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Category: blogSource: theflyonthewallMay 25th, 2021

Futures Rebound From Post-CPI Rout As China Property Stocks Soar

Futures Rebound From Post-CPI Rout As China Property Stocks Soar US futures rose and European bourses once again rebounded from overnight lows, this time after concerns that scorching US and Chinese CPI and PPI prints will prompt central banks to tighten much sooner than expected. The bounce was aided by a surge in Chinese property developers which booked their best two-day gain in six years, joined by a jump in technology stocks, as investors speculated Beijing may soften regulatory crackdowns on the two industries. At 730am S&P futures were up 16.75 ot 0.36 to 4,658.50, Dow Jones futs were up 40 points or 0.11% and Nasdaq futures were up 97.50 or 0.61%. The dollar index rose and cash Treasurys are closed today for Veterans day. Wednesday’s stronger-than-forecast data on U.S. consumer prices finally crushed the argument that inflation is transitory and weighed on the tech sector in particular as Treasury yields spiked. Tesla shares rose 5% in premarket trading following filings that showed Chief Executive Officer Elon Musk sold $5 billion in stock in the electric-vehicle maker a few days after the shares hit a record high. Disney dropped 4.8% in premarket trading to lead declines among Dow components after reporting the smallest rise in Disney+ subscriptions since the service's launch and posted downbeat profit at its theme park division. SoFi rose as much as 16% in premarket after Jefferies said the fintech’s third-quarter results were a “strong” beat. Amazon-backed electric-vehicle maker Rivian Automotive jumped 4.9%, adding to the nearly 30% gain on its blockbuster trading debut. Chinese tech stocks got some comfort from a report that ride-hailing company Didi Global Inc. is getting ready to relaunch its apps in China by the end of the year as an investigation wraps up. Here are some of the biggest U.S. movers today: Beyond Meat (BYND US) shares plunged 20% in premarket after the maker of plant-based meats released a disappointing sales projection for 4Q. Fossil (FOSL US) jumped 33% premarket after the accessory maker boosted its net sales forecast for the full year. Bumble (BMBL US) the dating app that lets women make the first move, reported earnings in the third quarter that missed analysts’ estimates. The shares fell 7% premarket. Disney (DIS US) shares fall as much as 5.3% in premarket, with analysts flagging softness in its Disney+ subscribers and net income in its fiscal fourth quarter. Rivian (RIVN US) jumps 8% in premarket after the electric truck maker soared in its trading debut on Wednesday. Didi (DIDI US) gains 4% in premarket after Reuters reported that the company is preparing to reintroduce its apps in China by the end of the year as regulators wrap up their investigations into the ride- hailing giant. Marqeta (MQ US) gains 17% premarket, with analysts saying the payments platform delivered a strong beat-and-raise report for 3Q. SoFi Technologies (SOFI US) rises 15% premarket with Jefferies saying the fintech’s 3Q results are a “strong” beat. Figs (FIGS US) shares sank 14% in postmarket trading on Wednesday, after the seller of scrubs for health-care workers reported a third-quarter profit in line with analysts’ estimates. Oscar Health (OSCR US) fell 10% postmarket Wednesday after the upstart health insurer projected a deeper adjusted Ebitda loss for the full year. Payoneer Global (PAYO US), the payment solutions company, gained 8% premarket after its full- year revenue forecast beat the average analyst estimate. Wish (WISH US) fell 2% after the e-commerce services company posted an Ebitda loss for the fourth quarter Despite today's mini relief rally, investors are bracing for tighter monetary policy sooner rather than later, after Wednesday’s stronger-than-forecast data on U.S. consumer prices dealt a blow to the argument that inflation is transitory. Meanwhile, Bloomberg reported that the European Central Bank could stop buying bonds as early as next September if inflation looks to have sustainably returned to the official target, Governing Council member Robert Holzmann said. “This is the perfect time to gravitate toward defensive plays, to take profit and to be in the sectors that are strategically positioned toward this volatile market that presents a lot of challenges,” Katerina Simonetti, senior vice president at Morgan Stanley Private Wealth Management, said on Bloomberg Television. Market participants were also watching developments around the nomination of the Federal Reserve Chair, with President Joe Biden still weighing whether to keep Jerome Powell for a second term or elevate Fed Governor Lael Brainard to the post In Europe, equities pushed into the green after a muted start, with the Stoxx 600 Index up 0.1% while the Euro Stoxx 50 is little changed as France's CAC outperformed and the U.K.’s exporter-heavy FTSE 100 Index rose as the pound held near an 11-month low after better-than-expected economic growth data. Basic resources, construction and banking names are the strongest sectors; travel and oil & gas the notable laggards. The Stoxx Europe 600 basic resources sub-index rose as much as 2.9%, the most in about a month, as iron ore rebounds and other metals rise. Anglo American, Rio Tinto, BHP, Glencore and Norsk Hydro among those leading gains by index points.ArcelorMittal also rallied after 3Q results. Miners are outperforming gains on the Stoxx Europe 600, which is up 0.2%. Iron ore’s rout halted as expectations build for an easing of the real-estate turmoil in China that’s battered demand, while aluminum jumped as supplies of the metal tighten. And speaking of Europe, ECB-dated OIS rates now price ~20bps of hikes by end-2022 as STIRs globally wrestle with the latest hot inflation prints. Here are some of the biggest European movers this morning: Auto Trader jumped as much as 15% to a record high, with Jefferies saying its new guidance should drive mid-single-digit upgrades to consensus estimates for the online car listings platform. Sika shares surge as much as 12% following the acquisition of construction chemicals peer MBCC, with Baader, Vontobel and Morgan Stanley all positive on the deal. ArcelorMittal shares rise as much as 4.4% after the steelmaker’s results, with Citi saying the update has a positive tone despite the numbers missing estimates. Siemens shares rise as much as 2.8% with analysts saying the German industrial group’s update was encouraging, with its dividend among the main positives. Johnson Matthey shares plummet as much as 20% after the company warned on its current trading and said it will exit its battery business. Burberry shares slump as much as 10% after the luxury goods company’s comparable store sales missed market expectations, with analysts saying consensus estimates are likely to remain unchanged, and the focus will be on the upcoming management change. Earlier in the session, Asia’s regional benchmark declined, on track for a third day of losses, after monthly U.S. consumer prices rose at the fastest annual pace since 1990, raising concerns over costs and monetary policy moves. The MSCI Asia Pacific Index slid as much as 0.6%, before paring most of the losses, with several tech hardware stocks weighing on the benchmark and Tencent the biggest drag after its 3Q revenue missed analyst estimates. Still, the Hang Seng Tech Index ended the day higher after Reuters reported that Didi Global is getting ready to relaunch apps in China by the end of the year. Investors have been cautiously eyeing inflation data as the next market catalyst amid the ongoing pandemic. China helped lead Asian stocks lower Wednesday after reporting a spike in producer prices. “The inflation number spoke to scope for greater and longer-lasting tightening, which understandably hurt the tech sector,” said Ilya Spivak, head of Greater Asia at DailyFX. “The vulnerability there is to longer-term financing, because near-term is pretty well locked in for the most part,” he said. India, Taiwan and the Philippines posted the steepest declines Thursday, while Australian equities slid after unemployment unexpectedly jumped in October. China was the top performer as property developers rallied, while Japan’s benchmarks posted their first rise in five sessions as the yen weakened.  Japanese equities rose, rebounding after after a four-day loss, as electronics and auto makers climbed while the yen weakened. Trading houses and machinery makers were also among the biggest boosts to the Topix, which rose 0.3%. Fanuc and SoftBank Group were the biggest contributors to a 0.6% gain in the Nikkei 225. The yen slightly extended its 0.9% overnight loss against the dollar. Tokyo shares fluctuated in early trading after U.S. stocks fell by the most in a month and Treasury yields spiked. Labor Department data showed consumer prices rose last month at the fastest annual pace since 1990, putting pressure on the Federal Reserve to end near-zero interest rates sooner than expected “Investors had been selling value stocks and buying up growth stocks, but now that’s being reversed,” said Mamoru Shimode, chief strategist at Resona Asset Management. Going forward “the environment will be a favorable one for Japanese equities,” he said, noting the local market’s underperformance against global peers. In rates, Treasury futures are mixed with a curve-flattening bent, remaining near low end of Wednesday’s range, when above-estimate CPI and poor 30-year bond auction caused a selloff across the curve. As noted above, the Cash Treasuries market is closed Thursday for Veteran’s Day. Treasury 10-year yields closed Wednesday at 1.549%, nearly 10bp higher on the day; EGBs and gilts are slightly richer on the day out to the 10-year sector, while curves are mildly steeper. Wednesday’s price action in the U.S. sent ripples through European markets, which now price 20bps of ECB rate hikes in December 2022 for the first time since the start of the month.  Euribor futures add 4-6 ticks in red and green packs. Bunds and gilts bear steepen gently. Peripheral spreads widen at the margin. Short end Italy underperforms despite a decent reception at today’s auctions. In FX, the Bloomberg Dollar Spot Index reached its strongest level in a year and the greenback advanced against all of its Group-of-10 peers, with the biggest losses seen among some commodity currencies. Cable inched lower to trade below $1.34 for the first time since December 2020. The U.K. economy grew more strongly than expected in September after a surge in service industries and construction. GDP rose 0.6% from August, the Office for National Statistics said Thursday. That was quicker than the 0.4% pace anticipated by economists. The Australian and New Zealand dollars were the worst G-10 performers; Aussie fell and Australian sovereign yields trimmed an opening spike after the nation’s jobless rate jumped to 5.2%. The initial move was in line with Treasuries, which plunged after U.S. inflation came in at the hottest since 1990. In commodities, crude futures fade a pop higher after quiet Asian trade; WTI is little changed near $81.20, Brent stalls below $83. Spot gold rises back toward Wednesday’s best levels, trading near $1,860/oz. Base metals are in the green with LME aluminum outperforming To the day ahead now, and the main data highlight will be the UK’s preliminary Q3 GDP reading. From central banks, the ECB will be publishing their Economic Bulletin, and speakers include the ECB’s Makhlouf, Schnabel and Hernandez de Cos, along with the BoE’s Mann. Otherwise, the European Commission will be releasing their latest economic forecasts, and it’s the Veterans’ Day Holiday in the United States. Market Snapshot S&P 500 futures up 0.4% to 4,658.25 STOXX Europe 600 up 0.1% to 484.44 MXAP little changed at 197.72 MXAPJ down 0.2% to 647.07 Nikkei up 0.6% to 29,277.86 Topix up 0.3% to 2,014.30 Hang Seng Index up 1.0% to 25,247.99 Shanghai Composite up 1.2% to 3,532.79 Sensex down 0.8% to 59,898.81 Australia S&P/ASX 200 down 0.6% to 7,381.95 Kospi down 0.2% to 2,924.92 Gold spot up 0.7% to $1,862.18 U.S. Dollar Index up 0.19% to 95.03 German 10Y yield little changed at -0.24% Euro down 0.2% to $1.1461 Brent Futures up 0.7% to $83.18/bbl Top Overnight News from Bloomberg The European Central Bank could stop buying bonds as early as next September if inflation looks to have sustainably returned to the official target, Governing Council member Robert Holzmann said China’s efforts to limit fallout from China Evergrande Group’s crisis are gathering steam. A series of articles published in state media in the past few days signal support measures are on the way to help developers tap debt markets, potentially easing a liquidity crunch that began with Evergrande’s meltdown five months ago Customers of international clearing firm Clearstream received overdue interest payments on three dollar bonds issued by Evergrande, a spokesperson for Clearstream said A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mixed as positive Chinese developer headlines including news of Evergrande payments, helped the region partially shrug off the losses seen stateside where duration sensitive stocks underperformed as yields surged following a hot CPI print and a soft 30yr auction. ASX 200 (-0.6%) declined with the index led lower by tech and energy which followed suit to the heavy losses in their US counterparts and with disappointing jobs data adding to the headwinds. Nikkei 225 (+0.6%) coat-tailed on the advances in USD/JPY which briefly climbed above the 114.00 level and with a slew of earnings releases providing a catalyst for individual stock prices. Hang Seng (+1.0%) and Shanghai Comp. (+1.2%) were varied with notable strength in property names after Evergrande was reported to have paid the overdue interest on three bonds to avoid a default and with China said to be considering moderating property curbs to help troubled developers unload assets. In addition, the PBoC continued with its mild liquidity efforts and it was also reported that the Biden-Xi virtual meeting is tentatively scheduled for next Monday, although weakness in tech capped upside in the Hong Kong benchmark with shares in index heavyweight Tencent pressured post-earnings as the Beijing crackdown decelerated revenue growth to the slowest pace since the Co. listed in 2004. Finally, 10yr JGBs suffered spillover selling from global peers including T-notes which declined by a point to below 131.00 and with prices also hampered after a weak 30yr auction, while focus in Japan shifted to the enhanced liquidity auction for longer dated government bonds which printed a lower b/c although the highest accepted spread returned positive. Top Asian News Indonesian Stocks Close at Record High on Economic Rebound Signs of Easing as Delayed Bond Coupons Paid: Evergrande Update Asia Stocks Slip After U.S. Inflation Spike, Weak Tencent Sales Kaisa Tells Investors It May Not Make Coupon Payments: REDD European equities (Eurostoxx 50 -0.1%) broadly trade mixed following on from this week’s firm inflation reports from the US and China. The handover from APAC was also mixed with focus on China amid notable strength in property names after Evergrande was reported to have paid the overdue interest on three bonds to avoid a default. Furthermore, the PBoC continued with its mild liquidity efforts and it was also reported that the Biden-Xi virtual meeting is tentatively scheduled for next Monday. Stateside, futures are a touch firmer (ES +0.2%) in the wake of yesterday’s cash market losses which saw duration sensitive stocks underperform as yields surged. From a macro perspective, Axios reported overnight that inflation concerns could see US Senator Manchin “punt” President Biden's Build Back Better agenda into next year. Eyes on the Wall St. open will be on Tesla after CEO Musk offloaded USD 5bln of stock in the Co. Back to Europe, Goldman Sachs outlook for 2022 sees a price target for the Stoxx 600 of 530 (vs. current 483) which would deliver a total return of around 13% and mark a continuation of the current bull market, albeit at a slower pace. Sectors in Europe are somewhat mixed with Basic Resources a clear outperformer amid broad strength in mining names and following earnings from ArcelorMittal (+2.9%) which sent the Co.’s shares to the top of the CAC. Banking names are also on a firmer footing amid the favourable yield environment post-CPI with Lloyds (+1.3%) and Commerzbank (+3.0%) supported by broker upgrades at Keefe Bruyette and Morgan Stanley respectively. To the downside, Oil & Gas names are softer as the crude complex struggles to recoup recent losses. Retail names have been weighed on by Burberry (-6.2%) post-earnings with the Co. noting that performance in Europe remains under pressure. Renault (-3.1%) sits at the foot of the CAC after Daimler opted to sell its stake in the Co. for USD 364mln. Finally, Johnson Matthey (-16.3%) is the clear laggard in the region after its CEO announced his decision to step down and the Co. announced it is to exit the battery materials business. Top European News U.K. Growth Data Leave December BOE Rate Rise in the Balance Scholz Aims to ‘Winter Proof’ Germany Against New Covid Wave Kering Says Creative Head Daniel Lee to Leave Bottega Veneta Gas Crunch Fuels RWE Profits as Energy Giant Burns Coal In FX, the Dollar took some time out for reflection and a rest after extending yesterday’s post-US CPI gains with the additional thrust of a supply-related ramp up in Treasury yields following a poor new long bond auction. However, the index could not quite muster enough bullish momentum to touch 95.000 until APAC buyers got a chance to respond to the strength of the inflation data and bear-steepening reaction in debt markets that evolved after initial bear-flattening. The DXY subsequently reset, refuelled and cleared the psychological barrier more convincingly, at 95.101 before fading again as several basket components found underlying bids and technical support around key levels, but still seems bid and upwardly mobile in thinner trading volumes due to Veteran’s Day. NZD/AUD - Perhaps perversely given overnight macro fundamentals, the Kiwi is lagging down under with Aud/Nzd cross elevated near 1.0400, though this could be in recognition of a sharp retreat in NZ food prices and mitigating factors leading to Aussie labour metrics missing consensus by some distance right across the board. Whatever the rationale, Nzd/Usd is lower than Aud/Usd in absolute terms even though the former is holding above 0.7100 and latter has now lost 0.7300+ status. CAD - Weaker WTI crude (in relative terms rather than on the day per se) is not helping the Loonie’s cause after it managed to contain losses on Wednesday, as Usd/Cad hovers near the top of a 1.2535-1.2473 range awaiting the BoC’s Q3 Senior Loan Officer Survey tomorrow for further direction from a Canadian perspective. CHF/EUR/JPY/GBP - All giving up more ground to the Greenback, but to varying degrees with the Franc trying to keep sight of 0.9200, the Euro defend 1.1450 having closed below 1.1500 and a key Fib retracement just shy of the round number, the Yen stay within touching distance of 114.00 and Sterling stop the rot after letting go of the 1.3400 handle again. On that note, a late December 2020 low in Cable at 1.3361 remains intact ahead of 1.3350 for semi-sentimental reasons and then a deep channel trendline from 1.3330-20, while Usd/Jpy has scope to be drawn to decent option expiry interest at 113.70 (1.6 bn) if not similar size spanning 113.60-00. In commodities, WTI and Brent have been choppy this morning with catalysts limited and conditions thinner than normal on account of Veteran’s Day. Price action thus far has seen the benchmarks print a range in excess of USD 1.00/bbl in a narrow timespan, note, that these parameters remain comfortably within yesterday’s levels; currently, both WTI and Brent are at the lower-end of this band as any initial attempt at a recovery has fizzled out with the USD likely a factor. While newsflow directly for the complex has been sparse attention remains on the monthly oil surveys, COVID-19 and geopolitics. Firstly, the OPEC MOMR is scheduled for release today and as a reminder the EIA STEO, under greater focus given US crude/SPR watch, raised 2021 world oil demand growth forecast by +60k BPD to 5.11mln BPD Y/Y increase this week, but cut its 2022 forecast by 130k BPD to 3.35mln BPD Y/Y increase. On COVID, the demand-side is attentive to increasing cases in areas such as Germany with the effective Chancellor-in-waiting Scholz saying further measures will be needed through Winter; additionally, the Netherlands outbreak team are recommending a short lockdown and Beijing has implemented various local measures. Finally, geopolitics is attentive to the situation in Belarus after Lukashenko said they will respond to any sanctions and has suggested closing gas and goods transit through the area. Moving to metals, spot gold and silver remain towards the top-end of yesterday’s parameters, but are only modestly firmer on the session, as newsflow has been slim and the USD’s more gradual upside and lack-of cash UST action is providing a respite from yesterday’s upside. Action that saw spot gold supported by almost USD 40/oz from opening levels. Elsewhere, ArcelorMittal’s earnings update featured a forecast for global steel demand to increase between 12-13% this year excluding China given a softening of real demand. US Event Calendar 9:45am: Nov. Langer Consumer Comfort, prior 49.2 Central Banks Nothing major scheduled DB's Jim Reid concludes the overnight wrap Yesterday was one of those days to just go “wow” at. The headline YoY US CPI rate of 6.2% was the highest since the 6.3% in 1990, which means that unless you’re at least 50 this will be the highest US inflation print of your career. In fact, apart from 2 months in 1990 at 6.3%, you’d have to go back to 1982 to find a higher print. So you’d have to probably be at least 60 to remember anything like this in your work life, other than that brief spike in 1990. In more detail, for the 6th time in the last 8 months, the headline print came in above the consensus estimate on Bloomberg, with prices up by +0.9% on a month-on-month basis (vs. +0.6% expected). If you look at the reading to two decimal places, it was actually the strongest monthly inflation since July 2008, so hardly a sign that those pressures have been dimming as we move towards year end. We’ll go through some of the moves in more depth below, but markets didn’t react well to the prospect of a more inflationary future, with both bonds and equities moving lower as investors moved to price in earlier and a more rapid pace of future rate hikes by the Fed. A horrible 30 year auction 4.5 hours later cemented a big rise in yields on the day. Note US bond markets are closed today for Veterans Day. Equities remain open but trading will be thin. Just completing the inflation picture, the October price rise was a fairly broad-based one that included upward pressure across all the main categories, including components that are tied to more persistent inflation. Admittedly, a big driver was energy inflation (+4.8% on a monthly basis), but even if you stripped out the more volatile factors, core inflation was still up +0.6% (vs. +0.4% expected), sending the annual core inflation measure up to its highest since 1991, at +4.6% (vs. +4.3% expected). There were also further signs of pressure from the housing categories, with owners’ equivalent rent (+0.44%) seeing its largest monthly increase since June 2006. This housing inflation is coming in bang on script (see page 19 of my 1970s chart book here). Medical care services (+0.49%) was also a big contributor to the upside surprise. The broad-based price gains drove trimmed mean and median CPI, measures of underlying trend inflation, to their highest levels since 1983. There’ll understandably be questions for the Fed off the back of this release, and markets responded by bringing forward their pricing of the first rate hike to the July 2022 meeting. In fact, by the close of trade, roughly an extra 13bps of hikes were priced in by end-2022 relative to the previous day. It’s also worth noting that the latest CPI release means that the real fed funds rate in October was beneath -6%, which is lower than at any point in the 1970s, where the bottom was -5% (see page 3 in the same 1970s chart book and draw the line down another few tenths of a basis point). So by this measure, monetary policy is even more accommodative now than it was back then, in a decade that saw inflation get progressively out of control. For more on those 1970s comparisons, take a look at our full note from last month (link here.) Treasuries understandably sold off, led by the front end and belly of the curve, as investors brought forward the likely timing of future rate hikes. 5yr Treasuries increased +13.5bps (the biggest one-day increase since February), and 10yrs +11.4bps (largest increase since September). The yield curve flattened, with 5s30s down -4.9bps to 68.5bps, the flattest since March 2020. Longer-dated yields were drifting higher through the New York session but accelerated after a 5.2bp tail in the 30yr Treasury auction. The tail was the highest since 2011, and primary dealer takedown was almost 2 standard deviations above average over the last year. Unlike after less-than-stellar auctions earlier this year, bonds stabilised for the rest of the day, with the 30yr +8.6 bps higher, only +1.7bps above pre-auction trading. After all, 30yr yields have rallied 26.0bps since early October, inclusive of today’s poor auction, as there has been some long-end duration demand. Indeed, even with the policy rate repricing, 5y5y rates, one proxy for long-run or terminal policy rates, remain below 2%, after increasing just +6.2bps. This is also manifest in record low real yields through the curve. 10yr real yields initially sunk to an all-time low intraday at -1.253% after the CPI print before ultimately increasing +3.0bps on the day to -1.17%. Likewise, 5yr real yields touched -1.97% in the aftermath of the CPI print, and closed the day +2.5bps higher than Tuesday’s close at -1.88%. With nominal yields outpacing real yields, inflation compensation increased across the curve: 5yr breakevens increased +11.1bps to 3.10%, an all-time high, whilst 10yr breakevens increased +6.4bps to a post-2006 high of 2.71%. Gold (+0.97%), and other precious metals, including silver (+1.37%) and platinum (+0.75%) gained, as did Bitcoin, which clipped another all-time high, $68,992, intraday. The dollar (+0.90%) also benefitted. The continued prevalence of high inflation is having increasing political ramifications, and President Biden put out a statement following the release, commenting on the inflation data (as well as the more positive weekly jobless claims). He said that reversing the trend in inflation was “a top priority for me” and laid a decent chunk of the blame at rising energy costs. He said that he’d directed the National Economic Council to look at further ways of reducing energy costs, and that he’d also “asked the Federal Trade Commission to strike back at any market manipulation or price gouging in this sector”. However, we also heard from moderate Democratic senator Joe Manchin of West Virginia, who tweeted that “the threat posed by record inflation to the American people is not ‘transitory’ and is instead getting worse. … DC can no longer ignore the economic pain Americans feel every day.” Manchin is a key swing vote on Biden’s Build Back Better Plan, and he has already influenced cutting the bill from the $3.5tn initially envisaged to a framework half that size, due in part to the potential inflationary impact of additional spending. From the Fed however, the only signal we got came from San Francisco Fed President Daly (one of the most dovish FOMC members), who gave an interview with Bloomberg TV shortly following the CPI print. She notably referred to inflation as “eye-popping”, but demurred when asked about changing the course of Fed policy, asserting that it would be premature to “start changing our calculations about raising rates” or to accelerate the pace of tapering. Higher inflation and pricing of aggressive Fed tightening was not a good combination for US risk. The S&P 500 fell -0.82% in its second consecutive decline (which feels like its own record after the recent run), and was down more than a percent intraday. Energy (-2.97%) led the declines (more below) but, tech (-1.68%) and communication services (-1.25%) each declined more than a percent due to the increase in discount rates. Commensurate with the big rate selloff, the Nasdaq (-1.66%) also underperformed. Meanwhile, European equities outperformed, with the STOXX 600 up +0.22% to reach an all-time high, just as the DAX (+0.17%) and the CAC 40 (+0.03%) also hit new records. To be fair, US equities were only slightly down on the day when European bourses closed. Sovereign bonds echoed the US moves however, and a selloff across the continent saw yields on 10yr bunds (+4.9bps), OATs (+6.8bps) and BTPs (+9.5bps) all move higher. Stocks in Asia are trading mixed overnight with CSI (+0.89%) leading the pack, followed by the Shanghai Composite (+0.59%), and the Nikkei (+0.56%) in the green while the Hang Seng (-0.16%) and KOSPI (-0.59%) have lost ground. Staying on inflation, Japan’s PPI for October came out at 8.0% year-on-year (7.0% consensus and 6.3% previous), the highest since 1981. Elsewhere, in Australia the unemployment rate for October saw a big surprise, jumping to 5.2% (4.9% consensus, 4.6% previous) as many people re-entered the labour force after lockdowns. The participation rate rose to 64.7% from 64.5% in September. Futures are indicating a muted start to the day in the US & Europe with S&P 500 futures (+0.08%) up but DAX futures (-0.28%) catching down with the late US sell-off. One solace on the inflation front was a decline in energy prices yesterday, with both Brent crude (-2.52%) and WTI (-3.34%) losing ground. That followed 3 consecutive gains and came after the US EIA reported that crude oil inventories had risen by +1.00m barrels last week. There was also another decline in natural gas prices, with US futures falling -1.99% in their 4th consecutive decline, whilst European futures were down -4.06%. Looking at yesterday’s other data, the weekly initial jobless claims for the US over the week through November 6 fell to 267k (vs. 260k expected). That’s their 6th successive weekly decline and takes the measure to a post-pandemic low. To the day ahead now, and the main data highlight will be the UK’s preliminary Q3 GDP reading. From central banks, the ECB will be publishing their Economic Bulletin, and speakers include the ECB’s Makhlouf, Schnabel and Hernandez de Cos, along with the BoE’s Mann. Otherwise, the European Commission will be releasing their latest economic forecasts, and it’s the Veterans’ Day Holiday in the United States. Tyler Durden Thu, 11/11/2021 - 07:48.....»»

