Advertisements



Bitcoin"s biggest corporate investors whipsawed amid volatility

Bitcoin’s corporate holders, such as Tesla, Square and Microstrategy, may be in for the long haul despite the sharp downturn hitting cryptos......»»

Category: topSource: foxnewsMay 24th, 2021

Futures Bounce On Evergrande Reprieve With Fed Looming

Futures Bounce On Evergrande Reprieve With Fed Looming Despite today's looming hawkish FOMC meeting in which Powell is widely expected to unveil that tapering is set to begin as soon as November and where the Fed's dot plot may signal one rate hike in 2022, futures climbed as investor concerns over China's Evergrande eased after the property developer negotiated a domestic bond payment deal. Commodities rallied while the dollar was steady. Contracts on the S&P 500 and Nasdaq 100 flipped from losses to gains as China’s central bank boosted liquidity when it injected a gross 120BN in yuan, the most since January... ... and investors mulled a vaguely-worded statement from the troubled developer about an interest payment.  S&P 500 E-minis were up 23.0 points, or 0.53%, at 7:30 a.m. ET. Dow E-minis were up 199 points, or 0.60%, and Nasdaq 100 E-minis were up 44.00 points, or 0.29%. Among individual stocks, Fedex fell 5.8% after the delivery company cut its profit outlook on higher costs and stalled growth in shipments. Morgan Stanley says it sees the company’s 1Q issues getting “tougher from here.” Commodity-linked oil and metal stocks led gains in premarket trade, while a slight rise in Treasury yields supported major banks. However, most sectors were nursing steep losses in recent sessions. Here are some of the biggest U.S. movers: Adobe (ADBE US) down 3.1% after 3Q update disappointed the high expectations of investors, though the broader picture still looks solid, Morgan Stanley said in a note Freeport McMoRan (FCX US), Cleveland- Cliffs (CLF US), Alcoa (AA US) and U.S. Steel (X US) up 2%-3% premarket, following the path of global peers as iron ore prices in China rallied Aethlon Medical (AEMD US) and Exela Technologies (XELAU US) advance along with other retail traders’ favorites in the U.S. premarket session. Aethlon jumps 21%; Exela up 8.3% Other so-called meme stocks also rise: ContextLogic +1%; Clover Health +0.9%; Naked Brand +0.9%; AMC +0.5% ReWalk Robotics slumps 18% in U.S. premarket trading, a day after nearly doubling in value Stitch Fix (SFIX US) rises 15.7% in light volume after the personal styling company’s 4Q profit and sales blew past analysts’ expectations Hyatt Hotels (H US) seen opening lower after the company launches a seven-million-share stock offering Summit Therapeutics (SMMT US) shares fell as much as 17% in Tuesday extended trading after it said the FDA doesn’t agree with the change to the primary endpoint that has been implemented in the ongoing Phase III Ri-CoDIFy studies when combining the studies Marin Software (MRIN US) surged more than 75% Tuesday postmarket after signing a new revenue-sharing agreement with Google to develop its enterprise technology platforms and software products The S&P 500 had fallen for 10 of the past 12 sessions since hitting a record high, as fears of an Evergrande default exacerbated seasonally weak trends and saw investors pull out of stocks trading at lofty valuations. The Nasdaq fell the least among its peers in recent sessions, as investors pivoted back into big technology names that had proven resilient through the pandemic. Focus now turns to the Fed's decision, due at 2 p.m. ET where officials are expected to signal a start to scaling down monthly bond purchases (see our preview here).  The Fed meeting comes after a period of market volatility stoked by Evergrande’s woes. China’s wider property-sector curbs are also feeding into concerns about a slowdown in the economic recovery from the pandemic. “Chair Jerome Powell could hint at the tapering approaching shortly,” said Sébastien Barbé, a strategist at Credit Agricole CIB. “However, given the current uncertainty factors (China property market, Covid, pace of global slowdown), the Fed should remain cautious when it comes to withdrawing liquidity support.” Meanwhile, confirming what Ray Dalio said that the taper will just bring more QE, Governing Council member Madis Muller said the  European Central Bank may boost its regular asset purchases once the pandemic-era emergency stimulus comes to an end. “Dovish signals could unwind some of the greenback’s gains while offering relief to stock markets,” Han Tan, chief market analyst at Exinity Group, wrote in emailed comments. A “hawkish shift would jolt markets, potentially pushing Treasury yields and the dollar past the upper bound of recent ranges, while gold and equities would sell off hunting down the next levels of support.” China avoided a major selloff as trading resumed following a holiday, after the country’s central bank boosted its injection of short-term cash into the financial system. MSCI’s Asia-Pacific index declined for a third day, dragged lower by Japan. Stocks were also higher in Europe. Basic resources - which bounced from a seven month low - and energy were among the leading gainers in the Stoxx Europe 600 index as commodity prices steadied after Beijing moved to contain fears of a spiraling debt crisis. Entain Plc rose more than 7%, extending Tuesday’s gain as it confirmed it received a takeover proposal from DraftKings Inc. Peer Flutter Entertainment Plc climbed after settling a legal dispute.  Here are some of the biggest European movers today: Entain shares jump as much as 11% after DraftKings Inc. offered to acquire the U.K. gambling company for about $22.4 billion. Vivendi rises as much as 3.1% in Paris, after Tuesday’s spinoff of Universal Music Group. Legrand climbs as much as 2.1% after Exane BNP Paribas upgrades to outperform and raises PT to a Street-high of EU135. Orpea shares falls as much as 2.9%, after delivering 1H results that Jefferies (buy) says were a “touch” below consensus. Bechtle slides as much as 5.1% after Metzler downgrades to hold from buy, saying persistent supply chain problems seem to be weighing on growth. Sopra Steria drops as much as 4.1% after Stifel initiates coverage with a sell, citing caution on company’s M&A strategy Despite the Evergrande announcement, Asian stocks headed for their longest losing streak in more than a month amid continued China-related concerns, with traders also eying policy decisions from major central banks. The MSCI Asia Pacific Index dropped as much as 0.7% in its third day of declines, with TSMC and Keyence the biggest drags. China’s CSI 300 tumbled as much as 1.9% as the local market reopened following a two-day holiday. However, the gauge came off lows after an Evergrande unit said it will make a bond interest payment and as China’s central bank boosted liquidity.  Taiwan’s equity benchmark led losses in Asia on Wednesday, dragged by TSMC after a two-day holiday, while markets in Hong Kong and South Korea were closed. Key stock gauges in Australia, Indonesia and Vietnam rose “A liquidity injection from the People’s Bank of China accompanied the Evergrande announcement, which only served to bolster sentiment further,” according to DailyFX’s Thomas Westwater and Daniel Dubrovsky. “For now, it appears that market-wide contagion risk linked to a potential Evergrande collapse is off the table.” Japanese equities fell for a second day amid global concern over China’s real-estate sector, as the Bank of Japan held its key stimulus tools in place while flagging pressures on the economy. Electronics makers were the biggest drag on the Topix, which declined 1%. Daikin and Fanuc were the largest contributors to a 0.7% loss in the Nikkei 225. The BOJ had been expected to maintain its policy levers ahead of next week’s key ruling party election. Traders are keenly awaiting the Federal Reserve’s decision due later for clues on the U.S. central banks plan for tapering stimulus. “Markets for some time have been convinced that the BOJ has reached the end of the line on normalization and will remain in a holding pattern on policy until at least April 2023 when Governor Kuroda is scheduled to leave,” UOB economist Alvin Liew wrote in a note. “Attention for the BOJ will now likely shift to dealing with the long-term climate change issues.” In the despotic lockdown regime that is Australia, the S&P/ASX 200 index rose 0.3% to close at 7,296.90, reversing an early decline in a rally led by mining and energy stocks. Banks closed lower for the fourth day in a row. Champion Iron was among the top performers after it was upgraded at Citi. IAG was among the worst performers after an earthquake caused damage to buildings in Melbourne. In New Zealand, the S&P/NZX 50 index rose 0.3% to 13,215.80 In FX, commodity currencies rallied as concerns about China Evergrande Group’s debt troubles eased as China’s central bank boosted liquidity and investors reviewed a statement from the troubled developer about an interest payment. Overnight implied volatility on the pound climbed to the highest since March ahead of Bank of England’s meeting on Thursday. The British pound weakened after Business Secretary Kwasi Kwarteng warnedthat people should prepare for longer-term high energy prices amid a natural-gas shortage that sent power costs soaring. Several U.K. power firms have stopped taking in new clients as small energy suppliers struggle to meet their previous commitments to sell supplies at lower prices. Overnight volatility in the euro rises above 10% for the first time since July ahead of the Federal Reserve’s monetary policy decision announcement. The Aussie jumped as much as 0.5% as iron-ore prices rebounded. Spot surged through option-related selling at 0.7240 before topping out near 0.7265 strikes expiring Wednesday, according to Asia- based FX traders.  Elsewhere, the yen weakened and commodity-linked currencies such as the Australian dollar pushed higher. In rates, the dollar weakened against most of its Group-of-10 peers. Treasury futures were under modest pressure in early U.S. trading, leaving yields cheaper by ~1.5bp from belly to long-end of the curve. The 10-year yield was at ~1.336% steepening the 2s10s curve by ~1bp as the front-end was little changed. Improved risk appetite weighed; with stock futures have recovering much of Tuesday’s losses as Evergrande concerns subside. Focal point for Wednesday’s session is FOMC rate decision at 2pm ET.   FOMC is expected to suggest it will start scaling back asset purchases later this year, while its quarterly summary of economic projections reveals policy makers’ expectations for the fed funds target in coming years in the dot-plot update; eurodollar positions have emerged recently that anticipate a hawkish shift Bitcoin dropped briefly below $40,000 for the first time since August amid rising criticism from regulators, before rallying as the mood in global markets improved. In commodities, Iron ore halted its collapse and metals steadied. Oil advanced for a second day. Bitcoin slid below $40,000 for the first time since early August before rebounding back above $42,000.   To the day ahead now, and the main highlight will be the aforementioned Federal Reserve decision and Chair Powell’s subsequent press conference. Otherwise on the data side, we’ll get US existing home sales for August, and the European Commission’s advance consumer confidence reading for the Euro Area in September. Market Snapshot S&P 500 futures up 0.4% to 4,362.25 STOXX Europe 600 up 0.5% to 461.19 MXAP down 0.7% to 199.29 MXAPJ down 0.4% to 638.39 Nikkei down 0.7% to 29,639.40 Topix down 1.0% to 2,043.55 Hang Seng Index up 0.5% to 24,221.54 Shanghai Composite up 0.4% to 3,628.49 Sensex little changed at 59,046.84 Australia S&P/ASX 200 up 0.3% to 7,296.94 Kospi up 0.3% to 3,140.51 Brent Futures up 1.5% to $75.47/bbl Gold spot up 0.0% to $1,775.15 U.S. Dollar Index little changed at 93.26 German 10Y yield rose 0.6 bps to -0.319% Euro little changed at $1.1725 Top Overnight News from Bloomberg What would it take to knock the U.S. recovery off course and send Federal Reserve policy makers back to the drawing board? Not much — and there are plenty of candidates to deliver the blow The European Central Bank will discuss boosting its regular asset purchases once the pandemic-era emergency stimulus comes to an end, but any such increase is uncertain, Governing Council member Madis Muller said Investors seeking hints about how Beijing plans to deal with China Evergrande Group’s debt crisis are training their cross hairs on the central bank’s liquidity management A quick look at global markets courtesy of Newsquawk Asian equity markets traded mixed as caution lingered ahead of upcoming risk events including the FOMC, with participants also digesting the latest Evergrande developments and China’s return to the market from the Mid-Autumn Festival. ASX 200 (+0.3%) was positive with the index led higher by the energy sector after a rebound in oil prices and as tech also outperformed, but with gains capped by weakness in the largest-weighted financials sector including Westpac which was forced to scrap the sale of its Pacific businesses after failing to secure regulatory approval. Nikkei 225 (-0.7%) was subdued amid the lack of fireworks from the BoJ announcement to keep policy settings unchanged and ahead of the upcoming holiday closure with the index only briefly supported by favourable currency outflows. Shanghai Comp. (+0.4%) was initially pressured on return from the long-weekend and with Hong Kong markets closed, but pared losses with risk appetite supported by news that Evergrande’s main unit Hengda Real Estate will make coupon payments due tomorrow, although other sources noted this is referring to the onshore bond payments valued around USD 36mln and that there was no mention of the offshore bond payments valued at USD 83.5mln which are also due tomorrow. Meanwhile, the PBoC facilitated liquidity through a CNY 120bln injection and provided no surprises in keeping its 1-year and 5-year Loan Prime Rates unchanged for the 17th consecutive month at 3.85% and 4.65%, respectively. Finally, 10yr JGBs were flat amid the absence of any major surprises from the BoJ policy announcement and following the choppy trade in T-notes which were briefly pressured in a knee-jerk reaction to the news that Evergrande’s unit will satisfy its coupon obligations tomorrow, but then faded most of the losses as cautiousness prevailed. Top Asian News Gold Steady as Traders Await Outcome of Fed Policy Meeting Evergrande Filing on Yuan Bond Interest Leaves Analysts Guessing Singapore Category E COE Price Rises to Highest Since April 2014 Asian Stocks Fall for Third Day as Focus Turns to Central Banks European equities (Stoxx 600 +0.5%) trade on a firmer footing in the wake of an encouraging APAC handover. Focus overnight was on the return of Chinese participants from the Mid-Autumn Festival and news that Evergrande’s main unit, Hengda Real Estate will make coupon payments due tomorrow; however, we await indication as to whether they will meet Thursday’s offshore payment deadline as well. Furthermore, the PBoC facilitated liquidity through a CNY 120bln injection whilst keeping its 1-year and 5-year Loan Prime Rates unchanged (as expected). Note, despite gaining yesterday and today, thus far, the Stoxx 600 is still lower to the tune of 0.7% on the week. Stateside, futures are also trading on a firmer footing ahead of today’s FOMC policy announcement, at which, market participants will be eyeing any clues for when the taper will begin and digesting the latest dot plot forecasts. Furthermore, the US House voted to pass the bill to fund the government through to December 3rd and suspend the debt limit to end-2022, although this will likely be blocked by Senate Republicans. Back to Europe, sectors are mostly firmer with outperformance in Basic Resources and Oil & Gas amid upside in the metals and energy complex. Elsewhere, Travel & Leisure is faring well amid further upside in Entain (+6.1%) with the Co. noting it rejected an earlier approach from DraftKings at GBP 25/shr with the new offer standing at GBP 28/shr. Additionally for the sector, Flutter Entertainment (+4.1%) are trading higher after settling the legal dispute between the Co. and Commonwealth of Kentucky. Elsewhere, in terms of deal flow, Iliad announced that it is to acquire UPC Poland for around USD 1.8bln. Top European News Energy Cost Spike Gets on EU Ministers’ Green Deal Agenda Travel Startup HomeToGo Gains in Frankfurt Debut After SPAC Deal London Stock Exchange to Shut Down CurveGlobal Exchange EU Banks Expected to Add Capital for Climate Risk, EBA Says In FX, trade remains volatile as this week’s deluge of global Central Bank policy meetings continues to unfold amidst fluctuations in broad risk sentiment from relatively pronounced aversion at various stages to a measured and cautious pick-up in appetite more recently. Hence, the tide is currently turning in favour of activity, cyclical and commodity currencies, albeit tentatively in the run up to the Fed, with the Kiwi and Aussie trying to regroup on the 0.7000 handle and 0.7350 axis against their US counterpart, and the latter also striving to shrug off negative domestic impulses like a further decline below zero in Westpac’s leading index and an earthquake near Melbourne. Next up for Nzd/Usd and Aud/Usd, beyond the FOMC, trade data and preliminary PMIs respectively. DXY/CHF/EUR/CAD - Notwithstanding the overall improvement in market tone noted above, or another major change in mood and direction, the Dollar index appears to have found a base just ahead of 93.000 and ceiling a similar distance away from 93.500, as it meanders inside those extremes awaiting US existing home sales that are scheduled for release before the main Fed events (policy statement, SEP and post-meeting press conference from chair Powell). Indeed, the Franc, Euro and Loonie have all recoiled into tighter bands vs the Greenback, between 0.9250-26, 1.1739-17 and 1.2831-1.2770, but with the former still retaining an underlying bid more evident in the Eur/Chf cross that is consolidating under 1.0850 and will undoubtedly be acknowledged by the SNB tomorrow. Meanwhile, Eur/Usd has hardly reacted to latest ECB commentary from Muller underpinning that the APP is likely to be boosted once the PEPP envelope is closed, though Usd/Cad is eyeing a firm rebound in oil prices in conjunction with hefty option expiry interest at the 1.2750 strike (1.8 bn) that may prevent the headline pair from revisiting w-t-d lows not far beneath the half round number. GBP/JPY - The major laggards, as Sterling slips slightly further beneath 1.3650 against the Buck to a fresh weekly low and Eur/Gbp rebounds from circa 0.8574 to top 0.8600 on FOMC day and T-1 to super BoE Thursday. Elsewhere, the Yen has lost momentum after peaking around 109.12 and still not garnering sufficient impetus to test 109.00 via an unchanged BoJ in terms of all policy settings and guidance, as Governor Kuroda trotted out the no hesitation to loosen the reins if required line for the umpteenth time. However, Usd/Jpy is holding around 109.61 and some distance from 1.1 bn option expiries rolling off between 109.85-110.00 at the NY cut. SCANDI/EM - Brent’s revival to Usd 75.50+/brl from sub-Usd 73.50 only yesterday has given the Nok another fillip pending confirmation of a Norges Bank hike tomorrow, while the Zar has regained some poise with the aid of firmer than forecast SA headline and core CPI alongside a degree of retracement following Wednesday’s breakdown of talks on a pay deal for engineering workers that prompted the union to call a strike from early October. Similarly, the Cnh and Cny by default have regrouped amidst reports that the CCP is finalising details to restructure Evergrande into 3 separate entities under a plan that will see the Chinese Government take control. In commodities, WTI and Brent are firmer this morning though once again fresh newsflow for the complex has been relatively slim and largely consisting of gas-related commentary; as such, the benchmarks are taking their cue from the broader risk tone (see equity section). The improvement in sentiment today has brought WTI and Brent back in proximity to being unchanged on the week so far as a whole; however, the complex will be dictated directly by the EIA weekly inventory first and then indirectly, but perhaps more pertinently, by today’s FOMC. On the weekly inventories, last nights private release was a larger than expected draw for the headline and distillate components, though the Cushing draw was beneath expectations; for today, consensus is a headline draw pf 2.44mln. Moving to metals where the return of China has seen a resurgence for base metals with LME copper posting upside of nearly 3.0%, for instance. Albeit there is no fresh newsflow for the complex as such, so it remains to be seen how lasting this resurgence will be. Finally, spot gold and silver are firmer but with the magnitude once again favouring silver over the yellow metal. US Event Calendar 10am: Aug. Existing Home Sales MoM, est. -1.7%, prior 2.0% 2pm: Sept. FOMC Rate Decision (Lower Boun, est. 0%, prior 0% DB's Jim Reid concludes the overnight wrap All eyes firmly on China this morning as it reopens following a 2-day holiday. As expected the indices there have opened lower but the scale of the declines are being softened by the PBoC increasing its short term cash injections into the economy. They’ve added a net CNY 90bn into the system. On Evergrande, we’ve also seen some positive headlines as the property developers’ main unit Hengda Real Estate Group has said that it will make coupon payment for an onshore bond tomorrow. However, the exchange filing said that the interest payment “has been resolved via negotiations with bondholders off the clearing house”. This is all a bit vague and doesn’t mention the dollar bond at this stage. Meanwhile, Bloomberg has reported that Chinese authorities have begun to lay the groundwork for a potential restructuring that could be one of the country’s biggest, assembling accounting and legal experts to examine the finances of the group. All this follows news from Bloomberg yesterday that Evergrande missed interest payments that had been due on Monday to at least two banks. In terms of markets the CSI (-1.11%), Shanghai Comp (-0.29%) and Shenzhen Comp (-0.53%) are all lower but have pared back deeper losses from the open. We did a flash poll in the CoTD yesterday (link here) and after over 700 responses in a couple of hours we found only 8% who we thought Evergrande would still be impacting financial markets significantly in a month’s time. 24% thought it would be slightly impacting. The other 68% thought limited or no impact. So the world is relatively relaxed about contagion risk for now. The bigger risk might be the knock on impact of weaker Chinese growth. So that’s one to watch even if you’re sanguine on the systemic threat. Craig Nicol in my credit team did a good note yesterday (link here) looking at the contagion risk to the broader HY market. I thought he summed it up nicely as to why we all need to care one way or another in saying that “Evergrande is the largest corporate, in the largest sector, of the second largest economy in the world”. For context AT&T is the largest corporate borrower in the US market and VW the largest in Europe. Turning back to other Asian markets now and the Nikkei (-0.65%) is down but the Hang Seng (+0.51%) and Asx (+0.58%) are up. South Korean markets continue to remain closed for a holiday. Elsewhere, yields on 10y USTs are trading flattish while futures on the S&P 500 are up +0.10% and those on the Stoxx 50 are up +0.21%. Crude oil prices are also up c.+1% this morning. In other news, the Bank of Japan policy announcement overnight was a non-event as the central bank maintained its yield curve target while keeping the policy rate and asset purchases plan unchanged. The central bank also unveiled more details of its green lending program and said that it would immediately start accepting applications and would begin making the loans in December. The relatively calm Asian session follows a stabilisation in markets yesterday following their rout on Monday as investors looked forward to the outcome of the Fed’s meeting later today. That said, it was hardly a resounding performance, with the S&P 500 unable to hold on to its intraday gains and ending just worse than unchanged after the -1.70% decline the previous day as investors remained vigilant as to the array of risks that continue to pile up on the horizon. One of these is in US politics and legislators seem no closer to resolving the various issues surrounding a potential government shutdown at the end of the month, along with a potential debt ceiling crisis in October, which is another flashing alert on the dashboard for investors that’s further contributing to weaker sentiment right now. Looking ahead now, today’s main highlight will be the latest Federal Reserve decision along with Chair Powell’s subsequent press conference, with the policy decision out at 19:00 London time. Markets have been on edge for any clues about when the Fed might begin to taper asset purchases, but concern about tapering actually being announced at this meeting has dissipated over recent weeks, particularly after the most recent nonfarm payrolls in August came in at just +235k, and the monthly CPI print also came in beneath consensus expectations for the first time since November. In terms of what to expect, our US economists write in their preview (link here) that they see the statement adopting Chair Powell’s language that a reduction in the pace of asset purchases is appropriate “this year”, so long as the economy remains on track. They see Powell maintaining optionality about the exact timing of that announcement, but they think that the message will effectively be that the bar to pushing the announcement beyond November is relatively high in the absence of any material downside surprises. This meeting also sees the release of the FOMC’s latest economic projections and the dot plot, where they expect there’ll be an upward drift in the dots that raises the number of rate hikes in 2023 to 3, followed by another 3 increases in 2024. Back to yesterday, and as mentioned US equity markets fell for a second straight day after being unable to hold on to earlier gains, with the S&P 500 slightly lower (-0.08%). High-growth industries outperformed with biotech (+0.38%) and semiconductors (+0.18%) leading the NASDAQ (+0.22%) slightly higher, however the Dow Jones (-0.15%) also struggled. Europe saw a much stronger performance though as much of the US decline came after Europe had closed. The STOXX 600 gained +1.00% to erase most of Monday’s losses, with almost every sector in the index ending the day in positive territory. With risk sentiment improving for much of the day yesterday, US Treasuries sold off slightly and by the close of trade yields on 10yr Treasuries were up +1.2bps to 1.3226%, thanks to a +1.8bps increase in real yields. However, sovereign bonds in Europe told a different story as yields on 10yr bunds (-0.3bps), OATs (-0.3bps) and BTPs (-1.9bps) moved lower. Other safe havens including gold (+0.59%) and silver (+1.02%) also benefited, but this wasn’t reflected across commodities more broadly, with Bloomberg’s Commodity Spot Index (-0.30%) losing ground for a 4th consecutive session. Democratic Party leaders plan to vote on the Senate-approved $500bn bipartisan infrastructure bill next Monday, even with no resolution to the $3.5tr budget reconciliation measure that encompasses the remainder of the Biden Administration’s economic agenda. Democrats continue to work on the reconciliation measure but have turned their attention to the debt ceiling and government funding bills.Congress has fewer than two weeks before the current budget expires – on Oct 1 – to fund the government and raise the debt ceiling. Republicans yesterday noted that the Democrats could raise the ceiling on their own through the reconciliation process, with many saying that they would not be offering their support to any funding bill. Democrats continue to push for a bipartisan bill to raise the debt ceiling, pointing to their votes during the Trump administration. If Democrats are forced to tie the debt ceiling and funding bills to budget reconciliation, it could limit how much of the $3.5 trillion bill survives the last minute negotiations between progressives and moderates. More to come over the next 10 days. Staying on the US, there was an important announcement in President Biden’s speech at the UN General Assembly, as he said that he would work with Congress to double US funding to poorer nations to deal with climate change. That comes as UK Prime Minister Johnson (with the UK hosting the COP26 summit in less than 6 weeks’ time) has been lobbying other world leaders to find the $100bn per year that developed economies pledged by 2020 to support developing countries as they reduce their emissions and deal with climate change. In Germany, there are just 4 days to go now until the federal election, and a Forsa poll out yesterday showed a slight narrowing in the race, with the centre-left SPD remaining on 25%, but the CDU/CSU gained a point on last week to 22%, which puts them within the +/- 2.5 point margin of error. That narrowing has been seen in Politico’s Poll of Polls as well, with the race having tightened from a 5-point SPD lead over the CDU/CSU last week to a 3-point one now. Turning to the pandemic, Johnson & Johnson reported that their booster shot given 8 weeks after the first offered 100% protection against severe disease, 94% protection against symptomatic Covid in the US, and 75% against symptomatic Covid globally. Speaking of boosters, Bloomberg reported that the FDA was expected to decide as soon as today on a recommendation for Pfizer’s booster vaccine. That follows an FDA advisory panel rejecting a booster for all adults last Friday, restricting the recommendation to those over-65 and other high-risk categories. Staying with the US and vaccines, President Biden announced that the US was ordering 500mn doses of the Pfizer vaccine to be exported to the rest of the world. On the data front, there were some strong US housing releases for August, with housing starts up by an annualised 1.615m (vs. 1.55m expected), and building permits up by 1.728m (vs. 1.6m expected). Separately, the OECD released their Interim Economic Outlook, which saw them upgrade their inflation expectations for the G20 this year to +3.7% (up +0.2ppts from May) and for 2022 to +3.9% (up +0.5ppts from May). Their global growth forecast saw little change at +5.7% in 2021 (down a tenth) and +4.5% for 2022 (up a tenth). To the day ahead now, and the main highlight will be the aforementioned Federal Reserve decision and Chair Powell’s subsequent press conference. Otherwise on the data side, we’ll get US existing home sales for August, and the European Commission’s advance consumer confidence reading for the Euro Area in September. Tyler Durden Wed, 09/22/2021 - 08:05.....»»

