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Dow tumbles 300 points, S&P 500 skids 1.3% as investors eye Fed response to strong U.S economic data

U.S. stocks fell Monday to kick off a fresh week, with the S&P 500 and Nasdaq both down more than 1.2% heading into midday. The Dow Jones Industrial Average was down about 299 point, or 0.9%, trading near 34,134, while the S&P 500 index was off 1.2% and the Nasdaq Composite Index was 1.4% lower, according to FactSet. Stocks were lower on fears that the Federal Reserve might need to be more aggressive in 2023 in tightening monetary policy than previously expected to tame high inflation, given that the U.S. economy has proven relatively resilient to the Fed's aggressive pace of rate hikes already this year. The 10-year Treasury yield also was marching higher, up 7 basis points to about 3.58% on Monday, while the shorter 2-year Treasury rate was at 4.36%. 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: marketwatch1 min. ago Related News

Economic Report: The U.S. economy is still growing, report finds, even as warning signs mount

ISM service-sector index climbs to 56.5% in November, a strong sign that the economy continues to expand steadily......»»

Category: topSource: marketwatch17 min. ago Related News

U.S. stocks open lower as yields rise on hopes of China COVID policy relief

U.S. stock indexes opened lower on Monday as China began easing its COVID-19 restrictions in major cities, while investors awaited more economic data ahead of next week's Federal Reserve policy meeting. The S&P 500 fell 0.6%, while the Dow Jones Industrial Average declined 0.7% and the Nasdaq Composite shed 0.5%. The 10-year Treasury yield advanced to 3.550% from 3.502% on Friday. Several Chinese cities relaxed movement curbs and testing mandates over the weekend, raising hopes for a broader scaling back of the world's most stringent anti-COVID controls. On Monday, commuters in Beijing and at least 16 other cities were allowed to board buses and subways without a virus test in the previous 48 hours for the first time in months. Shares of Chinese and Hong Kong stocks rallied on Monday, while the U.S.-traded Chinese stocks are on pace to book their biggest advance since at least March.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: marketwatch45 min. ago Related News

JD.com, Inc. (JD) Just Overtook the 200-Day Moving Average

Is it a good or bad thing when a stock surpasses resistance at the 200-day simple moving average? JD.com, Inc. (JD) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, JD crossed above the 200-day moving average, suggesting a long-term bullish trend.The 200-day simple moving average helps traders and analysts determine overall long-term market trends for stocks, commodities, indexes, and other financial instruments. The indicator moves higher or lower along with longer-term price moves, serving as a support or resistance level.JD could be on the verge of another rally after moving 32.1% higher over the last four weeks. Plus, the company is currently a Zacks Rank #3 (Hold) stock.Looking at JD's earnings estimate revisions, investors will be even more convinced of the bullish uptrend. There have been 2 higher compared to none lower for the current fiscal year, and the consensus estimate has moved up as well.Investors may want to watch JD for more gains in the near future given the company's key technical level and positive earnings estimate revisions. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report JD.com, Inc. (JD): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacks1 hr. 32 min. ago Related News

Beat the Market Like Zacks: Novo Nordisk, Axon, General Mills in Focus

Last week, our time-tested methodologies served investors well in navigating the market. Check out some of our achievements from the past three months. The three most widely followed indexes closed a second straight winning week for the first time since October. The Dow Jones Industrial Average, the S&P 500 and the tech-heavy Nasdaq gained 0.2%, 1.1% and 2.1%, respectively.Stocks did well earlier in the week on Fed Chair Jerome Powell’s comment in which he strongly signaled that the central bank would be slowing down its rate hikes. Markets were eagerly awaiting definitive indications from the Fed to this effect ahead of the holiday season.As the week drew to a close, a hotter-than-expected labor report wiped away some of the gains, sparking a debate on whether the numbers would push the Fed into raising rates yet again by 75 bps in its December meeting. However, investor mood remains upbeat, as December is generally one of the best months of the year for the market.Regardless of market conditions, we, here at Zacks, provide investors with unbiased guidance on how to beat the market.  As usual, Zacks Research guided investors over the past three months with its time-tested methodologies. Given the prevailing market uncertainty, you may want to look at our feats to prepare better for your next action.Here are some of our key achievements:Webster Financial, HF Sinclair Surge Following Zacks Rank UpgradeShares of Webster Financial Corporation WBS have surged 17.1% since it was upgraded to a Zacks Rank #2 (Buy) on September 23.Another stock, HF Sinclair Corporation DINO, was upgraded to a Zacks Rank #1 (Strong Buy) on September 20and has returned 11.8% since then.Zacks Rank, our short-term rating system, has earnings estimate revisions at its core. Empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.  This stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 to Zacks Rank #5 (Strong Sell), has an impressive externally audited track record, with Zacks Rank #1 stocks generating an average annual return of +24.8% since 1988.You can see the complete list of today’s Zacks Rank #1 stocks here >>>Check Webster Financial’s historical EPS and Sales here>>>Check Grupo HF Sinclair’s historical EPS and Sales here>>>            Image Source: Zacks Investment ResearchZacks Recommendation Upgrade Drives Cactus and Reliance Steel Higher  Shares of Cactus, Inc. WHD and Reliance Steel & Aluminum Co. RS have gained 50.3% and 17.4% since their Zacks Recommendation was upgraded to Outperform on September 28 and September 20, respectively.While the Zacks Rank is our short-term rating system that is most effective over the one- to three-month holding horizon, the Zacks Recommendation aims to predict performance over the next 6 to 12 months. However, just like the Zacks Rank, the foundation for the Zacks Recommendation is trends in earnings estimate revisions.The Zacks Recommendation classifies stocks into three groups — Outperform, Neutral and Underperform. While these recommendations are determined quantitatively, our analysts have the flexibility to override them for the 1100+ stocks they closely follow based on their better judgment of factors such as valuation, industry conditions and management effectiveness than the quantitative model.To access our research reports with Zacks Recommendations for the 1100+ stocks we cover, click here>>>Zacks Focus List Model Portfolio Axon, Caterpillar Surge AheadShares of Axon Enterprise, Inc. AXON, which belongs to the Zacks Focus List, have surged 53.9% over the past 12 weeks. The stock was added to the Focus List on June 3, 2020. Another Focus-List holding, Caterpillar Inc. CAT, which was added to the portfolio on April 18,2017, has returned 28.9% over the past 12 weeks. The Zacks Focus List is a model portfolio of 50 hand-picked stocks that possess the right fundamental ingredients to outperform the market over the next 12 months. These 50 stocks are picked from a long list of stocks with the highest Zacks Rank.Since its inception on February 1, 1996, the Focus List portfolio has delivered an annualized return of +12.9%.Unlock all of our powerful research, tools and analysis, including the Focus List, Zacks #1 Rank List, Equity Research Reports, Zacks Earnings ESP Filter, Premium Screener and more, as part of Zacks Premium. Gain full access now >>Zacks ECAP Stocks Novo Nordisk, AmerisourceBergen SoarNovo Nordisk A/S NVO, a component of our Earnings Certain Admiral Portfolio (ECAP), jumped 20.1% over the past 12 weeks. AmerisourceBergen Corporation ABC followed Novo Nordisk with 17.9% returns.ECAP is a model portfolio of 30 concentrated, ultra-defensive, long-term Buy and Hold stocks. With little to no turnover and annual rebalance periodicity, the ECAP seeks to minimize capital loss by holding shares of companies whose earnings streams exhibit a proven 20+ year track record of surviving recessionary periods with minimal impact on aggregate earnings growth relative to the overall S&P 500.The ECAP and many other model portfolios are available as part of Zacks Advisor Tools, a cloud-based solution to access Zacks award-winning stock, mutual fund and ETF research. Click here to schedule a demo.Zacks ECDP Stocks Starbucks, General Mills Outperform PeersStarbucks Corporation SBUX, which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 17.4% over the past 12 weeks. Another ECDP stock, General Mills, Inc. GIS, has climbed 14.4% over the same time frame. Of course, the inclination of investors toward quality dividend stocks to secure an income stream amid the heightened market volatility contributed to this performance.Check Starbucks’ dividend history here>>>Check General Mills’ dividend history here>>>With an extremely low Beta and a history of minimum earnings variability over the last 20+ years, this 25-stock portfolio helps significantly mitigate risk. The ECDP has consistently outperformed the S&P 500 Dividend Aristocrats ETF NOBL.Click here to access this portfolio on Zacks Advisor Tools.   Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Caterpillar Inc. (CAT): Free Stock Analysis Report Novo Nordisk AS (NVO): Free Stock Analysis Report Starbucks Corporation (SBUX): Free Stock Analysis Report General Mills, Inc. (GIS): Free Stock Analysis Report AmerisourceBergen Corporation (ABC): Free Stock Analysis Report Reliance Steel & Aluminum Co. (RS): Free Stock Analysis Report Webster Financial Corporation (WBS): Free Stock Analysis Report Axon Enterprise, Inc (AXON): Free Stock Analysis Report ProShares S&P 500 Dividend Aristocrats ETF (NOBL): ETF Research Reports Cactus, Inc. (WHD): Free Stock Analysis Report HF Sinclair Corporation (DINO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacks2 hr. 44 min. ago Related News

3 Market Neutral Funds to Counter Market Volatility

Below, we share with you three top-ranked market-neutral funds. Each has a Zacks Mutual Fund Rank #1 (Strong Buy). In a volatile stock market, investors usually focus on a long-term strategy, which keeps them protected from concurrent ups and downs. But that is easier said than done, and adding market-neutral funds to their portfolio often bails them out in terms of hedging their risk in the prevailing market conditions.Market-neutral funds are designed to provide returns that are relatively unaffected by the state of the overall stock market. Adding these to the portfolio should boost returns and reduce risk. They typically deliver returns by combining long and short positions in various securities.Below, we share with you three top-ranked market-neutral funds, viz., Victory Market Neutral Income Fund CBHAX, Gabelli ABC Fund (The) GABCX and Hussman Strategic Growth Fd HSGFX. Each has a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of market neutral funds.Victory Market Neutral Income Fund seeks to achieve its investment objective of high current income by implementing a proprietary, rules-based market-neutral investment strategy. CBHAX aims to generate income from its investments while maintaining a low correlation to the foreign and domestic equity and bond markets.Victory Market Neutral Income Fund has three-year annualized returns of 1.5%. As of June 2022, CBHAX held 445 issues, with 10.3% of its assets invested in TOTAL OTHER.Gabelli ABC Fund (The) typically invests in securities that provide attractive opportunities for appreciation or investment income. GABCX seeks to limit the excessive risk of capital loss by employing a varied investment strategy, including investing in value-oriented common stocks.Gabelli ABC Fund (The) has three-year annualized returns of 2%. Mario J. Gabelli has been one of the fund managers of GABCX since 1993.Hussman Strategic Growth Fd typically invests most of its assets in common stocks picked by investment advisors. HSGFX may use options and index futures, and other hedging strategies, to balance the fund’s exposure during unfavorable market conditions.Hussman Strategic Growth Fd fund has three-year annualized returns of 7.9%. HSGFX has an expense ratio of 1.14% compared with the category average of 1.90%.To view the Zacks Rank and the past performance of all market-neutralfunds, investors can click here to see the complete list of market neutral funds.Want key mutual fund info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >> Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>View All Zacks #1 Ranked Mutual FundsWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (HSGFX): Fund Analysis Report Get Your Free (GABCX): Fund Analysis Report Get Your Free (CBHAX): Fund Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacks2 hr. 44 min. ago Related News

