administration in 2021 urging closer cooperation with China on the oligarchs’ shared ambition of sustainable development. Post Russia’s war with Ukraine and the West’s sanction response, BlackRock’s PetroChina investment doesn’t look like such a monumental mistake now. The spike in oil prices saw a huge surge in profits for PetroChina, as it did for nearly every other oil and gas company. But BlackRock’s Chinese investment strategy is astute for other reasons too. With energy flows suddenly being directed away from the West and towards the East, moves such as the multibillion dollar deal between Russia’s “state owned” Gazprom and China’s “state owned” CNPC will further improve BlackRock’s bottom line. Pushed by the sanctions, Gazprom and CNPC will conduct their business in the ruble and the yuan. The consequent underpinning of their currencies strengthens the BRICS plan to challenge the primacy of the dollar as a reserve currency. With its Chinese mutual fund in operation, not only will BlackRock investors capitalise on their PetroChina deal, they are also well placed to take advantage of the likely shift in the International Monetary and Financial System (IMFS). It seems BlackRock possesses almost magical powers of prescience. There is no hint that the multipolar world order will do anything the tackle the inordinate power of the private sector oligarchs who dominate the United Nations’ global public-private partnership (UN-G3P). Neither they nor their investment portfolios are confined within national borders. Any nation-state can be an investment vehicle and international relations are just part of their strategic financial planning. The global mechanisms and partnership networks that “act as a force multiplier” for the globalist oligarchs are not at risk. In terms of global governance, from the oligarchs’ perspective, the shift to the multipolar model is simply a change of middle management. The oligarchs’ policy agendas, including the creation of a new global economy built upon debt–based sustainable development and natural asset classes, set within a $4 quadrillion carbon-neutral IMFS, remain firmly on track. Far from a threat, the multipolar world order is crucial. Without it, the theft of our natural resources and the capitalisation of nature cannot proceed. Recently, Larry Fink, speaking at the Clinton Foundation’s Global Initiative seminar, said: If we are going to change the world, there’s just not enough money that is going in to the emerging world. We must change the Charters of the IMF and the World Bank if we are going to get there. [. . .] There’s huge pools of capital but that capital is not equipped[.] [. . .] Its up to the equity owners [. . .] basically the G20, they have to have a desire for doing this. [. . .] If we can do that, the amount of capital that is going to go into the emerging world, into Africa [for example], will be extraordinary. [. . .] there is that opportunity in the next few years to do this and then we will have, not just a tectonic shift in the developed world, but a tectonic shift in all of the world. Perhaps Larry is thinking of the kind of reforms that the BRICS, exploiting the pseudopandemic, suggested in 2021. Collectively the BRICS stated priorities for reform of the IMF and the World Bank included “innovative and inclusive solutions, including digital and technological tools to promote sustainable development” and stregnthening nations’ capacity to tackle problem relating to “terrorism, money laundering, [the] cyber-realm, infodemics and fake news.” The hegemons of the multipolar world order would also like to see “reform” of the UN Security Council by increasing “representation of the developing countries,” such as Brazil, India or South Africa, thereby swinging control in the BRICS favour. They also recognised “the 2030 Sustainable Development Agenda as a comprehensive, indivisible, far-reaching and people-centred set of universal and transformative targets.” All of this will supposedly improve “the system of global governance” they said. The only perceptible difference is that the BRICS “emphasized the urgency of revitalization of the UN General Assembly so as to enhance its role and authority.” As we discussed previously, under the UN Charter, the General Assembly doesn’t have any “authority.” Yet the BRICS envisaged reform of the General Assembly will be “in accordance with the UN Charter.” If the BRICS statement doesn’t make any sense that is because it doesn’t. Clearly BlackRock and the BRICS are on the same page, but leaving that aside, this new model of global governance, headed by China and Russia, while the same as the existing model, will be better presumably because Russian, Chinese and Indian oligarchs are nicer people than their Western counterparts. We will explore that assumption in Part 3. Just like the IRBO, the multipolar world order has signalled its intention to maintain the censorship agenda. The commitment to reform the IMF and the World Banks is firmly based upon an unshakeable commitment to “sustainable development” and Agenda 2030—thus Agenda21—which suits BlackRock, Vanguard and the rest of the global-public-private partnership perfectly. In order for this new