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Broadstone Net Lease (BNL) Passes Through 5% Yield Mark

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Category: topSource: redinewsMay 1st, 2021

Futures Rise To 4,700 "Max Gamma" As Oil Slide Accelerates

Futures Rise To 4,700 "Max Gamma" As Oil Slide Accelerates U.S. index futures rose again, trading on top of the massive 4700 "max gamma" level despite downbeat data out of Chinese tech names, as investors awaited the latest batch of unemployment data and taking comfort from signals that central banks will stay far behind the curve and keep pledges to overlook faster inflation rather than rush into rate hikes. European stocks were steady and Asian equities fell as Chinese tech stocks tumbled after poor results from Baidu and Bilibili. Treasury yields edged higher, the dollar was little changed and gold declined. Bitcoin retreated for a fifth straight day. Oil prices skidded to a six-week low on concern about a supply overhang and the prospect of China, Japan and the United States dipping in to their fuel reserves, with Brent futures last at $79.77, more than 8% off last month's three-year high. Nasdaq futures rose 86.25 points or 0.53% outperforming S&P 500 futs which were up 11.50 points or 0.25% to 4697.75, after chip giant Nvidia jumped 7% after a sales forecast by the world’s largest chipmaker. Elsewhere in premarket trading, Cisco dropped 6.6% after the computer networking equipment group’s growth and earnings forecast fell short of expectations while Alibaba slid after reporting sales that missed analyst estimates for a second straight quarter. Some other notable premarket movers: EV makers are mixed in U.S. premarket trading, with Rivian Automotive (RIVN US), Lucid (LCID US) and Canoo (GOEV US) all declining and newly-listed Sono (SEV US) extending its bounce Nvidia (NVDA US) shares gain 7% in U.S. premarket trading, with analysts saying the chipmaker delivered a strong enough quarter to justify its punchy valuation Amtech (ASYS US) fell 22% in post-market trading after reporting fourth quarter revenue that missed estimates from two analysts. The semiconductor stock has risen 139% this year through Wednesday’s trading. Kraft Heinz (KHC US) fell 1.6% in postmarket trading on Wednesday after announcing one of its top holders was selling a portion of its stake. Victoria’s Secret (VSCO US) shares gain 13% in U.S. premarket trading as analysts highlight “better-than- feared” 3Q results for the lingerie retailer. JD.com (JD US) shares advanced 2.2% premarket after it reported net revenue for the third quarter that beat the average analyst estimate. “While companies are managing to report solid third-quarter numbers, the ability to do so is being tempered by concerns about slimmer margins,” said Michael Hewson, chief market analyst at CMC Markets in London. “One positive thing, aside from the concern over rising inflation, has been the resilience of labor markets, on both sides of the Atlantic.” The Stoxx Europe 600 Index was little changed with most cash indexes giving back early gains or losses to trade flat as travel and consumer companies gained while the energy and minings industries retreated. FTSE 100 underperformed slightly. Oil & gas was the weakest sector followed by mining stocks. European metals and mining stocks fall 0.8%, the second worst performing sub-index on the benchmark Stoxx 600, amid sinking iron ore futures and copper prices. Iron ore retreated as investors weighed a top producer’s forecasts of a balanced market next year and the impact on miners amid a price collapse in recent months. Diversified miners drop, Glencore -0.8%, Anglo American -1%, BHP -0.7%, Rio Tinto -1.1%; the four stocks account for more than 60% of the SXPP. Earlier in the session, Asian stocks fell, on track for a second day of losses, as Baidu helped lead a slump in Chinese technology giants.  The MSCI Asia Pacific Index dropped as much as 0.4%, extending its two-day slide to about 0.9%. The Hang Seng Tech Index lost about 3%, as search engine giant Baidu tumbled on worries over the advertising outlook and video-streaming firm Bilibili dropped after posting a larger-than-expected loss. Hong Kong’s Hang Seng Index and China’s CSI 300 benchmark were the worst performing national benchmarks Thursday, while Taiwan’s Taiex managed a small gain. Alibaba also fell, ahead of its highly awaited earnings report later today that may show the impact of Beijing’s regulatory curbs. Japan's Nikkei was down 0.6% in early trade. "We do seem to have stalled somewhat as we head into the year end," said Jun Bei Liu, a portfolio manager at Tribeca Investment Partners in Sydney. "Investors perhaps are just taking a bit of pause," she said, in the wake of a strong U.S. results season, but as inflation and China's slowdown loom as macroeconomic headwinds. “With a bout of earnings having been released and put behind the market, we’re in an environment where investors are inclined to take profits,” said Takashi Ito, an equity market strategist at Nomura Securities in Tokyo. “Investors are likely to cherry pick stocks that have high earnings and ROE and have strong momentum for growth.”  The region’s equities are now poised for a weekly drop after wiping out gains from earlier this week. Anxiety over global inflation has weighed on sentiment as investors search for clues on when central banks will start raising interest rates. Indonesia and the Philippines kept borrowing costs unchanged, as expected, to aid two economies that bore the brunt of Covid-19 outbreaks in Southeast Asia this year. In rates, treasuries were slightly cheaper across long-end of the curve after S&P 500 and Nasdaq 100 futures breached Wednesday’s highs. Yields are higher by ~1bp in 30-year sector, with 2s10s steeper by ~1bp, 5s30s by ~0.5bp; 10-year is ~1.60%, trailing bunds by ~2bp as traders push back on ECB rate-hike pricing. Focal points Thursday include several Fed speakers and a potentially historic 10-year TIPS auction at 1pm ET - at $14BN, the 10Y TIPS reopening is poised to draw a record low yield near -1.14%; breakeven inflation rate at ~2.71% is within 7bp of Monday’s YTD high. Elsewhere, Gilts outperformed richening ~2.5bps across the curve. Peripheral spreads tighten, semi-core widens marginally. In FX, the U.S. dollar erased an earlier modest loss and was flat, with majors mostly range-bound. Treasury yields stabilized from overnight declines; the greenback traded mixed versus its Group-of-10 peers, though most were confined to tight ranges, New Zealand’s dollar led G-10 gains after two-year ahead inflation expectations rose to 2.96% in the fourth quarter from 2.27% in the third, according to survey of businesses published by the Reserve Bank of New Zealand. Support in euro- Swiss franc at 1.0500 holds for now and consolidation for risk reversals this week suggests that a breach of the key level may not see a big follow through. The pound inched up and is on its longest winning streak in nearly seven months after this week’s jobs and inflation data fueled confidence that the Bank of England will hike rates. The Turkish lira plunged to a new all time low, with the USDTRY rising to 10.93 after the central bank cut rates by 100bps. Currency traders are also assessing a sharp downdraft in the Aussie/yen cross, often a barometer of market sentiment. It fell through its 200-day moving average on Tuesday and has lost almost 4% in a dozen sessions . "You've got the perfect storm there for bears," said Matt Simpson, senior analyst at brokerage City Index. "Fundamentally and technically Aussie/yen looks pretty good with lower oil prices." In commodities, crude futures remained in the red but bounce off worst levels as the potential for SPR releases remains center stage. WTI finds support near $77, recovering toward $78; Brent regains a $80-handle. Spot gold gives back Asia’s small gains, dropping ~$7 to trade near $1,860/oz. Base metals trade poorly, LME zinc and lead underperform. Looking at the day ahead now, and data releases from the US include the weekly initial jobless claims, the Philadelphia Fed’s business outlook for November, the Kansas City Fed’s manufacturing index for November, and the Conference Board’s leading index for October. Central bank speakers include PBoC Governor Yi Gang, the ECB’s Centeno, Panetta and Lane, and the Fed’s Bostic, Williams, Evans and Daly. There’ll also be a number of decisions from EM central banks, including Bank Indonesia, the Central Bank of Turkey and the South African Reserve Bank. Finally, earnings releases include Intuit, Applied Materials and TJX. Market Snapshot S&P 500 futures up 0.4% to 4,703.25 STOXX Europe 600 up 0.1% to 490.50 MXAP down 0.3% to 199.31 MXAPJ down 0.6% to 650.79 Nikkei down 0.3% to 29,598.66 Topix down 0.1% to 2,035.52 Hang Seng Index down 1.3% to 25,319.72 Shanghai Composite down 0.5% to 3,520.71 Sensex down 0.4% to 59,755.91 Australia S&P/ASX 200 up 0.1% to 7,379.20 Kospi down 0.5% to 2,947.38 Brent Futures down 0.1% to $80.18/bbl Gold spot down 0.2% to $1,863.45 U.S. Dollar Index little changed at 95.75 German 10Y yield little changed at -0.26% Euro little changed at $1.1327 Top Overnight News from Bloomberg More Wall Street banks are wagering that the Federal Reserve will hike rates at a faster-than-expected pace, with Citigroup Inc. joining Morgan Stanley in backing trades that will profit if the central bank does just that China is releasing some oil from its strategic reserves days after the U.S. invited it to participate in a joint sale, suggesting the world’s two biggest oil consumers are willing to work together to keep a lid on energy costs European countries are increasingly forcing reluctant companies to let employees work from home in an effort to break the rapidly spreading fourth wave of the coronavirus pandemic A more in depth look at global markets courtesy of Newsqauwk Asia-Pac stocks traded mostly negative with sentiment in the region subdued amid a lack of significant macro drivers and following the uninspired lead from the US - where the major indices finished a choppy session in the red and the DJIA gave up the 36k status. Nonetheless, the ASX 200 (+0.1%) remained afloat with notable strength in gold miners, as well as some consumer stocks, although advances in the index were limited by losses in the financial and energy sectors after similar underperformance stateside amid a decline in yields and oil prices. The Nikkei 225 (-0.3%) was initially dragged lower by unfavourable currency inflows which overshadowed reports that Japan wants to enhance tax breaks for corporations that raise wages, while shares in Eisai were hit after EU regulators placed doubts regarding the approval of Co. and Biogen’s co-developed Alzheimer’s drug and SoftBank also declined after the US regulator raised concerns regarding Nvidia’s acquisition of Arm. However, the index then briefly returned flat in late trade on reports that the Japanese stimulus package is to require JPY 55.7tln of fiscal spending which is higher than the previously speculated of around JPY 40tln. The Hang Seng (-1.3%) and Shanghai Comp. (-0.5%) weakened after another liquidity drain by the PBoC and with the declines in Hong Kong exacerbated by tech selling, while the losses in the mainland were to a lesser extent with China said to be mulling additional industrial policies aimed to support growth and SGH Macro sources suggested the US and China agreed there would be some substantial progress on trade such as the removal of some punitive tariffs by the US and increased purchases of US products by China, although the report highlighted that it was unclear if this would be from a high-profile announcement or a discrete relaxing of tariffs. Finally, 10yr JGBs were initially flat as prices failed to benefit from the subdued risk appetite in Japan and rebound in global peers, while firmer metrics at the 20yr JGB bond auction provided a mild tailwind in late trade although the support was only brief and prices were then pressured on news of the potentially larger than anticipated fiscal spending in PM Kishida's stimulus package. Top Asian News China Property Stocks Sink, $4.2 Billion Rush: Evergrande Update Japan’s Kishida Eyes Record Fiscal Firepower to Boost Recovery China Property Firm Shinsun’s Shares and Bonds Slump JD.com Sales Beat Estimates as Investments Start to Pay Off Major bourses in Europe are choppy, although sentiment picked up following a subdued APAC session but despite a distinct lack of fresh catalysts. US equity futures have also been grinding higher in early European hours, with the NQ (+0.6%) outpacing the ES (+0.3%), RTY (+0.2%) and YM (+0.2%). Back to European cash – broad-based gains are seen across the Euro bourses – which lifted the CAC, DAX and SMI to notch record intraday highs, whilst upside in the UK's FTSE 100 (-0.2%) has been hampered by hefty losses in today's lagging sectors– the Energy and Basic Resources - amid price action in the respective markets. Tech names also see a strong performance thus far as chip names cheer NVIDIA (+6% pre-market) earnings yesterday. Overall, sectors have maintained a similarly mixed picture vs the cash open, with no overarching theme. In terms of individual movers, Swatch (+2.8%) and Richemont (+0.6) piggyback on the increase in Swiss Watch Exports vs 2020 and 2019. Metro Bank (-20%) plumbed the depths after terminating takeover talks with Carlyle. Top European News Royal Mail Hands Investors $540 Million Amid Parcel Surge German Coalition Plans Stricter Rent Increase Regulation: Bild HSBC Sees ECB Sticking With Easy Stance Despite Record Inflation Astra Covid Antibody Data Shows Long-Lasting Protection In FX, the Kiwi has extended its recovery on heightened RBNZ tightening expectations prompted by significant increases in Q4 inflation projections, with some pundits now assigning a greater probability to the OCR rising 50 bp compared to the 25 bp more generally forecast and factored in. Nzd/Usd is eyeing 0.7050 and the 50 DMA just above (at 0.7054 today) having breached the 100 DMA (0.7026), while the Aud/Nzd cross is probing further below 1.0350 even though the Aussie has found some support into 0.7250 against its US rival and will be encouraged by news that COVID-19 restrictions in the state of Victoria are on the verge of being completely lifted. GBP/EUR/DXY - Notwithstanding Kiwi outperformance, the Dollar has lost a bit more of its bullish momentum to the benefit of most rivals, and several of those that compose the basket. Indeed, Cable has popped above 1.3500, while the Euro is looking more comfortable on the 1.1300 handle as the index retreats further from Wednesday’s new y-t-d peak and away from the psychological 96.000 level into a 95.840-642 range. Ahead, IJC and Philly Fed are due amidst another decent slate of Fed speakers, while Eur/Usd will also be eyeing the latest ECB orators for some direction and Eur/Gbp is back around 0.8400 where decent option expiry interest resides (1.1 bn), but perhaps more focused on latest talks between the UK and EU on the NI dispute. CHF/CAD/JPY - The Franc has pared more declines vs the Buck from sub-0.9300 and remains firm against the Euro near 1.0500 in wake of Swiss trade data showing a wider surplus and pick-up in key watch exports, but the Loonie looks a bit hampered by a more pronounced fall in the price of oil as the US calls on other countries for a concerted SPR tap and China is said to be working on the release of some crude stocks. Usd/Cad is tethered to 1.2600 and highly unlikely to threaten 1.1 bn option expiries at the 1.2500 strike in contrast to the Yen that stalled above 114.00 and could be restrained by 1.4 bn between 113.90 and the round number or 1.3 bn from 114.20-25, if not reports that Japan’s stimulus package may require Jpy 55.7 tn of fiscal spending compared to Jpy 40 tn previously speculated. In commodities, WTI and Brent front-month futures are off worst levels but still under pressure amid the prospect of looming crude reserves releases, with reports suggesting China is gearing up for its own release. There were also prior source reports that the US was said to have asked other countries to coordinate a release of strategic oil reserves and raised the oil reserve release request with Japan and China. Furthermore, the US tapping of the SPR could be either in the form of a sale and/or loan from the reserve, and the release from the reserve needs to be more than 20mln-30mln bbls to get the message to OPEC, while a source added that the US asked India, South Korea and large oil-consuming countries, but not European countries, to consider oil reserve releases after pleas to OPEC failed. This concoction of headlines guided Brent and WTI futures under USD 80/bbl and USD 78/bbl respectively with early selling also experienced as European players entered the fray. On the geopolitical front, US National security adviser Jake Sullivan raised with his Israeli counterpart the idea of an interim agreement with Iran to buy more time for nuclear negotiations, according to sources. However, two American sources familiar with the call said the officials were just "brainstorming" and that Sullivan passed along an idea put forward by a European ally. Next, participants should continue to expect jawboning from the larger economies that advocated OPEC+ to release more oil. OPEC+ is unlikely to react to prices ahead of next month's meeting (barring any shocks). Elsewhere, spot gold and silver have been choppy within a tight range. Spot gold trades under USD 1,875/oz - with technicians flagging a Fib around USD 1,876/oz. Spot silver trades on either side of USD 25/oz. Base metals are on a softer footing amid the broader performance across industrial commodities – LME copper remains subdued under the USD 9,500/t level, whilst some reports suggest companies are attempting to arbitrage the copper spread between Shanghai and London. US Event Calendar 8:30am: Nov. Initial Jobless Claims, est. 260,000, prior 267,000; Continuing Claims, est. 2.12m, prior 2.16m 8:30am: Nov. Philadelphia Fed Business Outl, est. 24.0, prior 23.8 9:45am: Nov. Langer Consumer Comfort, prior 50.3, revised 50.3 10am: Oct. Leading Index, est. 0.8%, prior 0.2% 11am: Nov. Kansas City Fed Manf. Activity, est. 28, prior 31 Central banks 8am: Fed’s Bostic Discusses Regional Outlook 9:30am: Fed’s Williams speaks on Transatlantic responses to pandemic 2pm: Fed’s Evans Takes Part in Moderated Q&A 3:30pm: Fed’s Daly takes part in Fed Listens event DB's Jim Reid concludes the overnight wrap After 9 weeks since surgery, yesterday I got the green light to play golf again from my consultant. Yippee. However he said that he’ll likely see me in 3-5 years to do a procedure called distal femoral osteotomy where he’ll break my femur and realign the leg over the good part of the knee. Basically I have a knee that is very good on the inside half and very bad on the outer lateral side. He’s patched the bad side up but it’s unlikely to last more than a few years before the arthritis becomes too painful. This operation would be aimed at delaying knee replacement for as long as possible! Sounds painful and a bit crazy! Meanwhile I also have a painful slipped disc in my back at the moment that I’m going to have an injection for to hopefully avoid surgery after years of managing it. As you might imagine from reading my posts last week I don’t get much sympathy at home at the moment for my various ailments. In terms of operations and golf I’m turning into a very very poor man’s Tiger Woods! Markets have been limping a bit over the last 24 hours too as the inflation realities seemed to be a bit more in focus. Those worries were given additional fuel from the UK CPI release for October, which followed the US and the Euro Area in delivering another upside surprise, just as a number of key agricultural prices continued to show significant strength. Oil was down notably though as we’ll discuss below. To add to the mix, the latest global Covid-19 wave has shown no sign of abating yet, even if some countries are better equipped for it than others. Starting with inflation, one of the main pieces of news arrived yesterday morning, when the UK reported that CPI came in at +4.2% year-on-year in October. That was above every economist’s estimate on Bloomberg, surpassing the +3.9% consensus expectation that was also the BoE’s staff projection in their November Monetary Policy Report. That’s the fastest UK inflation since 2011, and core inflation also surprised on the upside with a +3.4% reading (vs. +3.1% expected). In response to this, our UK economist (link here) is now expecting that CPI will peak at +5.4% in April, with the 2022 annual average CPI still at +4.2%, which is more than double the BoE’s 2% target. The release was also seen as strengthening the case for a December rate hike by the BoE, and sterling was the second best performing G10 currency after being top the day before in response, strengthening +0.45% against the US dollar. Even as inflation risks mounted however, the major equity indices demonstrated an impressive resilience, with the STOXX 600 (+0.14%) rising for the 17th time in the last 19 sessions. This is the best such streak since June this year, when the index managed to increase 18 of 20 days. We’ll see if that mark is matched today That was a better performance than the S&P 500 (-0.26%). 342 stocks were in the red today, the most in three weeks. Energy (-1.74%) and financials (-1.11%) each declined more than a percent, on lower oil prices and yields, respectively. Real estate (+0.65%) and consumer discretionary (+0.59%) led the way, driven by a +3.25% increase in Tesla. In line with the broad-based retreat, small-caps continued to put in a much weaker performance, with the Russell 2000 shedding -1.16% as it underperformed the S&P for a 4th consecutive session. Sovereign bonds also managed to advance yesterday, with yields on 10yr Treasuries (-4.5bps) posting their biggest decline in over a week, taking them to 1.59%. Declining inflation expectations drove that move, with the 10yr breakeven down -3.2bps to 2.71%, which was its biggest decline in over two weeks. For Europe it was a different story however, with yields on 10yr bunds only down -0.3bps, just as those on 10yr OATs (+0.1bps) and BTPs (+0.5bps) both moved higher. Most of the Treasury rally was after Europe closed though. Those moves came against the backdrop of a fairly divergent performance among commodities. On the one hand oil prices fell back, with WTI (-2.97%) closing beneath $80/bbl for only the second time in the last month as speculation continued that the US would tap its strategic reserves. On the other hand, there was no sign of any relenting in European natural gas prices, which rose a further +0.79% yesterday to bring their gains over the last 7 days to +31.57%. That follows the German regulator’s decision to temporarily suspend certification for Nord Stream 2, which has added to fears that Europe will face major supply issues over the winter. And while we’re discussing the factors fuelling inflation, there were some fresh moves higher in agricultural prices as well yesterday, with wheat futures (+1.48%) hitting an 8-year high, and coffee futures (+4.75%) climbing to their highest level in almost a decade. Central banks will be watching these trends closely. There’s still no word on who’s going to lead the Fed over the next 4 years, but yesterday’s news was that President Biden will make his pick by Thanksgiving. For those keeping track at home, on Tuesday the guidance was within the next four days. So, while it appears momentum toward an announcement is growing, take signaling of any particular day with a grain of salt. On the topic of the Fed, our US economists released their updated Fed outlook yesterday (link here) in which they brought forward their view of the expected liftoff to July 2022, with another rate increase following in Q4 2022. And although it’s not their base case, they acknowledge that incoming data could even push the Fed to speed up their taper and raise rates before June. They don’t see the choice of the next Fed Chair as having much impact on the broad policy trajectory, since inflation next year is likely to still be at high levels that makes most officials uncomfortable, plus the annual rotation of regional Fed presidents with an FOMC vote leans more hawkish next year. So that will constrain the extent to which a new chair could shift matters in a dovish direction, even if they wanted to. Overnight in Asia stocks are trading mostly in the red outside of a flat KOSPI (+0.01%). The Shanghai Composite (-0.13%), CSI (-0.64%), Nikkei (-0.77%) and Hang Seng (-1.35%) are being dragged down by tech after a bout of Chinese IT companies missed earnings continuing a theme of this earnings season. Elsewhere in Japan, the Nikkei reported that the new economic stimulus package could be around YEN 78.9 tn ($691 bn). Prime Minister Fumio Kishida will announce the package on Friday. Elsewhere S&P 500 (+0.08%) and DAX futures (+0.01%) both fairly flat. The House of Representatives is slated to begin debate on the Biden social and climate spending ‘build back better’ bill. Word from Congress suggested it could be tabled for a vote as soon as today, though the House has been as profligate missing self-imposed deadlines to vote on the bill as President Biden has been with the announcement of Fed Chair. In addition to the Build Back Better package, there’ll still be plenty of action in Congress over the next month, with another government shutdown looming on December 3, and then a debt ceiling deadline estimated on December 15. The House Budget Chair echoed Treasury Secretary Yellen’s exhortation, and urged Congress to raise the debt ceiling to avoid a government default. Treasury bills are pricing increasing debt ceiling uncertainty during December; yields on bills maturing from mid- to late-December are around double the yields of bills maturing in November and January. Turning to the pandemic, cases have continued to rise at the global level over recent days, as alarm grows in a number of countries about the potential extent of the winter wave. In Germany, Chancellor Merkel and Vice Chancellor Scholz are taking part in a video conference with state leaders today on the pandemic amidst a major surge in cases. And Sweden’s government said that they planned to bring in a requirement for vaccine passports at indoor events with more than 100 people. In better news however, the UK’s 7-day average of reported cases moved lower for the first time in a week yesterday. Moderna also joined Pfizer in seeking emergency use authorization from the FDA for booster jabs of its Covid vaccines for all adults. Looking at yesterday’s other data, US housing starts fell in October to an annualised rate of 1.520m (vs. 1.579m expected), whilst the previous months’ reading was also revised lower. Building permits rose by more than expected however, up to an annualised rate of 1.650m (vs. 1.630m expected). Finally, Canada’s CPI inflation reading rose to +4.7% in October as expected, marking the largest annual rise since February 2003. To the day ahead now, and data releases from the US include the weekly initial jobless claims, the Philadelphia Fed’s business outlook for November, the Kansas City Fed’s manufacturing index for November, and the Conference Board’s leading index for October. Central bank speakers include PBoC Governor Yi Gang, the ECB’s Centeno, Panetta and Lane, and the Fed’s Bostic, Williams, Evans and Daly. There’ll also be a number of decisions from EM central banks, including Bank Indonesia, the Central Bank of Turkey and the South African Reserve Bank. Finally, earnings releases include Intuit, Applied Materials and TJX. Tyler Durden Thu, 11/18/2021 - 08:05.....»»

