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TSMC capacity utilization fall to widen in 1H23

TSMC's overall fab capacity utilization rate is estimated to fall to 80% in the first half of 2023, with the utilization for 7/6 nm process capacity to see a widening fall, 5/4nm capacity utilization to decline month by month starting next January while 40/45nm, 28nm and 12/16nm process capacities are also loosening in utilization, according to semiconductor supply chain sources......»»

Category: topSource: digitimesNov 28th, 2022

Treasuries Drift Higher After BOJ Reversal, Await PPI And Retail Sales

Treasuries Drift Higher After BOJ Reversal, Await PPI And Retail Sales US stock-index futures were muted on Wednesday, swinging between gains and losses, as investors initially welcomes a dovish announcement by the BOJ which refrained from further expanding its yield curve control band, then turned to corporate earnings for more clues on the health of corporate America amid growing prospects for a recession. Nasdaq 100 and the S&P 500 futures were up 0.2% as of 7:15 a.m. in New York. Treasury and JGB yields tumbled after the BOJ kept monetary settings unchanged, while the yen first slid against the dollar but then recovered all losses amid expectations the BOJ has only bought a few weeks of time. WTI crude added 1.7% this morning and has been holding above $80 amid optimism around China reopening demand. Dollar is weaker; DXY at 102 helping gold trade back over $1900. Among notable movers in premarket trading, Moderna Inc. climbed 6.7% after saying its vaccine against respiratory syncytial virus infections met targets. IBM dropped 1.9% after Morgan Stanley cut the stock to equal-weight from overweight, saying that it is transitioning out of more defensive IT hardware name. Bank stocks are mixed as investors await the release of key economic data, including the Beige Book and retail sales. Coinbase said it’s halting operations in Japan. Meanwhile, Bank of Montreal has received approval from the Federal Reserve to acquire San Francisco-based Bank of the West. Here are the other notable premarket movers: United Airlines (UAL US) rises 2.6%, boosting carrier peers, after the airline operator’s guidance for the first quarter and 2023 beat analyst estimates. Brokers pointing to strong growth in sales, assuaging any worries over demand taking a hit from an economic slowdown. American Airlines +1.4%, Delta Air +1% GoDaddy (GDDY US) gains 3% after the website domain company was upgraded to outperform from inline at Evercore ISI, with the broker highlighting the firm’s relatively recession- resistant business model and new-product cycle. International Business Machines (IBM US) drops 1.9% after Morgan Stanley cut the stock to equal-weight from overweight, saying that it is transitioning out of more defensive IT hardware names. Skechers (SKX US) slides 2.1% after Morgan Stanley downgraded it to equal-weight on valuation, risk of FY23 guidance missing expectations and as the market shifts to early-cycle names. The broker raised Gap (GPS US) to equal-weight and anticipates a 2023 of two halves for US specialty retail and department stores. SmileDirectClub (SDC US) jumps 13% after the maker of dental aligners projected a narrower Ebitda loss for 2023 and said that it planned to rejig its global workforce and introduce additional cost savings. Jefferies, however, remains cautious on the stock, saying that the company saw a “weak” finish to a tough year. Oatly (OTLY US) gains 6.3% after Mizuho Securities upgrades its rating on the oat drink company to buy from hold, with long-term growth seen still intact. While US stocks have gained in the new year as cooling inflation spurred bets of a softening in the Federal Reserve’s policy, they’ve dramatically underperformed international peers as investors worry that the combination of rising interest rates and slowing consumer demand could trigger an economic contraction. A weaker dollar and optimism around a China reopening have lured investors to non-US stocks. Goldman Sachs strategists said US equity funds have seen outflows in the first two weeks of the year, while Europe has seen inflows — both major trend reversals from 2022. UK inflation as well as a more muted start to the US earnings-reporting season boosted those who believe monetary easing would have to begin this year. The yen dropped as much as 2.6% against the dollar after Japan’s policymakers doubled down on defending their stimulus, defying intense market speculation. The currency later trimmed the losses to 0.7%. Even as investors remain on guard for the central bank to continue large scale bond buying to protect its yield goal, there are doubts about how long it can continue. The yen’s drop proved to be an idiosyncratic trend in the foreign-exchange markets as the dollar fell against all but five of its 31 major peers including the Japanese currency. Meanwhile, Analysts expect fourth-quarter earnings to show a drop of 2.7%, the first year-over-year decline since 2020, according to data from Bloomberg Intelligence. “Given the difficult backdrop, there’s fear among some parts of the market that US earnings forecasts might still be too high for 2023 and that stocks might not be able to sustain their current strength,” said Russ Mould, investment director at AJ Bell. He added that reports from the likes of Procter & Gamble Co., Schlumberger Ltd., Microsoft Corp. and Tesla Inc. “will certainly be ones to watch as their fortunes could have a major influence on market sentiment.” European equity markets are mixed after the BOJ sent the yen spiraling lower by leaving its policy settings unchanged. The Stoxx 600 is up 0.1% with gains in the CAC and FTSE 100 while the DAX trades lower; today's move brought the total Stoxx 600 gains since a Sept. 29 low to more than 19%. If the index closes at 20% or higher, it will join other regional peers in confirming a technical bull market. Tech, travel and miners are the best performing sectors while chemicals and real estate fall.  Here are the notable European movers: Richemont shares gain as much as 2.8% in Europe despite the Cartier owner posting worse-than-expected 3Q sales as investors take the view that disruptions in China caused by a surge in Covid infections may prove temporary. Just Eat Takeaway.com jumps as much as 16% after 4Q Ebitda beat estimates as the food delivery firm said it remains focused on improving profitability. Peers Deliveroo and Delivery Hero rose as much as +5.5% and 6.3% respectively ASM International shares rise as much as 8.7% after 4Q update shows a strong beat on sales that is likely to boost sentiment on the semiconductor-equipment maker, analysts say. ASML shares rise as much as 2.1% in sympathy. Capgemini shares rise as much as 3.5%, hitting highest in just over a month, after Barclays upgrades the IT services firm to overweight on greater resilience in its business mix and on utilization. EQT shares drop as much as 8.4%, the most in more than three months, after the investment firm delivered results which analysts say missed on adjusted Ebitda. Continental shares fall as much as 5% after the German car-parts and tiremaker said late Tuesday that it expects FY22 adjusted free cash flow of €200m, below its outlook range of €600m to €800m. Encavis shares fall as much as 5.3% after Barclays analyst cut the recommendation to underweight from equalweight, Orsted also downgraded. Barclays notes that growth pipeline valuations for the two energy companies have moved significantly above vertically integrated peers. Wise shares drop as much as 5%, extending yesterday’s double-digit losses, after the UK money- transfer firm’s growth slowed and missed analyst expectations. Earlier in the session Asian stocks edged higher as Japanese shares advanced after the Bank of Japan announced no change to its yield curve control policy, countering broader caution ahead of the Lunar New Year holidays. The MSCI Asia Pacific Index erased an earlier loss of as much as 0.7% to rise 0.5%, lifted by communication services and health care shares. Japanese equities jumped as the yen fell after the BOJ kept policy on hold, pushing back against intense market speculation of policy change by ramping up the defense of its stimulus framework. “What has been happening so far is a fairly easy pattern to understand,” said Makoto Furukawa, chief portfolio strategist at Mitsubishi UFJ Morgan Stanley Securities. “I think the pattern of bank stocks rising and exchange-rate-sensitive stocks being hit will continue. Expectations for further revisions to the BOJ’s policy will emerge.” South Korea was among the biggest losers on Thursday, dragged by a loss in Samsung Electronics. Chinese benchmarks were mixed in thin volumes before market closures next week. The MSCI Asian stock benchmark has gained more than 20% from an October low to enter a bull market, outperforming US and European peers. Japanese stocks have underperformed, with the Nikkei down almost 1% in the same span, hurt in part by the BOJ’s December move to widen a band on bond yields. Australian stocks edged higher: the S&P/ASX 200 index rose to close at 7,393.40, as healthcare and technology shares buoyed the benchmark. In New Zealand, the S&P/NZX 50 index rose 0.3% to 11,920.41. The nation’s home sales fell 39% y/y in December, according to the Real Estate Institute of New Zealand. The Bloomberg Dollar Index is down 0.3%, swinging to a loss in European trading as the greenback weakened against all of its Group-of-10 peers apart from the yen; the JPY traded well off its worst levels. EUR gained after ECB’s Villeroy said he was surprised by the sources story suggesting they are considering smaller hikes beyond February. GBP rose after data showed UK core CPI was slightly stronger than expected in December.  Some more details: The yen slumped as much as as 2.6% against the dollar, hitting 131.58, and Japan’s bond yields fell by up to 11bps after the BOJ pushed back against intense market speculation of policy change by ramping up the defense of its stimulus framework. Risk reversals in the front-end rallied in the run-up to the BOJ decision in favor of greenback calls, suggesting that the market was positioning for a no-change decision by the central bank. The move for risk reversals suggests that investors are still looking for bullish yen expressions over the medium-term, and especially after Kuroda’s term ends in April The Swiss franc extended its advance against to 0.9131 per dollar, the strongest level in a year The euro extended an advance against the dollar and bunds reversed opening gains after ECB official Francois Villeroy de Galhau said that guidance from ECB President Christine Lagarde that borrowing costs will continue to be lifted in half-point steps for some time still holds. One trader has placed a large bet using options on German 5-year futures, targeting the yield to rise above 2.40% for maximum profit, up from about 2.13% currently The pound rose against the dollar and traders added to wagers on the BOE’s hiking cycle after UK inflation figures showed month-on-month and core readings came in higher than anticipated in December In rates, Treasuries and JGBs spiked higher overnight after the Bank of Japan kept monetary settings unchanged with no nod to any concession on current policy; 10-year TSY yields fell as much as 8.3bp to 3.465% and were trading at 3.47% last. Gains have been broadly maintained into early US session, with 10-year note futures trading near day’s high. Heavy US economic data slate includes PPI and retail sales, and Treasury auctions 20-year bonds. UK and German government bonds pared earlier advances to trade in the red as Treasury yields were richer by 3bp to 7bp across the curve with gains led by intermediates, flattening 2s10s spread by 4bp on the day; 10-year yields trade around 3.48% with bunds and gilts underperforming by 4bp and 7bp in the sector. Most gains in Treasuries were made during aggressive rally in JGBs after Bank of Japan policy announcement, which left benchmark JGB 10-year richer by around 8bp on the day. US Treasury auctions resume with $12b 20-year bond reopening at 1pm. In commodities, crude futures rose with WTI adding 1.7% to trade near $81.50. Spot gold rises roughly $4 to trade near $1,913/oz To the day ahead now, and data releases from the US include December’s PPI, retail sales and industrial production, whilst from the UK we’ll also get the December CPI release. From central banks, we’ll hear from the ECB’s Villeroy, and the Fed’s Bostic, Harker and Logan. Lastly, the Fed will also be releasing their Beige Book. Market Snapshot S&P 500 futures little changed at 4,012.00 MXAP up 0.5% to 166.79 MXAPJ up 0.3% to 546.45 Nikkei up 2.5% to 26,791.12 Topix up 1.7% to 1,934.93 Hang Seng Index up 0.5% to 21,678.00 Shanghai Composite little changed at 3,224.41 Sensex up 0.6% to 61,049.16 Australia S&P/ASX 200 little changed at 7,393.36 Kospi down 0.5% to 2,368.32 STOXX Europe 600 up 0.1% to 457.14 German 10Y yield little changed at 2.10% Euro up 0.6% to $1.0855 Brent Futures up 1.1% to $86.89/bbl Gold spot up 0.3% to $1,913.84 U.S. Dollar Index down 0.39% to 101.99 Top Overnight News from Bloomberg ECB policymakers are starting to consider a slower pace of interest-rate hikes than President Christine Lagarde indicated in December, according to officials with knowledge of their discussions The BOJ standing pat caught some traders by surprise, but is unlikely to douse speculation that it will normalize policy as inflation in Japan accelerates and Governor Haruhiko Kuroda nears the end of his term China’s top economic official told an audience of international billionaires and bankers that his country’s economy will likely rebound to its pre-pandemic growth trend this year after coronavirus infections passed their peak A more detailed look at global markets courtesy of Newsquawk APAC stocks were positive albeit with price action mostly kept rangebound after the weak lead from Wall Street, while focus overnight centred on the BoJ policy announcement in which the central bank defied the increased speculation for a policy tweak. ASX 200 was flat with strength in the tech and consumer sectors offset by losses in commodity-related stocks. Nikkei 225 was boosted after the BoJ stuck with its ultra-easy policy settings and reaffirmed its dovish guidance. Hang Seng and Shanghai Comp were choppy but with strength in key tech names after China approved licences for 88 new games including titles from Tencent and NetEase in a further sign of an end to its tech crackdown. Top Asian News PBoC injected CNY 133bln via 7-day reverse repos with the rate kept at 2.00% and injects CNY 447bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 515bln net injection. China's NDRC's said the economic development situation this year is still complicated, external environment is turbulent and pressure is still large, but it is confident and capable of promoting the continuous recovery and overall improvement of China's economy, according to Reuters. Hong Kong is expected to end its COVID mask mandate by March or April, according to sources cited by Ming Pao News. European bourses are contained overall, Euro Stoxx 50 +0.1%, as the dovish BoJ fails to provide impetus. US futures are similarly steady ahead of earnings, data and Fed speak, ES +0.1%. Within Europe, sectors are mixed with marked outperformance in Tech after updates from Just Eat and ASM International. Top European News ECB's Villeroy reaffirms that a European recession should be avoided in 2023, will bring inflation back to target around 2024/2025. Lagarde's 50bp guidance remains valid. Will remain at the terminal rate for as long as is necessary; will go to the terminal by summer, not there yet. UK Chancellor Hunt is reportedly planning a "slimmed down" spring budget which will not feature tax cuts within the statement, via The Guardian citing sources which add that there will be tax cuts before the next election, with the autumn statement the most likely point to announce such a change. Germany is reportedly to narrowly avoid a 2023 recession, with price-adj. growth of 0.2%, via Reuters citing source/draft of the economic report; Inflation: 2023 6.0%, 2024 2.8%. Magnitude 7.0 earthquake strikes off Sulawesi, Indonesia; Tsunami waves are possible for coasts located within 300km of Indonesia's quake epicentre, Pacific Tsunami Centre says. Ukraine Latest: Helicopter Crash Kills 18 People Near Kyiv Sweden Boosts Capacity to Send Power South to Ease Supply Crunch French Power Crunch This Winter Now Less Likely, Grid Says Women Are Macron’s Biggest Critics on Pension Reform BASF Drops After €7.3 Billion Russia Writedown Sparks Loss BOJ BoJ kept its policy settings unchanged with rates at -0.10% and YCC maintained to target 10yr JGBs at 0% via unanimous vote, while it kept the yield band and yield target unchanged. BoJ stuck with its forward guidance on interest rates and guidance that it will continue large-scale JGB buying and make nimble responses for each maturity, while it reiterated that it will not hesitate to take additional easing measures as necessary. Furthermore, the BoJ extended the fund operation to support financial lending by one year and the Outlook Report contained cuts to Real GDP growth forecasts and mostly upward revisions to Core CPI estimates, although fiscal 2023 and fiscal 2024 Core CPI forecasts remained below the 2% price goal. BoJ Governor Kuroda (post-meeting press conference) says he is not expecting 10yr JGB yields to continue trading with yields above 0.5%, and there is no need to further expand its bond target band; today's decision is not a change in BoJ's monetary policy. It is still early days since the adjustment to yield bands made in December, BoJ needs more time to assess impact on market functions. YCC is fully sustainable, widening band has made YCC more sustainable. Important for FX rates to move stably, reflecting fundamentals; he has no specific comments on FX levels, noting that currency policy is the jurisdiction of the government. FX Yen yields gains made on the premise of further BoJ YCT adjustment as the Bank holds fire. USD/JPY jumps to 131.57 from the low 128.00 area at one stage, DXY rebounds accordingly to 102.900 before sharp reversal on the back of strength elsewhere in the index. Sterling extends on UK pay gains as services and core inflation top consensus, Cable breaches 1.2300 on the way to 1.2360+ peak. Euro eyes resistance in the high 1.0800 zone as the Dollar recoils and Kiwi approaches 0.6500 and Aussie takes firmer hold of 0.7000 handle PBoC set USD/CNY mid-point at 6.7602 vs exp. 6.7644 (prev. 6.7222) Fixed Income Core benchmarks have picked off the European morning's lows to near unchanged levels, but remain shy of overnight BoJ-inspired peaks. The overnight BoJ derived upside seemingly fizzled out amid ECB's Villeroy dismissing the dovish source reports and hot UK core CPI. Stateside, USTs are holding firmer than their EGB peers ahead of a packed afternoon docket. Commodities Crude benchmarks are bid and have broken out of contained overnight ranges following the latest geopolitical rhetoric, lifting the complex to fresh YTD peaks. WTI Feb’23 and Brent Mar’23 are at the top-end of USD 80.55-81.86/bbl and USD 86.13-87.43/bbl parameters, ranges that mark fresh YTD peaks for the complex, though, the benchmarks remain well within late-2022 extremes. China's NDRC warned iron ore trading companies and iron ore futures companies against price gouging and speculation, while it will step up supervision on iron ore's spot and futures markets, according to Reuters. IEA Oil Market Report: Demand set to increase by 1.9mln BPD to a record of 101.7mln BPD. Spot gold is essentially unchanged and unable to derive much support from the Dollar’s weakness as the overall tone remains a tentative one post-BoJ. Copper prices are bid this morning in the wake of disruption to Glencore’s Antapaccay copper mine in Peru, which is operating at restricted capacity amid anti-government protests, according to Reuters sources. Geopolitics US reportedly sends Ukraine US arms which were stored in Israel, according to NYT. Russian Foreign Minister Lavrov says discussions with Ukraine President Zelenskiy are not possible; ready to respond to Western proposals on Ukraine but have not seen any serious proposals; adds, that they will have to take corresponding military measures if Finland/Sweden were to join NATO. Ukrainian Minister of Internal Affairs has died in a helicopter crash near Kyiv, according to local journalists. Serbian President Vucic says Crimea is Ukraine, and the EU path is the only one for Serbia. US Event Calendar 07:00: Jan. MBA Mortgage Applications 27.9%, prior 1.2% 08:30: Dec. Retail Sales Ex Auto and Gas, est. 0%, prior -0.2% 08:30: Dec. PPI Final Demand MoM, est. -0.1%, prior 0.3%; YoY, est. 6.8%, prior 7.4% PPI Ex Food and Energy MoM, est. 0.1%, prior 0.4%; YoY, est. 5.6%, prior 6.2% 08:30: Dec. Retail Sales Advance MoM, est. -0.9%, prior -0.6% Retail Sales Ex Auto MoM, est. -0.5%, prior -0.2% Retail Sales Control Group, est. -0.3%, prior -0.2% 09:15: Dec. Industrial Production MoM, est. -0.1%, prior -0.2% 09:15: Dec. Capacity Utilization, est. 79.5%, prior 79.7% 09:15: Dec. Manufacturing (SIC) Production, est. -0.2%, prior -0.6% 10:00: Nov. Business Inventories, est. 0.4%, prior 0.3% 10:00: Jan. NAHB Housing Market Index, est. 31, prior 31 14:00: Federal Reserve Releases Beige Book 16:00: Nov. Total Net TIC Flows, prior $179.9b Central Bank speakers 09:00: Fed’s Bostic Makes Welcoming Remarks at Academic Conference 14:00: Fed’s Harker Discusses the Economic Outlook 14:00: Federal Reserve Releases Beige Book 17:00: Fed’s Logan Gives Speech in Austin DB's Jim Reid concludes the overnight wrap The big news overnight is that there is no big news overnight as the BoJ met economists expectation that they wouldn’t change anything on YCC today despite increasing market expectation that they would. The policy does seems unsustainable if current conditions persist though as since the last meeting on December 20th, they've spent $265bn (a whopping 6% of annual GDP!) buying bonds. Indeed, as George Saravelos pointed out yesterday there are some reports suggesting the BoJ may own more than 100% of some benchmark 10yr bonds. So not only has it bought the entire stock, but it has lent it out to short-sellers who have sold it back to the BoJ. Before the meeting our Japanese economists suggested that he does expect the BoJ to abandon YCC by the end of Q2 this year, but more around forces such as the “shunto” spring wage negotiations, a positive output gap and leadership changes at the bank. It is clear from the market reaction that although economists expected no change the market was set up for one as the Yen has slumped -2.54% against the dollar, marking its biggest one-day drop since March 2020, trading at $131.42 as I type. Given this, the Nikkei (+2.45%) is leading gains across the region. Meanwhile, yields on 10yr Government Bonds tumbled well below policy cap, declining around -10bps, to trade at 0.40% following the central bank’s decision (they did dip to 0.36% immediately after). US 10yr Treasuries are -6bps lower on the back of the news. The BOJ did enhance its YCC by expanding its fund-supply market operations by offering funds of up to 10 years against pooled collateral to financial institutions for both fixed- and variable-rate loans. This is hoped to ease pressure on the swaps market and help market function. We will see. The press conference is to come after we go to press, so we'll see if that changes anything. In the rest of Asia, equity markets are lower with the KOSPI (-0.69%) being the biggest underperformer followed by Chinese equities with the CSI (-0.22%) and the Hang Seng (-0.11%) both down whilst the Shanghai Composite (-0.03%) is just below flat. In overnight trading, US stock futures are edging higher with contracts on the S&P 500 (+0.12%) and NADAQ 100 (+0.17%) climbing after a weaker start. Central banks were also driving markets yesterday ahead of the BoJ, with a strong European rally after Bloomberg reported that the ECB might go for a smaller 25bps hike in March following another 50bps move in February. Obviously this is just a report, but if true it would be significant, as it would be a slower pace than President Lagarde implied at the last meeting in December. Indeed, she said that “we should expect to raise interest rates at a 50 basis-point pace for a period of time”, so it would imply that this “period of time” could actually just be one meeting. The article only said that 25bps in March was “gaining support”, but there were some massive market moves in response to its release. Investors immediately adjusted their expectations for ECB policy over the coming months, with the rate priced in by the June meeting down -9.3bps on the day. That led to a significant rally in sovereign bonds too, with yields on 10yr German bunds down -8.4bps, having fallen from 2.14% just before the report came out to an intraday low of 2.06% immediately after. That was echoed across the continent, with yields on 10yr OATs (-10.1bps) and BTPs (-12.6bps) falling by even larger margins, and it left the spread of 10yr Italian yields over bunds at just 180bps, their tightest level since April. This buoyancy was seen amongst European equities as well, which continued their run as one of the top-performing assets of 2023. The STOXX 600 (+0.40%) and the DAX (+0.35%) both surged following the Bloomberg report, which brings their YTD gains to +7.43% and +9.07%, respectively. And for the DAX those gains mean the index is now at its highest level since mid-February, just before Russia’s invasion of Ukraine began. Another factor helping to boost sentiment in Europe was the release of the latest ZEW survey from Germany. That saw a massive upside surprise in the expectations component for January, which came in at an 11-month high of 16.9 (vs. -15.0 expected), thus adding to the growing body of evidence on the brightening outlook in Europe. Over in the US, the picture wasn’t quite as rosy as investors came back from holiday. Indeed, the S&P 500 (-0.20%) ended a run of 4 consecutive gains after weak earnings releases dampened risk appetite, with Goldman Sachs (-6.44%) as the second-worst performer in the entire S&P 500 after their earnings missed expectations. On the other hand, fellow major US bank Morgan Stanley (+5.91%) was the second-best performing S&P 500 member as the company beat expectations and pushed a rosier guidance than its peers. The best performer was Tesla (7.43%) which continues to have a rollercoaster time of it. Around this we also had the latest Empire State manufacturing survey for January, which fell to a new low for this cycle at -32.9 (vs. -8.6 expected). And apart from April and May 2020 at the height of the pandemic, that’s now the lowest reading for the survey since Q1 2009. For US Treasuries there was also a relative underperformance with Europe, with the 10yr yield up +4.4bps to 3.547%. This has reversed overnight on the BoJ news mentioned at the top. The Fed’s next meeting just two weeks from now we start to come firmly into view now, where investors are placing a very high weight on a downshift in the pace of rate hikes to 25bps. It also comes as further posturing takes place ahead of US debt ceiling negotiations. Yesterday, House Speaker McCarthy called on Senate Democrats and the White House to discuss conditions on raising the debt ceiling such as changes to major entitlement programs and discretionary spending, while White House Press Secretary Jean-Pierre remained adamant that the Biden Administration would not be negotiating over the debt ceiling. Treasury Secretary Yellen told lawmakers late last week that the government would need to start using “extraordinary measures” by the end of this week in order to avoid running out of cash. Elsewhere, UK gilts lagged slightly behind the rest of Europe with the 10yr yield “only” down -6.0bps. That followed UK labour market data that showed nominal wage running at +6.4% over the three months ending-November (vs. +6.2% expected). In turn, that led investors to raise the prospects of another 50bps hike from the BoE in February, with the hike priced in up +1.8bps on the day to 44.6bps. In other news, oil prices continued their steady advance over recent days, with Brent crude (+1.73%) nearly closing above $86/bbl for the first time this year. That uptick in energy prices was seen more broadly as well, with European natural gas futures (+7.71%) coming off their 16-month low to close at €59.35 per megawatt-hour. Lastly, at Davos yesterday, European Commission President von der Leyen said in a speech that in order “to keep European industry attractive, there is a need to be competitive with offers and incentives that are currently available outside the European Union”. That follows EU criticism of the recent Inflation Reduction Act in the US, which they consider to unfairly subsidise US firms. Our own European economists put out a note yesterday on the issue (link here) where they write the US legislation is probably more of an additional competitiveness shock to the EU, which could reinforce the energy crisis and the fear that high energy costs could linger for years. They also look at how the US policies might negatively impact the EU over different time horizons. To the day ahead now, and data releases from the US include December’s PPI, retail sales and industrial production, whilst from the UK we’ll also get the December CPI release. From central banks, we’ll hear from the ECB’s Villeroy, and the Fed’s Bostic, Harker and Logan. Lastly, the Fed will also be releasing their Beige Book. Tyler Durden Wed, 01/18/2023 - 08:03.....»»