US Futures Drop As Chinese Stocks Soar On Reopening Optimism

US Futures Drop As Chinese Stocks Soar On Reopening Optimism US stock futures fell on Monday as investors weighed the outlook for economic growth against the possibility of a softening in the Federal Reserve’s policy, or in other words, whether bad news is again bad news. At the same time, and just one week after China was swept by violent anti-covid zero protests, Chinese stocks in listed in the US rose sharply after Hong Kong-listed peers rallied and the offshore yuan strengthened past the key 7.00 level after Chinese authorities eased Covid testing requirements across major cities over the weekend. The financial hub of Shanghai scrapped PCR testing requirements to enter outdoor public venues such as parks or use public transportation starting Monday. Hangzhou, home to tech giant Alibaba dropped obligations to enter most public venues including offices and supermarkets, while Shanghai also eased rules.  As a result, Hong Kong’s Hang Seng Tech Index closed at session highs, soaring some 9.2%, the biggest jump since Nov. 11, after China eased Covid testing requirements across major cities over the weekend. Meanwhile in the US, Nasdaq 100 futures were down 0.4% by 7:30 a.m. in New York, while S&P 500 futures dipped 0.5%. The indexes shrugged off a hotter-than-expected jobs report on Friday as investors and erased almost all early losses as they remained optimistic that the Fed would slow the pace of interest rate hikes at its meeting this month. The dollar remained near session lows, boosting most Group-of-10 currencies. Treasury yields climbed across the curve. Oil advanced after OPEC+ kept its 2 million production cut and amid growing signs China is reopening, while gold was little changed. Bitcoin rose more than 1%, gaining for a second day. The S&P 500 is on course for its biggest fourth-quarter gain since 1999 as signs of a cooling in US inflation have led to a pullback in bond yields, but market participants warn the outlook for next year remains uncertain amid the risk to corporate earnings from the specter of a recession. Among notable moves in premarket trading, US-listed Chinese stocks extended their torrid rally as easing Covid curbs in major Chinese cities fueled optimism that Beijing is hastening the shift away from its Covid Zero strategy; Alibaba rose 5.2%, Baidu +5.6%, Pinduoduo +5%, JD.com +5.6%, Bilibili +16%, Nio +6.3%, XPeng +11%. Cryptocurrency-exposed stocks rose as Bitcoin extended gains for a second day. Tesla slipped as much as 4.8% after a Bloomberg News report said that the electric vehicle maker planned to lower production at its Shanghai factory. Here are the other notable premarket movers: Activision Blizzard rises 2.3% after Bloomberg News reported that Microsoft is ready to fight for its $69 billion acquisition of the video gaming company if the US Federal Trade Commission files a lawsuit seeking to block the deal. Marathon Digital and Riot Blockchain lead cryptocurrency-exposed stocks higher as Bitcoin extends gains for a second day. Marathon Digital +4.9%, Riot Blockchain (RIOT US) +2.8% and Coinbase  +2.3% Keep an eye on airlines’ shares as Morgan Stanley says 2023 could be a “Goldilocks” year for air travel, boosting earnings beyond current expectations, as the broker upgrades United Airlines to overweight and cuts Allegiant Travel to equal-weight. Alaska Air is initiated with a buy recommendation at Citi, saying the carrier has attributes to offset headwinds facing domestic airlines in 2023. Additionally, the broker begins coverage on JetBlue with a neutral rating. Watch Terex as Deutsche Bank cut its rating to hold from buy on recent outperformance, saying that it’s best to stay defensively-positioned on US industrial stocks into 2023. Keep an eye on Ameris Bancorp and Atlantic Union (AUB US) as Piper Sandler resumed coverage on US mid-Atlantic and southeast banks, saying the two lenders are its preferred larger-cap names with both at attractive entry points. “Despite an increasingly optimistic end to the year, the main indexes seem unlikely to recover their lost ground and the current rally may be too little, too late,” said Richard Hunter, head of markets at Interactive Investor. Moreover, “doubts still linger” on how much more the Fed will still need to raise interest rates and the impact of higher-for-longer inflation, he said. Morgan Stanley strategist Michael Wilson said the year-end rally he had predicted had now run its course and investors are better off booking profits from here on. He sees an “absolute upside” for the S&P 500 at 4,150 points -- about 2% above current levels -- which could be achieved “over the next week or so.” Notable other US headlines: WSJ's Timiraos writes that Fed officials have signalled plans to hike by 50bp at the December gathering, though elevated wage pressures could lead them to continue increasing rates to levels higher than investors currently expect. Delta Air Lines (DAL) confirmed it reached an agreement in principle for a new pilot contract after it offered a 34% pay increase to pilots over 3 years, according to Reuters. Apple (AAPL) supplier Foxconn (2317 TT) expects full production at its COVID-hit plant in China to resume from late December to early January, while the Co. and the local government are pushing hard on the plant's recruitment drive but many uncertainties remain, according to sources cited by Reuters. Moldova’s central bank is to conduct an extraordinary meeting on Monday to assess its main policy indicators including the policy rate, according to Reuters. Iran’s Attorney General announced that Iran abolished its morality police and is considering changing hijab laws following the protests, according to WSJ. Euro Stoxx 50 falls 0.2%. FTSE 100 outperforms peers, adding 0.3%. Here are some of the biggest European movers today: Tech investors Naspers and Prosus both gain more than 5% in Johannesburg trading Monday after Chinese authorities accelerate a shift toward reopening the economy. European mining stocks in focus as metals advance after Chinese authorities eased Covid testing requirements across major cities over the weekend. Rio Tinto and Glencore shares rise as much as 3.7% and 2.4% respectively. Credit Suisse shares climb as much as 3.7% in early trading after the Wall Street Journal reported that Saudi Arabia’s Crown Prince Mohammed bin Salman is preparing to invest in the Swiss lender’s investment-bank unit. Grifols shares rise as much as 6.5% in early trading after Morgan Stanley raised to overweight from equal-weight on the expectation that 2023 will be a “strong growth year” supported by accelerating plasma collections and early signs of declining donor fees. Bayer shares slide as much as 2.8%, the most in about a month, after Bank of America cut its recommendation for the German agropharmaceutical giant to neutral on the company’s lack of catalysts after a 2022 outperformance. FlatexDEGIRO shares fall as much as 38%, the biggest intraday drop since its 2009 listing, after the online brokerage firm cut its revenue forecast and said it was working on measures to address shortcomings in some business practices and governance identified by a BaFin audit. German catering equipment company Rational sinks as much as 9%, making them the worst performer in the Stoxx 600, after Bank of America initiated coverage on the stock with an underperform recommendation, citing a “demand crunch” in 2023. Swedish Orphan Biovitrum shares drop as much as 2.2% after Morgan Stanley downgrades the stock to equal-weight from overweight. Asian stocks rebounded, inching closer to bull market territory, as Chinese equities resumed their rally on further relaxation of Covid rules in Asia’s biggest economy. The MSCI Asia Pacific Index climbed as much as 1.4%, led by communication services and consumer discretionary shares. Benchmarks in Hong Kong led gains in the region with the Hang Seng Tech Index soaring more than 9% and the Hang Seng China Enterprises Index up roughly 5%. Morgan Stanley upgraded China to overweight. Investors cheered latest signs of China pivoting from its strict virus rules as authorities eased Covid testing requirements across major cities over the weekend, including the financial hub of Shanghai. The move fueled gains in reopening stocks in China and its neighboring countries such as South Korea. Markets were closed in Thailand for a holiday. The moves coincided with growing bullish calls from Wall Street banks on Chinese equities, with more market watchers calling a bottom in the nation’s shares. Morgan Stanley upgraded China stocks to overweight from an equal-weight position held since January 2021, while abrdn’s Asia Pacific chief executive Rene Buehlmann urged investors to “go back” into Chinese markets. Elsewhere, stock benchmarks were mixed with gauges in Japan and South Korea trading lower while those in Australia, Singapore and Vietnam rose.  After falling for much of the year, Asian stocks staged a dramatic rally in the past few weeks with a surge in foreign inflows into emerging Asian shares, supported by the dollar’s weakness and expectations for a slowdown in the Fed’s hikes.  The key Asian stock benchmark still remains about 17% lower so far this year, on course for its worst annual performance in more than a decade. A closer look at Japanese stocks reveals that they ended mixed as investors gauged the impact of China’s shift toward reopening and US employment data. The Topix fell 0.3% to close at 1,947.90, while the Nikkei advanced 0.2% to 27,820.40. Toyota Motor Corp. contributed the most to the Topix decline, decreasing 1%. Out of 2,164 stocks in the index, 741 rose and 1,304 fell, while 119 were unchanged. “Japanese stocks are a bit weak at the moment as economic indicators are becoming a little more globally skewed,” said Mamoru Shimode, a chief strategist at Resona Asset Management.  Australian stocks rose: the S&P/ASX 200 index rose 0.3% to close at 7,325.60, led by gains in mining and real estate shares, as traders bet on further reopening of the Chinese economy from Covid restrictions.  Shares of iron ore miners and steel companies were among top performers advancing as commodity prices rallied on China reopening bets.  In New Zealand, the S&P/NZX 50 index rose 0.3% to 11,677.75. Stocks in India ended flat on Monday as investors likely took profits in recent outperformers, while the focus shifts to the central bank’s monetary policy announcement later this week. The S&P BSE Sensex ended flat at 62,834.60 in Mumbai, while the NSE Nifty 50 Index was also little changed, as both indexes overcame declines of as much as 0.6% each. The key gauges rose for eight consecutive sessions before declining on Friday. The Reserve Bank of India’s rate-setting panel will commenced its three-day meet Monday for the monetary policy to be announced on Wednesday. All of the economists surveyed by Bloomberg expect the benchmark lending rate to be increased, with the median estimate for a 35 basis points hike. Polls in India’s Gujarat, also the home state to Prime Minister Narendra Modi, end today and results will be announced on Dec. 8. Investors will be watchful of the outcome as the results will indicate Modi’s popularity for national elections next in 2024.  In rates, treasuries are mixed as the curve bear flattens with 2s10s narrowing 1.6bps as US trading day begins, extending the flattening move unleashed Friday by stronger-than-estimated November employment data. All Treasuries apart from the very long end fell, with the largest decline seen in the belly of the curve, as traders added to Fed hike wagers ahead of US ISM services numbers for November. Yields remain inside Friday’s ranges, though inverted 2s10s reached -81.4bp, new low for the cycle. 