Category: blogSource: zerohedgeNov 18th, 2021

Veeva Systems (VEEV) Vault Quality Suite Gets Adopted by CBM

Veeva Systems' (VEEV) product gets adopted by CBM. This can drive the development and delivery of groundbreaking treatments for patients. Veeva Systems Inc.’s VEEV Veeva Vault Quality Suite has recently been adopted by the Center for Breakthrough Medicines (“CBM”) with the aim of modernizing development and manufacturing services for sponsors. It is important to mention here that the Vault Quality Suite includes Veeva Vault Product Surveillance, Veeva Vault QualityDocs and Veeva Vault Validation Management, to name a few.With respect to CBM, the contract development and manufacturing organization is focused on reducing the lack of capacity, which is stopping patients from accessing critically needed cell and gene therapies. In fact, the company is committed to advancing the delivery and affordability of therapies by providing a complete solution for discovery, development as well as commercialization.This announcement is likely to provide a further boost to Veeva Systems’ product adoption.Rationale Behind the AdoptionThe adoption will allow CBM to balance quality processes, content, and training for better visibility and control throughout its manufacturing and testing network.Image Source: Zacks Investment ResearchIn fact, the Veeva Vault Quality Suite can help VEEV to unify quality processes, boost agility and drive seamless collaboration with CBM customers.Per management at Vault Quality, Veeva Systems, this partnership will allow VEEV to be part of CBM’s goal of establishing a leading cell and gene manufacturing and testing facility.Market ProspectsPer a report by Grand View Research, the global cell and gene therapy manufacturing market was worth $13.1 billion in 2020 and is projected to expand at a CAGR of 20.3% from 2021 to 2028. The massive growth in the advanced therapy space is a crucial driving factor when it comes to this market’s growth.Recent DevelopmentsIn October, Veeva Systems announced the launch of the Veeva Digital Trials Platform, which is a new solution to substantially accelerate clinical trial execution by offering a complete and connected technology ecosystem that spans patients, research sites, and trial sponsors. The platform is currently available for early adopters.In the same month, the company announced the adoption of Veeva eConsent — a MyVeeva for Patients solution — by Celerion in order to complete electronic consent for the latter’s Phase I clinical trials. On the back of Veeva eConsent, Celerion is making a transition from manual and paper-based informed consent to a fully digital process.Price PerformanceShares of this Zacks Rank #2 (Buy) company have gained 17.6% on a year-to-date basis against the industry’s 6.6% decline.Other Stocks to ConsiderOther top-ranked stocks in the broader medical space include Thermo Fisher Scientific Inc. TMO, McKesson Corporation MCK and AngioDynamics, Inc. ANGO.Thermo Fisher surpassed earnings estimates in the trailing four quarters, with the average being 9.02%. The company currently carries a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).McKesson surpassed earnings estimates in the trailing four quarters, with the average being 19.9%. The company currently carries a Zacks Rank #2.McKesson’s long-term earnings growth rate is estimated at 8.9%. The company’s earnings yield of 9.9% compares favorably with the industry’s 3.2%.AngioDynamics surpassed earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 125.6%. The company currently carries a Zacks Rank #2.AngioDynamics’ consensus mark for revenues for fiscal 2022 stands at $313.3 million, suggesting an improvement of 7.7% from the prior-year reported figure. The company’s earnings yield of 0.1% compares favorably with the industry’s (3.6%). Zacks’ Top Picks to Cash in on Artificial Intelligence This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AngioDynamics, Inc. (ANGO): Free Stock Analysis Report Thermo Fisher Scientific Inc. (TMO): Free Stock Analysis Report McKesson Corporation (MCK): Free Stock Analysis Report Veeva Systems Inc. (VEEV): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 17th, 2021