Category: worldSource: nytJan 18th, 2023

TSMC capacity utilization fall to widen in 1H23

TSMC's overall fab capacity utilization rate is estimated to fall to 80% in the first half of 2023, with the utilization for 7/6 nm process capacity to see a widening fall, 5/4nm capacity utilization to decline month by month starting next January while 40/45nm, 28nm and 12/16nm process capacities are also loosening in utilization, according to semiconductor supply chain sources......»»

Category: topSource: digitimesNov 28th, 2022

Futures Reverse Early Losses As Walmart Beat Sparks Relief Buying

Futures Reverse Early Losses As Walmart Beat Sparks Relief Buying US stock futures drifted modestly lower after hitting a 4-month high just above 4,300 during Monday's session, boosted by solid earnings and a guidance boost from Walmart, as attention turned back to lingering worries about the path of economic growth, how long until the NBER admits the US is in a recession and how Fed policy ties the room together. Contracts on the Nasdaq 100 and the S&P 500 were down less than 0.1% by 7:45 a.m. ET.  Gains in technology stocks on Monday spurred the broader benchmark equity index to its highest since May, with investors shrugging off terrible Chinese economic data. Crude oil reversed some of its recent sharp losses amid economic headwinds that clouded the demand outlook and prospects for an increase in supply. The greenback settled higher after fluctuating between gains and losses, while bitcoin traded above $24K. Chinese stocks listed in the US declined in premarket trading after a Reuters report that Tencent would liquidate its $24BN stake in Meituan to appease Beijing, sparking concerns it would do the same to its other investments. Among notable movers in premarket trading, Snowflake fell 3.5% after Tiger Global Management cut its position in the software firm for the first time in eight quarters, according to latest 13F filings. Chinese stocks listed in New York fell in premarket trading following the Tencent report. Pinduoduo Inc. lost 4%, while JD.com Inc. declined 2.2%. Zoom Video Communications slid 3% after Citigroup Inc. downgraded its recommendation on the stock to sell from neutral, seeing “new hurdles to sustaining growth.”  Here are some other notable premarket movers: Big-box retailers gain in premarket trading after Walmart said it sees a full-year adjusted EPS decline of 9% to 11% -- less steep than its previous projection for a decline of 11% to 13% -- following a stronger-than-expected earnings report for the second quarter. Zoom VideoCommunications (ZM US) down 3% in pre-market trading as Citi cuts its recommendation on the stock to sell from neutral, saying it sees “new hurdles to sustaining growth,” including growing competition from services like Microsoft Teams and macro-related pressures hitting customers. Bird Global (BRDS US) shares drop 6.4% in premarket trading after the electric vehicle company on Aug. 15 posted second-quarter results that showed a wider net loss than the same period a year earlier. Chinese stocks in US fall in premarket trading following a report that Tencent plans to sell all or much of its stake in food delivery company Meituan, in an effort to appease Beijing and lock in profits. Alibaba (BABA US) -2.2%, Nio (NIO US) -1%, Baidu (BIDU US) -1.8% Compass (COMP US) analysts at Barclays and Morgan Stanley cut their price targets on the real estate brokerage after it reduced its full-year guidance and announced plans to cut costs. The shares plunged 12% in US postmarket trading on Monday. Ginkgo Bioworks (DNA US) shares jump as much as 23% in US premarket trading after the cell programming platform operator’s revenue for the second quarter beat estimates. Snowflake (SNOW US) drops 3.5% in premarket trading after Tiger Global Management cut its position in the software firm for the first time in eight quarters, according to latest 13F filings. “The lack of clear direction is driving the markets up and down,” Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, wrote in a note. “Yesterday’s data softens the case for the continuation of the steep recovery, and throws the foundation of a period of consolidation, and perhaps a downside correction.” A sharp drop in New York state manufacturing, the second-worst reading since 2001, along with the longest streak of declines since 2007 in homebuilder sentiment, sparked another round of "bad news is good news" and boosted hopes that the Fed may slow interest-rate hikes. However, it was soon outweighed by fears of a recession and belief among some traders the Fed could still press ahead with its tightening irrespective of a slowdown.  US stocks have been rallying since mid-June on optimism that corporate earnings are holding up even with higher prices and weakening consumer sentiment. The market also has gotten a boost from speculation that the Fed will slow the pace of interest rate increases after cooler-than-expected inflation data. While some strategists, especially those at JPMorgan, suggest the rebound could extend until the end of the year as investors turn less bearish, others including Michael Wilson at Morgan Stanley have said disappointing earnings are likely to spark another selloff in stocks. As a result of the recent frenzied positional rally, four weeks of gains have pushed more than 90% of S&P 500 members above their 50-day moving averages. That’s been a good omen in the past, with stocks showing gains of 5.7% on average in the following three months and rising 18% in the 12 months after the signal. Negative returns have been a rare exception, with stocks falling only twice. “While this is not a necessary condition for the end of the bear market, it would increase our confidence that a rally back to the old highs will come before a return to the June lows,” Jeff Buchbinder, a strategist at LPL Financial, wrote in a note on Monday. On the other hand, Skylar Montgomery Koning, senior global macro strategist at TS Lombard, said the bar for the Fed to stop its hiking cycle was high. “The market is betting not only that inflation comes down to a level that the Fed is comfortable with, but that the Fed reaction is timely,” she said on Bloomberg Television. “It may take until we get a 75-basis point hike in September or the new set of dot projections, and that may have to be what makes the market narrative shift.” European bourses are firmer across the board after a relatively constructive APAC handover, the Euro Stoxx 50 rising +0.4%, though off best levels post-ZEW. IBEX outperforms, adding 1.1%. Miners, telecoms and utilities are the strongest performing sectors. Here are some of the biggest European movers today: Delivery Hero shares jump as much as 14% after the firm projected 7% q/q growth in gross merchandise value in 3Q, in- line with expectations and putting the firm on track to meet its FY targets Glencore and other European miners outperform the broader market after BHP posted its highest ever FY profit and said it will push ahead with growth options Philips rises as much as 3.6% after its CEO Frans van Houten said he would step down in October, with the current head of the company’s Connected Care division, Roy Jakobs, taking over Watches of Switzerland jumps as much as 7.1%, reaching the highest since June 7, after the watchmaker published a first-quarter trading update. Analysts found the update to be solid Jyske Bank gains as much as 9.1% after the Danish lender reported 2Q pretax profit that topped Citigroup’s estimate by more than 20%, with Citi noting provisions came in well above expectations DFDS climbs as much as 8.7% after the Danish logistics company published 2Q results that beat consensus estimates and boosted its FY22 revenue forecast, RBC writes in a note Pandora drops as much as 8%, the most in more than three months, after the jewelery maker reported Ebit before significant items that missed the average analyst estimate Sonova and other European hearing aid makers lead losses on the Stoxx 600 after the firm and Danish peer Demant cut their guidance, with analysts flagging negative consensus revisions Straumann plunges as much as 14%, the most intraday since May 2020, after the oral care company announced 1H results and reaffirmed its guidance for the year Hemnet falls as much as 16% after the Swedish property ad company offered 8 million shares at SEK147 a share in a secondary offering announced on Monday after markets closed Hargreaves Lansdown declines as much as 1.8% after Credit Suisse downgraded its recommendation to neutral from outperform due to the personal investment firm’s valuation Earlier in the session, Asian equities fell as investors weighed growth risks in the region against the probability of a slower pace of US interest-rate increases. The MSCI Asia Pacific Index declined as much as 0.4%, and is poised to snap a four-day winning streak. Hong Kong shares fell the most, with Meituan among the biggest drags on the regional gauge after Reuters reported that Tencent intends to sell all or much of its $24 billion stake in the food-delivery giant to appease Beijing. Across Asia, energy shares slid as oil prices fell on rapidly cooling US manufacturing that followed weaker-than-expected Chinese data Monday -- offsetting gains in materials and utilities shares. After improving sentiment pushed up the region’s stocks for four straight weeks, markets are looking ahead to minutes of the Federal Reserve’s latest policy meeting due Wednesday for hints on its rate-hike trajectory. Closer to home, China’s surprise interest-rate cut on Monday did little to allay concerns over the property sector and the broader slowdown from Covid restrictions. Economists and state media are calling for additional stimulus, which could aid a rally in Chinese stocks and Asian peers. “While the downside surprises across the economic calendar suggested that growth conditions have clearly worsened, market participants seem willing to ride on optimism” that the Fed may shift to a looser policy stance sooner with easing inflation, Jun Rong Yeap, market strategist at IG Asia said in a note. Japan’s benchmarks dropped while gauges in the Philippines, Malaysia and India rose. Indonesian shares were higher after President Joko Widodo said in his annual budget speech that he aims to narrow next year’s deficit to below 3% of gross domestic product for the first time since 2019. Japanese stocks edged lower as investors remained on the lookout for signs of an economic slowdown in the US and China. The Topix Index fell 0.2% to 1,981.96 at the market close in Tokyo, while the Nikkei 225 was virtually unchanged at 28,868.91. SoftBank Group Corp. contributed the most to the Topix’s decline, decreasing 2.6% after Elliot Management sold off almost all of its position in the company. Out of 2,170 stocks in the index, 908 rose and 1,138 fell, while 124 were unchanged.  Australia's S&P/ASX 200 index rose 0.6% to close at 7,105.40, its highest level since June 8. BHP, the largest-weighted stock in the benchmark, was among the top performers Tuesday after its full-year profit exceeded analysts’ expectations. Challenger slumped after announcing a strategic review of Challenger Bank. In New Zealand, the S&P/NZX 50 index rose 0.5% to 11,847.15. In FX, the Bloomberg Dollar Spot Index advanced a third day as the greenback was steady to higher against all of its Group-of-10 peers. The euro touched an almost two-week low of $1.0125 after German ZEW expecations index came in lower than forecast. Aussie recovered a loss after the Reserve Bank’s August minutes failed to bolster bearish views, only to resume its slide in the European session. Australia’s central bank signaled further interest-rate increases would come in the period ahead, while restating it will be guided by incoming economic data and the inflation outlook. The yen was steady in the Asian session only to slip in the European session. China’s onshore yuan fell to the lowest since May, tracking Monday’s losses in the offshore unit. The nation’s central bank didn’t push back strongly against the currency weakness through its daily reference rate on Tuesday but traders are watching if its stance would change in case the yuan selloff deepens. USD/CNY rose as much as 0.3% to 6.7978, the highest since May 16; USD/CNH falls 0.1% to 6.8113 after surging 1.2% on Monday In rates, Treasuries were mixed, pivoting around a near unchanged 10-year sector with the curve flatter as long-end outperforms. Bunds and gilts underperform with the latter following stronger-than-forecast UK wage figures for June. US yields cheaper by up to 2bp across front-end and richer by 1.5bp in long-end of the curve -- 2s10s, 5s30s spreads subsequently flatter by 1.7bp and 2.7bp on the day; 10-year yields around 2.79% and near unchanged, outperforming both bunds and gilts by over 1bp.  European bonds fall, with the yield on German 10-year up about 2bps, while gilts 10-year yield rises ~3bps following stronger-than-forecast UK wage figures for June. . Both are trading within Monday’s range. Peripheral spreads are mixed to Germany; Italy and Spain widen, Portugal tightens. Italian 10-year yield rises ~7bps to 3.04%. Australian and New Zealand bonds extended opening gains amid concerns over economic growth. Japanese government bonds rallied as a smooth five-year auction and concerns over global economic slowdown encouraged buying. In commodities, WTI traded within Monday’s range when crude futures fell around 5% over the previous two sessions. Besides economic worries, investors are also facing the prospect of rising supply as demand moderates. Libya is pumping more and Iran is edging closer to reviving a nuclear deal that will likely see higher crude flows. On Tuesday, oil reversed recent losses however, and rose more than 1% to over $90 as the prospect of an "imminent" Iranian deal once again faded; Iran responded to the EU's draft nuclear deal and expects a response in the next two days, according to a source cited by ISNA. It was also reported that an adviser to the Iranian negotiating delegation told Al-Jazeera they are not far from an agreement and chances of reaching a nuclear deal are very high. Iran's response to the draft EU JCPOA text will probably fail to satisfy Western parties, particularly the US, according to Iran International; Iran wants further provisions around economic guarantees above the one-year exemption reportedly being offered. Elsewhere, spot gold falls roughly $4 to around $1,775/oz. Base metals are mixed; LME tin falls 1% while LME zinc gains 1.9%. Looking to the day ahead, data releases from the US include July’s industrial production, capacity utilization, housing starts and building permits. In the UK, there’s unemployment for June, Germany has the ZEW survey for August and Canada has July’s CPI. Elsewhere, we’ll get earnings releases from Walmart and Home Depot. Market Snapshot S&P 500 futures little changed at 4,295.50 STOXX Europe 600 up 0.4% to 443.91 MXAP down 0.3% to 163.03 MXAPJ little changed at 529.75 Nikkei little changed at 28,868.91 Topix down 0.2% to 1,981.96 Hang Seng Index down 1.0% to 19,830.52 Shanghai Composite little changed at 3,277.89 Sensex up 0.5% to 59,751.63 Australia S&P/ASX 200 up 0.6% to 7,105.39 Kospi up 0.2% to 2,533.52 German 10Y yield little changed at 0.91% Euro down 0.2% to $1.0140 Gold spot down 0.3% to $1,774.93 U.S. Dollar Index up 0.18% to 106.74 Top Overnight News from Bloomberg Tencent-Backed Giants Dive on Report of $24 Billion Meituan Sale Oil Extends Losses on Global Slowdown and Chance of More Supply Babylon Said to Mull Take-Private Not Long After SPAC Deal Chipmakers’ Pandemic Boom Turns to Bust as Recession Looms Apple Lays Off Recruiters as Part of Its Slowdown in Hiring FAA Warns of Monday Evening Delays at NYC Area Airports Wong Says Singapore Must Compromise Over Law on Sex Between Men ‘Broken’ Barclays ETN Soars to 33% Premium With Issuance Halted Trump Executive Weisselberg in Plea Talks to Resolve Tax Case US Congress Pushes Biden Toward Risky Confrontation With China Twitter Must Give Musk Data, Documents From Ex-Product Head Next Singapore PM Warns US, China May ‘Sleepwalk Into Conflict’ Apple Sets Return-to-Office Deadline of Sept. 5 After Delays Tiger Global, Yale Cut Stocks Last Quarter as Markets Tumbled Druckenmiller Sold Big Tech in Bear Market as Soros Dove Back In A Century of Fed Crises Holds Secrets to Fight Future Recession Compass Stock Slumps as CEO Reffkin Plots Out More Cost Cuts A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were mostly positive as the region followed suit to the gains on Wall Street but with upside limited as economic slowdown concerns lingered. ASX 200 traded higher amid a deluge of earnings and with the index led by the mining sector including BHP shares after the industry giant reported a record FY underlying net and dividend. Nikkei 225 lacked direction amid the absence of any major fresh macro drivers and alongside a choppy currency. Hang Seng and Shanghai Comp were initially kept afloat by support-related optimism with developers encouraged after reports that China is considering issuing government-guaranteed bonds to provide liquidity to certain developers, while PBoC-backed press noted that China needs additional policy stimulus to increase economic growth. However, the Hang Seng later pulled back ahead of the European open to slip below 20k. Top Asian News China's NDRC said macro policies should be strong, reasonable and moderate in expanding demand actively, while it will roll out practical measures to support starting up businesses and job employment, according to Reuters. PBoC-backed Financial News front page report stated that China needs additional policy stimulus to increase economic growth, while Securities Times suggested the recent surprise PBoC rate cut could be the first in a series of measures to stabilise growth. China is to consider issuing government-guaranteed bonds to provide liquidity to certain developers. RBA Minutes from the August 2nd meeting stated the board expects to take further steps in the process of normalising monetary conditions in the months ahead, but is not on a pre-set path and seeks to do this in a way that keeps the economy on an even keel. The minutes also reiterated that members agreed it was appropriate to continue the process of normalising monetary conditions and that inflation was expected to peak later in 2022 and then decline back to the top of the 2%-3% range by the end of 2024. Australian Bureau of Statistics will begin publishing a monthly CPI indicator with the first publication on October 26th to coincide with the release of the quarterly CPI data, while it added that quarterly CPI will continue to be the key measure of inflation. China is reportedly to enhance policy to increase new births, will boost housing support for those with additional children, via Bloomberg. European bourses are firmer across the board after a relatively constructive APAC handover, Euro Stoxx 50 +0.4%, though off best levels post-ZEW. US futures are in contained ranges and pivoting the unchanged mark at this point in time, ES -0.2%; HD and WMT in focus. Home Depot Inc (HD) Q1 2023 (USD): EPS 5.05 (exp. 4.94), Revenue 43.79 (exp. 43.36bln); confirms FY22 guidance. Top European News Delivery Hero Sees Path to 2023 Profit Powered by Asia Unit Pandora Sells Lab-Grown Diamonds in US as Mined Ones Dropped UK Real Wages are Falling at Their Fastest Pace on Record: Chart Hearing Aid Makers Plunge After Sonova, Demant Cut Guidance DFDS Gains on Guidance Upgrade; RBC Sees Future Growth Potential Turkey Limits Resales of Newly Bought Cars by Dealers FX DXY breaches last week’s peak as Treasury yields rebound and Yuan weakens further amidst Chinese growth concerns, index up to 106.860 vs 106.810 on August 8, USD/CNY and USD/CNH approach 6.8000 and 6.8200 respectively. Euro stumbles after unexpected deterioration in German ZEW economic sentiment and Pound slips following mixed UK jobs and wage data, EUR/USD down to 1.0125 and Cable low 1.2000 area. Yen and Franc retreat as risk sentiment improves and bonds back off, USD/JPY tops 134.00 and USD/CHF above 0.9500. Kiwi cautious ahead of RBNZ, but Aussie holds up better post-RBA minutes flagging more hikes, NZD/USD eyes bids into 0.6300 and AUD/USD hovers just under 0.7000. Loonie underpinned awaiting Canadian CPI as crude prices stabilise to a degree, USD/CAD straddles 1.2900. Fixed Income Debt futures retreat further from Monday's lofty levels in corrective price action and as broad risk sentiment improves. Bunds down to 156.07 having been closer to 157.00, Gilts to 116.52 vs 116.99 earlier and 117+ yesterday, T-notes to 119-19 from almost 120-00. UK 2029 and German 2027 supply snapped up amidst given some yield concession. Commodities Crude benchmarks pressure, but off worst levels and well within yesterday's ranges, as the EU receives Iran's response to the JCPOA draft. Initial indications are that a deal is in reach, though, caveats/unknowns remain in focus - particularly the US' response. EIA said US oil output from top shale regions in September is due to increase to the highest since March 2020, according to Reuters. Iran sets September Iranian light crude OSP to Asia at Oman/Dubai + USD 9.50/bbl, via Reuters. Major European zinc smelter (Nyrstar Budel) reportedly to shut due to elevated energy costs, via Bloomberg; will shut as of September 1st. Spot gold under modest pressure as the USD lifts, but still near the 50-DMA while base metals recoup from Monday's data-driven pressure. US Event Calendar 08:30: July Housing Starts, est. 1.53m, prior 1.56m July Housing Starts MoM, est. -2.0%, prior -2.0% July Building Permits, est. 1.64m, prior 1.69m, revised 1.7m July Building Permits MoM, est. -3.3%, prior -0.6%, revised 0.1% 09:15: July Industrial Production MoM, est. 0.3%, prior -0.2% July Capacity Utilization, est. 80.2%, prior 80.0% July Manufacturing (SIC) Production, est. 0.3%, prior -0.5% DB's Henry Allen concludes the overnight wrap Here in the UK we’ve had quite a historic weather spell recently. Last month was the driest July in England since 1935, and a new record temperature just above 40°C was also recorded. But as this dry spell finally comes to an end, there are now weather warnings about thunderstorms over the coming days. My wife and I discovered this to our cost on our evening walk yesterday, when we hadn’t packed an umbrella and got soaked. One thing I hadn’t realised until watching the news the other day was that healthy grass actually absorbs water much quicker than parched grass – I had assumed like humans that the grass that’s been without water for days would drink it up rapidly. So while I’m not paid to give you my bad hunches on how weather works, the risk now is that the water just runs off the hard ground and leads to flooding. Let’s hope we can catch a break from this in the days ahead. Markets were also struggling to catch a break yesterday thanks to a succession of disappointing data releases that brought the risks of a recession back into focus. That marks a shift in the dominant narrative over the last couple of weeks, when there had actually been a small but growing hope that central banks might be able to execute a soft landing, not least after the much stronger-than-expected US jobs report for July. But ultimately, a number of leading indicators are still moving in the wrong direction, and yesterday’s releases served as a reminder that hard landings have historically been the norm when starting from a position as unfavourable as the present one. In terms of the specifics of those data releases, the more negative tone was set from the outset by the Chinese data we mentioned in yesterday’s edition, which showed that retail sales and industrial production for July had been weaker than expected by the consensus. But we then also got the Empire State manufacturing survey for August, which plunged to -31.3 (vs. 5.0 expected), thus also marking its worst performance since the GFC apart from April and May 2020 during the Covid lockdowns. Lastly, we then had the NAHB’s housing market index for August, which similarly fell to its lowest level since May 2020 at 49 (vs. 54 expected). That marked its 8th consecutive move lower, which comes against the backdrop of one of the most aggressive Fed tightening cycles in decades, with housing one of the most sensitive sectors to rate hikes. Growing fears of a slowdown led to a decent risk-off move across multiple asset classes, but one of the places that was most evident was in oil prices, where both Brent crude (-3.11%) and WTI (-2.91%) underwent sizeable declines on the day. In fact on an intraday basis, Brent crude traded at $92.78 per barrel at its lows, which exactly matches its previous intraday low on August 5, and prior to that you’ve got to go back before Russia’s invasion of Ukraine in late February for the last time that oil prices were trading lower. That decline in oil prices was offered further support by the latest developments on the Iran nuclear deal, where Iran sent its response to the European Union’s proposed text to revive the deal. While the specific contents of the response are unknown, it’s been reported by the semi-official Iranian Students’ News Agency that Iran expects a response back from the EU within the next two days, so there could be tangible progress this week. Furthermore, Iran’s foreign minister said that an agreement with the US could be reached in the coming days. That trend towards weaker oil prices has continued this morning as well, with Brent crude down a further -0.87% at $94.27/bbl, and WTI down -0.62% at $88.86/bbl. Whilst oil prices fell back yesterday, the seemingly inexorable move higher in European natural gas continued, with futures up +6.79% on the day to €220 per megawatt-hour, which is just shy of their March peak at €227. Prices have been bolstered by the latest European heatwave, which has seen rivers dry up and caused issues with fuel transportation, further compounding the continent’s existing woes on the energy side. That gloomy backdrop saw Germany’s government announce a levy of an extra 2.419 euro cents per kilowatt hour for natural gas, which comes as policymakers are hoping that measures to reduce demand will help the continent get through the winter. Meanwhile, German and French power prices for next year rose to fresh records yesterday, rising +3.67% and +3.24% respectively. In light of the decline in oil prices and the more general risk-off tone, sovereign bonds rallied on both sides of the Atlantic yesterday, and yields on 10yr Treasuries came down -4.3bps to 2.79%. Inflation breakevens led the bulk of that decline amidst the moves lower in commodity prices, with the 10yr breakeven down by -2.9bps, whilst the 2s10s curve (+2.1bps) remained firmly in inversion territory at -40.0bps, even as it underwent a modest steepening. For Europe there were even larger declines in yields yesterday, with those on 10yr bunds (-8.8bps), OATs (-8.1bps) and BTPs (-6.5bps) all moving lower on the day, which came as investors moved to price in a less aggressive ECB hiking cycle over the coming months, with the June 2023 implied rate down by -9.9bps on the day. In overnight trading, yields on 10yr USTs (-0.9bps) have posted a further decline to 2.78% as we write. One asset class that didn’t fit this pattern so well were equities yesterday, as they pared back their earlier losses to move higher on the day, building on a run of 4 consecutive weekly moves higher. In the US, the S&P had opened -0.54% lower, but reversed course to end the session up +0.40%, which brings its advances from its recent low in mid-June to more than +17% now. It was a fairly broad-based advance across sectors, and the NASDAQ posted a similar +0.62% gain as well, whilst in Europe, the STOXX 600 (+0.34%) also strengthened in the afternoon to post a 4th consecutive daily advance. Those moves in US and European equities have been echoed in Asia this morning, with the Hang Seng (+0.12%), Shanghai Composite (+0.24%), CSI (+0.13%) and the Kospi (+0.31%) all edging higher in early trade. The main exception is the Nikkei (-0.08%), which has lost ground modestly after reaching a 7-month high in the previous session. That said, there are signs that equities may be losing momentum as well this morning, with futures on the S&P 500 (-0.12%) and the NASDAQ 100 (-0.12%) both pointing lower following their strong run of gains recently. To the day ahead now, and data releases from the US include July’s industrial production, capacity utilisation, housing starts and building permits. In the UK, there’s unemployment for June, Germany has the ZEW survey for August and Canada has July’s CPI. Elsewhere, we’ll get earnings releases from Walmart and Home Depot. Tyler Durden Tue, 08/16/2022 - 08:20.....»»