Category: personnelSource: nytNov 11th, 2021

Futures Meltup To New All Time High As November Begins With A Bang

Futures Meltup To New All Time High As November Begins With A Bang US futures and European stocks rose to a new record high to start the historically stellar month of November... ... and Asian markets jumped amid positive earnings surprises and as concerns of a global stagflation and central bank policy error faded for a few hours (they will return shortly). TSLA melted up by another $35BN in market cap "because gamma." S&P 500 futures climbed 0.4% after the cash index posted the biggest monthly gain since last November. Treasury Secretary Janet Yellen expressed confidence in the continuing recovery from the pandemic, helping spur gains in equity markets. Health-care shares rallied in Europe. The dollar and Treasury yields advanced as investors awaited this week’s Federal Reserve meeting to announce the start of tapering (which will then lead to rate hikes next July according to Goldman). Oil rebounded on fresh supply concerns. In addition to the now absolutely batshit insane meltup in Tesla, which won't end until the SEC cracks down on gamma squeeze manipulation, other mega-cap technology stocks such as Google, Meta, Microsoft, Amazon.and Apple, aka oddly enough GAMMA, traded mixed. Exxon and Chevron added about 0.7% each as JP Morgan raised its price target on the oil majors following their strong quarterly results last week. Major Wall Street banks gained between 0.2% and 0.8%. The broader S&P 500 financials sector slipped last week, breaking a three-week winning streak. Lucid Group Inc. rose 4.8% in premarket, extending its advance from last week, after the new U.S. tax plan included a proposal to make EV tax credits more widely available. Harley-Davidson Inc jumped 8.2% after the European Union removed retaliatory tariffs on U.S. products including whiskey, power boats and company’s motorcycles. Here are the most notable pre-market movers: Tesla shares rise 2.3% in U.S. premarket trading after their biggest monthly gain in almost a year in October ABVC BioPharma jumps more than 700% as thelittle known biotechnology company garners attention from retail traders on social media Ocugen and Zosano (ZSAN US) are some other top gainers among retail trader stocks in premarket A largely upbeat earnings season has helped investors look past a mixed-macro economic picture, with the benchmark S&P 500 and the tech-heavy Nasdaq recording their best monthly performance since November 2020 in October. Of the 279 S&P 500 companies that have reported quarterly results, 87% have met or exceeded estimates. Among members of Europe’s Stoxx 600 index, 68% surpassed expectations. On the economic data front, readings on October factory activity data from IHS Markit and ISM are due after market open, followed by non-farm payrolls on Friday. Focus is now on the Fed’s two-day policy meeting which concludes at 2pm on Nov 3, where the central bank will announce the tapering of its $120 billion monthly bond buying program by $15 billion. With recent U.S. data showing inflation pressures building, the market has also started pricing in rate hikes next year. November and December tend to be among the strongest months for stocks and any hawkish tilt in the Fed’s message could catch equities by surprise.  Meanwhile, Biden’s economic agenda seemed to be on track as Democratic lawmakers worked to overcome their differences on a $1.75 trillion social-spending plan. “Depending on where you are looking, you are getting very different stories on the outlook for global markets,” Kerry Craig, global market strategist at JPMorgan Asset Management, said on Bloomberg Television. “If you look at equities and the rally you are seeing, you think everything is OK. If you look at the bond market and how yields are moving, there’s obviously a lot more concern around inflation and policy normalization.” European stocks hit the afterburner out of the gate with the Euro Stoxx 50 adding as much as 1% before drifting off best levels. FTSE MIB and IBEX outperform, FTSE 100 lags slightly. Banks, construction and travel are the strongest sectors; tech the sole Stoxx 600 sector in the red. Barclays Plc fell 1.5%. Chief Executive Officer Jes Staley stepped down amid a U.K. regulatory probe into how he characterized his ties to the financier and sex offender Jeffrey Epstein. Asian stocks were poised to snap a three-day decline thanks to a rally in Japanese equities, which got a boost from an election victory for the country’s ruling party and Prime Minister Fumio Kishida.  The MSCI Asia Pacific Index advanced as much as 0.6%, while Japan’s benchmark Topix and the blue-chip Nikkei 225 Stock Average each added more than 2%. Sony Group, Toyota Motor and Tokyo Electron were among the single-largest contributors to the regional measure’s rise. By sector, industrials and information-technology companies provided the biggest boosts.  Japan’s ruling Liberal Democratic Party defied worst-case scenarios to secure a majority by itself in a closely-watched election Sunday. Analysts said the outcome signals political stability, paving the way for economic stimulus to be executed as anticipated (see Street Wrap).  “Indicators of market activity show that there will be a positive market impact to the election, as although it was not greatly different than expectations, the LDP clearly surpassed some of the more dire polls of last week and there will not likely be any party shake-up in the intermediate-term,” John Vail, Tokyo-based chief global strategist at Nikko Asset Management wrote in a note.  The market is also “reacting positively” to Friday’s share-price gains in the U.S., Vail said. Futures on the S&P 500 rose during Asian trading hours after the underlying gauge added 0.2%.  Asia’s regional benchmark capped a weekly drop of 1.5%, its worst such performance since early October, as disappointing results weighed on big technology stocks. More than half of the companies on the MSCI Asia Pacific Index have reported results for the latest quarter with about 37% posting a positive surprise, according to data compiled by Bloomberg. Australia's S&P/ASX 200 index rose 0.6% to 7,370.80, recouping some losses after Friday’s 1.4% plunge. Health and consumer discretionary stocks contributed the most to the benchmark’s gain. WiseTech was among the top performers, snapping a four-day losing streak. Westpac was the worst performer after the bank delivered a smaller share buyback than some had expected. In New Zealand, the S&P/NZX 50 index fell 0.5% to 13,030.31. In rates, fixed income trades heavy with gilts leading the long end weakness. Treasuries were slightly cheaper on the long-end of the curve as S&P 500 futures exceed last week’s record highs. Yields are cheaper by 2bp to 2.5bp from belly out to long-end, with front-end slightly outperforming and steepening 2s10s spread by 1.7bp; 10-year yields around 1.58% with gilts underperforming by 1.1bp, Italian bonds by 3.5bp. Gilts and Italian bonds lag, with Bank of England rate decision due Thursday. In the U.S., weekly highlights include refunding announcement and FOMC Wednesday and Friday’s October jobs report. Bund and gilt curves bear steepen with gilts ~1bps cheaper to bunds. Peripheral spreads swing an early tightening to a broad widening to core with Italy the weakest performer. Overnight futures and options flows included block seller in 5-year note futures (3,900 at 3:09am ET) and a buyer of TY Week 1 129.00 puts at 3 on 10,000, says London trader. In FX, the Bloomberg dollar index held a narrow range. SEK and CHF top the G-10 score board, GBP lags with cable snapping below 1.3650. TRY outperforms EMFX peers. The BBDXY inched up and the greenback traded mixed against its Group-of-10 peers, with many of the risk-sensitive currencies leading gains The pound retraced some losses against the dollar, after dipping earlier in the European session. The yield on 2-year gilts hit the highest since May 2019. Financial markets are almost fully pricing in a 15-basis point increase in the Bank of England’s benchmark lending rate on Nov. 4, while economists increasingly share that view, even as they see the decision as a far closer call. A record share of U.K. businesses are expecting to increase prices, adding to the inflationary pressures confronting Bank of England policy makers ahead of their meeting on Thursday Australian bonds extended opening gains as traders positioned for the Reserve Bank’s policy decision Tuesday. The Aussie fell, tracking losses in iron ore prices following a weak China PMI, which showed signs of further weakness in October The yen fell for a second day after the ruling Liberal Democratic Party retained its outright majority in a lower-house election, reinforcing bets for fiscal stimulus and reforms. Hedge funds boosted net short positions on the yen to the most since January 2019, raising the risk of a squeeze should risk appetite deteriorate suddenly and demand for havens rise The Turkish lira edged higher after Turkish President Recep Tayyip Erdogan said he had “positive” talks with U.S. President Joe Biden In commodities, crude futures drift higher. WTI adds 40c to trade near $84; Brent rises ~1% near $84.50. Spot gold is quiet near $1,786/oz. Base metals are mixed: LME nickel and tin outperform, zinc lags. Looking at today's calendar, earnings continue on Monday with PG&E and ON Semiconductor reporting pre-market, and NXP Semiconductors post-market. We also get the latest Mfg PMI print and the October Mfg ISM print. Market Snapshot S&P 500 futures up 0.3% to 4,612.25 STOXX Europe 600 up 0.8% to 479.40 MXAP up 0.4% to 198.04 MXAPJ down 0.3% to 645.49 Nikkei up 2.6% to 29,647.08 Topix up 2.2% to 2,044.72 Hang Seng Index down 0.9% to 25,154.32 Shanghai Composite little changed at 3,544.48 Sensex up 1.3% to 60,079.40 Australia S&P/ASX 200 up 0.6% to 7,370.78 Kospi up 0.3% to 2,978.94 Brent Futures up 0.3% to $83.95/bbl Gold spot down 0.0% to $1,783.20 U.S. Dollar Index little changed at 94.14 German 10Y yield little changed at -0.091% Euro up 0.1% to $1.1571 Top Overnight News from Bloomberg House Democratic leaders are pushing hard to get Biden’s package finalized, with votes on both that bill and a smaller infrastructure plan this week -- the latest in a string of self- imposed deadlines. The Senate, which already approved the public-works bill, is likely to vote on the larger package later in the month Leaders of the Group of 20 countries agreed on a climate deal that fell well short of what some nations were pushing for, leaving it to negotiators at the COP26 summit in Glasgow this week to try to achieve a breakthrough The U.K. said it will trigger legal action against France within 48 hours unless a dispute over post-Brexit fishing rights is resolved, as the growing spat threatens to overshadow the United Nations’ climate summit Treasury Secretary Janet Yellen said she believes Federal Reserve Chair Jerome Powell has taken “significant action” in the wake of revelations over the personal investments of U.S. central-bank policy makers; Yellen dismissed recent moves in the bond market that have signaled concern about monetary policy makers squelching economic growth, and expressed confidence in the continuing recovery from the Covid-19 pandemic The U.S. and the European Union have reached a trade truce on steel and aluminum that will allow the allies to remove tariffs on more than $10 billion of their exports each year Asia-Pac bourses traded mostly higher amid tailwinds from last Friday's fresh record highs in the US where Wall St. topped off its best monthly performance YTD, but with some of the advances in the region capped as participants digested mixed Chinese PMI data and ahead of this week’s slew of key risk events including crucial central bank policy announcements from the RBA, BOE and FOMC, as well as the latest NFP jobs data. ASX 200 (+0.8%) was led higher by the consumer-related sectors amid a reopening play after Australia permitted fully vaccinated citizens to travel internationally again and with several M&A related headlines adding to the optimism including the Brookfield-led consortium acquisition of AusNet Services and Seven West Media’s takeover of Prime Media. Conversely, the largest weighted financials sector failed to join in on the spoils with Westpac shares heavily pressured following its FY results which fell short of analyst estimates despite more than doubling on its cash earnings. Nikkei 225 (+2.5%) was the biggest gainer with the index underpinned by favourable currency flows and following the general election in which the ruling LDP maintained a majority in the lower house although won fewer seats than previously for its slimmest majority since 2012, while the KOSPI (+0.4%) was kept afloat but with upside limited by slightly softer than expected trade data. Hang Seng (-1.5%) and Shanghai Comp. (+0.1%) were subdued amid a slew of earnings releases and following mixed Chinese PMI data in which the official Manufacturing and Non-Manufacturing PMIs disappointed analysts’ forecasts with the former at a second consecutive contraction, although Caixin Manufacturing PMI was more encouraging and topped market consensus. Finally, 10yr JGBs initially declined amid gains in stocks and recent pressure in T-notes due to rate hike bets with analysts at Goldman Sachs bringing forward their Fed rate hike calls to July 2022 from summer 2023 citing inflation concerns, although 10yr JGBS then recovered despite the mixed results from the 10yr JGB auction which showed a higher b/c amid lower accepted prices and wider tail in price. Top Asian News Japan’s Kishida Mulls Motegi for LDP Secretary General: Kyodo Home Sales Slump; Another Bond Deadline Looms: Evergrande Update Two Thirds of China’s Top Developers Breach a ‘Red Line’ on Debt Hedge Fund Quad Sells Memory Stocks Citing Demand Uncertainty European equities (Stoxx 600 +0.6%) have kicked the week off on the front-foot with the Stoxx 600 printing a fresh all-time-high. The handover from the APAC session was a largely constructive one with the Nikkei 225 (+2.6%) the best in class for the region amid favourable currency flows and the fallout from the Japanese general election which saw the ruling LDP party maintain a majority in the lower house. Elsewhere, performance for the Shanghai Composite (-0.1%) and Hang Seng (-0.9%) was less impressive amid a slew of earnings releases and mixed Chinese PMI data in which the official Manufacturing and Non-Manufacturing PMIs disappointed analysts’ forecasts. US equity index futures are trading on a firmer footing (ES +0.5%) ahead of Wednesday’s FOMC announcement and Friday’s NFP data. The latest reports from Washington suggest that House Democrats are hoping to pass the social spending and bipartisan infrastructure bills as soon as Tuesday. Back to Europe, a recent note from JPM stated that Q3 European earnings “are coming in well ahead of expectations in aggregate”, adding that results are healthy when considering the “trickier operating backdrop”. Sectors in the region are higher across the board with Auto names top of the leaderboard. Renault (+3.3%) sits at the top of the CAC 40 with the name potentially gaining some reprieve from agreement to resolve the US-EU steel and aluminium trade dispute (something which the Co. has previously noted as a negative). Also following the resolution, Thyssenkrupp (+2.8%) and Salzgitter (+4.5%) are both trading notably higher. Barclays (-2.0%) shares are seen lower after news that CEO Staley is to step down with immediate effect following the investigation into his relationship with sex offender Jeffrey Epstein; Barclays' Global Head of Markets, Venkatakrishnan is to take over. UK homebuilders (Persimmon -2.1%, Taylor Wimpey -1.9%, Barratt Developments -1.9%, Berkeley Group -1.7%) are softer on the session amid concerns that the sector could fall victim to higher mortgage rates given the shape of the UK yield curve. Ryanair (+1%) shares are higher post-earnings which saw the Co. continue its recovery from the pandemic, albeit still expects a loss for the year. Furthermore, the board is considering the merits of retaining its standard listing on the LSE. Finally, BT (+4.2%) is the best performer in the Stoxx 600 ahead of earnings on Thursday with press reports suggesting that the Co. could announce that its GBP 1bln cost savings target will be met a year earlier than the guided March 2023. Top European News SIG Proposed Offering for EU300m Senior Secured Notes Due 2026 Delivery Hero’s Turkey Unit CEO Nevzat Aydin to Step Down Goldman Sachs Says ‘Lost Decade’ Is Looming for 60/40 Portfolios URW Sells Stake in Paris Triangle Tower Project to AXA IM Alts In FX, the Greenback is holding above 94.000 in index terms and gradually ground higher after pausing for breath and taking some time out following its rapid resurgence last Friday to eclipse the 94.302 month end best at 94.313 before waning again. Hawkish vibes going into the FOMC are underpinning the Dollar and helping to offset external factors that are less supportive, including ongoing strength in global stock markets on solid if not stellar Q3 earnings and economic recovery from COVID-19 lockdown or restricted levels. Hence, the DXY is keeping its head above the round number and outperforming most major peers within and beyond the basket, awaiting Markit’s final manufacturing PMI, the equivalent ISM and construction spending ahead of the Fed on Wednesday and NFP on Friday. JPY/AUD - Little sign of relief for the Yen from victory by Japan’s ruling LDP part at the weekend elections as the 261 seat majority secured is down from the previous 276 and the tightest winning margin since 2012. Moreover, Security General Amari lost his constituency and new PM Kishida concedes that this reflects the public’s adverse feelings towards the Government over the last 4 years. Usd/Jpy is eyeing 114.50 as a result and the Aussie is looking precarious around 0.7500 against the backdrop of weakness in commodity prices even though perceptions for the upcoming RBA have turned markedly towards the potential for YCT to be withdrawn following firm core inflation readings and no defence of the 0.1% April 2024 bond target. NZD/EUR/CHF/CAD/GBP - All narrowly mixed vs their US counterpart, and with the Kiwi also taking advantage of the aforementioned apprehension in the Aud via the cross, while the Euro has pared declines from just under 1.1550, but still looks top-heavy into 1.1600. Elsewhere, the Franc is pivoting 0.9160 and 1.0600 against the Euro with more attention on a rise in Swiss sight deposits at domestic banks as evidence of intervention than a fractionally softer than expected manufacturing PMI, the Loonie is keeping afloat of 1.2400 ahead of Markit’s Canadian manufacturing PMI and Sterling is striving to stay above 1.3600, but underperforming vs the Euro circa 0.8470 amidst the ongoing tiff between the UK and France over fishing rights. SCANDI/EM - Robust Swedish and Norwegian manufacturing PMIs plus broad risk appetite is underpinning the Sek and Nok, in contrast to the Cnh and Cny following disappointing official Chinese PMIs vs a more respectable Caixin print, but the EM laggard is the Zar in knock-on reaction to Gold’s fall from grace on Friday, increasingly bearish technical impulses and SA energy supply issues compounded by Eskom’s load-shedding. Conversely, the Try has pared some declines irrespective of a slowdown in Turkey’s manufacturing PMI as the CBRT conducted a second repo op for Lira 27 bn funds maturing on November 11 at 16%. In commodities, WTI and Brent are firmer this morning with gains of between USD 0.50-1.00/bbl, this upside is in-spite of a lack of fundamental newsflow explicitly for the complex and is seemingly derived from broader risk sentiment, as mentioned above. Nonetheless, Energy Ministers are beginning to give commentary ahead of Thursday’s OPEC+ event and so far Angola, Kuwait and Iraq officials have voiced their support for the planned 400k BPD hike to production in December. This reiteration of existing plans is in opposition from calls from non-OPEC members such as the US and Japan that the group should look to increase production quicker than planned, in a bid to quell rising prices. Separately, Saudi Aramco reported Q3 earnings over the weekend in which its net profit doubled given strong crude prices and sales volumes improving by 12% QQ; subsequently, some analysts have highlighted the possibility for a end-2021 special dividend. Elsewhere, base metals are mixed and fairly contained in-spite of the EU and US announcing an agreement to resolve the ongoing aluminium and steel trade dispute. While spot gold and silver are modestly firmer this morning as the yellow metal remains contained after its slip from the USD 1800/oz mark in the tail-end of last week. Currently, spot gold is pivoting its 100-DMA at USD 1786 with the 50- and 200-DMAs residing either side at USD 1780/oz and USD 1791/oz respectively. US Event Calendar 9:45am: Oct. Markit US Manufacturing PMI, est. 59.2, prior 59.2 10am: Oct. ISM Manufacturing, est. 60.5, prior 61.1 10am: Sept. Construction Spending MoM, est. 0.4%, prior 0% DB's Jim Reid concludes the overnight wrap Welcome to November. I had three halloween parties over the weekend which is probably more than the entire number I went to before I had kids. I still have some spooky make up on this morning that I just couldn’t get off from last night. So there’s a reason alone to zoom into the call at 3pm today. As it’s the 1st of November Henry is about to publish our monthly performance review. It was a hectic month of higher inflation expectations and commodities, and also the best S&P 500 month of the year. Bonds underperformed across the board but these small negatives masked great volatility and stress under the surface, especially in the last week. See the report that should be out in the next 30-60mins. With all due respect to our readers in Australia, I’m going to open the market section this morning with a line I don’t think I’ve written in 27 years of market commentary and probably won’t again. And it’s not about England thrashing Australia at cricket on Saturday. Yes the most important event of the week could be the RBA meeting tomorrow. 2 year yields last week rose from 0.15% on Wednesday morning to 0.775% at the close on Friday as the RBA were conspicuous by their absence in defending the 0.1% target on the April 24 bond. I’ve absolutely zero idea what they are going to do tomorrow which should help you all tremendously but their absence again this morning gives a decent indication. I was taught economics in an era where central banks liked to keep an element of mystery and surprise. As such I’ve always disliked the forward guidance era as it encourages markets to pile on to much riskier, one way positions that a normally functioning market should naturally allow. But to go from forward guidance to silence (that rhymes) is a recipe for huge market turmoil if the facts change. It's unclear if the full implications of last week’s carnage at the global front end has yet been cleared out. There is lots of speculation about large unwinds, big stop losses etc. Liquidity was also awful last week. Much might depend on central banks this week. Make no mistake though there is considerable pain out there. The latest this morning in Aussie rates is that the 2y yield is down around -7bps while the 10y yield is down -19.0bps. So we wait with baited breath for tomorrow. Elsewhere in Asia, the Nikkei 225 (+2.42%) is charging ahead this morning as Japan’s Liberal Democratic Party kept its majority after lower house elections, thus boosting optimism about a potential fiscal stimulus. Elsewhere, the KOSPI (+0.43%) and the Shanghai composite (+0.07%) are outperforming the Hang Seng (-1.10%). In terms of data, China’s official manufacturing PMI fell from 49.6 to 49.2 (49.7 expected), not helped by commodities price rises and electricity shortages. The non-manufacturing PMI also fell to 52.4 from 53.2 (consensus 53). The Caixin manufacturing PMI did beat at 50.6 this morning (consensus 50). In terms of virus developments in the region, Shanghai Disneyland is closed amid recent COVID outbreaks, while Singapore is adding ICU beds in response to high levels of serious cases. The S&P 500 mini futures is up +0.23% this morning, the US 10y Treasury is at 1.56% (+1.2bps). It’s strange to have a likely Fed taper announcement on Wednesday be third billing for the week but the BoE on Thursday might be the next most important meeting as it’s still a finely judged call as to whether they hike this week or not. DB (preview here) think they will raise rates by 15bps with two 25bps hikes in February and May. They’ll also end QE a month earlier than planned. So over to the third billing, namely the Fed. They will announce a well flagged taper on Wednesday. In line with recent guidance, DB expect that the Fed will announce monthly reductions of $10bn and $5bn of Treasury and MBS purchases, respectively. With the first cut to purchases coming mid-November, this will bring the latest round of QE to a conclusion in June 2022. The Fed has some flexibility with this timetable but it will be interesting to hear how much Powell pushes back on markets that price in two hikes in 2022, including one almost fully priced for before the taper ends. If markets attacked the Fed in the same way they have the RBA the global financial system would have a lot of issues so it’s a fine balance for the Fed. They won’t want to push back too aggressively on market pricing given the uncertainty but they won’t want an outright attack on forward guidance. Moving on, a lowly fourth billing will be reserved for US payrolls on Friday. DB expect the headline gain (+400k forecast, consensus +425k vs. +194k previously) to modestly outperform that of private payrolls (+350k vs. +317k) and for the unemployment rate to fall by a tenth to 4.7% and average hourly earnings to post another strong gain (+0.4% vs. +0.6%) amidst still-elevated hours worked (34.8hrs vs. 34.8hrs). Outside of all this excitement, we have the COP26 which will dominate all your news outlets. The other main data highlight are the global PMIs (today and Wednesday mostly) which will give insight into how the economic recovery has progressed in the first month of Q4 with the surveys shedding light onto how inflation is affecting suppliers. There is lots more in store for us this week but see the day by day calendar at the end for the full run down The market also enters the second half of the 3Q earnings season. There are 168 S&P 500 and 85 Stoxx 600 companies reporting this week with 52% of the S&P 500 and 48% of the STOXX 600 having already reported. DB’s Binky Chadha published an update on earnings season over the weekend (link here). In the US, the size of the earnings beat has declined over the course of the season and is on track to hit 7%, well below the record 14-20% range post pandemic. Excluding the lumpy loan-loss reserve releases by banks, the beat is even lower at 5%, bringing it back in line with the historical norm. Quarterly earnings are on track to be down sequentially from Q2 to Q3 by -1.1% (qoq seasonally adjusted), the first drop since Q2 2020. The flat to down read of earnings is broad based across sector groups. Forward consensus estimates have fallen outside of the Energy sector. The S&P 500 nevertheless has seen one of the strongest earning season rallies on record. See much more in Binky’s piece. This week’s highlights include NXP Semiconductors, Zoom, and Tata Motors today before Pfizer, T-Mobile, Estee Lauder, BP, Mondelez, Activision Blizzard, and AP Moller-Maersk tomorrow. Then on Wednesday we’ll hear from Novo Nordisk, Qualcomm, CVS, Marriott, Albemarle, and MGM resorts. Thursday sees reports from Toyota, Moderna, Square, Airbnb, Uber, and Deutsche Post and then a busy Friday with Alibaba Group, Dominion Energy, Honda, and Mitsubishi. Looking back now and reviewing last week in numbers, it was a week of heightened intraday volatility within rates, as markets brought forward the expected timing of central bank policy actions across advanced economies while revising down growth expectations. Position stop outs almost certainly played a role as the magnitude of the moves were out of sync with macro developments while FX and equity markets were not nearly as volatile. Global front end rates started moving in earnest on Wednesday, following the Bank of Canada’s surprise decision to end net asset purchases, while bringing forward the timing of liftoff, which sent 2yr Canadian bonds more than +20bps higher. In the following days, the RBA opted not to defend their yield curve control target, and ECB President Lagarde did not use her press conference to provide much of a forceful pushback on recent repricing. All told, almost every DM economy saw their 2 yr bond selloff, including the US (+4.4 bps, +0.8 bps Friday), UK (+4.9 bps, +5.9 bps Friday), Germany (+5.2 bps, +3.2 bps Friday), Canada (+23bps) and Australia (+65bps). The long end went the other direction in the core countries, with many curves twist flattening over the week as negative growth sentiment weighed on the back end. Nominal 10yr yields declined -6.2 bps (-2.8 bps Friday) in the US, -11.1 bps (+2.5 bps Friday) in the UK, and were flat in Germany (+3.0 bps Friday). Unlike the rest of October, the decline in nominal yields coincided with declining inflation breakevens (albeit from historically high levels), with 10yr breakevens declining -5.2 bps (-0.6 bps Friday) in the US, -25.4 bps (-8.5 bps Friday) in the UK, and -16.3 bps (-11.5 bps Friday) in Germany. Note that outside the core there were some bond markets that moved higher in yield with 10yr bonds in Canada (+7bps), Australia (+30bps) and Italy (+19bps) all higher for different reasons. Some of the bond moves above don’t do the intra-day volatility any justice though. Elsewhere Crude oil prices dipped to close out what was otherwise another very good month, with Brent and WTI -1.34% (+0.07% Friday) and -0.23% (+0.92% Friday) lower. Meanwhile, equity markets marched to the beat of a different drum. The S&P 500 (+1.33%, +0.19% Friday), Nasdaq (+2.71%, +0.33% Friday), and DJIA (+0.40%, +.25% Friday) all set new all-time highs, while the STOXX 600 increased +0.77% (+0.07% Friday), cents below the all-time high set in August. Generally strong earnings relative to a worried market prior to the season again supported equity markets. Calls were replete with mentions of supply chain woes and labour shortages though, but companies sounded an optimistic note on end-user demand. Many big tech stocks reported, to more mixed results than the broader index. Alphabet and Microsoft beat on both revenue and earnings, Facebook and Apple missed analyst revenue estimates, while Amazon and Twitter missed revenue and earnings estimates. Ford and Caterpillar, two bellwethers particularly exposed to current supply chain and labour maladies, fared especially well. So far this season 279 companies have reported, with 206 beating on revenue and 237 beating on earnings Out of D.C., after prolonged negotiations within the Democratic Party, US President Biden unveiled a new social and climate spending framework, containing $1.75 trillion in spending measures as well as revenue-raising offsets. Once the text is finalized, it should enable a vote on the social spending package as well as the separately-negotiated bi-partisan infrastructure bill. More is likely to come this week. Tyler Durden Mon, 11/01/2021 - 07:59.....»»