Category: blogSource: zerohedgeSep 22nd, 2021

Futures Rise On Taper, Evergrande Optimism

Futures Rise On Taper, Evergrande Optimism US index futures jumped overnight even as the Fed confirmed that a November tapering was now guaranteed and would be completed by mid-2022 with one rate hike now on deck, while maintaining the possibility to extend stimulus if necessitated by the economy. Sentiment got an additional boost from a strong showing of Evergrande stock - which closed up 17% - during the Chinese session, which peaked just after Bloomberg reported that China told Evergrande to avoid a near-term dollar bond default and which suggested that the "government wants to avoid an imminent collapse of the developer" however that quickly reversed when the WSJ reported, just one hour later, that China was making preparations for Evergrande's demise, and although that hammered stocks, the report explicitly noted that a worst-case scenario for Evergrande would mean a partial or full nationalization as "local-level government agencies and state-owned enterprises have been instructed to step in only at the last minute should Evergrande fail to manage its affairs in an orderly fashion." In other words, both reports are bullish: either foreign creditors are made whole (no default) as per BBG or the situation deteriorates and Evergrande is nationalized ("SOEs step in") as per WSJ. According to Bloomberg, confidence is building that markets can ride out a pullback in Fed stimulus, unlike 2013 when the taper tantrum triggered large losses in bonds and equities. "Investors are betting that the economic and profit recovery will be strong enough to outweigh a reduction in asset purchases, while ultra-low rates will continue to support riskier assets even as concerns linger about contagion from China’s real-estate woes." That's one view: the other is that the Fed has so broken the market's discounting ability we won't know just how bad tapering will get until it actually begins. “The Fed has got to be pleased that their communication on the longer way to tapering has avoided the dreaded fear of the tantrum,” Jeffrey Rosenberg, senior portfolio manager for systematic fixed income at BlackRock Inc., said on Bloomberg Television. “This is a very good outcome for the Fed in terms of signaling their intent to give the market information well ahead of the tapering decision.” Then there is the question of Evergrande: “With regards to Evergrande, all those people who are waiting for a Lehman moment in China will probably have to wait another turn,” said Ken Peng, an investment strategist at Citi Private Bank Asia Pacific. “So I wouldn’t treat this as completely bad, but there are definitely a lot of risks on the horizon.” In any case, today's action is a continuation of the best day in two months for both the Dow and the S&P which staged a strong recovery from two-month lows hit earlier in the week, and as of 745am ET, S&P 500 E-minis were up 25.25 points, or 0.6%, Dow E-minis were up 202 points, or 0.59%, while Nasdaq 100 E-minis were up 92.0 points, or 0.60%. In the premarket, electric vehicle startup Lucid Group rose 3.1% in U.S. premarket trading. PAVmed (PVM US) jumps 11% after its Lucid Diagnostics unit announced plans to list on the Global Market of the Nasdaq Stock Market.  Here are some of the biggest movers today: U.S.-listed Chinese stocks rise in premarket trading as fears of contagion from China Evergrande Group’s debt crisis ease. Blackberry (BB US) shares rise 8.7% in premarket after co.’s 2Q adjusted revenue beat the average of analysts’ estimates Eargo (EAR US) falls 57% in Thursday premarket after the hearing aid company revealed it was the target of a Justice Department criminal probe and withdrew its forecasts for the year Amplitude Healthcare Acquisition (AMHC US) doubled in U.S. premarket trading after the SPAC’s shareholders approved the previously announced business combination with Jasper Therapeutics Steelcase (SCS US) fell 4.8% Wednesday postmarket after the office products company reported revenue for the second quarter that missed the average analyst estimate Vertex Energy Inc. (VTNR US) gained 2.1% premarket after saying the planned acquisition of a refinery in Mobile, Alabama from Royal DutVTNR US Equitych Shell Plc is on schedule Synlogic (SYBX US) shares declined 9.7% premarket after it launched a stock offering launched without disclosing a size HB Fuller (FUL US) climbed 2.7% in postmarket trading after third quarter sales beat even the highest analyst estimate Europe's Stoxx 600 index rose 0.9%, lifted by carmakers, tech stocks and utilities, which helped it recover losses sparked earlier in the week by concerns about Evergrande and China’s crackdown on its property sector. The gauge held its gain after surveys of purchasing managers showed business activity in the euro area lost momentum and slowed broadly in September after demand peaked over the summer and supply-chain bottlenecks hurt services and manufacturers. Euro Area Composite PMI (September, Flash): 56.1, consensus 58.5, last 59.0. Euro Area Manufacturing PMI (September, Flash): 58.7, consensus 60.3, last 61.4. Euro Area Services PMI (September, Flash): 56.3, consensus 58.5, last 59.0. Germany Composite PMI (September, Flash): 55.3, consensus 59.2, last 60.0. France Composite PMI (September, Flash): 55.1, consensus 55.7, last 55.9. UK Composite PMI (September, Flash): 54.1, consensus 54.6, last 54.8. Commenting on Europe's PMIs, Goldman said that the Euro area composite PMI declined by 2.9pt to 56.1 in September, well below consensus expectations. The softening was broad-based across countries but primarily led by Germany. The peripheral composite flash PMI also weakened significantly in September but remain very high by historical standards (-2.4pt to 57.5). Across sectors, the September composite decline was also broad-based, with manufacturing output softening (-3.3pt to 55.6) to a similar extent as services (-2.7pt to 56.3). Supply-side issues and upward cost and price pressures continued to be widely reported. Expectations of future output growth declined by less than spot output on the back of delta variant worries and supply issues, remaining far above historically average levels. Earlier in the session, Asian stocks rose for the first time in four sessions, as Hong Kong helped lead a rally on hopes that troubled property firm China Evergrande Group will make progress on debt repayment. The MSCI Asia Pacific Index climbed as much as 0.5%, with Tencent and Meituan providing the biggest boosts. The Hang Seng jumped as much as 2.5%, led by real estate stocks as Evergrande surged more than 30%. Hong Kong shares later pared their gains. Asian markets were also cheered by gains in U.S. stocks overnight even as the Federal Reserve said it may begin scaling back stimulus this year. A $17 billion net liquidity injection from the People’s Bank of China also provided a lift, while the Fed and Bank of Japan downplayed Evergrande risks in comments accompanying policy decisions Wednesday. Evergrande’s stock closed 18% higher in Hong Kong, in a delayed reaction to news a unit of the developer had negotiated interest payments on yuan notes. A coupon payment on its 2022 dollar bond is due on Thursday “Investors are perhaps reassessing the tail risk of a disorderly fallout from Evergrande’s credit issues,” said Chetan Seth, a strategist at Nomura. “However, I am not sure if the fundamental issue around its sustainable deleveraging has been addressed. I suspect markets will likely remain quite volatile until we have some definite direction from authorities on the eventual resolution of Evergrande’s debt problems.” Stocks rose in most markets, with Australia, Taiwan, Singapore and India also among the day’s big winners. South Korea’s benchmark was the lone decliner, while Japan was closed for a holiday In rates, Treasuries were off session lows, with the 10Y trading a 1.34%, but remained under pressure in early U.S. session led by intermediate sectors, where 5Y yield touched highest since July 2. Wednesday’s dramatic yield-curve flattening move unleashed by Fed communications continued, compressing 5s30s spread to 93.8bp, lowest since May 2020. UK 10-year yield climbed 3.4bp to session high 0.833% following BOE rate decision (7-2 vote to keep bond-buying target unchanged); bunds outperformed slightly. Peripheral spreads tighten with long-end Italy outperforming. In FX, the Bloomberg Dollar Spot Index reversed an earlier gain and dropped 0.3% as the dollar weakened against all of its Group-of-10 peers apart from the yen amid a more positive sentiment. CAD, NOK and SEK are the strongest performers in G-10, JPY the laggard.  The euro and the pound briefly pared gains after weaker-than-forecast German and British PMIs. The pound rebounded from an eight-month low amid a return of global risk appetite as investors assessed whether the Bank of England will follow the Federal Reserve’s hawkish tone later Thursday. The yield differential between 10-year German and Italian debt narrowed to its tightest since April. Norway’s krone advanced after Norges Bank raised its policy rate in line with expectations and signaled a faster pace of tightening over the coming years. The franc whipsawed as the Swiss National Bank kept its policy rate and deposit rate at record lows, as expected, and reiterated its pledge to wage currency market interventions. The yen fell as a unit of China Evergrande said it had reached an agreement with bond holders over an interest payment, reducing demand for haven assets. Turkey’s lira slumped toa record low against the dollar after the central bank unexpectedly cut interest rates. In commodities, crude futures drifted lower after a rangebound Asia session. WTI was 0.25% lower, trading near $72; Brent dips into the red, so far holding above $76. Spot gold adds $3.5, gentle reversing Asia’s losses to trade near $1,771/oz. Base metals are well bid with LME aluminum leading gains. Bitcoin steadied just below $44,000. Looking at the day ahead, we get the weekly initial jobless claims, the Chicago Fed’s national activity index for August, and the Kansas City fed’s manufacturing activity index for September. From central banks, there’ll be a monetary policy decision from the Bank of England, while the ECB will be publishing their Economic Bulletin and the ECB’s Elderson will also speak. From emerging markets, there’ll also be monetary policy decisions from the Central Bank of Turkey and the South African Reserve Bank. Finally in Germany, there’s an election debate with the lead candidates from the Bundestag parties. Market Snapshot S&P 500 futures up 0.7% to 4,413.75 STOXX Europe 600 up 1.1% to 468.32 MXAP up 0.5% to 200.57 MXAPJ up 0.9% to 645.76 Nikkei down 0.7% to 29,639.40 Topix down 1.0% to 2,043.55 Hang Seng Index up 1.2% to 24,510.98 Shanghai Composite up 0.4% to 3,642.22 Sensex up 1.4% to 59,728.37 Australia S&P/ASX 200 up 1.0% to 7,370.22 Kospi down 0.4% to 3,127.58 German 10Y yield fell 5.6 bps to -0.306% Euro up 0.4% to $1.1728 Brent Futures up 0.3% to $76.39/bbl Gold spot up 0.0% to $1,768.25 U.S. Dollar Index down 0.33% to 93.16 Top Overnight News from Bloomberg Financial regulators in Beijing issued a broad set of instructions to China Evergrande Group, telling the embattled developer to focus on completing unfinished properties and repaying individual investors while avoiding a near-term default on dollar bonds China’s central bank net-injected the most short- term liquidity in eight months into the financial system, with markets roiled by concerns over China Evergrande Group’s debt crisis Europe’s worst energy crisis in decades could drag deep into the cold months as Russia is unlikely to boost shipments until at least November Business activity in the euro area “markedly” lost momentum in September after demand peaked over the summer and supply chain bottlenecks hurt both services and manufacturers. Surveys of purchasing managers by IHS Markit showed growth in both sectors slowing more than expected, bringing overall activity to a five-month low. Input costs, meanwhile, surged to the highest in 21 years, according to the report The U.K. private sector had its weakest month since the height of the winter lockdown and inflation pressures escalated in September, adding to evidence that the recovery is running into significant headwinds, IHS Markit said The U.K.’s record- breaking debut green bond sale has given debt chief Robert Stheeman conviction on the benefits of an environmental borrowing program. The 10 billion-pound ($13.7 billion) deal this week was the biggest-ever ethical bond sale and the country is already planning another offering next month A more detailed look at global markets courtesy of Newsquaw Asian equity markets traded mostly positive as the region took its cue from the gains in US with the improved global sentiment spurred by some easing of Evergrande concerns and with stocks also unfazed by the marginally more hawkish than anticipated FOMC announcement (detailed above). ASX 200 (+1.0%) was underpinned by outperformance in the commodity-related sectors and strength in defensives, which have more than atoned for the losses in tech and financials, as well as helped markets overlook the record daily COVID-19 infections in Victoria state. Hang Seng (+0.7%) and Shanghai Comp. (+0.6%) were also positive after another respectable liquidity operation by the PBoC and with some relief in Evergrande shares which saw early gains of more than 30% after recent reports suggested a potential restructuring by China’s government and with the Co. Chairman noting that the top priority is to help wealth investors redeem their products, although the majority of the Evergrande gains were then pared and unit China Evergrande New Energy Vehicle fully retraced the initial double-digit advances. KOSPI (-0.5%) was the laggard as it played catch up to the recent losses on its first trading day of the week and amid concerns that COVID cases could surge following the holiday period, while Japanese markets were closed in observance of the Autumnal Equinox Day. China Pumps $17 Billion Into System Amid Evergrande Concerns China Stocks From Property to Tech Jump on Evergrande Respite Philippines Holds Key Rate to Spur Growth Amid Higher Prices Taiwan’s Trade Deal Application Sets Up Showdown With China Top Asian News European equities (Stoxx 600 +0.9%) trade on the front-foot and have extended gains since the cash open with the Stoxx 600 now higher on the week after Monday’s heavy losses. From a macro perspective, price action in Europe has been undeterred by a slowdown in Eurozone PMIs which saw the composite metric slip to 56.1 from 59.0 (exp. 58.5) with IHS Markit noting “an unwelcome combination of sharply slower economic growth and steeply rising prices.” Instead, stocks in the region have taken the cue from a firmer US and Asia-Pac handover with performance in Chinese markets aided by further liquidity injections by the PBoC. Some positivity has also been observed on the Evergrande front amid mounting expectations of a potential restructuring at the company. That said, at the time of writing, it remains unclear what the company’s intentions are for repaying its USD 83.5mln onshore coupon payment. Note, ING highlights that “missing that payment today would still leave a 30-day grace period before this is registered as a default”. The most recent reports via WSJ indicate that Chinese authorities are asking local governments to begin preparations for the potential downfall of Evergrande; however, the article highlights that this is a last resort and Beijing is reluctant to step in. Nonetheless, this article has taken the shine off the mornings risk appetite, though we do remain firmer on the session. Stateside, as the dust settles on yesterday’s FOMC announcement, futures are firmer with outperformance in the RTY (+0.8% vs. ES +0.7%). Sectors in Europe are higher across the board with outperformance in Tech and Autos with the latter aided by gains in Faurecia (+4.6%) who sit at the top of the Stoxx 600 after making an unsurprising cut to its guidance, which will at least provide some clarity on the Co.’s near-term future; in sympathy, Valeo (+6.6) is also a notable gainer in the region. To the downside, Entain (+2.6%) sit at the foot of the Stoxx 600 after recent strong gains with the latest newsflow surrounding the Co. noting that MGM Resorts is considering different methods to acquire control of the BetMGM online gambling business JV, following the DraftKings offer for Entain, according to sources. The agreement between Entain and MGM gives MGM the ability to block any deal with competing businesses; MGM officials believe this grants the leverage to take full control of BetMGM without spending much. Top European News BOE Confronts Rising Prices, Slower Growth: Decision Guide La Banque Postale Eyes Retail, Asset Management M&A in Europe Activist Bluebell Raises Pressure on Glaxo CEO Walmsley Norway Delivers Rate Lift-Off With Next Hike Set for December In FX, not much bang for the Buck even though the FOMC matched the most hawkish market expectations and Fed chair Powell arguably went further by concluding in the post-meeting press conference that substantial progress on the lagging labour front is all but done. Hence, assuming the economy remains on course, tapering could start as soon as November and be completed my the middle of 2022, though he continued to play down tightening prospects irrespective of the more hawkish trajectory implied by the latest SEP dot plots that are now skewed towards at least one hike next year and a cumulative seven over the forecast horizon. However, the Greenback only managed to grind out marginally higher highs overnight, with the index reaching 93.526 vs 93.517 at best yesterday before retreating quite sharply and quickly to 93.138 in advance of jobless claims and Markit’s flash PMIs. CAD/NZD/AUD - The Loonie is leading the comeback charge in major circles and only partially assisted by WTI keeping a firm bid mostly beyond Usd 72/brl, and Usd/Cad may remain contained within 1.2796-50 ahead of Canadian retail sales given decent option expiry interest nearby and protecting the downside (1 bn between 1.2650-65 and 2.7 bn from 1.2620-00). Meanwhile, the Kiwi has secured a firmer grip on the 0.7000 handle to test 0.7050 pre-NZ trade and the Aussie is looking much more comfortable beyond 0.7250 amidst signs of improvement in the flash PMIs, albeit with the services and composite headline indices still some way short of the 50.0 mark. NOK/GBP/EUR/CHF - All firmer, and the Norwegian Crown outperforming following confirmation of the start of rate normalisation by the Norges Bank that also underscored another 25 bp hike in December and further tightening via a loftier rate path. Eur/Nok encountered some support around 10.1000 for a while, but is now below, while the Pound has rebounded against the Dollar and Euro in the run up to the BoE at midday. Cable is back up around 1.3770 and Eur/Gbp circa 0.8580 as Eur/Usd hovers in the low 1.1700 area eyeing multiple and a couple of huge option expiries (at the 1.1700 strike in 4.1 bn, 1.1730 in 1 bn, 1.1745-55 totalling 2.7 bn and 1.8 bn from 1.1790-1.1800). Note, Eurozone and UK flash PMIs did not live up to their name, but hardly impacted. Elsewhere, the Franc is lagging either side of 0.9250 vs the Buck and 1.0835 against the Euro on the back of a dovish SNB Quarterly Review that retained a high Chf valuation and necessity to maintain NIRP, with only minor change in the ordering of the language surrounding intervention. JPY - The Yen is struggling to keep its head afloat of 110.00 vs the Greenback as Treasury yields rebound and risk sentiment remains bullish pre-Japanese CPI and in thinner trading conditions due to the Autumn Equinox holiday. In commodities, WTI and Brent have been choppy throughout the morning in-spite of the broadly constructive risk appetite. Benchmarks spent much of the morning in proximity to the unchanged mark but the most recent Evergrande developments, via WSJ, have dampened sentiment and sent WTI and Brent back into negative territory for the session and printing incremental fresh lows at the time of publication. Back to crude, newsflow has once again centred around energy ministry commentary with Iraq making clear that oil exports will continue to increase. Elsewhere, gas remains at the forefront of focus particularly in the UK/Europe but developments today have been somewhat incremental. On the subject, Citi writes that Asia and Europe Nat. Gas prices could reach USD 100/MMBtu of USD 580/BOE in the winter, under their tail-risk scenario. For metals, its very much a case of more of the same with base-metals supportive, albeit off-best given Evergrande, after a robust APAC session post-FOMC. Given the gas issues, desks highlight that some companies are being forced to suspend/reduce production of items such as steel in Asian/European markets, a narrative that could become pertinent for broader prices if the situation continues. Elsewhere, spot gold and silver are both modestly firmer but remain well within the range of yesterday’s session and are yet to recovery from the pressure seen in wake of the FOMC. US Event Calendar 8:30am: Sept. Initial Jobless Claims, est. 320,000, prior 332,000; Continuing Claims, est. 2.6m, prior 2.67m 8:30am: Aug. Chicago Fed Nat Activity Index, est. 0.50, prior 0.53 9:45am: Sept. Markit US Composite PMI, prior 55.4 9:45am: Sept. Markit US Services PMI, est. 54.9, prior 55.1 9:45am: Sept. Markit US Manufacturing PMI, est. 61.0, prior 61.1 11am: Sept. Kansas City Fed Manf. Activity, est. 25, prior 29 12pm: 2Q US Household Change in Net Wor, prior $5t DB's Jim Reid concludes the overnight wrap My wife was at a parents event at school last night so I had to read three lots of bedtime stories just as the Fed were announcing their policy decision. Peppa Pig, Biff and Kipper, and somebody called Wonder Kid were interspersed with Powell’s press conference live on my phone. It’s fair to say the kids weren’t that impressed by the dot plot and just wanted to join them up. The twins (just turned 4) got their first reading book homework this week and it was a bit sad that one of them was deemed ready to have one with words whereas the other one only pictures. The latter was very upset and cried that his brother had words and he didn’t. That should create even more competitive tension! Back to the dots and yesterday’s Fed meeting was on the hawkish side in terms of the dots and also in terms of Powell’s confidence that the taper could be complete by mid-2022. Powell said that the Fed could begin tapering bond purchases as soon as the November FOMC meeting, in line with our US economists’ forecasts. He left some room for uncertainty, saying they would taper only “If the economy continues to progress broadly in line with expectations, and also the overall situation is appropriate for this.” However he made clear that “the timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff.” The quarterly “dot plot” showed that the 18 FOMC officials were split on whether to start raising rates next year or not. In June, the median dot indicated no rate increases until 2023, but now 6 members see a 25bps raise next year and 3 members see two such hikes. Their inflation forecasts were also revised up and DB’s Matt Luzzetti writes in his FOMC review (link here) that “If inflation is at or below the Fed's current forecast next year of 2.3% core PCE, liftoff is likely to come in 2023, consistent with our view. However, if inflation proves to be higher with inflation expectations continuing to rise, the first rate increase could well migrate into 2022.” Markets took the overall meeting very much in its stride with the biggest impact probably being a yield curve flattening even if US 10yr Treasury yields traded in just over a 4bp range yesterday and finishing -2.2bps lower at 1.301%. The 5y30y curve flattened -6.7bps to 95.6bps, its flattest level since August 2020, while the 2y10y curve was -4.2bps flatter. So the market seems to believe the more hawkish the Fed gets the more likely they’ll control inflation and/or choke the recovery. The puzzle is that even if the dots are correct, real Fed funds should still be negative and very accommodative historically for all of the forecasting period. As such the market has a very dim view of the ability of the economy to withstand rate hikes or alternatively that the QE technicals are overpowering everything at the moment. In equities, the S&P 500 was up nearly +1.0% 15 minutes prior to the Fed, and then rallied a further 0.5% in the immediate aftermath before a late dip look it back to +0.95%. The late dip meant that the S&P still has not seen a 1% up day since July 23. The index’s rise was driven by cyclicals in particular with energy (+3.17%), semiconductors (-2.20%), and banks (+2.13%) leading the way. Asian markets are mostly trading higher this morning with the Hang Seng (+0.69%), Shanghai Comp (+0.58%), ASX (+1.03%) and India’s Nifty (+0.81%) all up. The Kospi (-0.36%) is trading lower though and is still catching up from the early week holidays. Japan’s markets are closed for a holiday today. Futures on the S&P 500 are up +0.25% while those on the Stoxx 50 are up +0.49%. There is no new news on the Evergrande debt crisis however markets participants are likely to pay attention to whether the group is able to make interest rate payment on its 5 year dollar note today after the group had said yesterday that it resolved a domestic bond coupon by negotiations which was also due today. As we highlighted in our CoTD flash poll conducted earlier this week, market participants are not too worried about a wider fallout from the Evergrande crisis and even the Hang Seng Properties index is up +3.93% this morning and is largely back at the levels before the big Monday sell-off of -6.69%. Overnight we have received flash PMIs for Australia which improved as parts of the country have eased the coronavirus restrictions. The services reading came in at 44.9 (vs. 42.9 last month) and the manufacturing print was even stronger at 57.3 (vs. 52.0 last month). Japan’s flash PMIs will be out tomorrow due to today’s holiday. Ahead of the Fed, markets had continued to rebound from their declines earlier in the week, with Europe’s STOXX 600 gaining +0.99% to narrowly put the index in positive territory for the week. This continues the theme of a relative outperformance among European equities compared to the US, with the STOXX 600 having outpaced the S&P 500 for 5 consecutive sessions now, though obviously by a slim margin yesterday. Sovereign bonds in Europe also posted gains, with yields on 10yr bunds (-0.7bps), OATs (-1.0bps) and BTPs (-3.2bps) all moving lower. Furthermore, there was another tightening in peripheral spreads, with the gap in Italian 10yr yields over bunds falling to 98.8bps yesterday, less than half a basis point away from its tightest level since early April. Moving to fiscal and with Democrats seemingly unable to pass the $3.5 trillion Biden budget plan by Monday, when the House is set to vote on the bipartisan infrastructure bill, Republican leadership is calling on their members to vote against the bipartisan bill in hopes of delaying the process further. While the there is still a high likelihood the measure will eventually get passed, time is becoming a factor. Congress now has just over a week to get a government funding bill through both chambers of congress as well as raise the debt ceiling by next month. Republicans have told Democrats to do the latter in a partisan manner and include it in the reconciliation process which could mean that a significant portion of the Biden economic agenda – mostly encapsulated in the $3.5 trillion over 10 year budget – may have to be cut down to get the entire Democratic caucus on board. Looking ahead, an event to watch out for today will be the Bank of England’s policy decision at 12:00 London time, where our economists write (link here) that they expect no change in the policy settings. However, they do expect a reaffirmation of the BoE’s updated forward guidance that some tightening will be needed over the next few years to keep inflation in check, even if it’s too early to expect a further hawkish pivot at this stage. Staying on the UK, two further energy suppliers (Avro Energy and Green Supplier) ceased trading yesterday amidst the surge in gas prices, with the two supplying 2.9% of domestic customers between them. We have actually seen a modest fall in European natural gas prices over the last couple of days, with the benchmark future down -4.81% since its close on Monday, although it’s worth noting that still leaves them up +75.90% since the start of August alone. There wasn’t much data to speak of yesterday, though US existing home sales fell to an annualised rate of 5.88 in August (vs. 5.89m expected). Separately, the European Commission’s advance consumer confidence reading for the Euro Area unexpectedly rose to -4.0 in September (vs. -5.9 expected). To the day ahead now, the data highlights include the September flash PMIs from around the world, while in the US there’s the weekly initial jobless claims, the Chicago Fed’s national activity index for August, and the Kansas City fed’s manufacturing activity index for September. From central banks, there’ll be a monetary policy decision from the Bank of England, while the ECB will be publishing their Economic Bulletin and the ECB’s Elderson will also speak. From emerging markets, there’ll also be monetary policy decisions from the Central Bank of Turkey and the South African Reserve Bank. Finally in Germany, there’s an election debate with the lead candidates from the Bundestag parties. Tyler Durden Thu, 09/23/2021 - 08:13.....»»

Category: blogSource: zerohedge49 min. ago

5 ETF Areas for Investors to Consider Amid the September Slump

Amid the market uncertainty, we have highlighted some ETF areas that can be good investment options for market participants to combat the September chaos. Wall Street is witnessing a tough time in the historically weak month of September. The Dow Jones Industrial Average has fallen 4%, whereas the S&P 500 has lost 3.7% in the month. Not just the reputation of the month, there are other factors like uncertainty surrounding the Fed’s decision, several weak economic data releases, concerns about rising COVID-19 cases and the approaching winter season, a large chunk of unvaccinated population, possibilities of high corporate tax rates, China property market concerns along with inflation pressure that have been keeping investors on the edge.Investors are waiting for the minutes from the Fed’s two-day policy meeting that began on Sep 21. They are concerned about the Fed’s chances of tapering the fiscal stimulus support, which includes the $120 billion a month bond-buying program. Several economic data releases are also weighing on investors’ minds.Amid the market uncertainty, we have highlighted some ETF areas that can be good investment options for market participants amid the September chaos:Healthcare ETFsThe pandemic has triggered a race to introduce vaccines and treatment options, opening up investing opportunities in the healthcare sector. Moreover, the space has been gaining increasing attention lately, largely due to the resurgence in COVID-19 infections due to the Delta variant. This has made investors jittery, compelling them to shift toward defensive investments.Considering the current market situation, investors can consider The Health Care Select Sector SPDR Fund XLV, Vanguard Health Care ETF VHT, iShares U.S. Healthcare ETF IYH and Fidelity MSCI Health Care Index ETF (FHLC).Retail ETFsThe latest retail sales data has pleasantly surprised investors. The metric rose 0.7% sequentially in August 2021 against market expectations of a 0.8% decline, per a CNBC article. Online retail sales rose 5.3% last month after declining 4.6% in July, per a Reuters article. There was a rise in sales at clothing stores as well as building material and furniture in the previous month. Encouragingly, the core retail sales rebounded 2.5% in August from a downwardly revised drop of 1.9% in July, according to the Reuters article. Importantly, the metric highlights the spending component of GDP.Going on, market analysts expect impressive retail sales in 2021 along with a strong holiday season. The strength in consumer sentiment can be the major driving force as they are believed to be prepared to splurge this holiday season after facing strict restrictions for more than a year and have gathered enough resources.Considering the strong trends, investors may park their money in the following retail ETFs to tap the sales boom -- SPDR S&P Retail ETF XRT, Amplify Online Retail ETF IBUY, VanEck Retail ETF RTH and ProShares Online Retail ETF (ONLN) (read: ETFs to Win & Lose as Delta Variant Cases Surge).Housing ETFsThe U.S. housing sector saw a bright spot with strength in housing demand and declining lumber prices. However, headwinds like increasing construction costs and continued material supply-chain worries along with rising home prices remain. These factors took a toll on builder confidence, which declined for three months. Per the monthly National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder sentiment for the newly-built single-family homes rose a point to 76 in September from 75 in August, 80 in July, 81 in June and 30 in April (the lowest since June 2012). The reading looks strong as any number above 50 signals at improving confidence.Against such a backdrop, here are a few housing ETFs like iShares U.S. Home Construction ETF ITB, SPDR S&P Homebuilders ETF XHB, Invesco Dynamic Building & Construction ETF (PKB) and Hoya Capital Housing ETF (HOMZ) (read: Forget Bubble Fear: Bet on Housing ETFs).Dividend ETFsDividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. Moreover, dividend aristocrat funds provide investors with dividend growth opportunities in comparison to other products in the space but might not necessarily have the highest yields.‘Dividend aristocrats’ or ‘dividend growers’ are mostly deemed to be the smartest way to deal with market turmoil. Notably, the inclination toward dividend investing has been rising due to easing monetary policy on the global front, and market uncertainty triggered by the pandemic and deceleration in global growth.These products also form a strong portfolio, with a higher scope of capital appreciation as against simple dividend-paying stocks or those with high yields. As a result, these products deliver a nice combination of annual dividend growth and capital-appreciation opportunities and are mostly good for risk adverse long-term investors.Against this backdrop, let’s take a look at some ETFs that investors can consider like Vanguard Dividend Appreciation ETF VIG, SPDR S&P Dividend ETF SDY, iShares Select Dividend ETF DVY and ProShares S&P 500 Dividend Aristocrats ETF (NOBL) (read: Tax Hike Worries Drive Last Week's Inflows: 5 Hot ETFs).Low Volatility ETFsDemand for funds with “low volatility” or “minimum volatility” generally increases during tumultuous times. These seemingly-safe products usually do not surge in bull market conditions but offer more protection than the unpredictable ones. Providing more stable cash flow than the overall market, these funds are less cyclical in nature. Here are some options --  iShares Edge MSCI Min Vol USA ETF USMV, Invesco S&P 500 Low Volatility ETF SPLV, iShares Edge MSCI EAFE Minimum Volatility ETF EFAV, iShares Edge MSCI Min Vol Global ETF (ACWV), Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) (read: Growth Concerns to Drive Demand for Low-Volatility ETFs). Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Health Care Select Sector SPDR ETF (XLV): ETF Research Reports iShares U.S. Healthcare ETF (IYH): ETF Research Reports Vanguard Health Care ETF (VHT): ETF Research Reports SPDR S&P Homebuilders ETF (XHB): ETF Research Reports SPDR S&P Retail ETF (XRT): ETF Research Reports VanEck Retail ETF (RTH): ETF Research Reports iShares U.S. Home Construction ETF (ITB): ETF Research Reports SPDR S&P Dividend ETF (SDY): ETF Research Reports Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports iShares Select Dividend ETF (DVY): ETF Research Reports iShares MSCI USA Min Vol Factor ETF (USMV): ETF Research Reports iShares MSCI EAFE Min Vol Factor ETF (EFAV): ETF Research Reports Amplify Online Retail ETF (IBUY): ETF Research Reports Invesco S&P 500 Low Volatility ETF (SPLV): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 22nd, 2021