2- to 7-year yields higher by 3bp-4bp on the day, 30-year lower by ~1bp; 10-year higher by ~2bp at 3.50% Most European 10-year yields are lower, led by UK as expectations for BOE rate hikes are pared. IG credit issuance slate blank so far, however dealers expect $10b-$15b this week and $20b for December. Three-month dollar Libor fell for a third straight day, longest streak since February, to 4.72343%. The Bloomberg Dollar Spot Index snapped a four-day drop as the greenback rose 0.1%. CAD and AUD are the strongest performers in G-10 FX, JPY and GBP underperform. ZAR (1.7%) leads gains in EMFX. The yen underperformed all its Group-of-10 peers while the Australian and Canadian dollar were the top gainers as commodities got a boost on hopes that China is engineering a gradual shift away from its strict Covid Zero policy. Chinese stocks and the yuan also rallied. The yuan strengthened past the key 7 per dollar level after Shanghai and Hangzou relaxed Covid testing rules. Hong Kong dollar surged to the strongest level since June 2021. Te onshore yuan extended gain to 1.5% to 6.9450 per dollar, the most since Nov. 11 as reopening optimism continues to boost the currency.  The euro steadied after rising to a fresh five-month high of $1.0585. Euro options bets suggest a run above $1.06 before FOMC meeting. Bunds, Italian bonds swung between modest gains and losses amid a slew of ECB speeches. The pound slipped after posting four consecutive weeks of gains. Money markets eased BOE rate-hike wagers after policy-maker Swati Dhingra said in a newspaper interview that interest rates should peak below 4.5%. The central bank will conduct bond sales later on Monday In commoidties, Crude benchmarks have been choppy, but are ultimately firmer post-OPEC+ and as the Russian oil cap comes into effect at USD 60/bbl. Brent rises 1.8% near $87.15 while WTI Jan was at 81.50/bbl, with the latest easing of China's COVID controls also factoring. OPEC+ ministers formally endorsed the output policy rollover and will hold the next JMMC meeting on February 1st, while it vowed to stand ready to adjust oil output to stabilize markets. Russian Deputy PM Novak said they will not operate under the oil price cap even if they have to cut production and the price cap may affect other countries as well, while he added that they are working on mechanisms to ban supplies which are capped. Russia is analysing the price cap imposed by G7 and allies on its oil and made preparations for this, while it will not accept the oil price cap, according to state news agencies citing the Kremlin. Russia's Kremlin, on price cap, said Russia is preparing a decision and will not recognise the price cap; price cap will destabilise global energy market but will not affect Russia's ability to sustain the military operation in Ukraine. US economic data include November final S&P Global US services and composite PMIs (9:45am), October factory orders and November ISM services (10am) Market Snapshot S&P 500 futures down 0.3% to 4,062.75 STOXX Europe 600 little changed at 442.85 MXAP up 1.1% to 159.66 MXAPJ up 1.7% to 521.41 Nikkei up 0.2% to 27,820.40 Topix down 0.3% to 1,947.90 Hang Seng Index up 4.5% to 19,518.29 Shanghai Composite up 1.8% to 3,211.81 Sensex down 0.1% to 62,798.89 Australia S&P/ASX 200 up 0.3% to 7,325.60 Kospi down 0.6% to 2,419.32 German 10Y yield little changed at 1.85% Euro up 0.2% to $1.0555 Brent Futures up 1.9% to $87.16/bbl Gold spot down 0.0% to $1,797.23 US Dollar Index little changed at 104.47 Top US News From Bloomberg ECB Governing Council member Francois Villeroy de Galhau said it’s too early to discuss where interest rates will peak, saying the monetary-tightening process should be carried out at the appropriate pace The ECB should raise borrowing costs by at least a half-point this month to curb surging consumer prices, according to Governing Council member Gabriel Makhlouf ECB Governing Council Member Mario Centeno said “everything indicates” that the peak of inflation may be reached in the fourth quarter “Decisive monetary tightening must continue” as inflation persists above target, Croatian Central Bank Governor Boris Vujcic told the newspaper Jutarnji List, weeks before the Balkan nation joins the euro zone The US dollar has erased more than half of this year’s gains amid growing expectations the Federal Reserve will temper its aggressive rate hikes, and as optimism grows over China’s reopening plans Swedish central bankers are divided on the prospects for bringing inflation back to its target after a string of interest-rate increases, minutes from the bank’s latest policy meeting show Emerging-market central banks face a Catch-22 where plunging economic growth means they can’t keep monetary conditions tight, but elevated inflation doesn’t allow them to halt rate hikes either OPEC+ responded to surging volatility and growing market uncertainty by keeping its oil production unchanged The world’s worst- performing major currency looks poised for an impressive turnaround in 2023 as its two key drivers -- a hawkish Federal Reserve and dovish Bank of Japan -- swap places in the eyes of some investors The BOJ may achieve its inflation target in 2023 as the cost of living has consistently exceeded market expectations this year, according to Takatoshi Ito, a contender to replace Governor Haruhiko Kuroda in April The PBOC injected a record monthly amount into state policy banks in November to help spur infrastructure spending and boost a struggling economy Turkish inflation slowed for the first time in over a year-and-a-half, though measures to revive the economy ahead of elections in 2023 may keep it elevated for some time A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks traded mostly positive as Chinese markets led the advances on reopening optimism after several large cities further loosened COVID-19 restrictions, although the gains for the rest of the region were limited after Friday’s mixed post-NFP performance on Wall St and a further deterioration in Chinese Caixin Services and Composite PMI data. ASX 200 was higher with the index supported by strength in mining and energy as underlying commodity prices benefitted from the China reopening play. Nikkei 225 was indecisive and just about kept afloat throughout the session with price action contained by a lack of pertinent drivers to propel the index closer to the 28,000 level. Hang Seng and Shanghai Comp shrugged off the weak Chinese PMI data with risk appetite supported by reopening hopes and as the PBoC’s previously announced RRR cut took effect, while developers were boosted after reports last week that China's top four banks intend to issue loans for domestic developers’ overseas debt repayments. Top Asian News Chinese Caixin Services PMI (Nov) 46.7 vs. Exp. 48.0 (Prev. 48.4); Composite PMI (Nov) 47.0 (Prev. 48.3) Several Chinese cities accelerated the loosening of COVID-19 restrictions over the weekend including Shanghai and Shenzhen which scrapped requirements for commuters to present PCR tests for travelling on public transport, while apartment complexes in Beijing indicated that those that tested positive could quarantine at home, according to FT. China could announce 10 supplementary COVID measures as soon as Wednesday, via Reuters citing sources; could downgrade COVID to category B management as early as January. Subsequently, Shanghai scraps COVID testing requirement at more public venues from Tuesday, according to Bloomberg. PBoC is reportedly expected to reduce the amount of open market operations towards the end of the year to avoid excess liquidity, according to China Securities Journal. Morgan Stanley upgraded MSCI China to overweight from equal weight and said the ROE is likely to rise to 11.1% by end-2023, according to Reuters. European bourses are under modest pressure, Euro Stoxx 50 -0.2%, following on from fairly contained action in futures overnight. In APAC hours, Chinese stocks were the marked outpeformers given the loosening of COVID restrictions, though the region's PMIs slipped. Stateside, futures are are in-fitting with European peers and are under slight pressure, ES -0.3%, with specific developments light during the Fed blackout window. Tesla (TSLA) reduced Shanghai output by up to 20% due to sluggish demand, according to Bloomberg; output cuts set to take effect as soon as this week, sources state. Foxconn (2317 TT) November sales -11.4% YY. Q4 outlook expected in-line with consensus. November was the month most affected by COVID; due to off-peak seasonality and COVID November revenue declined MM. Top European News BoE’s Dhingra said higher interest rates could lead to a deeper and longer recession which is what she thinks they should all be worried about, while she sees few signs that demands for higher wages are raising the risk of a wage-price spiral, according to the Observer. Confederation of British Industry warned the UK will fall into a year-long recession next year as a combination of rising inflation, negative growth and declining business investment weigh on the economy, according to FT. UK Conservative Party Chairman and Minister without Portfolio in the Cabinet Office Zahawi said the government is looking at bringing in the military if strikes go ahead in various sectors including the health sector, according to Reuters and Sky News. UK RMT union rejected the Rail Delivery Group offer and demanded a meeting on Monday to resolve the dispute, while UK Transport Secretary Harper said the situation is disappointing and unfair to the public, according to Reuters. ECB’s Villeroy said that inflation should peak in H1 next year and that he favours a 50bps rate hike at the December 15th meeting, while he added that rate hikes will continue after that but cannot say when they will stop and he expects to beat inflation by 2024-2025, according to Reuters. ECB's Makhlouf sees a 50bps increase at a minimum at the December (15th) meeting, expects the eventual magntude to be 50bp; have to be open to policy rates moving into restrictive territory for a period in 2023; pre-mature to be talking about the endpoint for rates EU Commission President von der Leyen said the US Inflation Reduction Act is raising concerns in Europe and there is a risk it could lead to unfair competition, close markets and fragment supply chains that have already been tested by the pandemic, while she added that competition is good but it must be a level playing field and that they must take action to rebalance the playing field where the IRA or other measures conduct distortions, according to Reuters. FX DXY bid despite an earlier move to 104.10 lows, with the index recovering to 104.75+ parameters amid favourable technical levels US yields. Action which has been felt most keenly against the JPY, USD/JPY testing 135.50 at best from an initial 134.10 low, action which has offset the Yuan's impact on the USD. Yuan outperforms given the latest easing of COVID restrictions and source reports pointing to additional measures being forthcoming. AUD the next-best ahead of the RBA policy announcement with a 25bp hike expected. Both EUR and GBP were unreactive to the latest PMIs, with hefty OpEx in EUR/USD of note for the NY Cut; though, GBP has felt the USD's bid more keenly, sub-1.2250 at worst. PBoC set USD/CNY mid-point at 7.0384 vs exp. 7.0368 (prev. 7.0542) Fixed Income Core benchmarks are experiencing choppy trade, but retain an underlying bid with Bunds surpassing touted 142.17 resistance and Gilts briefly breaching 106.00. A move which leaves USTs lagging slightly with corresponding yields bid, though the curve is mixed and action is once again most pronounced at the short-end ahead of ISM & Factory Orders. Commodities Crude benchmarks have been choppy, but are ultimately firmer post-OPEC+ and as the Russian oil cap comes into effect at USD 60/bbl. Currently, WTI Jan & Brent Fed are pivoting USD 81.50/bbl and USD 87/bbl respectively, with the latest easing of China's COVID controls also factoring. OPEC+ ministers formally endorsed the output policy rollover and will hold the next JMMC meeting on February 1st, while it vowed to stand ready to adjust oil output to stabilise markets, according to Reuters and FT. Iraqi Oil Minister said OPEC members are committed to the agreed production rates until the end of 2023 and the Algerian Energy Minister said the decision to keep output unchanged is appropriate to market fluctuations. Kuwaiti Oil Minister said OPEC+ decisions are based on market data and ensure its stability, while he added the impact of slow global economic growth on oil demand is a cause for continuous caution, according to Reuters. G7 and Australia announced on Friday