Category: smallbizSource: nytNov 1st, 2021

Futures Rise Ahead Of Deluge Of Big Tech Earnings

Futures Rise Ahead Of Deluge Of Big Tech Earnings One day after Goldman doubled down on its call for a market meltup into year-end, futures on the Nasdaq 100 edged higher, while contracts on the S&P 500 were modestly higher on Monday, approaching record highs again as investors braced for a flood of earnings (164 of 500 S&P companies report this week) while weighing rising inflation concerns, Covid-19 risks and China’s deteriorating outlook (Goldman slashed China's 2022 GDP to 5.2% from 5.6% overnight). The FOMC enters quiet period ahead of next week's FOMC meeting, which means no Fed speakers as attention shifts to economic data and corporate earnings. At 745 a.m. ET, Dow e-minis were up 3 points, or 0.01%, S&P 500 e-minis were up 4.25 points, or 0.1%, and Nasdaq 100 e-minis were up 36.25 points, or 0.25%. Bitcoin bounced back over $63,000 after sliding below $60,000 over the weekend, the 10-year US Treasury yield rose and the dollar also rose after Federal Reserve Chair Jerome Powell flagged that inflation could stay higher for longer, fueling investor concern that sticky price increases may force policy makers to raise borrowing costs. Global markets have remained resilient despite risks from price pressures stoked by supply-chain bottlenecks and higher energy costs. On Sunday, Janet Yellen was among those counseling the inflation situation reflects temporary pain that will ease in the second half of 2022 even as Twitter CEO Jack Dorsey warned hyperinflation is coming. Investors are wary that tighter monetary policy to keep inflation in check will stir volatility “Inflation concerns will continue to dominate markets this year as the price of crude oil remains elevated,” while “the pandemic remains a central concern,” said Siobhan Redford, an analyst at FirstRand Bank Ltd. in Johannesburg. “This will add further complexity to the already difficult decisions facing policy makers around the world.” All of FAAMG - Facebook, Microsoft, Apple, Alphabet and Amazon.com - are set to report their results later this week. The companies shares, which collectively account for over 22% of the weighting in the S&P 500, were mixed in trading before the bell. Facebook shares fell in premarket trading, extending six weeks of declines, after Bloomberg reported that the social-media company is struggling to attract younger users and that employees are concerned over the spread of misinformation and hate speech on its platform. The company is scheduled to report quarterly results after the market closes. “After Snap got an Apple caught in its throat, markets will have an itchy trigger finger over the sell button if the social network says the same,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA. “Additionally, this week, it is a FAANG-sters paradise ... that decides whether the U.S. earnings season party continues, before the FOMC (Federal Open Market Committee) reasserts its dominance next week.” PayPal jumped 6.4% as the company said it wasn’t currently pursuing an acquisition of Pinterest, ending days of speculation over a potential $45 billion deal. Shares of Pinterest plunged 12.5%. Tesla gained 2.2% in premarket trading after Morgan Stanley raised its price target for the stock by a third, citing “extraordinary” sales growth. The stock then surged to new all time highs after Bloomberg reported that Hertz placed an order for 100,000 Teslas in the first step of an ambitious plan to electrify its rental-car fleet. Oil firms including Chevron Corp and Exxon Mobil rose about 0.5% each, tracking Brent crude prices to three-year high. Cryptocurrency-exposed stocks gain in premarket trading as Bitcoin climbs back above the $63,000 per token level after slipping from its record high last week. Crypto-linked stocks that are climbing in premarket include Bakkt +6.6%, Hive Blockchain +3.9%, Hut 8 Mining +2.8%, Riot Blockchain +2.2%, MicroStrategy +2.3%, Marathon Digital +2.8%, Coinbase +1.9%, Silvergate +1.8%, Bit Digital +1.2% and Mogo +0.8% Strong earnings reports helped lift the S&P 500 and the Dow to record highs last week, with the benchmark index rising 5.5% so far in October to recoup all of the losses suffered last month.  However, market participants are looking beyond the impressive earnings numbers with a focus on how companies mitigate supply chain bottlenecks, labor shortages and inflationary pressures to sustain growth. Analysts expect S&P 500 earnings to grow 34.8% year-on-year for the third quarter, according to data from Refinitiv. On the economic data front, readings on U.S. third-quarter GDP - the Federal Reserve’s favored inflation gauge, the core PCE price index and consumer confidence data will be released later this week. In Europe, mining companies and banks gained but the telecommunications and industrial goods and services sectors declined, leaving the Stoxx 600 index little changed. Banks rose on HSBC’s bright outlook. Spain’s Banco de Sabadell SA jumped more than 5% after rejecting an offer for its U.K. unit. Telecoms and industrials were the biggest losers. Volvo Car slashed its initial public offering by a fifth, making it the latest in a string of European companies to pull back from equity markets roiled by soaring energy costs and persistent supply chain delay. Here are some of the biggest European movers today: Banca Monte dei Paschi slides as much as 9.5% after the Italian government and UniCredit ended talks over the sale of the lender. Exor shares gain as much as 5.6% in Milan trading to the highest level on record after a report that the Agnelli family’s holding co. revived talks with Covea for the sale of Exor’s reinsurance unit PartnerRe. Banco Sabadell jumps as much as 5.6% after it said it rejected an offer for its TSB Bank unit in the U.K. from Co-operative Bank. SSAB rises as much as 5.2% after the Swedish steelmaker posted 3Q earnings well above analysts expectations. Handelsbanken analyst Gustaf Schwerin said the figures were “very strong.” Weir Group rises as much as 3.7% after Exane BNP Paribas raised the stock to outperform. Analyst Bruno Gjani says the stock’s underperformance YTD provides a “compelling entry opportunity.” Darktrace drops as much as 26% after Peel Hunt initiated coverage of the cybersecurity firm with a sell rating and 473p price target that implies about 50% downside to Friday’s close. Nordic Semiconductor declines as much as 8.8% after ABG Sundal Collier downgraded to hold. German business morale deteriorated for the fourth month running in October as supply bottlenecks in manufacturing, a spike in energy prices and rising COVID-19 infections are slowing the pace of recovery in Europe’s largest economy from the pandemic. The Ifo institute said on Monday that its business climate index fell to 97.7 from an upwardly revised 98.9 in September. This was the lowest reading since April and undershot the 97.9 consensus forecast in a Reuters poll. “Supply problems are giving businesses headaches,” Ifo President Clemens Fuest said, adding that capacity utilisation in manufacturing was falling. “Sand in the wheels of the German economy is hampering recovery.” The weaker-than-expected business sentiment survey was followed by a grim outlook from Germany’s central bank, which said in its monthly report that economic growth was likely to slow sharply in the fourth quarter. The Bundesbank added that full-year growth was now likely to be “significantly” below its 3.7% prediction made in June. Earlier in Asia, stocks dipped in Japan and were mixed in China, where the central bank boosted a daily liquidity injection and officials expanded a property-tax trial. Signs that it would take at least five years before authorities impose any nationwide property tax bolstered some industrial metals.  Asia-Pac equities kicked off the week with a downside bias as the region adopted a similar lead from Friday’s Wall Street session, although sentiment marginally improved. The ASX 200 (+0.3%) was kept afloat by its energy sector as oil prices drifted higher, whilst index heavyweight Telstra was boosted after partnering with the Australian government to acquire Digicel Pacific in USD 1.6bln deal - for which Telstra contributed only USD 270mln. The Nikkei 225 (-0.7%) opened lower by around 1% with Softbank and Fast Retailing the biggest losers, although the index initially trimmed losses as the JPY remained on the backfoot. The Hang Seng (+0.1%) and Shanghai Comp (+0.8%) were mixed at the open, with the latter supported by a net PBoC injection of CNY 190bln, while the Hang Seng Mainland Properties Index (-2.9%) was pressured by reports China's State Council is to expand the property-tax reform trials to more areas. On the flip side, China Evergrande and Evergrande New Energy Vehicle opened higher after the chairman said the group is to complete its transition to the NEV industry from real estate within 10 years. Finally, 10yr JGBs trade subdued and in contrast to its US and German counterparts. In FX, the Bloomberg Dollar Spot Index was little changed after earlier inching lower to touch the weakest level since Sept. 27; the greenback was mixed against its Group-of-10 peers with commodity currencies performing best, led by the Australian dollar and Norwegian krone. The euro hovered around $1.1650 even as German business confidence took another hit in October as global supply logjams damp momentum in the manufacturing-heavy economy. Ifo business confidence fell to 97.7 in October, from 98.9 in the prior month. The pound inched up, rising alongside other risk- sensitive Group-of-10 currencies, having trailed all its peers on Friday after Brexit risks reared their head late in the London session. A quiet week for U.K. data turns focus to the upcoming government budget. The Australian dollar rose against all its Group-of-10 peers, tracking commodity gains, with market sentiment also boosted by the People’s Bank of China’s move to inject additional cash into the banking system. The yen declined after rising for three consecutive days; Economists expect the BoJ to keep its policy rate unchanged Thursday. Turkey’s lira fell to a record low as the country’s latest diplomatic spat gave traders another reason to sell the struggling currency. Day traders in Japan have started trimming their bullish wagers on the Turkish lira, with forced liquidation a growing threat as the currency tumbles. In rates, Treasuries were under pressure again, with the yield curve steeper as US trading begins Monday. They’re retracing a portion of Friday’s swift flattening, which occurred after Fed Chair Powell said rising inflation rates would draw a response from the central bank. 5s30s curve is back to ~89bp vs Friday’s low 85bp, within half a basis point of the lowest level in more than a year. Long-end yields are higher by as much as 3bp, 10-year by 2.7bp at 1.66%, widening vs most developed-market yields; yields across the curve remain inside Friday’s ranges, which included higher 2- and 5-year yields since 1Q 2020. Curve-steepening advanced after an apparent wager via futures blocks. In commodities, Brent oil rallied above $86 a barrel after Saudi Arabia urged caution in boosting supply. Gold rose for a fifth day, the longest run of gains since July, as risks around higher-for-longer inflation bolstered the metal’s appeal. Facebook will report its third quarter results after the market today, followed by Alphabet, Microsoft, Apple and Amazon later in the week.  On the economic data front, readings on U.S. third-quarter GDP - the Federal Reserve’s favored inflation gauge, the core PCE price index and consumer confidence data will be released later this week. Top Overnight News from Bloomberg S&P 500 futures up 0.1% to 4,542.25 STOXX Europe 600 little changed at 472.03 MXAP little changed at 200.13 MXAPJ up 0.1% to 661.46 Nikkei down 0.7% to 28,600.41 Topix down 0.3% to 1,995.42 Hang Seng Index little changed at 26,132.03 Shanghai Composite up 0.8% to 3,609.86 Sensex up 0.4% to 61,038.76 Australia S&P/ASX 200 up 0.3% to 7,441.00 Kospi up 0.5% to 3,020.54 Brent Futures up 0.7% to $86.14/bbl Gold spot up 0.4% to $1,800.45 U.S. Dollar Index down 0.10% to 93.55 Euro up 0.1% to $1.1655 Top Overnight News from Bloomberg U.S. Treasury Secretary Janet Yellen defended Federal Reserve Chair Jerome Powell’s record on regulating the financial system, which has been a target of criticism from progressive Democrats arguing he shouldn’t get a new term. Yellen said she expects price increases to remain high through the first half of 2022, but rejected criticism that the U.S. risks losing control of inflation. Speaker Nancy Pelosi opened the door to Democrats using a special budget tool to raise the U.S. debt ceiling without the support of Senate Republicans, whose votes would otherwise be needed to end a filibuster on the increase. President Joe Biden and fellow Democrats are racing to reach agreement on a scaled-back version of his economic agenda, with a self-imposed deadline and his departure later this week for summits in Europe intensifying pressure on negotiations. Bundesbank chief Jens Weidmann’s surprise announcement last week that he will leave on Dec. 31 has hit Berlin at a sensitive time, with Chancellor Angela Merkel currently running only a caretaker administration in the aftermath of an election whose outcome is likely to remove her CDU party from power. Some holders of an Evergrande bond on which the embattled developer had missed a coupon deadline last month received the interest before the end of a grace period Saturday, according to people familiar with the matter. A more detailed look at global markets courtesy of Newsquawk Asia-Pac equities kicked off the week with a downside bias as the region adopted a similar lead from Friday’s Wall Street session, although sentiment marginally improved with the region now mixed heading into the European open. US equity futures overnight opened trade with a mild negative tilt before drifting higher, with a broad-based performance experienced across the Stateside contracts, whilst European equity contracts are marginally firmer. Back to APAC, the ASX 200 (+0.3%) was kept afloat by its energy sector as oil prices drifted higher, whilst index heavyweight Telstra was boosted after partnering with the Australian government to acquire Digicel Pacific in USD 1.6bln deal - for which Telstra contributed only USD 270mln. The Nikkei 225 (-0.7%) opened lower by around 1% with Softbank and Fast Retailing the biggest losers, although the index initially trimmed losses as the JPY remained on the backfoot. The Hang Seng (+0.1%) and Shanghai Comp (+0.8%) were mixed at the open, with the latter supported by a net PBoC injection of CNY 190bln, whilst the Hang Seng Mainland Properties Index (-2.9%) was pressured by reports China's State Council is to expand the property-tax reform trials to more areas. On the flip side, China Evergrande and Evergrande New Energy Vehicle opened higher after the chairman said the group is to complete its transition to the NEV industry from real estate within 10 years. Finally, 10yr JGBs trade subdued and in contrast to its US and German counterparts. Top Asian News Xi Takes Veiled Swipe at U.S. as China Marks 50 Years at UN Hong Kong Convicts Second Person Under National Security Law Gold Extends Gain as Inflation Risks and Virus Concerns Persist Amnesty to Quit Hong Kong Citing Fears Under Security Law A tentative start to the week for European equities (Stoxx 600 U/C) as stocks struggle to find direction. On the macro front, the latest IFO report from Germany was mixed, with commentary from IFO downbeat, noting that Germany's economy faces an uncomfortable autumn as supply chain problems were causing trouble for companies, and production capacities were falling. The overnight session was a mixed bag with the Shanghai Composite (+0.8%) supported by a liquidity injection from the PBoC whilst the Hang Seng Mainland Properties Index (-2.9%) was pressured by reports China's State Council is to expand the property-tax reform trials to more areas. Stateside, US futures are marginally firmer with newsflow in the US in part, focused on events on Capitol Hill with CNN reporting that the goal among Democratic leaders is to have a vote Wednesday or Thursday on the infrastructure package. Note, the Fed is currently observing its blackout period ahead of the November meeting. From an earnings perspective, large-cap tech earnings dominate the slate for the week with the likes of Facebook (FB), Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN) all due to report. Back to Europe, sectors are somewhat mixed as Basic Resources is the marked outperformer amid upside in underlying commodity prices. It’s been a busy morning for the Banking sector as HSBC (+1%) reported a 74% increase in Q3 earnings, whilst Credit Suisse (+0.7%) is reportedly mulling the sale of its asset management unit. Less encouragingly for the sector, UniCredit (-0.5%) and BMPS (-3.2%) shares are lower after negations on a rescue plan for BMPS have ended without an agreement. Finally, Airbus (-1.2%) and Safran (-2.3%) sit at the foot of the CAC after reports suggesting that the CEO's of Avolon and AerCap have, in recent weeks, written to the Airbus CEO expressing their concerns that the market will not support Airbus' aggressive plans to increase the pace of production; subsequently, Airbus has rejected their proposal, according to sources. Top European News The Man Behind Erdogan’s Worst Spat With the West: QuickTake Weidmann Succession Suspense May Last for Weeks on Berlin Talks Cat Rock Capital Urges Just Eat Takeaway to Sell GrubHub European Gas Jumps Most in a Week as Russian Supplies Slump In FX, the Dollar is somewhat mixed vs major counterparts and the index is jobbing around 93.500 as a result in rather aimless fashion at the start of a typically quiet start to the new week awaiting fresh impetus or clearer direction that is highly unlikely to come from September’s national activity index or October’s Dallas Fed business survey. Instead, the Greenback appears to be reliant on overall risk sentiment, US Treasury yields on an outright and relative basis along with moves elsewhere and technical impulses as the DXY roams within a 93.775-483 range. TRY - Lira losses continue to stack up, and the latest swoon to circa 9.8545 against the Buck came on the back of Turkish President Erdogan’s decision to declare 10 ambassadors persona non grata status due to their countries’ support for a jailed activist, including diplomats from the US, France and Germany. However, Usd/Try has actually pared some gains irrespective of a deterioration in manufacturing confidence and this may be partly psychological given that 10.0000 is looming with little in the way of chart resistance ahead of the big round number. AUD/NZD - Iron ore prices are helping the Aussie overcome rather mixed news on the COVID-19 front, as the state of Victoria is on course to open up further from Friday, but new cases in NSW rose by almost 300 for the second consecutive day on Sunday. Nevertheless, Aud/Usd has had another look at offers around 0.7500 and Aud/Nzd is approaching 1.0500 even though Westpac sees near term downside prospects for the cross while maintaining its 1.0600 year end projection, as Nzd/Usd continues to encounter resistance and supply into 0.7200. GBP/CAD - Sterling has regrouped after losing some of its hawkish BoE momentum and perhaps the Pound is benefiting from the latest rebound in Brent prices towards Usd 86.50/br on top of reports that the first round of talks between the UK and EU on NI Protocol were constructive, while the Loonie is up alongside WTI that has been adobe Usd 84.50 and awaiting the BoC on Wednesday. Cable is around 1.3750 after fading into 1.3800, Eur/Gbp is hovering above 0.8450 and Usd/Cad is pivoting 1.2350. EUR/JPY/CHF - The Euro has bounced from the lower half of 1.1600-1.1700 parameters and looks enshrined by a key Fib just beyond the current high (1.1670 represents a 38.2% retracement of the reversal from September peak to October trough) and decent option expiry interest under the low (1 bn between 1.1615-00), with little fundamental direction coming from a very inconclusive German Ifo survey - see 9.00BST post on the Headline Feed for the main metrics and accompanying comments from the institute. Elsewhere, the Yen is hedging bets prior to the BoJ within a 113.83-42 band against the Dollar and the Franc seems to have taken heed of another rise in weekly Swiss sight deposits at domestic banks as Usd/Chf climbs from circa 0.9150 towards 0.9200 and Eur/Chf trades nearer the top of a 1.0692-65 corridor. SCANDI/EM/PM - Firm oil prices are also underpinning the Nok, Rub and Mxn to various extents, while the Zar looks content with Gold’s advance on Usd 1800/oz and the Cnh/Cny have derived traction via a firmer onshore PBoC midpoint fix, a net Yuan 190 bn 7 day liquidity injection and the fact that China’s Evergrande has restarted work on more than 10 projects having made more interest payments on bonds in time to meet 30 day grace period deadlines. In commodities, a modestly firmer start to the week for the crude complex though action has been contained and rangebound throughout the European session after a modest grinding bid was seen in APAC hours. Currently, the benchmarks post upside of circa USD 0.30/bbl amid relatively minimal newsflow. The most pertinent update to watch stems from China, where the National Health Commission spokesperson said China's current COVID outbreak covers 11 provinces and expects the number of new cases to keep rising; additionally, the number of affected provinces could increase. Separately, but on COVID, they are some reports that the UK Government is paving the wat for ‘plan B’ measures in England, while this are primarily ‘softer’ restrictions a return of work-from-home guidance could hamper the demand-side of the equation. Note, further reports indicate this is not on the cards for this week and there are some indications that we could see, if necessary, such an announcement after the COP26 summit in Scotland ends on November 12th. Elsewhere, and commentary to keep an eye on for alterations given the above factors, Goldman Sachs writes that the persistence of the global oil demand recovery being on course to hit pre-COVID levels would present an upside risk to its end-2021 USD 90/bbl Brent price target. Moving to metals, spot gold and silver are firmer but reside within tight ranges of just over USD 10/oz in gold, for instance. In a similar vein to crude, newsflow explicitly for metals has been minimal but it is of course attentive to the COVID-19 situation while coal futures were hampered overnight as China’s State Planner announced it is to increase credit supervision in the area. US Event Calendar 8:30am: Sept. Chicago Fed Nat Activity Index, est. 0.20, prior 0.29 10:30am: Oct. Dallas Fed Manf. Activity, est. 6.2, prior 4.6 DB's Jim Reid concludes the overnight wrap Well I saw Frozen twice this weekend. Once in the flesh up in London in the musical version and once on TV on Sunday at the heart of Manchester United’s defence which was breached 5 (five) times by Liverpool without reply. Regular readers can guess which I enjoyed the most. Anyway I’ll let it go for now and prepare myself for a bumper week ahead for markets. This week we have decisions from the ECB and the Bank of Japan (both Thursday) even if the Fed will be on mute as they hit their blackout period ahead of the likely taper decision next week. Inflation will obviously remain in the spotlight too as we get the October flash estimate for the Euro Area (Friday) with some regional numbers like German (Thursday) before. In addition, the Q3 earnings season will ramp up further, with 165 companies in the S&P 500 reporting, including Facebook (today), Microsoft, and Alphabet (both tomorrow), and Apple and Amazon (Thursday). Elsewhere, the UK government will be announcing their latest budget and spending review (Wednesday), Covid will remain in the headlines in light of the growing number of cases in many countries, and we’ll get the first look at Q3 GDP growth in the US (Thursday) and the Euro Area (Friday). Starting with those central bank meetings, we’re about to enter a couple of important weeks with the ECB and BoJ meeting this week, before the Fed and the BoE follow the week after. Market anticipation is much higher for the latter two though. So by comparison, the ECB and the BoJ are likely to be somewhat quieter, and our European economists write in their preview (link here) that this Governing Council meeting is likely to be a staging ground ahead of wide-ranging policy decisions in December, and will therefore be about tone and expectations management. One thing to keep an eye on in particular will be what is said about the recent surge in natural gas prices, as well as if ECB President Lagarde challenges the market pricing on liftoff as inconsistent with their inflation forecasts and new rates guidance. 5yr5yr Euro inflation swaps hit 2% for the first time on Friday so if the market is to be believed the ECB has achieved long-term success in hitting its mandate. With regards to the meeting, we think there’ll be more action in December where our economists’ baseline is that there’ll be confirmation that PEPP purchases will end in March 2022. See the BoJ preview here. Inflation will remain heavily in focus for markets over the week ahead, with recent days having seen investor expectations of future inflation rise to fresh multi-year highs. See the week in review at the end for more details. This week one of the main highlights will be the flash Euro Area CPI reading for October, which is out on Friday. Last month, CPI rose to 3.4%, which is the highest inflation has been since 2008, and this time around our economists are expecting a further increase in the measure to 3.8%. However, their latest forecast update (link here) expects that we’ll see the peak of 3.9% in November, before inflation starts to head back down again. The other main data highlight will come from the Q3 GDP figures, with releases for both the US and the Euro Area. For the US on Thursday the Atlanta Fed tracker has now hit a low of only +0.53%. DB is at 2.3% with consensus at 2.8%. Earnings season really ramps up this week, with the highlights including some of the megacap tech firms, and a total of 165 companies in the S&P 500 will be reporting. Among the firms to watch out for include Facebook and HSBC today. Then tomorrow, we’ll hear from Microsoft, Alphabet, Visa, Eli Lilly, Novartis, Texas Instruments, UPS, General Electric, UBS and Twitter. On Wednesday, releases will include Thermo Fisher Scientific, Coca-Cola, McDonald’s, Boeing, General Motors, Santander and Ford. Thursday then sees reports from Apple, Amazon, Mastercard, Comcast, Merck, Royal Dutch Shell, Linde, Volkswagen, Starbucks, Sanofi, Caterpillar, Lloyds Banking Group and Samsung. Finally on Friday, we’ll hear from ExxonMobil, Chevron, AbbVie, Charter Communications, Daimler, BNP Paribas, Aon and NatWest Group. Here in the UK, the main highlight next week will be the government’s Autumn Budget on Wednesday, with the Office for Budget Responsibility also set to release their latest Economic and Fiscal Outlook alongside that. In addition to the budget, the government will also be outlining the latest Spending Review, which will cover public spending priorities over the next 3 years. Our UK economists have released a preview of the event (link here), where they write that 2021-22 borrowing is expected to be revised down by £60bn, and they expect day-to-day spending will follow the path set out at the Spring Budget. They’re also expecting Chancellor Sunak will outline new fiscal rules. Finally, the pandemic is gaining increasing attention from investors again, with a number of countries having moved to toughen up restrictions in light of rising cases. This week, something to look out for will be the US FDA’s advisory committee meeting tomorrow, where they’ll be discussing Pfizer’s request for an emergency use authorization for its vaccine on 5-11 year olds. The CDC’s advisory committee is then holding a meeting on November 2 and 3 the following week, and the White House have said that if it’s authorised then the vaccine would be made available at over 25,000 paediatricians’ offices and other primary care sites, as well as in pharmacies, and school and community-based clinics. The full day by day calendar is at the end as usual. Asian markets are mixed this morning so far, as the Shanghai Composite (+0.38%), Hang Seng (+0.09%) and the KOSPI (+0.30%) are edging higher, while the Nikkei (-0.85%) is down. The rise in Chinese markets comes despite the news of 38 new COVID-19 cases as well as an announcement of a lockdown affecting around 35,700 residents of a county in Inner Mongolia. As China is one of the last countries in the world to still adhere to strict containment measures, a major outbreak can deal a fresh blow to the domestic economy and further reinforce global supply chain issues. Elsewhere the Turkish Lira hit fresh record lows, and is down around -1.5% as we type after last week’s surprise interest rate cut and Saturday’s news that ambassadors from 10 countries, including the US, Germany and France, were no longer welcome in the country. S&P 500 futures (+0.06%) are around unchanged and 10yr US Treasury yields are back up c.1bp. Looking back on an eventful week now, and there was a marked increase in inflation expectations, which manifested itself in global breakevens hitting multi-year, if not all-time, highs. Starting with the all-time highs, US 5-year breakevens increased +14.9bps (-1.0bps Friday) to 2.90%, the highest level since 5-year TIPS have started trading, while 10-year breakevens increased +7.5bps (-0.7bps Friday) to 2.64%, their highest readings since 2005. 10-year breakevens in Germany increased +9.5 bps (+3.6bps Friday) to 1.91%, their highest since 2011, while in the UK 10-year breakevens increased +17.1 bps (+4.0bps Friday) to 4.19%, the highest level since 1996. Remarkable as these levels are, 5-year 5-year inflation swaps in the US, UK, and Euro Area finished the week at 2.63%, 4.00%, and 2.00%, multi-year highs for all of these measures. If you never thought you’d see the day that long term inflation expectations in Europe would hit 2% then this is a nice/nasty surprise. Overall, this suggests investors are pricing in the potential for inflation far into the future to be higher, in addition to responding to near-term stimulus and Covid reopening impacts. Crude oil prices also climbed to their highest levels since 2014, with Brent climbing +1.07% (+1.37% Friday) and WTI gaining +2.07% (+1.79% Friday). One area where there was some reprieve was in industrial metals. Copper decreased -4.81% (-1.24% Friday), but at $449.80, remains +10.10% higher month-to-date. Bitcoin also joined the all-time high club intraweek, and finished the week +2.28% higher (-3.08% Friday). It marked a seminal week for the crypto asset, which saw ETFs and options on said ETFs begin trading in the US. The inflationary sentiment coincided with market pricing of central bank rate hikes shifting earlier. 2-year yields in the US, UK, and Germany increased +5.9 bps (+0.1bps Friday), +8.0 bps (-4.7 bps Friday), and +4.0 bps (+0.9bps Friday) respectively. In fact, money markets are now placing slightly-better-than even odds that the MPC will raise Bank Rate as early as next week. Fed and ECB officials offered some push back against the aggressive policy path repricing, but BoE speakers seemed to confirm a hike next week was a legitimate possibility. Rounding out sovereign bonds, nominal 10-year yields increased +6.2 bps (-6.9bps Friday) in the US, +4.0 bps (-5.6bps Friday) in the UK, +6.2 bps (-0.3 bps Friday) in Germany, +6.0 bps (-0.1bpFriday) in France, and +8.1 bps (+0.8bps Friday) in Italy. Inflation expectations didn’t fall with the big rally in the US and U.K. but real rates rallied hard. The S&P 500 increased +1.64% over the week, but ended its 7-day winning streak after retreating on -0.11% Friday. On earnings, 117 S&P 500 companies have now reported third quarter earnings. Roughly 85% of companies have beat earnings expectations compared to the five-year average of 76%, while 74% of reporting companies have beat sales estimates. The aggregate earnings surprise is +13.05%, topping the 5-year average of +8.4%, while the sales surprise is +2.06%. Although a seemingly strong performance on the surface, our equity team, after taking a look under the hood in this note here, points out that a large part of the beats so far is due to loan-loss reserve releases by banks. Excluding those, the aggregate S&P 500 beat is running much closer to historical average, suggesting the headline beats have not been as broad based as they look at first glance. Congressional Democrats spent the week negotiating the next fiscal package, which is set to spend more than $1 trillion on social priorities key to the Biden administration. On Sunday, House Speaker Nancy Pelosi noted that 90% of the bill is agreed to and would be voted on before October was out. One of the key sticking points has been what offsetting revenue raising measures should be included in the final bill. As those details emerge, it should give us a better picture as to the ultimate additional fiscal impulse the new bill will provide. Finally, global services PMIs out last Friday expanded while manufacturing PMIs lagged. Readings across jurisdictions were consistent with supply chain issues continuing to impact activity. Tyler Durden Mon, 10/25/2021 - 08:09.....»»