Futures Flat Amid Fresh Inflation Jitters; Yen Tumbles To 5 Year Low

Futures Flat Amid Fresh Inflation Jitters; Yen Tumbles To 5 Year Low Price action has been generally uninspiring, with US index futures and European stocks flat after UK inflation climbed faster than expected to the highest in a decade, heaping pressure on the Bank of England to raise interest rates, while Asian markets fell as investors fretted over early rate hikes by the Federal Reserve after strong retail earnings dented the stagflation narrative.  Ten-year Treasury yields held around 1.63% and the dollar was steady. Cryptocurrencies suffered a broad selloff, while oil extended losses amid talk of a coordinated U.S.-China release of reserves to tame prices. Gold rose. At 7:30 a.m. ET, Dow e-minis were down 14 points, or 0.04%. S&P 500 e-minis were up 1.25 points, or 0.0.3% and Nasdaq 100 e-minis were up 24.75 points, or 0.15%, boosted by gains in Tesla and other electric car-makers amid growing demand for EV makers. Target Corp was the latest big-name retailer to report positive results, as it raised its annual forecasts and beat profit expectations, citing an early start in holiday shopping. But similar to Walmart, shares of the retailer fell 3.1% in premarket trade as its third-quarter margins were hit by supply-chain issues. Lowe's rose 2.2% after the home improvement chain raised its full-year sales forecast on higher demand from builders and contractors, as well as a strong U.S. housing market. Wall Street indexes had ended higher on Tuesday after data showed retail sales jumped in October, and Walmart and Home Depot both flagged strength in consumer demand going into the holiday season. While the readings showed that a rise in inflation has not stifled economic growth so far, any further gains in prices could potentially dampen an economic recovery. Indeed, even as global stocks trade near all-time highs, worries are rising that growth could be derailed by inflation, the resurgent virus, or both. The question remains whether the jump in costs will prove transitory or become a bigger challenge that forces a sharper monetary policy response, roiling both shares and bonds. The market now sees a 19% probability of a rate hike by the Fed in their March 2022 meet, up from 11.8% probability last month. “The markets are still driven by uncertainty regarding how transitory inflation is,” according to Sebastien Galy, senior macro strategist at Nordea Investment Funds. “The market is assessing the situation about inflation -- what is in the price and what is not.” On the earnings front, Baidu reported a 13% jump in sales after growth in newer businesses such as the cloud helped offset a slowdown in its main internet advertising division. Nvidia and Cisco Systems are scheduled to report results later today In premarket trading, Tesla inexplicably rose as much as 2.4% in U.S. pre-market trading, extending a bounce from the previous session after CEO Elon Musk disclosed even more stock sales. Peers Rivian and Lucid added 0.9% and 8.8%, respectively. Here are some of the biggest U.S. movers today: Electric-vehicle makers Rivian Automotive (RIVN US), Lucid (LCID US) and Canoo (GOEV US) all move higher in U.S. premarket trading on heavy volumes, extending their gains and after Rivian and Lucid notched up milestones in their market values on Tuesday. The gains for Rivian on Tuesday saw its market capitalization surpass Germany’s Volkswagen, while Lucid’s market value leapfrogged General Motors and Ford. Tesla (TSLA US) shares rise 1.3% in U.S. premarket trading, extending the bounce the EV maker saw in the prior session and after CEO Elon Musk disclosed more share sales. Visa (V US) shares slip in U.S. premarket trading after Amazon.com said it will stop accepting payments using Visa credit cards issued in the U.K. starting next year. Boeing (BA US) gains 1.9% in premarket trading after Wells Fargo upgrades the airplane maker to overweight from equal weight in a note, saying the risk-reward is now skewed positive. Citi initiates a pair trade of overweight Plug Power (PLUG US) and underweight Ballard Power Systems (BLDP US), downgrading the latter to neutral on weak sales in China and likely delay in meaningful fuel cell adoption. Ballard Power falls 3.4% in premarket trading. La-Z-Boy (LZB US) climbed 7% in postmarket trading after it reported adjusted earnings per share for the fiscal second quarter of 2022 that beat the average analyst estimate and boosted its quarterly dividend. StoneCo’s (STNE US) shares fall as much as 9% in postmarket trading Tuesday after the fintech reported a weaker-than-expected adjusted results for the third quarter. Chembio Diagnostics (CEMI US) rose 11% in extended trading after saying it submitted an Emergency Use Authorization application to the U.S FDA for its new DPP SARS-CoV-2 Antigen test. European stocks treaded water with U.S. equity futures as the worst outbreak of Covid infections since the start of the pandemic held the rally in check. In the U.K., inflation climbed faster than expected to the highest in a decade, heaping pressure on the Bank of England to raise interest rates, pressing on the FTSE 100 to lag peer markets. Asian stocks fell, halting a four-day rally, as investors factored in higher Treasury yields and the outlook for U.S. monetary policy to assess whether the region’s recent gains were excessive.   The MSCI Asia Pacific Index slid as much as 0.7%, pulling back from a two-month high reached Tuesday. The banking sector contributed the most to Wednesday’s drop as the Commonwealth Bank of Australia reported cash earnings that were below some estimates. South Korea led the region’s decline, with the Kospi falling more than 1%, weighed down by bio-pharmaceutical firms. Asia’s stocks are taking a breather from a run-up driven by expectations for earnings to improve and economies to recover from quarters of pandemic-induced weakness. The benchmark is coming off a two-week gain of 1.5%.  “Shares are correcting recent gains, although I’d say it’s not much of a correction as the drop is mild,” said Tomo Kinoshita, a global market strategist at Invesco Asset Management in Tokyo. “The relatively solid economic performances in the U.S. and Europe signal positive trends for Asian exporters,” which will support equities over the long term, he said.  U.S. stocks climbed after data showed the biggest increase in U.S. retail sales since March, while results from Walmart Inc. and Home Depot Inc. showed robust demand. The 10-year Treasury yield hit 1.64%, gaining for a fourth day. Japanese equities fell, cooling off after a four-day advance despite the yen’s drop to the lowest level against the dollar since 2017. Service providers and retailers were the biggest drags on the Topix, which dropped 0.6%. Recruit and Fast Retailing were the largest contributors to a 0.4% loss in the Nikkei 225. The yen slightly extended its decline after tumbling 0.6% against the greenback on Tuesday. The value of Japan’s exports gained 9.4% in October, the slowest pace in eight months, adding to signs that global supply constraints are still weighing on the economy. Indian stocks fell, led by banking and energy companies, as worries over economic recovery and inflation hurt investors’ sentiment. The S&P BSE Sensex fell 0.5% to 60,008.33 in Mumbai, while the NSE Nifty 50 Index declined by 0.6%. The benchmark index has now dropped for five of seven sessions and is off 3.7% its record level reached on Oct. 18. All but five of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by a gauge of real estate companies.  Fitch Ratings kept a negative outlook on India’s sovereign rating, already at the lowest investment grade, citing concerns over public debt that’s the highest among similar rated emerging-market sovereigns.  While high-frequency data suggests India’s economic recovery is taking hold, central bank Governor Shaktikanta Das said at an event on Tuesday that the recovery is uneven. “Feeble global cues are weighing on sentiment,” Ajit Mishra, a strategist with Religare Broking, said in a note. He expects indexes to slide further but the pace of decline to be gradual with Nifty having support at 17,700-17,800 level. Shares of Paytm are scheduled to start trading on Thursday after the digital payment company raised $2.5b in India’s biggest initial share sale. Local markets will be closed on Friday for a holiday.  Reliance Industries contributed the most to Sensex’s decline, decreasing 2.1%. The index heavyweight has lost 5% this week, headed for the biggest weekly drop since June 27. In rates, Treasuries were steady with yields slightly richer across the curve and gilts mildly outperforming after paring early losses. Treasury yields except 20-year are richer by less than 1bp across curve with 30-year sector outperforming slightly; 10-year yields around 1.63% after rising as high as 1.647% in early Asia session. Focal points for U.S. session include 20-year bond auction -- against backdrop of Fed decision to not taper in the sector, made after last week’s poorly bid 30-year bond sale, and seven Fed speakers scheduled. The $23BN 20-year new issue at 1pm ET is first at that size after cuts announced this month; WI yield at 2.06% is 4bp richer than last month’s, which tailed the WI by 2.5bp. In Europe, gilts richen slightly across the short end, short-sterling futures fade an open drop after a hot inflation print. Peripheral spreads are marginally wider to core. In FX, the Bloomberg Dollar Spot Index drifted after earlier rising to its highest level in over a year, spurred by strong U.S. retail sales and factory output data Tuesday; the greenback traded mixed versus its Group-of-10 peers though most currencies were consolidating recent losses against the greenback. The pound reached its strongest level against the euro in nearly nine months after U.K. inflation climbed faster than expected to the highest in a decade, heaping pressure on the Bank of England to raise interest rates. The Australian dollar hit a six-week low as third quarter wage data missed the central bank’s target, prompting offshore funds to sell the currency; the three-year yield fell back under 1%. The yen declined to its lowest level in more than four years as growing wagers of quicker policy normalization in the U.S. contrasted with the outlook in Japan, where interest rates are expected to be kept low. Super-long bonds fell. Volatility broke through the recent calm in currency markets, where the cost of hedging against volatility in the euro against the dollar over the next month climbed the most since the pandemic struck in March 2020. The move comes as traders bake in bets on faster rate hikes to curb inflation. The Turkish lira extended the week’s downward move, weakening another 2% against the dollar after comments from Erdogan sent the USDTRY hitting record highs of 10.5619 The Chinese yuan advanced to its highest level since 2015 against a basket of trading partners’ currencies following the dollar’s surge. Bloomberg’s replica of the CFETS basket index rises 0.3% to 101.9571, closer to the level that triggered a shock devaluation by the PBOC in 2015, testing the central bank’s tolerance before stepping in with intervention. In commodities, crude futures dropped as the market weighs the potential for a join U.S.-China stockpile-reserve release. WTI is down more than 1%, back on a $79-handle; Brent slips back toward $81.50, trading near the middle of this week’s range. Most base metals are under pressure with LME copper down as much as 1.4%. Spot gold adds $10 near $1,860/oz. European gas surged to the highest level in a month as delays to a controversial new pipeline from Russia stoked fears of a supply shortage with winter setting in. Cryptocurrencies remained lower after a tumble, with Bitcoin steadying around the $60,000 level. Looking at the day ahead now, and data releases include October data on UK and Canadian CPI, as well as US housing starts and building permits. Central bank speakers include ECB President Lagarde and the ECB’s Schnabel, the Fed’s Williams, Bowman, Mester, Waller, Daly, Evans and Bostic, and the BoE’s Mann. Finally, the ECB will be publishing their Financial Stability Review, and earnings releases today include Nvidia, Cisco, Lowe’s and Target. Market Snapshot S&P 500 futures little changed at 4,696.00 STOXX Europe 600 up 0.1% to 489.79 MXAP down 0.5% to 200.06 MXAPJ down 0.4% to 656.01 Nikkei down 0.4% to 29,688.33 Topix down 0.6% to 2,038.34 Hang Seng Index down 0.2% to 25,650.08 Shanghai Composite up 0.4% to 3,537.37 Sensex down 0.4% to 60,064.33 Australia S&P/ASX 200 down 0.7% to 7,369.93 Kospi down 1.2% to 2,962.42 Brent Futures down 0.8% to $81.79/bbl Gold spot up 0.5% to $1,859.93 U.S. Dollar Index little changed at 95.95 German 10Y yield little changed at -0.25% Euro little changed at $1.1310 Top Overnight News from Bloomberg Bond traders are bracing for a key test Wednesday as the Treasury looks to sell its first long-dated debt since inflation worries spooked buyers at last week’s poorly received 30-year auction Increasingly stretched prices in property and financial markets, risk-taking by non-banks and elevated borrowing pose a threat to euro-area stability, the European Central Bank warned Germany is giving investors a rare chance to grab some of Europe’s safest and positive-yielding debt. The country will sell one billion euros ($1.13 billion) of its longest-dated debt at 10:30 a.m. London on Wednesday. The country’s 30-year notes are currently trading with a yield 0.09%. It’s a paltry rate, but probably the last time for a while that Germany will offer the maturity ECB Governing Council member Olli Rehn says euro- area inflation is accelerating due to increasing demand pushing up the price of energy and supply bottlenecks, according to interview in Finland’s Talouselama magazine The yuan’s advance to a six-year high versus China’s trading partners this week has investors asking how far the central bank will let the rally run. The yuan extended gains on Wednesday against a basket of 24 currencies of the nation’s trading partners, bringing it close to the level that triggered a shock devaluation by the People’s Bank of China in 2015 Turkish President Recep Tayyip Erdogan vowed to continue fighting for lower interest rates, sending a clear signal to investors a day before the central bank sets its policy. The lira weakened A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mixed and struggled to sustain the positive lead from the US where better than expected Industrial Production and Retail Sales data spurred the major indices, in which the S&P 500 reclaimed the 4,700 level and briefly approached to within four points of its all-time high. ASX 200 (-0.7%) was led lower by underperformance in the top-weighted financials sector amid weakness in the largest lender CBA despite a 20% jump in quarterly cash profit, as operating income was steady and it noted that loan margins were significantly lower. Mining related stocks also lagged in Australia due to the recent declines in global commodity prices amid the stronger USD and higher US yields. Nikkei 225 (-0.4%) retraced its opening gains after disappointing Machinery Orders and miss on Exports which grew at the slowest pace in eight months, while the KOSPI (-1.2%) suffered due to virus concerns with daily infections at the second highest on record for South Korea. Hang Seng (-0.3%) and Shanghai Comp. (+0.4%) were varied with Hong Kong dragged lower by tech stocks including NetEase post-earnings, while the mainland was choppy as markets continued to digest the recent Biden-Xi meeting that was described by President Biden as a 'good meeting' and in which they discussed the need for nuclear “strategic stability” talks. US and China also agreed to provide access to each other’s journalists, although there were also comments from Commerce Secretary Raimondo that China is not living up to phase 1 trade commitments and it was reported that China is to speed up plans to replace US and foreign tech. Finally, 10yr JGBs were flat with demand hampered following the declines in T-notes, although downside was stemmed amid the flimsy sentiment across Asia-Pac trade and with the BoJ also in the market for JPY 925bln of JGBs mostly concentrated in 1-3yr and 5-10yr maturities. Top Asian News Asia Stocks Set to Snap Four-Day Advance as Kospi Leads Decline Gold Rises as Fed Officials Feed Debate on Inflation Response Deadly Toxic Air Chokes Delhi as India Clings to Coal Power PBOC May Start Raising Rates by 10bps Every Quarter in 2022: TD European equities (Stoxx 600 +0.1%) trade with little in the way of firm direction as the Stoxx 600 lingers around its ATH printed during yesterday’s session. The handover from the APAC session was mostly a softer one after the region failed to sustain the positive lead from the US which saw the S&P 500 approach within four points of its all-time high. Stateside, US futures are just as uninspiring as their European counterparts (ES flat) ahead of another busy day of Fed speak and pre-market earnings from retail names Target (TGT) and TJX Companies (TJK) with Cisco (CSCO) and NVIDIA (NVDA) due to report after-hours. Markets still await a decision on the next Fed Chair which President Biden said will come in around four days yesterday; as it stands, PredictIt assigns a circa 65% chance of Powell winning the renomination. Sectors in Europe have a marginal positive tilt with Media names outperforming peers alongside gains in Vivendi (+1.0%) after Italian prosecutors asked a judge to drop a case against Vivendi's owner and CEO for alleged market manipulation. Travel & Leisure names are the notable underperformer amid losses in sector heavyweight Evolution Gaming (-9.6%) who account for 14% of the sector with the Co. accused of taking illegal wagers. In terms of individual movers, Siemens Healthineers (+4.6%) is one of the best performers in the region after the Co. noted that revenues are on track to grow 6-8% between 2023 and 2025. UK Banking names such as Lloyds (+1.3%) and Natwest (+1.1%) have benefitted from the favourable rate environment in the UK with today’s inflation data further cementing expectations for a move in rates by the BoE next month. Conversely, this acted as a drag on the UK homebuilder sector at the open before moves were eventually scaled back. SSE (-4.5%) underperforms after announcing a GBP 12.5bln investment to accelerate its net zero ambitions. Top European News Epstein’s Paris Apartment Listed for $14 Million, Telegraph Says Volkswagen Shares Stall as Analysts Doubt Its EV Street Cred Germany to Move Ahead With Tighter Covid Curbs Amid Record Cases U.K. Urges EU Not to Start Trade War If Brexit Deal Suspended In FX, the Greenback extended Tuesday’s post-US retail sales and ip gains to set new 2021/multi-year highs overnight when the index hit 96.266 and several Dollar pairs probed or crossed psychological round numbers. However, the latest bull run has abated somewhat amidst some recovery gains in certain rival currencies and a general bout of consolidation ahead of housing data, another raft of Fed speakers and Usd 23 bn 20 year supply that will be of note after a bad debut for new long londs last week, not to mention tepid receptions for 3 and 10 year offerings prior to that. NZD/AUD - A marked change in the tide down under as the Aud/Nzd cross reverses sharply from around 1.0450 to sub-1.0400 and gives the Kiwi enough impetus to regain 0.7000+ status vs its US peer with extra incentive provided by NZ PM Ardern announcing that the entire country is expected to end lockdown and move to a new traffic light system after November 29, while Auckland’s domestic borders will reopen from December 15 for the fully vaccinated and those with negative COVID-19 tests. Conversely, the Aussie is struggling to stay within sight of 0.7300 against its US counterpart in wake of broadly in line Q3 wage prices that leaves the y/y rate still some way short of the 3% pace deemed necessary to lift overall inflation by the RBA. GBP/CAD - Sterling is striving to buck the overall trend with help from more forecast-topping UK data that should give the BoE a green light for lifting the Bank Rate in December, as headline CPI came in at 4.2% y/y, core at 3.4% and PPI prints indicate more price pressure building in the pipeline. Cable printed a minor new w-t-d peak circa 1.3474 in response before waning and Eur/Gbp fell below the prior y-t-d low and 0.8400, but is now back above awaiting more news on the Brexit front and a speech from one of the less hawkish MPC members, Mann. Elsewhere, the Loonie is hovering around 1.2550 vs the Greenback and looking toward Canadian inflation for some fundamental direction as oil prices continue to fluctuate near recent lows, but Usd/Cad may also be attracted to decent option expiry interest between 1.2540-55 in 1.12 bn. CHF/EUR/JPY - All straddling or adjacent to round numbers against the Dollar, but the Franc lagging below 0.9300 on yield differentials, while the Euro has recovered from a fresh 2021 trough under 1.1300 and Fib support at 1.1290 to fill a gap if nothing else, and the Yen just defended 115.00 irrespective of disappointing Japanese machinery orders and internals within the latest trade balance. In commodities, WTI and Brent benchmarks are pressured this morning but the magnitude of the action, circa USD 0.70/bbl at the time of writing, is less pronounced when compared to the range of the week thus far and particularly against last week’s moves. Newsflow has been slim and the downside action has arisen without fresh catalysts or drivers; note, participants are cognisant of influence perhaps being exerted by today’s WTI Dec’21 option expiry. To briefly surmise the morning’s action, Vitol executives provided bullish commentary citing limited capacity to deal with shocks and on that theme, there were reports of an explosion at an oil pipeline in Southern Iran, said to be due to aging equipment. This, alongside reports that Belarus is restricting oil flows to Poland for three-days for maintenance purposes, have not steadied the benchmarks. Elsewhere, last night’s private inventories were mixed but bullish overall, with the headline a smaller than expected build and gasoline a larger than expected draw. On gasoline, some desks posit that this draw may serve to increase pressure for a US SPR release, and as such look to today’s EIA release which is expected to print a gasoline draw of 0.575M. Moving to metals, spot gold and silver are firmer this morning but, in a similar vein to crude, remain well within familiar ranges as specific catalysts have been light and initial USD action has largely fizzled out to the index pivoting the U/C mark. More broadly, base metals are pressured as inventories of iron ore are at their highest for almost three years in China as demand drops, with this having a knock-on impact on coking coal, for instance. US Event Calendar 7am: Nov. MBA Mortgage Applications, prior 5.5% 8:30am: Oct. Building Permits, est. 1.63m, prior 1.59m, revised 1.59m 8:30am: Oct. Building Permits MoM, est. 2.8%, prior -7.7%, revised -7.8% 8:30am: Oct. Housing Starts MoM, est. 1.5%, prior -1.6%; Housing Starts, est. 1.58m, prior 1.56m DB's Henry Allen concludes the overnight wrap Even as inflation jitters remained on investors’ radars, that didn’t prevent risk assets pushing onto fresh highs yesterday, as investor sentiment was bolstered by strong economic data and decent corporate earnings releases. In fact by the close of trade, the S&P 500 (+0.39%) had closed just -0.02% beneath its all-time closing record, in a move that also brought the index’s YTD gains back above +25%, whilst Europe’s STOXX 600 (+0.17%) hit an all-time high as it posted its 16th gain in the last 18 sessions. Starting with the data, we had a number of positive US releases for October out yesterday, which echoed the strength we’d seen in some of the other prints, including the ISMs and nonfarm payrolls that had both surprised to the upside in the last couple of weeks. Headline retail sales posted their biggest gain since March, with a +1.7% advance (vs. +1.4% expected), whilst the measure excluding autos and gas stations was also up by a stronger-than-expected +1.4% (vs. +0.7% expected). Then we had the industrial production numbers, which showed a +1.6% gain in October (vs. +0.9% expected), though it’s worth noting around half of that increase was a recovery from Hurricane Ida’s effects. And that came against the backdrop of solid earnings results from Walmart and Home Depot as well earlier in the session. They saw Walmart raise their full-year guidance for adjusted EPS to around $6.40, up from $6.20-$6.35 previously, whilst Home Depot reported comparable sales that were up +6.1%. To be honest it was difficult to find much in the way of weak data, with the NAHB’s housing market index for November up to a 6-month high of 83 (vs. 80 expected). Amidst the optimism however, concerns about near-term (and longer-term) inflation pressures haven’t gone away just yet, and the 5yr US breakeven rose again, increasing +1.1bps yesterday to an all-time high of 3.21%. Bear in mind that just 12 days ago (before the upside CPI release) that measure stood at 2.89%, so we’ve seen a pretty sizeable shift in investor expectations in a very short space of time as they’ve reacted to the prospect inflation won’t be as transitory as previously believed. The increase was matched by a +1.3bps increase in nominal 5yr yields to a post-pandemic high of 1.27%. The 10yr yield also saw a slight gain of +1.9bps to close at 1.63%, and this morning is up a further +0.7bps. Against this backdrop, the dollar index (+0.58%) strengthened further to its highest level in over a year yesterday, though the reverse picture has seen the euro weaken beneath $1.13 this morning for the first time since July 2020. Speaking of inflation, there were fresh pressures on European natural gas prices yesterday, which surged by +17.81% to €94.19 per megawatt-hour. That’s their biggest move higher in over a month, and follows the decision from the German energy regulator to temporarily suspend the certification of the Nord Stream 2 pipeline, adding further short-term uncertainty to the winter outlook. UK natural gas futures (+17.15%) witnessed a similar surge, and their US counterparts were also up +3.19%. Elsewhere in the energy complex, Brent crude (+0.46%) oil prices moved higher as well. Overnight in Asia, equity indices are trading lower this morning including the CSI (-0.05%), the Nikkei (-0.45%) and the Hang Seng (-0.55%), though the Shanghai Composite (+0.19%) has posted a modest advance. There were also some constructive discussions in the aftermath of the Biden-Xi summit the previous day, with US national security adviser Jake Sullivan saying that the two had spoken about the need for nuclear “strategic stability” talks, which could offer the prospect of a further easing in tensions if they do come about. Looking forward, futures are indicating a muted start in US & Europe later on, with those on the S&P 500 (-0.03%) and the DAX (-0.15%) pointing to modest declines. Elsewhere, markets are still awaiting some concrete news on who might be nominated as the next Fed Chair, though President Biden did say to reporters that an announcement would be coming “in about four days”, so investors will be paying close attention to any announcements. Senator Sherrod Brown, who chairs the Senate Banking Committee, who earlier in the week noted a pick was imminent, followed up by proclaiming he was “certain” that the Senate would confirm either of Chair Powell or Governor Brainard. Staying on the US, as Congress waits for the Congressional Budget Office’s score on Biden’s social and climate spending bill, moderate Democratic Senator Manchin noted continued uncertainty about the bill’s anti-inflationary bona fides. Elsewhere, the impending debt ceiling has worked its way back into the spotlight, with Treasury Secretary Yellen saying that she’ll soon provide updates on how much cash the Treasury will have to pay the government’s bills. The market has started to price in at least some risk, with yields on Treasury bills maturing in mid-to-late December higher than neighbouring maturities, and the Washington Post’s Tony Romm tweeted yesterday that the new deadline that the Treasury was expected to share soon was on December 15. Turning to Germany, coalition negotiations are continuing between the centre-left SPD, the Greens and the liberal FDP, and yesterday saw SPD general secretary Lars Klingbeil state that “The goal is very clear, to have a completed coalition agreement in the next week”. We’ve heard similar comments from the Greens’ general secretary, Michael Kellner, who also said that “We aim to achieve a coalition agreement next week". One issue they’ll have to grapple with is the resurgence in Covid-19 cases there, and Chancellor Merkel and Vice Chancellor Scholz (who would become chancellor if agreement on a traffic-light coalition is reached) are set to have a video conference with regional leaders tomorrow on the issue. Staying on the pandemic, it’s been reported by the Washington Post that the Biden administration will announce this week that it plans to purchase 10 million doses of Pfizer’s Covid pill. The company will submit data for the pill to regulators before Thanksgiving. It’s not just the US that will benefit from Pfizer’s pill however, as the pharmaceutical company will also license generic, inexpensive versions of the pill to low- and middle-income countries, which should be a global boost in the fight against the virus. Looking at yesterday’s other data, the main release came from the UK employment numbers, which showed that the number of payrolled employees rose by +160k in October, whilst the unemployment rate in the three months to September fell to 4.3% (vs. 4.4% expected). That release was better than the Bank of England’s MPC had expected in their November projections, and sterling was the top-performing G10 currency yesterday (+0.06% vs. USD) as the statistics were seen strengthening the case for a December rate hike. In response to that, gilts underperformed their European counterparts, with 10yr yields up +2.7bps. That contrasted with yields on 10yr bunds (-1.4bps), OATs (-1.8bps) and BTPs (-2.6bps), which all moved lower on the day. Interestingly, that divergence between bunds and treasury yields widened further yesterday, moving up to 188bps, the widest since late-April. To the day ahead now, and data releases include October data on UK and Canadian CPI, as well as US housing starts and building permits. Central bank speakers include ECB President Lagarde and the ECB’s Schnabel, the Fed’s Williams, Bowman, Mester, Waller, Daly, Evans and Bostic, and the BoE’s Mann. Finally, the ECB will be publishing their Financial Stability Review, and earnings releases today include Nvidia, Cisco, Lowe’s and Target. Tyler Durden Wed, 11/17/2021 - 07:50.....»»