that a consensus was reached on a price cap for Russian seaborne oil at USD 60/bbl which will enter into force on December 5th or very soon thereafter and they will ‘grandfather’ any revision of the price cap to allow compliant transactions concluded beforehand. Furthermore, US Treasury Secretary Yellen said that the price cap will immediately cut into Russia’s most important source of revenue and preserve stable global energy supplies, while a senior Treasury official stated that the price cap will create an anchor for Russian oil and has already driven prices lower, according to Reuters. Ukrainian President Zelensky’s chief of staff commented that the price cap on Russian oil should be capped to USD 30/bbl, according to Reuters. Russian Deputy PM Novak said they will not operate under the oil price cap even if they have to cut production and the price cap may affect other countries as well, while he added that they are working on mechanisms to ban supplies which are capped. Russia is analysing the price cap imposed by G7 and allies on its oil and made preparations for this, while it will not accept the oil price cap, according to state news agencies citing the Kremlin. Russia's Kremlin, on price cap, said Russia is preparing a decision and will not recognise the price cap; price cap will destabilise global energy market but will not affect Russia's ability to sustain the military operation in Ukraine. EU countries cut their gas demand by a quarter last month despite a fall in temperature which shows an effort in reducing the reliance on Russian energy, according to FT. Moldova’s Deputy PM Spinu said they will not pay a 50% advance to Gasprom by December 20th for its December gas supplies, according to Reuters. Spot gold has pulled back below USD 1800/oz and now resides in proximity to its 200-DMA at USD 1795/oz while base metals remain bid, but have eased from initial best levels. Geopolitics US Defense Secretary Austin accused Russia of deliberate cruelty in its war in Ukraine and that it was intentionally targeting civilians, according to Reuters. US Director of National Intelligence Haines said they expect a reduced tempo in Ukraine fighting to continue in the coming months, while she added that Russia is not capable of indigenously producing munitions they are expending, according to Reuters. US Indo-Pacific Commander Aquilino said it is in China’s strategy to encourage nations like North Korea to create problems for the US and he is not optimistic about China doing anything helpful to stabilise the Indo-Pacific region, according to Reuters. N.Korea has fired around 130 artillery shots off its East & West Coast, via Yonhap; Subsequently, N. Korean military says the firing of artillery shells was a warning to S. Korean military action, via KCNA. US Event Calendar 09:45: Nov. S&P Global US Composite PMI, est. 46.3, prior 46.3 09:45: Nov. S&P Global US Services PMI, est. 46.1, prior 46.1 10:00: Oct. Durable Goods Orders, est. 1.0%, prior 1.0% Durables-Less Transportation, est. 0.5%, prior 0.5% Cap Goods Ship Nondef Ex Air, prior 1.3% Cap Goods Orders Nondef Ex Air, prior 0.7% 10:00: Oct. Factory Orders, est. 0.7%, prior 0.3% Factory Orders Ex Trans, prior -0.1% 10:00: Nov. ISM Services Index, est. 53.3, prior 54.4 DB's Jim Reid concludes the overnight wrap Although there is little question that I feel fully aware that someone has cut my back open with a knife within the last few days and sawed off some bone inside, I feel remarkably mobile and spritely. However, I'm trying not to appear too mobile as I've been signed off housework for a few weeks as I'm not supposed to bend, twist or lift. Don't waste a crisis as they say. I also resisted any urge to celebrate England waltzing into the last 8 of World Cup last night. Still plenty of time for it to go spectacularly wrong. No need to stress the back needlessly at this stage! As the World Cup builds to the business end of the tournament, we welcome in a week with limited US data and one with the Fed now on their blackout period ahead of next week's FOMC. In fact, could it actually be quite a quiet week ahead? Famous last words in a year like this, but next week should be much more interesting than this week given that we also have US CPI and the ECB meeting to go alongside the Fed. The data we do see in the US starts today with the ISM services index (DB forecast 53.9 vs 54.4 in October) and ends with PPI and the UoM consumer confidence number on Friday with the latest inflation expectations numbers included. Elsewhere we’ll also get CPI and PPI from China (Friday), industrial production from Germany (Wednesday) and trade data from key economies. While central bank speak will be sparse, Lagarde speaks today and for this week some attention will shift to Canada and Australia. The former meet on Wednesday and as a reminder, their last meeting's dovish tilt spurred a pivot trade in the US on the back of expectations the Fed would mimic the message. So this meeting may be a driver of sentiment more broadly. The consensus is split on Bloomberg between 25bps and 50bps which makes it interesting. The Reserve Bank of Australia will also decide on policy tomorrow, and consensus expects a 25bp rate hike that takes the cash rate to 3.1%. Wednesday will also likely see the Reserve Bank of India downshift to 25bps after three 50bps hikes. So by midweek we’ll have a better feel for whether these central banks are trying to downshift. The full day-by-day week ahead is at the end as usual on a Monday. Staying on the topic of where central bank rates are going, payrolls from last Friday merit some closer attention. The headline (263k vs 284k last and 200k consensus) and private (221k vs. 248k last and 185k consensus) payrolls numbers beat with unemployment steady at 3.7%. However, market focus was squarely on the upside surprise to average hourly earnings (+0.6% vs. +0.5% last and +0.3% consensus) which boosted the year-over-year growth rate by a couple of tenths to 5.1% vs consensus at only 4.6%. This big upside miss got our economists digging into the data and they found that the response rate for the establishment survey, which measures nonfarm payrolls, hours and earnings, was just 49.4%, well below the normal 65-70% range and the lowest since 2002. So it feels like you could see decent sized revisions. In addition, our economists found that most of the upside surprise to AHEs was due to the transportation and warehouse sector, which showed a +2.5% monthly gain - over five standard deviations above the average and by far a record increase. Information services AHEs (+1.6% vs. Unch.) also showed an unusually large gain that was about 2.5 standard deviations outside of the average. Combined, the unusually large increases in these two sectors likely boosted overall AHEs by around one to two tenths in their view. Nevertheless, income growth from our economists’ payroll proxy was still up 7.6% compared to a year ago and inflation is not going to be coming down to trend with labour markets like this. There is more and more evidence that the supply side is normalising on the inflation front but it's seems inconceivable that inflation can normalise overall when we see the type of employment numbers we saw last week, not just from the employment report but also from the JOLTS data which still pointed towards a tight labour market. Indeed, in Powell's mid-week speech which caused a major bond/rates rally, he did cite the latest JOLTS data as still showing a large imbalance between supply and demand for labour, referencing the roughly 1.7 job openings for every unemployed worker. Powell also noted that for "the principal wage measures that we look at, I would say that you're one and half or two percent above that (which is consistent with two percent inflation over time)". So it's fascinating that at the moment the market is focusing squarely on the very strong likelihood that we'll ratchet down to 'only' a 50bps hike next week and extrapolating that level of dovishness rather than focus on any risks that the terminal rate could end up being nearer say 6% than 5%. Indeed Larry Summers was doing the rounds over the weekend suggesting that markets were likely under-pricing terminal and seemingly being more comfortable suggesting a peak nearer 6 than 5%, even if he wasn't specific over a particular number. In terms of weekend news OPEC+ decided to keep production at current levels as expected. This follows the EU decision on Friday, after months of negotiations, to cap the price of Russian crude at $60 per barrel, starting today. This morning in Asia trading hours, oil prices are trading higher with Brent crude futures (+0.82%) trading at $86.27/bbl and WTI futures (+0.83%) at $80.64/bbl following China’s further easing of its Covid Curbs. Elsewhere, Shanghai and Hangzhou have followed other Chinese cities in easing some Covid restrictions over the weekend. They announced that from tomorrow, they will remove the requirement to have a PCR test to enter outdoor public venues and to use public transport. Chinese equities surged on the news with the Hang Seng rising +3.3% in early trading to its highest since mid-September, leading gains across the region with the CSI (+1.60%) and the Shanghai Composite (+1.55%) also rallying. Outside of China, the Nikkei (+0.01%) is struggling to gain traction this morning whilst the KOSPI (-0.51%) is slipping back slightly. In overnight trading, US stock futures are indicating a negative start with contracts tied to S&P 500 (-0.14%) and the NASDAQ 100 (-0.17%) edging lower. Meanwhile, yields on 10yr USTs (+4.55 bps) have climbed higher, trading at 3.53% with the 2s10s curve at -79.15 bps as we go to press. Data out from China today showed that services activity contracted further in November as Covid restrictions continued to restrain growth, with the Caixin China services PMI falling to a six-month low of 46.7 from 48.4 in October. Elsewhere, the final estimate of Japan’s services PMI fell to 50.3 from October's 53.2, hitting the lowest since August as cost pressures remained acute. The composite PMI contracted to 48.9 in November from 51.8 a month earlier. In FX, the Chinese currency strengthened to 6.96 against the US dollar, moving below 7 for the first time since mid-September on hopes of reopening. Recapping last week now and for the second week running major sovereign bond markets and equity indices rallied, after perceived dovishness from Fed Chair Powell in his last remarks before the December FOMC communications blackout period, troubling global growth data, and further confirmation of China moving on from the strictest form zero Covid policies that have plagued global supply chains. Treasury and Bund yields fell over the week, a largely parallel shock to the already inverted US yield curve while Bund yields flattened slightly. All told, 2yr Treasuries fell -18.1bps (+4.4bps Friday) while 10yr yields were -19.1bps lower (-1.9bps Friday). 2yr Bunds fell -8.7bps, though climbed +8.0bps Friday, while 10yr yields were -11.8bps lower after climbing +4.2bps Friday following the US jobs report. But note that 10yr US yields fell c.7bps after the European close and c.15bps lower than their highs for the day just after payrolls were released. Terminal Fed Funds fell c.8bps on the week but were first c.6bps higher pre-Powell's speech and then c.22bps lower into payrolls, before climbing 8bps after and into the close for the week. A second straight week of falling discount rates led to a second straight week of decent equity performance. The S&P 500 climbed +1.13% (-0.12% Friday) with the more rate-sensitive NASDAQ outperforming, up +2.09% (-0.18% Friday). One area of weakness was bank stocks, where the S&P 500 banks sector fell -2.03% (-1.04% Friday) as slower growth and flatter curves weighed. Performance was more mixed in Europe, but the STOXX 600 still managed to post a +0.58% weekly gain (-0.15% Friday), while the regional indices took their cues from the World Cup: the DAX fell -0.08% (+0.27% Friday) with Germany failing to reach the knockout round again while the CAC and FTSE 100 increased +0.44% (-0.17% Friday) and +0.93% (-0.03% Friday), respectively. Tyler Durden Mon, 12/05/2022 - 08:03.....»»