Category: blogSource: zerohedgeOct 25th, 2021

Futures Top 4,500 As Market Meltup Accelerates

Futures Top 4,500 As Market Meltup Accelerates Over the weekend, a Goldman flow trader explained why it expected a powerful market meltup to emerge in coming days, and this time Goldman was right because after trading at 4317 just one week ago, spoos are now almost 200 points higher, rising above 4500 this morning after a powerful ramp pushed US equity futures and global markets as an upbeat profit forecast from Johnson & Johnson which boosted (get it "boosted") its Revenue and EPS guidance, added to the positive momentum in corporate earnings generated by big banks last week and helped counter concerns about elevated inflation. At 715 a.m. ET, Dow e-minis were up 183 points, or 0.52%, S&P 500 e-minis were up 22.75 points, or 0.51%, and Nasdaq 100 e-minis were up 61.75 points, or 0.40%. Treasury yields were unchanged at 1.60% and the dollar slumped to a 4 week low. In premarket trading Johnson & Johnson - whose covid vaccine will soon be "mixed and matched" with mRNA platforms - rose 1.7% after it raised its 2021 adjusted profit forecast, even as it stuck to its outlook of $2.5 billion in sales from its COVID-19 vaccine this year. Walmart rose 2% after Goldman Sachs added the world’s largest retailer to its “Americas Conviction List”. Travelers Cos Inc rose 2.7% after the property and casualty insurer beat estimates for third-quarter profit. Large-cap FAAMG names all rose between 0.3% and 0.7%. Netflix Inc rose 0.1% ahead of its quarterly results later in the day, where it is expected to report blowout guidance for subscriber growth on the back of Squid Games. Here are some of the biggest U.S. movers today: Crypto stocks in spotlight as Bitcoin continued its climb toward all-time highs, bolstered by optimism over the launch of the first Bitcoin futures exchange-traded fund in the U.S. on Tuesday Hive Blockchain (HIVE US) +1.8%, Riot Blockchain (RIOT US) +2.3%, Marathon Digital (MARA US) +0.9%, Bitfarms (BITF US) +3.9% AgEagle Aerial Systems (UAVS US) shares rise as much as 16% in U.S. premarket after the provider of drones, sensors and software entered into a definitive agreement to buy Sensefly from Parrot at a valuation of $23m in cash and stock Steel Dynamics (STLD US) +1.5% in U.S. premarket trading after it reported 3Q adj. EPS above average analyst estimate Frontline (FRO US) jumps 6.5% in U.S. premarket trading, helped by rising oil prices Apple (AAPL US) marginally higher Tuesday premarket after analysts were upbeat on the company following an event where it showcased a revamp of its MacBook Pro laptops, along with new audio products EverQuote (EVER US) shares slipped Monday postmarket after co. cut 3Q revenue outlook TaskUS (TAS US) fell 6.8% Monday postmarket after holders offered shares via Goldman Sachs, JPMorgan Markets have taken comfort from robust earnings, but also grappling with the prospect of tightening monetary policy to quell price pressures. As Bloomberg notesm, traders are waiting to see if a slate of Federal Reserve speakers this week will try to calm the jitters stemming from the scaling back of pandemic-era policy support. “The world is watching interest rates more closely than it has for some time -- and rightly so, the moves have been emphatic, especially in the short-term maturities,” Chris Weston, head of research at Pepperstone Financial Pty, wrote in a note. He added it’s “impressive how resilient and calm markets are in the face of the rates repricing.” Still, the recent bounce in the Nasdaq 100 index has failed to shoo away the bears, with net short positions on the tech-heavy benchmark higher than at the peak of the pandemic, Citigroup strategists said. J&J, P&G, Philip Morris, Netflix and United Airlines are scheduled to report today. “We’ve seen companies post some fairly decent beats,” said Michael Hewson, chief market analyst at CMC Markets in London. “While it’s been notable that most have cited concerns about rising costs, as well as supply-chain disruptions, we haven’t seen many significant profit downgrades yet.” In Europe, gains for mining companies outweighed a retreat for the travel industry, lifting the Stoxx Europe 600 Index up 0.2%. Danone dropped 2.2% in Paris after the French food giant reported sales that were overall in line with expectations, but warned of rising costs of milk, packaging and transportation. Ericsson AB fell after sales were hit by supply chain issues.  Miners and oil & gas are the strongest sectors, healthcare and travel underperform. Here are some of the biggest European movers today: Moneysupermarket.com shares climb as much as 8.9% after the British price comparison website posted its 3Q update and announced the acquisition of cashback site Quidco for GBP101m in cash. Hochschild gains as much as 6.8% after the silver miner said it plans to spin off the rare earths project it bought two years ago and list the new company in Canada. Software AG drops as much as 14%, the most since 2014, after the company cut its FY bookings growth guidance in the Digital Business segment, which analysts highlight as a negative. Bachem falls as much as 11% to CHF745 after placing 750,000 new shares at CHF778 apiece to raise CHF584m for growth. Beijer Ref trades down as much 7.2% after the cooling and heatings systems manufacturer missed analyst estimates on both sales and profit in 3Q. Earlier in the session, Asian equities gained, buoyed by a rebound in technology shares listed in Hong Kong and elsewhere in the region amid better-than-expected earnings and lower valuations. The MSCI Asia Pacific Index climbed as much as 1%, as TSMC and Alibaba provided some of the biggest boosts. The Hang Seng Tech Index rose to its highest since Sept. 13, as Chinese authorities are said to be considering opening up access for content on Tencent and ByteDance platforms to search engines such as Baidu. “Markets are currently adjusting their expectations around regulatory risks,” said Jun Rong Yeap, market strategist at IG Asia.  Most benchmarks in the region were in the green as the earnings season comforted edgy investors, who are keenly watching inflation figures, supply chain bottlenecks and China’s growth slowdown. The Asian measure crossed above a key technical level that it’s been flip-flopping around for most of 2021. Some material and energy stocks took a breather, even as supply shortages and strong demand cause a price surge for raw materials. Profits for Asian oil refiners have shot back up to pre-pandemic levels as the shortage of gas and coal sparks a rush to secure alternative supplies. “The policy misstep, which I think is unlikely, is for central banks to confuse themselves by saying there’s inflation because of us, as aggregate demand is way too strong and so let’s fix a supply chain, Covid-driven pickup in costs by tightening monetary policies,” Ajay Kapur, head emerging markets strategy at BofA Global Research told Bloomberg Television. In a notable development, China Evergrande Group’s main onshore unit paid interest due Tuesday on a yuan bond, Reuters reported, citing four people with knowledge of the matter. Japanese equities rose, powered by advances in technology stocks as cyclicals fell. Electronics makers and telecommunications providers were the biggest boosts to the Topix, which gained 0.4%. Fast Retailing and SoftBank Group were the largest contributors to a 0.7% rise in the Nikkei 225. Australian stocks snapped a 3-day winning streak as banks, miners declined. The S&P/ASX 200 index fell 0.1% to close at 7,374.90, edging lower after three consecutive days of advances. Mining stocks and banks were the biggest drags on the benchmark. Appen was among the top performers, extending gains for a fifth straight session. Chalice Mining retreated, snapping a four-day winning streak. Higher interest rates would remove some of the heat from the nation’s property market, though it would come at the cost of fewer jobs and weaker wages growth, the Reserve Bank of Australia said in minutes of its October meeting released Tuesday.  In New Zealand, the S&P/NZX 50 index rose 0.5% to 13,065.92. “We are going to get a lot of information on whether margins are being squeezed by these shortages and higher prices and wages continuing to go up,” JoAnne Feeney, Advisors Capital Management partner and portfolio manager, said on Bloomberg Television. She added the delta-plus Covid variant could be among sources of volatility in the next few months. In rates, Treasury yields fell, led by the front end; Bund yields were also lower but by less than U.S. peers. Yields are richer by 2bp-3bp across front-end of the curve, cheaper by ~1bp across long-end, with 2s10s, 5s30s spreads steeper by 2bp-3bp; 10-year is little changed at 1.597%, with bunds, gilts lagging by ~2bp. Daily ranges remain narrow while bunds and gilts underperform. Stock index futures are rising, lifting S&P 500 futures to highest level in more than a month.  In FX, the Bloomberg Dollar Spot Index plunged as the dollar steepened its losses throughout the day; the greenback fell versus all of its Group-of-10 peers and risk-sensitive antipodean and Scandinavian currencies were the best performers.  The euro advanced a fifth consecutive day against the greenback to touch an almost three-week high of $1.1663. Options suggest the euro will rise above a string of resistance levels that it faces in the spot market. Australian and New Zealand dollars both advanced to the strongest in more than a month as lower Treasury yields dragged down the U.S. currency. Australia’s sovereign bonds rebounded after minutes from the nation’s latest central bank meeting prompted a rollback of early rate-hike bets. The central bank said it is committed to maintaining a supportive policy until actual inflation is sustainably within its 2%-3% target range. The yen snapped a three-day decline aided by falling U.S. yields and as traders saw the recent losses as excessive; Japan’s 20-year debt sale drew the lowest bid-to-cover ratio since 2015. In commodities, oil gained as Russia signaled that it won’t go out of its way to offer European consumers extra gas to ease the current energy crisis unless it gets regulatory approval to start shipments through the controversial Nord Stream 2 pipeline. Spot gold rallied, clawing back half of Friday’s losses to trade near $1,780/oz. Base metals are well bid. LME nickel and tin outperform, both rising over 2%. Looking at the day ahead, and we’ll hear from an array of central bank speakers, including the BoE’s Governor Bailey, Pill and Mann, the ECB’s Rehn, Centeno, Elderson, Panetta and Lane, along with the Fed’s Daly, Barkin, Bostic and Waller. Otherwise, US Data releases including September’s housing starts and building permits, and earnings today include Johnson & Johnson, Procter & Gamble, Netflix, Philip Morris International and BNY Mellon. Market Snapshot S&P 500 futures up 0.2% to 4,488.50 STOXX Europe 600 up 0.2% to 467.87 MXAP up 1.0% to 200.25 MXAPJ up 1.2% to 658.33 Nikkei up 0.7% to 29,215.52 Topix up 0.4% to 2,026.57 Hang Seng Index up 1.5% to 25,787.21 Shanghai Composite up 0.7% to 3,593.15 Sensex up 0.5% to 62,070.31 Australia S&P/ASX 200 little changed at 7,374.85 Kospi up 0.7% to 3,029.04 Brent Futures up 0.4% to $84.63/bbl Gold spot up 1.0% to $1,782.67 U.S. Dollar Index down 0.36% to 93.61 German 10Y yield rose 4.7 bps to -0.155% Euro up 0.4% to $1.1652 Top Overnight News from Bloomberg Bank of France Governor Francois Villeroy de Galhau says there is no reason to raise rates next year as inflation will come back below ECB’s 2% target, according to France Info radio interview U.S. Treasuries, European sovereigns, U.K. gilts and emerging-market credit are all set to lose money over the 12 months through September as dwindling coupons provide little cushion against rising yields, according to forecasts from Bloomberg Intelligence. Adding to the potentially toxic environment for bonds is the prospect of major central banks unwinding debt purchases and raising interest rates U.K. Prime Minister Boris Johnson promised to find a solution to Brexit’s Northern Ireland Protocol, a sign that a compromise will be reached with the European Union in a dispute that had threatened to spiral into a trade war. Bitcoin continued its climb toward all-time highs, bolstered by optimism over the upcoming launch of the first Bitcoin futures exchange-traded fund in the U.S. by asset manager ProShares China’s property and construction industries contracted in the third quarter for the first time since the start of the pandemic, weighed by a slump in real estate China’s central bank has room to cut the amount of cash banks must hold in reserve in order to boost liquidity and support economic growth, a government adviser said Contagion effects on inflation from the recent surge in energy prices can’t be excluded, but they are not the most likely scenario, Riksbank Deputy Governor Martin Floden says in parliamentary hearing A more detailed look at global markets courtesy of Newsquawk Asian equity markets were kept afloat with the region encouraged after the mostly positive lead from US, where equity markets shrugged off the hawkish calls on global rates and big tech gained including Apple which benefitted following its hardware event. ASX 200 (-0.1%) was initially marginally higher as tech mirrored the outperformance of the sector stateside and with notable gains in property stocks, although the advances in the index were capped and upside faded ahead of resistance at the 7,400 level and due to weakness in mining-related stocks following yesterday’s cooldown in commodity prices, as well as lower production results from BHP. Nikkei 225 (+0.7%) was underpinned as exporters benefitted from favourable currency flows, while the KOSPI (+0.7%) was also firmer with the index unfazed by the latest North Korean projectile launches which were said to be ballistic missiles and therefore banned under UN Security Council resolutions. Hang Seng (+1.5%) and Shanghai Comp. (+0.7%) adhered to the upbeat mood with Hong Kong the biggest gainer in the region amid strength across a broad range of sectors aside from energy due to the recent pullback in oil and with casino names also underwhelmed by weaker Q3 Macau gaming revenue compared with the prior quarter. Finally, 10yr JGBs nursed some of yesterday’s losses after global counterparts also found reprieve from the latest bout of bond selling pressure but with the recovery only marginal amid the mostly positive risk tone and following mixed results from the 20yr JGB auction. Top Asian News Alibaba Unveils One of China’s Most Advanced Chips Secretive Body Leads Xinjiang’s AI Policing, Report Finds China’s Central Bank Should Cut RRR, Government Adviser Says China’s Curbs on Fertilizer Exports to Worsen Global Price Shock European equities (Euro Stoxx 50 +0.1%; Stoxx 600 +0.2%) trade with an upside in an attempt to claw back some of yesterday’s losses with fresh macro impulses relatively light since Monday’s close. The Asia-Pac session was predominantly firmer with indices kept afloat by the mostly positive lead from the US and performance in the tech sector. As it stands, US equity index futures are marginally firmer with performance across the majors relatively even (ES +0.4%) as markets await a slew of large-cap earnings. In terms of market commentary, JP Morgan notes that global EPS revisions remain plentiful as sell-side analysts’ global EPS upgrades continue to outnumber EPS downgrades. That said, JPM is of the view that the trend is slowing. In terms of the sector breakdown, analysts note that Defensive Sectors show improving EPS revisions, whilst Global Cyclicals sectors such as Technology, Financials, Energy, Industrials and Discretionary dominate the largest upgrades. Back to Europe, sectors are mostly firmer with outperformance in Basic Resources amid upside in underlying commodity prices. Elsewhere, Retail names also outperform peers with some of the French luxury names such as Kering, LVMH and Hermes trying to claw back some of yesterday’s post-Chinese GDP losses with the former set to release earnings after-hours. To the downside, the Telecoms sector sits in modest negative as Ericsson (-0.3%) acts as a drag post-Q3 results. In terms of individual movers, Pearson (+3.6%) stands at the top of the Stoxx 600 after being upgraded at Credit Suisse, whilst Iberdrola (+3.2%) is also a notable gainer amid news that it is to invest USD 8.3bln into a North Sea wind farm complex – its largest global investment. Laggards include Teamviewer (-4.8%) following a broker downgrade at Exane, whilst broker action has also hampered IAG (-3.5%). In terms of large cap earnings, Danone (-1%) shares are seen lower after flagging rising costs and a slowdown in sales growth. Top European News European Gas Prices Drop on Windy and Mild Weather Forecasts Most of Barclays’ U.S. Workers Now Back in Office, Staley Says Poland Escalates Rule-of-Law Dispute, Risking EU Recovery Money Goldman Sachs Investment Banker Joins Nordic Venture Fund Hadean In FX, a downbeat session for the Dollar thus far as the index retreats further from the 94.000 mark to extend the lower bound of a two-week range. There has been little in terms of fundamental catalysts to trigger the selloff as yields remain elevated (albeit off recent highs), and market sentiment remains tentative. State-side, there is a lack of developments Capitol Hill, with US President Biden stating that he is "right now" going to try for a deal with Moderate Democratic Senator Manchin, while it was separately reported that Senator Manchin said he does not see how a deal on Biden's agenda will happen by October 31st. The DXY is more interesting from a technical standpoint after falling just short of the 100 WMA (94.213) during yesterday's session to a high of 94.174 and losses exacerbated overnight by a breach of support at the 21 DMA (98.879) – with the line acting as firm support over the past three consecutive trading sessions. The next levels to the downside naturally reside at the 93.500 mark – with clean air seen until the psychological mark. Below that, the September 28th low resides at 93.360, followed by the 50 DMA at 93.242 and the 27th Sept base at 93.206. Ahead, the data docket remains light, but Fed speak is abundant, although from regulars. AUD, NZD, CAD - The antipodeans top the G10 chart, with the NZD the marked outperformer as participants mull stepper RBNZ rate hikes following yesterday's hot Kiwi CPI metrics. ANZ Bank brought forward its forecast for the RBNZ to lift the OCR to a neutral rate of 2% by August 2022 from a prior forecast of a neutral rate by the end of 2022. NZD/USD surpassed its 200 DMA - which matches the 0.7100 psychological level (vs low 0.7079). The pair now probes 0.7150 with some potential resistance seen at 0.7156 (September 10th high), 0.7167 (September 6th high), and 0.7170 (September 3rd high). The Aussie meanwhile saw a relatively mundane RBA minutes release, but the AUD optimism is likely spurred by the rebound in base metals. AUD/USD found support at its 100 DMA (0.7406) and inches closer towards 0.7450. Gains in the CAD are still somewhat hampered by the slide in crude prices yesterday; nonetheless, USD/CAD re-eyes levels last seen in July. EUR, GBP, JPY - All benefit from the softer Dollar, although the Sterling fares slightly better as BoE market pricing provides further tailwinds; markets are currently assigning a 78% probability of a 25bps hike at the November 4th confab. HBSC weighed in this morning and suggested the economic fundamentals do not appear to have changed sufficiently to warrant the recent market move, with market pricing looking too aggressive given the balance of supply and demand in their view. This followed GS and JPM reeling in their BoE hike forecasts yesterday. GBP/USD extends upside above 1.3800 and topped its 100 DMA situated at 1.3809. On the UK docket, BoE’s Mann and Chief Economic Pill could provide some more meat on the bones following Governor Bailey’s weekend remarks. EUR/USD was bolstered above its 21 DMA (1.1620) and posts gains north of 1.1650 at the time of writing, with the pair also eyeing chunky OpEx with EUR 1.3bln between 1.1600-15 and EUR 581mln between 1.1670-75. EUR/GBP meanwhile tests 0.8450 to the downside from a current 0.8463 high. USD/JPY has pulled back after failing to breach resistance just ahead of the 114.50 mark, with the softer Buck bringing the pair back towards the 114.00 ahead – with Friday's base at 113.63. In commodities, WTI and Brent front-month futures are nursing yesterday’s wounds and prices remain elevated despite a lack of fresh catalysts and with the macro landscape little changed as of late. The themes remain a) OPEC+ supply, b) supply crunch in the natural gas, LNG, electricity, and coal markets and c) winter demand. Elsewhere, the White House said it is continuing to press OPEC members to address the oil supply issue and is also addressing logistics of supply. Furthermore, the White House will use every lever at its disposal and the FTC is also looking at possible price gouging. WTI Nov extends gains above USD 83/bbl (vs 82.05/bbl low) while Brent Dec aims at USD 85/bbl (vs low 83.83/bbl). Elsewhere, metals have been spurred by the retreat in the Dollar, with spot gold topping its 50 DMA (1,778/oz) after testing its 21 DMA (1,760/oz) overnight, with the yellow metal also seeing its 200 and 100 DMAs at 1,793/oz and 1,794/oz respectively. Over to base metals, Dalian iron ore futures snapped a four-day losing streak, with iron ore shipments departing from Australia and Brazil lower W/W according to Mysteel data. Copper prices meanwhile are buoyed with the LME future holding onto comfortable gains north of USD 10k/t. US Event Calendar 8:30am: Sept. Building Permits MoM, est. -2.4%, prior 6.0%, revised 5.6% 8:30am: Sept. Housing Starts MoM, est. -0.2%, prior 3.9% 8:30am: Sept. Building Permits, est. 1.68m, prior 1.73m, revised 1.72m 8:30am: Sept. Housing Starts, est. 1.61m, prior 1.62m DB's Jim Reid concludes the overnight wrap At home we have recently bought a wooden bench for our kitchen table with the names of our three kids carved into the seats. We are pretty confident that there’ll be no need for more names. The problem was though that we chose an elegant, flamboyant font. The twins have just started to learn how to recognise and write their own names with the school having a very strict letter formation. As such last night when we were discussing it, young James refused to accept that this was his name on the bench and was hysterical with anger screaming that the bench needed to go as it was wrong. He kept on shouting “that’s not my name”. Nothing could persuade him otherwise. I thought I was defusing the situation by playing the famous Ting Tings song “that’s not my name” on the kitchen speakers but this just made matters far worse just before bedtime. So if anyone wants a bench with Edward, Maisie and James carved into it let me know as it’s causing a lot of grief at home. It seems like rate hikes are increasingly being carved into markets at the moment as Bank of England Governor Bailey’s hawkish Sunday comments that we discussed yesterday set the tone for the last 24 hours. Rates opened very weak across the globe but a similar pattern broke out to that seen over the last couple of weeks where higher yields have either brought in fresh bond buyers or markets have decided that the higher rate story is enough of a potential risk-off or negative growth story that dip buying mentality sets in. So yields have been a bit 3 steps higher, two steps lower over the last couple of weeks even though the inflation data has been largely one way higher. It was the UK that saw the most seismic shifts yesterday after Governor Bailey’s comments, with yields on 2yr UK gilts (+13.1bps) seeing their biggest daily move higher since August 2015, and the 2s10s curve (-9.8bps) flattening by the most since the height of the pandemic in March 2020. Markets are now pricing in a move in the Bank Rate up to around 0.45% by the December meeting (from 0.1%), and up to around 0.95% by the June meeting, around 15-30bps more priced in across the next several meetings from Friday’s close. So tomorrow’s CPI release from the UK will be interesting in light of this but it will likely be the calm before the storm given favourable base effects and with other pipeline inflation items yet to feed into the data. You can get a sense of how the UK is moving much faster than others in its rate hike pricing in that the spread between 2yr gilts and treasury yields is now at its widest in favour of gilt yields since late 2014. Yields on shorter maturities saw the most sustained movement elsewhere as well as investors began to anticipate imminent rate hikes. In fact, by the close of trade yesterday, markets were just shy of pricing in 2 Fed hikes by the end of 2022, which is some way ahead of the Fed’s dot plot from last month, when half the members didn’t see any hikes until at least 2023. Indeed, December 2022 Eurodollar futures have increased some 40 basis points over the last month, whilst September 2022 futures have increased more than 20 basis points. 10yr Treasury yields climbed +3.0 to 1.600%, with the rise entirely driven by higher real yields (+4.6bps). They were at 1.625% at the session highs, though. Those movements were echoed in the Euro Area, although the main difference to the US and the UK was that higher inflation breakevens rather than real rates drove the moves higher in yields. By the close of trade, yields on 10yr bunds (+2.1bps), OATs (+2.2bps) and BTPs (+3.0bps) had all moved higher even if again a few bps off the highs for the session. On the inflation side, the 10yr German breakeven hit a post-2013 high of 1.85%, just as the 5y5y forward inflation swap for the Euro Area was up +4.5bps to 1.91%, its highest closing level since 2014. The prospect of faster rate hikes put a dampener on equities, especially earlier in the day, though the S&P 500 (+0.34%) recovered to close just -1.13% beneath its all-time closing high from early September. Cyclical industries led the index higher, with the FANG+ index of megacap tech stocks (+1.99%) seeing a strong outperformance as all but 1 of its 10 constituents moved higher on the day. It was a different story in Europe however, where the STOXX 600 fell -0.50% in line with the losses elsewhere on the continent. At the sectoral level, energy was the outperformer in Europe but faded into the US close. After 8 successive weekly advances for WTI oil prices, yesterday saw it hit fresh multi-year highs (again…) intraday, gaining as much as +1.89% during the London session. However WTI made an about turn after the London close, and ultimately finished only slightly higher (+0.19%) on the day. Elsewhere, Bitcoin increased +3.31% yesterday and is up another +1.95% this morning to $62,564, bringing it within 1.5% of its own all-time closing high back in April and 3.6% beneath its all-time intraday high. The cryptocurrency has rallied in recent weeks as news picked up that the first US bitcoin ETF would be approved. Later today the ProShares ETF is expected to start trading, offering US retail investors a new avenue to trade the world’s largest cryptocurrency. The ETF will offer exposure to bitcoin futures contracts rather than “physical” bitcoin. Stocks are trading higher in Asia overnight, with the Hang Seng (+1.30%), CSI (+1.01%), Shanghai Composite (+0.74%), the Nikkei (+0.73%) and the KOSPI (+0.61%) all advancing thanks to an outperformance from technology stocks. For now at least, positive earnings are outweighing the impact from the prospect of faster than expected interest rate hikes. However, the issues stemming from Evergrande will continue to remain in focus as the developer has a Yuan bond interest due today. Outside of Asia, futures are pointing towards modest gains at the open, with those on the S&P 500 (+0.06%) and the DAX (0.11%) moving higher. Turning to the pandemic, the continued decline in global cases over the last couple of months and the lack of new variants has rather taken it off the front business pages of late. That said, there were a few concerning indications yesterday when it came to the health picture. Firstly, China is dealing with a fresh cluster in its northwestern provinces, with further positive tests reported overnight. Second, there are signs that we could be facing a more severe flu season as we approach winter in the northern hemisphere, with the Walgreens Boots Alliance reporting that flu cases are 23% higher in the US relative to a year ago. Third, there were some questions from the UK, as former US FDA Commissioner Scott Gottlieb wrote on Twitter on Sunday that given the recent rise in UK cases and the “delta-plus” variant, that there should be “urgent research” to discover if it was more transmissible or had partial immune evasion. Finally, New Zealand (which had been pursuing a zero-Covid strategy in the past) reported a record 94 cases yesterday as Auckland remains in lockdown. There wasn’t a massive amount of data yesterday, though US industrial production fell -1.3% in September (vs. +0.1% expected), and the August number was also revised down half a percentage point to now show a -0.1% contraction. Partly that was thanks to the continuing effects of Hurricane Ida, which contributed around 0.6 percentage point of the overall drop in production, but the contraction also reflected supply-chain issues (eg auto chip shortages). Otherwise, the NAHB housing market index for October unexpectedly rose to 80 (vs. 75 expected). To the day ahead now, and we’ll hear from an array of central bank speakers, including the BoE’s Governor Bailey, Pill and Mann, the ECB’s Rehn, Centeno, Elderson, Panetta and Lane, along with the Fed’s Daly, Barkin, Bostic and Waller. Otherwise, US Data releases including September’s housing starts and building permits, and earnings today include Johnson & Johnson, Procter & Gamble, Netflix, Philip Morris International and BNY Mellon. Tyler Durden Tue, 10/19/2021 - 07:50.....»»