model of G20 based “global governance” to have a bite and not merely a bark, a global tax system is required. To this end, in December 2021 the G20 and the Organisation for Economic Co-operation and Development (OECD) finalised their “Two Pillar Solution To Address Tax Challenges.” Supposedly designed to stop the tax avoidance of “multinational enterprises” (MNEs), which it won’t, the impetus for this nascent global tax system has largely come from the G20. Unsurprisingly, the BRICS core of the multipolar world order are all signatories to the first concerted effort to legislate a single, unified global tax system into being. It seems that the new world order will fund itself into existence just as all empires do—by taxing the people. Larry Fink – CEO BlackRock CHANGING THE NEIGHBOURHOOD The Western, unipolar, debt-ridden world order is economically and financially spent and, for the UN-G3P, is approaching its used by date. The current IMFS, first established with the Bretton Woods Agreement and maintained by the subsequent petrodollar scheme, is finished. It finally pegged out in 2008 with the global financial collapse. Since then it has been kept on life support simply by printing—digitally speaking—trillions of dollars. Little of that money found its way into the real economy that you and I inhabit. The bulk of it has been siphoned off to prop up the financial markets while the move towards the multipolar system progresses. This excess supply of the US dollar, the current leading global reserve currency, will keep eroding—and ultimately destroy—its value. Consequently, the US economy in its present form, along with significant swathes of the Western economic order, is degrading. As noted by BlackRock, the existing drivers of financial exploitation are tapped out. Now that Western economies have reached their limits of growth, new sources of global economic stimulus are required. Neither Russia nor China have become the world’s engine for growth by chance. China is energy hungry and Russia is energy rich. Collectively they lead the world in military technology and China leads the world in manufacturing which Russia is happy to fuel with its oil, gas and coal. Despite the enmities of the past, the leadership in both nations not only recognised the mutual benefit of a closer partnership, they forged one. If capable, all nation-states engage in industrial espionage. It is silly to claim that Russia and China don’t. Equally silly were the comments of the former director of the US National Security Agency (NSA) and then head of US Cyber Command, Gen. Keith Alexander, who, when speaking about China’s technological development, told a 2015 US Senate Armed Forces Committee: All they’re doing is stealing everything they can to grow their economy. [. . .] It’s intellectual property, it’s our future. I think it’s the greatest transfer of wealth in history. Tax and inflation are the greatest transfers of wealth in history, but that wasn’t the end of Gen. Alexanders blunders. Contrary to his claims, the Western public-private partnership has done everything it possibly can to assist China’s development. In 1970 Zbigniew Brzezinski published Between Two Ages: America’s Role In The Technetronic Era. He recognised that private sector power had already exceeded that of governments and saw the a merger of the political and corporate state as the logical way forward in an emerging world dominated by digital technology: The nation-state as a fundamental unit of man’s organized life has ceased to be the principal creative force: International banks and multi-national corporations are acting and planning in terms that are far in advance of the political concepts of the nation-state. In 1973 Brzezinki joined the oligarch David Rockefeller in the formation of the Trilateral Commission (think tank). Their objective, with a mind to US led public-private partnership dominance, was to invigorate development in the East, with a particular focus upon China. Recounting their initial purpose and subsequent evolution, the Commission says: [T]here was a sense that the United States was no longer in such a singular leadership position as it had been in earlier post-World War II years. [. . .] , and that a more shared form of leadership [. . .] would be needed for the international system to navigate successfully the major challenges of the coming years. [. . .] [T]he enduring effects of the financial crisis that began in 2008 has been felt in every nation and region. It has fundamentally shaken confidence in the international system as a whole. The Commission sees in these unprecedented events a stronger need for shared thinking and leadership by the Trilateral countries. In 2009 delegates from the governments of China and India joined the Pacific Asian Group of the Trilateral Commission. Hence trilateralist George Soros’ promotion of greater involvement for China in the creation of a “new world order” in the same year. Efforts to shift the centre of global power eastward began in earnest in the 1980’s. Guided by the policy trajectories advised by the Trilaterlists and other globalist think tanks, the West notably stepped up its efforts to bolster China’s economic, financial