Category: worldSource: nytAug 16th, 2022

Futures, Yields And Oil All Rise On Last Day Of Turbulent Week

Futures, Yields And Oil All Rise On Last Day Of Turbulent Week After several extremely volatile days, US equity futures are ending the week in the green (for now) with European equities snapping two days of declines sparked by the Federal Reserve’s plan for aggressive monetary-policy tightening, and Asian stocks trading higher. S&P 500 and Nasdaq 100 futures trimmed earlier gains to trade 0.3% higher as traders weighed the latest developments about the war in Ukraine. Contracts on U.S. stock benchmarks trim earlier gains as traders weigh developments about the war in Ukraine.Nasdaq 100 futures flat; S&P 500 futures +0.1%; Dow Jones futures +0.2%. The dollar rose for a 7th consecutive week and US Treasuries sold off across the curve; gold and bitcoin were flat. Oil was steady after three days of losses stoked by plans to release millions of barrels of crude from strategic reserves and China’s demand-sapping virus outbreak. Markets had a subdued session yesterday after sinking more than 4% in the previous two days as hawkish signals from the Federal Reserve sent Treasury yields surging. Among notable premarket moves, Robinhood slid 3% after Goldman Sachs, not too long ago the lead underwriter on the company's IPO, cut their rating on the stock to sell, saying softening retail engagement levels and profitability concerns will likely limit any outperformance. Some other notable premarket movers: Alcoa (AA US) is 1.2% lower as Credit Suisse analyst Curt Woodworth trims his recommendation to neutral as he views LME aluminum prices near peak levels. Quidel (QDEL US) gained in extended trading Thursday after it posted preliminary revenue for the first quarter that beat the average analyst estimate. CrowdStrike (CRWD US) advanced 4.1%. Analysts responded positively after management set a framework to reach $5 billion in annual recurring revenue (ARR) by 2026, during the cybersecurity company’s investor briefing. WD-40 (WDFC US) is poised to gain after producing a “solid” beat in the second quarter, Jefferies said, adding that an increased market share and new product launches would support volume growth of 3% in 2022. Kura Sushi (KRUS US) shares rose in postmarket trading after the restaurant chain reported a year-over-year jump in quarterly sales. ACM Research (ACMR US) edged lower in extended trading Thursday after saying in a release its first quarter revenue would be “significantly below” expectations, but reiterated full-year revenue guidance for 2022. U.S. stocks are on course to snap a three-week winning streak with investors shedding risk assets following indications from the Fed of a faster-than-expected pace of tightening in monetary policy. Concerns are also growing about the impact of high inflation and slowing economic growth on corporate earnings. The two-year Treasury yield rose five basis points and the 10-year yield climbed one point, reversing some of the curve steepening seen in the wake of the Fed minutes Wednesday, which outlined plans to pare the central bank’s balance sheet by more than $1 trillion a year alongside interest-rate hikes. Global equities are nursing losses for the week as markets grapple with the Fed’s campaign against elevated price pressures, Russia’s grinding war in Ukraine and China’s Covid travails. The lockdown in Shanghai -- which recorded more than 21,000 new daily virus cases -- has become one of President Xi Jinping’s biggest challenges. Expectations are growing that China will take steps to support its economy. “Stocks have had a little bit of a harder time this week digesting the fact that interest rates are going to be higher” amid a major shift in expectations around monetary policy, Anthony Saglimbene, global market strategist at Ameriprise Financial Inc., said on Bloomberg Television. Still, U.S. equities saw a second straight week of inflows at $1.5 billion, with large-cap and growth stocks outperforming small-cap and value sectors, according to Bank of America strategists. Marija Veitmane, a senior strategist at State Street Global Markets, also said stocks still appeared to be the safest option. “Cash gives you nothing with 7% inflation, bonds just had one of the worse quarters in history, and then if you look at stocks, we still have decent earnings outlook, and to me the biggest attraction is really strong balance sheets,” she said on Bloomberg TV. In the latest news out of Ukraine, dozens were killed Friday morning as Russian troops allegedly bombed civilians waiting at a train station to be evacuated from the Donetsk region. Meanwhile, U.S. officials warned that the war may last for weeks, months or even years, as Kyiv’s foreign minister pleaded for urgent military assistance. Here are the latest Ukraine war developments: Ukraine intends to establish up to 10 humanitarian corridors on Friday, those leaving Mariupol will need to use private vehicles. Ukrainian advisor Podolyak says negotiations with Russia continue online constantly, but the mood changed after Bucha events, via Reuters. Kremlin says it does not understand EU concerns about European countries paying for Russian gas in RUB, adds Commission President von der Leyen probably needs more information. On planned EU ban of Russian coal, says coal is in high demand. Special operation in Ukraine could be completed in the foreseeable future, given aims are being achieved and work is being carried out by peace negotiators and the military. EU ready to release EUR 500mln for arms to Ukraine, according to AFP citing EU chief. Russia says it has destroyed a training centre for foreign mercenaries within Ukraine, was located north of Odesa, via Tass. Japan's Industry Ministry plans to reduce Russian coal imports gradually while looking for alternative suppliers, according to Reuters. Ukraine PM says they have large stocks of grain, cereals and vegetable oil. Are able to provide themselves with food; this year's harvest will be 20% less YY. Ukraine gas grid warns that Russian actions could impact gas flows to Europe, via Reuters. On Thursday, St Louis Fed president James Bullard said he prefers boosting the policy rate to 3%-3.25% in the second half of 2022. Chicago Fed President Charles Evans and his Atlanta counterpart Raphael Bostic said they favor raising rates to neutral while monitoring the economy’s performance. The steepening in the Treasury yield curve contrasts with the flattening and inversions that have vexed markets this year. The two-year rate topped the 10-year last week for the first time since 2019, a possible warning of recession. “We’re seeing a tactical re-steepening right now but the curve is going to continue to flatten,” Kelsey Berro, fixed income portfolio manager at JPMorgan Asset Management, said on Bloomberg Television. “That’s because the Fed has told us, we’d like to get to neutral expeditiously. On top of that, they may need to tighten beyond neutral. Front-end yields can still go higher.” In Europe, Euro Stoxx 50 rallies over 1.8% before stalling while the Stoxx 600 index climbed 1.2% but drifted off best levels as investors took advantage of beaten-down stock valuations with energy, banks and autos the strongest-performing sectors. Banks outperformed as Banco BPM SpA surged after Credit Agricole SA bought a 9.2% stake in the Italian lender. An Asia-Pacific share index eked out a small increase.  Here are some of the biggest European movers today: Scout24 shares rise as much as 17%, the most intraday since December 2018, after a report that Hellman & Friedman, EQT and Permira have discussed taking the firm private. Banco BPM shares rise as much as 17% after Credit Agricole bought a 9.2% stake in the Italian lender, with Bank of America saying the deal is a reminder that real value should be based on fundamentals. Sodexo shares jump as much as 7.4%, their biggest single-day gain in a month, after RBC Capital Markets upgrades the French caterer to outperform from sector perform. K+S gains as much as 10% after JPMorgan double-upgraded the shares to overweight from underweight, seeing a very positive environment for fertilizers amid supply disruptions and high energy prices. Atlantia shares rise as much as 4.5% following a report in a Italian newspaper that the Benetton family and Blackstone may start their takeover offer for Atlantia at more than EU22 per share. Saab rise as much as 5% as SEB upgrades the shares to buy from hold on the Swedish defense firm’s sales potential in the coming decade in the wake of Russia’s invasion of Ukraine. Moncler shares rise as much as 4.2% after Barclays upgrades the Italian luxury company to overweight, citing an “attractive” defensive profile in the current environment. Genmab fall as much as 10%, the most since September 2020, after saying a tribunal decided in favor of Janssen Biotech over two issues surrounding the cancer drug daratumumab (Darzalex). Ahead of this weekend's French election, Macron's lead is shrinking: the current President led his rivals in the April 10 election with 26.2% support, down from 27.2% a day earlier, according to a polling average calculated by Bloomberg on April 8. Macron was 3.5 percentage points ahead of second-placed Marine Le Pen, down from 4.1 points. Asian stocks edged higher on Friday, poised to snap three days of declines as traders assessed the prospect of policy easing by Beijing.  The MSCI Asia Pacific Index erased early losses of as much as 0.4% to climb 0.2%. Chinese property and infrastructure-related stocks surged on hopes for fiscal as well as monetary easing as the government seeks to prop up growth.   For the week, the Asian benchmark was down 2% as investors turned cautious on risk assets after latest comments from the Federal Reserve suggested aggressive tightening lies ahead. Tech shares were hit hard in particular, with the MSCI Asia-Pacific Information Technology Index losing 4% this week, on track for its worst performance since end-January. “There appears to be speculation that monetary easing by the PBOC might be imminent,” said Kazutaka Kubo, senior economist at Okasan Securities. There are also expectations that once lockdowns are over, the economy could be supported by pent-up demand, he added.  Chinese authorities have repeatedly vowed to support the economy and markets in thet past few weeks, as rising Covid-19 infections and lockdowns darken the outlook for growth. The pledges have spurred bets that some form of monetary easing may come soon.  Movements in most national benchmarks in the region were modest on Friday, gaining less than 1%. Stocks in the Philippines and Indonesia outperformed, while Singapore shares fell.  Indian stocks gained after the Reserve Bank of India kept borrowing costs at a record low, while India’s 10-year bond yield hit 7% - the highest since 2019 - as the nation’s central bank boosted an inflation forecast. The central bank also announced the start of policy normalization as the pandemic’s impact fades. The S&P BSE Sensex climbed 0.7% to 59,447.18 in Mumbai to complete a second week of gains, while the NSE Nifty 50 Index rose 0.8%. Gauges of small- and mid-sized companies gained 1% and 0.9%, respectively. The Reserve Bank of India’s monetary policy panel held the benchmark rate at 4%, in line with predictions of all 36 economists surveyed by Bloomberg. RBI Governor Shaktikanta Das said the central bank will start focusing on withdrawal of banking liquidity accommodation to target inflation but such a move would be “multi-year” and carried out without disrupting the markets. “Equity markets will like the RBI’s continued focus on growth and its commitment to an accommodative stance,” said Abhay Agarwal, a fund manager at Mumbai-based Piper Serica Advisors Pvt.  The RBI’s commentary means adequate flow of liquidity will continue and immediate beneficiaries will be consumers who are borrowing to purchase real estate and autos, he added. All but one of 19 sectoral sub-indexes compiled by BSE Ltd. advanced, led by a gauge of power companies. Reliance Industries Ltd. was a key gainer on the Sensex, which saw 22 of its 30 components advance. The RBI has comforted markets by refraining from being aggressive, unlike its global peers, and by ensuring that the liquidity withdrawal will be gradual, Yesha Shah, head of equity research at Samco Securities wrote in a note.  “On the growth front, one can assume that the central bank expects private investment to ramp up now that capacity utilization has improved further,” she said, adding the policy lays the framework for a possible rate increase in coming reviews. Australian stocks advanced - the S&P/ASX 200 index rose 0.5% to close at 7,478.00 - supported by materials and industrial stocks. GrainCorp shares surged to a record high, after the firm upgraded its FY22 earnings guidance as high levels of rain in Australia lay a path for a bumper crop.  Platinum Asset plunged to an all-time low after the company reported net outflows of A$222 million in March. In New Zealand, the S&P/NZX 50 index was little changed at 12,066.27. In rates, Treasuries fell across the curve, with the front-end of the Treasuries curve pressured lower, flattening 2s10s spread by ~5bp as 2-year yields trade more than 7bp cheaper on the day at ~2.54%. S&P 500 futures near top of Thursday’s range, following bigger advance for European stocks after three straight declines. Yields across long-end of the curve are little changed on the day, as flattening extends out to 5s30s spread which is tighter by ~4bp; 10-year yields around 2.683%, cheaper by 2.5bp vs Thursday close; bunds and gilts outperform by 1bp-2bp in the sector. Bunds reversed opening gains, adding to a three-day run of declines; French debt underperformed bunds ahead of presidential elections beginning Sunday. The German curve bull-flattens, richening 2bps across the back end. Peripheral spreads widen to core with Italy underperforming. In FX, Bloomberg dollar index advanced a seventh consecutive day and neared the strongest level since July 2020 as the greenback advanced against all of its Group-of-10 peers apart from the Norwegian krone. The euro pared losses after touching a one-month low against the dollar in early London trading. The pound fell to the lowest in more than three weeks as bets for aggressive policy tightening by the Federal Reserve boost the dollar. Gilts rose across the curve as U.S. Treasury yields stabilized following the recent selloff. The Australian and New Zealand dollars were the worst-performing G-10 currencies; Australia’s yield curve steepened following a similar move in Treasuries on Thursday. Most Japanese government bonds rose, thanks to support from the central bank’s regular purchase operations. The yen briefly reversed early an Asia session loss after an ex-BOJ official said there’s likelihood of a policy shift as soon as this summer. Bitcoin is contained and unable to derive traction either way from the broader risk tone. Strike payment platform launches Shopify (SHOP) integration, which allows merchants to accept Bitcoin (BTC), according to Bloomberg. In commodities, crude futures trade within Thursday’s range; WTI holds above $96, Brent stalls near $102. Spot gold holds steady near $1,930/oz. Most base metals trade well: LME zinc and lead outperforming, tin lags. To the day ahead now. Central bank speakers include the ECB’s de Cos, Centeno, Panetta, Stournaras, Makhlouf and Herodotou. Italian retail sales for February and Canadian employment for March round out this week’s data. Market Snapshot S&P 500 futures up 0.5% to 4,517.00 STOXX Europe 600 up 1.4% to 461.27 MXAP up 0.2% to 176.33 MXAPJ up 0.3% to 584.66 Nikkei up 0.4% to 26,985.80 Topix up 0.2% to 1,896.79 Hang Seng Index up 0.3% to 21,872.01 Shanghai Composite up 0.5% to 3,251.85 Sensex up 0.9% to 59,558.63 Australia S&P/ASX 200 up 0.5% to 7,477.99 Kospi up 0.2% to 2,700.39 Brent Futures up 1.2% to $101.76/bbl Gold spot down 0.0% to $1,931.38 U.S. Dollar Index up 0.14% to 99.89 German 10Y yield little changed at 0.68% Euro down 0.1% to $1.0865 Top Overnight News from Bloomberg The Bank of Russia delivered a surprise cut in its key interest rate Friday, reversing some of the steep increase it made after the invasion of Ukraine as the ruble recovered. The central bank lowered the rate to 17% from 20% and said further cuts could be made at upcoming meetings if conditions permit EU countries agreed to ban coal imports from Russia, the first time the bloc’s sanctions have targeted Moscow’s crucial energy revenues. Japan is also looking to curb imports, in what could be a shift in policy from one of the world’s largest energy buyers The EU is aiming to lock in progress on trade and technology disputes with the U.S. during President Joe Biden’s first term amid concerns that any gains could otherwise be easily reversed The relationship between Australia’s equities and currency has become the closest in a decade as commodity prices surge. The 180-day correlation between the country’s stock benchmark and the Australian dollar has climbed to the highest level since late 2011, according to data compiled by Bloomberg. The strengthened ties come as rallies in materials from oil to iron ore have boosted both the nation’s equities and the Aussie The ECB will look past threats to economic growth from the war in Ukraine, ending asset purchases in the summer and setting the stage for a first interest-rate increase in more than a decade in December, according to a survey of economists Junk bond sales across Europe are experiencing their longest drought in more than 10 years, as the Russian invasion of Ukraine and the prospect of rising interest rates neuter risk appetite A more detailed look at global markets courtesy of Newsquawk: Asia-Pacific stocks were choppy and eventually conformed to a mixed picture; some weakness was seen shortly after the Chinese cash open. ASX 200 bucked the trend and was propped up by its energy and gold names. Nikkei 225 was choppy and moved in tandem with action in USD/JPY whilst the KOSPI was weighed on by its chip and telecoms sectors. Hang Seng remained pressured by losses across its large constituents - Alibaba and JD.com. Shanghai Comp swung between gains and losses but overall remained supported by reports from China's Securities Journal which noted of a potential PBoC RRR in Q2. Top Asian News Hong Kong Tycoons Heed China, Endorse John Lee to lead City Chinese Tech Stocks Fall as Tencent Shuts Game Streaming Site Abu Dhabi’s IHC Invests $2 Billion in Billionaire Adani’s Empire ADDX Rolls Out Private Market Services for Wealth Managers European bourses are firmer across the board, Euro Stoxx 50 +1.5%, bouncing in a morning of quiet newsflow with the broader tone modestly risk-on. Albeit, benchmarks are still negative on the week and some way from earlier WTD peaks; unsurprisingly, sectors are all in the green with defensive-bias names lagging. Stateside, futures are similarly in the green, ES +0.2%, though magnitudes are more contained ahead of a limited US schedule to round off the week. Top European News U.S. Sanctions Russian Miner Producing 30% of World’s Diamonds Atlantia Gains After Reports of Offer Price Above EU22/Share Generali CEO Says He Won’t Change Plan Challenged by Investors Baader Downgrades Six Chemical Firms, Citing Ukraine War In FX: DXY touches 100.000 as US Treasury yields continue to soar and curve steepen, but unable to break barrier. Kiwi underperforms awaiting NZIER Q1 survey, while Aussie holds up better after hawkish warning in RBA FSR; NZD/USD around 0.6950, AUD/USD nearer 0.7460. Yen sub-124.00 as Japanese export supply is absorbed, Euro supported by bids circa 1.0850 and Sterling treading water above 1.3000. Rouble relatively resilient in the face of 300 bp CBR rate reduction as it remains above pre-conflict highs. Fixed income: Choppy trade in bonds approaching the end of another very bearish week. Bunds and Gilts nurse losses mostly above par around 157.00 and 120.00 handles vs fresh cycle lows of 156.40 and 119.83. US Treasuries most seeing red, but curve less steep in correction after hawkish FOMC minutes and Fed commentary, via Brainard and Bullard especially Central Banks: RBA Financial Stability Review: important that borrowers are prepared for an increase interest rates; global asset markets are vulnerable to larger-than-expected rate increases, via Reuters. RBI leave rates unchanged as expected, retains "accommodative" stance as expected; will focus on withdrawing accommodation going forward. RBI is to restore LAF corridor to 50bps and floor to be constituted by SDF, according to Reuters. CBRT April survey sees Turkish End-Year CPI at 46.44% (prev. 40.47%) CNB Minutes (March): Dedek and Michl voted in the minority for stable rates. Board assessed risks and uncertainties of winter forecast as being markedly inflationary, particularly in short-term CBR cuts its Key Rate to 17.00% (prev. 20.00%) as of April 11th; holds open the prospect of further key rate reduction at its upcoming meetings. In commodities, WTI and Brent are bolstered amid broader sentiment, though crude/geopolitical specific developments have been limited In-fitting with equities, the benchmarks are negative on the week and some way shy of best levels as such. New York will suspend the state gas tax from June 1st to December 31st, according to Reuters. Barclays raises oil forecasts by USD 7-8/bb assuming no material disruption in Russian supplies beyond Q2 2022, according to Reuters. Spot gold is marginally firmer, but, remains drawn to USD 1930/oz after marginally eclipsing the level overnight; base metals bid in-line with sentiment. US Event Calendar 10:00: Feb. Wholesale Trade Sales MoM, est. 0.8%, prior 4.0% 10:00: Feb. Wholesale Inventories MoM, est. 2.1%, prior 2.1% DB's Henry Allen concludes the overnight wrap Yesterday’s ECB minutes reinforced what we learned from the March FOMC minutes and soon-to-be Vice Chair Brainard earlier this week – there are no doves in fox holes – by casting doubt on the likelihood of inflation returning to target this year. We also heard from St. Louis Fed President Bullard, the hawk leading the charge, who called for a fed funds rates above 3% this year. That would beckon a faster pace of hikes along with more aggregate tightening. Regional Presidents Bostic and Evans, non-voters each, meanwhile, want to get rates to neutral. The tighter path of global policy continued to drive sovereign yields higher and equity indices lower. Market-implied ECB policy rates by the end of the year increased +6.0bps to +62.3bps, the highest level this cycle. Sovereign yields rose to multi-year highs of their own, with those on 10yr bund (+3.4bps), OATs (+4.4bps) and BTPs (+3.5bps) moving higher, with 10yr breakevens falling in Germany (-1.9bps) and France (-0.7bps) for the first time in five days, while Italian breakevens were essentially flat (+0.2bps). Meanwhile, fed funds futures by end-2022 staged a slight retreat, falling -1.2bps to 2.50%, albeit +10bps higher than a week ago. While the probability of a +50bp hike in May remained steady at 85.4%. 2yr yields fell in line, declining -1.2bps, while 10yr Treasuries gained +6.0bps, leaving the curve at +19.2bps. If you’re up on the yield curve discourse, you’ll know the Fed discounts the signal coming from 2s10s, instead preferring shorter-dated measures of the yield curve, which wound up flattening yesterday. Yesterday’s yield curve steepening should not be viewed in a vacuum. The 2s10s curve has taken a 58.3bp round trip over the last two weeks, falling from +23.1bps two weeks ago, to -8.0bps last Friday, to +19.2bps at yesterday’s close. The fundamental outlook hasn’t changed dramatically over that time span. Instead, this likely reflects the elevated rates volatility environment we currently sit in. This, all before QT has even begun. Real Treasury yields continue to march higher in the back end, with 10yr real yields gaining +5.3bps to -0.19%, their highest level since March 2020, having gained +25.1bps this week alone, and +91.3bps YTD. Despite higher rates and more restrictive language, the S&P 500 ended the day +0.43% higher, after losing -2.21% the previous two sessions. The S&P 500 is now -5.58% YTD following the massive repricing of Fed expectations, while the Bloomberg Financial Conditions index is just a hair tighter than the post-2010 average. Monetary policy may need to adjust tighter yet to engineer the demand slowdown commensurate with a return of inflation to target. European equities were modestly lower, with the STOXX 600 slipping -0.21% and the DAX down -0.52%. The CAC (-0.57%) underperformed the STOXX 600 for the seventh consecutive session, on the back of growing Presidential election jitters. Polls between President Macron and his closest rival, Marine Le Pen, tightened. In particular, one poll (caveat emptor) from Atlas actually put Le Pen marginally ahead of Macron in a head-to-head runoff for the first time, by 50.5%-49.5%. The news immediately saw the French 10yr spread over bund yields widen in response, ending the day at 54.2bps, its widest since March 2020. While one poll a race does not make, it’s worth noting the broader poll narrowing over the last month. That has seen Macron’s lead in the first round over Le Pen go from 30%-17% a month ago (according to Politico’s average), to just 27%-22% now. In the second round, polls are likewise pointing to a tight contest, with Macron ahead of Le Pen by 52-48% (Ifop) and 53%-47% (Ipsos). For those looking for more details on the presidential race, DB’s Marc de-Muizon put out a guide yesterday (link here), where he looks at the current state of play in the election, the main aspects of both Macron and Le Pen’s programmes, as well as some potential challenges for both candidates. Back to the US, in a rare show of bi-partisanship, the Senate voted 100-0 to discontinue normal trade relations with Russia and Belarus and to ban Russian oil imports. Brent crude prices fell below $100/bbl for the first time since mid-March intraday, ultimately falling -0.48% to close at $100.58/bbl. The EU also moved to include a Russian coal embargo in its fifth round of sanctions. The opprobrium was global, with the UN General Assembly voting to suspend Russia from the Human Rights Council following its human rights violations, the first such suspension since Libya in 2011. On the ground, the Kremlin admitted to enduring heavy troop losses, and while the locus of the war still seems set to shift eastward, Ukrainian commanders have their guard up for a renewed assault on Kyiv. Elsewhere, Judge Ketanji Brown Jackson was confirmed to the Supreme Court. It’s expected the Senate will now turn to approving President Biden’s nominations for the Fed Board of Governors later this month, which will still have one empty seat following Sarah Bloom Raskin withdrawing her nomination. Asian equity markets this morning aren’t matching Wall Street’s resilience from yesterday. The Hang Seng (-0.57%) is leading the moves lower with the Nikkei (-0.08%), Kospi (-0.10%), Shanghai Composite (-0.06%) and CSI (-0.10%) all slightly on the wrong foot. Along with tighter global monetary policy, China’s Covid outbreak is worsening and dragging on sentiment. US stock futures are unperturbed, with S&P 500 and Nasdaq futures virtually unchanged. Meanwhile, the aforementioned rates volatility continues to rear its head, with the curve snapping back flatter as we go to press, with 2yr Treasuries +4.2bps higher and the 10yr a bit softer at -0.5bps. Oil prices are extending their decline this morning with Brent futures (-0.74%) sliding below $100/bbl. On the data side, Japan’s current account swung back to surplus in February to +¥1.6 trillion, following a -¥1.2 trillion deficit in January - the second-biggest deficit on record. The main release yesterday came from the US weekly initial jobless claims, which fell to their lowest level since 1968, with just 166k initial claims in the week through April 2 (vs. 200k expected). In addition, the previous week was revised down to 171k from 202k, which left the smoother 4-week moving average at 170k, the lowest ever in the entire data series going back to 1967. Euro Area retail sales grew by +0.3% in February (vs. +0.5% expected), and German industrial production grew by +0.2% that same month, in line with expectations. To the day ahead now. Central bank speakers include the ECB’s de Cos, Centeno, Panetta, Stournaras, Makhlouf and Herodotou. Italian retail sales for February and Canadian employment for March round out this week’s data. Tyler Durden Fri, 04/08/2022 - 07:51.....»»