A Bunch of Dirt-Cheap Value ETFs to Buy Now

Honing in on lower expense ratio ETFs in the value space will be an ideal choice. The global stock market has been caught in a nasty web of woes that led to a broad sell-off. The biggest culprit is the fear over the potential collapse of property developer China Evergrande Group. The China-based real estate juggernaut, which has been sitting on a huge debt of more than $300 billion, could default on its interest payment of $150 million due later this week, potentially triggering a global financial meltdown like the post Lehmann Brothers collapse.Ongoing debates over the debt limit in Washington and the Fed’s taper talks added to the market uncertainty. The White House warned that failure by the U.S. Congress to extend the debt limit could push the economy into a recession and lead the country to default on its payment obligations. The U.S. House is set to vote this week on the debt ceiling.Additionally, concerns over accelerating coronavirus infections, renewed inflation fears, signs of a slowdown in China, and potential for high corporate tax rates have been making investors jittery in recent weeks (read: September's Weak History Turning True: 5 ETF Buying Zones).However, the wider spread of COVID-19 vaccines, a greater vaccination push, improving economic growth, an expanded stimulus, and the resumption of corporate earnings growth have been fueling rally in the stock market this year and will likely continue doing so. The latest batch of data also painted an upbeat picture of U.S. consumers. Retail sales unexpectedly jumped in August as a pickup in purchases across most categories more than offset the weakness at auto dealers, showing resilient consumer demand for merchandise.Amid such a scenario, value investing seems appealing to investors.Why Value?Value stocks have strong fundamentals — earnings, dividends, book value, and cash flow — that trade below their intrinsic value and are undervalued by the market. These seek to capitalize on the inefficiencies in the market and have the potential to deliver higher returns with lower volatility compared with their growth and blend counterparts. Additionally, value stocks are less susceptible to trending markets and their dividend payouts offer safety in times of market turbulence (read: Value ETFs Looking Attractive Now: Let's Explore).Notably, these stocks outperform the growth ones across all asset classes when considered on a long-term investment horizon. Honing in on lower expense ratio ETFs in this space will be an ideal choice. With an ongoing price war, expense ratio is the biggest crowd puller in the ETF world. Funds with low expense ratios significantly outperform their expensive counterparts when other factors remain constant.Given this, we have presented a bunch of ETFs with a solid Zacks ETF Rank #2 (Buy) and a lower expense ratio of under 15% that will likely outperform in the coming weeks, especially in a shaky market.SPDR Portfolio S&P 500 Value ETF SPYV – Expense Ratio: 0.04%With AUM of $12.4 billion, this ETF tracks the S&P 500 Value Index. It holds 431 stocks in its basket with each making up for no more than 3% share. The product sees average daily volume of 2.1 million shares.Schwab U.S. Large-Cap Value ETF SCHV – Expense ratio: 0.04%This is also a large-cap centric fund that targets the value segment by tracking the Dow Jones U.S. Large-Cap Value Total Stock Market Index. It holds well diversified 541 stocks in its basket and has amassed assets worth $9.7 billion. The fund trades in volume of around 324,000 shares a day on average.Vanguard Value ETF VTV – Expense ratio: 0.04%This ETF follows the CRSP US Large Cap Value Index, holding 352 stocks in its basket with each accounting for less than 3% share. VTV has AUM of $83.7 billion and an average daily volume of 2.1 million shares (read: Volatility ETFs Spike on Evergrande Collapse Fears).Vanguard Mega Cap Value ETF MGV – Expense ratio: 0.07%This fund offers diversified exposure to 146 largest value stocks in the U.S. market by tracking the CRSP US Mega Cap Value Index. It has been able to manage assets worth $4.5 billion and trades in average daily volume of 106,000 shares.Vanguard Russell 1000 Value ETF VONV – Expense ratio: 0.08%With AUM of $6.5 billion, this ETF follows the Russell 1000 Value Index and holds 844 stocks in its basket. The product trades in average daily volume of 402,000 shares.Vanguard S&P 500 Value ETF VOOV – Expense ratio: 0.10%This fund seeks to track the S&P 500 Value Index, holding 433 stocks in its basket. It has AUM of $2.3 billion sees average daily volume of 68,000 shares.Invesco S&P 500 Enhanced Value ETF SPVU – Expense Ratio: 0.13%This fund follows the S&P 500 Enhanced Value Index, holding 99 stocks in its basket with each making up for less than 5.4% of assets. It has accumulated $134.7 million in AUM while trades in a light average daily volume of 176,000 shares (read: 401(k) Balances at All-Time Highs: 6 ETFs to Buy). Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Vanguard Value ETF (VTV): ETF Research Reports Schwab U.S. LargeCap Value ETF (SCHV): ETF Research Reports Vanguard Russell 1000 Value ETF (VONV): ETF Research Reports SPDR Portfolio S&P 500 Value ETF (SPYV): ETF Research Reports Vanguard S&P 500 Value ETF (VOOV): ETF Research Reports Vanguard Mega Cap Value ETF (MGV): ETF Research Reports Invesco S&P 500 Enhanced Value ETF (SPVU): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 22nd, 2021

US futures inch higher ahead of Fed meeting after Evergrande payment plan soothes some investor nerves

Stock market investors were keeping one eye on Evergrande and one eye on the Federal Reserve, which sets monetary policy on Wednesday. Federal Reserve chair Jay Powell struck a dovish tone on Tuesday Pool/Getty Images US futures rose on Wednesday as focus turned to the Federal Reserve's monetary policy decision. Chinese stocks fell less than some had feared after embattled developer Evergrande said it would make a coupon payment. Evergrande could still trigger further volatility, with an offshore bond payment due on Thursday. See more stories on Insider's business page. US stock futures edged higher on Wednesday, as investors waited for the Federal Reserve's latest monetary policy decision, and fears about embattled Chinese property developer Evergrande receded.Evergrande unit Hengda announced it would make a coupon payment and the Chinese central bank pumped a net 90 billion yuan ($13.9 billion) of liquidity into the financial system, limiting the decline in Asian stocks.S&P 500 futures rose 0.58% as of 4.45 a.m. ET, after the index whipsawed on Tuesday and closed 0.08% lower. Dow Jones futures climbed 0.63%, while Nasdaq 100 futures rose 0.4%.In Asia overnight, China's CSI 300 index fell 0.7% - less than many analysts had feared - after reopening from a two-day holiday. Tokyo's Nikkei 225 fell 0.67%.Europe's continent-wide Stoxx 600 index rose 0.74%, putting it on track for a second day in the green. London's FTSE 100 rose 1.05%.The debt crisis enveloping Evergrande, China's second-biggest property developer, has shaken stock markets around the world this week. The S&P 500 fell 1.7% on Monday in its biggest one-day drop since May.Some have suggested Evergrande's size means a default could send shockwaves through the global economy, although the consensus on Wall Street is that the Chinese government will contain the problem. The People's Bank of China's injection of cash into the banking system helped cool market nerves, analysts said.However, Evergrande still has an interest payment due on one of its dollar bonds on Thursday, which could trigger more volatility.Read more: History is repeating itself as similarities between today's market and 2018's 20% crash mount, Bank of America warns - but these 27 dividend growth stocks should weather the stormInvestors had one eye on Evergrande and another on the Fed, which will conclude its two-day monetary policy decision on Wednesday. Analysts said the Fed is likely to signal that it plans to start withdrawing its support for the economy this year, after a period of strong growth and inflation."We expect the statement to indicate that a reduction is likely to be appropriate 'this year' as long as the economy remains on track," Deutsche Bank economists, led by Brett Ryan, said in a note.The key issue for investors is when the Fed will start trimming - or "tapering" - its $120 billion a month of bond purchases. Ryan said he expects the Fed's message to be that "the bar to pushing the announcement beyond November is relatively high."US bond yields and the dollar were little changed, suggesting investors do not expect any major jolts to come from the Fed meeting.The yield on the 10-year US Treasury note, which moves inversely to the price, flatlined at 1.324%. The dollar index was little changed at 93.24.Elsewhere in markets, oil prices continued to rise, reflecting the global economic recovery and tightening supply. Brent crude climbed 1.51% to $75.48 a barrel while WTI crude rose 1.7% to $71.67 a barrel.Bitcoin rose 3.61% to $42,405, according to Bloomberg prices. The world's biggest cryptocurrency stood above $47,000 on Monday, but has been hit hard by general risk aversion during the Evergrande crisis.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 22nd, 2021

Bitcoin"s claim to be digital gold loses its shine after the token plunges alongside stocks in the Evergrande sell-off

Bitcoin advocates often call the cryptocurrency "digital gold", but it didn't behave like it as stocks cratered on Evergrande debt default fears. Bitcoin tumbled on Monday along with stocks. REUTERS/Dado Ruvic Bitcoin's claim to be digital gold was delivered a blow when it sold off alongside stocks on Monday. The world's biggest cryptocurrency tumbled over 8% as fears about Evergrande's debt shook markets. Data from Bloomberg shows that bitcoin's correlation with stocks has been rising of late. See more stories on Insider's business page. Bitcoin fans often say the world's biggest cryptocurrency is "digital gold" - a safe-haven asset that investors can turn to at times of market stress or high inflation.Yet that view was dealt a blow on Monday, when the digital currency crumbled along with stocks as Chinese property developer Evergrande's debt crisis roiled markets.Bitcoin tumbled 8.5% on Monday, according to Bloomberg data, while the S&P 500 fell 1.7% in its worst day since May and the tech-heavy Nasdaq 100 dropped 2.1%. Other cryptocurrencies, such as ether and cardano, also plunged.Meanwhile, gold and government bonds rallied as investors turned to assets that are traditionally seen as safe places for investors to hide during market volatility.Billionaire investor Ray Dalio is among those to have said bitcoin could be a diversifying asset in portfolios, while crypto bulls such as Mike Novogratz have long hailed it as digital gold. But a number of analysts said Monday's sell-off showed there are problems with that argument."It's funny, [bitcoin] always sells off when risk takes a hit," said Neil Wilson, chief market analyst at trading platform Markets.com."That's because it is the most risky asset, so it's the first to dump when there is liquidating of positions, margin calls, et cetera, to worry about."Read more: A 26-year-old crypto millionaire shows us the tools he uses to make the best trades and stay on top of tokens before they trendData from Bloomberg showed that bitcoin's correlation to the S&P 500 has been growing and is at its highest level in a year.Naeem Aslam, chief market analyst at AvaTrade, said institutional investors in particular see cryptocurrencies such as bitcoin as risky assets. This means they are inclined to ditch them to cover other positions when stock markets take a tumble.Cryptocurrencies' wild volatility limits their appeal as diversifying assets, according to a report released by UBS Global Wealth Management this week.However, bitcoin has other benefits for those who can stomach the wild ride, the UBS unit said, noting that it saw much higher returns than gold between 2016 and 2021. Bitcoin has risen around 290% in the last year.Crypto advocates argue that bitcoin and other cryptocurrencies are still relatively young, and that their volatility is likely to decline as the market grows and matures.Bitcoin was down 2.1% on Tuesday to $42,620, while the S&P 500 was up 0.15% as of 11.10 a.m. ET.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 21st, 2021

Tax Hike Worries Drive Last Week"s Inflows: 5 Hot ETFs

Investors have poured in a near record amount of money into ETFs driven by worries over a tax hike. Last week was marked by wild swings in the U.S. stock market driven by renewed inflation fears, potential hike in corporate taxes, Fed’s tapering talks and concerns over a slowdown in economic growth. The three major indices ended last week in red with the tech-heavy Nasdaq Composite Index suffering the biggest decline.The spate of latest data shows that rising Delta variant cases is derailing the activities and threatening the continued reopening of economies. U.S. consumer sentiment remained close to a near-decade low in early September, while buying conditions for household durables deteriorated to their worst since 1980 because of high prices. U.S. producer prices rose  8.3% year over year in August, leading to the biggest annual gain in nearly 11 years. This also indicates that high inflation will persist since the pandemic will put pressure on supply chains.While consumer sentiment is still downbeat and inflation is picking up, a report showing an unexpected jump in August retail sales with gains across most categories, suggests steady demand (read: August Retail Sales Shine: ETFs & Stocks to Win).Despite volatility, investors have poured in a near record amount of money into ETFs partly driven by worries over a tax hike. This is because the ETFs are more tax efficient than mutual funds. Mutual fund managers need to sell securities to raise cash for redemptions in case an investor exits the fund, which triggers a taxable event for all investors. On the other hand, ETFs follow an “in-kind” creation and redemption process where ETF issuers exchange shares for baskets of underlying securities, which do not trigger a taxable event.Per Bloomberg, ETFs’ tax efficiency characteristic could be a boon for those looking at a higher tax bill. This would accelerate the ongoing shift that has shifted hundreds of billions of dollars from mutual funds to ETFs.As such, ETFs overall gathered about $62.2 billion capital last week (ending Sep 16), just shy of the weekly record of $71 billion set in March. This brings in year-to-date inflows of $669.8 billion, double the $332.5 billion seen at this same time a year ago. With this, ETFs are on track for more than $900 billion of inflows in 2021. U.S. equity ETFs led the way higher last week with $52.7 billion inflows, closely followed by $4.1 billion in international equity ETFs and $4 billion in U.S. fixed income ETFs, per etf.com.Further, investors should note that Vanguard products led the ETF creations list last week, dominating about half of the weekly inflows. Here, we have highlighted the top five asset gatherers:SPDR S&P 500 ETF Trust SPYSPY topped asset flow creation last week, gathering $10.6 billion in capital. It tracks the S&P 500 Index and holds 505 stocks in its basket with information technology, healthcare, consumer discretionary, communication services and financials being the top five, with a double-digit allocation each. With AUM of $410.3 billion, the ETF charges investors 9 bps in annual fees and trades in an average daily volume of 55 million shares. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Tax Hike in the Cards? ETFs in Focus).Vanguard Total Stock Market ETF VTIThis fund has accumulated $3.5 billion in capital, taking its total AUM to $274.4 billion. It provides exposure to the broader stock market by tracking the CRSP US Total Market Index. The ETF holds a large basket of well-diversified 3,980 stocks with key holdings in technology, consumer discretionary, industrials, healthcare and financials. It charges 3 bps in fees per year from investors and trades in an average daily volume 3.1 million shares. VTI has a Zacks ETF Rank #2 with a Medium risk outlook.Vanguard Dividend Appreciation ETF VIGVIG gathered $3 billion in capital last week. This is the largest and the most popular ETF in the dividend space with AUM of $66 billion. The fund follows the NASDAQ US Dividend Achievers Select Index, which is composed of high-quality stocks that have a record of raising dividends every year. It holds 247 securities in the basket with none accounting for more than 4.5% share. The fund charges 6 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Dividend Aristocrat ETFs Investing Guide).Vanguard Extended Market ETF VXFThis ETF accumulated about $2.9 billion last week, taking its total AUM to $20.3 billion. It follows the S&P Completion Index, which contains all of the U.S. common stocks regularly traded on the New York Stock Exchange and the Nasdaq over-the-counter market, except those stocks included on the S&P 500 Index. The fund is a home to 3,535 stocks with each accounting for no more than 1.3% share. It charges 6 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook. Vanguard Mid-Cap ETF VOThis fund gathered $2.8 billion in capital last week. It targets the mid-cap segment of the broad stock market and tracks the CRSP US Mid Cap Index. With AUM of $55.4 billion, the fund holds 373 stocks with a well-diversified portfolio as each firm holds no more than 1% of the total assets. The product charges investors 4 bps in fees per year and has a Zacks ETF Rank #2 with a Medium risk outlook (read: Mid-Cap ETFs Looking Good Amid Market Uncertainties). Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SPDR S&P 500 ETF (SPY): ETF Research Reports Vanguard Total Stock Market ETF (VTI): ETF Research Reports Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports Vanguard Extended Market ETF (VXF): ETF Research Reports Vanguard MidCap ETF (VO): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

5 Low-Beta ETFs to Invest in Uncertain Markets

Low-beta products exhibit greater levels of stability than their market-sensitive counterparts and will usually lose less when the market crumbles. U.S. stocks have been caught in a wild swing of trading lately driven by a combination of factors like resurgence in COVID-19 infections, inflation fears, signs of a slowdown in China, potential tax hike increases and Fed tapering talks. All the three major indices have turned negative for the month and is about 3% below their all-time highs (read: ETFs to Win & Lose as Delta Variant Cases Surge).Additionally, a historical tendency for September to be a weak month for equities has added to the chaos. The Q3 earnings trend has also lost momentum with the magnitude of positive revisions to the estimates notably below the comparable periods of the last three earnings seasons.Further, warnings of economic catastrophe sent the U.S. stocks into a tailspin. The White House warned on Friday that a failure by the U.S. Congress to extend the debt limit could push the economy into a recession and lead the country to default on its payment obligations. Notably, the Dow Jones logged in the three straight weeks of losses for first time in 2021 while the S&P 500 notched the second straight week of losses.However, the wider spread of COVID-19 vaccines, a greater vaccination push, improving economic growth, an expanded stimulus and the resumption of corporate earnings growth have powered the rally this year and will likely continue to do so. In fact, Wall Street is the most bullish on stocks in almost two decades with about 56% of all recommendations on the S&P 500 firms listed as buys, the highest since 2002.As a result, investors may want to remain invested in the equity world but at the same time seek protection from a downside. This could be easily achieved by investing in low-beta products.Why Low Beta?Beta measures the price volatility of stocks relative to the overall market. It has direct relationship to market movements. A beta of 1 indicates that the price of the stock or fund tends to move with the broader market. A beta of more than 1 indicates that the price tends to move higher than the broader market and is extremely volatile while a beta of less than 1 indicates that the price of the stock or fund is less volatile than the market.That said, low-beta products exhibit greater levels of stability than their market-sensitive counterparts and will usually lose less when the market crumbles. Given lesser risks and lower returns, these are considered safe and resilient amid uncertainty. However, when markets soar, these low-beta funds experience lesser gains than the broader market counterparts and thus lag their peers (read: Mid-Cap ETFs Looking Good Amid Market Uncertainties).With the help of etfdb.com, we have highlighted five low-beta ETFs targeting broad markets that could be intriguing options for investors amid the current market turbulence. All the funds offer exposure to a number of sectors and have AUM of more than $50 million, indicating their good tradability.Invesco S&P 500 Downside Hedged ETF PHDG – Beta: 0.32This actively managed fund seeks to deliver positive returns in rising or falling markets that are not directly correlated to broad equity or fixed-income market returns. It tries to follow the S&P 500 Dynamic VEQTOR Index, which provides broad equity market exposure with an implied volatility hedge by dynamically allocating between different asset classes: equity, volatility and cash. The index allows investors to receive exposure to the equity and volatility of the S&P 500 Index in a dynamic framework. The fund has accumulated $234.2 million in its asset base and charges 40 bps in fees per year from its investors. Volume is good, exchanging 73,000 shares a day on average (read: Invest in These Hedge Volatility ETFs to Protect Your Portfolio).FT Cboe Vest Fund of Deep Buffer ETFs BUFD – Beta: 0.38This is an actively managed ETF providing investors exposure to U.S. large-cap equity stocks while limiting downside risk through a laddered portfolio of 12 FT Cboe Vest U.S. Equity Deep Buffer ETFs. It seeks to provide returns that match the price return of the SPDR S&P 500 ETF Trust (SPY), up to a predetermined upside cap, while providing a buffer against losses between 5% and 30% of SPY, over a defined one-year period. BUFD has amassed $175.6 million in its asset since its inception in January and trades in an average daily volume of 74,000 shares. It charges 1.05% in annual fees.Nationwide Risk-Managed Income ETF NUSI – Beta: 0.42This ETF targets high income with lower risk as it uses a rules-based options trading strategy. It seeks to provide investors with a measure of downside protection in falling markets and the potential for upside participation in rising markets. With AUM of $631.3 million, it charges 68 bps in annual fees and trades in an average daily volume of 333,000 shares.6 Meridian Small Cap Equity ETF SIXS - Beta: 0.49This actively managed ETF uses a quantitively-driven strategy emphasizing high-quality, small-cap stocks. Stocks are first screened to remove those that score poorly on financial and growth measures. Those stocks that pass the screen are then ranked on a stand-alone basis in relation to two factors – beta and value. The stocks that rank the highest for each factor are combined into one portfolio. Stocks that rank high in both factors are over-weighted. This strategy results in a basket of 87 stocks, charging investors 97 bps in annual fees. The product has amassed $58.9 million in its asset base and trades in paltry volume of 2,000 shares per day on average.Pacer Trendpilot Fund of Funds ETF TRND – Beta: 0.57This ETF follows the Pacer Trendpilot Fund of Funds Index, which seeks to implement a systematic trend-following strategy that directs exposure to 100% to the equity component; or 50% to the equity component and 50% to 3-month US Treasury bills; or 100% to 3-month US Treasury bills, depending on the relative performance of the equity Component and its 200-business day historical simple moving average. With AUM of $60.4 million, it charges 77 bps in annual fees and trades in volume of around 11,000 shares a day on average.Bottom LineInvestors should note that these products are not meant for generating outsized returns. Instead, these provide stability to the portfolio, protecting the initial investment. In particular, these products could be worthwhile for low risk-tolerant investors looking to safeguard their portfolio in the current market environment and seeking outperformance. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco S&P 500 Downside Hedged ETF (PHDG): ETF Research Reports Pacer Trendpilot Fund of Funds ETF (TRND): ETF Research Reports Nationwide RiskManaged Income ETF (NUSI): ETF Research Reports 6 Meridian Small Cap Equity ETF (SIXS): ETF Research Reports FT Cboe Vest Fund of Deep Buffer ETFs (BUFD): ETF Research Reports To read this article on Zacks.com click here......»»