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Rapid wage growth will keep inflation sticky and could force the Fed to raise interest rates above 5%, UBS warns

Wage growth "is too high for the Fed's liking and heading in the wrong direction," UBS analysts said Monday. Average hourly wages have jumped 5.1% year-on-year, according to the latest jobs report.AP Photo/Nam Y. Huh Surging wages could disrupt the Federal Reserve's efforts to tame inflation, according to UBS. Wage growth "is too high for the Fed's liking and heading in the wrong direction," the bank said Monday. Average hourly earnings have climbed at the fastest month-on-month pace since January. Accelerated wage increases will likely hinder the Federal Reserve's fight against inflation and could lead to the central bank boosting interest rates more aggressively than the market currently expects, according to UBS.Strategists at the Swiss bank said Monday that the November US jobs report — which showed average hourly wages climbing at the fastest monthly pace since January of 0.6% — showed wage pressures in the world's largest economy still remain high.That suggests the Fed will probably raise benchmark rates higher than 5%, the level that financial markets are currently pricing in as the likely peak in borrowing costs. The so-called fed funds rate is currently set in the 3.75% to 4% range."Friday's jobs report indicated that the labor market remains tight," a team led by UBS CIO Mark Haefele wrote in a note. "The 0.6% growth in average hourly earnings is too high for the Fed's liking and heading in the wrong direction."The US central bank has raised interest rates by an outsized 75 basis points at each of the last four meetings in a bid to tame soaring prices, and will next review rates at a December 13-14 meeting.UBS expects the Fed to slow the pace of its policy tightening, and predicts the institution to announce a 50-basis-point hike on December 14.Higher wages tend to fuel inflation because they mean Americans have more disposable income, leading to a rise in spending. The most recent reading of US annual inflation came in at 7.7%, well above the central bank's 2% target.In a speech at the Brookings Institution last week, Fed chair Jerome Powell warned that wage growth remains "well above the levels that would be consistent with 2% inflation over time"."We appear to be heading for a situation where inflation is slowing from its peak, but is not on track to hit the 2% target because of rapid wage growth," Haefele's team said. "We think this could eventually end up forcing the Fed to raise rates beyond the 5% terminal rate currently priced into markets.""However, we still expect the Fed to moderate the pace of hikes to 50 basis points at the Federal Open Market Committee meeting on 14 December," the strategists added.UBS's warning came after a stronger-than-expected jobs report weighed on stocks at the end of last week.The US added 263,000 jobs in November, exceeding economists' forecast for a gain of 200,000. That sparked a mixed finish to the week for equities, with the benchmark S&P 500 index sliding 0.12% Friday.Read more: The US jobs market keeps beating the odds, adding another 263,000 jobs in NovemberRead the original article on Business Insider.....»»

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Market Snapshot: U.S. stock futures dip as bond yields rise on China COVID hopes

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CNN Fear & Greed Index In "Greed" Zone After November Jobs Data

The CNN Money Fear and Greed index remained in the "Greed" zone following the release of nonfarm payrolls data. Labor data released Friday showed nonfarm payrolls increased by 263,000 in November, higher than market estimates of 200,000. read more.....»»

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Dow Jones Newswires: Turkey inflation eased in November for first time in more than a year

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Massachusetts employer confidence bounces back after 2 months of pessimism

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Alibaba Up 5%, Nio Surges 12%: Hang Seng Jumps As China Dials Down Zero-COVID Controls

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Stocks Have "Considerably More Downside" & Commodities Have A "Brand New Tailwind" In 2023