Category: dealsSource: nytNov 17th, 2021

Gold Probes Multi-Month Highs As Inflation Drives Investor Interest In Haven Assets

Gold Probes Multi-Month Highs As Inflation Drives Investor Interest In Haven Assets Authored by Tom Ozimek via The Epoch Times, Surging inflation has pushed gold prices to near five-month highs, with Credit Suisse analysts predicting a more sustained move higher that could see the haven metal attempt a breakout beyond its $2,075 record high. Spot gold prices rose sharply on Nov. 3, the day Fed policymakers capped a two-day meeting by saying they would start tapering their massive asset-buying program but broadly continue “accommodative financial conditions,” and again on Nov. 10, the day the Labor Department released data showing year-over-year inflation in October running at a near 31-year high. On Nov. 15, the haven metal was hovering around the $1,860 per ounce mark, not far off its five-month high, with the recent leg up suggesting investors are betting that the current inflationary run-up will continue for some time. “Gold continues to improve steadily and has now cleared key price resistance from the July and September highs and downtrend from August 2020 at $1,834 to establish a five-month base,” Credit Suisse analysts wrote in a note, cited by FX Street. “With the market also above rising short, medium and long-term averages evidence looks to be building we may be at the beginning of a more sustained move higher.” Credit Suisse analysts said they expect gold to continue its bullish tendency and test the June high of $1,917, with a breakout above that level adding “further weight to our view with resistance then seen next at $1,959/77 and eventually back to the $2,075 record high.” Inflation concerns have also sparked interest in the 30-year Treasury inflation-protected securities, whose yield on Nov. 9 fell to a record low of minus 0.57 percent, though it has since recovered some ground to minus 0.51 percent as of Nov. 12. While Fed officials have maintained that the current bout of inflation is “transitory” and will abate once supply-side dislocations are smoothed out, Fed Chair Jerome Powell said at a Nov. 3 press conference that the central bank’s idea of “transitory” has evolved as upward price pressures have turned out to be more persistent than previously thought. “Really for us, what transitory has meant is that if something is transitory, it will not leave behind it permanently or very persistently higher inflation,” Powell said, adding that it is not yet time to raise interest rates as “there is still ground to cover” in terms of labor market recovery. But with job openings near historic highs and the quits rate, which reflects worker confidence in being able to find a better job, at a record high, some economists believe it’s high time the Fed hit the brakes on easy money more forcefully. Former Treasury Secretary Larry Summers, who was early to sound the alarm on the current bout of surging prices, said in a CNN interview last week that he believes the labor market is tight and loose monetary policy is counterproductive. “We’ve got to recognize our problem is not that not enough people have jobs,” Summers told the outlet. “The current problem is that we are pushing demand into the economy faster than supply can grow and that we are just going to get more and more inflation until we stop doing that,” he said. “That’s the real problem,” he added. Unless the Fed makes a significant change to policy or an “accident” delivers a major disruptive blow to the economy, it’s “quite unlikely” the rate of inflation will fall back to the central bank’s 2 percent target in the foreseeable future, Summers predicted. The Fed has responded to surging prices by announcing a rollback in the pace of monthly asset-buys, one of the stimulus measures adopted in response to the pandemic crisis. At their most recent policy meeting at the beginning of November, Fed policymakers voted to taper their $120 billion in monthly asset-purchases—buying $10 billion less in Treasurys and $5 billion less in mortgage-backed securities each month. Summers said that’s not fast enough. “If they started by saying that they were going to stop immediately buying mortgages in the midst of a major housing bubble, that would be helpful,” he said, adding that surging housing prices have yet to be fully reflected in the headline inflation numbers. “If they said they were going to stop growing their balance sheet and not reduce their balance sheet but just stop the process of growing it—if they were going to get that done in three months, rather than in eight, that would be helpful,” he said. “I think the Fed has made a significant mistake in the approach that it’s taking by doubling down on the massive fiscal stimulus we had at the beginning of the year with really easy monetary policy,” Summers added. Tyler Durden Wed, 11/17/2021 - 05:00.....»»

Category: dealsSource: nytNov 17th, 2021

Workday (WDAY) to Report Q3 Earnings: What"s in Store?

Workday's (WDAY) fiscal third-quarter performance is expected to benefit from high demand for its cloud-based HCM and financial management solutions. Workday WDAY is scheduled to report third-quarter fiscal 2022 results on Nov 18.The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at 87 cents per share, indicating an improvement of 1.2% from the figure reported in the year-ago quarter. The consensus estimate for earnings has been stable in the past 30 days.The consensus mark for fiscal third-quarter revenues is currently pegged at $1.31 billion, suggesting a rise of 18.4% from the figure reported in the year-ago quarter.Let’s see how things have shaped up for Workday prior to this announcement.Factors to ConsiderWorkday’s fiscal third-quarter performance is likely to have benefited from healthy demand for its cloud-based human capital management (HCM) solutions and financial management solutions. Workday, Inc. Price and EPS Surprise  Workday, Inc. price-eps-surprise | Workday, Inc. Quote Workday has a diverse product portfolio, which continues to yield a steady flow of customers. Workday has been gaining traction in the international markets. These factors are expected to have aided top-line growth.Workday’s HR, finance and planning solutions continue to gain traction, driven by the growing demand from large enterprises. For the fiscal third quarter, Workday expects subscription revenues in the range of $1.156-$1.158 billion. The Zacks Consensus Estimate is pegged at $1.16 billion, indicating growth of 19.7% from the figure reported in the year-ago quarter.The coronavirus pandemic has accelerated digital transformation for corporates across all the industries. This is anticipated to have led to the robust uptake of Workday Adaptive Planning, Workday Prism Analytics and Workday Strategic Sourcing as well as Spend Management offerings. This is likely to have benefited the top line in the to-be-reported quarter.Professional services revenues for the fiscal third quarter are projected to be $150 million, driven by new business trends. The Zacks Consensus Estimate is pegged at $150 million, suggesting an increase of 9.5% from the figure reported in the year-ago quarter.What Our Model IndicatesPer the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.Workday has an Earnings ESP of -0.86 and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Stocks to ConsiderHere are some companies worth considering per our model, as these have the right combination of elements to beat on earnings this reporting cycle:Applied Materials AMAT has an Earnings ESP of +0.52% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.Applied Materials’ shares have surged 81.1% year to date compared with the Zacks Semiconductor Equipment - Wafer Fabrication industry’s rally of 66.5% and the Computer & Technology sector’s return of 27.9%.Agilent Technologies A has an Earnings ESP of +0.61% and a Zacks Rank of 3.Agilent’s shares have returned 33.1% year to date compared with the Zacks Electronics- Testing Equipment industry’s growth of 17.3%. Agilent has outperformed the Computer & Technology sector’s return of 27.9% year to date.Intuit INTU has an Earnings ESP of +1.87% and a Zacks Rank of 3.Intuit’s shares have soared 64.8% year to date compared with the Zacks Computer Software industry’s growth of 42.3%. Intuit has outperformed the Computer & Technology sector’s return of 27.9% year to date. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Agilent Technologies, Inc. (A): Free Stock Analysis Report Intuit Inc. (INTU): Free Stock Analysis Report Applied Materials, Inc. (AMAT): Free Stock Analysis Report Workday, Inc. (WDAY): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 16th, 2021

Baxter"s (BAX) $100M Investment to Strengthen Global Presence

Baxter's (BAX) strategic investment to help expand the manufacturing footprint of BPS and ensure improvement in products. Baxter International Inc. BAX recently announced an expansion of around $100 million with respect to its sterile fill/finish manufacturing facility based in Halle/Westfalen, Germany. Interestingly, BioPharma Solutions (“BPS”) — a business unit of Baxter — operates this facility. The construction of the new manufacturing building is anticipated to begin in 2022, while completion is expected in 2024.It is worth mentioning that BPS specializes in collaborating with leading pharmaceutical and biotech companies when it comes to the development and contract manufacturing of drug products for parenteral (injectable) pharmaceuticals.This expansion is likely to provide a boost to Baxter’s global foothold.More on the NewsPer management at BPS, Baxter’s aforementioned manufacturing site is one of the most advanced facilities in its global network and has witnessed substantial growth over the last few years. This investment is likely to ensure that the facility can serve the company’s partners at the highest level in the present as well as in the future.Image Source: Zacks Investment ResearchThis strategic investment is likely to expand BPS’ manufacturing footprint and provide it access to superior equipment that help products achieve stability and enhanced shelf life through lyophilization (freeze drying). Apart from this, construction is likely to add an aseptic syringe filling line, which will enable BPS to meet the rising demand for this delivery platform in both Europe and the United States.It is important to note here that pre-filled syringes can improve efficiency and ease-of-use for clinicians and reduce microbial contamination and minimize medication dosing errors during medication preparation, which are crucial to patient safety.Market ProspectsPer a report by Grand View Research, the global prefilled syringes market is projected to attain a value of $22.5 billion by 2025, witnessing a CAGR of 11.2% during the forecast period (2014-2025). Increase in use of prefilled syringes and technological advancements in auto-injectors are the main factors driving the market. Hence, this announcement comes at an opportune time for Baxter.Recent DevelopmentsThis month, Baxter presented new data that showed that kidney patients might experience a nearly two-times higher survival rate and a prolonged time to an adverse event (AE) and hospitalization by utilizing the Sharesource remote patient management digital health platform to help manage home automated peritoneal dialysis (APD).In October, the company announced the CE marking of the NEPHROCLEAR CCL14 Test in collaboration with a global leader in in vitro diagnostics.In September, the company announced the receipt of the FDA’s approval and commercial launch of premix (ready-to-use) Norepinephrine Bitartrate in 5% Dextrose Injection (norepinephrine).Price PerformanceShares of this Zacks Rank #3 (Hold) company have lost 0.9% on a year-to-date basis compared with the industry’s decline of 0.3%.Stocks to ConsiderSome better-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. TMO, McKesson Corporation MCK, and AngioDynamics, Inc. ANGO.Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.Thermo Fisher surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).McKesson’s long-term earnings growth rate is estimated at 8.9%. The company currently carries a Zacks Rank #2.McKesson surpassed earnings estimates in each of the trailing four quarters, the average surprise being 19.9%. The company’s earnings yield of 9.9% compared to the industry’s 3.2%.AngioDynamics’ consensus mark for revenues for fiscal 2022 stands at $313.3 million, suggesting an improvement of 7.7% from the prior-year reported figure. The company currently carries a Zacks Rank #1.AngioDynamics surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 125.6%. The company’s earnings yield of 0.1% compares favorably with the industry’s (3.6%). Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AngioDynamics, Inc. (ANGO): Free Stock Analysis Report Baxter International Inc. (BAX): Free Stock Analysis Report Thermo Fisher Scientific Inc. (TMO): Free Stock Analysis Report McKesson Corporation (MCK): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 16th, 2021

3D Systems (DDD) Boosts Additive Manufacturing Portfolio

3D Systems (DDD) launches SLS 380 workflow and dual laser printers along with other high-throughput 3D printing technologies to enhance its additive manufacturing portfolio. 3D Systems DDD recently introduced a number of high-throughput 3D printing technologies to enhance additive manufacturing (“AM”) performance and productivity in healthcare and industrial markets.Firstly, 3D Systems unveiled its next-generation Selective Laser Sintering (“SLS”) workflow that combines the newly launched SLS 380 with 3D Sprint, DuraForm materials, and AMT’s PostPro to produce cost-effective end-use parts with high-throughput, consistency, performance, and yield. The SLS 380 will be available in the first-quarter of fiscal 2022.It is worth mentioning that 3D Systems will be reselling AMT’s line of products to provide a fully automated post-processing workflow. The AMT’s PostPro industrial-scale SLS post-processing system enables batch cleaning and smoothing of parts, and reduces lead time and manufacturing costs. Thus, it ensures increased efficiency and enhanced factory scalability for the printing major.Secondly, 3D Systems unveiled MQC 600, a new Material Quality Control (“MQC”) system to deliver material to up to four printers simultaneously with minimum waste materials and eliminate intervention of operators.Thirdly, 3D Systems enhanced its Direct Metal Printing (“DMP”) portfolio with the launch of DMP Flex 350 Dual, DMP Factory 350 Dual and DMP Flex 200 printers. The Flex 350 Dual and Factory 350 Dual models have two lasers, which reduces 50% build time and costs. While the DMP Flex 350 Dual comes with flexible application use and quick-swap build modules, the DMP Factory 350 Dual comes with integrated powder recycling.Both the printers have a central server to manage print jobs, materials, settings, and maintenance for 24/7 productivity. They will accelerate innovation for certain applications such as medical devices, aerospace, turbomachinery, semiconductors, and automotive & motorsports.3D Systems Corporation Price and Consensus 3D Systems Corporation price-consensus-chart | 3D Systems Corporation QuoteMeanwhile, the DMP Flex 200 model is specifically built for dental applications. It will ensure high-quality, small, complex, fine detail metal parts making including the next-day removable partial dentures, crowns, bridges, and implant bars. All three printers will be available in first-quarter fiscal 2022.3D Systems introduced 3DXpert 17, a new metal AM software platform, available from its newly acquired business, Oqton. 3DXpert is all-in-one, integrated 3D additive manufacturing software that streamlines workflow, from design to printing. Its enhanced features enable rapid design for additive manufacturing (“DfAM”). 3DXpert 17 will be available in fourth-quarter fiscal 2021.In addition to the above roll-outs, 3D Systems boosted its material portfolio with the introduction of Figure 4 Rigid 140C Black, a two-part epoxy/acrylate hybrid material, to deliver production-grade parts with long-term mechanical stability in various environments. The material not only provides toughness comparable to injection molded polybutylene glass fiber (“PBT GF”) but also is attractive for under-the-hood and internal cabin automotive applications including end-use clips, covers, connectors, housings and fasteners, electrical latching, and board connectors.Zacks Rank & Stocks to Consider3D Systems currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Advanced Micro Devices AMD, Qualcomm QCOM and TD SYNNEX SNX, all 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 Advanced Micro Devices’ fourth-quarter 2021 earnings has been revised upward by 8 cents to 76 cents per share over the past 30 days. For 2021, earnings estimates have been moved upward by 15 cents to $2.65 per share in the last 30 days.Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 14%. Shares of AMD stock have rallied 59.7% in the year-to-date (“YTD”) period.The consensus mark for Qualcomm’s first-quarter fiscal 2022 earnings has been raised to $3 per share from $2.63 per share 30 days ago. For fiscal 2022, earnings estimates revised upward by 11 cents to $10.51 per share in the last seven days.Qualcomm’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 11.2%. Shares of QCOM stock have gained 10.6% YTD.TD SYNNEX’s consensus estimate for fourth-quarter fiscal 2021 earnings has been revised upward by 11.7% to $2.67 per share over the past 60 days. For fiscal 2021, earnings estimates have been moved upward by 6.5% to $8.95 per share over the last 60 days.TD SYNNEX’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.4%. Shares of SNX stock have rallied 38.1% YTD. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report QUALCOMM Incorporated (QCOM): Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report TD SYNNEX Corp. (SNX): Free Stock Analysis Report 3D Systems Corporation (DDD): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksNov 16th, 2021

Will CARZ ETF Gain Despite Mixed Auto Earnings?