Category: topSource: zacksSep 21st, 2021

Fed Rescues Market (Again) from Steep Morning Pullback

Fed Rescues Market (Again) from Steep Morning Pullback The major indices started this week in the green, but it needed help from the Fed to overcome a sharp morning selloff brought on by fears of a second coronavirus wave. Chair Jerome Powell said that the central bank had a lot of tools at its disposal and would do whatever it takes to support this economy… and he keeps proving it. On Monday, the Fed said it would start buying individual corporate bonds, which the market liked to hear amid renewed volatility over the virus and pace of reopenings. The Dow went on quite a ride today by plunging over 760 points at its worst before soaring by nearly 290 points at its best. It dipped into the negative in the final hour again but ultimately finished higher by 0.62% (or about 157 points) to 25,763.16. The index gained nearly 2% on Friday but was down 5.5% for the week. The S&P was off by about 2% early in the day, but managed to gain 0.83% to 3066.59 by the close. However, the NASDAQ outperformed the major indices again with a rise of 1.43% (or around 137 points) to 9726.02. Obviously, tech had a good day, so this advance differs from the more optimistic “reopening rally” of early this month and late May. The S&P and NASDAQ are coming off a week that saw declines of 4.7% and 2.3%, respectively. We’ll practically have wall-to-wall Powell this week, as the Chair will be speaking three times in the next four days. He’ll be appearing before the Senate tomorrow and the House on Wednesday, and then will be part of a virtual discussion on Friday. His somber outlook for the economic recovery on Wednesday was one of the main reasons why the market took such a steep step back last week. We already know that he’ll be talking about supporting this economy at all costs, but investors will be especially interested in his tone. But before Powell speaks tomorrow, we’ll get a read on the U.S. consumer with the retail sales report for May. The market is expecting a rebound from the previous month’s horrible report that saw a plunge of 16.4% for April. Today's Portfolio Highlights: Blockchain Innovators: If you’re talking about e-commerce payments and transactions, then Dave can’t help but think of blockchain. That’s why he bought PFSweb (PFSW) on Monday. This Zacks Rank #2 (Buy) is an international provider of transaction management services for traditional and e-commerce companies. PFSW has seen a “significant uptick in volume” since its quarterly report last month, while earnings growth for this year and next are expected at 80% and 22%, respectively. The editor also decided to cash in Alibaba (BABA) for a nice 53.5% win! Read the full write-up for more. Stocks Under $10: Amid second wave fears and civil unrest, shares of Bed Bath & Beyond (BBBY) have dropped another 20% and are now in the wheelhouse of this portfolio. Brian believes this specialty retailer of domestic merchandise and home furnishings has a brighter future once we get past this difficult time. He notes that its losses are expected to narrow significantly to 52 cents next fiscal year from $2.34 for this fiscal year, which is a big improvement and the reason for its status as a Zacks Rank #2 (Buy). Plus, BBBY has beaten earnings estimates in three of the last four quarters. Read the complete commentary for a lot more on this new addition, and be ready for another buy tomorrow as the editor works on getting back to a full portfolio of 15 names. Insider Trader: The portfolio needs more large-cap exposure, so Tracey jumped on an opportunity to buy CME Group (CME). This is the largest futures exchange in the world in terms of trading volume and notional value traded. Speaking of trading volume, the company saw a lot of it during the coronavirus sell-off, which helped it put together a solid first quarter report. Last Thursday when the Dow plunged over 1860 points, a director stepped in and bought 1229 shares. The editor considers that a strong bullish signal. Therefore, she bought CME on Monday with a 10% allocation. The complete commentary has a lot more on this new pick. Technology Innovators: Chips have been the place to be lately, so Brian decided to go with the flow by adding Semtech (SMTC) on Monday. This Zacks Rank #1 (Strong Buy) makes a wide range of analog and mixed-signal semiconductors for commercial applications. The editor likes this company’s earnings history, which includes four straight surprises with an average beat of 8.6%. And as its Zacks Rank attests, earnings estimates are on the rise over the past 30 days. Meanwhile, the portfolio also sold Facebook (FB) for a 47.2% return in just under three months as both political parties have problems with the social media pioneer. Pluralsight (PS) was also sold for a loss. Read the complete commentary for more on all today’s moves. Black Box Trader: Half of the portfolio was replaced in this week's adjustment. The stocks sold today included: • B&G Foods (BGS, +11.9%) • Sprouts Farmers Market (SFM) • United Natural Foods (UNFI) • Cheniere Energy (LNG) • Blue Apron (APRN) The new buys that replaced these names are: • AerCap (AER) • H&R Block (HRB) • KB Home (KBH) • LPL Financial (LPLA) • Sportsman's Warehouse (SPWH) Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing. By the way, this portfolio had one of the top performers of the day with Camping World Holdings (CWH) rising 8%. Have a Great Evening, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

Dow Stays in Record Territory to Start Short Week

Dow Stays in Record Territory to Start Short Week Last week’s more reserved market pace continued on Tuesday as we returned from the three-day break, leaving two of the major indices lower for the session. However, we still saw a new all-time high. The Dow kept the good times rolling with a rise of 0.2% (or about 64 points) to 31,522.75, marking back-to-back sessions with record closes. This performance was the second time in less than a week that the Dow made history while the other indices took a step back. The NASDAQ actually lagged its counterparts today, as tech took a bit of a break while the energy and financial sectors led the way. The index was still only off by 0.34% (or about 48 points) to 14,047.50. The S&P was nearly breakeven with a decline of only 0.06% to 3932.59. The major indices jumped by 1% or more last week and finished Friday’s session at all-time highs. Stocks have been calmer of late compared to the first week of February, but are still inching higher while waiting for the market’s next decisive move. Some investors are getting concerned with the yields, as the 10-year climbed past 1.25% today for the first time in nearly a year.   “Any fast movements in the bond market could cause portfolio managers to rethink allocations of their biggest winners,” said Daniel Laboe in the new Headline Trader, which had its first picks today (see below). “You can see this concern showing its colors in today’s index returns, with the growth-propelled NASDAQ 100 showing weakness, while the value-driven Dow Jones Industrial Average remains buoyant,” he continued. For the moment though, investors have most of their attention on the present, especially with new stimulus on the horizon and the vaccine rollout continuing. And let’s not forget that there are still hundreds of earnings reports scheduled for this shortened week, as this better-than-expected earnings season continues. Today's Portfolio Highlights: Headline Trader: The first picks for this new service were released today! Daniel Laboe chose three stocks with robust headline-driven momentum that are trading at a fundamental discount in their industries. The first buys are: • Alibaba (BABA) – a play on the digital revolution in Asia • Virtu (VIRT) – a play on volatility amid the “retail trading revolution” • Skyworks (SWKS) – a play on the need for connectivity in the 5G rollout The editor added BABA and VIRT with 10% allocations each, while SWKS has an 8% allocation. Read the complete commentary for extensive analysis of these first picks and to learn about Dan’s stock-picking thought process as we embark on this new portfolio.  Stocks Under $10: This portfolio cashed in a pair of double-digit winners before the three-day weekend on Friday, and today Brian replaced one of them. He picked up EMCORE (EMKR), an electronics manufacturer that makes chips for the broadband, fiber optic, satellite and terrestrial solar power markets. The company has beaten the Zacks Consensus Estimate in the past three quarters, while rising earnings estimates have made the stock a Zacks Rank #2 (Buy). Its margins showed “drastic improvement” of late, which the editor loves to see since it means the stock could run to double digits in the next several months. The service now has 13 names after the recent sells and today’s buy, which Brian considers to be the “appropriate exposure level to the overall market” at the moment. Read the full write-up for more. In other news, this portfolio had a top performer today when Cassava Sciences (SAVA) jumped 12.4%. The stock is also the best performer over the past 30 days with a surge of approximately 390%.   Surprise Trader: There’s still plenty of earnings season left, so Dave isn’t taking any breaks. On Tuesday, he picked up Primoris Services (PRIM), a Zacks Rank #1 (Strong Buy) that operates as one of the largest specialty contractors and infrastructure companies in the U.S. The company reported double-digit surprises in each of the last two quarters. Looking forward, it has a positive Earnings ESP of 4.55% for the quarter coming after the bell on Monday, February 22. The editor added PRIM today with a 12.5% allocation, while also selling Terex (TEX) for a 1% advance in about a week. See the full write-up for more on today’s action. Commodity Innovators: Uranium stocks have been looking very bullish of late, so Jeremy decided to add some exposure by picking up Cameco Corp. (CCJ). Most of the names in this field have a low market cap or can be considered quite risky. But the editor considers CCJ to be “best in breed”. Read the complete commentary for more on this new addition and to discover why uranium is so popular these days. Jeremy also did some fine-tuning to the portfolio on Tuesday by selling Schlumberger (SLB) and IPath Series B Bloomberg Coffee Subindex Total Return ETN (JO) for gains of 27.1% and 11.8%, respectively, in less than five months. IPath Bloomberg Cocoa Subindex Total Return ETN (NIB) was also sold for a slight loss. Marijuana Innovators: This portfolio continues to dominate the top movers list. Not only did it have the three biggest winners on Tuesday, but they were also all higher by double digits. The noteworthy performances came from Aphria (APHA, +28.3%), HEXO (HEXO, +22.6%) and Aurora Cannabis (ACB, +12.9%). Zacks Short Sell List: Half of the portfolio was replaced in this week's adjustment. The stocks that were short-covered included: • BioMarin Pharmaceutical (BMRN, +1.05%) • Marriott Int'l (MAR) • Intuit (INTU) • Nuance Communications (NUAN) • Square (SQ) The new buys that filled these open spots were: • Ceridian HCM (CDAY) • China Lodging Group (HTHT) • TAL Education (TAL) • Teradata (TDC) • Viasat (VSAT) Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide. Black Box Trader: The portfolio cashed in two double-digit winners in this week's adjustment, which is coming a day later than usual due to President's Day. The four stocks that were sold included: • Alcoa (AA, +21.1%) • Vista Outdoor (VSTO, +10.7%) • Ford Motor (F, +0.9%) • KB Home (KBH) The new buys that replaced these names were: • Camping World (CWH) • Taylor Morrison Home (TMHC) • Valero Energy (VLO) • XPO Logistics (XPO)   Read the Black Box Trader’s Guide to learn more about this computer-driven service. By the way, this portfolio made the Top 5 scoreboard on Tuesday as U.S. Steel (X) rose 12%.  Have a Great Evening, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

Stocks Come Off Lows While Waiting for Jobs Report

Stocks Come Off Lows While Waiting for Jobs Report SPECIAL ALERT: Remember, we need your input to make next week’s new Zacks Ultimate Strategy Session episode the best it can be. There are two ways you can participate: 1) Zacks Mailbag: In this regular segment, Kevin Matras answers your questions ranging from current market conditions, general investing wisdom, usage of the Zacks Rank or any resources of Zacks.com and more. Pretty much anything goes. 2) Portfolio Makeover: Sheraz Mian and Kevin Cook review a customer portfolio to give feedback for improvement. No need to send us personal information such as dollar value of holdings. Simply email us with all of the tickers you own. Just make sure to email your submissions for either one, or both, by tomorrow morning, June 4. Email now to mailbag@zacks.com. The major indices were all in the red on Thursday, but they came well off the morning lows amid solid economic data released today and before the big monthly jobs report scheduled for tomorrow. A potential compromise on the corporate tax rate also helped the rebound. The Dow’s five-day winning streak has come to an end, but it was still the best-performing index with a loss of only 0.07% (or about 23 points) to 34,577.04. It had been off by more than 250 points earlier in the session. The S&P also had a nice comeback and finished lower by 0.36% to 4192.85. Unfortunately, the NASDAQ didn’t have quite as dramatic a bounce as tech lagged once again. The index slipped by 1.03% (or nearly 142 points) to 13,614.51. Tomorrow’s Government Employment Situation report may be the biggest jobs report of the month… but it’s far from the only one. We had two other such releases on Thursday and they were both noteworthy. The ADP employment report showed that private payrolls added an impressive 978,000 jobs in May, squashing expectations of less than 700K and the previous month’s downwardly-revised total of 654K. As you’d expect in an economy that’s finally reopening, the leisure & hospitality space is making up some lost ground by adding more than 400K jobs. But there’s more. Jobless claims reached another pandemic milestone by moving under 400K at 385,000, which was slightly better than expectations and marked a fifth straight decline. Meanwhile, ISM Services jumped to 64 in May, which is far into expansion territory above 50. The print was better than April’s 62.7 and expectations at just over 63. Ironically (but not surprisingly) these strong reports were probably a big factor in the market’s morning malaise. After tomorrow’s jobs report, the market’s obsession will switch to the next Fed meeting scheduled for June 15-16. These strong results provide even more fuel to nervous investors’ concerns that the Committee may have to change policy sooner than expected. The market fortunately simmered down as the day progressed. And it got a big boost from a news report that the Biden Administration may offer a 15% tax floor instead of hiking the corporate tax rate to 28%. It’ll be interested to see where this goes in the coming weeks as Washington attempts to pass an infrastructure bill. Well… here we go! The jobs report comes out tomorrow. We probably won’t have anything nearly as dramatic as last month’s miss of approximately 700K, but it does have the potential to be a market mover.  As of this moment, the Dow is up slightly in this abbreviated week heading into Friday, while the other two major indices are in the red. Today's Portfolio Highlights: Home Run Investor: It’s time to get more exposure to the oil patch as crude prices continue to climb, so Brian added PDC Energy (PDCE) on Thursday. This independent upstream operator explores for, develops and produces natural gas, crude oil and natural gas liquids. The company has beaten the Zacks Consensus Estimate in each of the last four quarters and amassed an average surprise of 79% in that time. Rising earnings estimates have made PDCE a Zacks Rank #1 (Strong Buy). Looking forward, analysts are calling for topline growth of 24% this year and 11% next year. In order to make room for PDCE, the editor decided to sell MarineMax (HZO) after a sharp pullback, which protects a 42% profit in less than seven months. Read the full write-up for more on all of today’s moves. Counterstrike: Business is picking up for Ulta Beauty (ULTA), which recently reported a 113% positive surprise and raised its fiscal 2021 guidance. The stock just filled its post-earnings gap today but Jeremy thinks it will hold support and continue its move upwards. This Zacks Rank #1 (Strong Buy) is an obvious reopening play, so the editor added it on Thursday with a small 4% allocation. If the selling continues but the support levels hold, he’ll add more of ULTA. Read the full write-up for the specifics on this move. Headline Trader: The first quarter report from Goldman Sachs (GS) was so “unbelievable” that Dan wasted no time and added this financial giant on the same day of its release. And why shouldn’t he? The company beat the Zacks Consensus Estimate by 90% and grew sales by nearly 160% year over year. That was back in mid April. Now, GS is nearing the editor’s Fibonacci-derived price target around $391 and the relative strength index has reached overbought territory. He thinks this is a great time to “scale out” of the stock, so half of the position was sold on Thursday for a more than 16% return in less than two months. Dan is leaving the other half in the portfolio as he still thinks GS has upside potential. Read more in the full write-up. All the Best, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