Stocks Have "Considerably More Downside" & Commodities Have A "Brand New Tailwind" In 2023 Submitted by QTR's Fringe Finance Friend of Fringe Finance Mark B. Spiegel of Stanphyl Capital released his most recent investor letter last week, with his updated take on the market’s valuation and Tesla. Mark is a recurring guest on my podcast (and will be coming back on again soon hopefully) and definitely one of Wall Street’s iconoclasts. I read every letter he publishes and only recently thought it would be a great idea to share them with my readers. Like many of my friends/guests, he’s the type of voice that gets little coverage in the mainstream media, which, in my opinion, makes him someone worth listening to twice as closely. Photo: Real Vision Mark was kind enough to allow me to share his thoughts from his November 2022 investor letter. Mark’s Thoughts On Macro Despite the stock market’s recent rally (we were up a hell of a lot more this month before today!) we  continue to carry a large SPY short position, as I believe the major indexes—although not all individual  stocks—have considerably more downside to go, the inevitable hangover from the biggest asset bubble in U.S. history. For far too long, the Fed printed $120 billion a month and held short-term rates at zero while the government concurrently ran a record fiscal deficit. Now, thanks to the massive inflationary  hangover from those idiotic policies (November’s “not as bad as feared” data not withstanding), the Fed is reducing its balance sheet and raising interest rates, and although the current rate of high-7% year over-year inflation is unsustainable, the eventual end of China’s “zero-Covid policy” and its November reversal on bailing out its real estate industry combined with the end of Biden’s SPR drawdowns will give commodity prices a brand new tailwind in 2023. Longer term, the war on fossil fuel, expensive “onshoring,” fewer available workers and perpetual government budget deficits make a new baseline of  around 4% inflation (double the Fed’s 2% target) likely.  Even a 2023 Fed interest rate “pause” at 4.75% (and remember, a “pause” is not a “pivot”!) would,  combined with $90 billion a month in ongoing QT, make current stock market valuations unsustainable,  as stocks are still expensive. [QTR’s note: This echos Kenny Polcari’s sentiments & my sentiments of recent.] According to Standard & Poor’s, with 97% of companies having reported, Q3 S&P 500 GAAP earnings came in at around $44.79, which annualizes to $179.16. (And these were the sixth  highest quarterly earnings in history; i.e., they were not “trough.”) A 16x multiple on that—generous for  a rising rate, recessionary (or even just slow-growth) environment—would bring the S&P 500 down to 2867 vs. November’s close of 4080.11. And remember, just as in bull markets, PE multiples usually overshoot to the upside, in bear markets they often overshoot to the downside. A bottom formed at a  considerably lower multiple is not unfathomable.  Additionally, we can see from CurrentMarketValuation.com that the U.S. stock market’s valuation as a  percentage of GDP (the so-called “Buffett Indicator”) is still very high, and thus valuations have a long way  to go before reaching “normalcy”: Regarding sentiment, we can see from Ed Yardeni that in the Investors Intelligence poll the highest the “bear percentage” got so far in the current market was only around 45% (in the most recent poll it was just 31.5%), yet there were multiple times during the 1980s, 1990s and 2008 that it climbed much higher:  Also, we can see from this old academic paper that during the grinding bear market of 1973 to 1975, when  the S&P 500’s GAAP PE multiple dropped from 18x to 8x, the bears in the Investors Intelligence poll climbed to around 75% and went over 80% during the bear markets of the 1960s. So if you think that based on this bear market’s sentiment we’ve “seen the bottom,” I wish you luck! Meanwhile, interest costs on the Federal debt are already set to grow massively. Does anyone seriously think this Fed has the stomach to face the political firestorm of Congress having to slash Medicare, the  defense budget, etc. in order to pay the even higher interest cost that would be created by upping those rates to a level commensurate with crushing even just 4% inflation? Powell doesn’t have the guts for that, nor does anyone else in Washington; thus, this Fed will likely be behind the inflation curve for at least a  decade. And that’s why we remain long gold (via the GLD ETF).  Mark On His Fund’s Positions (Positions May Change At Any Time) We continue to own automaker Stellantis (STLA), which has a great balance sheet with plenty of net cash (and a 7% dividend yield!) and which—at a current price of $15.62/share—sells for only around 3x 2022 earnings estimates of $5.26/share. I believe Jeep alone (which in September announced a full  electrification strategy) could be worth more than what we paid for the entire company, which also  includes Dodge, Chrysler, Ram, Fiat, Citroen, Peugeot, Opel, Alfa Romeo, Vauxhall, Lancia and Maserati. And if current EV sales are your interest, Stellantis already has Europe’s best-selling mass-market model.  We continue to own Volkswagen AG (via its VWAPY ADR, which represent “preference shares” that are  identical to “ordinary” shares except they lack voting rights and thus sell at a discount). VW currently sells  for around 4.2x estimated 2022 earnings due to a combination of “recession fears” and short-term issues obtaining energy (until either the Ukraine war is over or alternative supplies are in place), but it controls a massive number of terrific brands including Porsche, of which it recently IPO’d a small percentage at  a $73 billion valuation, thus valuing the rest of the company at only around $10 billion; I believe Audi  alone is worth 4x that! And a Lamborghini IPO may be next. Additionally, VW will pay a January special  dividend of around $1.90 per VWAPY share in proceeds from Porsche’s IPO, and the regular yield is  currently over 5%! Meanwhile VW Group’s EVs (several of which are more technologically advanced than  any Tesla) combine to heavily outsell Tesla in Europe and by 2025 may outsell Tesla worldwide. We continue to own General Motors (GM), which currently sells for only around 6.5x the $6.26/share  midpoint of its 2022 GAAP EPS guidance (which was reiterated in November). GM is doing all the right  things in electric cars, autonomous driving (via its Cruise ownership) and software, yet it’s cheap because,  as with other established automakers, many investors have (for now) forsaken it in favor of “electric car  pure-plays,” a sector which has thus become the largest valuation bubble in history. Get 50% off: If you enjoy this article, would like to support my work, I would love to have you as a subscriber and can offer you 50% off for life: Get 50% off forever And regarding  “autonomy,” keep in mind that unlike Tesla, which sells a LiDAR-less fraud to rubes, Cruise is already  running a fleet of fully autonomous cars in San Francisco (and soon Phoenix and Austin); you can see many  videos of this on its YouTube channel. GM will also benefit more than any other manufacturer from the  proposed new EV tax credit, as it will soon have the largest variety of North American-made (a requirement of the credit) EV models fitting within the new price restrictions. Additionally, in August the  company reinstituted a modest dividend. I thus consider these positions (Stellantis, GM and VW) to be both “freestanding value stock buys” and “relative-value paired trades” against our Tesla short.One oft heard knock against “the autos” is a belief  that their recent earnings have been “peak,” but keep in mind that due to supply chain issues they all  sold around 20% fewer cars than they otherwise could have. Thus, I believe those recent earnings are more like “strong midcycle” and should likely have around a 10x run-rate PE, not the current 3x to 6x. Also, thanks to those same supply chain issues they’re much lighter on inventory than they’d normally  be heading into a recession. Therefore, I believe these stocks have considerable upside from here.  We continue to own Fuel Tech Inc. (FTEK), a seller of air and water pollution control technologies, which in November reported a solid Q2, with revenue up 6.1% year-over-year (although at a lower gross margin),  .01/share in GAAP earnings and around $600,000 in free cash flow. At a current price of $1.24/share with  30.3 million shares outstanding and $33.9 million in cash and Treasuries (and no debt), this is a 43% gross  margin business selling for an enterprise value of only around 0.14x 26.4 million in TTM revenue. This is  the kind of company that will either ignite growth and its stock will take off (its new “Dissolved Gas  Infusion” water treatment technology is a potential medium-term catalyst for that), or it’s so cheap that  it will make for a good strategic acquisition target, as removing the costs of being an independent public  company could make it instantly earnings-accretive while allowing the buyer to acquire a nice chunk of  revenue very cheaply. In short, I think it’s a good “value stock” in which to park some money and see what  happens.  And now, Tesla…  Despite big, margin-slashing price cuts in both China and Europe, Tesla delivery wait times worldwide  have declined substantially, down to just one week in China while in the U.S. (where Musk’s Twitter boondoggle is rapidly destroying the brand) Tesla is choking on Model 3 inventory and offers December Model Y delivery, while Europe’s backlog is expected to be completely gone by year-end. This means Tesla’s production capacity now outstrips its rate of incoming orders despite the new German and Texas  factories producing at only around 10% of capacity!  Meanwhile, combined deliveries for the last two quarters (Q2 & Q3 2022) were lower than those for  the previous two quarters (Q4 2021 & Q1 2022). As Tesla slashes prices it will undoubtedly sell more  cars (I expect Q4 deliveries to be in the range of around 400,000 vs. previous quarters in the 300,000s,  thanks to the cuts plus a rush to beat year-end expiring EV incentives in China, Germany and France), but any other car company can slash prices and do the same thing. (Welcome to the auto business,  which currently sells for around 5x earnings!) Tesla’s apparent market saturation rate of around 1.6 million cars/year worldwide (at least until it slashes prices yet again!) is massively below its current factories’ production capacity, much less the bulls’ absurd expectations of adding a new factory every six months for the next ten years! For some valuation perspective, BMW sells around 2 million cars a year with very high margins  (including the best electric SUV now on the market (the new iX), the best luxury EV( the new i7), and  among the best small luxury EVs (the new i4), and has a market cap of around $59 billion. If Tesla grew annual deliveries to the size of BMW’s and had BMW-level margins, at BMW's current market cap it  would sell for less than $19/share vs. this month's closing price in the $194s! (Remember: Tesla now  has 3.16 billion shares outstanding!)  Meanwhile, Elon Musk remains the most vile person ever to head a large-cap U.S. public company, and  we remain short Tesla, the biggest bubble-stock in modern market history, because:  1) It has a sliding share of the world’s EV market and a share of the overall auto market that’s less than 2%, yet a market cap almost as big the next 6 largest automakers (by market cap) combined.  2) It has no “moat” of any kind; i.e., nothing meaningfully proprietary in terms of its electric  car technology (which has now been equaled or surpassed by numerous competitors) and its previously proprietary Superchargers are being opened to everyone), while existing  automakers—unlike Tesla—have a decades-long “experience moat” of knowing how to  mass-produce, distribute and service high-quality cars consistently and profitably.  3) Excluding working capital benefits and sunsetting emission credit sales Tesla generates only  minimal free cash flow.  4) Growth in sequential demand for Tesla’s cars is at a crawl relative to expectations. 5) Elon Musk is a pathological liar.  In October Tesla claimed that it had Q3 GAAP earnings of around .87/share excluding sunsetting emission  credit sales. If you believe that after viewing this chart (courtesy of Twitter user @Keubiko), I have a bridge to sell you in Brooklyn: Orange is revenue, green is operating expenses Furthermore, Tesla’s minimal depreciation of its new factories appears fraudulently low, as does its  warranty reserve.  Even if you believe Tesla’s clearly nonsensical earnings number, it annualizes to only $3.48/share, which  based on November’s closing price of $194.70 = a run-rate PE ratio of around 56 for a now slow-growing (or growing-but-margin-slashing) car company in an industry with a current average PE of around 5.  Meanwhile, Tesla has objectively lost its “product edge,” with many competing cars now offering comparable or better real-world range, better interiors, similar or faster charging speeds and much better quality. (Tesla ranks near the bottom of Consumer Reports’ reliability survey while British consumer  organization Which? found it to be one of the least reliable cars in existence.) Thus, due to competitors’ temporary production constraints, waiting times are now longer for many of Tesla’s direct EV competitors than they are for a Tesla.   In fact, Tesla is likely now the second, third or fourth choice for many EV buyers, and only maintains its  volume lead though a short-lived edge in production capacity that will disappear over the next 12 to 36 months as competitors rapidly increase the ability to produce their superior EVs. Tesla’s poorly-built  Model Y faces current (or imminent) competition from the much better made (and often just better)  electric Hyundai Ioniq 5, Kia EV6, Ford Mustang Mach E, Cadillac Lyriq, Nissan Ariya, Audi Q4 e-tron, BMW  iX3, Mercedes EQB, Volvo XC40 Recharge, Chevrolet Blazer EV & $30,000 Equinox EV and Polestar 3. And  Tesla’s Model 3 now has terrific direct “sedan competition” from Volvo’s beautiful Polestar 2, the great  new BMW i4, the upcoming Hyundai Ioniq 6 and Volkswagen Aero, and multiple local competitors in  China.  And in the high-end electric car segment worldwide the Porsche Taycan (the base model of which is now  considerably less expensive than Tesla’s Model S) outsells the Model S, while the spectacular new BMW  i7, Mercedes EQS, Audi e-Tron GT and Lucid Air make it look like a fast Yugo, and the extremely well  reviewed new BMW iX, Mercedes EQS SUV and Audi Q8 eTron (as well as multiple new Chinese models)  do the same to the Model X.  Indeed, for years I’ve said “Tesla is Blackberry”—the maker of a first-generation version of a product  that—once the market was proven—would be supplanted into niche obscurity by newer, better versions;  now I can provide a much more recent analogy: Tesla is Netflix. For years Netflix had an absurd valuation  based on its pioneering position in streaming media, but once it proved that such a market existed myriad  competitors swarmed all over it, and this year the stock collapsed when we learned that not only is Netflix  no longer in “hypergrowth” mode but for the first time since 2011 (when it transitioned from physical  DVDs) it actually lost subscribers. I believe Musk knows that Tesla is “the next Netflix” (hence his recent  “Twitter buying distraction”), with VW, Hyundai/Kia, Ford, GM, Stellantis, BMW, Mercedes, BYD & other  Chinese competitors and, in a few years, Toyota & Honda, being the Disney, HBO Max, Amazon Prime, Peacock, Hulu, Paramount +, etc., of the electric car market, stealing Tesla’s share and eventually  pounding its stock price down 90% or so from today’s, into the valuation of “just another car company.” Despite this obvious “writing on the wall,” many Tesla bulls sincerely believe that ten years from now the  company will be twice the size of Volkswagen or Toyota, thereby selling around 20 million cars a year (up  from the anticipated Q4 annualized run-rate of around 1.6 million); in fact in May Musk himself even  raised this as a possibility. Setting aside the absurdity of selling that many cars into the limited market of Tesla’s high price points, the “logistical absurdity” of selling 20 million cars/year in ten years means that  in addition to 2.4 million cars a year of sold-out existing claimed production capacity (once the German  and Texas factories are fully operational), Tesla would have to add 35 more brand new 500,000 car/year  factories with sold out production; i.e., a new factory approximately every single quarter for the next ten years! Only a Teslemming could be dumb enough to believe this!  Meanwhile, in June the NHTSA announced that its investigation of Tesla’s deadly Autopilot has  expanded into “an engineering analysis,” the last required step before (finally!) demanding a full recall,  and in October it was reported that this deadly scam is being investigated by both the SEC and the DOJ.  The refund liability potential for Tesla for this is in the billions of dollars, and possibly even the tens of  billions if a class action lawsuit proves that the cars involved were purchased solely due to the  (fallacious) promise of “full self-driving.” And, of course, there will be a massive “valuation reappraisal”  for Tesla’s stock as the world wakes up to the fact that Tesla’s so-called “autonomy technology” is deadly, trailing-edge garbage. In fact, the NHTSA has reported a slew of Autopilot-related deaths just  since last year. For all Tesla deaths cited in the media—which is likely only a small fraction of those that  have occurred—see TeslaDeaths.com. And Tesla has sold this trashy software for over six years now:  …and still promotes it on its website via a completely fraudulent video! Another favorite Tesla hype story has been built around so-called “proprietary battery technology.” In fact  though, Tesla has nothing proprietary there—it doesn’t make them, it buys them from Panasonic, CATL and LG, and it’s the biggest liar in the industry regarding the real-world range of its cars. And if new-format 4680 cells enter the market some time in 2024 (as is now expected), even if Tesla makes some of its own,  other manufacturers will gladly sell them to anyone, and BMW has already announced it will buy them  from CATL and EVE.  And oh, the joke of a “pickup truck” Tesla previewed in 2019 (and still hasn’t shown in production-ready  form) won’t be much of “growth engine” either, as by the time it’s in mass-production in 2024 it will enter  a dogfight of a market; in fact, Ford’s terrific 2022 all-electric F-150 Lightning now has over 200,000 retail  reservations (plus many more fleet reservations), GM has introduced its fantastic 2023 electric Silverado which already has nearly 200,000 reservations, Rivian’s pick-up has gotten excellent early reviews, and  Ram will also be out with a great truck in 2024. About Mark Spiegel Mark manages Stanphyl Capital, established in 2011, a deep-value equity & macro long-short investing fund based in New York City. Mark can be reached at mark@stanphylcap.com or at @StanphylCap on Twitter. Disclaimer: This letter was not reproduced in full. I may own Tesla call and put options and may be long/short TSLA and or any names mentioned. You should assume I have positions in any names I publish about. I have no position in Mark’s funds. Mark is a subscriber to Fringe Finance via a comped subscription I gave him and has been on my podcast. The excerpts from Mark’s letter, above, shall not be construed as an offer to sell, or the solicitation of an offer to sell, any securities or services. Any such offering may only be made at the time a qualified investor receives formal materials describing an offering plus related subscription documentation. There is no guarantee the Fund’s investment strategy will be successful. Investing involves risk, and an investment in the Fund could lose money. Tyler Durden Sun, 12/04/2022 - 15:40.....»»