Let's look at the impact of major automakers' earnings releases on automobile ETF amid the coronavirus crisis. The automobile, tires, trucks sector has come up with mixed results this reporting season. Notably, 75% of the S&P automobile companies beat on earnings and revenues. However, earnings declined 12.3% year over year and revenues were down 2.6%, as reported by the Earnings Trends issued on Nov 10. Notably, the First Trust NASDAQ Global Auto Index Fund CARZ has gained 26% in the year-to-date period, outperforming the SPDR S&P 500 ETF’s SPY rise of 25%.The U.S. automobile sector has been attracting investor attention as the gradual reopening of U.S. and global economies highlights brighter prospects. The coronavirus vaccine rollout is gradually helping control the outbreak's spread across the globe. Accordingly, the global demand and economic growth levels are on the path of recovery from the pandemic-led slump. Vehicle demand is on the upswing, courtesy of the growing inclination toward personal mobility and easier credit conditions. Electric vehicles (EVs) are seeing greater popularity with each passing day and are likely to boost the prospects of automakers.However, consumers seem disturbed about the rising prices of homes, vehicles, food and household durables. The Michigan survey has also highlighted that the buying conditions for household goods have declined to the second-lowest level since the recording of data began in 1978. The metric came in at a reading of 78 (per a Bloomberg article).Against this backdrop, we take a look at some big automobile earnings releases and check if these can impact ETFs exposed to the sector.Automobile ETF in FocusGiven the current scenario, it is prudent to discuss the following ETF that has relatively higher exposure to the major players in the space:First Trust NASDAQ Global Auto ETFThe investment objective of First Trust NASDAQ Global Auto ETF is to seek investment results that generally correspond to the price and yield, before the Fund's fees and expenses, of an equity index called the NASDAQ OMX Global Auto Index.First Trust NASDAQ Global Auto ETF comprises 34 holdings, with the below-mentioned companies carrying about 25% weight. CARZ’s AUM is $77.4 million and expense ratio, 0.70%. First Trust NASDAQ Global Auto ETF currently carries a Zacks ETF Rank #3 (Hold), with a High-risk outlook (read:  U.S. Inflation at a 30-Year High: 5 Sector ETFs to Win).Earnings in FocusTesla TSLA is the market leader in battery-powered electric car sales in the United States, owning around 60% of the market share. In fact, the company’s flagship Model 3 accounts for about half of the U.S. EV market. On Oct 20, Tesla reported earnings per share of $1.86 for third-quarter 2021, beating the Zacks Consensus Estimate of $1.39.  The outperformance stemmed from higher-than-expected automotive gross profit, which came in at $3.67 billion, outpacing the consensus mark of $3.33 billion.  The earnings figure also compared favorably with the prior-year quarter’s earnings of 76 cents per share. Revenues rose to $13.76 billion, surpassing the consensus mark of $13.16 billion. The top line also witnessed year-over-year growth of 56.8%. During the third quarter, Tesla reported delivery and production of 241,391 and 237,823 vehicles, reflecting a year-over-year increase of 73% and 64%, respectively.Tesla had cash and cash equivalents of $16.07 billion as of Sep 30, 2021, compared with $14.53 billion as of Sep 30, 2020.Ford Motor Company F designs, manufactures, markets and services cars, trucks, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles. On Oct 27, Ford reported third-quarter 2021 adjusted earnings per share of 51 cents, outpacing the Zacks Consensus Estimate of 28 cents. Higher-than-expected profits, primarily in the North America and South America markets, drove the earnings results. However, in the prior-year quarter, the company had reported earnings of 65 cents.During the reported quarter, Ford reported automotive revenues of $33.2 billion, which outpaced the Zacks Consensus Estimate of $31.7 billion. Ford had cash and cash equivalents of $27.43 billion as of Sep 30, 2021, compared with $25.24 billion on Dec 31, 2020.One of the world’s largest automakers, General Motors GM, leads the U.S. market share with 17.1% of the industry’s total sales in 2020. On Oct 27, General Motors reported adjusted earnings of $1.52 per share for third-quarter 2021, beating the Zacks Consensus Estimate of $1.07. Stronger-than-expected contribution from its Financial segment led to this outperformance. The bottom line, however, compares unfavorably with year-ago quarter’s earnings of $2.83 per share. General Motors reported revenues worth $26.78 billion, down from the year-ago figure of $35.48 billion. Also, the revenue figure lagged the Zacks Consensus Estimate of $31.17 billion.General Motors had cash and cash equivalents of $17.4 billion as of Sep 30, 2021, compared with $19.9 billion at the end of 2020.  The company recorded adjusted automotive free cash flow (FCF) of $4.39 billion for third-quarter 2021 comparing unfavorably with FCF of $9.12 billion in the prior-year period. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>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 Ford Motor Company (F): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis Report SPDR S&P 500 ETF (SPY): ETF Research Reports First Trust NASDAQ Global Auto ETF (CARZ): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 16th, 2021

Goldman Releases 2022 Stock Forecast: Diverges With A Bearish Morgan Stanley, Sees S&P Rising To 5,100

Goldman Releases 2022 Stock Forecast: Diverges With A Bearish Morgan Stanley, Sees S&P Rising To 5,100 One day after the increasingly grouchy Morgan Stanley published its 2022 equity market outlook, in which it predicted that the S&P would close the coming year at 4,400, some 6% lower from current levels, as a result of multiple contraction emerging from higher yields and urged clients to exit the US and instead focus on Europe and Japan, Goldman overnight published its own far more cheerful view on where stock will trade in the coming years. In keeping with its traditional bullishness, and with the S&P having recently surpassed the bank's 2021 year-end price target of 4,700, there was little downside for the bank's chief equity strategist David Kostin to continue the levitating autopilot, and he did just that, forecasting that the S&P 500 will climb by 9% to 5100 at year-end 2022, "reflecting a prospective total return of 10% including dividends." With multiples already stretched, Goldman said that profit growth - which accounted for the entire S&P 500 return in 2021 - will continue to drive gains in 2022. It sees S&P 500 EPS will rising 8% to $226 in 2022 and by 4% to $236 in 2023 (the bank's EPS estimate is 2% above 2022 bottom-up consensus). Curiously, with companies consistently expanding profit margins despite input cost pressures and supply chain challenges, Goldman expects profit margins to rise another 40 bps to 12.6% in 2022 before declining by 20 bp in 2023 due to corporate tax reform. Of course, Goldman's base case will likely be wrong (as was its forecast in Nov 2020 when the bank forecast the S&P rising to "only" 4,300 despite predicting a "Roaring '20s Redux"), and so it has also supplied two alternative projections: i) a faster growth and lower inflation than expected, would lift the S&P 500 to 5500, 17% above the current level; ii) Slower growth and higher inflation would reduce the S&P 500 by 25% to 3500. With the Fed set to hike at least twice in 2022, our money is on the latter, unless of course a market crash some time in the H2 of 2022 spooks the Fed and it promptly is forced to unwind its tightening. And speaking of multiples, Goldman forecasts that the S&P 500 P/E multiple will remain roughly flat, ending 2022 at 21.6x, especially since after two years of near-zero interest rates, the Fed will likely begin hiking in July. And while 10-year Treasury yields will rise to 2% by the end of next year, Goldman believes that this will be offset by a declining Equity Risk Premium as policy uncertainty declines and consumer confidence rises. Strong corporate and household demand for equities will help support valuation. (TL/DR): here are Goldman's official client-facing Investment Strategies (for what the bank's trading desk will actually be doing with the firm's, and clients' money, check back in a few days): Own virus- and inflation-sensitive cyclicals; Avoid high labor cost firms; Buy growth stocks with high margins vs. low margin or unprofitable growth stocks. Overweight Technology, Financials, and Health Care For those curious for more, below is the investment summary section excerpted from the note: For the last 30 years, declining interest rates have accompanied both rising equity valuations and higher corporate profit margins. The last 20 months have been no exception. The Fed responded to the pandemic by flooding financial markets with liquidity and pushing the funds rate to zero. Since the March 2020 trough, the S&P 500 index has more than doubled in a nearly uninterrupted upward trajectory to reach its current all-time high. But the 2022 investment environment will be different in several important respects from the past two years. One aspect that will change next year is that the Fed will begin to hike rates in July. Real interest rates will also rise, solidifying the ceiling on valuation multiples and driving rotations within the equity market. However, other aspects of the current equity market will persist. Real rates, while rising, will remain negative, and investor equity allocations will continue to establish record highs. In contrast with our expectation during the past year, corporate tax rates will likely remain unchanged in 2022 and rise in 2023. Or, as Kostin summarized it "Corporate earnings will grow and lift share prices. The equity bull market will continue." We'll see about that, but for now, here are Goldman's key assumptions: PRICE: We forecast the S&P 500 index will climb by 9% to 5100 at year-end 2022, reflecting a prospective total return of 10% including dividends. Decelerating economic growth, a tightening Fed, and rising real yields suggest investors should expect modestly below-average returns next year. The S&P 500 has historically generated an average 12-month return of 8% in environments of positive but slowing economic activity and rising real interest rates, which describes our economists’ forecast for 2022. Counter to the intuition of many investors, the stellar 26% YTD return is not a good reason in itself to expect a weak return in 2022. Since 1900, the S&P 500 has generated an average 12-month return of 10%. Returns have actually averaged slightly better than that (+11%) following 12-month gains exceeding 20%, and only slightly lower (+9%) following 24-month gains exceeding 50%. SALES & EARNINGS: Earnings growth has accounted for the entire S&P 500 return in 2021 and will continue to drive gains in 2022. S&P 500 EPS will grow by 8% in 2022 to $226 and by 4% in 2023 to $236. Aggregate sales for S&P 500 index will rise by 9% in 2022 and 5% in 2023. Based on the current reconciliation framework, we assume Congress will enact tax reform legislation, but the increase in the effective corporate tax rate will occur in 2023 rather than in 2022. If the existing tax law is unchanged, it would add 200 bp to our 2023 EPS growth rate (4% vs. 6%) and our EPS forecast would equal $241. PROFIT MARGINS: We estimate that S&P 500 net margins will increase by 41 bp to 12.6% in 2022 before tax hikes compress margins by 18 bp to 12.4% in 2023. No near-term solutions exist to solve the supply chain and input cost problems that plague so many industries. However, managements have used price increases, cost controls, and technology to preserve margins, and many of the headwinds will ease in 2022. However, a tight labor market will persist and drive wage inflation. Our commodities research colleagues forecast Brent crude oil will peak at $90/bbl in early 2022 and then decline to $80 by year-end. Our economists expect annualized US GDP growth will decelerate from 4.5% in 1Q to 1.8% in 4Q 2022. During the same time, core PCE inflation will subside from 4.3% in 1Q to 2.4% by year-end. VALUATIONS: Gradually rising interest rates will offset an Equity Risk Premium that declines but remains wider than its long-term average, keeping the P/E multiple roughly flat at 21.6x at year-end 2022. The valuation of both the median S&P 500 stock and the aggregate index rank in the 90th+ percentile vs. history on a wide range of metrics ranging from P/E, to EV/sales, to EV/EBITDA, and P/B. However, the yield gap between the S&P 500 earnings yield (4.6%) and the ten-year Treasury note yield (1.6%) currently equals 301 bp, ranking in the 40th percentile vs. history. Our Dividend Discount Model-implied ERP of 5% ranks in the 30th percentile. We expect that declining policy uncertainty and rising consumer confidence will lower it to 4.6% by year-end 2022. MONEY FLOW: Households and corporations will be the key sources of demand for US equities in 2022. Households own half of the $28 trillion in US cash assets, an increase of $3 trillion since before the pandemic. We expect households will shift some of this capital into equities over time. On the corporate side, cash/asset ratios stand at record highs, and this year has witnessed record buyback authorizations exceeding $1 trillion. Foreign investors will also be net buyers ($100 billion) while mutual and pension funds will collectively be net sellers of $400 billion. ALTERNATIVE SCENARIOS: (1) Faster growth and lower inflation than we expect would lift the S&P 500 to 5500, 17% above the current level. (2) Slower growth and higher inflation would reduce the S&P 500 by 25% to 3500. Supply chain disruptions and inflation pressures easing more quickly than currently assumed together with strong consumer demand would support 10% EPS growth in 2022. While interest rates would rise, so would valuation multiples. Alternatively, worse-than-expected inflation pressures could weigh on consumer demand, damage profit margins, and lead to a more aggressive Fed than currently priced. This would lead to zero earnings growth in 2022 alongside a large decline in valuations. As our economists have highlighted, a key risk for US equities looking beyond 2022 will be a higher terminal fed funds rate than currently implied by markets. MARKET STRUCTURE: The highest degree of equity market concentration in decades means the path of the S&P 500 will be tied to the fates of its largest stocks. The “FAAMG” companies (FB, AAPL, AMZN, MSFT, GOOGL) account for 23% of S&P 500 market cap and 17% of earnings. These firms’ strong secular revenue growth, high profit margins, and elevated reinvestment rates have helped lift them to the top of the index. However, shifting tax and regulatory policy has increased the idiosyncratic risk these companies face, and therefore also the idiosyncratic risk borne by investors in the broad US equity market. INVESTMENT STRATEGIES: Own virus-sensitive cyclicals; avoid high labor cost firms; profitable vs. unprofitable growth stocks. (1) Own cyclicals, including “re-opening” stocks and those exposed to recent input cost headwinds that will benefit from accelerating economic growth in early 2022; (2) Avoid companies with elevated labor cost exposure given a tightening jobs market with the strongest wage growth in decades; (3) Own highly profitable long duration growth stocks and avoid fast-growing firms valued entirely on long-term growth expectations, which will be more vulnerable to the risk of rising interest rates or disappointing revenues. SECTOR RECOMMENDATIONS: Our earnings forecasts coupled with our macro model indicate investors should overweight the Info Tech, Financials, and Health Care sectors. Raise Financials to overweight on expectations of rising interest rates and strong economic growth in the first half of the year. Raise Health Care to overweight as declining policy uncertainty should help close the sector’s record valuation discount. Maintain long-term overweight in Information Technology on strong secular growth, high margins, and valuations in line with historical averages. Underweight “bond proxy” Consumer Staples, Utilities, and Telecom Services as well as the expensive Autos industry group. A snapshot of the bank's various scenarios: In terms of macro assumptions, Goldman's economists expect strong but decelerating US and global economic growth in 2022. Based on the bank's top-down model, US economic growth accounts for roughly 50% of the variability in annual EPS growth. Kostin calculates that each 1% increase in GDP growth translates to roughly $7 of S&P 500 EPS; the bank's macro earnings model also assumes the labor market will continue to tighten, 2-year and 10-year interest rates will rise gradually, and oil prices will decline by year-end 2022 after peaking at $90/bbl early next year. Some more on Goldman's earnings forecasts, which the bank sees rising by 8% to $226 in 2022, an increase of $14 from its previously published estimate of $212, and is driven by the bank's expectations for continued margin expansion (this is where Goldman and Morgan Stanley differ greatly in their outlooks) as well as a "smaller-than-expected tax reform impact that should take effect in 2023 rather than in 2022." We lift our 2021 EPS estimate by $2 to $209 (+47%) to incorporate better-than-expected realized EPS growth in 3Q. We also raise our 2023 estimate by $10 to $236, reflecting 4% annual growth. The upward revisions can be attributed to our expectations of additional organic margin expansion and a smaller-than-expected tax reform impact that should take effect in 2023 rather than in 2022, as we previously expected. Goldman's top-down estimates are roughly 2% above consensus bottom-up estimates in 2021 and 2022 but below consensus in 2023, even excluding tax reform. Consistent with the recent trend, Goldman believes that analysts remain too conservative with their near-term forecasts, "as companies continue to leverage pricing power and cost reductions to withstand rising material and wage costs." However, outside of post-recession recoveries, analysts are typically too optimistic with their forecasts, and Goldman (which is certainly subject to this optimism bias) expects this dynamic to resume by late 2022. The median revision to consensus EPS estimates during the last 30 years has been -8% (-4% annually). Goldman also laid out its revised tax expectations, which now assume that corporate tax reform will reduce 2023 S&P 500 EPS by roughly 2-3% relative to constant tax policy. The Build Back Better framework indicated that most of the corporate tax provisions will take effect in 2023, not 2022 as previously assumed. Under current tax policy, Goldman forecasts 2023 EPS of $241 (+6% year/year growth). However, our new base case assumes the implementation of a 15% minimum book tax rate and a 15% “GILTI” tax rate on foreign income, which results in our revised 2023 EPS estimate of $236 (+4% year/year growth). Note that if passed, the proposed buyback excise tax would be accounted for as a reduction in equity, not a tax expense on the income statement, and therefore would have a de minimis impact on EPS. From a sector perspective, Kostin expects that Information Technology earnings will face the largest headwind from tax reform. The tax proposals focus on firms with low effective tax rates and high foreign income which encompass many Information Technology and Health Care companies. The median Info Tech company has a consensus 2023 effective tax rate of 16%, with 34% of companies (representing 29% of aggregate Info Tech EPS) expected to have effective tax rates below the 15% threshold. * * * Finally, looking closer at valuation, Goldman expects that rising interest rates will be offset by equity risk premium (ERP) compression and lead to a roughly flat forward P/E multiple in 2022. Goldman economists expect the nominal 10-year US Treasury yield will rise to 2.0% by year-end 2022, driven primarily by increasing real rates. If this forecast is realized, both nominal and real interest rates would still remain low by historical standards and continue to support the relative attractiveness of equities. The bank's ERP model includes changes in 10-year breakeven inflation, the 10s2s slope of the yield curve, consumer confidence, policy uncertainty, and the size of the Fed balance sheet. Kostin forecasts the ERP will decline to 4.6% by year-end 2022 from 5.0% currently as investors gain clarity and confidence regarding the inflation and fiscal policy outlooks. This would still register modestly above the 45-year average. Combining Goldman's interest rate assumptions and its ERP model imply a forward P/E multiple of 21.6x at year-end 2022 compared with 21.8x today. As Kostin admits, the start of a Fed hiking cycle, rising real rates, and a decelerating economic growth environment suggest further absolute valuation expansion is unlikely, which is why Goldman is confined to forecasting EPS growth as the driver of higher stock prices. Even so, at 21.6x, the P/E multiple would rank in the 93rd percentile vs. history in absolute terms. However, relative equity valuations vs. US Treasury yields would still register as attractive compared with historical averages (46th percentile). In effect, this entire note boils down to two things: the Fed model, i.e., rates are so low so investors have to buy stocks... and FOMO, or there is nothing else all that money sloshing around can buy. Focusing on the first, the chart below provides a sensitivity of S&P 500 forward P/E multiples to various interest rate and ERP scenarios. Investors remain focused on the prospect for a sharp, sustained rise in bond yields. The drivers of higher rates will determine the corresponding change in the ERP and the ultimate impact on the S&P 500 index level: Rising rates driven by an improving growth outlook would likely correspond with a declining ERP and represent less of a headwind to valuation than a large rise in real interest rates driven by a hawkish shift from the Fed. Of course, if the economy were to contract sharply then this pillar of Goldman's forecast will be useless. Those who wish to pick bones with Goldman's forecast can do so with the next assumption namely that "the upcoming rate hikes will not derail the bull market, but the historical experience during Fed tightening cycles suggests further valuation expansion is unlikely." Current futures market pricing anticipates a path of Fed tightening roughly in line with the bank economists’ expectations, for liftoff in mid-2022 (this was pulled forward by an entire year just a few weeks ago) and two total hikes in each of 2022 and 2023. Looking at the previous five Fed hiking cycles, P/E multiples were roughly flat from 6 months prior to 6 months after the first Fed hike. As Kostin notes, the path of multiples varied beyond the 6-month mark, highlighting the importance of the length and magnitude of the tightening cycle. Although the bank's economists and rates strategists believe that policy rates will eventually exceed current market pricing, they expect the market to adopt that view gradually and do not expect a sharp repricing of rates in 2022. The risk is that should inflation persist, this is the weakest argument behind Goldman's optimistic forecast. This, then, brings us to the second and perhaps most important assumption behind Goldman's optimistic outlook: the absence of attractive alternatives, which means investor allocations to equities should rise further into uncharted territory in 2022 (unless of course allocations to cryptos and other alternative assets take their place). According to Goldman calculations, nearly $220 billion has flowed into US equity mutual funds and ETFs YTD, a pace that will set a new annual record. Along with strong equity market appreciation, these inflows helped to lift the aggregate equity allocation of households, foreign investors, mutual funds and pension funds (collective owners of 84% of the US equity market) to a record 53% of their combined financial assets. According to Kostin, the alternatives to stocks are "understandingly unappealing" (we assume this includes cryptos which for those who can hold on to the volatility rollercoaster, is certainly not the case), with the return on cash effectively zero, the yield on 10-year US Treasury note just 1.6%, and tight IG and HY corporate bond spreads. As Goldman concludes, equity allocations typically increase most when consumer confidence increases, policy uncertainty declines, and growth expectations rise, suggesting that a strong 2022 macro environment could further support rising allocations. In other words, continued low rates and FOMO will keep pushing stocks higher for another year. * * * One final point,here are Goldman's sector recommendations: Goldman recommends investors increase their exposures to Health Care and Financials from Neutral to Overweight and reiterates its Overweight allocation to Info Tech (translation: Goldman's market desk will be selling these sectors to clients). Financials should benefit from strong US and global economic activity in early 2022 and the rise in interest rates that our economists expect next year. Health Care trades at depressed valuations that should recover as political risk eases. In addition, it is a rare sector that typically outperforms in environments when real rates drive nominal rates higher, which describes our economists’ forecasts for most of 2022: "We have maintained a long-term overweight position in the Info Tech sector since December 2016 and continue to find its elevated profit margins and secular growth profile attractive at valuations that appear reasonable relative to its fundamentals." Goldman also recommends Underweight allocations to the Consumer Staples and Utilities sectors as well as to the Autos & Components industry group within Consumer Discretionary and Telecom Services within the Communication Services sector (again, this is what Goldman will be buying from its clients). Goldman economists’ forecast strong 4.0%+ annualized US GDP growth during the first half of 2022 suggests it is too early for investors to fully rotate into defensive sectors. Consumer Staples, Utilities, and Telecom Services generally struggle to outperform the index as interest rates climb. Within Consumer Discretionary, Automobiles & Components has historically been challenged in periods where growth was decelerating and rates were rising, as our economists expect will happen next year. The sector has recently outperformed and trades at an elevated valuation vs. history, suggesting it has already priced some improvement in supply chains. Investors should neutral-weight a variety of cyclical sectors including Materials, Real Estate, Industrials, and Energy. Goldman also recommends a neutral weighting to the Media & Entertainment industry group within the Communication Services sector as well as Consumer Durables & Apparel, Consumer Services, and Retailing within Consumer Discretionary There is much more in the full report which is available to pro subs, and can be found in the usual space. Tyler Durden Tue, 11/16/2021 - 16:30.....»»