Precarious Market Action

Precarious Market Action Dan Laboe here, Editor of the Headline Trader portfolio. I am covering for the acclaimed Jim who will be back in action tomorrow. The market is growing increasingly cautious as we enter post-earnings season action. This precarious market posture was apparent in today's dicey trade. Stocks were buoyant for most of the day (trading right around even) until the last hour of the session, where indecisiveness turned into panic, causing all the major averages to spill into the close. We are entering a seasonally weak period for the public equity market (September & October have been the worst months for stocks in the past decade), where down days are expected. Market participants are increasingly taking on the mindset that this may be as good as it gets, which could cause further short-term volatility. This is the second consecutive down day for all the major averages, with the S&P 500 and Dow Jones slipping 1.07% & 1.08%, respectively. The growth-driven Nasdaq 100 was punished marginally less because of its larger decline yesterday but still experienced a 0.97% decline. The VIX broke above its 200-day moving average for just the 3rd time since early March, and its 50-day turned into a support today. This may be an indication that volatility will remain with us for a time. Consumer discretionary, the biggest laggard yesterday following weak retail sales data, was the only market sector to close in the green today. This morning, robust earnings from Lowe's (LOW) and TJX (TJX) drove fresh hope back into the retail space. Fed Minutes July's Fed Minutes were published this afternoon, and the markets had an immediate knee-jerk reaction to the Fed's focus on the potential impact of the Delta-variant, causing the US 10 Year yield to plummet and equity indexes to jump in the 5 minutes that followed its release. This move quickly reversed with an exaggerated move in the opposite direction, which inevitably led to the end of session sell-off. Today's released Fed Minutes were stale. The Fed in last month's FOMC meeting is not the same Fed that we have today. Since the exceptional July jobs report earlier this month, members of the Fed have changed their stance on the tapering timeline. In the last couple of weeks, several Central Bankers have come out and said that it would be prudent to start paring its $120 billion in asset purchases sooner rather than later. The markets are now pricing in a September announcement (FOMC meeting September 21-22) to start tapering in October and complete its asset purchasing program in mid-2022. This morning, St. Louis Fed president James Bullard discussed the risks of delaying monetary tightening, stating that if the Fed's inflation projections are wrong, they may be forced to implement abrupt and potentially "very disruptive" policy changes. He declared that "every indication is that labor markets are about as tight as they ever get." Bullard wants the Fed to be done tapering by the first quarter of next year so that the Central Bank would have the flexibility to begin liftoff (first Fed Funds rate hike) as soon as possible. Every day it seems that the Fed gets more hawkish, but if the Delta-variant does begin to impact the economy, this narrative will quickly reverse.  Is This As Good As It Gets? Market participants are taking on a 'this is as good as it gets' mentality with peak earnings growth, ultra-low interest rates, peak consumer demand, and accommodative monetary/fiscal policies, all now ostensibly in the rearview mirror. Investors still have their mouths open as we round out a jaw-dropping Q2 earnings season. This was one of the best earnings seasons in history, with 88% of companies beating EPS estimates by an average of 17.5% while exhibiting record profit margins averaging 13.6%. Earnings and revenues are up an unprecedented 103% & 28% year-over-year, respectively. Despite the exceptionally weak Q2 2020 EPS comps, earnings are still up over 30% from pre-pandemic levels. Now investors are looking at decelerating earnings growth in the coming quarters, forcing market participants to reevaluate the market's rich valuation multiples. Since the pandemic lockdowns began, the Fed-induced ultra-low interest rate environment has provided a nice tailwind for high-growth stocks. Record low cost of capital (driven by low yields) provided nascent innovation-powered companies with an almost endless upside in the equity market. Analysts were able to catapult the value of growth businesses' projected future earnings, justifying some of the crazy valuation multiples we saw earlier this year. Most of the over euphoric valuations on unprofitable growth stocks have been compressed by the rising yields in anticipation of liftoff. Consumer spending took off in the first 4 months of 2021 as the economic reopening drove an unparalleled tidal wave of pent-up demand on Main Street. The pandemic lockdowns and resulting record levels of savings/wealth in the US ($19 trillion increase in wealth, 26% increase in net wealth) propelled our society's propensity to spend as storefronts reopened across the country. This effect has decelerated since April, causing investors to question if peak consumer spending is in the past. With back-to-school shopping and the holiday season around the corner, I find this notion unlikely. The unprecedented level of accommodation provided by record monetary (Federal Reserve) and fiscal (Federal Government) spending amid the pandemic is the only reason that our economy has been able to not only recover at such a speed but come out the other side better than ever. The PPP loans, COVID checks, and unemployment benefits provided by the Federal government provided the economy with enough liquidity to do a little better than survive last year and now thrive during the recovery. The Fed's swift action of dropping Fed Fund rates to 0-0.25% and its subsequent $120 billion monthly asset purchases (aka quantitative easing) allowed the equity market to take off after the initial pandemic sell-off. The accommodative monetary and fiscal policies are beginning to phase out. Still, I expect the aforementioned positive impacts will continue to echo in our economy for quarters to come. The best is yet to come. We are reentering the Roaring 20s with ambition. Technological advancements are accelerating faster than ever, pushing our economy to do the same. I expect to see growing annual stock market returns as prolifically advancing tech thrusts valuations to continuously new highs. A Technical Omen That Could Spell Trouble For Investors A Hindenburg Omen, a technical indicator that signals an elevated probability of a market crash, has been reached by this precarious market. This indicator looks for an elevated number of new 52-week highs and lows that surpasses 2.2% of all securities traded that day (the number of highs cannot be more than double the number of lows), along with an upward trending 50-day moving average, and negatively shifting market sentiment (indicated by the McClellan Oscillator or MCO). This indicator generally implies that market participants are tentative and uncertain. The Hindenburg Omen almost always precedes a stock market downturn but is only about 25% accurate when it is seen. Investors have been positioning themselves defensively as post-earnings price action commenced. These defensive investors are buying stocks in low beta sectors like health care, utilities, consumer staples, and real estate, which have led over the past week of trading. All of the previously mentioned sectors have lagged the broader market over the past 52-weeks, so it's only natural for weakness chasing money managers to rotate into these segments even if an index level correction (10%+ decline from recent highs) isn't coming. I'm not running for the hills quite yet, with trillions of bullish capital still waiting to be deployed on even the most immaterial dips. I am also not adding many new positions to my portfolio. I don't think we will experience a full correction, but I do believe that some consolidation may be in order over the next few months.  Cathie Wood vs. The Big Short's Michael Burry Expected interest rate growth and overzealous valuation multiples on ultra-high-growth stocks have some investors betting against Cathie Wood's Ark Innovation ETF (ARKK). 'Big Short' investor, Michael Burry, who is famous for predicting and profiting from the 2008 financial crisis, revealed a $31 million put position against ARKK, along with a $731 million bet against Tesla (TSLA), which happens to be Cathie's largest holding, in his latest 13-F filing (institutional investment managers' SEC required quarterly report). The actively traded ARKK fund has become the benchmark for high-growth 'market-disruptors,' and Cathie Wood has become an investing icon. Her innovation-driven ETF saw an impressive bull run during the pandemic, exhibiting a 384% 11-month rally from its March 2020 lows to its peak in mid-February, but has recently fallen out of market favor. Soaring yields forced investors to reevaluate the extreme growth multiples in Cathie's 4th Industrial Revolution focused holdings. Cathie Wood fired back at the press surrounding Burry's notable position against her ETF with a tweet saying, "I do not believe that he (Michael Burry) understands the fundamentals that are creating explosive growth and investment opportunities in the innovation space." Burry doesn't have a vendetta against Cathie Wood but sees a short-term trading opportunity. He is making a relatively small bet in his over $2 billion Scion Asset Management portfolio (ARKK put up just 1.5% of total assets under management). Burry believes that the current fundamentals of ARKK's high growth holdings are out of whack in this rising interest rate environment, and he is not alone with this thinking. A record 13.5% of outstanding ARKK shares are currently held short (24.87 million shares), and a Short ARKK ETF, which will trade under the ticker SARK, is awaiting SEC approval. ARKK is looking at a days-to-cover short ratio (number of shares held short divided by daily volume) of 4.6, which isn't exactly a concerning level yet, but it is growing. I personally love how Cathie Wood views this rapidly advancing market and focuses on long-term profitability instead of short-term volatility. I perceive Cathie's pandemic success as a reflection of her savvy ability to recognize market-disrupting innovators, and it finally paid off after more than 5 years of flying under the radar (relatively speaking). That being said, I still utilize her ETF for put option opportunities when they reveal themselves because of the speed at which ARKK moves. Cathie Wood remains one of if not the most influential players in the market today. "The Cathie Wood Effect" has replaced "The Warren Buffett Effect" in this rapidly progressing and digitalizing economic/market environment. ARKK is undoubtedly a long-term hold for the commencing 4th Industrial Revolution, which is already changing the world in which we live.  Today’s Portfolio Highlights Options Trader: Following some of this week's precarious price action, Kevin is pulling profits on the September call option in Nasdaq, Inc (NDAQ), after almost two months of holding. The NDAQ September 180 call contracts crossed the 30 days till expiration threshold, and Kevin doesn't want to lose that time premium baked into these options. This exchange has been an excellent trade for the Options Trader portfolio this year, with NDAQ providing three separate profit-driving trades since April. According to Kevin: "First one was a $892 gain on 4/16. Second one was a $906 gain on 6/24. Looks like we'll get approx. $435 on this one." NDAQ has been on an absolute tear so far this year, rallying over 40% year-to-date (more than doubling the S&P 500s performance). Kevin stated that he would likely jump back into this trade as he still sees further upside potential. Stocks Under $10: The health care sector has led the broader market over the past month of trading, with Moderna (MRNA) and Pfizer (PFE) leading the pack. Brian is taking advantage of this sector's momentum with the addition of Immunovant (IMVT) on this down day for the market. IMVT and its development of monoclonal antibodies for the treatment of autoimmune diseases are developing an early treatment for those with COVID. Brian expects this stock to get a Delta-variant catalyzed boost, and most analysts seem to agree with him with every price target showing a sizable increase from current price levels. Surprise Trader:  Car manufacturers are struggling to keep up with demand as chip shortages continue to plague the space, causing used/old cars to stay on the road longer. Dave is taking advantage of this notion with a read-through trade, adding Advanced Auto Parts (AAP) to the Surprise Trader portfolio. More old cars on the road means more tune-ups and breakdowns that will require vehicle parts. The company is reporting before open next Tuesday, and Dave believes that it has some strong upside potential that the markets are yet to price in. Happy Wednesday! DanRecommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

BTFD Arrives: Futures Rebound, Europe Surges While Asia Slumps On Evergrande Fears