Category: dealsSource: nytOct 19th, 2021

Prologis stock jumps after earnings beat expectations, amid record increases in market rents

Shares of Prologis Inc. rallied 1.7% toward a fifth straight gain Friday, after the real estate investment trust focused leasing logistics facilities reported third-quarter earnings that rose above expectations, and boosted its full-year outlook, amid record increases in market rents and valuations. Net income more than doubled to $722.0 million, or 97 cents a share, from $298.7 million, or 40 cents a share, in the year-ago period. Core funds from operations per share increased to $1.04 from 90 cents, beating the FactSet consensus of $1.03. Total revenue rose 9.3% to $1.18 billion, above the FactSet consensus of $1.04 billion. Average occupancy was 96.6%, up from 96.0% in the second quarter, and with 98.0% of property leased as of Sept. 30. Cash rent change was up 12.9%, with cash same-store net operating income grew 6.7%. For 2021, the company raised its core FFO guidance range to $4.11 to $4.13 from $4.04 to $4.08, compared with the FactSet consensus of $4.07. "Our third quarter results were underpinned by record increases in market rents and valuations," said Chief Executive Hamid Moghadam. "With vacancies at unprecedented lows, space in our markets is effectively sold out." The stock has rallied 36.2% year to date through Thursday, while the SPDR Real Estate Select Sector ETF has advanced 26.3% and the S&P 500 has gained 16.8%.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

Category: topSource: marketwatchOct 15th, 2021

Futures Rebound As Yields Drop

Futures Rebound As Yields Drop U.S. index futures rebounded on Tuesday from Monday's stagflation-fear driven rout as an increase in Treasury yields abated and the greenback dropped from a 10 month high while Brent crude dropped from a 3 year high of $80/barrel after API showed a surprise stockpile build across all products. One day after one of Wall Street’s worst selloff of this year which saw the S&P's biggest one-day drop since May, dip buyers made yet another another triumphal return to global markets, with Nasdaq 100 futures climbing 130 points or 0.9% after the tech-heavy index tumbled the most since March on Tuesday as U.S. Treasury yields rose on tapering and stagflationconcerns. S&P 500 futures rose 28 points or 0.6% after the underlying gauge also slumped amid mounting concern over the debt-ceiling impasse in Washington. A key catalyst for today's easing in financial conditions was the 10-year yield shedding four basis points and the five-year rate falling below 1%. In the past five sessions, the 10Y yield rose by a whopping 25 basis point, a fast enough move to trigger VaR shocks across risk parity investors. "We think (10-year treasury yields) are likely to around 1.5% to 1.75%, so they obviously still have room to go," said Daniel Lam, senior cross-asset strategist at Standard Chartered, who added that the rise in yields was driven by the fact that the United States was almost definitely going to start tapering its massive asset purchases by the end of this year, and that this would drive a shift from growth stocks into value names. Shares of FAAMG gigatechs rose between 1% and 1.3% in premarket trading as the surge in yields eased. Oil firms and supermajors like Exxon and Chevron dipped as a rally in crude prices petered out. The S&P energy sector has gained 3.9% so far this week and is on track for its best monthly performance since February. Among stocks, Boeing rose 2.5% after it said 737 MAX test flight for China’s aviation regulator last month was successful and the planemaker hopes a two-year grounding will be lifted this year. Cybersecurity firm Fortinet Inc. led premarket gains among S&P 500 Index companies. Here are some of the other big movers this morning: Micron (MU US) shares down more than 3% in U.S. premarket trading after the chipmaker’s forecast came in well below analyst expectations. Co. was hurt by slowing demand from personal-computer makers Lucid (LCID US) shares rise 9.7% in U.S. premarket trading after the electric-vehicle company said it has started production on its debut consumer car EQT Corp. (EQT US) shares fell 4.8% in Tuesday postmarket trading after co. reports offering by certain shareholders who received shares as a part of its acquisition of Alta Resources Development’s upstream and midstream units PTK Acquisition (PTK US) rises in U.S. premarket trading after the blank-check company’s shareholders approved its combination with the Israel-based semiconductor company Valens Cal-Maine (CALM US) shares rose 4.4% postmarket Tuesday after it reported net sales for the first quarter that beat the average analyst estimate as well as a narrower-than-estimated loss Sherwin-Williams (SHW US) dropped 3.5% in Tuesday postmarket trading after its forecasted adjusted earnings per share for the third quarter missed the average analyst estimate Boeing (BA US) and Spirit Aerosystems (SPR US) climb as much as 3% after being upgraded to outperform by Bernstein on travel finally heading to inflection point The S&P 500 is set to break its seven-month winning streak as fears about non-transitory inflation, China Evergrande’s default, potential higher corporate taxes and a sooner-than expected tapering of monetary support by the Federal Reserve clouded investor sentiment in what is usually a seasonally weak month. Meanwhile, Senate Democrats are seeking a vote Wednesday on a stopgap funding bill to avert a government shutdown, but without a provision to increase the federal debt limit. On Tuesday, Jamie Dimon said a U.S. default would be “potentially catastrophic” event, in other words yet another multibillion bailout for his bank. “Many things are in flux: the pandemic is not over, the supply chain bottlenecks we are seeing are affecting all sorts of prices and we’ll need to see how it plays out because the results are not clear in terms of inflation,” Belita Ong, Dalton Investments chairman, said on Bloomberg Television. Europe’s Stoxx 600 gauge rebounded from a two-month low, rising 0.9% and reversing half of yesterday's losses. Semiconductor-equipment company ASM International posted the biggest increase on the index amid positive comments by analysts on its growth outlook. A sharp rebound during the European session marked a turnaround from the downbeat Asian session, when equities extended losses amid concerns over stagflation and China Evergrande Group’s debt crisis. Sentiment improved as a steady flow of buyers emerged in the Treasury market, ranging from foreign and domestic funds to leveraged accounts.  Here are some of the biggest European movers today: Academedia shares rise as much as 6.9% in Stockholm, the most since June 1, after the company said the number of participants for its higher vocational education has increased 25% y/y. ASM International jumps as much as 7.3%, rebounding from a three-day sell-off, boosted by supportive analyst comments and easing bond yields. GEA Group gains as much as 4.7% after the company published new financial targets through 2026, which Citigroup says are above analysts’ consensus and an encouraging signal. DSV bounces as much as 4.4% as JPMorgan upgrades to overweight, saying the recent pullback in the shares presents an opportunity. Genova Property Group falls as much as 10% in Stockholm trading after the real estate services company placed shares at a discount to the last close. ITM Power drops as much as 6.4% after JPMorgan downgrades to neutral from overweight on relative valuation, with a more mixed near-term outlook making risk/reward seem less compelling. Royal Mail slides as much as 6.2% after UBS cuts its rating to sell from buy, expecting U.K. labor shortages and wage inflation pressures to hurt the parcel service company’s profit margins. Earlier in the session, Asian equities slumped in delayed response to the US rout. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.43% with Australia off 1.5%, and South Korea falling 2.06%. The Hong Kong benchmark shed 1.2% and Chinese blue chips were 1.1% lower. Japan's Nikkei shed 2.35% hurt by the general mood as the country's ruling party votes for a new leader who will almost certainly become the next prime minister ahead of a general election due in weeks.  Also on traders' minds was cash-strapped China Evergrande whose shares rose as much as 12% after it said it plans to sell a 9.99 billion yuan ($1.5 billion) stake it owns in Shengjing Bank. Evergrande is due to make a $47.5 million bond interest payment on its 9.5% March 2024 dollar bond, having missed a similar payment last week, but it said in the stock exchange filing the proceeds of the sale should be used to settle its financial liabilities due to Shengjing Bank. Chinese real estate company Fantasia Holdings Group is struggling to avoid falling deeper into distress, just as the crisis at China Evergrande flags broader risks to other heavily indebted developers. In Japan, the country's PGIF, or Government Pension Investment Fund, the world’s largest pension fund, said it won’t include yuan- denominated Chinese sovereign debt in its portfolio. In rates, as noted above, Treasuries lead global bonds higher, paring large portion of Tuesday’s losses with gains led by intermediates out to long-end of the curve. Treasury yields richer by up to 4bp across long-end of the curve with 10s at around 1.50%, outperforming bunds and gilts both by 2bp; front-end of the curve just marginally richer, flattening 2s10s spread by 3.2bp with 5s30s tighter by 0.5bp. Futures volumes remain elevated amid evidence of dip buyers emerging Tuesday and continuing over Wednesday’s Asia hours. Session highlights include a number of Fed speakers, including Chair Powell.     In FX, the Bloomberg Dollar Spot Index was little changed after earlier advancing, and the dollar slipped versus most of its Group-of-10 peers. The yen was the best G-10 performer as it whipsawed after earlier dropping to 111.68 per dollar, its weakest level since March 2020. The Australian dollar also advanced amid optimism over easing of Covid-related restrictions while the New Zealand dollar was the worst performer amid rising infections. The euro dropped to an 11-month low while the pound touched its weakest level since January against the greenback amid a bout of dollar strength as the London session kicked off. Confidence in the euro-area economy unexpectedly rose in September as consumers turned more optimistic about the outlook and construction companies saw employment prospects improve. The yen climbed from an 18-month low as a decline in stocks around the world helps boost demand for the currency as a haven. Japanese bonds also gained. In commodities, oil prices dropped after touching a near three-year high the day before. Brent crude fell 0.83% to $78.25 per barrel after topping $80 yesterday; WTI dipped 1.09% to $74.47 a barrel. Gold edged higher with the spot price at $1,735.6 an ounce, up 0.1% from the seven-week low hit the day before as higher yields hurt demand for the non interest bearing asset. Base metals are under pressure with LME aluminum and copper lagging. Looking at the day ahead, the biggest highlight will be a policy panel at the ECB forum on central banking featuring ECB President Lagarde, Fed Chair Powell, BoJ Governor Kuroda and BoE Governor Bailey. Other central bank speakers include ECB Vice President de Guindos, the ECB’s Centeno, Stournaras, Makhlouf, Elderson and Lane, as well as the Fed’s Harker, Daly and Bostic. Meanwhile, data releases include UK mortgage approvals for August, the final Euro Area consumer confidence reading for September, and US pending home sales for August. Market Snapshot S&P 500 futures up 0.7% to 4,371.75 STOXX Europe 600 up 0.8% to 455.97 MXAP down 1.2% to 197.38 MXAPJ down 0.7% to 635.17 Nikkei down 2.1% to 29,544.29 Topix down 2.1% to 2,038.29 Hang Seng Index up 0.7% to 24,663.50 Shanghai Composite down 1.8% to 3,536.29 Sensex down 0.4% to 59,445.57 Australia S&P/ASX 200 down 1.1% to 7,196.71 Kospi down 1.2% to 3,060.27 Brent Futures down 0.7% to $78.53/bbl Gold spot up 0.4% to $1,740.79 U.S. Dollar Index little changed at 93.81 German 10Y yield fell 1.1 bps to -0.210% Euro down 0.2% to $1.1664 Top Overnight News from Bloomberg China’s central bank governor said quantitative easing implemented by global peers can be damaging over the long term and vowed to keep policy normal for as long as possible China’s central bank injected liquidity into the financial system for a ninth day in the longest run since December as it sought to meet a surge in seasonal demand for cash China stepped in to buy a stake in a struggling regional bank from China Evergrande Group as it seeks to limit contagion in the financial sector from the embattled property developer The Chinese government is considering raising power prices for industrial consumers to help ease a growing supply crunch Japan’s Government Pension Investment Fund, the world’s largest pension fund, said it won’t include yuan-denominated Chinese sovereign debt in its portfolio. The decision comes as FTSE Russell is set to start adding Chinese debt to its benchmark global bond index, which the GPIF follows, from October Fumio Kishida is set to become Japan’s prime minister, after the ex-foreign minister overcame popular reformer Taro Kono to win leadership of the country’s ruling party, leaving stock traders feeling optimistic ECB Governing Council member Gabriel Makhlouf said policy makers must be ready to respond to persistently higher inflation that could result from lasting supply bottlenecks Inflation accelerated in Spain to the fastest pace in 13 years, evidence of how surging energy costs are feeding through to citizens around the euro-zone economy Sterling-debt sales by corporates exceeded 2020’s annual tally as borrowers rushed to secure ultra-cheap funding costs while they still can. Offerings will top 70 billion pounds ($95 billion) through Wednesday, beating last year’s total sales by at least 600 million pounds, according to data compiled by Bloomberg A more detailed look at global markets courtesy of Newsquawk Asian equity markets were pressured on spillover selling from global peers which saw the S&P 500 suffer its worst day since May after tech losses were magnified as yields climbed and with sentiment also dampened by weak data in the form of US Consumer Confidence and Richmond Fed indexes. ASX 200 (-1.1%) was heavily pressured by tech and with mining-related stocks dragged lower by weakness in underlying commodity prices, with the mood also clouded by reports that Queensland is on alert for a potential lockdown and that Australia will wind down emergency pandemic support payments within weeks. Nikkei 225 (-2.1%) underperformed amid the broad sell-off and as participants awaited the outcome of the LDP leadership vote which saw no candidate win a majority (as expected), triggering a runoff between vaccine minister Kono and former foreign minister Kishida to face off in a second round vote in which Kishida was named the new PM. KOSPI (-1.2%) was heavily pressured by the tech woes and after North Korea confirmed that yesterday’s launch was a new type of hypersonic missile. Hang Seng (+0.7%) and Shanghai Comp. (-1.8%) conformed to the broad risk aversion with tech stocks hit in Hong Kong, although the losses were milder compared to regional peers with Evergrande shares boosted after it sold CNY 10bln of shares in Shengjing Bank that will be used to pay the developer’s debt owed to Shengjing Bank, which is the Co.’s first asset sale amid the current collapse concerns although it still faces another USD 45.2mln in interest payments due today. In addition, the PBoC continued with its liquidity efforts and there was also the absence of Stock Connect flows to Hong Kong with Southbound trading already closed through to the National Holidays. Finally, 10yr JGBs were slightly higher as risk assets took a hit from the tech sell-off and with T-notes finding some reprieve overnight. Furthermore, the BoJ were also in the market for nearly JPY 1tln of JGBs mostly in 3yr-10yr maturities and there were notable comments from Japan’s GPIF that it is to avoid investments in Chinese government bonds due to concerns over China market. Top Asian News L&T Is Said in Talks to Merge Power Unit With Sembcorp India Prosecutors Seek Two Years Jail for Ghosn’s Alleged Accomplice Japan to Start Process to Sell $8.5 Billion Postal Stake Gold Climbs From Seven Week Low as Yields Retreat, Dollar Pauses Bourses in Europe are attempting to claw back some ground lost in the prior session’s global stocks rout (Euro Stoxx 50 +0.9%; Stoxx 600 +0.8%). The upside momentum seen at the cash open has somewhat stabilised amid a lack of news flow and with a busy agenda ahead from a central bank standpoint, with traders also cognizant of potential month-end influence. US equity futures have also been gradually drifting higher since the reopen of electronic trade. As things stand, the NQ (+1.0%) narrowly outperforms the ES (+0.7%), RTY (+0.8%) and YM (+0.6%) following the tech tumble in the prior session, and with yields easing off best levels. Back to European cash, major regional bourses see broad-based gains with no standout performers. Sectors are mostly in the green; Oil & Gas resides at the foot of the bunch as crude prices drift lower and following two consecutive sessions of outperformance. On the flip side, Tech resides among today’s winners in what is seemingly a reversal of yesterday’s sector configuration, although ASML (+1.3%) may be offering some tailwinds after upping its long-term outlook whilst suggesting ASML and its supply chain partners are actively adding and improving capacity to meet this future customer demand – potentially alleviating some concerns in the Auto sector which is outperforming at the time of writing. Retail also stands strong as Next (+3.0%) upped its guidance whilst suggesting the longer-term outlook for the Co. looks more positive than it had been for many years. In terms of individual movers, Unilever (+1.0%) is underpinned by source reports that the Co. has compiled a shortlist of at least four bidders for its PG Tips and Lipton Iced Tea brands for some GBP 4bln. HeidelbergCement (-1.4%) is pressured after acquiring a 45% stake in the software firm Command Alko. Elsewhere, Morrisons (+1.3%) is on the front foot as the takeover of the Co. is to be decided via an auction process as touted earlier in the month. Top European News Makhlouf Says ECB Must Be Ready to Act If Inflation Entrenched ASML to Ride Decade-Long Sales Boom After Chip Supply Crunch Spanish Inflation at 13-Year High in Foretaste of Regional Spike U.K. Mortgage Approvals Fall to 74,453 in Aug. Vs. Est. 73,000 In FX, the yield and risk backdrop is not as constructive for the Dollar directly, but the index has posted another marginal new y-t-d best, at 93.891 compared to 93.805 yesterday with ongoing bullish momentum and the bulk of the US Treasury curve remaining above key or psychological levels, in contrast to other global bond benchmarks. Hence, the Buck is still elevated and on an upward trajectory approaching month end on Thursday, aside from the fact that hedge rebalancing flows are moderately positive and stronger vs the Yen. Indeed, the Euro is the latest domino to fall and slip to a fresh 2021 low around 1.1656, not far from big barriers at 1.1650 and further away from decent option expiry interest at the 1.1700 strike (1 bn), and it may only be a matter of time before Sterling succumbs to the same fate. Cable is currently hovering precariously above 1.3500 and shy of the January 18 base (1.3520) that formed the last pillar of support for the Pound before the trough set a week earlier (circa 1.3451), and ostensibly supportive UK data in the form of BoE mortgage lending and approvals has not provided much relief. AUD/JPY - A rather odd couple in many ways given their contrasting characteristics as a high beta or activity currency vs traditional safe haven, but both are benefiting from an element of corrective trade, consolidation and short covering relative to their US counterpart. Aud/Usd is clinging to 0.7250 in advance of Aussie building approvals on Thursday and Usd/Jpy is retracing from its new 111.68 y-t-d pinnacle amidst the less rampant yield environment and weighing up the implications of ex-Foreign Minister Kishida’s run-off win in the LDP leadership contest and the PM-in-waiting’s pledge to put together a Yen tens of trillion COVID-19 stimulus package before year end. CHF/CAD/NZD - All relatively confined vs their US rival, as the Franc continues to fend off assaults on the 0.9300 level with some impetus from a significant improvement in Swiss investor sentiment, while the Loonie is striving to keep its head above 1.2700 ahead of Canadian ppi data and absent the recent prop of galloping oil prices with WTI back under Usd 75/brl from Usd 76.67 at best on Tuesday. Elsewhere, the Kiwi is pivoting 0.6950 pre-NZ building consents and still being buffeted by strong Aud/Nzd headwinds. SCANDI/EM - Not much purchase for the Sek via upgrades to Swedish GDP and inflation forecast upgrades by NIER as sentiment indices slipped across the board, but some respite for the Try given cheaper crude and an uptick in Turkish economic confidence. Conversely, the Cnh and Cny have not received their customary fillip even though the PBoC added liquidity for the ninth day in a row overnight and China’s currency regulator has tightened control over interbank trade and asked market makers to narrow the bid/ask spread, according to sources. In commodities, WTI and Brent front month futures have been trimming overnight losses in early European trade. Losses overnight were seemingly a function of profit-taking alongside the bearish Private Inventory Report – which showed a surprise build in weekly crude stocks of 4.1mln bbls vs exp. -1.7mln bbls, whilst the headline DoE looks for a draw of 1.652mln bbls. Further, there have been growing calls for OPEC+ to further open the taps beyond the monthly 400k BPD hike, with details also light on the White House’s deliberations with OPEC ahead of the decision-making meeting next week. Despite these calls, it’s worth bearing in mind that OPEC’s latest MOMR stated, “increased risk of COVID-19 cases primarily fuelled by the Delta variant is clouding oil demand prospects going into the final quarter of the year, resulting in downward adjustments to 4Q21 estimates. As a result, 2H21 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into 1H22.” Brent Dec dipped back under USD 78/bbl (vs low 763.77/bbl) after testing USD 80/bbl yesterday, whilst WTI Nov lost the USD 75/bbl handle (vs low USD 73.37/bbl). Over to metals, spot gold and silver have seen somewhat of divergence as real yields negate some effects of the new YTD peak printed by the Dollar index, whilst spot silver succumbs to the Buck. Over to base metals, LME copper trade is lacklustre as the firmer dollar weighs on the red metal. Shanghai stainless steel meanwhile extended on losses, notching the fourth session of overnight losses with desks citing dampened demand from the Chinese power crunch. US Event Calendar 7am: Sept. MBA Mortgage Applications, prior 4.9% 10am: Aug. Pending Home Sales YoY, est. -13.8%, prior -9.5% 10am: Aug. Pending Home Sales (MoM), est. 1.3%, prior -1.8% Central Bank speakers 9am: Fed’s Harker Discusses Economic Outlook 11:45am: Powell Takes Part in ECB Forum on Central Banking 11:45am: Bailey, Kuroda, Lagarde, Powell on ECB Forum Panel 1pm: Fed’s Daly Gives Speech to UCLA 2pm: Fed’s Bostic Gives Remarks at Chicago Fed Payments DB's Jim Reid concludes the overnight wrap The main story of the last 24 hours has been a big enough rise in yields to cause a major risk-off move, with 10yr Treasury yields up another +5.0bps to 1.537% yesterday, and this morning only seeing a slight -0.3bps pullback to 1.534%. At the intraday peak yesterday, they did climb as high as 1.565% earlier in the session, but this accelerated the risk off and sent yields somewhat lower intraday as a result, which impacted the European bond closes as we’ll see below. All told, US yields closed at their highest level in 3 months and up nearly +24bps since last Wednesday’s close, shortly after the FOMC meeting. That’s the largest 4-day jump in US yields since March 2020, at the outset of the pandemic and shortly after the Fed announced their latest round of QE. This all led to the worst day for the S&P 500 (-2.04%) since mid-May and the worst for the NASDAQ (-2.83%) since mid-March. The S&P 500 is down -4.06% from the highs now – trading just below the Evergrande (remember that?) lows from last week. So the index still has not seen a -5% sell-off on a closing basis for 228 days and counting. If we make it to Halloween it will be a full calendar year. Regardless, the S&P and STOXX 600 remain on track for their worst monthly performances so far this year. Those moves have continued this morning in Asia, where the KOSPI (-2.05%), Nikkei (-1.64%), Hang Seng (-0.60%), and the Shanghai Comp (-1.79%) are all trading lower. The power crisis in China is further dampening sentiment there, and this morning Bloomberg have reported that the government are considering raising prices for industrial users to ease the shortage. Separately, we heard that Evergrande would be selling its stake in a regional bank at 10 billion yuan ($1.55bn) as a step to resolve its debt crisis, and Fitch Ratings also downgraded Evergrande overnight from CC to C. However, US equity futures are pointing to some stabilisation later, with those on the S&P 500 up +0.49%. Running through yesterday’s moves in more depth, 23 of the 24 industry groups in the S&P 500 fell back yesterday with the lone exception being energy stocks (+0.46%), which gained despite the late pullback in oil prices. In fact only 53 S&P constituents gained on the day. The largest losses were in high-growth sectors like semiconductors (-3.82%), media (-3.08%) and software (-3.05%), whilst the FANG+ index was down -2.52% as 9 of the 10 index members lost ground – Alibaba’s +1.47% gain was the sole exception. Over in Europe it was much the same story, with the STOXX 600 (-2.18%) falling to its worst daily performance since July as bourses across the continent fell back, including the German DAX (-2.09%) and France’s CAC 40 (-2.17%). Back to bonds and the rise in 10yr Treasury yields yesterday was primarily led by higher real rates (+2.1bps), which hit a 3-month high of their own, whilst rising inflation breakevens (+2.3bps) also offered support. In turn, higher yields supported the US dollar, which strengthened +0.41% to its highest level since November last year, though precious metals including gold (-0.92%) fell back as investors had less need for the zero-interest safe haven. Over in Europe the sell-off was more muted as bonds rallied into the close before selling off again after. Yields on 10yr bunds (+2.4bps), OATs (+3.0bps) and BTPs (+6.1bps) all moved higher but were well off the peaks for the day. 10yr Gilts closed up +4.2bps but that was -6.6bps off the high print. And staying with the UK, sterling (-1.18%) saw its worst day this year and fell to its lowest level since January 11 as sentiment has increasingly been knocked by the optics of the fuel crisis here. Given this and the hawkish BoE last week many are now talking up the stagflation risk. On the petrol crisis it’s hard to know how much is real and how much is like an old fashion bank run fuelled mostly by wild speculation. Regardless it doesn’t look good to investors for now. All this came against the backdrop of yet further milestones on inflation expectations, as the German 10yr breakeven hit a fresh 8-year high of 1.690%, just as the Euro Area 5y5y forward inflation swap hit a 4-year high of its own at 1.789%. Meanwhile 10yr UK breakevens pulled back some, finishing -6bps lower on the day after initially spiking up nearly +5bps in the opening hours of trading. This highlights the uncertainty as to the implications of a more hawkish BoE last week. As we’ve discussed over recent days, part of the renewed concerns about inflation have come from a fresh spike in energy prices, and yesterday saw Brent crude move above $80/bbl in regards intraday trading for the first time since 2018. Furthermore, natural gas prices continued to hit fresh highs yesterday, with European futures up +2.69% to a fresh high of €78.56 megawatt-hours. That said, oil prices did pare back their gains later in the session as the equity selloff got underway, with Brent crude (-0.55%) and WTI (-0.21%) both closing lower on the day, and this morning they’ve fallen a further -1.49% and -1.54% respectively. Yesterday, Fed Chair Powell and his predecessor Treasury Secretary Yellen appeared jointly before the Senate Banking Committee. The most notable moment came from Senator Warren who criticized Chair Powell for his track record on regulation, saying he was a “dangerous man” and then saying on the record that the she would not support his re-nomination ahead of his term ending in February. Many senators, mostly Republicans, voiced concerns over inflationary pressures, but both Yellen and Powell maintained their stances that the current high level of inflation was temporary and due to the supply chain issues from Covid-19 that they expect to be resolved in time. Lastly, both Powell and Yellen warned the Senators that a potential US default would be “catastrophic” and Treasury Secretary Yellen said in a letter to Congress that the Treasury Department now estimated the US would hit the debt ceiling on October 18. So we’ve got an important few days and weeks coming up. Last night, Senate Majority Leader Schumer tried to pass a vote that would drop the threshold from 60 to a simple majority to suspend the debt limit, but GOP Senator Cruz amongst others blocked this and went forward with forcing Democrats to use the budget reconciliation measure instead. Some Democrats have pushed back saying that the budget process would take too long and increases the risk of a default. While this is all going on we’re now less than 48 hours from a US government shutdown as it stands, though there seems to be an agreement on the funding measure if it were to be raised as clean bill without the debt ceiling provisions. There is also other business in Washington due tomorrow, with the bipartisan infrastructure bill with $550bn of new spending up for a vote. While the funding bill is the higher short-term priority, there was news yesterday that progressive members of the House of Representatives may try and block the infrastructure bill if it comes up ahead of the budget reconciliation vote. That was according to Congressional Progressive Caucus Chair Jayapal who said “Progressives will vote for both bills, but a majority of our members will only vote for the infrastructure bill after the President’s visionary Build Back Better Act passes.” The infrastructure bill could be tabled once again as there is no real urgency to get it voted on until the more pressing debt ceiling and funding bill issues are resolved. Democratic leadership is trying to thread a needle and the key sticking point appears to be if the moderate and progressive wing can agree on the budget quickly enough to beat the clock on the US defaulting on its debt. Shifting back to central bankers, ECB President Lagarde warned against withdrawing stimulus too rapidly as a response to inflationary pressures. She contested that there are “no signs that this increase in inflation is becoming broad-based across the economy,” and continued that the “key challenge is to ensure that we do not overreact to transitory supply shocks that have no bearing on the medium term.” Similar to her US counterpart, Lagarde cited higher energy prices and supply-chain breakdowns as the root cause for the current high inflation data and argued these would recede in due time. The ECB continues to strike a more dovish tone than the Fed and BoE. Speaking of inflation, DB’s chief European economist, Mark Wall, has just put out a podcast where he discusses the ECB, inflation and the value of a flexible asset purchase programme. He and his team have a baseline assumption that the ECB will double the pace of their asset purchases to €40bn per month to smooth the exit from the Pandemic Emergency Purchase Programme, but the upward momentum in the inflation outlook and the latest uncertainty from recent supply shocks puts a premium on policy flexibility. You can listen to the podcast "Focus Europe: Podcast: ECB, inflation and the value of a flexible APP" here. In Germany, there weren’t a great deal of developments regarding the election and coalition negotiations yesterday, but NTV reported that CSU leader Markus Söder had told a regional group meeting of the party that he expected the next government would be a traffic-light coalition of the SPD, the Greens and the FDP. Speaking to reporters later in the day, he went onto say that the SPD’s Olaf Scholz had the best chance of becoming chancellor, and that the SPD had the right to begin coalition negotiations. Running through yesterday’s data, the Conference Board’s consumer confidence reading in the US for September fell to 109.3 (vs. 115.0 expected), which marks the third consecutive decline in the reading and the lowest it’s been since February. Meanwhile house prices continued to rise, with the FHFA’s house price index for July up +1.4% (vs. +1.5% expected), just as the S&P CoreLogic Case-Shiller index saw a record +19.7% increase in July as well. To the day ahead now, and the biggest highlight will be a policy panel at the ECB forum on central banking featuring ECB President Lagarde, Fed Chair Powell, BoJ Governor Kuroda and BoE Governor Bailey. Other central bank speakers include ECB Vice President de Guindos, the ECB’s Centeno, Stournaras, Makhlouf, Elderson and Lane, as well as the Fed’s Harker, Daly and Bostic. Meanwhile, data releases include UK mortgage approvals for August, the final Euro Area consumer confidence reading for September, and US pending home sales for August. Tyler Durden Wed, 09/29/2021 - 07:42.....»»