Category: blogSource: zerohedge19 hr. 44 min. ago Related News

Here"s why the inverted yield curve isn"t as bad for the stock market as many fear, Leuthold Group"s Jim Paulsen says

Despite the inverted yield curve's notoriety as a recession bellwether, stocks still could perform better than some think, Leuthold's Jim Paulsen said. Photo by Spencer Platt/Getty Images Stocks could perform well despite an inverted yield curve, Leuthold's Jim Paulsen said. Paulsen noted that previous inversions saw a gain in the S&P 500 over the following years five out of nine times. The S&P 500 may also have already discounted future headwinds, making losses from here minimal. An inverted yield curve isn't as bad for the stock market as investors may fear, according to Leuthold Group's Jim Paulsen, who says stocks may actually have an "agreeable" performance in the coming years despite bond yields flashing warnings of an incoming recession. The spread between the 10-year Treasury yield and the 2-year Treasury yield is a notorious indicator of a pending downturn, with inversions predicting recessions in 1990, 2001, and 2008. The yield on the 2-year on Friday was around 4.31%, while the 10-year yield was 3.54%. The 3-10 Treasury spread, which Powell has said is his preferred recession indicator, has also been inverted. It has prompted some degree of panic on Wall Street this year, with many analysts telling investors to brace for a recession in 2023. Bank of America last week said that stocks could fall 24% as a recession ravages the economy next year, and top economist David Rosenberg said an inverted yield curve means stocks are "nowhere near a bottom," warning investors of more pain to come.But the potential downside may be overstated, Paulsen said in a note on Friday. He pointed to the last nine inversions on the 3-year and 10-year yields, noting that the average return on the S&P 500 in the years following an inversion were "surprisingly positive." The index typically rose 6% the year after an inversion, and 14% in the next year. Five out of nine times, the stock index posted gains in the following years."While yield-curve inversions have customarily unleashed havoc on the economy, job creation, and even profits, they are not nearly as bad for the stock market as commonly advertised," Paulsen said.Losses are especially minimal when the S&P 500 discounts future headwinds before the yield curve actually inverts, he added, such as in 2019, when the index was already down 20% before the 3-10 curve inverted. The index went on to perform well in the following years, before the shock of the pandemic.That could also be the case for this year's inversion, as the S&P 500 was already down 25% before the 3-10 spread inverted in October – suggesting the downside may not be as bad as expected. "Notwithstanding today's pervasive worries about a death sentence for stocks being prompted by the recent yield-curve inversion, history suggests any fallout will probably prove less damaging than presumed, and the S&P 500 could well surprise on the upside," he said.Read the original article on Business Insider.....»»

Category: smallbizSource: nytDec 4th, 2022Related News

Bill Ackman"s latest short is a "smart lottery ticket" bet against the Hong Kong dollar – here are 7 of his biggest trades

From making $2.6 billion during the pandemic to a failed long position in Netflix, here are the billionaire investor's biggest trades. Bill Ackman is shorting the Hong Kong dollar for his latest trade.Richard Drew/AP Billionaire investor Bill Ackman is shorting the Hong Kong dollar for his latest trade. It's a 'smart lottery ticket' bet that the currency's dollar peg will break as interest rates rise, veteran trader Boaz Weinstein said. From making $2.6 billion during the pandemic to a failed long position in Netflix, here are Ackman's biggest trades. Bill Ackman is betting against the Hong Kong dollar's peg against the greenback for his latest trade."We have a large notional short position against the Hong Kong dollar through the ownership of put options," the billionaire investor tweeted last week. "The peg no longer makes sense for Hong Kong and it is only a matter of time before it breaks."Hong Kong's currency has had its value fixed at between 7.75 and 7.85 per US dollar for nearly four decades, but the Federal Reserve's aggressive interest-rate increases this year have put pressure on that peg. Put options are derivative contracts that grant the holder the right to sell an asset at a predetermined price on a fixed date.Hong Kong's finance ministry maintains the peg to the dollar by matching the Federal Reserve's rate decisions. But Ackman says there's a growing case for it to abandon that strategy, as China grapples with a zero-COVID-fueled economic slowdown and a debt crisis in its property sector.Veteran trader Boaz Weinstein praised Ackman's latest short as a 200-to-1 'smart lottery ticket' – but others have said that it's unlikely his big bet against the Hong Kong dollar will pay off."I can see Ackman's point – Hong Kong's economy is suffering from slow growth at a time when the dollar is surging because of tightening monetary policy," SEB's chief emerging markets strategist Per Hammarlund told Insider. "But I really don't think the peg is going to break at this point."In his 30-year career at the helm of Gotham Partners and then Pershing Square Capital Management, Ackman has racked up some outsized wins – as well as some troubling losses.Here are seven of the billionaire investor's biggest trades.1. Wendy's, 2004Shortly after setting up Pershing in 2004, Ackman took a large stake in the fast-food chain Wendy's.The activist investor immediately started pressuring Wendy's to spin off its Tim Hortons coffeehouse business, which it did successfully in 2006 to raise around $670 million for its shareholders.Ackman exited his Wendy's position in 2009 for a substantial profit – although the business has seen its share price tumble in the years since the Tim Hortons spinoff.2. General Growth Properties, 2009One of Ackman's all-time greatest trades saw him rescue mall operator General Growth from collapse – and eventually sell his stake for $1.6 billion.The hedge fund manager spent $60 million to acquire General Growth shares in 2009 before persuading the struggling company to file for bankruptcy.Ackman then played a key role in the company's reorganization, selling back shares as its stock price soared until he finally exited his position in 2014.3. Herbalife, 2012Ackman called the dietary supplement firm Herbalife a pyramid scheme in 2012 – marking the start of a five-year effort to generate returns by shorting the stock.Ackman opened up a short position worth around $1 billion in Herbalife, betting it would eventually see its share price crash towards $0.But the short became one of Ackman's biggest-ever losses, as Herbalife's share price continued to rise until he eventually had to liquidate his position in 2017.4. Valeant Pharmaceuticals, 2014Pershing Square acquired 8.5% of Valeant for $180 a share in 2014, in what would become known as one of Ackman's most disastrous trades.The pharmaceuticals firm saw its share price plummet more than 90% over the next three years after facing multiple accusations of fraud and coming under investigation from the Securities and Exchange Commission.Pershing Square eventually closed its entire position in Valeant in March 2017, losing over $3 billion on the trade.5. COVID-19 response, 2020Ackman's fame shot to new heights in March 2020, when he made just $2.6 billion betting that the coronavirus pandemic would trigger a full economic shutdown in the US.Pershing Square spent $27 million buying credit protection on investment-grade and high-yield bond indexes – and then liquidated its position once the Federal Reserve started buying up corporate bonds to protect the economy.That helped the hedge fund to post a 7.9% gain in March 2020 – a month when the pandemic triggered a 17% crash in the S&P 500.6. Netflix, 2022Ackman announced a big bet on Netflix in late January – but exited that position just three months later for a $400 million loss.That sale came on a day the streaming company saw its share price plummet 35% in a single day after announcing massive subscriber losses."While Netflix's business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company's future prospects with a sufficient degree of certainty," Pershing Square said in an April letter to investors.7. Rising interest rates, 2022But Ackman bounced back from that loss with a big bet on Federal Reserve interest-rate hikes.He said in October that Pershing Square had made $2.7 billion by spending around $400 million on interest rate-related hedges as the US central bank stepped up its tightening campaign."We've had some very significant profits from hedges, a decent percentage of which we've realized," Ackman told Interactive Investor. "We've probably made $2.7 billion of profits."Read the original article on Business Insider.....»»

Category: smallbizSource: nytDec 4th, 2022Related News

Where Next For Nasdaq’s Volatility Rollercoaster?

It has been a wild ride lately for the Nasdaq, with Thanksgiving, Black Friday, China’s Covid-19 crisis, and Powell’s interest rate speech driving peaks and dips for the benchmark stock market. But where is it headed next? “It seems like there is a rollercoaster of volatility right now within the US stock market” comments CMC […] It has been a wild ride lately for the Nasdaq, with Thanksgiving, Black Friday, China’s Covid-19 crisis, and Powell’s interest rate speech driving peaks and dips for the benchmark stock market. But where is it headed next? “It seems like there is a rollercoaster of volatility right now within the US stock market” comments CMC Markets’ chief market analyst Michael Hewson, as we witness the Nasdaq exchange and its major constituents chopping between new intraday highs and lows on a daily basis. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Given that it’s fairly common to see the market rally in the lead up to Thanksgiving, we may have expected a surge in price for the Nasdaq 100 and Nasdaq Composite indices, but this wasn’t exactly the case. “On a short-term basis US markets are neither overbought nor oversold, but ping-ponging between the two. That’s what happens when you have two days down, one day up, and the market simply chops about”, financial analyst Helene Meisler told CMC Markets in an exclusive interview (find out more). Is Tech In Trouble? One concern for investors may be the tech-heavy Nasdaq 100, which is often affected by external factors like the US dollar, interest rate hikes and international conflict. Last week, Apple Inc (NASDAQ:AAPL) shares fell on concerns over the production of its iPhone 14, as unrest in China has impacted its supply chain. This unrest could see a shortfall of nearly 6 million iPhones, mainly due to the disruption being experienced at the Foxconn plant in Zhengzhou. Additionally, some global tech giants have recently announced the loss of thousands of jobs, with Amazon reporting 10,000 and Meta reporting 11,000 positions, sparking concern for the US economy. The Nasdaq registered 140 new stock highs in early November, and by mid-November, this number had dropped to 139. Although this drop may seem small, the Nasdaq was 750 points higher than it was at the start of the month, so “we should have seen this figure expanding, not contracting, as the index rose”, Meisler points out. Of course, there may be other reasons for this, such as slowing momentum due to the time of year. Bounce Back After Powell's Announcement Wednesday 30th November was an important date to note, when Federal Reserve Chair Jerome Powell gave a speech indicating that a slowdown in the pace of rate hikes might be appropriate. Powell commented “the time for moderating the pace of rate increases may come as soon as the December meeting”, although he warned that "history cautions strongly against prematurely loosening policy." Smaller rate hikes could be expected going forward but the rate of inflation is uncertain. This could be attributed to a combination of concerns over policy lags, an economic slowdown, and inflation that may already have peaked. Upon the announcement, all major US benchmark indices showed signs of a bullish breakout, with the Nasdaq Composite surging 4.4% to 11,468. Tech giants listed on the Nasdaq like Netflix (NASDAQ:NFLX), Nvidia (NASDAQ:NVDA) and Meta Platforms (NASDAQ:META) jumped 8.2%, 8.7% and 8%, respectively. So, in which direction is the Nasdaq headed next? If the rate hikes do indeed slow down as promised, it’s possible that this stock rally will continue. “My estimation is that the market is slightly overbought on an intermediate-term basis, but could become fully overbought in early December,” predicts Meisler, suggesting that the Nasdaq’s volatility rollercoaster could continue into the New Year......»»