BTFD Arrives: Futures Rebound, Europe Surges While Asia Slumps On Evergrande Fears Even though China was closed for a second day, and even though the Evergrande drama is nowhere closer to a resolution with a bond default imminent and with Beijing mute on how it will resolve the potential "Lehman moment" even as rating agency S&P chimed in saying a default is likely and it does not expect China’s government “to provide any direct support” to the privately owned developer, overnight the BTFD crew emerged in full force, and ramped futures amid growing speculation that Beijing will rescue the troubled developer... Algos about to go on a rampage — zerohedge (@zerohedge) September 21, 2021 ... pushing spoos almost 100 points higher from their Monday lows, and European stock were solidly in the green - despite Asian stocks hitting a one-month low - as investors tried to shake off fears of contagion from a potential collapse of China’s Evergrande, although gains were capped by concerns the Federal Reserve could set out a timeline to taper its stimulus at its meeting tomorrow. The dollar dropped from a one-month high, Treasury yields rose and cryptos rebounded from yesterday's rout. To be sure, the "this is not a Lehman moment" crowed was out in full force, as indicated by this note from Mizuho analysts who wrote that “while street wisdom is that Evergrande is not a ‘Lehman risk’, it is by no stretch of the imagination any meaningful comfort. It could end up being China’s proverbial house of cards ... with cross-sector headwinds already felt in materials/commodities.” At 7:00 a.m. ET, S&P 500 e-minis were up 34.00 points, or 0.79% and Nasdaq 100 e-minis 110.25 points, or 0.73%, while futures tracking the Dow  jumped 0.97%, a day after the index tumbled 1.8% in its worst day since late-July,  suggesting a rebound in sentiment after concerns about contagion from China Evergrande Group’s upcoming default woes roiled markets Monday. Dip-buyers in the last hour of trading Monday helped the S&P 500 pare some losses, though the index still posted the biggest drop since May. The bounce also came after the S&P 500 dropped substantially below its 50-day moving average - which had served as a resilient floor for the index this year - on Monday, its first major breach in more than six months. Freeport-McMoRan mining stocks higher with a 3% jump, following a 3.2% plunge in the S&P mining index a day earlier as copper prices hit a one-month low. Interest rate-sensitive banking stocks also bounced, tracking a rise in Treasury yields. Here are some of the biggest U.S. movers today: U.S.-listed Chinese stocks start to recover from Monday’s slump in premarket trading as the global selloff moderates. Alibaba (BABA US), Baidu (BIDU US), Nio (NIO US), Tencent Music (TME US)and Bilibili (BILI US) are among the gainers Verrica Pharma (VRCA US) plunges 30% in premarket trading after failing to get FDA approval for VP-102 for the treatment of molluscum contagiosum ReWalk Robotics (RWLK US) shares jump 43% in U.S. premarket trading amid a spike in volume in the stock. Being discussed on StockTwits Aprea Therapeutics gains 21% in U.S. premarket trading after the company reported complete remission in a bladder cancer patient in Phase 1/2 clinical trial of eprenetapopt in combination with pembrolizumab Lennar (LEN US) shares fell 3% in Monday postmarket trading after the homebuilder forecast 4Q new orders below analysts’ consensus hurt by unprecedented supply chain challenges ConocoPhillips (COP US) ticks higher in U.S. premarket trading after it agreed to buy Shell’s  Permian Basin assets for $9.5 billion in cash, accelerating the consolidation of the largest U.S. oil patch SmileDirect (SDC US) slightly higher in premarket trading after it said on Monday that it plans to enter France with an initial location in Paris KAR Global (KAR US) shares fell 4.6% in post-market trading on Monday after the company withdrew is full-year financial outlook citing disruption caused by chip shortage Sportradar (SRAD US) shares jumped 4.5% in Monday postmarket trading, after the company said basketball legend Michael Jordan will serve as a special adviser to its board and also increase his investment in the sports betting and entertainment services provider, effective immediately Orbital Energy Group (OEG US) gained 6% postmarket Monday after a unit won a contract  to construct 1,910 miles of rural broadband network in Virginia. Terms were not disclosed “So much of this information is already known that we don’t think it will necessary set off a wave of problems,” John Bilton, head of global multi-asset strategy at JPMorgan Asset Management, said on Bloomberg TV. “I’m more concerned about knock-on sentiment at a time when investor sentiment is a bit fragile. But when we look at the fundamentals -- the general growth, and direction in the wider economy -- we still feel reasonably confident that the situation will right itself.” Aside from worries over Evergrande’s ability to make good on $300 billion of liabilities, investors are also positioning for the two-day Fed meeting starting Tuesday, where policy makers are expected to start laying the groundwork for paring stimulus.  Europe's Stoxx 600 index climbed more than 1%, rebounding from the biggest slump in two months, with energy companies leading the advance and all industry sectors in the green. Royal Dutch Shell rose after the company offered shareholders a payout from the sale of shale oil fields. Universal Music Group BV shares soared in their stock market debut after being spun off from Vivendi SE. European airlines other travel-related stocks rise for a second day following the U.S. decision to soon allow entry to most foreign air travelers as long as they’re fully vaccinated against Covid-19; British Airways parent IAG soars as much as 6.9%, extending Monday’s 11% jump. Here are some of the biggest European movers today: Stagecoach shares jump as much as 24% after the company confirmed it is in takeover talks with peer National Express. Shell climbs as much as 4.4% after selling its Permian Basin assets to ConocoPhillips for $9.5 billion. Bechtle gains as much as 4.3% after UBS initiated coverage at buy. Husqvarna tumbles as much as 9% after the company said it is suing Briggs & Stratton in the U.S. for failing to deliver sufficient lawn mower engines for the 2022 season. Kingfisher slides as much as 6.4% after the DIY retailer posted 1H results and forecast higher profits this fiscal year. The mood was decidedly more sour earlier in the session, when Asian stocks fell for a second day amid continued concerns over China’s property sector, with Japan leading regional declines as the market reopened after a holiday. The MSCI Asia Pacific Index was down 0.5%, headed for its lowest close since Aug. 30, with Alibaba and SoftBank the biggest drags. China Evergrande Group slid deeper in equity and credit markets Tuesday after S&P said the developer is on the brink of default. Markets in China, Taiwan and South Korea were closed for holidays. Worries over contagion risk from the Chinese developer’s debt problems and Beijing’s ongoing crackdowns, combined with concern over Federal Reserve tapering, sent global stocks tumbling Monday. The MSCI All-Country World Index fell 1.6%, the most since July 19. Japan’s stocks joined the selloff Tuesday as investor concerns grew over China’s real-estate sector as well as Federal Reserve tapering, with the Nikkei 225 sliding 2.2% - its biggest drop in three months, catching up with losses in global peers after a holiday - after a four-week rally boosted by expectations for favorable economic policies from a new government. Electronics makers were the biggest drag on the Topix, which declined 1.7%. SoftBank Group and Fast Retailing were the largest contributors to a 2.2% loss in the Nikkei 225. Japanese stocks with high China exposure including Toto and Nippon Paint also dropped. “The outsized reaction in global markets may be a function of having too many uncertainties bunched into this period,” Eugene Leow, a macro strategist at DBS Bank Ltd., wrote in a note. “It probably does not help that risk taking (especially in equities) has gone on for an extended period and may be vulnerable to a correction.” “The proportion of Japan’s exports to China is greater than those to the U.S. or Europe, making it sensitive to any slowdown worries in the Chinese economy,” said Hideyuki Ishiguro, a senior strategist at Nomura Asset Management in Tokyo. “The stock market has yet to fully price in the possibility of a bankruptcy by Evergrande Group.” The Nikkei 225 has been the best-performing major stock gauge in the world this month, up 6.2%, buoyed by expectations for favorable policies from a new government and an inflow of foreign cash. The Topix is up 5.3% so far in September. In FX, the Bloomberg Dollar Spot Index inched lower and the greenback fell versus most of its Group-of-10 peers as a selloff in global stocks over the past two sessions abated; the euro hovered while commodity currencies led by the Norwegian krone were the best performers amid an advance in crude oil prices. Sweden’s krona was little changed after the Riksbank steered clear of signaling any post-pandemic tightening, as it remains unconvinced that a recent surge in inflation will last. The pound bucked a three-day losing streak as global risk appetite revived, while investors look to Thursday’s Bank of England meeting for policy clues. The yen erased earlier gains as signs that risk appetite is stabilizing damped demand for haven assets. At the same time, losses were capped due to uncertainty over China’s handling of the Evergrande debt crisis. In rates, Treasuries were lower, although off worst levels of the day as U.S. stock futures recover around half of Monday’s losses while European equities trade with a strong bid tone. Yields are cheaper by up to 2.5bp across long-end of the curve, steepening 5s30s spread by 1.2bp; 10-year yields around 1.3226%, cheaper by 1.5bp on the day, lagging bunds and gilts by 1bp-2bp. The long-end of the curve lags ahead of $24b 20-year bond reopening. Treasury will auction $24b 20-year bonds in first reopening at 1pm ET; WI yield ~1.82% is below auction stops since January and ~3bp richer than last month’s new-issue result In commodities, crude futures rose, with the front month WTI up 1.5% near $71.50. Brent stalls near $75. Spot gold trades a narrow range near $1,765/oz. Base metals are mostly in the green with LME aluminum the best performer Looking at the day ahead now, and data releases include US housing starts and building permits for August, along with the UK public finances for September. From central banks, we’ll hear from ECB Vice President de Guindos. Otherwise, the General Debate will begin at the UN General Assembly, and the OECD publishes their Interim Economic Outlook. Market Snapshot S&P 500 futures up 1.0% to 4,392.75 STOXX Europe 600 up 1.1% to 459.10 MXAP down 0.5% to 200.25 MXAPJ up 0.2% to 640.31 Nikkei down 2.2% to 29,839.71 Topix down 1.7% to 2,064.55 Hang Seng Index up 0.5% to 24,221.54 Shanghai Composite up 0.2% to 3,613.97 Sensex up 0.4% to 58,751.30 Australia S&P/ASX 200 up 0.4% to 7,273.83 Kospi up 0.3% to 3,140.51 Brent Futures up 1.6% to $75.13/bbl Gold spot down 0.1% to $1,761.68 U.S. Dollar Index little changed at 93.19 German 10Y yield fell 5.0 bps to -0.304% Euro little changed at $1.1729 Top Overnight News from Bloomberg Lael Brainard is a leading candidate to be the Federal Reserve’s banking watchdog and is also being discussed for more prominent Biden administration appointments, including to replace Fed chairman Jerome Powell and, potentially, for Treasury secretary if Janet Yellen leaves Federal Reserve Chair Jerome Powell will this week face the challenge of convincing investors that plans to scale back asset purchases aren’t a runway to raising interest rates for the first time since 2018 ECB Vice President Luis de Guindos says there is “good news” with respect to the euro-area recovery after a strong development in the second and third quarter The ECB is likely to continue purchasing junk-rated Greek sovereign debt even after the pandemic crisis has passed, according to Governing Council member and Greek central bank chief Yannis Stournaras U.K. government borrowing was well below official forecasts in the first five months of the fiscal year, providing a fillip for Chancellor of the Exchequer Rishi Sunak as he prepares for a review of tax and spending next month U.K. Business Secretary Kwasi Kwarteng warned the next few days will be challenging as the energy crisis deepens, and meat producers struggle with a crunch in carbon dioxide supplies The U.K.’s green bond debut broke demand records for the nation’s debt as investors leaped on the long-anticipated sterling asset. The nation is offering a green bond maturing in 2033 via banks on Tuesday at 7.5 basis points over the June 2032 gilt. It has not given an exact size target for the sale, which has attracted a record of more than 90 billion pounds ($123 billion) in orders Germany cut planned debt sales in the fourth quarter by 4 billion euros ($4.7 billion), suggesting the surge in borrowing triggered by the coronavirus pandemic is receding Contagion from China Evergrande Group has started to engulf even safer debt in Asia, sparking the worst sustained selloff of the securities since April. Premiums on Asian investment-grade dollar bonds widened 2-3 basis points Tuesday, according to credit traders, after a jump of 3.4 basis points on Monday Swiss National Bank policy makers watching the effects of negative interest rates on the economy are worrying about the real-estate bubble that their policy is helping to foster Global central banks need to set out clear strategies for coping with inflation risks as the world economy experiences faster-than-expected cost increases amid an uneven recovery from the pandemic, the OECD said A quick look at global markets courtesy of Newsquawk Asian equities traded cautiously following the recent downbeat global risk appetite due to Evergrande contagion concerns which resulted in the worst day for Wall Street since May, with the region also contending with holiday-thinned conditions due to the ongoing closures in China, South Korea and Taiwan. ASX 200 (+0.2%) was indecisive with a rebound in the mining-related sectors counterbalanced by underperformance in utilities, financials and tech, while there were also reports that the Byron Bay area in New South Wales will be subject to a seven-day lockdown from this evening. Nikkei 225 (-1.8%) was heavily pressured and relinquished the 30k status as it played catch up to the contagion downturn on return from the extended weekend with recent detrimental currency inflows also contributing to the losses for exporters. Hang Seng (-0.3%) was choppy amid the continued absence of mainland participants with markets second-guessing whether Chinese authorities will intervene in the event of an Evergrande collapse, while shares in the world’s most indebted developer fluctuated and wiped out an early rebound, although affiliate Evergrande Property Services and other property names fared better after Sun Hung Kai disputed reports of China pressuring Hong Kong developers and with Guangzhou R&F Properties boosted by reports major shareholders pledged funds in the Co. which is also selling key assets to Country Garden. Finally, 10yr JGBs were higher amid the underperformance in Japanese stocks and with the Japan Securities Dealers Association recently noting that global funds purchased the most ultra-long Japanese bonds since 2014, although upside was limited amid softer demand at the enhanced liquidity auction for 2yr-20yr maturities and with the BoJ kickstarting its two-day policy meeting. Top Asian News Richest Banker Says Evergrande Is China’s ‘Lehman Moment’ Hong Kong Tycoons, Casino Giants Find Respite in Stock Rebound Taliban Add More Male Ministers, Say Will Include Women Later Asian Stocks Drop to Lowest Level This Month; Japan Leads Losses European equities (Stoxx 600 +1.1%) trade on a firmer footing attempting to recoup some of yesterday’s losses with not much in the way of incremental newsflow driving the upside. Despite the attempt to claw back some of the prior session’s lost ground, the Stoxx 600 is still lower by around 1.6% on the week. The Asia-Pac session was one characterised by caution and regional market closures with China remaining away from market. Focus remains on whether Evergrande will meet USD 83mln in interest payments due on Thursday and what actions Chinese authorities could take to limit the contagion from the company in the event of further troubles. Stateside, futures are also on a firmer footing with some slight outperformance in the RTY (+1.2%) vs. peers (ES +0.8%). Again, there is not much in the way of fresh positivity driving the upside and instead gains are likely more a by-product of dip-buying; attention for the US is set to become increasingly geared towards tomorrow’s FOMC policy announcement. Sectors in Europe are firmer across the board with outperformance in Oil & Gas names amid a recovery in the crude complex and gains in Shell (+4.4%) after news that the Co. is to sell its Permian Basin assets to ConocoPhillips (COP) for USD 9.5bln in cash. Other outperforming sectors include Tech, Insurance and Basic Resources. IAG (+4.1%) and Deutsche Lufthansa (+3.8%) both sit at the top of the Stoxx 600 as the Co.’s continue to enjoy the fallout from yesterday’s decision by the US to allow travel from vaccinated EU and UK passengers. Swatch (-0.7%) is lagging in the luxury space following a downgrade at RBC, whilst data showed Swiss watch exports were +11.5% Y/Y in August (prev. 29.1%). Finally, National Express (+7.7%) is reportedly considering a takeover of Stagecoach (+21.4%), which is valued at around GBP 370mln. Top European News U.K. Warns of Challenging Few Days as Energy Crisis Deepens Germany Trims Planned Debt Sales as Pandemic Impact Recedes U.K.’s Green Bond Debut Draws Record Demand of $123 Billion Goldman Plans $1.5 Billion Petershill Partners IPO in London In FX, all the signs are constructive for a classic turnaround Tuesday when it comes to Loonie fortunes as broad risk sentiment improves markedly, WTI consolidates within a firm range around Usd 71/brl compared to yesterday’s sub-Usd 70 low and incoming results from Canada’s general election indicate victory for the incumbent Liberal party that will secure a 3rd term for PM Trudeau. Hence, it’s better the devil you know as such and Usd/Cad retreated further from its stop-induced spike to just pips short of 1.2900 to probe 1.2750 at one stage before bouncing ahead of new house price data for August. Conversely, the Swedish Krona seems somewhat reluctant to get carried away with the much better market mood after the latest Riksbank policy meeting only acknowledged significantly stronger than expected inflation data in passing, and the repo rate path remained rooted to zero percent for the full forecast horizon as a consequence. However, Eur/Sek has slipped back to test 10.1600 bids/support following an initial upturn to almost 10.1800, irrespective of a rise in unemployment. NOK/AUD/NZD - No such qualms for the Norwegian Crown as Brent hovers near the top of a Usd 75.18-74.20/brl band and the Norges Bank is widely, if not universally tipped to become the first major Central Bank to shift into tightening mode on Thursday, with Eur/Nok hugging the base of a 10.1700-10.2430 range. Elsewhere, the Aussie and Kiwi look relieved rather than rejuvenated in their own right given dovish RBA minutes, a deterioration in Westpac’s NZ consumer sentiment and near reversal in credit card spending from 6.9% y/y in July to -6.3% last