and technological development. Between 1983 – 1991, Western foreign direct investment (FDI) in China increased from $920M to $4.37Bn. In 1994, in terms of US overseas investment, China ranked 30th. By 2000, it was 11th, as Western multinational corporations quadrupled their FDI into China between 1994 and 2001. By 2019, it had eclipsed $2.1Tn. The pseudopandemic saw an initial 42% slow-down in global FDI, but not in China where it grew again by another 4%. Consequently, China overtook the US to temporarily become the world’s leading recipient of foreign direct investment. While the private sector drove the modernisation of the Chinese economy, the public sector in the West encouraged China to embolden its global political presence. In 1979, the US granted China full diplomatic recognition; in 1982, the commitment was reaffirmed in the third joint communiqué; in 1984, Beijing was permitted to purchase US military hardware; in 1994, the Clinton Whitehouse intervened to scrap the cold war embargo on the export of “sensitive technology” to China (and Russia); the 2000 US – China Relations Act was signed by President Clinton (a member of the Trilateralist Commission), establishing further improvements to trade relations; In 2003 the US supported China’s entry into the World Trade Organisation and soon thereafter the Bush administration established permanent normal trading relations (PNTR) with China and, in 2005, then Deputy Secretary of State Robert B. Zoellick, called on China to take its place as a “responsible stakeholder.” A 2019 report by the World Bank, titled Innovate China: New Drivers of Growth, noted the depth of the West’s G3P commitment to Chinese development: Governments in other high-income countries have supported specific technologies and industries, particularly by targeting research and development (R&D). In the United States, government agencies such as the Defense Department’s Defense Advanced Research Projects Agency (DARPA) and the National Institutes of Health provided critical financing for key technologies. [. . .] These policies are complemented by support for key enabling technologies and industries—such as the space, defense, automotive, and steel industries—including through various funds, such as the European Structural and Investment Funds (five funds worth more than €450 billion) and Horizon 2020 (€77 billion for 2014–20). Bringing his enthusiasm for the multipolar world order with him, then Bank of England Governor Mark Carney, and now UN Special Envoy for Climate Action & Finance, spoke at the G7 Central Bankers symposium in Jackson Hole, Wyoming, in August 2019.  This remarkable speech, shocking to anyone who believes that politicians run the world, more or less laid out where the world order is heading: [A] destabilising asymmetry at the heart of the IMFS is growing. While the world economy is being reordered, the US dollar remains as important as when Bretton Woods collapsed[.] [. . .] In the medium term, policymakers need to reshuffle the deck. That is, we need to improve the structure of the current IMFS. [. . .] In the longer term, we need to change the game. [. . .] Any unipolar system is unsuited to a multi-polar world. [. . .] In the new world order, a reliance on keeping one’s house in order is no longer sufficient. The neighbourhood too must change. [. . .] [A] multi-polar global economy requires a new IMFS to realise its full potential. That won’t be easy. Transitions between global reserve currencies are rare events. [. . .] [I]t is an open question whether such a new Synthetic Hegemonic Currency (SHC) would be best provided by the public sector, perhaps through a network of central bank digital currencies. [. . .] [A]n SHC might smooth the transition that the IMFS needs. [. . .] The deficiencies of the IMFS have become increasingly potent. Even a passing acquaintance with monetary history suggests that this centre won’t hold. [. . .] Let’s end the malign neglect of the IMFS and build a system worthy of the diverse, multi-polar global economy that is emerging. In a nutshell, according to Carney: The “world economy is being reordered,” the dollar only remains “important” in the short term and “we”—the G7 central bankers—need to improve the IMFS by changing “the game” to suit a “multi-polar world” because the unipolar system is unsuitable. “The neighbourhood” (the Earth) must change to realise the potential of a “multi-polar” IMFS. This requires transforming “the global reserve currency” to some sort of “Synthetic Hegemonic Currency,” perhaps based upon “central bank digital currencies” (CBDCs). China, thanks in part to Western assistance, leads the world’s developed economies in CBDC technology. It began seriously testing CBDC in 2014, and started rolling it out in cities like Shenzhen, Chengdu and Suzhou in 2020. This year, China extended use of the digital yuan, called e-CNY, as it surged ahead in the race to become the first cashless major economy. Russia aren’t far behind. Russia 12 leading banks began technical trials of the digital ruble in 2021 prior to its official launch on the 15th February 2022, just nine days before the “special military operation” began in Ukraine. The First Deputy