Category: blogSource: zerohedgeApr 8th, 2022

TSMC may see 5nm capacity utilization drop below 70% in 2Q23

TSMC's capacity utilization for 5/4nm process nodes, which will fall to about 75% in the first quarter of 2023, may drop below 70% in the second quarter, according to industry sources......»»

Category: topSource: digitimesJan 19th, 2023

Investors Should Watch These 4 Hospital Stocks Despite Headwinds

Rising costs amid inflationary pressures are trimming margins for the Zacks Medical-Hospital industry players. Yet, HCA Healthcare (HCA), Universal Health (UHS), Acadia Healthcare (ACHC) and Tenet Healthcare (THC) are poised to win big with improving volumes. The operating environment for hospital companies is improving with increasing non-Covid utilization, outpatient surgeries and patient days. Staffing challenges are expected to decrease this year. However, recession fears, inflation and resultant escalating costs are eating up Zacks Medical-Hospital industry players’ margins. Growing competition in this market remains a common theme. Technological innovations and adoptions are expected to continue boosting hospital companies’ efficiency and generating cost savings. Leading industry players like HCA Healthcare Inc. HCA, Universal Health Services Inc. UHS, Acadia Healthcare Company, Inc. ACHC and Tenet Healthcare Corporation THC are set to benefit from these developments.About the Industry The Zacks Medical-Hospital industry comprises for-profit hospital companies that provide healthcare through different types of hospitals, such as acute care, rehabilitation and psychiatric. These hospital entities are engaged in internal medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and obstetrics, telehealth services, mental health care and diagnostic and emergency services. Revenues of these companies depend on inpatient occupancy levels, medical and ancillary services ordered by physicians and provided to patients, and the volume of outpatient procedures. These hospital companies receive payments for patient services from the government under the Medicare program, Medicaid or similar programs, managed care plans (including plans offered through the American Health Benefit Exchanges), private insurers and directly from patients.4 Key Trends to Watch in the Hospital IndustryImproving Volumes: Going ahead, non-COVID admissions are expected to continue rising as the intensity of COVID-related utilization of resources declines. Demand for elective procedures is expected to drive patient volumes. Growth in admissions, outpatient surgeries and Medicare reimbursements and deferred procedures can support hospital companies' revenues. However, inflationary pressures and financial constraints can force patients to delay addressing some non-emergency medical needs. The benefits of the Affordable Care Act and similar safety nets can provide customers with some respite, which can help patients navigate tough times.Increasing Expenses: With rising patient volumes, operating costs are bound to go up. High salaries, wages and benefits and increasing costs of hospital supplies due to inflation will likely reduce margins. Also, growth-project investments will keep expenses elevated, putting pressure on the bottom line. Even though labor shortages are expected to keep creating headaches for the industry players, the situation is expected to improve in the coming days. Moreover, renegotiating contracts with suppliers and vendors will provide an impetus.Growth in the Elderly Population: Steady advancements in science, nutrition and healthcare enable the senior population to witness constant growth. This can result in rising demand for hospital services in the long term. The U.S. Census Bureau’s revised report suggests that individuals above 65 years are projected to be one of the fastest-growing segments of the country’s population, reflecting a climb from 17% in 2020 to 21% in 2030. This demographic change and the rising incidence of diseases will likely be industry drivers. Plus, the increasing number of people signing up for healthcare plans through the Affordable Care Act indicates fewer challenges to visiting hospitals in the future.Technological Improvements: Technological innovations, improvements and wider adoption will continue to be a major theme in the hospital space. The trend should optimize hospital services, minimize unnecessary expenses and enhance the patient experience. The COVID-19 pandemic triggered the adoption of telehealth and telemedicine services, which will likely rise in the future. The industry players are leveraging AI and automation along with real-time analytics to provide quality care. AI helps improve clinical workflow management and medical diagnosis that hospitals utilize. The companies are using the virtual health domain to heighten their efficiency by limiting the patients’ waiting time and trimming their treatment costs.Zacks Industry Rank Indicates Bearish OutlookThe group’s  Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates dull near-term prospects. The Zacks Medical-Hospital industry, which is housed within the broader Zacks Medical sector, currently carries a Zacks Industry Rank #216, which places it in the bottom 14% of nearly 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are pessimistic about this group’s earnings growth potential. The industry’s earnings estimates for 2023 have declined 19.1% in the past year. Given the lackluster near-term prospects, companies in the space are expected to take a hit.Before we present the stocks that you may want to watch, let’s take a look at the industry’s recent stock-market performance and valuation picture.Industry Outperforms S&P 500 & Sector The Zacks Medical-Hospital industry has fared better than the Zacks S&P 500 composite as well as its broader sector over the past year. During this time period, the stocks in this industry have declined 0.5% compared with the S&P 500’s fall of 14.1% and the Zacks Medical sector’s decrease of 10.4%.One-Year Price PerformanceIndustry's Current ValuationOn the basis of the trailing 12-month EV/EBITDA (Enterprise Value/ Earnings Before Interest Tax Depreciation and Amortization) ratio, which is commonly used for valuing hospital stocks, the industry trades at 8.21X compared with the S&P 500’s 12.09X and the sector’s 8.37X.Over the past five years, the industry has traded as high as 8.75X, as low as 5.57X and at a median of 7.76X as the charts below show.EV/EBITDA Ratio (Past 5 Years)4 Stocks to Watch ForWe are presenting four stocks with a Zacks Ranks #3 (Hold) from the Medical-Hospital industry.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. HCA Healthcare: The company provides services via surgery centers, free-standing emergency rooms, physician clinics and urgent care centers. HCA’s inorganic growth strategies enable it to persistently increase patient volumes, expand its network across several markets and add more hospitals in its portfolio. The company has been gaining from its telemedicine business line. HCA Healthcare also focuses on boosting shareholders’ value with dividend hikes and buybacks.The Zacks Consensus Estimate for HCA Healthcare’s 2023 EPS indicates 7.2% year-over-year growth. The consensus mark for its revenues in 2023 signals 3.8% increase from a year ago. HCA beat earnings estimates twice in the past four quarters and missed on two occasions, the average surprise being 2.3%. Shares of the company have jumped 8.4% in the past month.Price & Consensus: HCAUniversal Health Services: The company focuses on behavioral indications like autism, eating disorders, sexual trauma and disorderliness in the military through its patriot support program. This segment holds immense scope for growth in the days ahead, considering the dire need to address behavioral health issues triggered by the pandemic. UHS’ plans to add new capacities in hospitals in important markets of Texas and California to address strong acute care demand are expected to be major tailwinds. It has a strong share buyback plan in place to boost shareholder value.The Zacks Consensus Estimate for Universal Health’s 2023 bottom line indicates 8.7% year-over-year growth. The consensus mark for its revenues in 2023 signals 4.4% increase from a year ago. UHS beat earnings estimates thrice in the past four quarters and missed on one occasion, the average surprise being 0.7%. Shares of the company have risen 9.9% in the past month.Price & Consensus: UHSAcadia Healthcare: ACHC provides behavioral healthcare services in the United States and Puerto Rico. It has been emphasizing on buyouts and new additions for robust growth. Acquisitions added facilities, beds and hospitals to Acadia Healthcare’s network and contributed to its top line. It is also actively pursuing joint ventures with renowned healthcare systems, which is helping it expand its capabilities through bed additions. The company is expected to have added a total of roughly 300 beds in 2022. Its moves to streamline its portfolio boost operating efficiency and profitability.The Zacks Consensus Estimate for ACHC’s 2023 bottom line indicates 6.9% year-over-year growth. The consensus mark for its revenues in 2023 signals 8.9% increase from a year ago. ACHC beat on earnings twice in the last four quarters, met the mark once and missed estimates on another occasion, the average surprise being 3.5%. Shares of ACHC have increased 3.9% in the past month.Price & Consensus: ACHCTenet Healthcare Corporation: THC, with its subsidiaries, provides healthcare services, primarily through general hospitals and related healthcare facilities. It has made multiple acquisitions, forged partnerships and strategic alliances to augment the scale of business, operating capacity and geographical presence. Tenet Healthcare’s performance has been kindled by USPI Holding Company’s (Ambulatory Care) operations.The Zacks Consensus Estimate for THC’s 2023 bottom line is pegged at $5.56 per share, which remained stable over the past month. The consensus mark for its revenues in 2023 signals 4.6% increase from the prior year. Tenet Healthcare beat earnings estimates in each of the past four quarters, the average surprise being 69.9%. Shares of the company have risen 18.6% in the past month.Price & Consensus: THC 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 HCA Healthcare, Inc. (HCA): Free Stock Analysis Report Universal Health Services, Inc. (UHS): Free Stock Analysis Report Tenet Healthcare Corporation (THC): Free Stock Analysis Report Acadia Healthcare Company, Inc. (ACHC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 17th, 2023

Top CEOs Give Their Predictions for the Year Ahead

Global leaders in business and policy-making are heading to the Swiss Alps this week for the World Economic Forum’s annual meeting in Davos. TIME will be there too, hosting events and reporting on all the best panel discussions—and parties. On that note, be on the lookout for special editions of the Leadership Brief in your… Global leaders in business and policy-making are heading to the Swiss Alps this week for the World Economic Forum’s annual meeting in Davos. TIME will be there too, hosting events and reporting on all the best panel discussions—and parties. On that note, be on the lookout for special editions of the Leadership Brief in your inbox this week, featuring Davos diaries from Senior Editor Ayesha Javed and Staff Writer Yasmeen Serhan. This week’s Davos confab is sure to be more sobering than most. Chief executives are worried about economic downturn, inflation, COVID-19, geopolitical instability, supply chain disruptions, and labor shortages as major disruptors to their companies’ operations this year, according to a survey released last week by the Conference Board. These pressing issues, and the increasing urgency of addressing—and reacting to—climate change “are converging to shape a unique, uncertain and turbulent decade to come,” according to the World Economic Forum’s own recent survey of leaders. [time-brightcove not-tgx=”true”] TIME Editor Jennifer Duggan delved deeper into some of those concerns, as she recently spoke with CEOs of some of the TIME100 Most Influential Companies of 2022—including Rosalind “Roz” Brewer of Walgreens Boots Alliance, Ben Minicucci of Alaska Airlines, David Velez of Nubank, David Ko of Calm, Mariana Matus of Biobot Analytics, and Christoph Gebald of Climeworks—about confronting challenges in the year ahead. Read their business predictions for the year ahead below. Finally, you can now join that esteemed TIME100 Companies community. The application period for the TIME100 Most Influential Companies of 2023 has officially begun. Apply here! -John Simons, Executive editor (These answers have been condensed and edited for clarity.) How do you see your role as a leader evolving over the coming year? Roz Brewer, CEO of Walgreens: I am a long-time believer that every truly exceptional organization understands that culture needs to be at the center of their success. In 2023 and beyond, connections to companies’ culture and values will be a key driver of motivation for their workforce more than ever. It will become table stakes as we rephrase the corporate environment and the new culture that will be required. As leaders, we will need to listen more not just to our employees, but also be more responsive to the needs of our wider communities. A year or two ago, I didn’t realize how much my day job as CEO would mean to the employees. As the world faces many trials and tribulations, people want to hear from CEOs and other company leaders on certain issues that affect us all. In 2023, the CEO needs to be a very broad-spectrum leader. Delivering shareholder value is paramount. However, I’m realizing more and more that I have to take my position as CEO and make it even more meaningful, not just to this company, but outside of it as well. Christoph Gebald, CEO of Climeworks: We follow the teachings of science and we always try to do our best and do it in a very authentic way. We have core values and I think this is becoming ever more also part of modern business and leadership teachings—that being authentic and also having times of showing vulnerability makes you more accessible to people. Personally I feel this is a very important aspect and particularly in the current macro economic environment. Ben Minicucci CEO of Alaska Airlines: As a leader, one of my top priorities going into 2023 is the mental wellness of our people. The last three years have been extremely stressful so we launched our Care Retreat, a daylong retreat where we bring guest-facing employees and leaders to realign our values. Mental wellbeing isn’t something you can see, but it can have a huge impact on people. For 2023, my focus is on leaning into our value of care and supporting our people, who can in-turn support our guests. Elaine Thompson—APAlaska Airlines President Ben Minicucci in Seattle, on Feb. 13, 2020. Minicucci became CEO in Nov. 2020. Amanda Baldwin, CEO of Supergoop!: What I’ve learned as a CEO of an entrepreneurial business is that change is the only constant, and agility and a willingness to learn and adapt are essential, and energizing. The reality is that one does not know what lies around the next corner, but you can’t lead from a place of fear, you have to lead from a place of being aware of what might happen, being prepared and still pushing ahead. Courtesy of Supergoop!Supergoop! CEO Amanda Baldwin David Vélez, founder and CEO of Nubank: My biggest push as a leader will be to increase pace and quality of execution across the organization while increasing motivation and engagement. This means doubling down on mission communication as well as prioritizing activities and efforts that drive that mission. Do less, remove distractions, and create an environment of focus. David Ko, CEO of Calm: The CEO role has evolved tremendously in the 15 plus years since I stepped into my first C-level position. In the past few years, COVID-19’s impact has required us to reshape our businesses from top to bottom and reevaluate what our teams need from us. As we head into another challenging year globally with economic uncertainty, financial stress and loneliness, more people than ever are relying on us for help. CEOs have to rethink innovation to meet people where they are, with the tools they need in this new world. And, we have to be advocates for new policies, empower our employees, and set a clear vision and purpose for the future. This is where I see myself spending most of my time in 2023. What are the biggest opportunities and challenges you expect in the year ahead? Mariana Matus, CEO and Cofounder of Biobot Analytics: Between the ongoing impacts of climate change, increased global mobility, and greater proximity between humans and animals, public health challenges will only grow more severe and complex in the years to come. The “tripledemic” we currently face – COVID, RSV, the flu – and the stresses it places on our healthcare infrastructure will carry over into 2023. This will be a focus for us over the next year as we add RSV and influenza products to our wastewater intelligence platform. As another example, we recently launched our High Risk Substance platform, which provides unbiased, naturally anonymized data on community use of fentanyl, methamphetamine, cocaine, xylazine, and nicotine. One community we worked with was able to reduce opioid overdoses by about 40% through improved resource allocation and more targeted public health messaging. We are excited to see this work grow in 2023. One of the larger challenges in 2023 and the years ahead will be maintaining high levels of government investment in pandemic preparedness and public health. Typically, funding increases during a crisis and then shrinks when the crisis has passed. However, in order for our country and the rest of the world to better anticipate the next pandemic or biothreat, governments need to invest sustained resources into national and international public health systems that include innovative approaches to disease monitoring, like wastewater intelligence. Brewer: The biggest challenge and opportunity are one and the same: affordable, accessible healthcare in the United States. This is a huge problem to solve for in the U.S. and in the year ahead, there will remain an opportunity to help fill in the gaps and reimagine local healthcare. Healthcare is fragmented and difficult to navigate. Walgreens is changing the healthcare experience, driving better care and outcomes at a lower cost for both patients and the broader healthcare system. We’re bringing together the disconnected parts of the healthcare system to keep patients connected to the care they need, how they need it. Gebald: It’s very often referred to as the biggest challenge humanity ever had, which is the climate crisis. However, of course the current macroeconomic situation is a tricky one. My hope is that climate action will not fall off the table. With an economic slowdown and recession ahead of us, companies will investigate how they spend money and they might need to do some streamlining. Of course, climate action could be one of the aspects a board of a large corporation might consider not the most important thing to achieve at least for short term business targets. Nevertheless, hopefully companies do understand that investing and climate action will make them a more profitable or more competitive firm. Courtesy of ClimeworksClimeworks CEO Crhistoph Gebald Minicucci: The biggest opportunity for us next year is getting back to 2019 capacity levels, followed by growth. We’ve learned a lot in the past three years. We’ve improved our hiring, our operation, secured five labor contracts in 2022 and built a five-part plan for 2023. In terms of challenges, there’s a lot of uncertainty out there—with a war in Ukraine, fuel prices, inflation, and signs pointing to a possible recession. We have a solid plan going into 2023 that is flexible and is one that we’re able to accelerate or decelerate, based on what we see in our environment and economy. Ko: One of the greatest opportunities we have is to continue normalizing mental health conversations and expand access to resources that can help. We’ve seen great strides in the past few years with public figures and younger generations coming forward discussing their mental health journeys openly and honestly. I hope this continues so people feel empowered and comfortable to get the help they need. The average delay between the onset of symptoms of mental health challenges and treatment is 11 years. We have to change this statistic. There are too many people suffering in silence. Courtesy of CalmCalm CEO David Ko The biggest challenge we face in the years ahead is the lack of mental health professionals to support all the people who need help. 122 million people live in areas with a mental health professional shortage, and of the 3,000 counties in the U.S., 60% have no psychiatrists at all. This is where we hope Calm can fill a necessary gap. Calm Health is our newest product, built to offer a digital mental healthcare solution to payors and providers. It will provide mental health screenings, condition-specific clinical mental health programs, medication management, and more to get the right mental health resources to the people that need it. Velez: 2022 has been a year of tremendous growth for Nubank: we registered profit for the first time with record revenues and now have over 70 million customers across Brazil, Mexico and Colombia. Yet, we are still in the early stages of our journey and with huge growth opportunities ahead. In Brazil, around 40% of the adult population is a Nubank customer, but we have the opportunity to grow our market share across different verticals, having expanded our portfolio to many more products in 2021/2022. Mexico and Colombia, together, have the potential to be even bigger than Brazil. Getting to the fair share in every product vertical is the largest growth opportunity we are focused on. The largest challenge will be to appropriately pace this share growth across a number of different products that are more or less dependent on the macroeconomic picture. What economic shifts are you expecting next year and how are you preparing for them? Minicucci: We’re a domestic airline so what happens in the U.S. impacts us. We can pull several levers, including slowing down utilization of aircraft, pushing deliveries of airplanes and decelerating as needed. Alaska has a strong balance sheet and plenty of liquidity, and a mitigation strategy in place if we need to use it next year. Still, our plan is to grow next year and to get through whatever financial downturn we may see. Brewer: It’s likely we will continue to face a period of macroeconomic challenges. Inflation has been running high and while I expect that to subside over time, it is a top concern among many consumers. Additionally, I expect the heightened interest rates and financing costs will continue to put pressure on consumer spending, particularly for larger ticket items. At Walgreens Boots Alliance, we have a resilient business. Our front-end assortment is less dependent on discretionary and large ticket items, unlike big box retailers. And health and wellness will always be a priority as consumers take a more proactive approach to their own health and wellbeing. Consumers are continuing their average spending levels versus one year ago but are doing so by saving less and taking on more debt. Shoppers are also looking for deals, reducing units, and slowly switching to owned brands. Ko: We expect next year’s economic shifts to greatly impact the world’s mental health. Our mission at Calm is to meet everyone on every step of their mental health journey, and that means offering a range of resources for individuals to find the support they need, when they need it. We know a traditional twenty minute meditation session isn’t going to work for everyone, so we are investing in short-form evidence-based content, between three to five minutes, designed to help relieve stress and anxiety in the moment. Whether someone is experiencing a panic attack, difficult emotions, negative thought spirals and more. This year we launched Overcome Stress and Anxiety with Dr. Julie Smith, and will continue to build this library of content next year. Vélez: It is the market expectation that 2023 will be equally—if not more—challenging than this year. The global macroeconomic environment will likely be impacted by inflation and high-interest rates, leading to slower economic growth. But it’s important to remember that the macroeconomic environment has not changed the fundamental and secular factors that have contributed to our growth. Those tailwinds keep strong and we have grown consistently across all business metrics throughout the year. Having IPOed in December 2021, we enter this cycle stronger and well-capitalized. The important point now is to focus on what we can control—our daily performance, our results, the opportunities ahead. As for the things that we can’t control, focus on how to react and be prepared. Entering this environment with a strong capital position, as well as a more efficient structure will definitely help capitalize on potential opportunities that might come up. How will the labor market evolve and what changes should workers expect in the coming year? Alaska: We’re seeing improvements in the labor market compared to what we saw earlier in the pandemic. Our ability to hire and attract new talent has improved and we’re seeing more stability and equilibrium than we’ve seen in the past two years. In 2023, I think we’ll see a balance of employees working in the office and working from home, which has evolved at Alaska Airlines since the start of the pandemic. Our company is all about creating connections and what we know is that our employees still want to connect with one another in person. On the guest front, we’re seeing our customers taking advantage of flexible work-from-home policies, which is helping people balance their quality of life. As one example in the airline industry, we’re seeing that Tuesdays and Wednesdays are no longer slow travel days. Historically Fridays and Sundays were the busiest travel days of the week. Today the peaks have diminished and have spread across the week and that’s because more people are traveling while they’re WFH. Over Thanksgiving, they may start their Thanksgiving break three days earlier and work from their out-of-town family’s home. Vélez: We will see a consolidation of the hybrid model. At Nubank, it has been surprising how quickly the company adapted to remote work during the pandemic, and consequently developed better, more efficient and productive working dynamics. We have created new spaces in our offices that foster integration and more productive face-to-face interactions. Additionally, I think that—more than ever—the labor market will prioritize companies with strong values and culture, that keeps them engaged and foster a strong sense of ownership. Ko: This is the tightest labor market we’ve seen in decades, and it’s uncertain what 2023 will bring, but one thing is clear: businesses have to prioritize the mental health of their workforce. Not just to differentiate themselves from competitors but because companies will play a critical role in mental health moving forward. The U.S. Surgeon General recently released a Framework for Workplace Mental Health and Well‑Being that demonstrates the foundational role employers will play in promoting and protecting the mental health of employees and their families. Brewer: There is a new set of expectations from the global workforce coming out of the pandemic and a new set of prerequisites: flexibility and choice. Remote work is a big part of that—it looks very different depending on what your workforce and the different segments of that population. Strong culture is also key, and shared purpose as the foundation of your employer/employee relationship is also critical in attracting talent......»»