month. Instead, Aud/Usd and Nzd/Usd have rebounded amidst the recovery in risk appetite that has undermined their US rival to top 0.7380 and 0.7050 respectively at best. GBP/CHF/EUR/JPY/DXY - Sterling is latching on to the ongoing Dollar retracement and more supportive backdrop elsewhere to pare losses under 1.3700, while the Franc continues its revival to 0.9250 or so and almost 1.0850 against the Euro even though the SNB is bound to check its stride at the upcoming policy review, and the single currency is also forming a firmer base above 1.1700 vs the Buck. Indeed, the collective reprieve in all components of the Greenback basket, bar the Yen on diminished safe-haven demand, has pushed the index down to 93.116 from 93.277 at the earlier apex, and Monday’s elevated 93.455 perch, while Usd/Jpy is straddling 109.50 and flanked by decent option expiry interest either side. On that note, 1.4 bn resides at the 109.00 strike and 1.1 bn between 109.60-70, while there is 1.6 bn in Usd/Cad bang on 1.2800. EM - Some respite across the board in wake of yesterday’s mauling at the hands of risk-off positioning in favour of the Usd, while the Czk has also been underpinned by more hawkish CNB commentary as Holub echoes the Governor by advocating a 50 bp hike at the end of September and a further 25-50 bp in November. In commodities, WTI and Brent are firmer in the European morning post gains in excess of 1.0%, though the benchmarks are off highs after an early foray saw Brent Nov’21 eclipse USD 75.00/bbl, for instance. While there has been newsflow for the complex, mainly from various energy ministers, there hasn’t been much explicitly for crude to change the dial; thus, the benchmarks are seemingly moving in tandem with broader risk sentiment (see equities). In terms of the energy commentary, the Qatar minister said they are not thinking of re-joining OPEC+ while the UAE minister spoke on the gas situation. On this, reports in Russian press suggests that Russia might allow Rosneft to supply 10bcm of gas to Europe per year under an agency agreement with Gazprom “as an experiment”, developments to this will be closely eyed for any indication that it could serve to ease the current gas situation. Looking ahead, we have the weekly private inventory report which is expected to post a headline draw of 2.4mln and draws, albeit of a smaller magnitude, are expected for distillate and gasoline as well. Moving to metals, spot gold is marginally firmer while silver outperforms with base-metals picking up across the board from the poor performance seen yesterday that, for instance, saw LME copper below the USD 9k mark. Note, the action is more of a steadying from yesterday’s downside performance than any notable upside, with the likes of copper well within Monday’s parameters. US Event Calendar 8:30am: Aug. Building Permits MoM, est. -1.8%, prior 2.6%, revised 2.3% 8:30am: Aug. Housing Starts MoM, est. 1.0%, prior -7.0% 8:30am: Aug. Building Permits, est. 1.6m, prior 1.64m, revised 1.63m 8:30am: Aug. Housing Starts, est. 1.55m, prior 1.53m 8:30am: 2Q Current Account Balance, est. -$190.8b, prior -$195.7b DB's Jim Reid concludes the overnight wrap Global markets slumped across the board yesterday in what was one of the worst days of the year as an array of concerns about the outlook gathered pace. The crisis at Evergrande and in the Chinese real estate sector was the catalyst most people were talking about, but truth be told, the market rout we’re seeing is reflecting a wider set of risks than just Chinese property, and comes after increasing questions have been asked about whether current valuations could still be justified, with talk of a potential correction picking up. Remember that 68% of respondents to my survey last week (link here) thought they’d be at least a 5% correction in equity markets before year end. So this has been front and centre of people’s mind even if the catalyst hasn’t been clear. We’ve all known about Evergrande’s woes and how big it was for a while but it wasn’t until Friday’s story of the Chinese regulatory crackdown extending into property that crystallised the story into having wider implications. As I noted in my chart of the day yesterday link here Chinese USD HY had been widening aggressively over the last couple of months but IG has been pretty rock solid. There were still no domestic signs of contagion by close of business Friday. However as it stands, there will likely be by the reopening post holidays tomorrow which reflects how quickly the story has evolved even without much new news. Before we get to the latest on this, note that we’ve still got a bumper couple of weeks on the calendar to get through, including the Fed decision tomorrow, which comes just as a potential government shutdown and debt ceiling fight are coming into view, alongside big debates on how much spending the Democrats will actually manage to pass. There has been some respite overnight with S&P 500 futures +0.58% higher and 10y UST yields up +1.5bps to 1.327%. Crude oil prices are also up c. 1%. On Evergrande, S&P Global Ratings has said that the company is on the brink of default and that it’s failure is unlikely to result in a scenario where China will be compelled to step in. The report added that they see China stepping in only if “there is a far-reaching contagion causing multiple major developers to fail and posing systemic risks to the economy.” The Hang Seng (-0.32%) is lower but the Hang Seng Properties index is up (+1.59%) and bouncing off the 5 plus year lows it hit yesterday. Elsewhere the ASX (+0.30%) and India’s Nifty (+0.35%) have also advanced. Chinese and South Korean markets are closed for a holiday but the Nikkei has reopened and is -1.80% and catching down to yesterday’s global move. Looking at yesterday’s moves in more depth, the gathering storm clouds saw the S&P 500 shed -1.70% in its worst day since May 12, with cyclical industries leading the declines and with just 10% of S&P 500 index members gaining. There was a late rally at the end of the US trading session that saw equity indices bounce off their lows, with the S&P 500 (-2.87%) and NASDAQ (-3.42%) both looking like they were going to register their worst days since October 2020 and late-February 2021 respectively. However, yesterday was still the 5th worst day for the S&P 500 in 2021. Reflecting the risk-off tone, small caps suffered in particular with the Russell 2000 falling -2.44%, whilst tech stocks were another underperformer as the NASDAQ lost -2.19% and the FANG+ index of 10 megacap tech firms saw an even bigger -3.16% decline. For Europe it was much the same story, with the STOXX 600 (-1.67%) and other bourses including the DAX (-2.31%) seeing significant losses amidst the cyclical underperformance. It was the STOXX 600’s worst performance since mid-July and the 6th worst day of the year overall. Unsurprisingly, there was also a significant spike in volatility, with the VIX index climbing +4.9pts to 25.7 – its highest closing level since mid-May – after trading above 28.0pts midday. In line with the broader risk-off move, especially sovereign bonds rallied strongly as investors downgraded their assessment of the economic outlook and moved to price out the chances of near-term rate hikes. By the close of trade, yields on 10yr Treasuries had fallen -5.1bps to 1.311%, with lower inflation breakevens (-4.1bps) leading the bulk of the declines. Meanwhile in Europe, yields on 10yr bunds (-4.0bps), OATs (-2.6bps) and BTPs (-0.9bps) similarly fell back, although there was a widening in spreads between core and periphery as investors turned more cautious. Elsewhere, commodities took a hit as concerns grew about the economic outlook, with Bloomberg’s Commodity Spot Index (-1.53%) losing ground for a third consecutive session. That said, European natural gas prices (+15.69%) were the massive exception once again, with the latest surge taking them above the peak from last Wednesday, and thus bringing the price gains since the start of August to +84.80%. Here in the UK, Business Secretary Kwarteng said that he didn’t expect an emergency regarding the energy supply, but also said that the government wouldn’t bail out failed companies. Meanwhile, EU transport and energy ministers are set to meet from tomorrow for an informal meeting, at which the massive spike in prices are likely to be discussed. Overnight, we have the first projections of the Canadian federal election with CBC News projecting that the Liberals will win enough seats to form a government for the third time albeit likely a minority government. With the counting still underway, Liberals are currently projected to win 156 seats while Conservatives are projected to win 120 seats. Both the parties are currently projected to win a seat less than last time. The Canadian dollar is up +0.44% overnight as the results remove some election uncertainty. Turning to the pandemic, the main news yesterday was that the US is set to relax its travel rules for foreign arrivals. President Biden announced the move yesterday, mandating that all adult visitors show proof of vaccination before entering the country. Airline stocks outperformed strongly in response, with the S&P 500 airlines (+1.55%) being one of the few industry groups that actually advanced yesterday. Otherwise, we heard from Pfizer and BioNTech that their vaccine trials on 5-11 year olds had successfully produced an antibody response among that age group. The dose was just a third of that used in those aged 12 and above, and they said they planned to share the data with regulators “as soon as possible”. Furthermore, they said that trials for the younger cohorts (2-5 and 6m-2) are expected as soon as Q4. In Germany, there are just 5 days left until the election now, and the last Insa poll before the vote showed a slight tightening in the race, with the centre-left SPD down a point to 25%, whilst the CDU/CSU bloc were up 1.5 points to 22%. Noticeably, that would also put the race back within the +/- 2.5% margin of error. The Greens were unchanged in third place on 15%. Staying with politics and shifting back to the US, there was news last night that Congressional Democratic leaders are looking to tie the suspension of the US debt ceiling vote to the spending bill that is due by the end of this month. If the spending bill is not enacted it would trigger a government shutdown, and if the debt ceiling is not raised it would cause defaults on federal payments as soon as October. Senate Majority Leader Schumer said the House will pass a spending bill that will fund the government through December 3rd and that the “legislation to avoid a government shutdown will also include a suspension of the debt limit through December 2022.” Republicans may balk at the second measure, given that it would take the issue off the table until after the 2022 midterm elections in November of that year. There wasn’t a great deal of data out yesterday, though German producer price inflation rose to +12.0% in August (vs. +11.1% expected), marking the fastest pace since December 1974. Separately in the US, the NAHB’s housing market index unexpectedly rose to 76 in September (vs. 75 expected), the first monthly increase since April. To the day ahead now, and data releases include US housing starts and building permits for August, along with the UK public finances for September. From central banks, we’ll hear from ECB Vice President de Guindos. Otherwise, the General Debate will begin at the UN General Assembly, and the OECD will be publishing their Interim Economic Outlook. Tyler Durden Tue, 09/21/2021 - 07:45.....»»

Category: blogSource: zerohedgeSep 21st, 2021

Crypto-market infrastructure creaks amid volatility test

As worries over the economic hit from the coronavirus outbreak spread from stocks, oil and bonds to cryptocurrencies late last week, bitcoin crashed to its worst day in seven years. But plummeting prices weren't the only problem for investors......»»

Category: topSource: reutersMar 19th, 2020

Fed Gives Bond-Buy Tapering Signal Without Timeline: 5 Picks

We have narrowed down our search to five U.S. corporate behemoths that have strong growth potential for the rest of 2021. These are: AAPL, MSFT, NVDA, DHR and COST. On Sep 22, Wall Street closed sharply higher ending its 4-day losing streak and recouped some of the losses it has suffered in September. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — rallied 1% each, while the small-cap-centric Russell 2000 surged 1.5%.U.S. stock markets rebounded following Fed Chairman Jerome Powell’s confirmation that a shift from the central bank’s ultra-dovish monetary policy is not immediate. The Fed will maintain its monetary stimulus and stick to a near-zero short-term benchmark interest rate at least for the time being.Powell Maintains Dovish StanceIn his statement after the conclusion of the two-day FOMC meeting, Fed Chairman Jerome Powell said “If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.”Fed Chairman made the point that it is “more important to do it right than fast.” “While no decisions were made, participants generally viewed that so long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate,” he said.Powell said that the central bank’s further progress test has been met regarding its inflation target. He added “My own view is the test for substantial further progress on employment is all but met.” However, Powell made it clear “For me it wouldn’t take a knockout, great, super strong employment report. It would take a reasonably good employment report for me to feel like that test is met.”Fed’s latest dot plot for rate projection is showing nine out of18 members believing that the first rate cut will come in the second half of 2022. This number was just seven after June’s FOMC meeting. However, Powell had commented in June that dot plots should be taken with a “big grain of salt.” It is “not a great forecaster of future rate moves." Fed's policy will be guided by the actual outcome of economic variables and not by its officials' expectations about the future.Tapering Likely Priced in Market ValuationThe Fed Chairman has said repeatedly that the central bank will give enough indication to market participants before it actually starts tapering in order to minimize volatility.Although the Fed has restrained from providing any timeline as to when the tapering of the monthly $120 billion bond-buy program will start, many economists and financial researchers believe that the announcement will come in the next FOMC meeting in November and the process will start from December.Despite this, yesterday’s rally indicates that the impact of tapering seems already factored in market valuations. The central bank had taken this extraordinary measure last year to tackle an extraordinary health hazard-led economic devastation. Everyone knows that this monetary stimulus will fade out gradually with the pace of U.S. economic recovery.Therefore, a possible tapering of the Fed’s monthly $80 billion Treasury Notes and $40 billion mortgage-backed bond-buying program this year may not shake market participants’ confidence. The important point is that the Fed has taken an extremely cautious approach to tapering its quantitative easing program.Stock Selection CriteriaAt this stage, it will be prudent to invest in stocks of U.S. corporate behemoths (market capital > $100 billion) that have performed better than the market’s benchmark — the S&P 500 Index — in the past month, amid September’s volatility.The stocks must carry a favorable Zacks Rank. These companies have highly established business models spread across the world, lucrative product pipelines, globally acclaimed brand recognition and robust financial positions, which will help them to cope with a higher interest rate.Accordingly, we have narrowed down our search to five U.S. corporate behemoths that have strong growth potential for the rest of 2021. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The chart below shows the price performance of our five picks in the past month.Image Source: Zacks Investment ResearchApple Inc.'s AAPL Services and Wearables businesses are expected to drive top-line growth in fiscal 2021 and beyond. Although Apple’s business primarily runs around its flagship iPhone, the Services portfolio has emerged as the company’s new cash cow. Its focus on autonomous vehicles and augmented reality/virtual reality technologies presents growth opportunities in the long haul.This Zacks Rank #1 company has an expected earnings growth rate of 2.2% for next year (ending September 2022) after estimated 70.4% growth in the current year (ending September 2021). The Zacks Consensus Estimate for next year improved 6.3% over the last 60 days.Microsoft Corp. MSFT is introducing new and improved Surface devices that could encourage enterprises to stick with Windows as they move toward BYOD and cloud computing. Microsoft’s advantages in this respect are two-fold.First, the company has a very large installed base of Office users. Most legacy data are based on Office, so enterprises are usually reluctant to use other productivity solutions. Second, the BYOD model is dependent on security and cloud integration, both of which are Microsoft’s strengths.This Zacks Rank#2 company has an expected earnings growth rate of 8.4% for the current year (ending June 2022). The Zacks Consensus Estimate for current-year earnings improved 3.7% over the last 60 days.NVIDIA Corp. NVDA is benefiting from the coronavirus-induced work-from-home and learn-at-home wave. It is also benefiting from strong growth in GeForce desktop and notebook GPUs, which are boosting gaming revenues.Moreover, a surge in Hyperscale demand remains a tailwind for the company’s Data Center business. The expansion of NVIDIA GeForce NOW is expected to drive its user base. Further, a solid uptake of artificial intelligence-based smart cockpit infotainment solutions is a boon.This Zacks Rank #2 company has an expected earnings growth rate of 68% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings has improved 5.8% over the last 60 days.Danaher Corp. DHR is poised to gain from Danaher Business System (“DBS”), the policy of rewarding shareholders through dividend payments, synergistic benefits from acquired assets and investment in product innovation in the quarters ahead.The company anticipates core revenue growth in the mid to high-teens range for the third quarter of 2021 and in the high-teens for 2021. The pandemic-led tailwinds are expected to boost core sales by high-single digits in the third quarter and by 10% in 2021.This Zacks Rank #2 company has an expected earnings growth rate of 50.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1% over the last 30 days.Costco Wholesale Corp. COST operates membership warehouses in the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Korea, Australia, Spain, France, Iceland, China, and Taiwan. It offers branded and private-label products in a range of merchandise categories.Its growth strategies, better price management, decent membership trend and increasing penetration of e-commerce business reinforce its position. The strategy to sell products at discounted prices has helped to draw customers seeking both value and convenience. These factors have been aiding in registering impressive sales numbers.This Zacks Rank #2 company has an expected earnings growth rate of 7.9% for the current year (ending August 2022). The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 30 days. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>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 Apple Inc. (AAPL): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Danaher Corporation (DHR): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks49 min. ago