Chairman of the CBR, Olga Skorobogatova, said: The digital ruble platform is a new opportunity for citizens, businesses and the state. We plan for citizens transfers in digital rubles [to] be free and available in any region of the country[.] [. . .] The state will also receive a new tool for targeted payments and administration of budget payments. More than that, adoption of CBDC in a cashless society, where no other form of payment is “permitted,” enslaves every citizen to the state. CBDC is both programmable money and a liability of the central banks. Not only does it always belong to the central bank, and never the user, it can be programmed to function as they see fit. Russia has already installed the legal framework to make this a reality. In 2019 Vladimir Putin announced amendments to Russian federal law that enables the Russian state to outlaw the use of cryptocurrencies. In a “cashless society” these could potentially be a form of alternative currency. As yet, the legal amendments have had little effect. But, if and when Russia moves to a cashless control grid the regulatory platform is ready and waiting. According to the NATO think tank, the Atlantic Council, as 105 countries representing 95% of global GDP explore CBDC, “the G7 economies, the US and UK are the furthest behind on CBDC development.” It seems strange that the unipolar IRBO is apparently lagging so far behind again. Especially given that fact that some of its leading “thinkers” would like to see “a network of central bank digital currencies.” Still, in its search for a Synthetic Hegemonic Currency, it may come as some relief to the leaders of the IRBO that, as noted by the Atlantic Council, “many countries are exploring alternative international payment systems” and that the “proliferation of different CBDC models is creating new urgency for international standard setting.” While it is evident that China are leading, perhaps the IRBO and the Central Bank of Russia can take some consolation in the NATO think tank’s assessment: The trend is likely to accelerate following financial sanctions on Russia. The neighbourhood is certainly changing. Mark Carney – former MD Goldman Sachs, Governor of the Bank of Canada and the Bank of England, UK Prime Minister’s Special Climate Envoy To COP26, Chairman of the FSB, WEF Board of Trustees member and current vice chairman and head of Impact Investing at Brookfield Asset Management and UN Special Envoy on Climate Change. BUILDING THE NEW IMFS Russia is the third–largest oil-producing nation after the US and Saudi Arabia and the second–largest producer of natural gas after the US. But since US domestic energy consumption far exceeds Russia’s, it is the second–largest oil exporter, after Saudi Arabia, and the leading natural gas exporter in the world. Russia also possesses the largest gas reserves on Earth. In 2018, the Shanghai International Energy Exchange started trading oil futures denominated in the Chinese yuan (CNY). All that was required, in order to make the yuan a full-blown petroyuan, was for crude oil exporters to widely accept it as payment. China has been paying Russia and Iran for oil using yuan since 2012, but the sanctions this year moved the credibility of the petroyuan to a whole new level. The Russian Federation has not only massively increased its oil exports to China, becoming its leading oil supplier, but is accepting payment in renminbi (RMB). The CNY is the principle of account for the RMB. Globally, as a direct consequence of the West’s sanctions, the petroyuan is now a practical reality. Venezuela, too, has already agreed to accept the petroyuan. If Saudi Arabia accepts the petroyuan, as seems increasingly likely, the yuan will also have taken a leap forward as a potentially dominant global reserve currency. Perhaps it is just a coincidence that both the pseudopandemic and the war in Ukraine have resulted in nation-states the world over committing to policies that precisely facilitate the transition to the multipolar world order. That both of these world-changing events just happen to “reshuffle the deck” exactly as desired by the global parasite class is certainly uncanny, if not downright unbelievable. Nonetheless, as the centre of power moves eastward, maybe the new world order will ultimately deliver on the promise claimed by some—namely, that Russia and China really are standing up to the insidious Great Reset. Could it be true? We live in hope. Despite the fact that the Western public-private partnership has played a pivotal and seemingly intentional role in this polarity shift, perhaps the Russian and Chinese governments are determined to create a better world order for us all, as some commentators suggest: [A] higher geopolitical reality is being born which will have a much greater benefit to [. . .] humanity more generally if it is not sabotaged. [. . .] A potentially beautiful new future driven by the re-awakening of the spirit of the Silk Road is being painted before our eyes. When we conclude this series with Part 3, we may just discover that the wondrous vision of a “beautiful new future” led by China and Russia is a realistic prospect. Or perhaps not. Tyler Durden Thu, 09/29/2022 - 03:30.....»»