Category: topSource: timeJan 15th, 2023

4 Coal Stocks to Watch From the Challenging Industry

Despite the expected drop in United States coal production volumes, high-quality coal producers like Peabody Energy (BTU), Alliance Resource Partners (ARLP), CONSOL Energy (CEIX) and Warrior Met Coal (HCC) are likely to remain competitive with improving export volumes. The Zacks Coal industry stocks staged a rebound in 2022 courtesy of global demand and surging natural gas prices. However,  in 2023 demand for coal may suffer due to lesser coal utilization in the United States to produce electricity, planned retirement of coal units and utilization of more renewable sources for electricity generation. The ongoing transition, with utility operators steadily phasing out coal units, will adversely impact the coal industry. Then again, the persisting conflict between Russia and Ukraine is creating fresh demand from coal-importing countries. Hence, coal export from the United States is expected to improve in 2023 from the year-ago level.Even in case of a drop in coal production, low-cost coal producers like Peabody Energy Corporation BTU should benefit from their met coal and thermal coal production. With improvement in global steel production Alliance Resource Partners L.P. ARLP , CONSOL Energy CEIX and Warrior Met Col Inc. HCC are expected to gain.About the IndustryThe Zacks Coal industry comprises companies involved in the discovery and mining of coal. Coal is mined by either the opencast or the underground method. The commodity is valued for its energy content and used worldwide to generate electricity, and manufacture steel and cement. Per the U.S. Energy Information Administration (“EIA”) report, the current U.S. estimated recoverable coal reserves are about 252 billion short tons, of which about 58% is underground mineable coal. Given the current production rates, coal resources are likely to last many more years. Five states in the United States contribute nearly 70% of yearly production and 60% of coal production from surface mining. Per EIA, the demand for coal will decline due to the usage of more renewable assets and a gradual shutdown of coal-powered generation units, hurting the prospects of the coal industry.3 Trends Likely to Impact the Coal IndustryNew Emission Policy to Hurt Coal Industry: The improvement in demand for coal is short-lived as the new environmental policy will target 100% carbon pollution-free electricity by 2035, which will significantly lower the demand for coal from the U.S. electricity space. Per EIA, coal-fired electricity generation would drop from 20% in 2022 to 18% in 2023 and further drop to 17% in 2024. Unless utility operators invest heavily in pollution-control measures to reduce emissions from power plants, domestic coal usage would fall significantly. Going forward, coal industry operators are likely to face many difficulties as a number of electric utilities have decided to become carbon neutral by 2050 and completely cut down coal usage. Per EIA, total coal consumption in the United States will drop 12.2% in 2023 to 458.5 MMst and further by 3.2% to 444.1 MMst in 2024.U.S. Coal Production Drops: As per EIA projection, coal production in the United States is expected to drop in 2023 and 2024 after showing an improvement in production volumes in the previous two years. EIA projects U.S. coal production to likely to decline by 11% to about 530 million short tons (MMst) in 2023 and a further 6% to 500 MMst in 2024 was due to an 11% reduction in coal consumption in the electric power sector in 2023 and a further reduction of 3% in 2024. This would hurt coal operators fighting a tough battle with the other sources of energy.Coal to Benefit From Rising Exports: The coal operators can benefit from the expected rise in coal export volumes. Coal, due to its economical prices compared to other energy sources, is still a viable energy option for many crucial industries across the globe. Per EIA, coal export volume may drop by 1.3% in 2023 to 83.3 MMst but would increase by 11.2% to 92.6 MMst in 2024. Steel production requires a lot of high-quality coal, and nearly 70% of global steel production depends on coal. The World Steel Association revised its 2023 steel demand outlook and now expects steel volumes to improve by 1% in 2023 to 1814.7 Mt. This expectation is lower than the prior expectation due to high inflation and rising interest rates globally, which may adversely impact coal export volumes in 2023. However, with the continued recovery in steel production, coal exports are expected to pick up from the end of 2023. Zacks Industry Rank Indicates Dull ProspectsThe Zacks Coal industry is a 10-stock group within the broader Zacks Oil and Energy sector. The industry currently carries a Zacks Industry Rank #232, which places it in the bottom 7% out of 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates strong performance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of the negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are losing confidence in this group’s earnings growth potential. Since September 2022, the industry’s earnings estimates for 2023 have gone down by 24.2%.Before we present a few coal stocks that you may want to consider, let’s take a look at the industry’s recent stock market performance and valuation picture.Industry Outperforms S&P 500 & SectorThe Zacks Coal industry has outperformed the Zacks S&P 500 composite and the Zacks Oil and Gas sector over the past 12 months.The stocks in the coal industry have gained 54.4% compared with the Zacks Oil-Energy sector’s growth of 21.3%. The Zacks S&P 500 composite has declined 16% in the same time frame.One-Year Price Performance Coal Industry's Current ValuationSince coal companies have a lot of debt on their balance sheet, it makes sense to value them based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio.The industry is currently trading at a trailing 12-month EV/EBITDA of 2.45X compared with the Zacks S&P 500 composite’s 12.03X and the sector’s 3.23X.Over the past five years, the industry has traded as high as 7.6X, as low as 2.34X and at the median of 4.8X.Enterprise Value-to EBITDA (EV/EBITDA) Ratio vs S&P 500Enterprise Value-to EBITDA (EV/EBITDA) Ratio vs Sector 4 Coal Industry Stocks to Keep a Close Watch OnPeabody Energy: St Louis, MO-based Peabody Energy engages in the coal mining business and has both thermal and metallurgical operations. In 2021, nearly 26% of the company’s revenues were derived from five customers with whom it still has 17 coal supply agreements (excluding trading and brokerage transactions) expiring at various periods from 2022 to 2026. This assures a steady flow of revenues. The Zacks Consensus Estimate for Peabody Energy’s 2022 earnings and revenues suggests a year-over-year rise of 118% and 34.3%, respectively.  The stock has gained 106.3% over the past year compared with the industry’s rally of 52.8%.Peabody Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Price and Consensus: BTUAlliance Resource Partners L.P.: Tulsa, OK- based Alliance Resource Partners produces and sells coal to utilities and industrial users in the United States. The firm produces coal from seven mining complexes operated by its subsidiaries. ARLP earns royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in different basins. The firm currently has a Zacks Rank #3. The Zacks Consensus Estimate for 2023 earnings per unit and revenues implies a year-over-year rise of 33.5% and 11%, respectively.  The stock has gained 36.1% over the past year.Price and Consensus: ARLPCONSOL Energy: Canonsburg, PA-based CONSOL Energy, currently has a Zacks Rank of 3, which produces and exports bituminous thermal coal. The company owns and operates the Pennsylvania Mining Complex and the Baltimore Marine Terminal, and controls more than 1 billion tons of undeveloped reserves. The company is consistently operating longwalls and has one of the largest export terminals on the Eastern seaboard. The Zacks Consensus Estimate for 2023 earnings and revenues suggests a year-over-year rise of 157.5% and 35.3%, respectively. The stock has gained 130.6% over the past year.Price and Consensus: CEIXWarrior Met Coal:  Brookwood, AL-based Warrior Met Coal currently has a Zacks Rank #3. The company produces and sells metallurgical coal for metal manufacturers in Europe, South America and Asia. The company is a low-cost producer of high-quality met coal, enjoys a price advantage and has an annual production capacity of over 7 million metric tons of coal.  The Zacks Consensus Estimate for its 2022 earnings and revenues indicates a year-over-year rise of 334.5% and 71.7%, respectively.Price and Consensus: HCC  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 Peabody Energy Corporation (BTU): Free Stock Analysis Report Alliance Resource Partners, L.P. (ARLP): Free Stock Analysis Report Warrior Met Coal (HCC): Free Stock Analysis Report Consol Energy Inc. (CEIX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 14th, 2023

IC manufacturing capacity utilization fall in 1H23 to accelerate inventory digestion

Taiwan's semiconductor manufacturers including top foundry TSMC and OSAT ASE Technology are expected to see their capacity utilization fall steeply in the first or even the second quarter of 2023, but that could return inventory to healthy levels earlier, according to industry sources......»»

Category: topSource: digitimesJan 3rd, 2023

Futures Rebound From Post BOJ Shock As Dollar Tumbles

Futures Rebound From Post BOJ Shock As Dollar Tumbles After last week's CPI and FOMC decision, it was supposed to be smooth sailing into the illiquid, year-end waters as trading desks closed down for the year, and where among those few traders left some expected a Santa rally while others kept pressing their shorts. The BOJ - which was badly been lagging all of its central bank peers in tightening financial conditions - however had other plans, and on Tuesday morning Japan's central bank shocked the world when it announced it would widen the Yield Control Curve band on the 10Y Treasury from 0.25% to 0.50% on either side, a move which had been viewed as a “when not if" - as markets knew the BoJ would eventually have to realign the "kinked" 10Y point with the rest of JGB curve and fundamentals… ... and begin a gradual policy alignment with rest of world’s already robust tightening, as they had instead continued to ease throughout ‘22 - but this was not seen as today's business and virtually everyone expected this move to come after the Kuroda term ended in April ‘23, with most expecting a “phase-in” executed in smaller increments over time. So the news that the yield on Japan's 10Y would be allowed to double from 0.25% to 0.50% came as a shock and sparked cross-asset contagion across the world, sending futures tumbling and bond yields soaring at least initially and briefly halted Japans' treasury futures. "Tighter BoJ policy would remove one of the last global anchors that’s helped to keep borrowing costs at low levels more broadly," Deutsche Bank analysts told clients, noting the BOJ move had come as markets were “already reeling” from the ECB and Fed’s hawkishness last week. BOJ governor Haruhiko Kuroda later reiterated at a press briefing that the widening of the yield band was aimed at improving market functioning and smoothing out a distorted yield curve. Still, the abrupt decision risks eroding confidence in the central bank’s messaging after the governor and other board members had repeatedly said a widening of the range would be tantamount to raising interest rates. As attention turned away from the surge in yields -to the plunge in the dollar,  US stock-index futures managed to recover most of their earlier losses, and as of 730am ET, contracts on the S&P 500 were flat while Nasdaq 100 futures slightly underperformed, falling 0.2% as the yield on 10-year Treasuries extended gains. Contracts on the S&P 500 had slumped as much as 1.1% earlier after the BOJ’s move triggered concerns among investors already worried about the growing chorus of hawkish central banks: “There are some investors that are doing cross assets, and so if the yen moves — if the foreign exchange moves a lot — they automatically readjust” their equity futures positions, said Michael Makdad, an analyst at Morningstar Inc. in Tokyo. But the move in stocks was actually relatively modest: the move in JGBs was more powerful, as the yield on 10Y bonds surged to the highest level since 2015... ... and dragged US TSYs along with it amid fears Japanese would be less willing to buy US paper (spoiler alert: the opposite will happen as local pensions start factoring in capital losses amid future YCC expansions) while the biggest fireworks took place in the world of FX, however, where the dollar tumbled as the yen rose: at one point the USDJPY plunged all the way down to 132.0 a 500+ pip move from where the pair was pre-BOJ, and the second biggest move in the past year, lagging only behind the shock US CPI miss repricing in November. Among US premarket moves, Lucid Group  advanced after the company said it has completed its stock sale program and successfully raised about $1.5 billion.  Here are some of the biggest US movers today: Verona Pharma (VRNA US) shares surge as much as 162% in US premarket trading after the drug developer achieved positive results in the Phase 3 ENHANCE-1 trial evaluating nebulized ensifentrine for the maintenance treatment of chronic obstructive pulmonary disease. Cryptocurrency-exposed stocks rise as Bitcoin rebounds after falling to the lowest level this month as worries over the path of central bank policy damped moves across risky assets. Riot Blockchain (RIOT US) advances 1.6%, Marathon Digital (MARA US) +0.8%, Silvergate (SI US) +1.9% MKS Instruments (MKSI US) stock rises 1.1% on low volumes after it was upgraded to overweight from sector weight at KeyBanc, with the broker saying the company’s strong competitive position should drive growth in semiconductor and advanced packaging. Heico (HEI US) shares could be in focus as the aerospace parts manufacturer reported earnings per share for the fourth quarter that matched the average analyst estimate, but did not provide guidance for 2023. Keep an eye on Conagra Brands (CAG US) stock as Morgan Stanley upgraded it to overweight, expecting the packaged-food sector to maintain its relative outperformance through 2023 and also raising J M Smucker (SJM US) to equal-weight. Beam Therapeutics (BEAM US) is upgraded to outperform from market perform at BMO, which said that the risk/reward on the stock now seems skewed to the upside. The insurance lead generation sector is JPMorgan’s favorite across small and mid-cap internet stocks for 2023, with analysts upgrading MediaAlpha (MAX US) to overweight from neutral, and EverQuote (EVER US) to overweight from underweight, while downgrading some advertising-exposed stocks. Even before the BOJ, US stocks dropped for a fourth session on Monday as traders recoiled at the growing possibility that the Fed will push the US economy into a painful recession after central bank officials vowed to keep raising rates until they’re confident inflation is coming down meaningfully. The S&P 500 closed at its lowest level in more than a month, dragged by declines in big-tech firms including Apple, Microsoft and Amazon.com. As Bloomberg points out, US tech stocks are facing a big technical trial this week, with the Nasdaq 100 Index testing a long-term uptrend in place since 2008, based on a logarithmic scale and weekly data. “The Fed now knows that the forward-looking indicators are starting to move in their favor,” Hugh Gimber, global market strategist at JPMorgan Asset Management, told Bloomberg Television. “They just want to see that coming through in hard data now and hence they want another few months just to get a clearer sense of the picture, but the direction of travel is much more positive.” Gimber expects a half-point hike when the Federal Open Market Committee meets in February, followed by a raise of 25 basis points in March. European stocks also erased earlier losses, with the Stoxx 600 trading down -0.20% after tumbling more than 1% earlier. European real estate stocks underperformed; the Stoxx 600 Real Estate subindex drops 3.6% at 9:36 a.m. CET. Biggest laggards include Aroundtown -9.1%, Wihlborgs -4.5%, Balder -4.4%, LEG Immobilien -4.2%, Vonovia -4%, SBB -3.8%. Other notable European movers include: Elior shares rise as much as 8.8% after the French caterer said it would buy Derichebourg Multiservices division by issuing new stock. The analysts noted that the equity-financed deal would add scale, boost margins and accelerate the company’s deleveraging. Hugo Boss shares rise as much as 6% after Deutsche Bank analyst Michael Kuhn raised the recommendation to buy from hold. Engie shares slumped as much as 6.9% after the French utility said it may take a hit of up to €5.7 billion ($6.1 billion) through next year from windfall taxes on soaring power sales and Belgium’s requirements for nuclear plant dismantling. Credit Suisse shares decline as much as 3.9% as both Citi and RBC say the troubled lender needs to give greater visibility on its planned strategic overhaul for the stock to recover. Petrofac shares drop as much as 10% to fresh record low as the energy infrastructure supplier predicts a full-year Ebit loss. European real estate stocks underperformed on Tuesday after a hawkish move from the Bank of Japan, which adjusted its yield curve control program. Aroundtown is the sector’s biggest decliner, falling as much as 11%, after being downgraded to hold from buy at Berenberg. Rheinmetall shares fall as much as 5.5% in Frankfurt, extending Monday’s losses, after German Defense Minister Christine Lambrecht set a deadline for the industry to fix defective infantry vehicles. Kinepolis shares drop as much as 6.6%, the most in more than a month, after Berenberg lowers its price target and adopts a “more cautious” stance over its FY23/24 estimates. Earlier in the session, Asian stocks fell as Japanese shares tumbled following a surprise policy tweak by the central bank, while China’s Covid disruptions also hurt sentiment. The MSCI Asia Pacific Index dropped as much as 1.1% before mostly trimming losses. The Nikkei 225 Index slumped 2.5% as the Bank of Japan raised the upper band limit of its yield curve control program, giving the yen a boost. Financial shares in the nation surged while tech and auto stocks slumped in Tokyo. “Usually the weak yen is good for the stock market earnings, and now if you have a stronger yen, it’s going to be a concern for the companies that were doing so well, mainly the exporters and maybe tourism,” said Peter Tasker, co-founder and strategist at Arcus Investment  “The whole Asian region is dragged down by BOJ’s new policy, which is triggering the short covering of yen,” said Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd. “Those who borrow yen and invest in other securities” need to unwind positions, he added. Stocks in China and Hong Kong fell for the second day as the reopening rally continued to cool. China reported a pickup in Covid deaths, with analysts expecting the actual toll to be much worse than the official tally. Despite the dismantling of heavy Covid restrictions, activity in key cities has slowed as infections spike, diminishing the economic boost from a reopening.  Investors are contending with slowdown risks in the region in 2023, with China’s path to reopening facing headwinds and doubts about the Fed’s ability to tackle inflation without pushing the US economy into a recession In FX, the Bloomberg Dollar Spot Index was set a second day of losses as the greenback weakened against all of its Group-of-10 peers apart from the Australian and New Zealand dollars. The yen rose by as much as 3.7%, to a four-month high of 132.06 per dollar, while the benchmark 10-year yield surged to 0.444%, the highest since 2015. The BOJ said it will now allow Japan’s 10-year bond yields to rise to around 0.5%, up from the previous limit of 0.25%; details here Cross sales into yen hit the Aussie and kiwi with the latter already weakened after data showed business confidence in the nation slumped to a record low. Both Australia’s and New Zealand’s bonds also fell The yuan flipped to a gain as the dollar weakened following the Bank of Japan’s hawkish shift. China’s loan prime rates were kept on hold, as expected. In rates, Treasuries, bunds and gilts yields are off highs reached after BOJ’s yield pivot, though still up about 8 basis points each at the 10-year mark. Treasury futures off worst levels of the day, recouping a portion of losses into early US session after an aggressive cheapening move sparked by Bank of Japan widens the trading band on 10-year bond yields. Into peak selloff 10-year yields topped through 3.70% and onto cheapest levels since Nov. 30, before settling around 3.65% into the US session; the 2s10s spread remains wider by 5bp on the day after reaching steepest since Nov. 16. On outright basis Treasury yields remain cheaper by 1bp to 8.5bp across the curve in a bear steepening move, following wider selloff across JGBs where 10- year yields closed at 0.399% and 2s10s curve steepened 13bp on the day In commodities, WTI trades within Monday’s range, adding 1.1% to near $75.98. Most base metals trade in the green. Spot gold rises roughly $19 to trade near $1,806/oz.  In crypto, Bitcoin is firmer to the tune of 1.0%, though once again remains within relatively narrow ranges. To the day ahead now, and data releases include German PPI for November, US housing starts and building permits for November, and the European Commission’s advance December reading on consumer confidence for the Euro Area. Central bank speakers include the ECB’s Kazimir and Muller. Finally, earnings releases include Nike. Market Snapshot S&P 500 futures little changed at 3,842.50 STOXX Europe 600 down 0.4% to 424.16 MXAP little changed at 155.50 MXAPJ down 1.0% to 502.25 Nikkei down 2.5% to 26,568.03 Topix down 1.5% to 1,905.59 Hang Seng Index down 1.3% to 19,094.80 Shanghai Composite down 1.1% to 3,073.77 Sensex down 0.2% to 61,653.10 Australia S&P/ASX 200 down 1.5% to 7,024.27 Kospi down 0.8% to 2,333.29 German 10Y yield little changed at 2.27% Euro up 0.2% to $1.0632 Brent Futures up 0.6% to $80.29/bbl Gold spot up 0.9% to $1,804.50 U.S. Dollar Index down 0.73% to 103.96 Top Overnight News from Bloomberg The BOJ’s surprise policy shift is sending shock waves through global markets that may just be getting started, as the developed world’s last holdout for rock-bottom interest rates inches toward policy normalization The BOJ’s latest policy shock is cementing the central bank’s reputation for using the element of surprise to achieve its strategic goals At least three funds stand to benefit from Japan’s policy move: UBS Asset Management, Schroders Plc and BlueBay Asset Management ECB Governing Council member Francois Villeroy de Galhau said the euro-zone economy is unlikely to experience a deep slump as interest rates are lifted to tackle soaring inflation The ECB remains “a long way” from achieving its goal of inflation of 2% over the medium term, according to Governing Council Member and Bundesbank President Joachim Nagel South African President Cyril Ramaphosa emerged from a ruling party electoral conference with a stronger mandate, yet still has to overcome a series of political hurdles to tackle a daunting economic to-do list Hong Kong will further ease social distancing measures, including rules on banquets, ahead of a trip by the city’s leader to Beijing A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks traded lower across the board with the broader risk profile hit by the BoJ's unexpected tweak to its Yield Curve Control. Nikkei 225 fell over 2.5% as it reacted to the BoJ's move, with the index briefly dipping under 26,500, although bank stocks soared. ASX 200 was dragged lower by its Tech and IT sectors whilst Banks and Utilities were the better performers. Hang Seng and Shanghai Comp conformed to the downbeat tone across the equity market, with the former seeing its housing stocks slip after the PBoC opted to maintain its 5yr LPR unchanged vs some expectations for a cut. Top Asian News RBA Minutes (Dec): Board considered several options for the cash rate decision at the December meeting: a 50bps increase; a 25bps increase; or no change in the cash; members also noted the importance of acting consistently. The Board did not rule out returning to larger increases if the situation warranted. Click here for the detailed headline PBoC maintained the 1yr and 5yr Loan Prime Rates (LPRs) at 3.65% and 4.30% respectively, as expected, according to Bloomberg. BoK Governor said the board believes it is premature to cut rates. BoK said consumer inflation is to gradually slow after hovering around 5% for some time; uncertainty is high over how swiftly consumer inflation will slow, according to Reuters. BoK Governor said the risk of USD/KRW rate surging at an unusual pace has decreased. China reports five COVID-related deaths in the mainland on Dec 19 vs two a day earlier, according to Reuters. Hong Kong Chief Executive Lee said Hong Kong will further ease social distancing measures, according to Bloomberg; subsequently, Hong Kong Health Authorities are to drop the rapid antigen COVID test requirement to enter bars/nightclubs from Thursday, no capacity limit on such venues. Japan is reportedly mulling issuing JPY 500bln of green transformation economic transition bonds (GX bonds) in FY23, according to Japanese press Yomiuri. Japanese government reportedly looking to issue around JPY 35.5tln of new JGBs for FY23/24, according to Reuters sources. PBoC injected CNY 5bln via 7-day reverse repos with the rate maintained at 2.00%; injects CNY 141bln via 14-day reverse repos with the rate maintained at 2.15%; daily net injection CNY 144bln. European bourses are under modest pressure, Euro Stoxx 50 -0.3%, as the complex lifts off post-BoJ lows in limited newsflow. US futures are moving in tandem with the above, ES -0.1%, ahead of a handful of stateside data prints. JPMorgan lowers its Apple (AAPL) iPhone volume forecasts for the December quarter to around 70mln (prev. forecast ~74mln). Top European News ECB’s Kazimir Says Stable Pace of Tightening Should Continue Spain Court Foils Sánchez Bid to Name Judges in Power Clash Engie Drops as Taxes, Nuclear Rules Take Multibillion Euro Bite Swedish Property Stocks End Brutal 2022 With Tough Reset Ahead Germany Cuts Russian Share in Gas Use by More Than Half in 2022 FX JPY is the standout outperformer after the BoJ widened the 10yr yield band, sending USD/JPY to a test of 132.00 vs 137.00+ initial levels. Amidst this, the DXY has been pushed below 104.00 to the modest benefit of G10 peers across the board. Though, the read across from the USD's downside to peers is being hampered somewhat by the pronounced action in JPY-crosses. Elsewhere, antipodeans are the incremental laggards following the ANZ survey and post-RBA minutes, which has a dovish tilt. PBoC sets USD/CNY mid-point at 6.9861 vs exp. 6.9862 (prev. 6.9746) Fixed Income Benchmarks have bounced from BoJ induced worst levels with modest assistance from German PPI and UK supply. However, core debt is lower by around 100 ticks for Bunds and Gilts, with the German 10yr approaching 2.3% at best. Stateside, USTs are directionally in-fitting though magnitudes are slightly more contained ahead of the US session, yields bid across the curve and bear-steepening. Geopolitics   North Korea said Japan's counterattack capabilities are effectively pre-emptive strike capabilities; said Japan's new security strategy is bringing security crisis in the region. North Korea said it has the right to take "decisive" military measures to protect its rights in response to the changing security environment, via KCNA. BOJ STATEMENT BoJ unexpectedly tweaked its Yield Curve Control (YCC) in which it widened the 10yr yield band to +/-0.5% (prev. +/-0.25%) and unexpectedly announced it is to increase bond purchases to JPY 9tln/m (prev. JPY 7.3tln/m) in Q1. The BoJ kept its rate unchanged at -0.10% and maintained 10yr JGB yield target of around 0% as expected. The decision on the YCC was unanimous. The adjustment is intended to “improve market functioning and encourage a smoother formation of the entire yield curve while maintaining accommodative financial conditions,” the central bank said. BoJ said it is to make nimble responses for each maturity by increasing the amount of purchases even more and conducting fixed-rate purchases operations when deemed necessary. BoJ maintained its rate guidance. Click here for the detailed headline GOVERNOR KURODA YCC: Market functionality was decreasing. Domestic market has been hit by volatility abroad. Decision was made today as deteriorating market functions could threaten corporate financing. Decision is not an exit of YCC or a change in policy, appropriate to continue easing policy. There is no need to further expanding the allowance band, not likely that the market calls for another increase of the yield cap maximum limit. Broader Policy: It is too early to debate the exit to current monetary policy; today's decision is not a rate hike. Won't hesitate to ease monetary policy further if necessary. No intention to hike rates or tighten policy. Not thinking about revising the 2013 gov't-BoJ joint statement. OTHER BoJ announced an unscheduled bond operation: BoJ offered to buy JPY 100bln in up to 1-3yr JGBs, JPY 100bln in 3-5yr JGBs, JPY 300bln in 5-10yr JGBs and JPY 100bln in 10-25yr, according to Reuters. BoJ to conduct unlimited bond buying in the 1-5yr tenors, according to Bloomberg. Japanese Finance Minister Suzuki said it is not true that the government and the BoJ have decided on a policy to revise its joint statement, according to Reuters. Japanese Economy, Trade, and Industry Ministry Nishimura said it is important to continue carrying out economic revitalisation based on the joint statement with the BoJ, according to Reuters. Japan Securities Clearing Corporation has issued an emergency margin call re. JGB futures. Commodities Crude benchmarks slipping in tandem with broader sentiment initially and in the hours since have pared this pressure and are now posting upside just shy of USD 1.0/bbl. Currently, Dutch TTF Jan’23 remains under modest pressure, but is yet to slip below the EUR 100/MWh mark. Germany's BDEW (energy industry association) says it is concerned about the EU gas price cap, it needs monitoring and adjusting if results in too little gas reaching Europe. The yellow metal is a handful of ounces above the USD 1800/oz handle while base metals are firmer in action that is for the most part in-fitting with the above risk tone/dynamics. US Event Calendar 08:30: Nov. Building Permits MoM, est. -2.1%, prior -2.4%, revised -3.3% 08:30: Nov. Building Permits, est. 1.48m, prior 1.53m, revised 1.51m 08:30: Nov. Housing Starts MoM, est. -1.8%, prior -4.2% 08:30: Nov. Housing Starts, est. 1.4m, prior 1.43m DB's Jim Reid concludes the overnight wrap We go to press this morning amidst big moves in global markets overnight, since the Bank of Japan have decided to adjust their yield-curve-control policy, which is widely seen as the beginning of a potential end to their ultra-loose monetary policy. That policy has made them a big outlier compared to other central banks this year, having maintained rates at the zero lower bound whilst others embarked on their biggest tightening cycle in a generation. Indeed, it’s important not to underestimate the impact this could have, because tighter BoJ policy would remove one of the last global anchors that’s helped to keep borrowing costs at low levels more broadly. In terms of the policy shift, the BoJ announced in a surprise move that Japan’s 10yr yield would now be able to rise to around 0.5%, having been limited to 0.25% previously. In turn, that led to a massive slump in Japanese equities, with the Nikkei down by -2.88% this morning, and those moves lower have been echoed more broadly. Indeed, not only are other indices in Asia pointing lower, including the CSI 300 (-1.64%), the Shanghai Comp (-1.03%), the Hang Seng (-2.19%) and the Kospi (-1.10%), but futures on the S&P 500 are currently down -1.07%, even after a run of 4 consecutive declines for the index already. The one big exception to this pattern of equity losses were bank stocks, with those in the Nikkei surging +4.96% this morning given the potential move away from ultra-low borrowing costs. Unsurprisingly, Japanese government bond yields have surged on the back of the announcement, with the 10yr yield up +15.5bps this morning to 0.41% after trading around 0.25% for months. But the impact hasn’t been confined there either, with Australian 10yr yields up +19.5bps this morning, and those on US 10yr Treasuries up +8.1bps to 3.666%. In the meantime, the yen has strengthened massively, gaining +2.75% against the US Dollar this morning to 133.22 per dollar. Even before the BoJ’s overnight announcement, markets had already got the week off to a rough start yesterday, with the bond selloff showing no sign of letting up whilst the S&P 500 (-0.90%) lost ground for a fourth day running. The moves were very similar to last week’s in many respects, with investors continuing to grapple with the prospect that central banks will keep hiking rates into 2023, not least after the hawkish tone from their recent meetings. That theme is only going to be bolstered by the BoJ’s move, which came as a big surprise to markets that were already reeling from the ECB and Fed’s hawkishness last week. Whilst many investors are still expecting we could get a dovish pivot later in 2023, markets aren’t banking on that for now, with sovereign bonds seeing fresh losses on both sides of the Atlantic yesterday. In terms of the daily moves, yields did come off their highs by the end of the session in Europe, but those on 10yr bunds (+5.1bps), OATs (+4.4bps) and BTPs (+8.5bps) were still noticeably higher by the close. We also saw another round of milestones at the front-end of the curve as well, since yields on 2yr German and French debt both hit their highest levels since 2008. That followed further hawkish rhetoric from ECB speakers over the last 24 hours, with a nod to rate hikes continuing at a 50bps pace. For instance, Vice President de Guindos said that they had “to take additional measures to increase interest rates at a speed similar to that of this last 50 basis-point increase”. In the meantime, Lithuania’s Simkus said he had “no doubt” there’d be another 50bp move in February, and Slovakia’s Kazimir said that “we need to increase the base interest rate significantly higher than today.” Whilst the continued bond selloff very much echoed last week, one key difference yesterday was that Eurozone bonds were no longer underperforming their international counterparts. For instance, yields on 10yr Treasuries saw a much larger increase on the day of +10.2bps to 3.585%, before their latest moves to 3.666% overnight. Higher real yields led that move yesterday, with the 10yr real yield up +7.2bps to 1.42%, followed by a further move to 1.45% this morning meaning that it’s now risen by over +40bps since its recent closing low earlier this month. And over in the UK, yields saw an even larger increase yesterday, with 10yr gilt yields up +17.3bps on the day to 3.50%. Those moves came as investors moved to price in a slightly more hawkish path for central bank policy rates, with pricing for the Fed’s rate by end-2023 up +5.5bps on the day to 4.413%. This backdrop of growing concern about the rates outlook proved further bad news for equities, and the S&P 500 (-0.90%) fell to its lowest level in nearly 6 weeks. That’s its 4th consecutive decline, and means that in less than a week since the S&P briefly surged after the downside CPI surprise, the index has now lost -6.91% since its intraday peak. In terms of the drivers, tech stocks were a major contributor, with the NASDAQ (-1.49%) and the FANG+ index (-2.02%) seeing sizeable declines, although the Dow Jones didn’t fare so badly with a -0.49% decline. Europe was also a relative outperformer, with the STOXX 600 seeing a modest +0.27% gain after its -3.28% decline last week. Elsewhere yesterday, we heard that EU member states had reached a deal to cap gas prices at €180 per megawatt-hour. It’ll apply for a year starting February 15, and follows lengthy negotiations on where the cap should be, with an earlier proposal from the Commission suggesting a €275/MWh level. The cap will also only apply if the difference with global liquefied natural gas prices is bigger than €35/MWh. Against this backdrop, European natural gas futures were down -5.98% yesterday to €109 per megawatt-hour. On the data side yesterday, we got further evidence that the European economy was outperforming expectations this winter, with the Ifo’s business climate indicator from Germany rising to 88.6 (vs. 87.5 expected), marking its highest level in 4 months. However in the US, the NAHB’s latest housing market index showed that the housing market was continuing to struggle, with a decline in December to 31 (vs. 34 expected). With the exception of April 2020, that’s the index’s lowest reading in over a decade, and means that it’s fallen in every single month over 2022. Finally, the US Congress are focusing on concluding their 2023 fiscal year omnibus budget package, ahead of the government funding deadline at the end of the week. Senate Minority Leader McConnell said that he expects to review the full text soon and signalled that there would be ample GOP support, indicating there would not be a period of protracted debate with the White House. The provisions are expected to total close to $1.7tr, and include funding for border security, state aid for natural disasters, a realigning of pandemic-era programs, and aid to Ukraine amongst a host of other initiatives and programs. Notably, it does not appear that there will be an increase to the debt ceiling in this agreement, so that’s another event that looks as though it could get some attention in 2023, particularly given the Republicans will control the House of Representatives next year. To the day ahead now, and data releases include German PPI for November, US housing starts and building permits for November, and the European Commission’s advance December reading on consumer confidence for the Euro Area. Central bank speakers include the ECB’s Kazimir and Muller. Finally, earnings releases include Nike. Tyler Durden Tue, 12/20/2022 - 08:08.....»»