The Zacks Rank Explained: How to Find Strong Buy Oils and Energy Stocks

Wondering how to pick strong, market-beating stocks for your investment portfolio? Look no further than the Zacks Rank. Building a successful investment portfolio takes skill and hard work, no matter if you're a growth, value, income, or momentum-focused investor.How do you find the right combination of stocks that will generate returns that could fund your retirement, or your kids' college tuition, or your short- and long-term savings goals?Enter the Zacks Rank.What is the Zacks Rank?The Zacks Rank, which is a unique, proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, that makes building a winning portfolio easier.There are four main factors behind the Zacks Rank: Agreement, Magnitude, Upside, and Surprise.Agreement is the extent to which all brokerage analysts are revising their earnings estimates in the same direction. The greater the percentage of analysts revising their estimates higher, the better chance the stock will outperform.Magnitude is the size of the recent change in the consensus estimate for the current and next fiscal years.Upside is the difference between the most accurate estimate, which is calculated by Zacks, and the consensus estimate.Surprise is made up of a company's last few quarters' earnings per share surprises; companies with a positive earnings surprise are more likely to beat expectations in the future.Each factor is given a raw score, which is recalculated every night and compiled into the Zacks Rank. Utilizing this data, stocks are put into five different groups: Strong Buy, Buy, Hold, Sell, and Strong Sell.The Power of Institutional InvestorsThe Zacks Rank also allows individual investors, or retail investors, to benefit from the power of institutional investors.Institutional investors are responsible for managing the trillions of dollars invested in mutual funds, hedge funds, and investment banks. Research has shown that these investors can and do move the market due to the large amount of money they deal with, and thus, the market tends to move in the same direction as them.In order to figure out the fair value of a company and its shares, these investors will build valuation models focused on earnings and earnings expectations. Because if you raise estimates for the bottom line, it creates a higher fair value for a company.Institutional investors then act on these changes in earnings estimates, typically buying stocks with rising estimates and selling those with falling estimates; an increase in earnings estimates can translate into higher stock prices and bigger gains for the investor.Since it can often take weeks, if not months, for an institutional investor to build a position (given their size), retail investors who get in at the first sign of upward earnings estimate revisions have a distinct advantage over these larger investors, and can benefit from the expected institutional buying that will follow.Not only can the Zacks Rank help you take advantage of trends in earnings estimate revisions, but it can also provide a way to get into stocks that are highly sought after by professionals.How to Invest with the Zacks RankThe Zacks Rank is known for transforming investment portfolios. In fact, a portfolio of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 26 of the last 32 years, with an average annual return of +25.41%.Moreover, stocks with a new #1 (Strong Buy) ranking have some of the biggest profit potential, while those that fell to a #4 (Sell) or #5 (Strong Sell) have some of the worst.Let's take a look at Ovintiv (OVV), which was added to the Zacks Rank #1 list on September 23, 2021.Ovintiv Inc. is an independent energy producer, which explores and churns out oil and natural gas from diverse assets located in the United States and Canada. Previously known as Encana, the company rebranded and shifted its corporate domicile from Calgary, Canada to Denver, U.S.  Three analysts revised their earnings estimate higher in the last 60 days for fiscal 2021, while the Zacks Consensus Estimate has increased $0.50 to $5.03 per share. OVV also boasts an average earnings surprise of 24.3%.Earnings are forecasted to see growth of 1337.1% for the current fiscal year, and sales are expected to increase 25.4%.Additionally, OVV has climbed higher over the past four weeks, gaining 12.6%. The S&P 500 is down 0.9% in comparison.Bottom LineWith a #1 (Strong Buy) ranking, positive trend in earnings estimate revisions, and strong market momentum, Ovintiv should be on investors' shortlist.If you want even more information on the Zacks Ranks, or one of our many other investing strategies, check out the Zacks Education home page.Discover Today's Top StocksOur private Zacks #1 Rank List, based on our quantitative Zacks Rank stock-rating system, has more than doubled the S&P 500 since 1988. Applying the Zacks Rank in your own trading can boost your investing returns on your very next trade. See Today's Zacks #1 Rank List >> More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>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 Ovintiv Inc. (OVV): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks49 min. ago

Here"s Why You Should Hold on to Cactus (WHD) Stock Now

Cactus (WHD) has a strong balance sheet and no outstanding bank debt, reflecting its tremendous financial flexibility. Cactus, Inc. WHD is well-poised for growth on the back of highly-engineered product sales and increasing footprint in the international markets. However, conservative spending by clients remains a concern.Headquartered in Houston, TX, Cactus is involved in manufacturing, designing and selling wellhead as well as pressure control equipment. The products are utilized by clients for drilling and completing onshore oil and natural gas wells. With a market cap of $2.5 billion, the company is engaged in creating long-term value for shareholders.Which Way are Estimates Treading?The Zacks Consensus Estimate for the partnership’s bottom line for third-quarter 2021 is pegged at 19 cents per share, indicating year-over-year growth of 46.2%. The bottom-line estimate has witnessed no movement in the past week. The consensus mark for the top line for the third quarter stands at $116.8 million, suggesting a rise of 95.4% year over year. Importantly, the company beat earnings estimates thrice in the last four quarters, missing on the other occasion, the average surprise being 140.8%.Cactus, Inc. Price and EPS Surprise Cactus, Inc. price-eps-surprise | Cactus, Inc. QuoteCactus currently has a Zacks Rank #3 (Hold). Let’s see what are the factors that substantiate this position.What’s Favoring the Stock?It shipped equipment tothe Middle East this January, which is expected to have driven the company’s momentum starting from the beginning of the year. It made an agreement with National Energy Services Reunited Corp. NESR to boost its presence in the Middle East and other locations. The deal to deploy its frac rental equipmentwillhelp the company increase revenues from the Rental business.The company generates significant cash flow from selling and renting the wellhead and pressure control equipment. Its products like Cactus SafeDrill wellhead systems, SafeClamp, Safe Inject systems and others helped the company to keep generating positive free cash flows even amidthe coronavirus pandemicinduced volatility. In the trailing 12-month period, Cactus reported free cash flow (before dividends) of $78 million.Cactus has a strong balance sheet and revealed that it has no bank debt outstanding as of Jun 30, 2021. At second quarter-end, the company had cash and cash equivalents of $309.1 million, up sequentially from $291.9 million. This providesit with immense financial flexibility.What’s Weighing on It?However, certain factors remain causes of concern.Upstream companies are facing constant pressure from investors for higher returns instead of rapid production growth. These headwinds are keeping investments from explorers and producers low in the domestic market. Hence, conservative spending by clients and weak North American drilling are likely to hurt demand for the company’s oilfield services. As such, for 2021, it anticipates net capital expenditure to be$10-$15 million, reflectinga decrease from the 2020 level of $18.1 million.With decreased demand for equipment and services amid ample supply, product pricing has become highly competitive. As a result, there is limited room for equipment providers to charge premium prices. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.Stocks to ConsiderSome better-ranked stocks from the energy space include Cheniere Energy, Inc. LNG and Kinder Morgan, Inc. KMI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Cheniere Energy’s bottom line for 2021 is pegged at $2.98 per share, indicating a massive improvement from the year-ago loss of 34 cents.Kinder Morgan’s bottom line for 2021 is expected to rise 47.7% year over year. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>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 Cheniere Energy, Inc. (LNG): Free Stock Analysis Report Kinder Morgan, Inc. (KMI): Free Stock Analysis Report NATIONAL ENERGY (NESR): Free Stock Analysis Report Cactus, Inc. (WHD): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks49 min. ago

4 Sector ETFs Gaining Double Digits Amid September Selling

We have highlighted four that have gained in double-digits over the past month and could be compelling picks in the weeks ahead even if September selling continues. With only a few trading days left, September, known for being a weak month for stock markets, has turned out to be brutal given a myriad of woes. These include concerns over accelerating coronavirus infections, renewed inflation fears, signs of a slowdown in China, potential for high corporate tax rates and Fed’s tapering worries.Concerns over the financial contagion of the potential failure of China’s Evergrande property group and the ongoing debates over the debt limit in Washington also made investors’ jittery early this week. But these worries seemed to ease with the China Evergrande deal on some of its looming debt payments as well as the House passing a bill to avert government shutdown.Notably, the S&P 500 Index logged in its worst day on Sep 20 since May 12 after three consecutive weekly declines. Every sector in the index is on track to end the month in negative territory for the first time since March 2020. Meanwhile, the five biggest tech titans — including Microsoft MSFT, Google-owner Alphabet GOOGL, Amazon.com AMZN, Apple AAPL, and Facebook FB collectively shed more than $500 billion since the Nasdaq 100 peaked on Sep 7 (read: September's Weak History Turning True: 5 ETF Buying Zones).The S&P 500 has dropped 3.7% so far in September, dragged down by a 7.2% decline in the materials sector. If the loss persists for the remaining trading days of the month, it will be the index’s first monthly decline since January.In such a scenario, a few sector ETFs are still trading in green. We have highlighted four that have gained in double-digits over the past month and could be compelling picks in the weeks ahead even if September selling continues.North Shore Global Uranium Mining ETF URNM – Up 44.9%Uranium stocks have been on a tear buoyed by growing social media attention, restart of nuclear reactors in Japan after 10 years and the growing uranium supply deficit, being accelerated by COVID-19 pandemic related production cuts (read: Why Uranium Stocks & ETFs are Going Nuclear).This ETF provides exposure to companies that are involved in the mining, exploration, development and production of uranium, as well as companies that hold physical uranium or other non-mining assets. It follows the North Shore Global Uranium Mining Index and charges investors 85 bps in annual fee. The ETF holds 35 stocks in its basket with a heavy concentration on the top two firms accounting for a combined 27.3% share while other make up for no more than 9.7% share. It has accumulated $780.1 million in its asset base and trades in a good volume of 298,000 shares per day on average.SonicShares Global Shipping ETF BOAT – Up 12.2%The global shipping industry is enjoying a smooth sailing due to supply chain disruptions around the world caused by the pandemic. Port congestion and delays are the primary drivers as the pandemic has halted the movement of ships and will continue to do so at least in the near term.BOAT provides pure-play exposure to the global maritime shipping industry by tracking the Solactive Global Shipping Index. The index consists of global shipping companies engaged in the maritime transportation of goods and raw materials, including consumer and industrial products, vehicles, dry bulk, crude oil and liquefied natural gas. The product holds 53 stocks in its basket with heavy concentration on the top two firms at 10% share each. It has amassed $10.1 million in its asset base since its inception last month and charges 69 bps in annual fees. The fund trades in average daily volume of 17,000 shares (read: What's Behind the Smooth Sailing of the Top ETF of 2021?).Invesco DWA Energy Momentum ETF PXI – Up 11.5%The energy sector has gained momentum on oil price surge driven by tightening supply and expectations of an increase in demand as vaccination roll-outs widen. While many of the energy ETFs have been rising, PXI is the biggest beneficiary. This fund tracks the Dorsey Wright Energy Technical Leaders Index, which is designed to identify companies that are showing relative strength (momentum). It charges 60 bps in annual fees and trades in a good volume of 139,000 shares a day on average. The fund has 36 stocks in its basket with each making up for less than 4.8% of assets and AUM of $64.1 million. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.Simplify Volt Fintech Disruption ETF VFIN – Up 10.1%Digitalization has been powering this niche ETF. It seeks to offer exposure to the most disruptive fintech companies that are on the forefront of cashless payments. It aims to invest close to 25% across Square (SQ) stock and Square call options while targeting 25% in Lemonade (LMND) stock and Lemonade call options. A modest put option overlay is designed to help mitigate sharp market crashes. The product has accumulated $2.7 million since its inception in late December and charges 0.95% in annual fees. It trades in an average daily volume of 2,000 shares. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco DWA Energy Momentum ETF (PXI): ETF Research Reports North Shore Global Uranium Mining ETF (URNM): ETF Research Reports Simplify Volt Fintech Disruption ETF (VFIN): ETF Research Reports SonicShares Global Shipping ETF (BOAT): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks49 min. ago

Crypto billionaire Mike Novogratz says bitcoin holding at $40,000 shows the market is in good shape - and recommends buying the dip

Mike Novogratz said investors are still very interested in crypto and that he's not nervous about the recent sell-off. Mike Novogratz is one of the biggest names in crypto. Photo by John Lamparski/Getty Images Mike Novogratz said bitcoin bouncing off $40,000 is a good sign for the crypto market. He said he's not worried about the recent sell-off and that it's a "buy-the-dip" opportunity. Bitcoin and ether fell sharply on Monday as the Evergrande crisis rattled financial markets. See more stories on Insider's business page. Billionaire crypto investor Mike Novogratz has said bitcoin holding firm at $40,000 during the recent sell-off is a good sign for the market, and recommended buying the dip in digital assets.Speaking after cryptocurrencies sold off sharply at the start of the week, Novogratz told CNBC earlier this week that he thought the market remained in good shape. Cryptocurrency prices rallied on Thursday, with bitcoin and ether rising along with altcoins."We held $40,000 overnight in bitcoin and $2,800 in ethereum. I think those are very important levels for people to watch. As long as those hold a think the crypto market is in good shape," he said.Bitcoin rallied 5% to $44,159 on Thursday, according to Coinmarketcap, while ether - the cryptocurrency on the ethereum network - rose 6.4% to $3,122.Yet both remain considerably lower than on Monday, when bitcoin stood above $47,000 and ether was above $3,300. They fell sharply on Monday, with bitcoin testing $40,000 on Tuesday, as worries about Chinese property developer Evergrande shook markets, causing investors to ditch riskier assets.Read more: 3 altcoins to buy: a crypto consultant explains why ether could surge to $15,000 and flip bitcoin, and criticizes one token as an overvalued 'joke'Novogratz said he's not nervous about the declines, however, and said he thinks it's a "buy-the-dip" situation.The crypto billionaire, a former hedge fund boss who founded the digital assets investment firm Galaxy, said he's seeing lots of engagement and activity in the crypto market. He pointed to SoftBank's participation in a $680 million funding round for sports NFT marketplace Sorare.Novogratz said he thought Monday's sell-off was also driven by concerns about regulation in the US. "The market got itself a little too long," he said.Read the original article on Business Insider.....»»

Category: topSource: businessinsider2 hr. 32 min. ago

Dow and S&P End Four-Day Skid after Fed Statement

Dow and S&P End Four-Day Skid after Fed Statement It took a Fed statement on Wednesday to snap the market out of its sour September mood and finally end a four-day losing streak. The major indices were each up approximately 1%. Basically, the economy is improving enough that scaling back the asset purchases “may soon be warranted”, perhaps as soon as the next meeting since the inflation and employment mandates are close to being met. For now, the Committee was unanimous in keeping rates near zero. “To summarize FOMC: Tapering is coming, but one month later than the market expected,” said Jeremy Mullin in Counterstrike. “The language hinted at a $20B taper in December, instead of November, which was enough for the market to rally after the statement came out. In reality, a month difference should not move markets, but the buy signal was triggered with the “no taper” language.” The S&P jumped 0.95% on Wednesday to 4395.64, while the Dow increased 1% (or about 338 points) to 34.258.32. These gains ended four consecutive days of losses for the indices. The NASDAQ rose 1.02% (or around 150 points) to 14,896.85. Stocks are still lower for the week with two sessions to go. But the Fed was only one concern this week. Now that the statement is behind us, investors are still nervous about China’s largest property developer Evergrande, which is in danger of defaulting. The company said it resolved a $36 million interest payment due tomorrow, which made enough room for the market to rise on Wednesday. However, an even bigger payment is due at the same time. Investors are concerned that such a problem in the world’s second-biggest economy could have an impact on the U.S., especially at a challenging time when the delta variant is limiting the economic recovery. Tomorrow will be interesting. Stocks often have big moves on the day after the FOMC meeting, and the Evergrande situation could exacerbate the volatility. We’ll also be getting the jobless claims number on Thursday. Today's Portfolio Highlights: Home Run Investor: It looks like Exp World Holdings (EXPI) could have a nice post-earnings drift higher, so Brian bought the stock on Wednesday to take part in the advance. This Zacks Rank #2 (Buy) provides cloud-based estate brokerage services. More specifically, it uses blockchain to record home sales and provide services to brokers. The editor was very impressed with EXPI’s topline growth of 182% in its most recent quarter, while earnings beat the Zacks Consensus Estimate by 380%. The valuation is rather high given its sales growth, but margins are slowly improving with plenty of room to continue rising. Make sure to read the complete commentary for a lot more on this new addition. By the way, Brian also sold Rada Electronics (RADA) today to make room for the new entrant. TAZR Trader: Even if the Fed sounds “lovey-dovey”, Kevin said yesterday that he would add more to the portfolio’s recent position in ProShares UltraPro Short QQQ ETF (SQQQ). Regardless of whatever kind of kneejerk reaction comes after the statement, the editor thinks the market is headed lower in the near term. Well, the Fed statement did send stocks higher by 1% on Wednesday, so Kevin stuck to his word and added more SQQQ today. Read the full write-up for more on his analysis moving forward. Technology Innovators: This portfolio easily had the top performer among all ZU services on Wednesday as Celestica (CLS) soared 17.5%. Brian added this electronics manufacturing services company back in late July after posting its eighth straight positive surprise. Today we found out that CLS raised its 2022 outlook and also entered into an agreement to acquire PCI Ltd. for $306 million in cash. CLS is currently up nearly 7% in the portfolio since being added less than two months ago. Options Trader: "(Stocks) were already up from the opening bell, but added to their gains after the Fed said they would likely begin tapering their bond-buying “soon,” which many have interpreted as their next meeting in November. "The market cheered the last time the Fed hinted that the tapering was likely to come sooner rather than later. And the market’s reaction was no different this time. "Why so happy about tightening monetary policy (albeit just a little)? "Because 1) it shows the Fed’s confidence in the recovery, and 2) it shows they won’t let inflation get too hot before acting. And that’s reassuring to the market. "As for rates, those expect to remain near zero for the foreseeable future." -- Kevin Matras Have a Good Evening, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacks11 hr. 16 min. ago