Category: smallbizSource: nytSep 29th, 2022

Pound In Retreat Again After Stinging Criticism Of The UK By The IMF

Sterling fell back to $1.06 after IMF raised concerns about UK economic policy. Bank of England signals super-size rate hike but not until November. Government bond yields hover at highs not seen since the financial crisis. Stocks in Asia drop sharply after falls on Wall Street amid worries about global recession. Oil dips back below […] Sterling fell back to $1.06 after IMF raised concerns about UK economic policy. Bank of England signals super-size rate hike but not until November. Government bond yields hover at highs not seen since the financial crisis. Stocks in Asia drop sharply after falls on Wall Street amid worries about global recession. Oil dips back below $85 dollars as OPEC+ members mull a production cut. Pound In Retreat Again The beleaguered pound was in retreat again after the UK government was slapped by stinging criticism from the International Monetary Fund over its handling of economic policy. Sterling dropped back to $1.06 after reaching $1.08 on Tuesday after the intervention by the IMF, which warned that these deep tax cuts were not only inappropriate with inflation so high, but would fuel inequality. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   The IMF’s move has added to worries that the UK is fast taking on the characteristics of an emerging market economy, and risks ditching its developed country status. It’s now not only wracked with trade disruptions, an energy crisis and soaring inflation but it’s also being closely monitored by international body known as the world’s lender of last resort. UK gilt yields - the interest paid on government debt - have retreated marginally but they are still sky high, with the yield on 10-year gilts hovering around 4.4%, up my more than 340% in a year. They have hit the highest level since the financial crisis in 2008, which is piling pressure on mortgage holders, given gilt yields have an impact on swap rates, which guide lenders’ mortgage offers. Corporate bond yields have shot up even for investment grade companies, considered to be low risk, adding to worries that companies needing to refinance soon or borrow more to cope with rising input costs could struggle to make repayments. Bank Of England To Hike Interest Rates Expectations that there will be a super-size interest rate hike coming from the Bank of England to try and counter the government splurge on tax cuts and spending have increased. But chief economist Huw Pill signalled this significant monetary response would not come until policymakers are due to meet as scheduled in November, instead of an emergency hike, which is likely to have added to the pound’s fresh weakness. Fresh unease has spread about the slowdown in the global economy brought about by the rapid ratcheting up in rates by central banks around the world. Falls on Wall Street amid expectations of the Fed won’t more from its aggressive stance on inflation, which would push the US into recession, prompted a fast slide in stocks in Asia. Oil has retreated again to below 85 dollars a barrel, amid worries that the risks of a global recession have escalated. There is also speculation that the oil cartel OPEC+ could slash production to try and stop the slide in prices. Oil producers had been sitting pretty on pipelines of cash higher prices had generated and want to preserve those lucrative flows. Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.....»»