Category: blogSource: zerohedgeSep 29th, 2021

Zscaler jumps 8% to $186.65 after Q3 results beat, FY21 guidance raised

See the rest of the story here. Theflyonthewall.com provides the latest financial news as it breaks. Known as a leader in market intelligence, The Fl.....»»

Category: blogSource: theflyonthewallMay 25th, 2021

Macy"s jumps 5% to $20.25 after Q1 results beat estimates, FY21 guidance raised

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Category: blogSource: theflyonthewallMay 18th, 2021

Sonos jumps 16% to $36.64 after Q2 results beat estimates, FY21 guidance raised

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Category: blogSource: theflyonthewallMay 12th, 2021

Wendy"s jumps 5% to $23.90 after Q1 results beat estimates, FY21 guidance raised

See the rest of the story here. Theflyonthewall.com provides the latest financial news as it breaks. Known as a leader in market intelligence, The Fl.....»»

Category: blogSource: theflyonthewallMay 12th, 2021

Market Swing Takes Hold; Q3 Results for ULTA, DOCU, MRVL

After the close, we also received new Q3 earnings results from Ulta Beauty (ULTA), DocuSign (DOCU) and Marvell Technologies (MRVL). That market swing-back into the green happened today, after Wednesday’s false-start and deeper gauge into Omicron variant/inflation fears. As scientists sift through data on the new variant, discovered in the U.S. yesterday for the first time, the buzz is these fears may be overblown. The Dow has thus enjoyed its best trading day since June, +619 points or +1.82%; the S&P 500 was +1.42% and the Nasdaq was +0.83%. The long-struggling Russell 2000 broke through +2.54% on the day.After the close, we also received new Q3 earnings results from Ulta Beauty ULTA, DocuSign DOCU and Marvell Technologies MRVL, two out of three Zacks Rank #3 (Hold) which outperformed expectations.We are far from data-secure on Omicron at this stage, but current discussions are whether it is more or less contagious and/or deadly than the Delta variant, and whether current vaccines and treatments can at least keep contractors of the coronavirus from getting sick enough to seek a hospital bed. That we are not seeing immediate emphatic evidence of Omicron being worse is, in itself, a good enough reason for market participants to go near-term bargain hunting.As far as the increased rate of the Fed’s tapering program, which startled markets Tuesday and shook them out somewhat yesterday, it would appear cooler heads have prevailed, near term. Ramping up asset purchases to higher than $15 billion per month — from the $120 billion that has kept the economy awash in cheap cash since the earliest days of Covid on our shores — is not the same as seeing interest rates tightening. That is saved for sometime in Q1 or Q2 of next year, and will be dependent on a continually strengthening economy, which would discount the overall effects of Omicron.Ulta Beauty posted a record quarter on very strong Q3 numbers after the closing bell today, with earnings of $3.93 per share rocketing past the $2.51 in the Zacks consensus or $2.00 billion in revenues, outpacing the $1.90 billion analysts were looking for. Full-year revenue guidance has also been raised to $8.6 billion from the previous consensus $8.3 billion. Shares bought up +6.5% immediately upon the news, but have moderated to +4.5% at this hour.DocuSign has had a rougher time of it after also reporting quarterly numbers after the closing bell. While the digital document services firm did beat on both top and bottom lines — 58 cents per share on $545 million in sales versus 46 dents expected on $529 million — revenue guidance for Q4 has been ratcheted notably lower: to a range of $557-563 from the Zacks consensus $573 million. This caused late-traders to dump shares over -20% on the news, giving up the company’s gains year to date.Marvell Technologies also put up record revenue numbers for its Q3 report released this afternoon, with 43 cents per share outperforming the 38 cents expected and 25 cents in the year-ago quarter, on record-high sales of $1.21 billion, which topped the $1.15 billion our analysts had projected. The company also upped guidance on both top and bottom lines for next quarter, calling its Data Center business “promising,” and now consisting of 40% of total company revenues.Questions or comments about this article and/or its author? Click here>> Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ulta Beauty Inc. (ULTA): Free Stock Analysis Report Marvell Technology, Inc. (MRVL): Free Stock Analysis Report DocuSign (DOCU): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report.....»»

Category: topSource: zacksDec 3rd, 2021

Ulta Beauty (ULTA) View Up on Q3 Earnings Beat, Stock Gains

Ulta Beauty's (ULTA) third-quarter fiscal 2021 results reflect higher earnings and sales, backed by growth in all major categories. Management raises fiscal 2021 view. Shares of Ulta Beauty, Inc. ULTA moved up 5.2% in the after-market trading session on Dec 2, as the company posted splendid third-quarter fiscal 2021 results. The company raised its fiscal 2021 guidance. During the quarter, the top and the bottom line advanced year over year and surpassed the Zacks Consensus Estimate.Results were backed by strength in the beauty category along with benefits from the company’s differentiated model. During the quarter, Ulta Beauty’s major categories posted robust double-digit year-over-year comparable sales or comps growth. The uptick was driven by the cycling of last year's pandemic-induced disruption, product newness along with solid performance from strategic promotional events.Despite the dynamic operating landscape and uncertainties amid the pandemic, Ulta Beauty pulled up the sales, comps, operating margin and earnings guidance for fiscal 2021.Ulta Beauty Inc. Price, Consensus and EPS Surprise  Ulta Beauty Inc. price-consensus-eps-surprise-chart | Ulta Beauty Inc. Quote Quarterly NumbersUlta Beauty posted earnings per share (EPS) of $3.94, which beat the Zacks Consensus Estimate of $2.51. In third-quarter fiscal 2020, adjusted EPS was $1.64.Net sales of this beauty products retailer surged 28.6% year over year to $1,995.8 million and beat the Zacks Consensus Estimate of $1,900.2 million. The uptick can be attributed to increased consumer confidence and the relaxation of pandemic-related curbs.Comps rose 25.8% against a decline of 8.9% recorded in the prior-year quarter. The metric was driven by 16.8% improvement in transactions along with a 7.7% increase in average ticket. Compared with third-quarter fiscal 2019 levels, comparable sales jumped 14.3%. Comps take into account stores that were open for at least 14 months, including stores temporarily closed due to the pandemic and e-commerce sales.E-commerce sales penetration in the quarter was almost 500 basis points less, as the company cycled year-ago period’s solid online growth. Buy online, pick up in-store or BOPIS orders rose 28% year over year, forming 20% of e-commerce sales in the quarter compared with 16% during the prior year.Gross profit advanced from $545.5 million to $789.5 million. Gross margin rose from 35.1% to 39.6%, mainly led by favorable channel mix shifts, better merchandise margins and leverage of fixed costs as well as salon costs.SG&A expenses escalated from $416.4 million to $503.4 million in the third quarter of fiscal 2021. SG&A expenses (as a percentage of net sales) came in at 25.2%, down from 26.8% reported in the year-ago quarter. This was caused by leveraging of corporate overhead, store expenses and store payroll as well as gains from increased sales. These were somewhat offset by increased marketing expenses.Operating income came in at $284.2 million and the operating margin was 14.2%. In the third quarter of fiscal 2020, the company had posted an operating income of $101.3 million, with the operating margin coming in at 6.5%. Solid top-line performance and the ongoing cost-optimization efforts boosted the operating margin performance.Other UpdatesUlta Beauty ended the third quarter with cash and cash equivalents of $605.1 million. Net merchandise inventories came in at $1.92 billion. Stockholders’ equity at the end of the quarter stood at $1,986.8 million. Net cash provided by operating activities was $414.9 million in the 39 weeks ended Oct 30, 2021.The company repurchased shares worth $126.4 million during the third quarter and worth $762.2 million in the nine months of fiscal 2021. As of Oct 30, 2021, the company had $759.8 million worth of shares remaining under its $1.6-billion buyback program announced in March 2020. The company expects share buybacks of nearly $850 million in fiscal 2021. For fiscal 2021, capital expenditures are expected in the bracket of $200-$225 million.During the reported quarter, the company introduced seven new stores along with relocating two, remodeling three and closing one. Ulta Beauty ended the quarter with 1,302 stores. For fiscal 2021, the company expects 44 net new stores along with 17 store remodeling and relocation projects.Image Source: Zacks Investment ResearchGuidanceThe company is impressed with its year-to-date performance as well as solid trends experienced so far in the fiscal fourth quarter. Management raised its fiscal 2021 view. It now expects net sales of $8.5-$8.6 billion, up from the $8.1-$8.3 billion expected before. The Zacks Consensus Estimate for fiscal 2021 top-line is currently pegged at $8.38 billion. Comps growth is now expected in the range of 36-37% compared with the prior band of 30-32%.Management expects the operating margin to be between 14.3-14.5%, up from nearly 13% projected before. Growth in operating margin is likely to be driven by an expansion in gross margin, which, in turn, is expected to benefit from fixed cost leverage, better merchandise margin, lower salon costs and reduced headwinds related to channel shift.Earnings are now envisioned in the range of $16.7-$17.1 per share compared with $14.5-$14.7 forecast earlier. The Zacks Consensus Estimate is currently pegged at $15.12 per share.The Zacks Rank #3 (Hold) stock has gained 4.9% in the past three months against the industry’s decline of 2.5%.3 More Stocks Hogging the LimelightSome other top-ranked stocks in the Retail - Wholesale sector are Boot Barn Holdings BOOT, Tractor Supply Company TSCO and Target TGT.Boot Barn Holdings, the lifestyle retailer of western and work-related footwear, apparel and accessories, sports a Zacks Rank #1 (Strong Buy). Shares of the company have jumped 42.8% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and earnings per share (EPS) suggests growth of 54.6% and 188%, respectively, from the year-ago period’s levels. BOOT has a trailing four-quarter earnings surprise of 35.3%, on average. Tractor Supply Company, a rural lifestyle retailer in the United States, flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 22.8%, on average. Shares of the company have increased 14.5% in the past three months. The Zacks Consensus Estimate for Tractor Supply Company’s current financial year sales and EPS suggests growth of 19% and 23.9%, respectively, from the year-ago period’s levels. TSCO has an expected EPS growth rate of 9.6% for three-five years. Target, a renowned omnichannel retailer, presently carries a Zacks Rank #2 (Buy). TGT has a trailing four-quarter earnings surprise of 19.7%, on average. The stock has inched up 0.5% in the past three months.The Zacks Consensus Estimate for Target’s current-year sales and EPS suggests growth of 14.3% and 39.6%, respectively, from the corresponding year-ago period’s levels. TGT has an expected EPS growth rate of 14.4% for three-five years. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Corporation (TGT): Free Stock Analysis Report Tractor Supply Company (TSCO): Free Stock Analysis Report Ulta Beauty Inc. (ULTA): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 3rd, 2021

HubSpot (HUBS) Down 3.1% Since Last Earnings Report: Can It Rebound?