Category: blogSource: zerohedgeDec 20th, 2022

TSMC may see revenue fall 10-15%, 7nm capacity utilization slip to 50% in 1Q23

TSMC is estimated to experience a 10-15% sequential revenue fall for the first quarter of 2023, driven by a significant shrinkage in new orders for the first half of the year, and particularly its 7nm process utilization may fall under 50% in the first quarter, according to semiconductor equipment supply chain sources......»»

Category: topSource: digitimesDec 12th, 2022

Luongo: EU"s Oil Price Cap Is "Simply Moronic", Chindia Already Filling Gaps

Luongo: EU's Oil Price Cap Is "Simply Moronic", Chindia Already Filling Gaps Authored by Tom Luongo via Gold, Goats, 'n Guns blog, The EU and the US went forward with their long-debated, long-telegraphed move to put a price cap on Russian oil at $60 per barrel. By believing they can pressure suppliers into not hauling Russian oil lest they run afoul of the sanctions that support the price cap, they believe they can take only Russian oil off the market for the long run. Because of the way oil is actually traded in the real world, versus the way it trades in Janet Yellen’s head, this policy is actually much harder to implement than it actually looks. You don’t buy oil at the crude oil counter at Target or Wal-Mart. There isn’t a price tag you can look at and say yes or no too. As Tsvetana Paraskova at Oilprice points out, crude contracts are written based on a discount or premium to a benchmark price at a particular moment in time. “Physical traders rarely trade on a fixed price,” John Driscoll, chief strategist at JTD Energy Services Pte Ltd, told Bloomberg.  “It’s a much more complex space where they trade on formulas and spot differentials to a benchmark crude for the trading of actual cargoes as well as for hedging that follows,” said Driscoll, who has more than 30 years of trading oil in Singapore. To complicate things further, the EU wants to remain flexible to change the cap at its discretion. “The price cap is not set in stone – it “is fixed for now but adjustable over time,” the EU said last week.   If this sounds like a recipe for complete disaster, it is. No matter what happens here, the quantity of oil to be produced under this cap, even if it isn’t successful, will go down. Period. See chart below. If you disagree with this then you might just qualify to replace Yellen as Treasury Secretary of the US. That said, Janet Yellen may be stupid, but she’s not that stupid. She knows what this price cap she’s championed will do. So, as always, with these people the question you shouldn’t be asking isn’t, “Will this work?” or “How will Russia respond?” but rather, “Is this the point of the exercise?” I was contacted by Sputnik News for my comments on this (article here) and this is the tact I took in answering their questions. If everyone involved knows that price floors and price ceilings always and without fail create production shortages, then why did they do this when the world clearly need more oil? Because this is a feature of the policy, not a bug. By doing this, like every other intervention into oil delivery since the start of the war in Ukraine, the goal was to take Russia’s supply offline and hope that other producers would see the opportunity to take market share from the evil Russians while simultaneously trying to push capital investment into competing energy technologies — like nuclear, hydrogen and unicorn farts. It hasn’t worked. Russia happily sells their oil at a major discount to Brent Crude, but will it remain the $30 China and India have been paying below Brent? Only if Brent stays at $90+ per barrel. With Brent now trading in the high $70’s those discounts will attenuate. And with Vanguard following Blackrock’s lead in ditching ESG as a policy driver for investment flows, we’ve likely reached the limit of this stupidity, because despite the protestations of commies the world over, capital flows to where it is treated best. That flow is now distinctly around Europe rather than the intended target, Russia. There are many goals of this price cap, some stated, some implied, my comments are in italics afterwards. Limit Russia’s oil revenue enough to bleed out their budget. Not likely as the discount to Brent will rise and fall with futures. Russia’s cost of production is the lowest in the world with the highest spare capacity to bring online or take offline. Spur other OPEC+ members to pump beyond their quotas and break the cartel. Again, not likely, as the only ones who have spare capacity are also under heavy sanctions, Venezuela, Iran, etc. To crib from Planet of the Apes, “OPEC together strong.” Make the Saudis an offer they can’t refuse, to lead OPEC without Russia. This has fully failed as KSA has just signed a Strategic Partnership with China during Xi’s first visit to a foreign power since COVID faster than you can say, “multi-polar world.” Bring the price of oil down to allow “Biden” to refill the SPR at a big discount. Only so long as they can manipulate futures prices down and keep demand off the market. Cause further chaos in oil shipping to freeze investment capital in an industry trillions behind the curve in exploration because of ESG and “US/EU policy” This is what the real goal is. It’s why I think Liz Truss was taken out as UK Prime Minister and why Germany happily went along with the Nordstream bombing and closing off the Druzbha Pipeline. Force Putin to sell Europe oil below market prices to fund the upcoming war effort against Russia, now clearly on the table for 2023. They want you to believe oil flows to Europe have already cratered, while bookings (as Sputnik pointed out) for Sovcomflot’s tanker fleet are up. The only numbers that matter are Russia’s exports, not whether oil flows through western tracking data. I’ve maintained for years that Europe feels they have some kind of monopsony (single buyer) power over Russian energy. And all they have to do is hold their nose and refuse to buy Russia’s products and this will force them to sell to them at whatever price they demand. What I’m still trying to figure out, however, is how much better a deal do they want than the one they had pre-Ukraine War, a war they did nothing substantial to stop? To believe that the EU only pursued this antagonistic relationship with Russia because it is a colony of the US Empire is simply delusional at this point. At no point did Europe try to make peace with Russia financially, economically or diplomatically. Former German Chancellor Angela Merkel reiterated recently in an interview with Die Zeit that the Minsk Accords were designed as a delaying tactic to arm Ukraine for the future war against Russia. This admission blows up that entire coping narrative of ideological leftists who hate the US (and all that it supposedly still stands for, i.e. capitalism) so much they can’t accept the reality of their insanity. Europe chose this path. They chose freely to freeze Russia’s foreign exchange reserves, decline to buy their oil and gas, and sanction Russia to the point of destabilizing not just their own food and energy security, but also everyone else’s in the process. Davos hates the freedom that oil and gas represent. Their strategy is to starve the entire oil complex of needed capital and hope it collapses. What it’s doing is accelerating the creation of parallel markets for shipping, insurance, payment clearance and investment banking for base commodities in markets outside of their control. They’ve interfered in elections/governments the world over in key pockets of resistance — the US, Brazil, now Peru, the UK, Pakistan, Kazakhstan, — to disrupt any further integration of Asia. Most of these have failed, but have succeeded in making the world less safe, less predictable. The price cap is a stupid policy implemented by people with a clear animus against humanity itself that they would drive the world to the brink of nuclear war. It’s nothing more than the same scorched earth policy that’s been on display for years now. If we can’t rule the world, we will burn it down. All it’s really doing is accelerating the split between East and West. Russia is done with Europe. They have turned East and will wait for Europeans to come to their senses and find common ground. Both they and the Chinese realize now there is no return to normalcy without the West collapsing in a fit of rage. All over a few miserable dollars per barrel. As always, my full replies to Sputnik are below the line. As the price cap on Russian oil comes into force, how will the global market react? What long-term consequences do you expect? The price cap is simply moronic from a price perspective.  Any 1st semester student of economics understands that price caps/floors create shortages.  So, we shouldn’t look at price directly.  Price is a consequence of supply and demand, in this case a deliberate attempt to create a shortage by introducing unnecessary friction all throughout the oil supply chain to create a global shortage of energy. Oil prices will rise in the short term because of this and investment in new oil sources will now accelerate but outside of the West who have turned completely hostile to new sources of oil entering the market. The price cap was conceived with the objective of punishing Russia over its special military operation in Ukraine – what are traps and pitfalls of energy supply politicization? As always with moves like this, there is the story we’re told and then there is the real story. This cap will not deter Russia in any significant way from exporting oil.  What will happen is the map of oil delivery worldwide will change.  Energy that flowed west will now flow east and south.  The ESPO pipeline will see full utilization as demand from SE Asia rises. Projects that previous to the divorce between Russia and the EU were uneconomic are now economic as a price floor has now been put on the market.  That’s what is so funny about this ‘price cap’ on Russian oil, it’s actually a ‘price floor,’ ensuring that Russia, the country with the lowest cost per barrel of any major producer, has guaranteed minimum income going forward. I believe the goal of Janet Yellen, the person most responsible for this idiocy, is to both raise the price of oil to accelerate investment into renewables but limit the amount of money Russia gets, starving them, and other oil producers of capital. In short, it’s nothing new.  These are the same people who put sanctions on Russia to make the ruble weak while the price of oil rose. How can the move backfire on G7 countries and the EU in particular? It already has.  As I said, this is just an extension of the same policy that’s always been in place.  What will (and is) happening is that the investment they are trying to retard into replacement oil and gas reserves will now occur outside of the western financial system and western currencies, i.e. the US dollar and the euro.  Capital flows both to where it’s needed and where it’s treated best.  What’s happening in the West is one big policy to freeze capital where it is currently trapped and beat it with the ESG stick.  I could write a book here about why this is dumb and counterproductive, but I’ll just state that, in short, it won’t work.  This price cap is the beginning of the major shift towards the East becoming the center for global capital investment. The price cap had sown discord within the EU and resulted in months of bickering – do you expect further split within the EU members now, as the measure came into force? Yes.  But the European Commission isn’t listening and is continuing to play hardball with every EU member state and Russia on every issue.  At the same time, they also support NATO expansion, which is tantamount to an open war declaration against Russia. Now it’s War Crimes Tribunals against Russia for a war it won’t fight or can even win. The internal politics of gas delivery within the EU is now facing a shift with Italy’s Giorgia Meloni clearly angling to replace Germany as the port of entry for most piped gas into Europe.  France and Germany are hopping mad about this. This energy crisis in the EU is designed to break the spirit of Europe’s people to accept full totalitarian/centralized control over everything.  The outward face of the EU is one of inevitability, while masking the deep divisions that are tearing it apart at the seams. What kind of problems will the EU face given that Russia’s Deputy Prime Minister Alexander Novak specified earlier that if the cap came into effect, Russia would either redirect its crude supply or slash production? China and India are already filling the gaps.  Russian oil will be blended in the Bahamas or other storage ports and then sent back to EU refineries.  It’s all shadow play and theater. The main goal, as I said, was to make the oil markets less efficient, raising costs while starving it of capital at the same time.  The EU will face continued high energy prices, a net outflow of capital from lack of investment and a falling currency as their competitiveness on the global market collapses.  Considering that they are also an unreliable trade partner who constantly changes the terms of contracts while they are still active, will see trade that used to be done with it go somewhere else. All they are doing is ensuring no one will want to do business with them after 2030, hence their full-throated support of further war with Russia over Ukraine…. If the EU will suffer, then so will the whole world.  It’s the ultimate game of brinksmanship.  And they are the ones driving this bus, along with certain old money connected players in the US, while simultaneously using those players in the US, like Yellen, as a smokescreen for their preferred outcomes. The clear story now is that the EU is blaming the US for all of its ills, exactly like I said they would do over a year ago.  EU Commission President Ursula Von der Leyen just did this, complaining about the US subsidies for green energy projects. French President Emmanuel Macron complained that the US was making too much money off selling the EU natural gas. Are they serious? Putin offered them a way out of this but, as always, the Eurocrats want their cake and eat it too… they want to punish Putin and get their energy at subsidized rates.  Seriously, why does anyone take these apparatchiks seriously?  Everything they do is the equivalent of pointing a gun to their head, pulling the trigger but only grazing the skull and then blaming everyone else for letting them do it and telling the Americans to go kick Russia out of Ukraine.  It’s pathological. What will be the market’s reaction in the event of Russia curbing its production? Clearly oil prices will rise.  China and India will still buy Russian oil, refine it and sell it back to the EU at value-added prices.  The money Europe used to make refining cheap Russian oil will now go to China and India, who paid for it at a discount, using their own currencies or rubles, and Europeans get stuck with the bill. So, in 2023, expect another major wave of inflation based on rising energy prices, China re-opening its economy putting upward pressure on metals prices and food shortages from the EU’s war on the periodic table of elements. Tyler Durden Sat, 12/10/2022 - 09:20.....»»

Category: blogSource: zerohedgeDec 10th, 2022

Transportation Prices See "Sharpest Rate Of Contraction" In November

Transportation Prices See "Sharpest Rate Of Contraction" In November By Todd Maiden of FreightWaves.com Transportation capacity continued to grow at a high rate during November with prices falling at the fastest rate on record, according to a monthly survey of supply chain executives released Tuesday. Inventories may be continuing to normalize, report finds. (Photo: Jim Allen/FreightWaves) The Logistics Managers’ Index (LMI) displayed a capacity reading of 71.4 in November, 1.7 percentage points lower than the all-time high established in October. The 12-month forward-looking expectation for the subindex is 65.7. A reading above 50 indicates expansion while one below that indicates contraction. A new low for the transportation prices subindex was set during the month. A 37.4 reading was 4.8 points lower than October and “the sharpest rate of contraction we have read in the history of the LMI,” the report said. Contraction was more pronounced among downstream respondents, or those in the supply chain that are closer to the end consumer. That group returned a 28.1 reading. Expectations for prices one year from now stood at 42.1 as “the transportation market continues to fall from the dizzying heights that had become the norm during 2021.” Transportation utilization was down 2.8 points to a neutral reading of 50. Responses captured in the second half of November were “slightly more negative,” meaning utilization “may be seeing the beginning of a contraction period” after expanding every month since May 2020. The overall LMI stood at 53.6 in November, 3.9 points lower sequentially and the second-lowest level captured in the data set’s six-year history. The all-time low was recorded in April 2020 during the height of pandemic-related lockdowns. FreightWaves’ National Truckload Index, a measure of TL spot rates, remains well off all-time highs established earlier in the year. However, spot rates are potentially bottoming, up nearly 10% from mid-November lows. The National Truckload Index (linehaul only – NTIL) is based on an average of booked spot dry van loads from 250,000 lanes and 10,000 daily spot market transactions. The NTIL is a seven-day moving average of linehaul spot rates excluding fuel. Inventories normalizing further? Inventory growth rates throughout the supply chain slowed significantly during the month. After average readings of 69.6 this year, 62.7 in 2021 and 58.4 in 2020, the subindex fell 10.7 points to 54.8 in November, with respondents at the wholesale level seeing slower growth. “Inventory levels have decreased significantly, particularly for upstream respondents,” the report said. “This is likely indicative of goods being positioned downstream for the holiday season and, more importantly for supply chains, being purchased by consumers.” The inventory levels subindex was neutral at 50 in the back half of November, which “suggests that many firms have successfully threaded the needle and worked through the bulk of the goods that have plagued them through the year.” The report cautioned that when the inventories subindex falls significantly, there is usually an increase in the following period. “So, there is a chance the inventory level index will bounce back up somewhat, post-holiday,” according to the report. The forward-looking expectation for inventory levels was 47.2. “The bullwhip effect was probably inevitable, given the sharp oscillations in supply and demand experienced over the last few years,” the report read. “The key now will be to observe whether supply chains have finally now right-sized their inventories, or if they have overcorrected back into a mild shortage.” Inventory costs (73.4) continued to grow but at a rate 7.5 points lower than in October as warehousing prices (74.4) remained firmly in expansion territory. Higher warehousing costs were driven by contracting capacity (46.8) and growing utilization rates (56.8). “It will be crucial to observe whether or not transportation metrics begin to bounce back at all in the new year, once the glut of inventory has been wound down further,” the report said. The LMI is a collaboration among Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University and the University of Nevada, Reno, conducted in conjunction with the Council of Supply Chain Management Professionals. Tyler Durden Thu, 12/08/2022 - 08:52.....»»