Category: dealsSource: nytNov 16th, 2021

A New Generation of Nuclear Reactors Could Hold the Key to a Green Future

On a conference-room whiteboard in the heart of Silicon Valley, Jacob DeWitte sketches his startup’s first product. In red marker, it looks like a beer can in a Koozie, stuck with a crazy straw. In real life, it will be about the size of a hot tub, and made from an array of exotic materials,… On a conference-room whiteboard in the heart of Silicon Valley, Jacob DeWitte sketches his startup’s first product. In red marker, it looks like a beer can in a Koozie, stuck with a crazy straw. In real life, it will be about the size of a hot tub, and made from an array of exotic materials, like zirconium and uranium. Under carefully controlled conditions, they will interact to produce heat, which in turn will make electricity—1.5 megawatts’ worth, enough to power a neighborhood or a factory. DeWitte’s little power plant will run for a decade without refueling and, amazingly, will emit no carbon. ”It’s a metallic thermal battery,” he says, coyly. But more often DeWitte calls it by another name: a nuclear reactor. [time-brightcove not-tgx=”true”] Fission isn’t for the faint of heart. Building a working reactor—even a very small one—requires precise and painstaking efforts of both engineering and paper pushing. Regulations are understandably exhaustive. Fuel is hard to come by—they don’t sell uranium at the Gas-N-Sip. But DeWitte plans to flip the switch on his first reactor around 2023, a mere decade after co-founding his company, Oklo. After that, they want to do for neighborhood nukes what Tesla has done for electric cars: use a niche and expensive first version as a stepping stone toward cheaper, bigger, higher-volume products. In Oklo’s case, that means starting with a “microreactor” designed for remote communities, like Alaskan villages, currently dependent on diesel fuel trucked, barged or even flown in, at an exorbitant expense. Then building more and incrementally larger reactors until their zero-carbon energy source might meaningfully contribute to the global effort to reduce fossil-fuel emissions. At global climate summits, in the corridors of Congress and at statehouses around the U.S., nuclear power has become the contentious keystone of carbon reduction plans. Everyone knows they need it. But no one is really sure they want it, given its history of accidents. Or even if they can get it in time to reach urgent climate goals, given how long it takes to build. Oklo is one of a growing handful of companies working to solve those problems by putting reactors inside safer, easier-to-build and smaller packages. None of them are quite ready to scale to market-level production, but given the investments being made into the technology right now, along with an increasing realization that we won’t be able to shift away from fossil fuels without nuclear power, it’s a good bet that at least one of them becomes a game changer. If existing plants are the energy equivalent of a 2-liter soda bottle, with giant, 1,000-megawatt-plus reactors, Oklo’s strategy is to make reactors by the can. The per-megawatt construction costs might be higher, at least at first. But producing units in a factory would give the company a chance to improve its processes and to lower costs. Oklo would pioneer a new model. Nuclear plants need no longer be bet-the-company big, even for giant utilities. Venture capitalists can get behind the potential to scale to a global market. And climate hawks should fawn over a zero-carbon energy option that complements burgeoning supplies of wind and solar power. Unlike today’s plants, which run most efficiently at full blast, making it challenging for them to adapt to a grid increasingly powered by variable sources (not every day is sunny, or windy), the next generation of nuclear technology wants to be more flexible, able to respond quickly to ups and downs in supply and demand. Engineering these innovations is hard. Oklo’s 30 employees are busy untangling the knots of safety and complexity that sent the cost of building nuclear plants to the stratosphere and all but halted their construction in the U.S. ”If this technology was brand-‘new’—like if fission was a recent breakthrough out of a lab, 10 or 15 years ago—we’d be talking about building our 30th reactor,” DeWitte says. But fission is an old, and fraught, technology, and utility companies are scrambling now to keep their existing gargantuan nuclear plants open. Economically, they struggle to compete with cheap natural gas, along with wind and solar, often subsidized by governments. Yet climate-focused nations like France and the U.K. that had planned to phase out nuclear are instead doubling down. (In October, French President Emmanuel Macron backed off plans to close 14 reactors, and in November, he announced the country would instead start building new ones.) At the U.N. climate summit in Glasgow, the U.S. announced its support for Poland, Kenya, Ukraine, Brazil, Romania and Indonesia to develop their own new nuclear plants—while European negotiators assured that nuclear energy counts as “green.” All the while, Democrats and Republicans are (to everyone’s surprise) often aligned on nuclear’s benefits—and, in many cases, putting their powers of the purse behind it, both to keep old plants open in the U.S. and speed up new technologies domestically and overseas. It makes for a decidedly odd moment in the life of a technology that already altered the course of one century, and now wants to make a difference in another. There are 93 operating nuclear reactors in the U.S.; combined, they supply 20% of U.S. electricity, and 50% of its carbon-free electricity. Nuclear should be a climate solution, satisfying both technical and economic needs. But while the existing plants finally operate with enviable efficiency (after 40 years of working out the kinks), the next generation of designs is still a decade away from being more than a niche player in our energy supply. Everyone wants a steady supply of electricity, without relying on coal. Nuclear is paradoxically right at hand, and out of reach. For that to change, “new nuclear” has to emerge before the old nuclear plants recede. It has to keep pace with technological improvements in other realms, like long-term energy storage, where each incremental improvement increases the potential for renewables to supply more of our electricity. It has to be cheaper than carbon-capture technologies, which would allow flexible gas plants to operate without climate impacts (but are still too expensive to build at scale). And finally it has to arrive before we give up—before the spectre of climate catastrophe creates a collective “doomerism,” and we stop trying to change. Not everyone thinks nuclear can reinvent itself in time. “When it comes to averting the imminent effects of climate change, even the cutting edge of nuclear technology will prove to be too little, too late,” predicts Allison Macfarlane, former chair of the U.S. Nuclear Regulatory Commission (NRC)—the government agency singularly responsible for permitting new plants. Can a stable, safe, known source of energy rise to the occasion, or will nuclear be cast aside as too expensive, too risky and too late? J R Eyerman—The LIFE Picture Collection/ShutterstockLaboratory personnel developing a fusion device in Project Sherwood at the Los Alamos National Laboratory, 1958 Trying Again Nuclear began in a rush. In 1942, in the lowest mire of World War II, the U.S. began the Manhattan Project, the vast effort to develop atomic weapons. It employed 130,000 people at secret sites across the country, the most famous of which was Los Alamos Laboratory, near Albuquerque, N.M., where Robert Oppenheimer led the design and construction of the first atomic bombs. DeWitte, 36, grew up nearby. Even as a child of the ’90s, he was steeped in the state’s nuclear history, and preoccupied with the terrifying success of its engineering and the power of its materials. “It’s so incredibly energy dense,” says DeWitte. “A golf ball of uranium would power your entire life!” DeWitte has taken that bromide almost literally. He co-founded Oklo in 2013 with Caroline Cochran, while both were graduate students in nuclear engineering at the Massachusetts Institute of Technology. When they arrived in Cambridge, Mass., in 2007 and 2008, the nuclear industry was on a precipice. Then presidential candidate Barack Obama espoused a new eagerness to address climate change by reducing carbon emissions—which at the time meant less coal, and more nuclear. (Wind and solar energy were still a blip.) It was an easy sell. In competitive power markets, nuclear plants were profitable. The 104 operating reactors in the U.S. at the time were running smoothly. There hadn’t been a major accident since Chernobyl, in 1986. The industry excitedly prepared for a “nuclear renaissance.” At the peak of interest, the NRC had applications for 30 new reactors in the U.S. Only two would be built. The cheap natural gas of the fracking boom began to drive down electricity prices, razing nuclear’s profits. Newly subsidized renewables, like wind and solar, added even more electricity generation, further saturating the markets. When on March 11, 2011, an earthquake and subsequent tsunami rolled over Japan’s Fukushima Daiichi nuclear power plant, leading to the meltdown of all three of its reactors and the evacuation of 154,000 people, the industry’s coffin was fully nailed. Not only would there be no renaissance in the U.S, but the existing plants had to justify their safety. Japan shut down 46 of its 50 operating reactors. Germany closed 11 of its 17. The U.S. fleet held on politically, but struggled to compete economically. Since Fukushima, 12 U.S. reactors have begun decommissioning, with three more planned. At MIT, Cochran and DeWitte—who were teaching assistants together for a nuclear reactor class in 2009, and married in 2011—were frustrated by the setback. ”It was like, There’re all these cool technologies out there. Let’s do something with it,” says Cochran. But the nuclear industry has never been an easy place for innovators. In the U.S., its operational ranks have long been dominated by “ring knockers”—the officer corps of the Navy’s nuclear fleet, properly trained in the way things are done, but less interested in doing them differently. Governments had always kept a tight grip on nuclear; for decades, the technology was under shrouds. The personal computing revolution, and then the wild rise of the Internet, further drained engineering talent. From DeWitte and Cochran’s perspective, the nuclear-energy industry had already ossified by the time Fukushima and fracking totally brought things to a halt. “You eventually got to the point where it’s like, we have to try something different,” DeWitte says. He and Cochran began to discreetly convene their MIT classmates for brainstorming sessions. Nuclear folks tend to be dogmatic about their favorite method of splitting atoms, but they stayed agnostic. “I didn’t start thinking we had to do everything differently,” says DeWitte. Rather, they had a hunch that marginal improvements might yield major results, if they could be spread across all of the industry’s usual snags—whether regulatory approaches, business models, the engineering of the systems themselves, or the challenge of actually constructing them. In 2013, Cochran and DeWitte began to rent out the spare room in their Cambridge home on Airbnb. Their first guests were a pair of teachers from Alaska. The remote communities they taught in were dependent on diesel fuel for electricity, brought in at enormous cost. That energy scarcity created an opportunity: in such an environment, even a very expensive nuclear reactor might still be cheaper than the current system. The duo targeted a price of $100 per megawatt hour, more than double typical energy costs. They imagined using this high-cost early market as a pathway to scale their manufacturing. They realized that to make it work economically, they wouldn’t have to reinvent the reactor technology, only the production and sales processes. They decided to own their reactors and supply electricity, rather than supply the reactors themselves—operating more like today’s solar or wind developers. “It’s less about the technology being different,” says DeWitte, “than it is about approaching the entire process differently.” That maverick streak raised eyebrows among nuclear veterans—and cash from Silicon Valley venture capitalists, including a boost from Y Combinator, where companies like Airbnb and Instacart got their start. In the eight years since, Oklo has distinguished itself from the competition by thinking smaller and moving faster. There are others competing in this space: NuScale, based in Oregon, is working to commercialize a reactor similar in design to existing nuclear plants, but constructed in 60-megawatt modules. TerraPower, founded by Bill Gates in 2006, has plans for a novel technology that uses its heat for energy storage, rather than to spin a turbine, which makes it an even more flexible option for electric grids that increasingly need that pliability. And X-energy, a Maryland-based firm that has received substantial funding from the U.S. Department of Energy, is developing 80-megawatt reactors that can also be grouped into “four-packs,” bringing them closer in size to today’s plants. Yet all are still years—and a billion dollars—away from their first installations. Oklo brags that its NRC application is 20 times shorter than NuScale’s, and its proposal cost 100 times less to develop. (Oklo’s proposed reactor would produce one-fortieth the power of NuScale’s.) NRC accepted Oklo’s application for review in March 2020, and regulations guarantee that process will be complete within three years. Oklo plans to power on around 2023, at a site at the Idaho National Laboratory, one of the U.S.’s oldest nuclear-research sites, and so already approved for such efforts. Then comes the hard part: doing it again and again, booking enough orders to justify building a factory to make many more reactors, driving costs down, and hoping politicians and activists worry more about the menace of greenhouse gases than the hazards of splitting atoms. Nuclear-industry veterans remain wary. They have seen this all before. Westinghouse’s AP1000 reactor, first approved by the NRC in 2005, was touted as the flagship technology of Obama’s nuclear renaissance. It promised to be safer and simpler, using gravity rather than electricity-driven pumps to cool the reactor in case of an emergency—in theory, this would mitigate the danger of power outages, like the one that led to the Fukushima disaster. Its components could be constructed at a centralized location, and then shipped in giant pieces for assembly. But all that was easier said than done. Westinghouse and its contractors struggled to manufacture the components according to nuclear’s mega-exacting requirements and in the end, only one AP1000 project in the U.S. actually happened: the Vogtle Electric Generating Plant in Georgia. Approved in 2012, its two reactors were expected at the time to cost $14 billion and be completed in 2016 and 2017, but costs have ballooned to $25 billion. The first will open, finally, next year. Oklo and its competitors insist things are different this time, but they have yet to prove it. “Because we haven’t built one of them yet, we can promise that they’re not going to be a problem to build,” quips Gregory Jaczko, a former NRC chair who has since become the technology’s most biting critic. “So there’s no evidence of our failure.” Georg Zinsler—Anzenberger/Redu​xA guided tour in the control room of reactor No. 2 inside the Chernobyl Nuclear Power Plant The Challenge The cooling tower of the Hope Creek nuclear plant rises 50 stories above Artificial Island, New Jersey, built up on the marshy edge of the Delaware River. The three reactors here—one belonging to Hope Creek, and two run by the Salem Generating Station, which shares the site—generate an astonishing 3,465 megawatts of electricity, or roughly 40% of New Jersey’s total supply. Construction began in 1968, and was completed in 1986. Their closest human neighbors are across the river in Delaware. Otherwise the plant is surrounded by protected marshlands, pocked with radiation sensors and the occasional guard booth. Of the 1,500 people working here, around 100 are licensed reactor operators—a special designation given by the NRC, and held by fewer than 4,000 people in the country. Among the newest in their ranks is Judy Rodriguez, an Elizabeth, N.J., native and another MIT grad. “Do I have your permission to enter?” she asks the operator on duty in the control room for the Salem Two reactor, which came online in 1981 and is capable of generating 1,200 megawatts of power. The operator opens a retractable belt barrier, like at an airport, and we step across a thick red line in the carpet. A horseshoe-shaped gray cabinet holds hundreds of buttons, glowing indicators and blinking lights, but a red LED counter at the center of the wall shows the most important number in the room: 944 megawatts, the amount of power the Salem Two reactor was generating that afternoon in September. Beside it is a circular pattern of square indicator lights showing the uranium fuel assemblies inside the core, deep inside the concrete domed containment building a couple hundred yards away. Salem Two has 764 of these constructions; each is about 6 inches sq and 15 ft. tall. They contain the source of the reactor’s energy, which are among the most guarded and controlled materials on earth. To make sure no one working there forgets that fact, a phrase is painted on walls all around the plant: “Line of Sight to the Reactor.” As the epitome of critical infrastructure, this station has been buffeted by the crises the U.S. has suffered in the past few decades. After 9/11, the three reactors here absorbed nearly $100 million in security upgrades. Everyone entering the plant passes through metal- and explosives detectors, and radiation detectors on the way out. Walking between the buildings entails crossing a concrete expanse beneath high bullet resistant enclosures (BREs). The plant has a guard corp that has more members than any in New Jersey besides the state police, and federal NRC rules mean that they don’t have to abide by state limitations on automatic weapons. The scale and complexity of the operation is staggering—and expensive. ”The place you’re sitting at right now costs us about $1.5 million to $2 million a day to run,” says Ralph Izzo, president and CEO of PSEG, New Jersey’s public utility company, which owns and operates the plants. “If those plants aren’t getting that in market, that’s a rough pill to swallow.” In 2019, the New Jersey Board of Public Utilities agreed to $300 million in annual subsidies to keep the three reactors running. The justification is simple: if the state wants to meet its carbon-reduction goals, keeping the plants online is essential, given that they supply 90% of the state’s zero-carbon energy. In September, the Illinois legislature came to the same conclusion as New Jersey, approving almost $700 million over five years to keep two existing nuclear plants open. The bipartisan infrastructure bill includes $6 billion in additional support (along with nearly $10 billion for development of future reactors). Even more is expected in the broader Build Back Better bill. These subsidies—framed in both states as “carbon mitigation credits”—acknowledge the reality that nuclear plants cannot, on their own terms, compete economically with natural gas or coal. “There has always been a perception of this technology that never was matched by reality,” says Jaczko. The subsidies also show how climate change has altered the equation, but not decisively enough to guarantee nuclear’s future. Lawmakers and energy companies are coming to terms with nuclear’s new identity as clean power, deserving of the same economic incentives as solar and wind. Operators of existing plants want to be compensated for producing enormous amounts of carbon free energy, according to Josh Freed, of Third Way, a Washington, D.C., think tank that champions nuclear power as a climate solution. “There’s an inherent benefit to providing that, and it should be paid for.” For the moment, that has brought some assurance to U.S. nuclear operators of their future prospects. “A megawatt of zero-carbon electricity that’s leaving the grid is no different from a new megawatt of zero carbon electricity coming onto the grid,” says Kathleen Barrón, senior vice president of government and regulatory affairs and public policy at Exelon, the nation’s largest operator of nuclear reactors. Globally, nations are struggling with the same equation. Germany and Japan both shuttered many of their plants after the Fukushima disaster, and saw their progress at reducing carbon emissions suffer. Germany has not built new renewables fast enough to meet its electricity needs, and has made up the gap with dirty coal and natural gas imported from Russia. Japan, under international pressure to move more aggressively to meet its carbon targets, announced in October that it would work to restart its reactors. “Nuclear power is indispensable when we think about how we can ensure a stable and affordable electricity supply while addressing climate change,” said Koichi Hagiuda, Japan’s minister of economy, trade and industry, at an October news conference. China is building more new nuclear reactors than any other country, with plans for as many as 150 by the 2030s, at an estimated cost of nearly half a trillion dollars. Long before that, in this decade, China will overtake the U.S. as the operator of the world’s largest nuclear-energy system. Francesca Todde—contrasto/Redux Civaux nuclear power plant, in Civaux, France, May 2018 The future won’t be decided by choosing between nuclear or solar power. Rather, it’s a technically and economically complicated balance of adding as much renewable energy as possible while ensuring a steady supply of electricity. At the moment, that’s easy. “There is enough opportunity to build renewables before achieving penetration levels that we’re worried about the grid having stability,” says PSEG’s Izzo. New Jersey, for its part, is aiming to add 7,500 megawatts of offshore wind by 2035—or about the equivalent of six new Salem-sized reactors. The technology to do that is readily at hand—Kansas alone has about that much wind power installed already. The challenge comes when renewables make up a greater proportion of the electricity supply—or when the wind stops blowing. The need for “firm” generation becomes more crucial. “You cannot run our grid solely on the basis of renewable supply,” says Izzo. “One needs an interseasonal storage solution, and no one has come up with an economic interseasonal storage solution.” Existing nuclear’s best pitch—aside from the very fact it exists already—is its “capacity factor,” the industry term for how often a plant meets its full energy making potential. For decades, nuclear plants struggled with outages and long maintenance periods. Today, improvements in management and technology make them more likely to run continuously—or “breaker to breaker”—between planned refuelings, which usually occur every 18 months, and take about a month. At Salem and Hope Creek, PSEG hangs banners in the hallways to celebrate each new record run without a maintenance breakdown. That improvement stretches across the industry. “If you took our performance back in the mid-’70s, and then look at our performance today, it’s equivalent to having built 30 new reactors,” says Maria Korsnick, president and CEO of the Nuclear Energy Institute, the industry’s main lobbying organization. That improved reliability has become its major calling card today. Over the next 20 years, nuclear plants will need to develop new tricks. “One of the new words in our vocabulary is flexibility,” says Marilyn Kray, vice president of nuclear strategy and development at Exelon, which operates 21 reactors. “Flexibility not only in the existing plants, but in the designs of the emerging ones, to make them even more flexible and adaptable to complement renewables.” Smaller plants can adapt more easily to the grid, but they can also serve new customers, like providing energy directly to factories, steel mills or desalination plants. Bringing those small plants into operation could be worth it, but it won’t be easy.”You can’t just excuse away the thing that’s at the center of all of it, which is it’s just a hard technology to build,” says Jaczko, the former NRC chair. “It’s difficult to make these plants, it’s difficult to design them, it’s difficult to engineer them, it’s difficult to construct them. At some point, that’s got to be the obvious conclusion to this technology.” But the equally obvious conclusion is we can no longer live without it. “The reality is, you have to really squint to see how you get to net zero without nuclear,” says Third Way’s Freed. “There’s a lot of wishful thinking, a lot of fingers crossed.”.....»»