Category: blogSource: valuewalkSep 29th, 2022

4 Stocks to Watch From the Thriving Internet Delivery Industry

The Zacks Internet - Delivery Services industry players like GoDaddy (GDDY), Vipshop (VIPS) MakeMyTrip (MMYT) and Asure Software (ASUR) are poised to benefit from the reopening of economies, and surging smartphone and Internet penetration in the emerging markets. Relaxation in pandemic-induced travel restrictions and social-distancing measures have been benefiting the Zacks Internet - Delivery Services industry. Moreover, recovery is anticipated for companies like GoDaddy GDDY, Vipshop Holdings VIPS MakeMyTrip MMYT and Asure Software ASUR, with business activities reaching pre-pandemic levels following the reopening of economies. Additionally, a greater Internet presence in emerging markets, a burgeoning affluent middle class and the accelerated uptake of smartphones are set to aid Internet – Delivery Services industry participants.Online delivery is yet to expand beyond the major metros, underlining lower penetration and significant room for growth. Nevertheless, as expansion into newer markets will take some time to generate volumes, higher upfront costs might erode profitability. These, along with elevated operating expenses related to hiring new employees and sales and marketing strategies to capture more market share, are likely to strain margins in the near term.Industry DescriptionThe Zacks Internet - Delivery Services industry primarily comprises companies that offer services via Internet-based platforms. These include food delivery, online travel booking, direct marketing and media services plus web hosting among others. Some companies in this space offer Internet domain registration and web hosting registration as well as sell e-business-related software and services. A few industry participants provide air and train ticket bookings, customized holiday packages, hotel booking, bus tickets and car hire services. Some players offer online direct marketing and media services, including online messaging, email broadcasting, search engine marketing, and brand management facilities. Being growth-stage companies, industry participants are spending more on R&D and sales & marketing, thereby making it difficult to generate profits in the near term.3 Trends Shaping the Future of the Internet-Delivery Services IndustrySmartphone and Internet Penetration Key Catalysts: The Internet is ubiquitous and the heightening usage of smartphones is changing the delivery landscape. The companies in the Zacks Internet - Delivery Services industry are benefiting from the growing number of Internet users, coupled with an improvement in Internet penetration and the rapid adoption of the 4G Volte technology. The emergence of 5G technology, which promises faster speed and deliverability, also bodes well for this industry.Shifting Consumer Preferences: The shift in consumer preference, driven by convenience and easy accessibility, is anticipated to aid the industry. Notably, the accelerated transition from offline to online food ordering as well as the rising penetration of online travel booking augurs well for industry players. Nevertheless, as higher consumer spending appetite is the main driver of the overall industry’s health, any sluggishness in the global economy will pose a risk.Higher Upfront Costs to Hurt Profitability: Online delivery is yet to expand beyond the major metros, underlining lower penetration and significant room for growth. Nevertheless, as expansion into the newer markets will take some time to generate volumes, higher upfront costs might erode profitability. Moreover, Amazon’s focus on strengthening its delivery system is a key challenge for the industry players. We believe the company’s powerful distribution channels are a major force that might highly threaten the incumbents in this industry. Also, search giant Alphabet has forayed into the food delivery market, with its delivery arm, Wing and an array of food delivery apps, which are likely to further intensify competition.Zacks Industry Rank Indicates Bright ProspectsThe Internet - Delivery Services industry is housed within the broader Computer and Technology sector. It carries a Zacks Industry Rank #55, which places it among the top 22% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Before we present a few stocks that you may want to consider for your portfolio, considering bright prospects, let us look at the industry’s recent stock-market performance and valuation picture.Industry Outperforms on Stock Market PerformanceThe Zacks Internet - Delivery industry has outperformed the broader Zacks Computer and Technology sector as well as the S&P 500 composite over the past year.The industry has declined 6.5% during this period, while the S&P 500 and the broader sector are down 17.2% and 32%, respectively.One-Year Price PerformanceIndustry's Current ValuationOn the basis of forward 12-month price-to-sales (P/S), a commonly-used multiple for valuing Internet-Delivery stocks, the industry is currently trading at 0.71X compared with the S&P 500’s 3.16X and the sector’s 2.89X.Over the past five years, the industry has traded as high as 1.29X, as low as 0.57X and recorded a median of 0.90X as the charts below show.Price-to-Sales Ratio (Industry Vs. S&P 500)Price-to-Sales Ratio (Industry Vs. Sector)4 Stocks to WatchVipshop Holdings: It is an online discount retailer for brands. The company offers branded products to consumers in