Category: personnelSource: nytDec 8th, 2022

Futures Slide As Recession Fears Trump China Reopening

Futures Slide As Recession Fears Trump China Reopening US futures slumped for a fifth day as investors faded the latest China reopening news - which saw Beijing move definitively away from its long-held Covid Zero approach as it eased a range of restrictions - as the latest dismal Chinese trade data reaffirmed the risk of a global recession. Contracts on S&P 500 futures dumped 0.7% at 7:20 a.m. ET with selling picking up US traders came to their desks after trading unchanged for much of the overnight session, and after the underlying gauge fell Tuesday for a fourth straight day and closed at the lowest level in nearly a month. Nasdaq 100 futures were down 0.8%  US futures are weaker as part of a global risk-off tone; MegaCap tech is again driving weakness, with Apple sliding after a key supplier warned of weaker demand. US/Global recession concerns seemingly outweighing the positivity surrounding China’s growth prospects. US lawmakers proposing an easing of restrictions on Chinese-made chips. SPX sits at its 100dma after falling below its 200dma this week; do we see follow-on selling from CTAs? Oil weakness continues and WTI sits ~11% above its 52-week low. EIA increased its 2023 oil production forecast. In politics, Warnock defeated Walker, giving Dems a 51-49 Senate majority; no immediate market impact. Today’s macro data include mortgage applications (-1.9%, vs -0.8% last week), labor costs, nonfarm productivity, and consumer credit. In premarket trading, Apple dropped more than 1% as mobile industry bellwether Murata Manufacturing expects the firm to reduce iPhone 14 production plans further in the coming months because of weak demand with the company’s president saying that handset stock in stores suggests slow demand. Last month, Bloomberg reported that Apple expects to make at least 3 million fewer iPhone 14 handsets than originally expected. Here are the most notable premarket movers: Chinese stocks listed in the US fall in Wednesday’s premarket trading, as Beijing’s new measures to ease Covid restrictions presented an opportunity for traders to lock in profit after recent rallies. Alibaba (BABA US) -4.5%, Baidu (BIDU US) -3.4%, Pinduoduo (PDD US) -4.1%, Bilibili (BILI US) -5.2%, Nio (NIO US) -4.5%, XPeng (XPEV US) -5.9% MongoDB (MDB US) shares rallied 28% after the database software company reported third-quarter results that beat expectations and gave a fourth-quarter revenue forecast that analysts see as strong. Toll Brothers (TOL US) shares advance 1.2% after the luxury home builder’s adjusted home sales gross margin forecast for 2023 beat estimates, with Citi positive on the better visibility for next year amid a difficult housing market. Pinterest gains 1.8% after the social media company added a board seat for Elliott Investment Management as part of a cooperation agreement with the activist investor. Carvana shares rise as much as 3% before paring gains after Bloomberg reported that some of its largest creditors, including Apollo and Pimco, signed a cooperation agreement to prevent the creditor fights that have complicated other debt restructurings in recent years. Summit Therapeutics fell, reversing earlier gains in premarket trading. On Tuesday, the shares soared 194% following the announcement of a partnership deal with Akeso to in-license ivonescimab, its breakthrough bispecific antibody. Watch Illumina stock as it was initiated at RBC with a recommendation of outperform, with the brokerage citing the biotech company’s competitive advantage in the next generation sequencing market. Keep an eye on Autoliv stock after UBS downgraded it to neutral, saying that the shares now offer limited valuation upside, while the airbag maker’s medium-term profitability targets look ambitious. Watch shares in US oil explorers as Citi says it does not foresee a further re-rating for the sector in 2023 for a number of reasons, in a note double-downgrading its rating on Comstock to sell, cutting Coterra to sell and moving EQT and Southwestern Energy down to neutral. Traders are also monitoring developments in China. The Asian country eased a range of Covid restrictions Wednesday in a sharp change in national strategy to quell public discontent and fire up the economy again. Meanwhile, statistics showed that the nation’s exports and imports both contracted at steeper paces in November - and absent the covid crash in early 2020, the fastest pace since 2016 - as external demand weakened and a worsening Covid outbreak disrupted production and cut demand at home. US stocks have started unwinding recent gains after strong jobs data and an unexpected increase in a US service-sector gauge stoked concerns the Fed will remain aggressive in tightening policy. Investors are growing wary that higher-for-longer interest rates will curb growth and corporate earnings. “We’re still in for a fairly rough period,” Shane Oliver, head of investment strategy and economics at AMP Services Ltd told Bloomberg Television. “Monetary conditions have gone from super easy to super tight. That is going to have economic consequences, with a sharp slowing in growth and possibly a mild recession.” Oliver expects a year-end rally after next week’s Fed meeting is out of the way before stocks test new lows in the first half of 2023. A recovery is likely to take place in the second half as monetary policy starts to ease again, he said, echoing Michael Wilson almost verbatim. The S&P 500’s worst selloff in a month was sharp enough to reverse the rally that followed Fed Chair Jerome Powell’s comments on a possible downshift in the pace of tightening, leaving the benchmark where it was a week ago just before he spoke. “Recent economic data has highlighted the uncertainty over the economic outlook and the Fed’s response,” Mark Haefele, UBS Global Wealth Management’s chief investment officer wrote in a Wednesday note. “We expect further volatility and maintain our defensive exposure.” European stocks fell for a fourth consecutive day, the longest run in almost two months. Energy, miners and telecoms are the worst-performing sectors, dragging most European stocks lower. Euro Stoxx 50 falls 0.4%. FTSE MIB outperforms peers. Here are the biggest European movers: Russia is considering either imposing a fixed price for its oil or stipulating maximum discounts to international benchmarks at which it can be sold, according to two officials familiar with the plan, as a response to a cap that the G-7 nations set out last week. France’s Engie (ENGI FP +0.1%) agreed to a 15-year contract to buy liquefied natural gas from Sempra Infrastructure as companies increasingly look for long-term supply from the US to avoid shortages. Salzgitter and Engie have concluded a power purchase agreement with volumes of about 250 GWh of electricity per year. ERG gains in Milan to be among the best performers on the FTSE MIB index, which it joined on Nov. 29. Intesa Sanpaolo notes positive stance on the stock is backed by “solid” fundamentals and a dividend yield above the sector average. French renewable- energy company Voltalia drops after an offering of 35.8m shares priced at €13.70 apiece, representing a discount of about ~26% to Monday’s close. Oil and gas firm Mol has restarted its Danube refinery in Hungary and is gradually ramping up capacity, though won’t be able to meet market demand as the supply situation has become “critical,” Gyorgy Bacsa, managing director of Mol Hungary says in emailed statement Credit Agricole SA said it would stop new financing for oil extraction immediately, as part of bank’s efforts to cut the carbon emissions caused by its lending to fossil-fuel companies by a third by the end of the decade. European equities have been outperforming their US counterparts since the lows of late September. As Bloomberg notes, the Stoxx Europe 600 moved beyond its 2022 downtrend and crossed the much-watched 200-day moving average a month ago, while its US counterpart is struggling to overcome that resistance level. The difference in technical setups might further widen the performance gap as it suggests a bearish view for the US and a bullish one for Europe. Earlier in the session, Asian stocks widened losses in the late afternoon as renewed concerns about China’s growth were revived by weak trade data, offsetting optimism as the nation moves away from its Covid-Zero policy.     The MSCI Asia Pacific Index slumped as much as 1.4% on Wednesday, its biggest drop in more than a week, led lower by consumer discretionary and information technology shares.  Benchmarks in Hong Kong plunged more than 3% in volatile trading as a selloff deepened following reports that mainland authorities are set to allow home quarantine and relax testing requirements. Weak trade data underscoring sluggish demand at home and abroad also hurt sentiment.  The market has already priced in the easing of Covid policy announced today, “so investors are selling on news,” said Banny Lam, head of research at CEB International.  The Philippine stock benchmark was among notable losers in the region, dropping 2.2% amid profit taking. Japanese stocks also declined, following US shares lower as downbeat warnings from bank chiefs deepened concerns over the global economy.  The Topix fell 0.1% to close at 1,948.31, while the Nikkei declined 0.7% to 27,686.40. Tokyo Electron Ltd. contributed the most to the Topix decline, decreasing 3.8%. Out of 2,164 stocks in the index, 1,202 rose and 816 fell, while 146 were unchanged. “With the comments from U.S. banks, there is increasing negative sentiment toward the global economy, and market participants are watching the shift of economic trends closely,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities. Shares in Australia, Taiwan, Singapore and Indonesia also declined.  Asian stocks have been relatively shielded from recession woes that hurt US stocks this week as investors expected China’s reopening moves could bolster its recovery. Wednesday’s selloff highlighted how volatile the path for recovery could be.   The key Asian stock benchmark has risen more than 15% from its October low amid expectations for China’s full reopening and the Fed’s pivot from its aggressive tightening. The gauge’s rally has paused in recent days, stopping short of entering a technical bull market. India’s benchmark stock gauge declined after the central bank raised borrowing costs in line with expectations but surprised investors with a trimmed outlook for growth. The S&P BSE Sensex fell 0.3% to 62,410.68 in Mumbai, its lowest level since Nov. 25. The NSE Nifty 50 Index dropped 0.4%. Both initially rose after the Reserve Bank of India raised its key rate by 35 basis points to 6.25%. Reliance Industries and mortgage lender HDFC dragged the Sensex the most, as 22 out of its 30 stocks traded lower while the rest advanced. All but four of the BSE’s 19 sector sub-indexes declined, led by utilities.  “For stocks, it’s important to note that the RBI continues to take out liquidity,” said Amit Kumar Gupta, a chief investment officer at New Delhi-based Fintrekk Capital. Stocks will face pressure on the RBI’s comments about consumption and commodity prices, he added.  India is Asia’s best-performing stock market so far this year. Foreign investors have resumed buying on expectations that corporate earnings will improve despite inflationary pressures. In the five months through November, they have bought more than $11 billion in local shares, lifting benchmarks to a record. Some investors are concerned that economic growth is peaking. The “growth narrative looks rather weak,” Kotak Institutional Equities analysts led by Sanjeev Prasad wrote earlier this month In FX, the Bloomberg Dollar Spot Index steadied after earlier rising to a one-week high as the greenback traded mixed against its Group- of-10 peers. JPY underperforms G-10 FX, trading around 137.46/USD. The term structures in the major currencies retained inversion mode as next week’s US CPI print and meetings by the Fed, the BOE, the SNB and the ECB are in focus. The euro snapped a two-day drop against the dollar after recovering in the European session. The common currency neared $1.05 after earlier touching a low of $1.0443. Bunds and Italian bonds twist-steepened as yields inched lower through the 10-year tenor while rising further out on the curve. The pound inched up against the dollar to trade at around $1.2150. Gilt yields crept higher. Concern over a protracted downturn in the housing market persisted after data showed that UK house prices fell at the sharpest pace in 14 years in November. The Norwegian krone and the Canadian dollar were among the worst G-10 performers amid a decline in oil prices. The yen also fell as a Bank of Japan board member said a wage hike alone may not lead to an immediate change in policy. The yield curve twist-flattened. Recession fears were palpable in the bond market, where demand for longer-dated bonds drove a yield inversion to a four-decade extreme, sending 10-year rates below those on 2-year notes by the most since the early 1980s. The Federal Reserve rate decision and inflation data due next week loom as pressure points for a market governed by central banks. Bunds, USTs and gilts 10-year yields fairly muted with less than a basis point move within Tuesday’s range. The US Treasury curve bull steepened slightly. The two-year yield fell 2bps to 4.35% while the 10-year yield shed one 1bp to 3.52%. Gilts lag with the UK curve bear-steepening while Treasuries 5s30s spread extends flattening, dropping as low as -22.7bp, tightest since start of November. The UK 10-year cheaper by 1.6bp; 2s10s steeper by ~2.5bp on the day with front- end yields richer by 1bp on outright basis while 5s30s spread is flatter by ~1.5bp In commodities, oil fluctuated after touching the lowest level since last December on Tuesday as investors pared back crude positions amid a broader market sell-off. The decline for West Texas Intermediate, which settled near $74 on Tuesday, erased all of this year’s gains as sentiment remaining fragile on signs that tighter interest rates could be needed for longer. WTI rebounded back into the green, trading at $74.37 last after earlier dropping as low as $72.75. A Russian price cap coalition official said nearly all 20 tankers waiting to cross Turkey's straits are loaded with Kazakh oil and not subject to the G7's Russian oil price cap, while the delays in tanker traffic from Russia's Black Sea ports to the Mediterranean stem from the Turkish insurance rule and not the price cap, according to Reuters.  Chinese nickel buyers are seeking to use Shanghai Future Exchange contracts not London Metal Exchange for 2023 pricing, according to Reuters sources; participants write this is due to the decline in liquidity and low stocks which has resulted in persistently high prices within London this year, which have not reflected market fundamentals. Spot gold is contained around USD 1775/oz, while base metals are mixed but with an underlying downward bias. Looking to the day ahead, from central banks we’ll get the Bank of Canada’s latest policy decision, along with remarks from the ECB’s Lane and Panetta. Otherwise, data releases include German industrial production and Italian retail sales for October. Market Snapshot S&P 500 futures down 0.2% to 3,937.00 STOXX Europe 600 down 0.5% to 436.56 MXAP down 1.3% to 155.60 MXAPJ down 1.5% to 506.31 Nikkei down 0.7% to 27,686.40 Topix little changed at 1,948.31 Hang Seng Index down 3.2% to 18,814.82 Shanghai Composite down 0.4% to 3,199.62 Sensex down 0.1% to 62,535.48 Australia S&P/ASX 200 down 0.8% to 7,229.39 Kospi down 0.4% to 2,382.81 German 10Y yield down 0.7% to 1.79% Euro up 0.1% to $1.0481 Brent Futures down 1.7% to $78.02/bbl Gold spot up 0.1% to $1,772.93 U.S. Dollar Index little changed at 105.56 Top overnight news from Bloomberg Senator Raphael Warnock defeated Republican challenger Herschel Walker in their hotly contested runoff for Georgia’s US Senate seat, giving Democrats a 51-49 edge in the upper chamber Mexico’s central bank may start to slow the pace of interest-rate increases, Reuters reported A sense of calm that has narrowed the gap between German and Italian debt yields will embolden policymakers next week as they announce principles for so-called quantitative tightening. But whatever they devise under such placid conditions must accommodate the danger of renewed volatility Foreign investors are positioning for Japan’s sovereign yields to rise as quickening inflation increases the pressure on the BOJ to alter its accommodative stance. Overseas funds are sticking to their guns even as central bank chief Haruhiko Kuroda has vowed repeatedly to keep easing to spur price gains China moved definitively away from its long-held Covid Zero approach Wednesday, easing a range of restrictions that it has persisted with long after the rest of the world moved on to living with the virus Senior Chinese officials are debating an economic growth target for next year of around 5%, according to people familiar with the discussion, as Beijing shifts gears toward bolstering the recovery The EU will proceed with two cases against China at the World Trade Organization on Wednesday after talks to resolve the issues with its largest trading partner failed to yield results A More detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks were mostly subdued after the losses on Wall St where risk sentiment was dampened by tech sector woes and recession concerns, while participants also digested weak trade data and an easing of restrictions in China. ASX 200 was pressured after Australian GDP data for Q3 missed forecasts and with the declines in the index led by tech and energy following similar weakness in US counterparts. Nikkei 225 was lacklustre but with downside limited by a lack of domestic catalysts and with BoJ’s Nakamura reiterating that the central bank must patiently maintain monetary easing. Hang Seng and Shanghai Comp were indecisive as the announcement of an easing of COVID restrictions was offset by the dismal trade data from China. Top Asian News China's Politburo said China will maintain its prudent monetary policy and that monetary policy should be targeted and forceful, while it urged coordinating COVID controls and economic development. China will also fine-tune COVID control measures and allow home quarantine, as well as ease testing, according to Xinhua. China's Health Commission said asymptomatic patients and cases with mild symptoms can undergo home quarantine, while it will accelerate vaccination of the elderly against new coronaviruses. Furthermore, China bans COVID movement restrictions in non-high-risk zones and scraps COVID test rules in most public venues nationwide, according to Reuters and Bloomberg. "Latest optimized measures against COVID do not represent a full re-opening or relaxation, but rather show that the country's anti-epidemic measures are becoming more scientific, more active and more accurately targeted", according to Global Time China is said to be considering a 5.0% GDP target for next year, according to Bloomberg. Shanghai Disneyland (DIS) to reopen on Thursday, December 8th. US Senators scaled back a proposal that placed new curbs on the use of Chinese-made chips by the US government and its contractors, according to a draft seen by Reuters. EU will proceed with two cases against China at the World Trade Organization on Wednesday after talks to resolve the issues with its largest trading partner failed to yield results, according to Bloomberg. RBI hiked the Repurchase Rate by 35bps to 6.25%, as expected, through 5-1 vote, while the Standing Deposit Facility was raised by 35bps to 6.00% and the Marginal Standing Facility was raised to 6.5%. RBI Governor Das said that inflation remains high and broad-based, as well as noted that the MPC will remain focused on the withdrawal of accommodation with 4 out of 6 in the MPC voting in favour of retaining the policy stance. Das added that further calibrated monetary policy is warranted to anchor inflation expectations and that they stand ready to act as necessary from time to time, while the focus on inflation continues and there will be no let-up in efforts to bring inflation to more manageable levels. European bourses are somewhat mixed after a predominantly soft cash open, Euro Stoxx 50 -0.5%; though, the breadth of the market remains narrow. Stateside, futures are in relative proximity to the unchanged mark and are yet to meaningfully deviate from overnight ranges, ES -0.2% at circa. 3935. In Europe, Health Care outperforms following Zantac updates for GSK (9.0%) & Sanofi (+5.5%) while Energy & Basic Resources lag given benchmark pricing. Key Apple (AAPL) supplier expects iPhone orders to drop on weak demand, via Bloomberg; "Mobile industry bellwether Murata Manufacturing Co. expects Apple Inc. to reduce iPhone 14 production plans further in the coming months because of weak demand, which would force the supplier to again cut its outlook for its handset-component business." Top European news UK PM Sunak is reportedly under pressure from Tory MPs to speed up anti-strike legislation, according to FT. ECB Consumer Expectations Survey (October): Consumer expectations for inflation 12 months ahead increased further, while expectations for inflation three years ahead remained unchanged. Europe Gas Rises as Cold Weather and China Shift Fuel Demand Prosus Valued at $31 Billion Excluding Tencent Stake Credit Agricole Stops New Oil Extraction Financing ECB Says 12-Month Consumer Inflation Expectations Rose Further Saxo Bank Shelves $2 Billion IPO After Dutch SPAC Deal Dropped UK Tones Down ‘Big Bang’ Finance Plan to Avoid Backlash FX USD is mixed vs G10 peers, though the DXY itself remains underpinned above 105.50. Overall, peers are narrowly mixed with EUR modestly outpacing and testing 1.05 while JPY lags as USD/JPY rebounds to near 138.00 CAD remains pressured given benchmark crude pricing with attention turning to the BoC with expectations split between 25bp and 50bp. NOK knocked on crude and domestic data, SEK gleaned limited traction from significantly better than forecast GDP. PBoC set USD/CNY mid-point at 6.9975 vs exp. 6.9941 (prev. 6.9746) Fixed income Overall, fundamentals little changed for the complex. Core benchmarks have drifted slightly down from intraday peaks. Bunds holding around 142.00 vs 142.65 peak, with USTs similarly at the bottom of a 114.03 to 114.13+ band yields marginally firmer, as such. Commodities Crude benchmarks are softer intraday given the cautious tone and resilient USD impacting the complex, despite further constructive China COVID updates. WTI has dipped under USD 73/bbl (vs USD 74.82/bbl high) while Brent Feb had lost the USD 78/bbl handle (vs USD 79.93/bbl high). US Energy Inventory Data (bbls): Crude -6.4mln (exp. -3.3mln), Cushing +0.0mln, Gasoline +5.9mln (exp. +2.7mln), Distillate +3.6mln (exp. +2.2mln) Price cap coalition official said nearly all 20 tankers waiting to cross Turkey's straits are loaded with Kazakh oil and not subject to the G7's Russian oil price cap, while the delays in tanker traffic from Russia's Black Sea ports to the Mediterranean stem from the Turkish insurance rule and not the price cap, according to Reuters. Hungarian government is to scrap its fuel price cap, according to PM Orban's chief of staff cited by Reuters. Chinese nickel buyers are seeking to use Shanghai Future Exchange contracts not London Metal Exchange for 2023 pricing, according to Reuters sources; participants write this is due to the decline in liquidity and low stocks which has resulted in persistently high prices within London this year, which have not reflected market fundamentals. Spot gold is contained around USD 1775/oz, while base metals are mixed but with an underlying downward bias. Crypto A new proposed amendment under National Defense Authorization Act (NDAA) could require the US Department of State to justify crypto rewards and disclose any crypto payouts within 15 days of making it, according to a document via CoinTelegraph. Geopolitics US Secretary of State Blinken said the US has neither encouraged nor enabled Ukraine to strike within Russia, according to Reuters. US Defense Secretary said the US military will increase the rotational presence of bomber task forces and other forces in Australia, according to Reuters. US State Department approved the sale of aircraft spare parts worth around USD 300mln to Taiwan and the sale of non-standard spare parts worth an estimated USD 98mln, according to the Pentagon, while Taiwan's Defence Ministry said the aircraft parts sale will help air force operations in the face of China's military activities, according to Reuters. US Event Calendar 07:00: Dec. MBA Mortgage Applications, prior -0.8% 08:30: 3Q Unit Labor Costs, est. 3.0%, prior 3.5%; Nonfarm Productivity, est. 0.6%, prior 0.3% 15:00: Oct. Consumer Credit, est. $28b, prior $25b DB's Jim Reid concludes the overnight wrap It's all crept up fast but today I'm taking an hour away from my desk to hobble to watch my 5-year-old twins in their nativity play. One of the twins has the lead role of Joseph and the other has just one line which is "I'm not a cow, I'm an Ox"! Ironically, I'm equally worried about both as although the latter has far less to do, he's shown little evidence at home that he understands his cue or how to say his line properly. With regard to the former, I will wince when he tells the innkeeper that "My wife is pregnant", and hope it's not a line he uses again for at least 20 years. Assuming we get over this, tomorrow it’s Maisie's turn for her play. As thoughts turn to Xmas and year-end, today we’re launching our final EMR survey of 2022 aimed at market participants (link here). This December edition is a special 2023 one with lots of easy-to-answer questions about the year ahead, with a few longer-term ones thrown in for consistency with prior surveys. It’ll close on Friday and will only take a few minutes to complete. Many of the questions look forward to the year ahead, including where you see the biggest market risks, the likelihood of stagflation, and where central banks will take their policy rates to. We have some seasonal ones as well, such as what’s your favourite Christmas song, and who you expect to win the football World Cup. All responses are very gratefully received, and everything is anonymous. Last year we had over 750 responses for our year-end survey, and it’s revealing what readers did and didn’t get right. A good call was that the two biggest risks were “Higher than expected inflation” and “an aggressive Fed tightening cycle”, both of which surprised well to the upside of consensus. But even then, very few saw quite how aggressive it would prove in the base case, with just 2% of respondents thinking US CPI would be above 7% by 2022 year-end, whilst the median estimate on Fed hikes was for 50bps this year. In reality, we’ll end up with 425bps if they go ahead with a 50bps move next week. Other interesting snippets were that just 19% thought the S&P 500 would post a negative return in 2022, and the average estimate for the 10yr Treasury yield by year-end was 1.9% with just 0.54% thinking they'd end this year above 3.5%. If you were any of those 4 people out of 750 please email me to tell me your predictions for the next 12 months. Before we get to 2023 we still have to survive 2022. The Santa Claus rally has struggled of late with last night continuing a streak of four successive losses for the S&P 500 (-1.44%) and seven down sessions out of eight. In fact, the latest moves for the S&P mean it’s now unwound the entirety of the rally following Fed Chair Powell’s speech last week, which makes sense on one level given he didn’t actually say anything particularly new. That said however, there hasn’t been a great deal of newsflow coming through, with markets still in something of a holding pattern ahead of next week’s bumper calendar of events, which includes the US CPI print as well as the Fed and ECB decisions. This gloomy outlook was evident from a number of indicators, not least the 2s10s Treasury curve which closed at its most inverted of this cycle yet, after falling -2.1bps on the day to -84.1bps, something we haven’t seen in over four decades. In the meantime, the prospect of weakening global demand led to a further slump in oil prices, with Brent Crude falling -4.03% on the day to $79.35/bbl. That’s its lowest closing level since January, and means that Brent Crude is now up by just +2.24% on a YTD basis, whilst WTI is actually now down -1.27%. One upside for policymakers is this is continuing to filter through to consumers, with average US gasoline prices now down to $3.38 per gallon, having been just above $5 back in mid-June. Elsewhere yesterday, the combination of moves made it a classic risk-off performance, with equities and HY credit struggling, whereas safe havens such as sovereign bonds and gold both advanced. For equities, the losses were led by the more cyclical sectors, with few strong performers as nearly 80% of the S&P 500 moved lower on the day. Tech stocks struggled in particular, with larger declines for the NASDAQ (-2.00%) and the FANG+ index (-2.33%). And over in Europe there were also broad-based declines, with losses for the STOXX 600 (-0.58%), the DAX (-0.72%) and the CAC 40 (-0.14%). In spite of the equity declines, the 60/40 portfolio didn’t have such a bad day yesterday thanks to a sovereign bond rally on both sides of the Atlantic. The moves were particularly pronounced in Europe, with yields on 10yr bunds (-8.4bps), OATs (-6.7bps) and BTPs (-10.0bps) all seeing sharp moves lower, including the lowest 10yr bund yield in a couple of months. That comes as market pricing continues to inch towards expecting a 50bps ECB hike next week, with the 53.6bps priced in for the December meeting being the lowest in nearly three months now. Meanwhile in the US, the moves were somewhat smaller and yields on the 10yr Treasury fell -4.2bps to 3.53%. Asian equity markets are mixed this morning. The Hang Seng (+1.38%) and CSI (+0.78%) jumped after China announced a significant loosening of Covid restrictions, saying it would allow home quarantine for some Covid patients and close contacts and would ditch Covid testing requirements in most public venues. This came hot on the heels of reports that officials are considering a growth target of around 5% for next year and offset disappointing early morning data showing that exports and imports in November fell to the lowest since early 2020. Exports dropped -8.7% y/y (v/s -3.9% expected) following a decline of -0.3% in the previous month while imports contracted -10.6% (v/s -7.1% expected) against October’s decline of -0.7%. Meanwhile, the Nikkei (-0.54%) and the KOSPI (-0.14%) are trading in negative territory. Outside of Asia, US stock futures are indicating a rebound with contracts tied to the S&P 500 and the NASDAQ 100 (+0.19%) edging higher. Elsewhere in the States, Democrat Raphael Warnock beat his Republican challenger in Georgia’s runoff to determine who they will send to the Senate. The outcome gives the Democrats a narrow 51-49 seat majority in the upper house. There wasn’t much in the way of data yesterday, although we did get the US trade balance for October, which showed a $78.2bn deficit (vs. $80.0bn expected). Elsewhere, the German construction PMI came in at a 20-month low of 41.5 in Germany, whilst the UK construction PMI just about remained in expansionary territory with a decline to 50.4 (vs. 52.0 expected). To the day ahead now, and from central banks we’ll get the Bank of Canada’s latest policy decision, along with remarks from the ECB’s Lane and Panetta. Otherwise, data releases include German industrial production and Italian retail sales for October. Tyler Durden Wed, 12/07/2022 - 08:06.....»»