HubSpot (HUBS) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. A month has gone by since the last earnings report for HubSpot (HUBS). Shares have lost about 3.1% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is HubSpot due for a breakout? 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. HubSpot’s Earnings & Revenues Beat Estimates in Q3HubSpot reported third-quarter 2021 non-GAAP earnings of 50 cents per share, which improved 78.6% on a year-over-year basis and beat the Zacks Consensus Estimate by 13.6%. The bottom line exceeded management’s guidance of 42-44 cents.Revenues of $339.2 million surpassed the Zacks Consensus Estimate by 3.9% and increased 49% (up 47% on a constant-currency basis) year over year. The top line was also above the higher end of management’s guidance range of $325-$327 million.The top line was driven by improvement in subscription revenues. Growing customer base, which surged 34% year over year to 128,144, also contributed to the results.Quarter DetailsSubscription revenues (97% of the total revenues) surged 49% from the year-ago quarter’s levels to $329 million. Professional services and other revenues (3%) were up 39% year over year to $10.2 million.Total average subscription revenue per customer was up 9% year over year to $10,536.Deferred revenues (including current portion) as of Sep 30, 2021, increased 45% year over year to $376 million. Calculated billings, defined as revenues plus the change in deferred revenues, amounted to $353 million, surging 43% year over year (up 45% at cc).International revenues climbed 58% from the year-ago quarter’s levels (up 54% at cc), contributing 46% to total revenues in the reported quarter. Domestic revenues rallied 41% in the quarter under review, contributing the remaining 54% to total revenues.MarginsNon-GAAP subscription margin of 83.1% contracted 260 basis points (bps) on a year-over-year basis.Non-GAAP Research and development (R&D) expenses, as a percentage of revenues, contracted 180 bps year over year to 17.4%. Non-GAAP General and administrative (G&A) expenses contracted 100 bps to 8.5% on a year-over-year basis.Non-GAAP Sales and marketing (S&M) expenses contracted 170 bps to 44.7% from the year-ago quarter’s levels.The company reported non-GAAP operating income of $32.9 million, up 99.4% from the year-ago quarter’s figure. Management had projected non-GAAP operating income to be $27-$29 million for the third quarter.Non-GAAP operating margin expanded 250 bps on a year-over-year basis to 9.7%.Balance Sheet & Cash FlowAs of Sep 30, 2021, HubSpot reported cash and cash equivalents and short-term investments of $1.3 billion, up from $1.2 billion as of Jun 30, 2021.Operating cash flow (excluding repayment of 2022 Convertible Notes attributable to the debt discount worth $11.4 million) during the reported quarter was $42.7 million compared with $38.7 million in the prior-year quarter.  During the first nine months of 2021, the company generated operating cash flow of $143.5 million.Free cash flow was $38.2 million compared with the prior-year figure of $25.3 million. During the first nine months, the company generated $125 million of free cash flow.GuidanceFor fourth-quarter 2021, HubSpot forecast revenues in the range of $356 million to $358 million.Management expects non-GAAP operating income in the band of $34-36 million.The company anticipates non-GAAP net income per share to be 52-54 cents.For 2021, the company raised guidance. The company now anticipates revenues between $1.287 billion and $1.289 billion compared with the prior range of $1.268-$1.272 billion.Management now expects non-GAAP operating income to be $113-$115 million compared with the earlier guidance of $107-$109 million.HubSpot now anticipates non-GAAP net income per share to be $1.76-$1.78 compared with the prior range of $1.67-$1.69.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed an upward trend in estimates review.VGM ScoresCurrently, HubSpot has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, HubSpot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report HubSpot, Inc. (HUBS): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksDec 3rd, 2021

Capri Holdings (CPRI) Down 5.3% Since Last Earnings Report: Can It Rebound?

Capri Holdings (CPRI) 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 Capri Holdings (CPRI). Shares have lost about 5.3% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Capri Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Capri Holdings’ Q2 Earnings Top Estimates, FY22 View UpIn spite of a challenging backdrop, Capri Holdings Limited reported stronger-than-anticipated second-quarter fiscal 2022 results, wherein both the top and the bottom lines improved meaningfully on a year-over-year basis. The company was encouraged by the performance of all three luxury brands. Impressively, management raised fiscal year revenues and earnings per share view.Quite apparent, the fashion and apparel space is brimming with optimism, courtesy of rapid inoculation drive and relaxation in pandemic-induced restrictions. The gradual return to active social lifestyle, events and occasions have spurred demand, and Capri Holdings looks well-poised to tap the same.Let’s Delve DeepCapri Holdings posted adjusted quarterly earnings of $1.53 per share that showcased a sharp improvement from earnings of 90 cents reported in the year-ago period. The quarterly earnings also handily beat the Zacks Consensus Estimate of 95 cents. Better revenue performance and margin expansion aided bottom-line results.Total revenues came in at $1,300 million that comfortably surpassed the Zacks Consensus Estimate of $1,260 million and surged approximately 17% year over year. On a constant-currency basis, total revenues rose 15%. Retail sales increased 20% driven by sturdy e-commerce sales as well as solid store sales. E-commerce sales rose double digits, building upon meaningful gains attained last year.By geographical regions, revenues in the Americas and EMEA increased 20% and 25%, respectively versus the prior year. In Asia, revenues were approximately flat due to the continued restrictions in Japan, Southeast Asia and Australia, as well as new travel and other regional restrictions in China. However, revenues in mainland China rose, despite greater restriction.Adjusted gross profit increased approximately 25% year over year to $879 million, while adjusted gross margin expanded 440 basis points to 67.6%. This reflected increased full price sell-throughs and select price increases at Jimmy Choo and Michael Kors. The company reported adjusted operating income of $241 million compared with $182 million in the year-ago quarter. Markedly, operating margin increased 210 basis points to 18.5%.Segment DetailsRevenues from Versace increased 45% year over year to $282 million. Notably, e-commerce sales were up double digits. Operating margin increased 920 basis points to 19.5%. Jimmy Choo revenues came in at $137 million, up 12% compared with the prior year. E-commerce sales rose in double digits. The segment operating income was $1 million and operating margin was 0.7% compared to break even in the prior year. Revenues from Michael Kors grew 11% year over year to $881 million. E-commerce sales increased double digits. Operating margin expanded 100 basis points to 25%.Other DetailsCapri Holdings ended the quarter with cash and cash equivalents of $234 million, net receivables of $358 million, long-term debt of $1,104 million and total shareholders’ equity of $2,600 million. During the quarter, the company repaid about $200 million of debt. During the quarter, the company repurchased roughly 1.8 million shares for approximately $100 million. The board of directors approved a new share repurchase program of up to $1 billion. This new two-year program will override the current $500 million share buyback program, which had $250 million of availability remaining. As of Sep 25, 2021, the company had 1,271 retail stores, which included 823 Michael Kors, 237 Jimmy Choo and 211 Versace stores.OutlookCapri Holdings now envisions revenues to be approximately $5.4 billion for fiscal 2022 compared with the previous forecast of $5.3 billion. The company also raised earnings guidance to $5.30 per share from its prior view of $4.50. We note that the company had reported revenues of $4,060 million and earnings per share of $1.90 in fiscal 2021. Management expects gross margin expansion of 250 basis points owing to full price sell-throughs and select price increases, which more than offset a higher-than-expected supply chain cost. It guided operating margin of approximately 18% for fiscal 2022.Fiscal 2022 top-line projection assumes revenues of approximately $1.06 billion from Versace, $575 million from Jimmy Choo, and $3.765 billion from Michael Kors. Management anticipates operating margin in the mid-teens range for Versace, to be slightly negative for Jimmy Choo, and in the mid 20% range for Michael Kors.Management envisions third-quarter revenues to be roughly $1.46 billion versus $1.3 billion reported in the year-ago period. It projected operating margin of approximately 20% and guided earnings of $1.65 per share, in line with prior year. For the third quarter, Capri Holdings anticipates revenues of approximately $235 million from Versace, $145 million from Jimmy Choo, and $1.08 billion from Michael Kors. The company expects operating margin in the low-double-digit range for Versace, in the negative mid-single digit range for Jimmy Choo, and in the high 20% range for Michael Kors.How Have Estimates Been Moving Since Then?It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 10.31% due to these changes.VGM ScoresCurrently, Capri Holdings has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Capri Holdings has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Capri Holdings Limited (CPRI): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksDec 3rd, 2021

Horizon Therapeutics (HZNP) Down 6.6% Since Last Earnings Report: Can It Rebound?

Horizon Therapeutics (HZNP) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. A month has gone by since the last earnings report for Horizon Therapeutics (HZNP). Shares have lost about 6.6% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Horizon Therapeutics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Horizon's Q3 Earnings Beat Estimates, 2021 Guidance UpHorizon reported third-quarter 2021 adjusted earnings of $1.75 per share, which beat the Zacks Consensus Estimate of $1.54 and also increased from the year-ago quarter’s adjusted earnings of $1.74.Quarterly sales of $1.04 billion surged 63% year over year and surpassed the Zacks Consensus Estimate of $980 million. Sales were up in the third quarter following the relaunch of Tepezza for treating TED.Quarter in DetailThe company reports financial results under two segments, namely Orphan (previously known as the Orphan and Rheumatology segment) and Inflammation (previously known as the primary care segment).Sales in the Orphan segment were $951 million, up 78% from the prior-year figure, driven by the strong relaunch of Tepezza as well as continued growth of drugs like Krystexxa, Ravicti, Procysbi and Actimmune. The segment represented 92% of the total third-quarter net sales.Krystexxa sales surged 46% year over year to $158.1 million. Tepezza generated net sales worth $616.4 million in the third quarter, up 115% year over year. Tepezza was relaunched in the United States in April 2021 after sales were negatively impacted by a short-term supply disruption due to U.S. government-mandated COVID-19 vaccine orders, which began in December 2020.Ravicti sales were $76.2 million in the quarter, up 18% year over year.Procysbi sales were $49.3 million in the quarter, up 14% year over year.Net sales in the Inflammation segment were $86 million, down 15% year over year.Adjusted research and development expenses were $74.3 million, up from $27.7 million in the year-ago quarter. Adjusted SG&A expenses were $301.1 million, up from $194.4 million in the year-ago quarter.The company had cash, cash equivalents and investments worth $1.07 billion as of Sep 30, 2021, up from $812.3 million as of Jun 30, 2021.2021 GuidanceHorizon raised the financial guidance it provided earlier this year.The company expects 2021 net sales between $3.16 and $3.21 billion compared with the previous expectation of $3.025-$3.125 billion. The Zacks Consensus Estimate stands at $3.19 billion.The company expects Tepezza net sales to be greater than $1.625billion. The same was earlier expected to be more than $1.550 billion. Krystexxa net sales are expected to be above $550 million compared with the previous expectation of $500 million.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -10.61% due to these changes.VGM ScoresCurrently, Horizon Therapeutics has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of C. 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. Notably, Horizon Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Horizon Therapeutics Public Limited Company (HZNP): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksDec 3rd, 2021

Steven Madden (SHOO) Down 5.8% Since Last Earnings Report: Can It Rebound?

Steven Madden (SHOO) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. A month has gone by since the last earnings report for Steven Madden (SHOO). Shares have lost about 5.8% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Steven Madden due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Steven Madden Q3 Earnings Top, Digital Business SolidSteven Madden posted sturdy third-quarter 2021 results. This uptrend also led management to hike view for 2021. Both the top and the bottom line improved year over year, thanks to solid gains from the company’s e-commerce business and strategic initiatives.Q3 HighlightsSteven Madden delivered earnings of 82 cents a share, which beat the Zacks Consensus Estimate of 78 cents. Also, the bottom line grew from adjusted earnings of 39 cents recorded in the year-earlier quarter. Higher sales and margins drove the bottom-line performance.Total revenues jumped 52.4% year over year to $528.7 million. This takes into account net sales of $525.1 million, which increased 17.2% year over year as well as commission and licensing fee income of $3.7 million that dropped 7.5% from the last-year levels. The Zacks Consensus Estimate for total revenues stood at $528 million. Gross profit increased 57.3% year over year to $220 million while consolidated gross margin expanded 130 basis points (bps) to 41.6%. Wholesale gross margin decreased 100 bps to 33.6% from the year-ago period’s level while retail gross margin expanded 210 bps to 65.9%. Higher freight cost was a deterrent to the metric.The company reported an adjusted operating income of $88.4 million, which surged 91.3% from $46.2 million registered in the same quarter a year ago. Also, adjusted operating margin expanded 340 bps to 16.7%.Segment PerformanceRevenues for the Wholesale business increased 41.6% year over year to $402 million. We note that wholesale footwear revenues climbed 42.6% to $304.2 million while wholesale accessories and apparel revenues were up 38.7% to $97.8 million.In the United States, the company’s women's business remained strong, growing 25% from the 2019 reading. Betsey Johnson and Dolce Vita also witnessed solid gains. Growth was offset by the absence of the Kate Spade footwear license the company had in 2019 along with decreases in Blondo, Anne Klein and private label brands. Also, robust performance in Europe was offset by sluggishness in Canada owing to a slower recovery from the pandemic woes and the impact of the supply-chain bottlenecks. Retail revenues surged 108.6% to $123.1 million, buoyed by a robust performance at the e-commerce business. Strength in the company’s e-commerce business continued with revenues soaring 83.7% year over year. E-commerce constituted about 49% of the company’s total retail segment sales in the third quarter. When compared with the same quarter of 2019, e-commerce revenues skyrocketed 200%. Also, its brick-and-mortar business remained strong. Global comp store sales rose 16% while domestic stores grew 23% from the respective 2019 levels.Other Financial AspectsSteven Madden ended the reported quarter with cash, cash equivalents and short-term investments of $259.9 million, and shareholders’ equity of $798.8 million excluding non-controlling interest of $8.4 million. As of Sep 30, 2021, the company had no debt and inventory was $201.2 million, up 83.4% year over year.CapEx came in at $1.8 million during the reported quarter. The company generated net cash from operating activities of $96.2 million at the end of the third quarter.In the reported quarter, management repurchased about 773,063 shares for $31.9 million including shares acquired via the net settlement of employees’ stock awards. On Nov 2, the company’s board approved a raise in the share repurchase authorization of roughly $200 million, bringing the total to $250 million. The same cleared a quarterly cash dividend of 15 cents per share, payable Dec 27, 2021 to its stockholders of record as of Dec 17.OutlookGiven the sturdy third-quarter results, management raised guidance for 2021 despite the global supply-chain disruption being a major headwind. For 2021, it projects revenue growth of 50-52% from the fiscal 2020 reading, up from the prior anticipation of a 43-47% increase. We note that the company delivered total revenues of $1,201.8 million in 2020.Reported earnings per share are expected in the range of $2.21-$2.26 while adjusted earnings per share are likely to fall in the bracket of $2.30-$2.35. Previously, management had projected earnings of $1.90-$2.00 a share while adjusted earnings were anticipated at $2-$2.10.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 36.91% due to these changes.VGM ScoresCurrently, Steven Madden has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Steven Madden has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Steven Madden, Ltd. (SHOO): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksDec 3rd, 2021

Why Is FleetCor Technologies (FLT) Down 14% Since Last Earnings Report?

FleetCor Technologies (FLT) 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 FleetCor Technologies (FLT). Shares have lost about 14% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is FleetCor Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. FLEETCOR Surpasses Q3 Earnings & Revenues EstimatesFLEETCOR Technologies reported solid third-quarter 2021 results as both earnings and revenues surpassed the Zacks Consensus Estimate.Adjusted earnings of $3.52 per share outpaced the consensus estimate by 0.9% and increased 25.7% year over year. The reported figure lies within the guidance of $3.35-$3.55.Revenues of $755.5 million beat the consensus mark by 2.3% and increased 29.1% year over year on a reported basis and 17% on a pro-forma and macro-adjusted basis. Let’s check out the numbers in detail:Revenues in DetailSegment wise, revenues from North America came in at $520.54 million, up 35.6% year over year. Internationally, revenues of $140.05 million increased 14.9% year over year. Revenues from Brazil grew 19.2% to $94.89 million.Product-category wise, fuel revenues of $306.8 million went up 20% year over year on a reported basis and 13% on a pro-forma and macro-adjusted basis.Corporate Payments revenues of $168.7 million increased 58% year over year on a reported basis and 22% on a pro-forma and macro-adjusted basis.Tolls revenues of $79 million improved 17% year over year on a reported basis and 14% on a pro-forma and macro-adjusted basis.Lodging revenues of $85.2 million grew 61% year over year on a reported basis and 40% on a pro-forma and macro-adjusted basis.Gift revenues of $48.6 million grew 25% year over year on a reported as well as on a pro-forma and macro-adjusted basis.Other revenues of $67.2 million increased 5% year over year on a reported and 2% on a pro-forma and macro-adjusted basis.Operating ResultsOperating income increased 28% from the prior-year quarter’s level to $338.69 million. Operating income margin came in at 44.8% from 45.2% in the prior-year quarter.Balance Sheet & Cash FlowFLEETCOR exited third-quarter 2021 with cash, cash equivalents and restricted cash of $2.01 billion compared with $2.06 billion at the end of the prior quarter.The company generated $243.09 million of net cash from operating activities. Capital expenditures totaled $28.69 million.In the reported quarter, FLEETCOR repurchased shares worth $405.69 million.2021 GuidanceFor 2021, FLEETCOR raised its guidance.Adjusted earnings per share are now anticipated between $13 and $13.10 compared with the prior guidance of $12.80-$13. Revenues are now anticipated in the range of $2.785-$2.805 billion compared with the prior guidance of $2.74-$2.79 billion.Adjusted tax rate is now anticipated between 22.5% and 23.5% compared with the prior guidance of 21.5-22.5%. Interest expenses are still expected between $120 million and $125 million.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed an upward trend in estimates review.VGM ScoresCurrently, FleetCor Technologies has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, FleetCor Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report FleetCor Technologies, Inc. (FLT): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksDec 3rd, 2021

Clean Harbors (CLH) Down 2.7% Since Last Earnings Report: Can It Rebound?

Clean Harbors (CLH) 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 Clean Harbors (CLH). Shares have lost about 2.7% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Clean Harbors due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Clean Harbors' Q2 Earnings & Revenue Surpass EstimatesClean Harbors reported solid second-quarter 2021 results wherein earnings and revenues surpassed the Zacks Consensus Estimate.Adjusted earnings per share of $1.19 outpaced the Zacks Consensus Estimate by 52.6% and increased more than 100% year over year. Total revenues of $926.45 million beat the consensus mark by 9.6% and grew 30.5% year over year due to the unprecedented market conditions.Quarterly results benefited from a steady flow of high-value waste streams into the company’s disposal network, solid performance of Safety-Kleen Sustainability Solutions business and demand for service offerings.Revenues by SegmentEnvironmental Services revenues of $724.09 million grew 18.2% year over year. The uptick was backed by growth in disposal and recycling volumes, surge in Industrial Services activity, demand for incineration network and improvement in landfill business.Safety-Kleen Sustainability Solutions revenues of $202.28 million grew more than 100% year over year. The uptick was backed by the combination of the company’s waste oil collection with its Safety-Kleen Oil business.Profitability PerformanceAdjusted EBITDA of $187.77 million increased 36% year over year. Adjusted EBITDA margin increased 80 basis points (bps) year over year to 20.3%.Segment wise, Environmental Services’ adjusted EBITDA was $176.04 million, down 0.1% year over year. Safety-Kleen Sustainability Solutions’ adjusted EBITDA was $63.31 million, up more than 100% year over year.Balance Sheet & Cash FlowClean Harbors exited second-quarter 2021 with cash and cash equivalents of $595.57 million compared with $496.38 million at the end of the prior quarter. Inventories and supplies were $215.73 million compared with $219.49 million in the prior quarter. Long-term debt of $1.55 billion was flat sequentially.The company generated $162.43 million in net cash from operating activities in the reported quarter. Adjusted free cash flow was $114.63 million.GuidanceClean Harbors has raised its guidance for the full year. Adjusted EBITDA is now anticipated between $620 million and $650 million compared with the prior-guided range of $560-$600 million. Net income is now anticipated between $159 million and $193 million, compared with the prior-guided range of $116-$157 million. Adjusted free cash flow is now expected between $285 million and $315 million, compared with the prior-guided range of $230-$270 million. Net cash from operating activities is now projected between $475 million and $525 million, compared with the prior-guided range of $415-$475 million.How Have Estimates Been Moving Since Then?It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -10.37% due to these changes.VGM ScoresAt this time, Clean Harbors has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Clean Harbors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Clean Harbors, Inc. (CLH): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 3rd, 2021

Maxar (MAXR) Down 13.7% Since Last Earnings Report: Can It Rebound?

Maxar (MAXR) 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 Maxar Technologies (MAXR). Shares have lost about 13.7% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Maxar due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Maxar’s Q3 Earnings Beat Estimates, Revenues MissMaxar reported mixed third-quarter 2021 results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed the same.The company made progress on its growth plans, with solid bookings in both the Earth Intelligence and Space Infrastructure segments. Notable awards included the 11th renewal of the EnhancedView program, another renewal of the Global Enhanced GEOINT Delivery program, and an award to continue the development and operations of a classified big data analytics program.Maxar also inked a deal with a fifth U.S. ally to upgrade the country’s ground infrastructure to be Legion ready and it was awarded contracts to build two new Geosynchronous Equatorial Orbit satellites for Sirius XM. Maxar advanced the Legion construction program and expects to launch the first two satellites between March and June 2022.Net IncomeNet income from continuing operations was $14 million or 19 cents per share compared with $84 million or $1.32 per share in the prior-year quarter. Despite an increase in operating income, net income declined mainly due to lower other income and no income tax benefit. The bottom line beat the Zacks Consensus Estimate by 4 cents, delivering a surprise of 26.7%.RevenuesQuarterly total revenues remained stable year over year at $437 million. The Earth Intelligence segment’s revenues were inclusive of a $20 million decrease in the recognition of deferred revenues related to the EnhancedView contract. While Product revenues increased to $166 million from $161 million year over year, Service revenues decreased to $271 million from $275 million. The top line missed the consensus estimate of $453 million.Segment-wise, revenues from Earth Intelligence declined 1.1% year over year to $271 million. The decrease was primarily due to a $20 million fall in the recognition of deferred revenues related to the EnhancedView contract and a $6 million decline in revenues from the U.S. government. The segment’s adjusted EBITDA declined to $124 million from $128 million a year ago.Revenues from Space Infrastructure declined 0.6% year over year to $180 million due to a $16 million decrease in revenues from U.S. government contracts. Adjusted EBITDA increased to $14 million from $12 million.Other DetailsOperating income increased to $37 million from $7 million in the prior-year quarter. Total adjusted EBITDA was $113 million compared with $112 million a year ago, with respective margins of 25.9% and 25.7%.Maxar generated solid cash flow in the quarter and good year-over-year revenue and adjusted EBITDA growth, considering deferred revenues included in last year’s results. The performance in Earth Intelligence was driven by growth in commercial and international defense and intelligence customers. Space Infrastructure benefited from commercial awards offset by the timing of work on certain government programs. Maxar has raised the full-year guidance for adjusted EBITDA and cash flow.Cash Flow & LiquidityDuring the first nine months of 2021, Maxar generated $185 million of cash from operating activities compared with $132 million in the prior-year period. As of Sep 30, 2021, the company had $36 million in cash and cash equivalents with $2,064 million of long-term debt.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -91.56% due to these changes.VGM ScoresAt this time, Maxar has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of B. 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. Notably, Maxar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Maxar Technologies Inc. (MAXR): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksDec 3rd, 2021