Category: topSource: timeNov 16th, 2021

Auto Stock Roundup: WPRT & ADNT Quarterly Results, DDAIF Twin Deals & More

While Westport (WPRT) and Adient (ADNT) deliver quarterly losses, Daimler (DDAIF) collaborates with Total Energies and Visa. Last week, automotive equipment providers Westport Fuel Systems Inc. WPRT and Adient plc ADNT reported quarterly numbers. While Adient reported narrower-than-expected loss for fourth-quarter fiscal 2021, Westport disappointed investors by posting third-quarter 2021 loss against the consensus estimate of break-even. Meanwhile, auto retailers Lithia Motors LAD and Sonic Automotive SAH acquired dealerships in a bid to enhance their brand portfolio and widen reach. Daimler AG DDAIF also made headlines as it collaborated with Total Energies and Visa to step up its decarbonization goals and digital payment services, respectively.China Association of Automobile Manufacturers unveiled the October vehicle sales data in the world’s largest car market, which once again made it evident that chip shortage has been wreaking havoc in the auto industry. Vehicle sales in the country declined 9.4% year over year to 2.33 million units, tumbling for the sixth consecutive month. Nonetheless, electric vehicles in China managed to sustain the momentum, with sales of new energy vehicles skyrocketing 135% to 383,000 units in October.Recap of Last Week’s Important News1. Westport posted third-quarter 2021 loss per share of 3 cents. The Zacks Consensus Estimate was pegged at break-even. The bottom line also deteriorated from earnings of 1 cent per share recorded in the year-ago period. The underperformance for the quarter under review can be attributed to higher operating expenses and unfavorable forex translations. Westport registered consolidated revenues of $74.3 million for the third quarter, rising 14% year over year. Yet, the top line missed the Zacks Consensus Estimate of $87 million.Westport had cash and cash equivalents of $142 million as of Sep 30, 2021, up from $64.3 million at 2020-end. Long-term debt decreased to $33.3 million at the end of third-quarter 2021 from $45.7 million as of Dec 30, 2020.Over the trailing four quarters, Westport topped the Zacks Consensus Estimate for earnings twice, missed once and matched on another occasion. The consensus mark for 2021 and 2022 earnings implies year-over-year growth of 220% and a decline of 85.8%, respectively. Shares of WPRT have tanked 44.4% year to date. The stock currently carries a Zacks Rank #5 (Strong Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.2. Lithia forayed into the North America powersports market with the acquisition of Pfaff Harley-Davidson in Toronto. This acquisition marks Lithia’s first motorcycle dealership and is in sync with the auto retailer’s proven success strategy of acquiring strong, high-performing franchises. The buyout will bring Lithia’s total annualized revenues acquired in 2021 to $6.3 billion, keeping the company well ahead of its schedule of network expansion. The firm remains on track to achieve its ambitious five-year plan to yield $50 billion in revenues and $50 in earnings per share by 2025.The consensus mark for Lithia's 2021 earnings and sales implies year-over-year growth of 106.8% and 73.3%, respectively. Shares of LAD are up 10.3% year to date. The stock currently carries a Zacks Rank #3 (Hold).3. Sonic announced the acquisition of Cook Volkswagen in Maryland, representing the firm’s fourth acquisition of the year. The latest buyout marks Sonic’s 89th franchised location and fourth Volkswagen dealership. The move aligns with the company’s strategy to enter new markets and attain $25 billion in revenues by 2025. Sonic has been back on the buyback mode this year as the company believes to have shored up the balance sheet to tap on to growth opportunities.The consensus mark for Sonic's 2021 earnings and sales implies year-over-year growth of 96.8% and 26.7%, respectively. Shares of SAH have edged up 32.2% year to date. The stock currently carries a Zacks Rank #3.4. Daimler inked a deal with TotalEnergies for decarbonization of the road freight in the European Union. Per the agreement, the companies will jointly build an ecosystem for hydrogen-fueled heavy-duty trucks. Daimler intends to supply hydrogen trucks to customers in the Netherlands, Belgium, Luxemburg and France by 2025. In a separate release, the Germany-based auto giant also announced that Daimler Mobility has teamed up with Visa to incorporate in-car payment features in vehicles. Effective spring 2022, customers of Daimler’s Mercedes-Benz will be able to make payments using a fingerprint sensor in the car. The company will initially roll out this payment solution for customers in the United Kingdom and Germany.  The Zacks Consensus Estimate for Daimler's 2021 earnings and sales implies year-over-year growth of 273.1% and 12%, respectively. Shares of DDAIF have rallied 43.1% year to date. The stock currently carries a Zacks Rank #3.5. Adient reported an adjusted loss per share of 24 cents for fiscal fourth-quarter 2021, narrower than the Zacks Consensus Estimate of a loss of 65 cents. The bottom line, however, compared unfavorably with the year-ago earnings of $1.15 per share.  For the reported quarter, Adient generated net sales of $2,771 million, down from $3,597 million recorded in the prior-year period. The top line also missed the Zacks Consensus Estimate of $3,013.2 million.Adient had cash and cash equivalents of $1,521 million as of Sep 30, 2021 compared with $1,692 million on Sep 30, 2020. Long-term debt amounted to $3,512 million for the reported quarter, down from $4,097 billion on Sep 30, 2020. The firm expects fiscal 2022 revenues of $14.8 billion, indicating an increase from $13.7 billion recorded in fiscal 2021.Over the trailing four quarters, Adient topped the Zacks Consensus Estimate for earnings thrice, with the average negative surprise of 131.1%. The consensus mark for fiscal 2022 and 2023 earnings implies year-over-year growth of 74% and 32.7%, respectively. Shares of ADNT have increased 35.8% year to date. The stock currently carries a Zacks Rank #5.Price PerformanceThe following table shows the price movement of some of the major auto players over the past week and six-month period.Image Source: Zacks Investment ResearchWhat’s Next in the Auto Space?Industry watchers will keep a tab on October passenger vehicle registrations in the European Union, likely to be released by the European Automobile Manufacturers Association this week. Also, stay tuned for updates on how automakers will tackle the semiconductor shortage and make changes in business operations. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>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 Daimler AG (DDAIF): Free Stock Analysis Report Westport Fuel Systems Inc. (WPRT): Free Stock Analysis Report Sonic Automotive, Inc. (SAH): Free Stock Analysis Report Lithia Motors, Inc. (LAD): Free Stock Analysis Report Adient (ADNT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 15th, 2021

Cooper Companies" (COO) Buyout to Boost Women"s Healthcare

Cooper Companies' (COO) agrees to acquire Generate Life Sciences. It will be an important addition to the former's present offerings, while improving women's healthcare. The Cooper Companies, Inc. COO recently inked a definitive purchase agreement to acquire Generate Life Sciences for around $1.6 billion. The buyout is anticipated to be completed in the acquirer’s first fiscal quarter of 2022 upon the fulfillment of customary closing conditions, which include regulatory approval.It’s worth mentioning that Generate Life Sciences is a privately held company and a leading provider of donor egg and sperm for fertility treatments, fertility cryopreservation services and newborn stem cell storage (cord blood & cord tissue).This transaction is likely to bolster Cooper Companies’ CooperSurgical (CSI) business segment.Rationale of the BuyoutPer management, the buyout is a strategic fit for CooperSurgical as it will enable the company to cater to the needs of fertility clinics and Ob/Gyns on the back of a more extensive product portfolio and services.Image Source: Zacks Investment ResearchGiven Cooper Companies’ leading position in women’s healthcare, the buyout, once completed, is going to be a crucial addition to its existing offerings. This, in turn, will enable the company to support its infrastructure and expertise, which include its sales forces’ solid clinical reputation and educational capabilities.From the financial perspective, the acquisition (excluding one-time charges and deal-related amortization) is anticipated to be accretive to Cooper Companies’ adjusted earnings per share by around 30 cents in the first year post completion.Market ProspectsPer a report by Grand View Research, the global women’s health market is anticipated to reach $47.8 billion by 2027, witnessing a CAGR of 4.9% during the forecast period (2016-2027). Hence, this buyout is a well-timed one for Cooper Companies.Another Notable DevelopmentIn August, Cooper Companies announced that its CooperVision MiSight 1 day contact lenses have received approval from China’s National Medical Products Administration — regulating medical devices and pharmaceuticals — for usage within the country post a priority review. CooperVision has been leading the way (for more than a decade) when it comes to building the global myopia management category to provide aid to millions of children and their caregivers through partnership with the optometry and ophthalmology communities.Price PerformanceShares of this Zacks Rank #4 (Sell) company have gained 14.9% on a year-to-date basis compared with the industry’s growth of 14.2%.Stocks to ConsiderSome better-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. TMO, DexCom, Inc. DXCM, and AngioDynamics, Inc. ANGO.Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.Thermo Fisher surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).DexCom’s earnings growth rate for next quarter is estimated at 60.6%. The company currently carries a Zacks Rank #2.DexCom surpassed earnings estimates in each of the trailing four quarters, the average surprise being 31.7%. The company’s earnings yield of 0.4% compares favorably with the industry’s (3.6%).AngioDynamics’ consensus mark for revenues for fiscal 2022 stands at $313.3 million, suggesting an improvement of 7.7% from the prior-year reported figure. The company currently carries a Zacks Rank #2.AngioDynamics surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 125.6%. The company’s earnings yield of 0.1% compares favorably with the industry’s (3.6%). 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>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 AngioDynamics, Inc. (ANGO): Free Stock Analysis Report Thermo Fisher Scientific Inc. (TMO): Free Stock Analysis Report DexCom, Inc. (DXCM): Free Stock Analysis Report The Cooper Companies, Inc. (COO): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksNov 15th, 2021

US stock futures climb to near record highs as sky-high inflation fails to rattle investors

Stocks remain around records highs despite inflation soaring, in part because the bond market is so unattractive. Stocks are near record highs despite inflation surging. Yana Paskova/Getty Images US stock futures rose to near record highs Monday, after a minor wobble last week. Soaring US inflation in October appears to be failing to persuade investors to change course. Equities have stayed buoyant in part because the bond market is so unattractive right now. US futures rose to near record highs on Monday, as investors appeared to remain calm in the face of the highest US inflation reading in 31 years.S&P 500 futures climbed 0.13% while Dow Jones futures were up 0.19% and Nasdaq 100 futures moved up 0.17%. US stocks fell very slightly last week to break a five-week winning streak despite finishing strongly Friday.Bond yields slipped back Monday after rising sharply the previous week, when the release of inflation data raised expectations that the Federal Reserve would have to hike interest rates sooner than expected.Oil prices also slid as investors weighed the possibility that US President Joe Biden may authorize the release of strategic reserves.US stocks have remained remarkably buoyant despite inflation rising sharply. Data on Wednesday showed US CPI inflation shot up to 6.2% year-on-year in October, its highest level since 1990.The reopening of economies around the world has caused a jump in global energy prices and supply chains have struggled to keep up with a surge in demand.Investors traditionally hate high inflation, given that it erodes the real value of their assets. Yet stocks have continued to trade at around record highs for a few reasons.One is that US companies had a strong third-quarter earnings season, with most beating analysts' expectations. Another is that the world's biggest central banks have been keener to keep up support for economies than expected.Read more: RBC breaks down how investors should time their trades in 2022 to get a much-needed edge as stock-market gains slow amid rising rates and supply-chain snagsBut a major reason is that the bond market is really unattractive right now, with "real yields" - the returns investors can expect on bonds when inflation is taken into account - at record lows. That's fueled the so-called TINA trade, with investors buying stocks because "there is no alternative" if they want to have a chance of beating inflation.That's not to say there aren't risks. Bank of America equity strategist Savita Subramanian said in a recent note that sentiment is "close to euphoric," which is worrying, and that companies will struggle to continue beating earnings expectations.The yield on the key 10-year US treasury note dropped 3.5 basis points to 1.549% on Monday, with short-term yields also dipping. Analysts have said they expect volatility in yields as investors try to work out what central banks are planning.Oil prices dropped after Senate Majority Leader Chuck Schumer urged Biden to release crude reserves from the US's strategic supplies to ease price pressures for consumers. WTI crude was down 0.58% to $79.23 a barrel, while Brent crude was 0.61% lower at $81.67 a barrel.Meanwhile, bitcoin picked up after spending a few days at around the $65,000 mark, having touched a record high above $68,500 last week. It was up 2.3% to $65,928 on the Bitstamp exchange.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 15th, 2021