Category: personnelSource: nytDec 7th, 2022

Price Of Ship Fuel Falling Even As Russia-Ukraine War Rages On

Price Of Ship Fuel Falling Even As Russia-Ukraine War Rages On By Greg Miller of FreightWaves.com When Russia invaded Ukraine, the price of ship fuel spiked to unprecedented highs. Prices are still high in historical terms, but they’ve now fallen back to prewar levels. Ship fuel is getting cheaper as fears of future demand weakness drag down the price of oil. Ship & Bunker put Friday’s average price of very low sulfur fuel oil (VLSFO) — the fuel used by most commercial ships — at $685.50 per ton (based on prices at the top 20 refueling hubs). That’s down 39% from the all-time high on June 14 and on par with prices seen in January. The average price of high sulfur fuel oil (HSFO) — the fuel burned by ships using exhaust gas scrubbers — was $457 per ton, down 32% from the high on May 5 and back to levels seen in September 2021. Average prices at top 20 refueling hubs (Chart: American Shipper based on data from Ship & Bunker) The price of ship fuel is important to importers of containerized cargo because shipping lines pass on fuel costs via bunker adjustment factors (BAFs). In bulk commodity shipping, the price of fuel is important to spot markets because shipowners pay for fuel on spot voyages. Shipowner spot earnings are net of that cost.  Meanwhile, the VLFSO-HSFO spread is pivotal for owners of ships with scrubbers. The higher the discount of HSFO to VLSFO, the more scrubbers pay off. Container shipping fuel surcharges falling On Friday, DPI Signals reported container line BAFs for the first quarter of 2023. The good news for cargo shippers: BAFs are now coming down rapidly as shipping lines pass along fuel-cost savings. The Asia-West Coast BAF of Zim (NYSE: ZIM) will be 32% lower in Q1 2023 versus Q4 2022, falling to $720 per forty-foot equivalent unit. Evergreen’s Asia-West Coast BAF peaked in Q3 2022. In the coming quarter, it will be down 41% from that high, at $443 per FEU. In the Asia-East Coast lane, Cosco’s BAF will fall 21% between Q3 2022 and Q1 2023, to $1,425 per FEU. CMA CGM’s BAF will decline 21% between the fourth quarter and the first, to $1,098 per FEU. Scrubber savings volatile but remain high The spread between VLSFO and HSFO jumped to over $300 per ton in January 2020, when the new IMO 2020 regulation went into force. That regulation required ships without scrubbers to switch from HSFO to more expensive VLSFO. But in the wake of the initial COVID lockdowns, the VLSFO-HSFO spread collapsed to around $50 per ton. This raised the question of whether scrubber installations were a mistake. A spread of around $100 per ton is generally seen as the point where scrubber installations make economic sense. As oil pricing and refinery utilization picked up in 2021, the spread widened again. When Russia invaded Ukraine, it rocketed to new highs, surpassing the previous peak in January 2020. According to Ship & Bunker data, the average spread at the 20 top refueling hubs hit an all-time high of $420.50 per ton on July 5. It has fallen back again in recent months. The spread was $228.50 per ton on Friday. Even so, scrubbers are still paying off handsomely for shipowners. According to Clarksons Securities, a spot-trading, scrubber-equipped Capesize (a bulker with capacity of around 180,000 deadweight tons) earned $9,400 more per day than a nonscrubber Capesize as of Monday, due to fuel savings. Spot earnings of Capesizes with scrubbers burning HSFO were 75% higher than Capesizes without scrubbers burning VLSFO. A 2011-built, scrubber-equipped very large crude carrier (VLCC; a tanker that carries 2 million barrels of crude) was earning $14,100 more per day than a nonscrubber VLCC in the spot market on Monday, a 26% premium. What’s driving the spread? American Shipper asked Stefka Weschsler, marine fuels editor at Argus, about what’s driving the spread and what could happen after the EU bans imports of Russian refined products. “Russia exports more HSFO than VLSFO, but Russia also exports distillate fuel, which is used as a blend stock to make VLSFO,” Weschsler explained. After the war began, VLSFO prices increased in the Amsterdam-Rotterdam-Antwerp (ARA) bunkering market, while HSFO prices declined. The spread rose to historic highs in July “as a reaction to distillates availability erosion.” The decline in the spread this autumn was due to the price of VLSFO dropping faster than the price of HSFO. Between July and November, VLSFO prices in ARA fell 25% and HSFO prices 18%, according to Argus data. The decline in VLSFO pricing outpaced HSFO “as Northwest Europe reshuffled its VLSFO sources, importing from the U.S. Gulf Coast, Gabon, Algeria, Tunisia, the UAE and Argentina,” said Weschsler. Asked about the EU ban on Russian products imports starting Feb. 5, he said, “Market views are divided. Some think that with Russian distillates completely out of the EU market, ARA VLSFO prices will outpace HSFO prices [widening the spread].” “Others think the spread will narrow once all Russian HSFO stocks are depleted from the ARA,” he said. In other words, lower HSFO supply would increase HSFO prices relative to VLSFO. Container shipping to drive future scrubber installations Scrubber installations make the most sense on high-capacity vessels on long-haul runs. Installations are more cost-effective with newbuildings than with retrofits. Data from Clarksons Research shows a sharp rise in scrubber use over the past two years, but also, that most future installations will be on newbuilds, primarily on container ships. In January 2020, when IMO 2020 was implemented, 35% of all VLCCs either on the water or on order had scrubbers installed or installations planned. As of Monday, the VLCC scrubber share had risen to 48%. However, future VLCC scrubber installations are limited. The orderbook is extremely small, with only 27 VLCCs on order. Of those, only 26% will have scrubbers installed. Of VLCCs in service, only 19 (2% of the fleet) have scrubber retrofits planned. The share of Capesizes with scrubbers or planned installations rose from 35% in January 2020 to 42% currently. As with VLCCs, the low orderbook will limit future installations. Only 19 of the Capesizes on order (16% of vessels under construction) will get scrubbers, and only 11 currently operating Capesizes have retrofits planned (less than 1% of the fleet), according to Clarksons Research data. The container shipping industry has been the biggest scrubber adopter in terms of fleet share. The share of container ships with capacity of 12,000 or more twenty-foot equivalent units that have scrubbers or plan to have scrubbers increased from 52% in January 2020 to 59% currently. Unlike VLCCs and Capesizes, newbuildings play a major role, as container shipping now has a historically large orderbook. According to Clarksons’ data, there are 140 container ships with capacity of 12,000 TEUs or more on order that will have scrubbers installed, representing 46% of ships under construction in that size category. Tyler Durden Tue, 12/06/2022 - 09:10.....»»

Category: personnelSource: nytDec 6th, 2022

Moody"s (MCO) Up 16% Since Last Earnings Report: Can It Continue?

Moody's (MCO) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. It has been about a month since the last earnings report for Moody's (MCO). Shares have added about 16% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Moody's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. Moody's Q3 Earnings Miss, Revenues Decline Y/YMoody's reported third-quarter 2022 adjusted earnings of $1.85 per share, which lagged the Zacks Consensus Estimate of $2.06. The bottom line also plunged 31% from the year-ago quarter figure.Subdued issuance volume was a major headwind, which hurt Moody’s results. A rise in operating expenses posed an undermining factor. However, strategic buyouts strengthened the MA segment’s performance. The company’s liquidity position was robust during the quarter.After taking into consideration certain non-recurring items, net income attributable to Moody's Corporation was $303 million or $1.65 per share, down from $474 million or $2.53 per share in the prior-year quarter.Revenues Down, Costs UpRevenues were $1.28 billion, which missed the Zacks Consensus Estimate of $1.35 billion. The top line declined 16% year over year. Foreign currency translation unfavorably impacted revenues by 4%.Total expenses were $873 million, up 1%. The rise was mainly due to operational and transaction-related costs related to the recent acquisitions. Foreign currency translation positively impacted operating expenses by 5%.Adjusted operating income of $497 million was down 33%. Adjusted operating margin was 39%, down from 48.3% a year ago.Mixed Segment PerformanceMoody’s Investors Service revenues plunged 36% year over year to $590 million. The fall was mainly due to muted capital market activities. Foreign currency translation affected the segment’s revenues by 3%.Moody’s Analytics revenues grew 14% to $685 million. This was mainly driven by the RMS acquisition and steady demand for Know Your Customer solutions and credit research. Foreign currency translation unfavorably impacted the segment’s revenues by 7%.Strong Balance SheetAs of Sep 30, 2022, Moody’s had total cash, cash equivalents and short-term investments of $1.75 billion, down from $1.9 billion as of Dec 31, 2021.The company had $7.5 billion in outstanding debt and $1.25 billion in additional borrowing capacity under the revolving credit facility.Share Repurchase UpdateDuring the quarter, Moody's repurchased shares worth $113 million.2022 GuidanceMoody’s lowered its earnings guidance on subdued year-to-date performance and “the ongoing macro uncertainties.” The company expects adjusted earnings of $8.20-$8.50 per share, down from the prior mentioned $9.20-$9.70 per share.On a GAAP basis, earnings are projected to be $6.90-$7.20 per share, lower than the earlier mentioned $8.10-$8.60 per share.Moody’s projects revenues to decrease in the low-double-digit percent range, a change from the earlier stated fall in the high-single-digit percent range.Operating expenses are projected to increase in the mid-single-digit percent range, changed from previously mentioned high-single-digit percent growth.Net interest expenses are expected to be $220-$240 million.Adjusted operating margin is expected to be 42%, down from the prior stated 44%.The operating margin is likely to be 34-35%, lower than 37-38% previously targeted.Moody’s expects cash flow from operations of $1.5 billion, lower than $1.7-$1.9 billion stated earlier. Similarly, free cash flow is projected to be $1.2 billion, down from $1.4-$1.6 billion mentioned previously.The company will likely repurchase shares worth $1 billion.The effective tax rate is projected to be 20.5-22.5%. Segment Outlook for 2022MIS segment revenues are anticipated to decline 30%, a change from the prior stated decrease in the low-twenties percent range.Adjusted operating margin is expected to be 51%, lower than the previously stated 54-55%.Coming to the MA segment, Moody’s anticipates revenues to grow in the mid-teens percent range.Adjusted operating margin is expected to be 30%, changed from the previously mentioned 29%. Further, the segment’s organic Annualized Recurring Revenue (ARR) is projected to rise in the low-double-digit percent range.2022-2023 Geolocation Restructuring ProgramManagement expects the program to help the company further adapt to the new global workplace and talent realities. Also, the restructuring plan will accelerate a number of ongoing cost-efficiency initiatives, and includes real estate optimization and increased utilization of lower-cost operational hubs.The program is expected to result in annualized savings of $100-$135 million per year.The exit from certain leased office spaces is expected to begin late in 2022 or early 2023 and is expected to result in $50-$70 million of pre-tax charges to either terminate or sublease the affected real estate leases.The program also includes $75-$100 million of pre-tax personnel-related restructuring charges, an amount that includes severance and related costs primarily determined under the company’s existing severance plans.Cash outlays associated with the program are expected to be $75-$100 million, which are expected to be paid through 2024.The program is expected to be substantially complete by the end of 2023.Medium-Term TargetsMoody’s projects total revenue growth of at least 10%, with adjusted operating margin in the low-50s range. Adjusted earnings per share are anticipated to increase in the low double-digit percentage range.MA segment revenues are projected to grow in the low-to-mid teen percentage range, with adjusted operating margin in the mid-30s range.MIS segment revenues are anticipated to rise in the low-to-mid-single-digit percentage range, with adjusted operating margin in the low-60s range.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in fresh estimates.The consensus estimate has shifted -25.14% due to these changes.VGM ScoresAt this time, Moody's has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Moody's has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.Performance of an Industry PlayerMoody's is part of the Zacks Financial - Miscellaneous Services industry. Over the past month, American Express (AXP), a stock from the same industry, has gained 4.8%. The company reported its results for the quarter ended September 2022 more than a month ago.American Express reported revenues of $13.56 billion in the last reported quarter, representing a year-over-year change of +24.1%. EPS of $2.47 for the same period compares with $2.27 a year ago.American Express is expected to post earnings of $2.15 per share for the current quarter, representing a year-over-year change of -1.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.American Express has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B. Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in?  If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.>>Send me my free report on the top 5 EV stocksWant 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 Moody's Corporation (MCO): Free Stock Analysis Report American Express Company (AXP): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 25th, 2022

Tyson Foods (TSN) Q4 Earnings Lag Estimates, Sales Increase

Tyson Foods' (TSN) fourth-quarter fiscal 2022 results reflect increased sales due to higher average prices and volumes. Management is on track with the productivity program. Tyson Foods, Inc. TSN posted fourth-quarter fiscal 2022 results, wherein the bottom line fell short of the Zacks Consensus Estimate and declined year over year. However, the top line increased and beat the consensus mark. Shares of the company rallied nearly 2% in the pre-market trading session on Nov 14.Management stated that its record fiscal 2022 results were backed by a diversified portfolio and the strong consumer demand for protein. Results were driven by robust Beef unit performance and an improvement in the Chicken unit. The company continued to gain share from its foodservice Focus 6 categories and retail core business lines, including its Tyson, Jimmy Dean, Hillshire Farm and Ball Park brands.The company is also moving fast with its productivity program, which is likely to generate its fiscal 2024 targeted savings of more than $1 billion before the schedule by the end of fiscal 2023. This program is focused on operational and automation and advanced technologies, functional excellence and digital solutions.Tyson Foods, Inc. Price, Consensus and EPS Surprise Tyson Foods, Inc. price-consensus-eps-surprise-chart | Tyson Foods, Inc. QuoteQuarter in DetailAdjusted earnings came in at $1.63 per share, falling short of the Zacks Consensus Estimate of $1.70. The bottom line declined 29% year over year.Total sales came in at $13,737 million, up 7.2% from the $12,811 million reported in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $13,289 million. Gains from the average price change were 5.1%, while total volumes rose 2.1%.The gross profit in the quarter came in at $1,307 million, down from the $2,476 million reported in the prior-year quarter. The gross profit, as a percentage of sales, came in at 9.5%, down from the 19.3% reported in the year-ago quarter.Tyson Foods’ adjusted operating income decreased 29% to $823 million. The adjusted operating margin contracted to 6% from the around 9% reported in the year-ago quarter.Segment DetailsBeef: Sales in the segment declined to $4,859 million from the $5,012 million reported in the year-ago quarter. Volumes inched up 5.1% on a better operational performance. However, the average price decreased 8.2% in the segment, led by the lower demand for premium cuts of beef.Pork: Sales in the segment decreased to $1,604 million from the $1,646 million reported in the year-ago quarter. Sales volumes declined 1.1% due to the reduced domestic availability of live hogs. The average price declined 1.5% due to an adverse product mix related to export demand and the increased domestic availability of finished products.Chicken: Sales in the segment increased to $4,619 million from the $3,873 million reported in the year-ago quarter. Sales volumes climbed 1.1% on higher domestic production, somewhat negated by the impacts of inventory growth and a strategic initiative mix. The average price increased 18.2% on the impacts of pricing actions undertaken amid the inflationary cost environment.Prepared Foods: Sales in the segment rose to $2,516 million from the $2,253 million reported in the year-ago quarter. Prepared Foods’ sales volumes rose 0.3%. The average price increased 11.4%, mainly due to revenue management efforts amid an inflationary cost environment.International/Other: Sales in the segment were $638 million, up from the $546 million reported in the year-ago quarter. Volumes moved up 7.3%, while the average sales price jumped 9.5%.Other Financial UpdatesTyson Foods exited the quarter with cash and cash equivalents of $1,031 million, long-term debt of $7,862 million and total shareholders’ equity (including non-controlling interests) of $19,811 million. In the 12 months ended Oct 1, 2022, cash provided by operating activities amounted to $2,687 million.Liquidity was roughly $3.3 billion as of Oct 1, 2022. Management expects liquidity to remain more than the company’s minimum target of $1 billion.The company projects capital expenditures of nearly $2.5 billion for fiscal 2023. These include expenditures related to capacity expansion and utilization, automation to battle labor-related hurdles, and product and brand innovation.Effective Nov 11, 2022, management raised its quarterly dividend rate to 48 cents per share for its Class A shares and 43.2 cents a share for its Class B shares. This is payable on Dec 15, 2022 to shareholders of record as of Dec 1. The resultant annual dividend rate for fiscal 2023 ($1.92 for Class A and $1.728 for Class B stock) represents a 4% hike from the fiscal 2022 annual dividend rate.GuidanceFor fiscal 2023, the United States Department of Agriculture (“USDA”) projects domestic protein production (beef, pork, chicken and turkey) to dip 1% from the fiscal 2022 levels.Starting from fiscal 2022, management launched a new productivity program to drive a better, faster and more agile organization. The company generated productivity savings of more than $700 million in fiscal 2022, which helped fight inflationary hurdles. The program is expected to generate savings of more than $1 billion by the end of fiscal 2023.Management anticipates sales in the $55-$57 billion range in fiscal 2023. The net interest expense is expected to be $320 million.Segment-Wise Guidance for Fiscal 2023For the Beef segment, USDA projects domestic production to fall roughly 6% year over year. For Pork, domestic production is projected to remain nearly flat. Per USDA forecasts, production in the Chicken segment will likely improve by nearly 2% in fiscal 2023. For the fiscal, the company expects better results from its foreign operations in the International/Other segment.Shares of this Zacks Rank #4 (Sell) company have decreased 17.9% in the past three months compared with the industry’s decline of 13.5%.Looking for Consumer Staple Stocks? Check TheseSome better-ranked stocks from the sector are Lamb Weston LW, The J.M. Smucker SJM and Conagra Brands CAG.Lamb Weston, a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 14.6% and 45.7%, respectively, from the year-ago reported numbers.The J.M. Smucker, which manufactures and markets branded food and beverage products, sports a Zacks Rank #1 at present. The J.M. Smucker has a trailing four-quarter earnings surprise of 20.8%, on average.The Zacks Consensus Estimate for SJM’s current financial-year sales suggests growth of 4.6% from the year-ago reported number.Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8%, on average.The Zacks Consensus Estimate for Conagra Brands’ current financial-year sales and EPS suggests growth of 5.2% and around 3%, respectively, from the corresponding year-ago reported figures. 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 Conagra Brands (CAG): Free Stock Analysis Report The J. M. Smucker Company (SJM): Free Stock Analysis Report Tyson Foods, Inc. (TSN): Free Stock Analysis Report Lamb Weston (LW): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 15th, 2022

ArcelorMittal"s (MT) Q3 Earnings and Revenues Top Estimates

ArcelorMittal's (MT) Q3 sales were hurt by lower iron ore prices and reduced steel shipments. ArcelorMittal MT recorded profits of $993 million or $1.11 per share in the third quarter of 2022, compared with $4,621 million or $4.17 in the year-ago quarter.Barring one-time items, earnings per share came in at $1.54, beating the Zacks Consensus Estimate of $1.26.Total sales fell around 6% year over year to $18,975 million in the quarter. The figure surpassed the Zacks Consensus Estimate of $17,216.5 million. Sales were hurt by lower iron ore prices and reduced steel shipments.Total steel shipments declined around 7% year over year to 13.6 million metric tons in the reported quarter. ArcelorMittal Price, Consensus and EPS Surprise  ArcelorMittal price-consensus-eps-surprise-chart | ArcelorMittal Quote Segment ReviewNAFTA: Sales were essentially flat year over year at $3.4 billion in the reported quarter. Crude steel production increased roughly 7% year over year to 2.1 million metric tons. Steel shipments rose around 3% year over year to 2.3 million metric tons. The average steel selling price declined roughly 9% year over year to $1,191 per ton.Brazil: Sales fell around 3% year over year to $3.5 billion. Crude steel production declined roughly 5% year over year to 3 million metric tons. Shipments were flat year over year at 2.8 million metric tons. Average steel selling price fell around 5% year over year to $1,137 per ton.Europe: Sales decreased around 5% year over year to $10.7 billion. Crude steel production fell roughly 12% year over year to 8 million metric tons in the reported quarter. Shipments fell around 6% year over year to 7.1 million metric tons. Average steel selling price went up roughly 5% year over year to $1,150 per ton.Asia Africa and CIS (ACIS): Sales fell around 35% year over year to $1.6 billion. Crude steel production totaled 1.8 million metric tons, down about 39% year over year. Shipments declined around 29% year over year to around 1.7 million metric tons. Average selling prices declined around 11% year over year to $773 per ton.Mining: Sales fell around 36% year over year to $742 million. Iron ore production totaled 6.9 million metric tons, up around 1% from the year-ago quarter’s levels. Iron ore shipments were stable year over year at 6.9 million metric tons.FinancialsAt the end of the quarter, ArcelorMittal had cash and cash equivalents of around $5.1 billion, up around 16% year over year. The company’s long-term debt was around $6.4 billion, down roughly 2% on a year-over-year basis.Net cash from operating activities fell around 19% year over year to $1,981 million for the third quarter.OutlookThe company noted that it has adapted its capacity for the fourth quarter to address the weak apparent demand environment and higher energy costs, especially in Europe. It expects apparent demand conditions to improve once the current destocking phase reaches maturity. ArcelorMittal is also adapting its cost base during this period of low capacity utilization, optimizing energy consumption and lowering fixed costs of unproductive capacity.The company expects real consumption to grow in the United States in 2022, However, a greater impact than earlier expected from destocking is predicted to lead to a modest contraction of apparent consumption by up to -1%.Inflation is leading to slower albeit positive real consumption growth in 2022 in Europe. However, the impact of destocking is expected to lead to a contraction of apparent consumption by up to -7%, the company noted.The ongoing economic weakness due to the pandemic-led restrictions and the soft construction sector are forecast to lead to a decline in apparent demand of around -3.5% in China.Price PerformanceShares of ArcelorMittal have declined 11.3% in the past year compared with a 1.3% fall of the industry. Image Source: Zacks Investment Research Zacks Rank & Key PicksArcelorMittal currently carries a Zacks Rank #5 (Strong Sell).Better-ranked stocks worth considering in the basic materials space include Sociedad Quimica y Minera de Chile S.A. SQM, Commercial Metals Company CMC and Reliance Steel & Aluminum Co. RS.Sociedad has a projected earnings growth rate of 538.1% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 1.2% upward in the past 60 days.Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 60% in a year. The company currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Commercial Metals currently carries a Zacks Rank #1. The Zacks Consensus Estimate for CMC's current-year earnings has been revised 3.8% upward in the past 60 days.Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 19.7%, on average. CMC has gained around 40% in a year.Reliance Steel, currently carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 29.7% for the current year. The Zacks Consensus Estimate for RS's current-year earnings has been revised 0.1% upward in the past 60 days.Reliance Steel’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 13.6%, on average. RS has gained around 22% in a 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 Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ArcelorMittal (MT): Free Stock Analysis Report Reliance Steel & Aluminum Co. (RS): Free Stock Analysis Report Sociedad Quimica y Minera S.A. (SQM): Free Stock Analysis Report Commercial Metals Company (CMC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 15th, 2022

Brokers: Shippers Are Pricing Down Contract Freight Faster

Brokers: Shippers Are Pricing Down Contract Freight Faster By John Paul Hampstead U.S. truckload capacity has continued to loosen in November as tender rejection rates fall and spot rates find a new floor.  Freight brokers told FreightWaves that shippers are working contract rates down as the trucking industry enters bid season. For a few weeks in September and October, it appeared that contract rates were falling fast enough to start closing the gap between contract and spot, but spot carriers are again lowering their rates in lieu of a strong peak retail season materializing. The national average outbound tender rejection rate fell to 4.28% Tuesday, a new low for the cycle that reflects a broad-based shift among asset-based carriers and freight brokerages alike from pricing strategies that maximize yield and margin to strategies to maintain asset utilization and volume.  ‘We’ve seen an increase in the frequency of pricing events, which we welcome,” said Jamie Teets, CEO of Transportation One, a Chicago-based freight brokerage. “This allows for a fluidity in contract pricing that promotes higher levels of Primary Tender Acceptance (PTA), carrier performance and in turn overall shipper satisfaction. We still engage in annual RFPs but see the biannual or even quarterly model as more effective from an overall network management standpoint.” In Uber Freight’s Q4 market update and outlook, the 3PL reported that contract rates continue to drop through the RFP process, but spot rates have mostly stabilized, and Uber Freight sees “continued pressure in incumbent carrier pricing as shippers look for cost savings. First tender accept[ance] has significantly improved as demand retreats.” Loose capacity conditions appear to be prevailing across the majority of the U.S. trucking market, with little regional variation or troublesome “hot spots” where trucks are difficult to procure on a spot basis. “There are no regions going against the grain as a whole,” a business analyst at a top 10 freight brokerage told FreightWaves, “maybe a little in the West, like the PNW, but it’s not noteworthy, just a little harder than in other areas.” Indeed, of the five largest trucking markets by outbound volume — Los Angeles, Dallas, Atlanta, Chicago and Harrisburg, Pennsylvania — only Harrisburg has higher tender rejection rates than the national average. It’s normal in a down cycle for Los Angeles to see lower tender rejections than the broader market because carriers tend to reallocate their assets to the most reliable sources of freight, which oversupplies those particular markets. But the fact that major markets, regardless of region, are all below the national average is striking. Spreads between truckload spot and contract rates are deeply negative, putting downward pressure on contract rates, as reflected in recent bids. When spot rates are well below contract rates, shippers have pricing power and can move their shipments on the spot market and reduce their cost, denying volume to their contracted carriers. Shippers use their volume leverage to pressure carriers to reduce contract rates, compressing the spread.  On the other hand, when spot rates are well above contract rates in a hot market, carriers reject their contracted freight and redeploy their assets into the spot market to fetch high rates per mile, using their capacity leverage to pressure shippers to increase contract rates and compress the spread. Despite contract rates trending down, spot rates have fallen at the same pace, maintaining a deeply negative spot-contract spread and putting further pressure on contract rates. That relatively wide spread keeps freight broker gross margin percentages healthy, even as net revenue dollars per load deteriorates. In other words, although the “take rate” may remain the same, total dollars of margin generated per load are falling.  “‘We expect spot and contract pricing to intersect at some point in 2023,” Teets said. “Regardless of market environment, we continue to focus on strengthening our long-term partnerships on all sides of the shipment. We understand the cyclical nature of the North American full truckload marketplace and how our partners are affected at all stages of a market cycle.” During C.H. Robinson’s third-quarter earnings call, CEO Bob Biesterfeld suggested that even Robinson’s traditionally aggressive approach to pricing — especially in scooping up volume with low contract rates in soft markets — has not been enough to grow volumes meaningfully.  “In our NAST Truckload business, we grew our year-over-year volume for the sixth quarter in a row, albeit with a modest shipment growth of 0.5%,” Biesterfeld said. “Volume growth in drop trailer, flatbed and temperature control was partially offset by a decline in our dry van volumes. Within the quarter, we saw mid-single-digit volume increases in July turned to declines in August and September as freight demand weakened.” As the largest freight brokerage in North America by far, C.H. Robinson has a harder time taking market share than other non-asset players.  A business analyst at a top 10 freight brokerage told FreightWaves that so far, on his boards, “volume is holding up for us, we’re just seeing more capacity willing to drop rates. Retail peak usually gets going by mid-November, but there are no signs of it.” Tyler Durden Thu, 11/10/2022 - 10:25.....»»

Category: worldSource: nytNov 10th, 2022

Foundry, backend houses see capacity utilization fall further on more LTA cancellations

In response to sharp order cuts by downstream clients, an increasing number of smaller IC designers in Taiwan, especially those focusing more on PC-related chip solutions, have canceled their long-term agreements (LTAs) signed with foundry and backend houses, heaping further downward pressure on capacity utilization rates at the upstream manufacturing partners, according to supply chain sources,.....»»

Category: topSource: digitimesNov 7th, 2022