China through flash sales on its vipshop.com website. Vipshop currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The company’s continued efforts toward strengthening product offerings and improving product procurement are aiding its financial performance, given the growing proliferation of online shopping amid the pandemic. Further, the solid execution of its merchandising strategy is bolstering its active customer base.Moreover, its successful transition to discount retailing is a major positive. This is likely to continue driving momentum across repeat customers and help attract new ones.Additionally, the company’s quarterly results will likely keep benefiting from its deepening focus on high-margin-generating apparel-related businesses, especially the discount apparel business. Furthermore, Vipshop’s deep discount channels are expected to bolster its online gross merchandise volumes in the quarters ahead.The Zacks Consensus Estimate for current-year earnings has moved 16 cents north to $1.34 per share over the past 60 days.Price and Consensus: VIPSMakeMyTrip: It is an online travel service company, which offers travel products and solutions in India and the United States. The company's services and products include air tickets, customized holiday packages, hotel booking, railway tickets, bus tickets and car hire. It also facilitates access to travel insurance.MakeMyTrip is gaining substantially from improving travel conditions and reopening of the economies. In addition, recovering hotel demand, as a result of the rise in short-stay getaway vacations, great travel deals and hygienically-safe properties, is a major positive. Also, this Zacks Rank #2 (Buy) company is optimistic regarding its cost-control initiatives, MySafety and GoSafe programs, and its strengthening hotel business.The Zacks Consensus Estimate for fiscal 2023 earnings has been revised downward to a loss of 3 cents per share from earnings of 29 cents per share in 30 days’ time.Price and Consensus: MMYTGoDaddy: It is an Internet domain registrar and web hosting company that also sells e-business-related software and services. This Zacks Rank #3 (Hold) company is engaged in the designing and development of cloud-based technology products for small businesses, web design professionals and individuals.GoDaddy thrives on the growing adoption of its domain products. Higher subscriptions to Websites + Marketing, and managed WordPress offerings, international expansion, robust feature engagements and strength in GoCentral are tailwinds for the company’s Hosting and Presence business.Additionally, the acquisition of payments processor firm Poynt has fortified GoDaddy’s commerce offerings and provided it an edge over its competitor, Shopify. Furthermore, the acquisition of Neustar’s Registry business last year has made the company one of the largest players in the Internet infrastructure industry.The Zacks Consensus Estimate for 2022 earnings has been revised upward by 13 cents to $2.20 per share over the past 60 days.Price and Consensus: GDDYAsure Software: It is a cloud computing firm that offers business clients the chance to modernize everything from human capital management (HCM) and time & attendance solutions to payroll and taxes. The stock currently carries a Zacks Rank #3.Asure Software’s strategic initiative to become a pure software-as-a-service HCM company is aiding its top-line growth.  The company’s focus on driving innovation for its HCM solutions is helping it expand its footprint in the HCM market.New client additions and continued focus on cross-selling to existing clients are driving Asure Software’s revenues. The company’s differentiated employee strategy, measurement capabilities and comprehensive product offerings are helping it win new customers.The Zacks Consensus Estimate for Asure Software’s 2022 earnings has been revised downward by 7 cents to 4 cents per share in the past 60 days.Price and Consensus: ASUR 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 UpWant 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 GoDaddy Inc. (GDDY): Free Stock Analysis Report MakeMyTrip Limited (MMYT): Free Stock Analysis Report Asure Software Inc (ASUR): Free Stock Analysis Report Vipshop Holdings Limited (VIPS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 28th, 2022

Here"s Why Prestige Brands (PBH) is a Strong Value Stock

Whether you're a value, growth, or momentum investor, finding strong stocks becomes easier with the Zacks Style Scores, a top feature of the Zacks Premium research service. Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.It also includes access to the Zacks Style Scores.What are the Zacks Style Scores?Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.The Style Scores are broken down into four categories:Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.Growth ScoreGrowth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.How Style Scores Work with the Zacks RankThe Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.That's where the Style Scores come in.You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only as a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.Stock to Watch: Prestige Brands (PBH)Based in New York, Prestige Consumer Healthcare Inc. and its subsidiaries develop, manufacture, market, sell and distributes over-the-counter (“OTC”) healthcare and household cleaning products in United States, Canada, Australia and certain other international markets. The company provides its products to mass merchandisers as well as drug, food, dollar, convenience, and club stores. Also, Prestige Consumer Healthcare operates through the e-commerce channel.PBH is a #2 (Buy) on the Zacks Rank, with a VGM Score of B.It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 11.58; value investors should take notice.For fiscal 2023, two analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.02 to $4.21 per share. PBH boasts an average earnings surprise of 5.6%.With a solid Zacks Rank and top-tier Value and VGM Style Scores, PBH should be on investors' short list. 