Category: blogSource: valuewalkDec 4th, 2022Related News

Can ZIM Defy Broad Downturn In The Container Shipping Industry?

ZIM Integrated Shipping Services is an example of what’s befallen the shipping industry:  Shares are down 33.58% in the past three months and down 17.48% year-to-date. The shipping industry as a whole is in a slump, largely due to continued lockdowns in China. Despite continued price declines, analysts have a rating of “hold” on ZIM. […] ZIM Integrated Shipping Services is an example of what’s befallen the shipping industry:  Shares are down 33.58% in the past three months and down 17.48% year-to-date. The shipping industry as a whole is in a slump, largely due to continued lockdowns in China. Despite continued price declines, analysts have a rating of “hold” on ZIM. ZIM Integrated Shipping Services (NYSE:ZIM) offers an example of what’s befallen the once red-hot shipping industry in the past six months. The Israel-based company’s stock is down 33.58% in the past three months and down 17.48% year-to-date. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. Its wider industry has suffered a similar fate. Six months ago the shipping industry as a whole was among the leaders in the broader market. ZIM, along with peers such as Eagle Bulk Shipping (NASDAQ:EGLE) and Star Bulk Carriers (NASDAQ:SBLK) rallied to new highs in the middle of this year, then began rolling over.  Besides a few low-priced stocks with little trading volume, ZIM is the worst price performer within the shipping industry in the past 12 months.  So what went wrong?  As you might imagine, a large percentage of the industry’s fate is tied to China, where many products are manufactured and shipped around the world. Key to the tanker industry’s rebound is the full reopening of China, or at least an easing of restrictions. While that’s been anticipated for quite some time, it’s yet to happen on a large scale.  Recent lockdowns in some cities have only exacerbated worries, although the Chinese government has made statements to the effect that it may be backing off some of its most draconian restrictions.  ZIM specializes in international container shipping for a range of industries. It operates a fleet of over 100 vehicles, most of which are chartered. ZIM has been around for nearly 70 years, and went public in 2021, just in time for a big rally as the markets trended higher and economies opened up.  Container Rates Plummeting One factor affecting ZIM: Spot rates for container shipping are decreasing.  The Drewry global composite index tracks bi-weekly ocean freight rate shipments of 40-foot containers in seven of the most significant maritime lanes. On Thursday, it dropped to $2,284, down 5% from the prior reading two weeks earlier.  The index has steadily declined all year. In January, it stood at $9,698. That’s a year-to-date industrywide decline of 76%.  When it comes to ZIM specifically, many investors get excited about the 131% dividend yield. The company pays out 30% of net income to shareholders as dividends. The stock has a Return on Equity of 191%, something you don’t see very often.  ZIM is clearly a stock with some mixed attributes. While the commitment to a 30% shareholder payout is attractive, the stock’s decline is less so. While the freefall may have been stemmed, at least for the moment, it’s generally not the best investing strategy to opt for dividend yield over price action. In other words, if a stock continues declining, or can’t muster up the strength for a rally, it’s probably best to avoid incurring the opportunity cost of that particular stock.  Is A Big Rally Possible? MarketBeat analyst data for ZIM show a consensus rating of “hold” on the stock, with a price target of $35.36, representing a 76% upside.  Is that kind of price gain likely in the next 12 to 18 months? Sure, anything is possible, but a lot of things would have to go right. Those include an easing of Covid restrictions in China, inflation cooling off, and recessionary fears receding.  ZIM’s earnings grew 795% in 2021. Analysts expect that to reverse this year, with a 2% decline to $38.01 per share. Next year, that’s seen declining by a whopping 88%, to $4.44 per share, pretty much back to 2020’s earnings.  It should come as no surprise that revenue has been slowing in the past four quarters, given the challenges facing ZIM and its entire industry. Eventually, ZIM and its industry peers will reverse their declines. But that day has not arrived. Until it does, it’s probably wise to focus on industries and stocks already showing clear upside momentum.  Should you invest $1,000 in ZIM Integrated Shipping Services right now? Before you consider ZIM Integrated Shipping Services, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and ZIM Integrated Shipping Services wasn't on the list. While ZIM Integrated Shipping Services currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. Article by Kate Stalter, MarketBeat.....»»

Category: blogSource: valuewalkDec 4th, 2022Related News

America"s Insolvency Is Mandatory

America's Insolvency Is Mandatory Authored by Brian McGlinchey via Stark Realities In October, the U.S. national debt reached $31 trillion, and the government is projected to wade another trillion dollars into the red in the 2023 fiscal year. The longer-term picture is even gloomier, with the deficit expected to double to $2 trillion by 2030. Indeed, the longer the horizon, the worse things get. At 98% of Gross Domestic Product, the current national debt is the highest it’s been since just after World War II. On its current course, the debt will soar to 185% of the country’s entire economic output by 2052. What’s particularly troubling is that the government’s 2022 $1.3 trillion-dollar deficit came at a time of near-record tax intake. At 19.8% of GDP, Uncle Sam’s 2022 tax haul was close to the all-time high of 20.5% set in 1944. Washington doesn’t have a revenue problem — it has a spending problem. What few people realize, however, is the extent to which the U.S. government’s disastrous trajectory is on autopilot, thanks to the fact that an ever-larger proportion of federal spending happens without Congressional action. To understand why, it’s important to first understand that there are two main categories of government spending: Discretionary spending, which requires a vote by Congress as part of the annual appropriations process. Mandatory spending, which is dictated by previously-enacted laws and thus happens without an annual vote in Congress. Social Security, Medicare and Medicaid comprise a big majority of mandatory spending. Here’s where things have taken an ominous turn. In 1965, mandatory spending accounted for 34% of all federal spending. Today, that share has more than doubled, with mandatory spending representing 71% of federal outlays. With overall spending higher too, mandatory spending is much larger slice of a larger pie. Via Spending, Taxes & Deficits: A Book of Charts by the Manhattan Institute’s Brian Riedl As much as it’s right to spotlight wasteful discretionary spending — like a $2.4 million National Science Foundation grant to promote dinosaur enthusiasm or $11.3 million to tell Vietnamese people to stop burning trash — the truth is that the annual budgeting process offers federal legislators a shrinking opportunity to make meaningful fiscal course corrections. While mandatory spending can be adjusted by passing new laws, there’s a big problem with that: Meaningfully changing the trajectory of mandatory spending requires meaningful adjustments to Social Security and Medicare. The mere idea arouses indignation among those who’ve been paying taxes into those programs for all their working lives. That’s understandable, since the government fosters the myth that Americans have Social Security and Medicare “accounts.” However, the truth is that these programs increasingly operate not as savings accounts or insurance plans, but rather as schemes that redistribute money from current workers to retirees. Social Security already dishes out far more in benefits than it takes in via payroll taxes, and Medicare crosses into an annual deficit this fiscal year. While former Democratic Speaker Tip O’Neill rightly called Social Security the “third rail” of American politics, some Republicans have recently dared to propose touching both it and Medicare. The Republican Study Committee — a group of House reps — in June of this year floated a budget that suggested: Gradually raising Medicare’s eligibility age to 67 and Social Security’s to 70, and then index both to life expectancy Withholding payments from those who retire early and earn more than a certain amount Reducing Social Security payroll taxes and redirecting them to private alternatives Phasing in means-testing for Medicare Sen. Ron Johnson (R-WI) has proposed moving Social Security and Medicare from the mandatory spending category to the discretionary one, so that Congress is compelled to actively monitor and manage the programs — rather than contentedly looking the other way as their mandatory nature digs them deeper into a hole. As the GOP went out on a political limb, Democrats naturally grabbed their saws. Henry Connelly, a spokesman for Speaker Nancy Pelosi, said “House Republicans are openly threatening to cause an economic catastrophe in order to realize their obsession with slashing Medicare and Social Security.” The “catastrophe” comment refers to the notion that Republicans may make reform of the programs a condition for raising the federal debt ceiling yet again. Republicans’ aspirations to reform Social Security and Medicare gave Democrats powerful midterm-election ammunition — with Democrats and allies pushing attack ads portraying the GOP as ruthlessly bent on shrinking the programs, apparently just for the sake of doing so. President Biden pushed the theme hard down the campaign stretch: “They’re coming after your Social Security and Medicare in a big way,” he warned in stump speeches with congressional candidates. Without action, however, time is coming for Social Security and Medicare in a big way. Social Security’s trust fund is projected to run out around around 2035. Absent congressional intervention, that will trigger a 20% cut for everyone receiving benefits when the well runs dry. Medicare’s trust fund is projected to vanish in just six years, with less clarity on how shrinking resources will be apportioned. As close as those two grim milestones are, to politicians of both parties whose principal aim is re-election, they’re critically still more than one election cycle away. Given that, don’t expect any fruitful action on Social Security or Medicare anytime soon. You can, however, expect that anyone who attempts to tailor the programs to economic reality will be accused of cruel intentions— by disingenuous politicians who portray their own irresponsible inaction as the height of benevolence. Stark Realities undermines official narratives, demolishes conventional wisdom and exposes fundamental myths across the political spectrum. Read more and subscribe at starkrealities.substack.com Stark Realities with Brian McGlinchey: Invigoratingly unorthodox perspectives for intellectually honest readers  Tyler Durden Sat, 12/03/2022 - 12:30.....»»

Category: blogSource: zerohedgeDec 3rd, 2022Related News