Futures Flat Ahead Of Taper Accelerating Payrolls

Futures Flat Ahead Of Taper Accelerating Payrolls U.S. equity futures are flat, rebounding from an overnight slide following news that 5 "mild" Omicron cases were found in New York, and European stocks wavered at the end of a volatile week as traders waited for the latest jobs data to assess the likely pace of Federal Reserve tightening and accelerated tapering. Emini S&P futures traded in a narrow range, and were up 2 points or 0.04%, Nasdaq futures were flat,while Dow Jones futures were up 8 points. The dollar edged higher, along with the euro after ECB President Christine Lagarde said inflation will decline in 2022. Crude advanced after OPEC+ left the door open to changing the plan to raise output at short notice. S&P 500 and Nasdaq 100 contracts fluctuated after dip-buyers Thursday fueled the S&P 500’s best climb since mid-October, a sign that some of the worst fears about the omicron virus strain are dissipating. That said, concerns about omicron are overshadowing economic news for now with “a lot of noise and very little meaningful information,” said Geir Lode, head of global equities at Federated Hermes in London. “The prospect of a faster monetary policy tightening could -- and should probably -- lead to a clear market reaction,” he said. “It is also another argument for why we assume value stocks outperform growth stocks. At the moment, however, investors’ attention is elsewhere.” In the latest U.S. data, jobless claims remained low, suggesting additional progress in the labor market. Traders are awaiting today's big event - the November payrolls numbers, which could shape expectations for the pace of Fed policy tightening (full preview here). Bloomberg Economics expects a strong report, while the median estimate in a Bloomberg survey of economists predicts an increase of 550,000. “Assuming the omicron news remains less end-of-the-world, a print above 550,000 jobs should see the faster Fed-taper trade reassert itself,” Jeffrey Halley, a senior market analyst at Oanda, wrote in a note. “That may nip the equity rally in the bud, while the dollar and U.S. yields could resume rising.” In premarket trading, Didi Global Inc. jumped more than 14% in U.S. premarket trading before reversing all gains, after the Chinese ride-hailing giant said it began preparations to withdraw from U.S. stock exchanges. U.S. antitrust officials sued to block chipmaker Nvidia’s proposed $40 billion takeover of Arm, saying the deal would hobble innovation and competition. Elon Musk’s offloading of Tesla Inc. shares surpassed the $10 billion mark as he sold stock in the electric-car maker for the fourth consecutive week. Here are some of the other biggest U.S. movers today: DocuSign (DOCU US) plunges 32% in premarket trading as the e-signature company’s quarterly revenue forecast missed analysts’ estimates. JPMorgan and Piper Sandler cut ratings. Marvell Technology (MRVL US) shares rise 18% in premarket after the semiconductor company’s fourth-quarter forecast beat analyst estimates; Morgan Stanley notes “an exceptional quarter” with surprising outperformance from enterprise networking, strength in 5G and in cloud. Asana (ASAN US) shares slump 14% in premarket trading after results, with KeyBanc cutting the software firm’s price target on a reset in the stock’s valuation. Piper Sandler said that slight deceleration in revenue and billings growth could disappoint some investors. Zillow Group (ZG US) shares rise 8.8% in premarket after the online real-estate company announced a $750 million share repurchase program and said it has made “significant progress” on Zillow Offers inventory wind- down. Stitch Fix (SFIX US) jumped in premarket after Morgan Stanley raised its rating to equal-weight from underweight. Smartsheet (SMAR US) rose in postmarket trading after the software company boosted its revenue forecast for the full year; the guidance beat the average analyst estimate. National Beverage Corp. (FIZZ US) gained in postmarket trading after the drinks company announced a special dividend of $3 a share. Ollie’s Bargain (OLLI US) plunged 21% in U.S. premarket trading on Friday, after the company’s quarterly results and forecast disappointed, hurt by supply-chain troubles. Smith & Wesson Brands (SWBI US) stock fell 15% in postmarket trading after adjusted earnings per share for the second quarter missed the average analyst estimate. In Europe, the Stoxx Europe 600 Index slipped as much as 0.2% before turning green with mining companies and carmakers underperforming and energy and utility stocks rising. Swedish Orphan Biovitrum AB fell as much as 26% after private-equity firm Advent International and Singapore wealth fund GIC abandoned their $7.6 billion bid to buy the drugmaker. Volatility across assets remains elevated, reflecting the Fed’s shift toward tighter monetary settings and uncertainty about how the omicron outbreak will affect global reopening. The hope is that vaccines will remain effective or can be adjusted to cope. New York state identified at least five cases of omicron, which is continuing its worldwide spread, while the latest research shows the risk of reinfection with the new variant is three times higher than for others. “The environment in markets is changing,” Steven Wieting, chief investment strategist at Citigroup Private Bank, said on Bloomberg Television. “Monetary policy, fiscal policy are all losing steam. It doesn’t mean a down market. But it’s not going to be like the rebound, the sharp recovery that we had for almost every asset in the past year.” Earlier in the session, Asian stocks held gains from the past two days as travel and consumer shares rallied after their U.S. peers rebounded and a report said Merck & Co. is seeking to obtain approval of its Covid-19 pill in Japan. The MSCI Asia Pacific Index was little changed after climbing as much as 0.3%, with Japan among the region’s best performers. South Korea’s benchmark had its biggest three-day advance since February, boosted by financial shares. Still, Asian stocks headed for a weekly loss as U.S. regulators moved a step closer to boot Chinese firms off American stock exchanges. The Hang Seng Tech Index slid as much as 2.7% to a new all time low, as Tencent Holdings and Alibaba Group Holding fell after Didi Global Inc. began preparations to withdraw its U.S. listing.  “While the risks of delisting have already been brought up previously, a step closer towards a final mandate seems to serve as a reminder for the regulatory risks in Chinese stocks,” said Jun Rong Yeap, a market strategist at IG Asia Pte. Asian stocks remain stuck near a one-year low, as the delisting issue damped sentiment already hurt by omicron and the Fed’s hawkish pivot. A U.S. payrolls report later today could give further clues on the pace of tightening Japanese equities rose, paring their weekly loss, helped by gains in economically sensitive names. Electronics makers reversed an early loss to become the biggest boost to the Topix, which gained 1.6%. Automakers and banks also gained, while reopening plays tracked a rebound in U.S. peers. Daikin and Recruit were the largest contributors to a 1% gain in the Nikkei 225, which erased a morning decline of as much as 0.6%. The Topix still dropped 1.4% on the week, extending the previous week’s 2.9% slide, amid concerns over the omicron coronavirus variant. Despite some profit-taking in tech stocks in the morning session, “the medium and long-term outlooks for these names continue to be really good,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “The spread of the omicron variant doesn’t mean an across-the-board selloff for Japanese stocks.” India’s benchmark equity index recorded a weekly advance, partly recovering from a sharp sell-off triggered by uncertainty around the new Covid variant, with investors focusing on the central bank’s monetary policy meeting from Monday.  The S&P BSE Sensex fell 1.3% to 57,696.46, but gained 1% for the week after declining for two weeks. The NSE Nifty 50 Index dropped 1.2%, the biggest one-day decline since Nov. 26. All but three of the 19 sector sub-indexes compiled by BSE Ltd. fell, led by a gauge of energy companies. “The focus seems to be shifting from premium Indian equities to relatively cheaper markets,” Shrikant Chouhan, head of retail equity search at Kotak Securities said in a note. The cautious mood in India was heightened by the “unenthusiastic” response to the IPO of Paytm, which was also the biggest public share sale in the country, and a resurgence of Covid concerns across Europe, he added.  Investors also focused on the country’s economic outlook, which is showing signs of improvement. Major data releases this week -- from economic expansion to tax collection -- showed robust growth. “Strong domestic indicators are playing a key role in driving the market amid negative global cues,” said Mohit Nigam, a fund manager with Hem Securities. But any further spread of the omicron strain in India may cap local equity gains, he said. Two cases of the new variant have been detected so far in the country. The market’s attention will shift to the Reserve Bank of India’s policy announcement on Dec. 8, after a three-day meeting from Monday. The panel is expected to leave record low interest rates unchanged as inflation remains within its target range. The economy faces new risks from the omicron variant after expanding 8.4% in the three months through September. Reliance Industries contributed the most to the Sensex’s decline, falling 3%. Out of 30 shares in the index, 26 fell and 4 gained. Australia stocks posted a fourth week of losses amid the Omicron threat even as the S&P/ASX 200 index rose 0.2% to close at 7,241.20, boosted by banks and miners. That trimmed the benchmark’s loss for the week to 0.5%, its fourth-straight weekly decline.  Corporate Travel was among the top performers, rising for a second session. TPG Telecom led the laggards, tumbling after media reports that founder David Teoh entered into an agreement to sell about 53.1 million shares in a block trade.  In New Zealand, the S&P/NZX 50 index was little changed at 12,676.50. In FX, the Bloomberg Dollar Spot Index advanced and the greenback was higher against all of its Group-of-10 peers, with risk-sensitive Scandinavian and Antipodean currencies the worst performers. Turkish lira swings back to gain against the USD after central bank intervention for the 2nd time in 3 days. The pound weakened and gilt yields fell after Bank of England policy maker Michael Saunders urged caution on monetary tightening due to the potential effects of the omicron variant on the economy. The euro fell below $1.13 and some traders are starting to use option plays to express the view that the currency may extend its drop in coming month, yet recover in the latter part of 2022. The Aussie dropped for a fourth day amid concern U.S. payroll data due Friday may add to divergence between RBA and Fed monetary policy. Australia’s sale of 2024 bonds saw yields drop below those in the secondary market by the most on record. The yen weakened for a second day as the prospects for a faster pace of Fed tapering fans speculation of portfolio outflows from Japan. In rates, Treasury yields ticked lower, erasing some of Tuesday jump after Fed officials laid out the case for a faster removal of policy support amid high inflation.  Treasurys followed gilts during European morning, when Bank of England’s Saunders said the omicron variant is a key consideration for the December MPC decision which in turn lowered odds of a December BOE rate hike. Treasury yields are richer by up to 1.5bp across 10-year sector which trades around 1.43%; gilts outperform by ~1bp as BOE rate- hike premium for the December meeting was pared following Saunders comments. Shorter-term Treasury yields inched up, and the 2-year yield touched the highest in a week Friday’s U.S. session features a raft of data headed by the November jobs report due 8:30am ET where the median estimate is 550k while Bloomberg whisper number is 564k; October NFP change was 531k Crude futures extend Asia’s modest gains advanced after OPEC+ proceeded with an output hike but left room for quick adjustments due to a cloudy outlook, making shorting difficult. WTI added on ~2.5% to trade near $68.20, roughly near the middle of the week’s range. Brent recovers near $71.50. Spot gold fades a small push higher to trade near $1,770/oz. Most base metals are well supported with LME aluminum and zinc outperforming.  Looking at the day ahead, and the aforementioned US jobs report for November will be the highlight. Other data releases include the services and composite PMIs for November from around the world, Euro Area retail sales for October, and in addition from the US, there’s October’s factory orders and the November ISM services index. From central banks, we’ll hear from ECB President Lagarde and chief economist Lane, the Fed’s Bullard and the BoE’s Saunders. Market Snapshot S&P 500 futures little changed at 4,574.25 STOXX Europe 600 up 0.2% to 466.43 MXAP little changed at 192.06 MXAPJ down 0.5% to 625.64 Nikkei up 1.0% to 28,029.57 Topix up 1.6% to 1,957.86 Hang Seng Index little changed at 23,766.69 Shanghai Composite up 0.9% to 3,607.43 Sensex down 1.3% to 57,692.90 Australia S&P/ASX 200 up 0.2% to 7,241.17 Kospi up 0.8% to 2,968.33 Brent Futures up 3.3% to $71.97/bbl Gold spot down 0.1% to $1,767.28 U.S. Dollar Index up 0.14% to 96.29 German 10Y yield little changed at -0.37% Euro down 0.1% to $1.1286 Top Overnight News from Bloomberg “I see an inflation profile which looks like a hump” and “we know how painful it is,” ECB President Christine Lagarde says at event Friday. She also said that “when the conditions of our forward guidance are satisfied, we won’t be hesitant to act” and that an interest rate increase in 2022 is very unlikely The betting window is open in the fixed-income market as hedge funds and other traders hunt for mispriced risk heading into 2022 -- whether it’s predictions for accelerating inflation or rising interest rates The U.K. Municipal Bonds Agency aims to sell the first ethical bonds on behalf of local governments early next year. The body, set up to help U.K. councils access capital markets, is looking to issue a couple of sustainable bonds in the first quarter of 2022, according to officials advising on the sales. It expects to follow that with a pooled ethical bond to raise money for a group of different local authorities Low- income countries indebted to Chinese commercial and policy banks could buy specially-created Chinese government bonds and then use these as collateral to support the sale of new yuan debt, Zhou Chengjun, head of the People’s Bank of China’s finance research institute, wrote in an article published in the ChinaBond Magazine Chinese tech shares briefly touched their record lows in Hong Kong, as Didi Global Inc.’s announcement to start U.S. delisting and rising scrutiny on mainland firms traded there dealt a further blow to already soured sentiment The yuan is set to weaken for the first time in three years in 2022, as capital inflows are expected to slow amid a shrinking yield gap between China and the U.S., a Bloomberg survey shows Turkish inflation accelerated for a sixth month in November to the highest level in three years, driven by a slump in the lira that continues to cloud consumer price outlook A more detailed look at global markets courtesy of Newsquawk Asian equities eventually traded mostly higher following the cyclical-led rebound in the US, but with the mood in the region tentative as Omicron uncertainty lingered after further cases of the new variant were reported stateside and with the latest NFP data drawing near. ASX 200 (+0.2%) lacked direction as resilience in cyclicals was offset by underperformance in defensives and amid ongoing COVID-19 concerns which prompted the Western Australian government to widen its state border closure to include South Australia. Nikkei 225 (+1.0%) was initially subdued amid recent currency inflows and with SoftBank among the worst performers amid several negative headlines including the FTC suing to block the Nvidia acquisition of Arm from SoftBank, while the Japanese conglomerate also suffered from its exposure in “super app” Grab which tumbled 20% in its New York debut and with Didi to start delisting from the NYSE in favour of a Hong Kong listing, although the index eventually recovered losses in latter half of trade. Hang Seng (-0.1%) and Shanghai Comp. (+0.9%) were varied with US-listed Chinese companies pressured as the US SEC moved closer to delisting Chinese ADRs for failing to comply with disclosure requirements, while the mood across developers was also glum with Kaisa shares at a record low after its bond exchange offer to avert a default was rejected by bondholders and China Aoyuan Property Group slumped by double-digit percentages following its warning of an inability to repay USD 651.2mln of debt due to a liquidity crunch. Furthermore, participants digested the latest Caixin Services and Composite PMI data which slowed from the prior month, but both remained in expansion territory and with reports that advisors are to recommend lowering China’s economic growth target to 5.0%-5.5% or above 5%, fanning hopes for looser policy. Finally, 10yr JGBs gained and made another incursion above 152.00 with prices supported amid the cautious mood in Japan and with the BoJ also present in the market today for a total of JPY 1.05tln of JGBs heavily concentrated in 1yr-5yr maturities. Top Asian News Astra Said to Sink Advent’s $7.6 Billion Buyout of Biotech Sobi BOJ Is Said to See Omicron as Potential Reason to Keep Covid Aid Kaisa Swap Rejected, Developer Bonds Slide: Evergrande Update Permira Is Said to Near Deal for U.K. Blood Plasma Lab BPL The positivity seen heading into the European open dissipated as the session went underway, with the region seeing more of a mixed configuration in cash markets (Euro Stoxx 50 -0.1%; Stoxx 600 Unch) – with no clear drivers in the run-up to the US jobs report. The release will be carefully watching measures of labour market slack to gauge the progress towards the Fed's 'three tests' for rate hikes, whilst the Fed appears almost certain to announce a quickening in the pace of asset purchase tapering at its December meeting (Full NFP preview available in the Newsquawk Research Suite). The recent downside in Europe also seeps into the US futures, with the RTY (-0.2%), NQ (-0.2%) and ES (-0.3%) posting broad-based losses as things stand. Sectors have shifted from the earlier firm cyclical layout to one of a more defensive nature, with Healthcare, Food & Beverages, and Personal & Household Goods making their way up the ranks. Travel & Leisure still sits in the green but largely owed to sector heavyweight Evolution (+6.3%) as the group is to acquire its own shares in Nasdaq Stockholm. Oil & Gas sits as the current winner as crude markets claw back a bulk of this week's losses. On the flip side, Basic Resources are hit as iron ore tumbled overnight. In terms of individual movers, Dassault Aviation (+8.0%) shares soared after France signed a deal with the UAE worth some EUR 17bln. Allianz (+1.0%) stays in the green after entering a reinsurance agreement with Resolution Life and affiliates of Sixth Street for its US fixed index annuity portfolio, with the transaction to unlock USD 4.1bln in value. Top European News U.K. Nov. Composite PMI 57.6 vs Flash Reading 57.7 The Chance of a BOE Rate Hike This Month Has Fallen: BofA’s Wood AP Moller Holding Agrees to Buy Diagnostics Company Unilabs Permira Is Said to Near Deal for U.K. Blood Plasma Lab BPL In FX, it’s debatable whether this month’s US jobs data will carry as much weight as normal given that Fed rhetoric in the run up to the pre-FOMC blackout period has effectively signalled a faster pace of tapering and the likelihood of more hawkishly aligned dot plots. However, the latest BLS report could be influential in terms of shaping the tightening path once QE has been withdrawn, as markets continue to monitor unfolding COVID-19 developments with the main focus on vaccine efficacy against the new Omicron variant. In the meantime, Buck bulls have resurfaced to lift the index more firmly back above 96.000 and towards loftier levels seen earlier this week within a 96.075-324 range, eyeing Monday’s 96.448 peak ahead of the semi-psychological 96.500 mark and then the w-t-d best at 96.647 set the day after. Back to Friday’s agenda, Fed’s Bullard is due to speak and the services ISM rounds off the week. AUD/NZD - The high betas are bearing the brunt of Greenback gains, but also bearish technical forces as the Aussie and Kiwi both lose sight of key chart and simple round number levels that were keeping them afloat or declines relatively contained at least. Aud/Usd is now probing 0.7050 and a Fib retracement just above, while Nzd/Usd is hovering around 0.6775 as the Aud/Nzd cross holds in the low 1.0400 zone. JPY/CAD/CHF/GBP/EUR - All softer vs their US counterpart, with the Yen looking towards 113.50 for support with added protection from option expiry interest up to 113.60 in 1.1 bn, while the Loonie is relying on WTI to maintain recovery momentum before Canada and the US go head-to-head in the employment stakes. Usd/Cad is meandering in the low 1.2800 area as the crude benchmark regains Usd 68+/brl status from a sub-Usd 66.50 base and even deeper trough below Usd 62.50 in knee-jerk response to OPEC+ sticking to its output plan yesterday. Elsewhere, the Franc continues to straddle 0.9200, Sterling has retreated from 1.3300+ terrain again post-fractionally softer than forecast final UK services and composite PMIs, whilst a less hawkish speech from BoE hawk Saunders took Cable to a session low of 1.3255 and a 15bps Dec hike pricing fell from 51% to 26%. The Euro has also reversed from recent highs beyond 1.1300 amidst rather mixed Eurozone readings and pretty routine ECB rhetoric from President Lagarde plus GC members Knot, de Cos and de Guindos. In commodities, WTI and Brent front month futures continue to nurse losses seen earlier this week, with the post-OPEC downside completely erased alongside some more. To recap, oil contracts were under pressure from compounding COVID headlines at the start of the week and in the run-up to OPEC+ whereby ministers opted to keep production plans despite the Omicron variant and the recent SPR releases. Delving deeper into these themes, desks suggest that a dominant Omicron variant could actually be positive if the strain turns out to be milder than some of its predecessors – with the jury still out but initial reports from India and South Africa suggesting so. Regarding OPEC+, some oil traders suggest the move to maintain plans was more of a political strategy as opposed to an attempt to balance markets, with journalists also suggesting that tensions with the US have simmered down and the prospect of further SPR releases have significantly declined. Further, it's also worth bearing in mind that due to maintenance and underinvestment, the real output hike from OPEC+ producers will likely be under the 400k BPD. In terms of Iranian developments, updates have been less constructive, with sources suggesting that Iran is holding a tougher stance than during the June talks. Negotiations will break today and resume next week. Crude contracts are modestly lower on the week and well-off worst levels, with Brent Feb now back around USD 71.50/bbl (65.72-77.02 weekly range), while WTI Jan resides around USD north of USD 68/bbl (62.43-72.93/bbl). Elsewhere, spot gold and silver vary, with the former finding some overnight support around USD 1,766/oz as risk sentiment erred lower, whilst the cluster of DMAs remain around the USD 1,790-91/oz region. In terms of base metals, LME copper is flat on either side of USD 9,500/t. Overnight, Dalian iron ore futures fell amid a decline in mill demand, whilst China's steel hub Tangshan city is to launch a second-level pollution alert from December 3-10th, the local government said – providing further headwinds for iron demand. US Event Calendar 8:30am: Nov. Change in Nonfarm Payrolls, est. 550,000, prior 531,000 Nov. Change in Private Payrolls, est. 525,000, prior 604,000 Nov. Change in Manufact. Payrolls, est. 45,000, prior 60,000 8:30am: Nov. Unemployment Rate, est. 4.5%, prior 4.6% Nov. Underemployment Rate, prior 8.3% Nov. Labor Force Participation Rate, est. 61.7%, prior 61.6% 8:30am: Nov. Average Hourly Earnings YoY, est. 5.0%, prior 4.9% Nov. Average Hourly Earnings MoM, est. 0.4%, prior 0.4% Nov. Average Weekly Hours All Emplo, est. 34.7, prior 34.7 9:45am: Nov. Markit US Composite PMI, prior 56.5 Nov. Markit US Services PMI, est. 57.0, prior 57.0 10am: Oct. Factory Orders, est. 0.5%, prior 0.2% Oct. Factory Orders Ex Trans, est. 0.6%, prior 0.7% Oct. Durable Goods Orders, est. -0.5%, prior -0.5% Oct. Cap Goods Ship Nondef Ex Air, prior 0.3% Oct. Cap Goods Orders Nondef Ex Air, prior 0.6% 10am: Nov. ISM Services Index, est. 65.0, prior 66.7 DB's Jim Reid concludes the overnight wrap I got great news yesterday. It was the school Xmas Fayre last weekend and at one stall we had to guess the weight of the school duck that lives in their pond. I spent a long time analysing it outside and was trying to mentally compare it to the weights of my various dumbbells at home. I learnt yesterday that I’d won. My prize? A rubber duck for the bath. In more trivial news I also learnt I was voted no.1 analyst in four categories of the Global Institutional Investor Fixed Income Analyst awards for 2021. So many thanks for all who voted. It is very much appreciated. However in terms of physical mementoes of my achievements yesterday, all I actually have to show for it is a brown rubber duck. Guessing the weight of a duck is a walk in the park at the moment compared to predicting markets. Indeed it’s been a wild week. If you’ve managed to time all the various swings you can surely only have done it via a time machine. If you have done so without one though I will happily hand over my prized rubber duck. By the close of trade, the S&P 500 (+1.42%) had begun to recover following its worst 2-day performance in over a year. The VIX index of volatility ticked back down beneath the 30 mark again, but finished above 25 for the fourth day in five for the first time since December of last year. Meanwhile Oil plunged and then soared on OPEC+ news and curves continued to flatten as 2yr yields got back close to their pre-Omicron levels after a near 20bps round journey over the last week. I’m glad I’m a research analyst not a day trader, and that’s before we get to today’s payrolls print. We’ll start with Omicron, where yesterday predictably saw a number of new countries report confirmed cases for the first time, as well as a second case in the United States during market hours, this one with roots in New York City, which reported more than 11,300 new cases yesterday, the highest daily count since January. After the market closed, an additional five cases were identified in New York, which sent futures over -0.5% lower at the time. They are back to flat as we type possibly helped by a late deal and vote in Congress to fund the US government through to February 18th and avert a shutdown at midnight tonight. Back to the virus and governments continued to ramp up their defence measures, with Germany yesterday announcing a range of fresh restrictions as they grapple with the latest wave, including a requirement that you must either be vaccinated or have recovered from Covid in order to get into restaurants or non-essential stores. There’s also set to be a parliamentary vote on mandatory vaccinations, and incoming Chancellor Scholz said that he expected it to pass. In the US, President Biden announced new measures to fight the impending winter wave and spreading Omicron variant, including tighter testing guidelines for international visitors, wider availability of at home tests, whilst accelerating efforts to get the rest of the world vaccinated. Over in South Africa, the daily case count rose further yesterday, with 11,535 reported, up from 8,561 the previous day and 4,373 the day before that. So definitely one to keep an eye on as we look for clues about what this could mean for the world more broadly. That said, we’re still yet to get the all-important information on how much less or more deadly this might be, as well as how effective vaccines still are and the extent to which it is more transmissible relative to other variants. Back to markets, and the revival in risk appetite led to a fresh selloff in US Treasuries, with the 2yr yield up +6.7bps, and the 10yr yield up +3.7bps. Nevertheless, as mentioned at the top, the latest round of curve flattening has sent the 2s10s slope to its flattest since before the Georgia Senate seat runoff gave Democrats control of Congress. It’s now at just +82.0bps, whilst the 5s30s slope is now at flattest since March 2020, at +55.0bps. So a warning sign for those who believe in the yield curve as a recessionary indicator, albeit with some way to go before that flashes red. In Europe there was also a modest curve flattening, but yields moved lower across the board, with those on 10yr bunds (-2.6bps), OATs (-3.2bps) and BTPs (-5.6bps) all down by the close. Over in equities, there was a decent rebound in the US following the recent selloff, with the S&P 500 (+1.42%) posting a solid gain. It was a very broad-based advance, with over 90% of the index’s members moving higher for the first time since mid-October. Every S&P sector increased, which was enough to compensate for the noticeable lag in mega-cap shares, with the FANG index gaining just +0.15%. The STOXX 600 decreased -1.15%, though that reflected the fact Europe closed ahead of the big reversal in sentiment the previous session. Aside from Omicron, one of the other biggest stories yesterday was the decision by the OPEC+ group to continue with their production hike, which will add a further +400k barrels/day to global supply in January. The news initially sent oil prices sharply lower, with Brent crude falling to an intraday low beneath $66/bbl, before recovering to end the day back at $69.67/bl in light of the group saying that they could adjust their plans “pending further developments of the pandemic”, with the ability to “make immediate adjustments if required”. Even with the bounceback yesterday however, oil has been one of the worst-performing assets over recent weeks, with Brent hitting an intraday high of $86.7/bbl in late-October, followed by a November that marked its worst monthly performance since the pandemic began. Overnight in Asia stocks are trading mostly higher with the KOSPI (+0.86%), Shanghai Composite (+0.58%), CSI (+0.35%) and the Nikkei (+0.29%) up but with the Hang Seng (-0.74%) under pressure amid the ongoing regulatory clampdown in technology from China as Didi prepares to delist on US markets. Looking forward now, the main highlight on today’s calendar is the US jobs report for November, which comes less than two weeks’ away from the Fed’s meeting where they’ll decide on the pace of tapering. In terms of what to expect, our US economists are looking for nonfarm payrolls to grow by +600k, which would be the fastest pace of job growth since July, and that in turn would take the unemployment rate down to a post-pandemic low of 4.4%. Ahead of that, we had another decent weekly claims report (albeit that took place after the jobs report survey period), with the number for the week through November 26 coming in at a stronger-than-expected 222k (vs. 240k expected). The previous week’s number was also revised down -5k, sending the 4-week moving average down to its own post-pandemic low of 238.75k. Looking at yesterday’s other data releases, the Euro Area unemployment rate fell to a post-pandemic low of 7.3% in October, in line with expectations. However producer price inflation shot up even faster than anticipated to +21.9% (vs. 19.0% expected). To the day ahead now, and the aforementioned US jobs report for November will be the highlight. Other data releases include the services and composite PMIs for November from around the world, Euro Area retail sales for October, and in addition from the US, there’s October’s factory orders and the November ISM services index. From central banks, we’ll hear from ECB President Lagarde and chief economist Lane, the Fed’s Bullard and the BoE’s Saunders. Tyler Durden Fri, 12/03/2021 - 07:55.....»»

Category: blogSource: zerohedgeDec 3rd, 2021