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 UpWant 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 Prestige Consumer Healthcare Inc. (PBH): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 28th, 2022

3 Reasons to Retain CONMED (CNMD) Stock in Your Portfolio

Investors continue to be optimistic about CONMED (CNMD) owing to its broad product spectrum. CONMED Corporation CNMD is well-poised for growth in the coming quarters, courtesy of its broad product spectrum. A robust second-quarter 2022 performance, along with a few recent buyouts, is expected to contribute further. Stiff competition and regulatory requirements persist.Over the past year, the Zacks Rank #3 (Hold) stock has lost 40.9% compared with 19.3% decline of the industry and 17.4% fall of the S&P 500.The renowned global medical products manufacturer specializing in surgical instruments and devices has a market capitalization of $2.37 billion. The company projects 11.2% growth for the next five years and expects to maintain its strong performance. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and matched the same in the other, the average surprise being 4.7%.Image Source: Zacks Investment ResearchLet’s delve deeper.Recent Buyouts: CONMED’s recent acquisitions raise our optimism. The company, in August, completed its previously-announced acquisition of privately-held Biorez, Inc. Per the management, the addition of Biorez and its proprietary BioBrace platform is expected to strengthen its sports medicine portfolio.In June, CONMED completed its previously-announced acquisition of privately-held In2Bones Global Inc., which will likely boost its Orthopedic portfolio.Broad Product Spectrum: CONMED offers a broad line of surgical products, which includes several new devices in the Orthopedic, Laparoscopic, Robotic, Open Surgery, Gastroenterology, Pulmonary and Cardiology sections. Products like Hi-Fi Tape and Hi-Fi suture interface represent a critical component of repair security in the rotator cuff repair space.Other notable offerings include the MicroFree platform in Orthopedics, the TruShot, the Y-Knot Pro and the CRYSTALVIEW Pump. The Anchor Tissue Retrieval bag is a unique product under the General Surgery arm.Strong Q2 Results: CONMED’s solid second-quarter 2022 results buoy optimism. The company witnessed strong segmental performances across its Orthopedic and General Surgery units. It saw sales growth in domestic and overseas markets. The expansion of both gross and operating margins bodes well for the stock.DownsidesRegulatory Requirements: Almost all of CONMED’s products are classified as class II medical devices subject to regulations of numerous agencies and legislative bodies, including the FDA and its international counterparts. As a medical device manufacturer, the company’s manufacturing processes and facilities are subject to on-site inspection and continuing review by the FDA for compliance with the Quality System Regulations. CONMED may have future inspections at its sites and there can be no assurance that the costs of responding to such inspections will not be material.Stiff Competition: The market for CONMED’s products is highly competitive and its customers have numerous alternatives of supply. Many of the company’s competitors offer a range of products in areas other than those in which it competes, making such competitors more attractive to surgeons, hospitals, group-purchasing organizations and others.Estimate TrendCONMED is witnessing a negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 5.7% south to $3.32.The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $282.2 million, suggesting a 13.4% improvement from the year-ago quarter’s reported number.Key PicksSome better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, ShockWave Medical, Inc. SWAV and McKesson Corporation MCK.AMN Healthcare, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.7%.You can see the complete list of today’s Zacks #1 Rank stocks here.AMN Healthcare has lost 9.4% compared with the industry’s 39.9% fall in the past year.ShockWave Medical, sporting a Zacks Rank #1 at present, has an estimated growth rate of 33.1% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.ShockWave Medical has gained 27% against the industry’s 35.8% fall over the past year.McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.McKesson has gained 66.2% against the industry’s 19.3% fall over the past year. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. 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 UpWant 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 CONMED Corporation (CNMD): Free Stock Analysis Report McKesson Corporation (MCK): Free Stock Analysis Report AMN Healthcare Services Inc (AMN): Free Stock Analysis Report ShockWave Medical, Inc. (SWAV): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 28th, 2022