SWK Holdings Corporation Announces Financial Results for Third Quarter 2021

DALLAS, Nov. 12, 2021 /PRNewswire/ -- Corporate Updates Conclusion of strategic review process with SWK to focus on specialty finance receivables business SWK evaluating ongoing dividend and additional leverage Third Quarter 2021 Finance Receivables Segment Updates: As of September 30, 2021, tangible book value per share was $17.50, a 12.7% increase from September 30, 2020 For the third quarter 2021, finance portfolio effective yield was 13.8%, a 40-bps increase compared with 13.4% for the third quarter 2020 For the third quarter 2021, finance portfolio realized yield was 18.8%, compared to 17.4% for the third quarter 2020 Core finance receivables business generated adjusted non-GAAP net income of $7.7 million for the quarter ended September 30, 2021, a 17.6% increase compared to $6.6 million for the quarter ended September 30, 2020 As of September 30, 2021, total investment assets were $206.3 million, a 10.3% increase from September 30, 2020 SWK Holdings Corporation (NASDAQ:SWKH) ("SWK" or the "Company"), a life science focused specialty finance company catering to small- and mid-sized commercial-stage companies, today provided a business update and announced its financial and operating results for the third quarter ended September 30, 2021. "I am pleased to report that both segments of our business performed well during the third quarter. The specialty finance portfolio continued its year-to-date strong performance as highlighted by its 18.8% realized yield during the quarter with strong underlying credit trends. Additionally, Enteris secured several new feasibility studies during the quarter and recently reported encouraging pharmacokinetics data for an internal development candidate," stated Winston Black, Chairman and CEO of SWK. "The recent completion of the strategic review process initiated earlier this year provides management the framework to focus efforts on our specialty finance business going forward. We have built a strong reputation with our platform and are encouraged by the Board's determination that growing the specialty finance business is in the best interests of our stockholders. We intend to return new deal originations to historical levels during 2022, although anticipate this may take a few quarters to ramp up as we fully intend to maintain the high integrity of our underwriting standards. Given SWK's strong current liquidity, including a Board commitment to increase leverage prudently as we scale, we foresee multiple opportunities to deploy capital given the need for small and mid-sized life sciences companies to obtain funding to enable innovation to reach the marketplace." Mr. Black continued, "Value creation continued at Enteris BioPharma, highlighted by six new Peptelligence® feasibility studies signed year-to-date. The increased industry interest in our Peptelligence technology is driven by the business development efforts of Dr. Rajiv Khosla and his team, as well as the technology's role in advancing Cara Therapeutics' Oral KORSUVA™ program. Last month, Enteris also announced successful completion of a Phase 1 clinical trial of optimized Peptelligence Oral Leuprolide, demonstrating delivery of drug levels comparable or greater to subcutaneous or depot injection. Enteris is advancing the program into the next round of clinical development, and we will provide additional details as warranted." Third Quarter 2021 Financial Results For the third quarter 2021, SWK reported total revenue of $9.6 million compared to $10.6 million for the third quarter 2020, which change was primarily the result of a $1.5 million increase in interest and fees earned on our finance receivables and a $2.6 million decrease in revenues from our Pharmaceutical Development segment. The $1.5 million increase in revenue attributable to our Finance Receivables segment primarily consists of a $1.4 million net increase in royalty income and a $1.1 million increase in fees and interest earned on our finance receivables due to funding new and existing loans, partially offset by a $1.0 million decrease in interest and fees earned on finance receivables that were paid off or paid down since the third quarter of 2020. The decrease in Pharmaceutical Development segment revenue includes $2.5 million of milestone revenue received in 2020 related to Enteris' license agreement with Cara. Income before taxes for the third quarter 2021 totaled $2.8 million compared to $3.9 million for the same period the previous year. The year-over-year $1.1 million decrease is primarily driven by a $2.6 million decrease in income from our Pharmaceutical Development segment due to the third quarter 2020 milestone achievement, offset by a $1.5 million increase in revenue from our Finance Receivables segment, and a $0.3 million net increase in operating expenses. The increase in operating expenses included a $1.0 million increase in expenses incurred in connection with the board's efforts to identify, review and explore strategic alternatives for the Company; such expenses primarily consist of legal and consulting fees, as well as board compensation. The increase in operating expenses was offset by a $2.0 million decrease in the amortization of intangible assets. GAAP net income for the quarter ended September 30, 2021, totaled $2.2 million, or $0.17 per diluted share, compared to $4.3 million, or $0.34 per diluted share for the third quarter 2020. For the third quarter 2021, non-GAAP adjusted net income was $4.3 million and non-GAAP adjusted net income for the Finance Receivables segment was $7.7 million, compared to $6.9 million and $6.6 million, respectively, for the third quarter 2020. Income producing assets (defined as finance receivables and corporate debt securities) totaled $196.3 million as of September 30, 2021. This is a 9.0% increase compared with income producing assets of $180.1 million as of September 30, 2020. Total investment assets, which include income producing assets plus equity-linked securities, totaled $206.3 million as of September 30, 2021, compared to the September 30, 2020 total investment assets of $187.1 million. Tangible financing book value per share totaled $17.50 as of September 30, 2021, a 12.7% increase from $15.52 as of September 30, 2020. Management views tangible financing book value per share as a relevant metric to value the Company's core finance receivable business. Book value per share was $20.36 as of September 30, 2021, compared to $18.44 as of September 30, 2020. Tables detailing SWK's financial performance for the third quarter 2021 are below. Portfolio Status During the quarter, SWK did not deploy any capital with existing portfolio companies. During the quarter ended September 30, 2021, the Company collected $7.1 million in principal payments. As of November 8, 2021, SWK had $6.4 million of unfunded commitments. At the end of the third quarter 2021, the weighted average projected effective yield of the finance receivables portfolio was 13.8%, including non-accrual positions, versus 13.4% at the end of the third quarter of last year. The projected effective yield is the rate at which income is expected to be recognized pursuant to the Company's revenue recognition policies, if all payments are received pursuant to the terms of the finance receivables and excludes non-interest earning assets such as warrants and equity investments. For the third quarter 2021, the realized yield of the finance receivables portfolio was 18.8%, versus 17.4% for the third quarter the previous year. The realized yield is inclusive of all fees, including all realized unamortized fees, amendment fees, and prepayment fees, and is calculated based on the simple average of finance receivables at the beginning and end of the period. The realized yield is greater than the effective yield due to actual cash collections being greater than modeled. Total portfolio investment activity for the three months ended September 30, 2021, and 2020 was as follows (in thousands): Three Months Ended September 30, 2021 2020 Beginning Portfolio $ 212,958 $ 182,311 Interest paid-in-kind 672 623 Investment in finance receivables — 6,350 Loan discount and fee accretion 885 555 Net unrealized gain (loss) on marketable investments and warrant assets 128 (193) Principal payments received on investments (7,112) (1,860) Royalty paydowns (1,284) (826) Warrant investments, net of cancellations — 79 Ending Portfolio $ 206,247 $ 187,039 Borrower Liquidity Events During the quarter ended September 30, 2021, no borrowers experienced liquidity events or repaid SWK. However, after quarter close, two borrowers repaid: In October 2021, borrower Thermedx repaid the $0.5 million subordinate note. Thermedx had repaid the majority of its facility in May 2019. In October 2021, borrower Misonix was acquired by Bioventus for $518.0 million. Upon closing of the transaction, Misonix made a $31.6 million payment to SWK to pay principal, accrued interest, and exit fees. Gain on the transaction will be recognized in SWK's fourth quarter. In conjunction with the acquisition, SWK tendered its Misonix stock at $28 per share and received $1.9 million of cash and 71,361 shares of Bioventus common stock, which are freely tradeable. Adjusted Non-GAAP Net Income The following table provides a reconciliation of SWK's reported (GAAP) consolidated net income to SWK's adjusted consolidated net income (Non-GAAP) for the three-month period ended September 30, 2021, and September 30, 2020. The table eliminates provisions for income taxes, non-cash mark-to-market changes on warrant assets and equity securities, amortization of Enteris intangible assets and any non-cash impact on the remeasurement of contingent consideration. Three Months EndedSeptember 30, 2021 2020 Consolidated net income $ 2,243 $ 4,342 Add (subtract): income tax expense (benefit) 513 (451) Add (subtract): (gain) loss on fair market value of equity securities (342) 178 Add (subtract): (gain) loss on fair market value of derivatives 214 (87) Add (subtract): strategic review legal, consulting and board expenses 1,004 126 Add: Enteris amortization expense 619 2,588 Add (subtract): (gain) loss on remeasurement of contingent consideration — 174 Adjusted income before income tax expense (benefit) 4,251 6,870 Adjusted income tax expense (benefit) — — Non-GAAP consolidated net income $ 4,251 $ 6,870 In the table above, management has deducted the following non-cash items: (i) change in the fair-market value of equities and warrants, as mark-to-market changes are non-cash, (ii) income taxes, as the Company has substantial net operating losses to offset against future income, (iii) amortization expense associated with Enteris intangible assets, and (iv) (gain) loss on remeasurement of contingent consideration. Management has also deducted legal and board expenses associated with the Company's strategic review; management believes these expenses are not reflective of operational execution. Finance Receivables Adjusted Non-GAAP Net Income The following table provides a reconciliation of SWK's consolidated adjusted income before provision for income taxes, listed in the table above, to the non-GAAP adjusted net income for the Finance Receivable segment for the three-month period ended September 30, 2021, and September 30, 2020. The table eliminates Enteris operating (income) and loss. The adjusted income before income taxes is derived in the table above and eliminates income tax expense, non-cash mark-to-market changes on warrant assets and equity securities. Three Months EndedSeptember 30, 2021 2020 Adjusted income before income tax expense (benefit).....»»

Category: earningsSource: benzingaNov 12th, 2021

Surmodics (SRDX) Stock Loses 2.2% Despite Q4 Earnings Beat

Surmodics' (SRDX) fiscal fourth-quarter results reflect benefits from segmental strength. Shares of Surmodics, Inc. SRDX declined 2.2% on Nov 11, following the company's fiscal fourth-quarter 2021 results.The company reported fourth-quarter fiscal 2021 adjusted loss per share of 10 cents, which was narrower than the Zacks Consensus Estimate of a loss of 25 cents per share. The company had reported an adjusted loss per share of 18 cents in the year-ago quarter.GAAP loss per share for the quarter was 2 cents compared with the year-ago loss of 22 cents.For fiscal 2021, the company reported GAAP earnings per share of 37 cents, up 184.6% from the previous year.Revenues in DetailSurmodics delivered revenues of $24 million in the fiscal fourth quarter, up 6% year over year. The figure outpaced the Zacks Consensus Estimate by 6.7%.The top line was driven by continued strength in its In Vitro Diagnostics (“IVD”) and Product revenues.For fiscal 2021, the company reported revenues of $105.1 million, up 10.8% from that of fiscal 2020.Segmental AnalysisSurmodics operates via two reportable segments — Medical Device and IVD.In the reported quarter, sales at the Medical Device segment amounted to $17.4 million, up 1.3% from the year-ago quarter.In the quarter under review, IVD sales jumped 22.6% to $6.6 million, driven by broad-based growth coupled with favorable comparison related to antigen sales.Surmodics, Inc. Price, Consensus and EPS Surprise Surmodics, Inc. price-consensus-eps-surprise-chart | Surmodics, Inc. QuoteThe company derives revenues from three primary sources — Product sales, Royalties and license fees, and Research, development and other fees.In the quarter under review, Product sales were $12.5 million, up 18.2% from the prior-year quarter. Royalty and license fee revenues totaled $8.9 million, down 10.1% from the prior-year quarter. Research, development and other revenues were $2.6 million, up 23.8% year over year.Margin TrendIn the quarter under review, Surmodics’ gross profit rose 6.3% to $19.8 million. Gross margin contracted 4 basis points (bps) to 82.7%.Selling, general & administrative expenses rose 7.7% to $7.9 million. Research and development expenses declined 16.1% year over year to $10.7 million. Total operating expenses of $24.5 million fell 0.3% year over year.Operating loss totaled $0.5 million, narrower than the prior-year quarter’s loss of $1.9 million.Financial PositionSurmodics exited the fiscal 2021 with cash and cash equivalents of $31.2 million compared with $62.2 million at the end of fiscal third quarter.Cumulative net cash flow from operating activities at the end of the fiscal fourth quarter was $15.4 million compared with $14 million a year ago.Fiscal 2022 GuidanceFor fiscal 2022, the company projects revenues to be $97-$101 million. The Zacks Consensus Estimate for the same is currently pegged at $126.6 million.Adjusted loss per share for fiscal 2022 is expected between $1.75 and $1.25. The Zacks Consensus Estimate for earnings currently stands at $1.45.Our TakeSurmodics exited the fourth quarter of fiscal 2021 wherein both earnings and revenues beat the consensus mark. The company witnessed narrower year-over-year bottom-line results and revenue growth in the quarter under review. The company saw strength across its reportable segments in the fourth quarter, which is encouraging. Surmodics saw a successful first-patient usage of Sublime .018 RX PTA Dilatation Catheter in the quarter under review. The company completed the buyout of Vetex Medical Limited during the fiscal fourth quarter. These developments buoy optimism.Lower revenues from the royalty and license fees are discouraging. Gross margin contraction does not bode well for the stock. Surmodics incurred an operating loss in the reported quarter, which further raises our apprehension.Zacks RankSurmodics currently carries a Zacks Rank #3 (Hold).Earnings of Other MedTech Majors at a GlanceSome better-ranked stocks in the broader medical space that have already announced their quarterly results are Thermo Fisher Scientific Inc. TMO, Medpace Holdings, Inc. MEDP, and AngioDynamics, Inc. ANGO.Thermo Fisher reported third-quarter 2021 adjusted EPS of $5.76, which beat the Zacks Consensus Estimate by 23.3%. Third-quarter revenues of $9.33 billion outpaced the consensus mark by 12%. The company currently sports a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.Thermo Fisher has an estimated long-term growth rate of 14%. The company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%.Medpace, currently carrying a Zacks Rank #2, reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.Medpace has an estimated long-term growth rate of 16.4%. The company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 11.9%.AngioDynamics reported first-quarter fiscal 2022 loss per share of 2 cents, narrower than the Zacks Consensus Estimate of a loss of 5 cents. Revenues of $76.9 million surpassed the Zacks Consensus Estimate by 8.4%. Presently, the company sports a Zacks Rank #1.AngioDynamics’ earnings yield of 0.1% compares favorably with the industry’s (2.8%). The company surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 125.6%. Tech IPOs With Massive Profit Potential In the past few years, many popular platforms and like Uber and Airbnb finally made their way to the public markets. But the biggest paydays came from lesser-known names. For example, electric carmaker X Peng shot up +299.4% in just 2 months. Think of it this way… If you had put $5,000 into XPEV at its IPO in September 2020, you could have cashed out with $19,970 in November. With record amounts of cash flooding into IPOs and a record-setting stock market, this year’s lineup could be even more lucrative.See Zacks Hottest Tech IPOs 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 AngioDynamics, Inc. (ANGO): Free Stock Analysis Report Thermo Fisher Scientific Inc. (TMO): Free Stock Analysis Report Surmodics, Inc. (SRDX): Free Stock Analysis Report Medpace Holdings, Inc. (MEDP): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksNov 12th, 2021

Futures Rise Boosted By JNJ Split As Treasuries, Dollar Slide

Futures Rise Boosted By JNJ Split As Treasuries, Dollar Slide U.S. equity index futures were slightly up at the end of a volatile week, trading in a narrow 20 point range for the second day in a row, while Treasuries resumed declines in response to the recent shock inflation data from the world’s largest economies. Contracts on the three main U.S. gauges were higher, with Johnson & Johnson rising in premarket trading after saying it will split into two companies, while tech stocks again led gains at the end of a week scarred by deepening concerns over prolonged inflation. All the major U.S. indexes were set for a more than 1% weekly drop, their first since the week ended Oct. 1, as hot inflation numbers sapped investor sentiment and halted an earnings-driven streak of record closing highs. At 7:15 a.m. ET, Dow e-minis were up 106 points, or 0.3%, S&P 500 e-minis were up 8.5 points, or 0.18%, and Nasdaq 100 e-minis were up 40.25points, or 0.25%. The same bullish sentiment that lifted US futures pushed European shares up as luxury shares gained after Cartier owner Richemont posted better-than-forecast earnings, offsetting a drop in travel stocks. Asian shares also climbed, helped by a rally in Japan. At the same time, Treasuries resumed a selloff after a trading holiday Thursday, with this week’s shock US inflation figures still reverberating through the bond market. Five-year notes led losses on concern the price pressure will force the Federal Reserve to raise rates earlier than anticipated. A gauge of the yield curve flattened to the least since March 2020. While global stocks are set for their first weekly drop since early October, their swings have been muted compared with the gyrations in the bond market. Investor focus on a strong earnings season has tempered worries about higher inflation. “Inflation could remain elevated in the coming months, and each inflation release that comes in above expectations has the potential to cause volatility in rate and equity markets, but we still don’t expect inflation to derail the equity rally,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note. In US premarket trading, Johnson & Johnson jumped 4.7% in premarket trading after the drugmaker said it is planning to break up into two companies focused on its consumer health division and the large pharmaceuticals unit. Shares of the GAMMA giga techs (fka as FAAMG) also inched up. Tesla’s boss Elon Musk sold even more shares of the electric car maker, regulatory filings showed, after offloading about $5 billion worth of stock following a poll he posted on Twitter. The sale news naturally pushed TSLA stock price higher.  A gauge of U.S.-listed Chinese stocks jumped more than 5%, helped by Alibaba’s blowout Singles’ Day shopping festival and a report that Didi is getting ready to relaunch its apps. Rivian shares gain as much as 5% in U.S. premarket trading, extending the surge for the EV maker seen since its IPO this week which has sent its market value over $100b. Rivian trading at $122.99 in at 5am in New York, compared to IPO price of $78 Rising price pressures across the globe have been a top concern for market participants, with focus now shifting towards how consumer spending would fare as the holiday shopping season approaches. “The risk-on trading stance remains,” said Pierre Veyret, a technical analyst at ActivTrades in London. “However, markets are likely to remain volatile as investors will need to have more clues on where both the economy and monetary policies are going.” In Europe, gains for consumer and retail stocks balanced out declines for mining and energy companies. The Stoxx Europe 600 Index fluctuated as Bank of America strategists predicted a fall of at least 10% for the continent’s equities by early next year. Here are some of the biggest European movers today: Richemont shares jump as much as 9.8% to a record high, with analysts seeing scope for earnings estimates to be upgraded after the company reported first-half results that Citigroup described as “stellar.” Peer Swatch also bounced. Renault shares gain as much as 4.6% after Morgan Stanley upgraded the French automaker to overweight, saying it should have a stronger 2022 if it can raise production levels from a currently low base. Deutsche Telekom rises as much as 3% with analysts highlighting a good revenue performance and upgraded earnings and cash flow guidance as key positives from its earnings. Intertrust shares surge as much as 40% after the trust and corporate-services firm entered talks to be acquired by private-equity firm CVC. AstraZeneca falls as much as 5.9% after the drugmaker’s 3Q results missed estimates, with analysts noting a big miss for cancer drug Tagrisso. Wise shares sink as much as 8.8% after the money-transfer company won’t be added to an MSCI index in the latest rejig as some investors had expected. JDE Peet’s, Atos and Investor AB also all moved after the MSCI review. Fortum shares decline as much as 3.6% after the Finnish utility’s 3Q sales missed estimates. Uniper, in which Fortum owns a 75% stake, also slid after Fortum said it stopped share purchases in the German group in July owing to high prices. Avon Protection plummet as much as 44% after it warned of testing failures for some body-armor plates ordered by the U.S. military. SimCorp shares drop as much as 7.1% after the financial software and services company’s 3Q earnings, with Handelsbanken calling the quarter “weak,” and saying it raises doubts for the 2022 outlook Earlier in the session, Asia’s regional benchmark advanced, on track for a second day of gains, after sales in the Singles’ Day shopping festival boosted optimism. The MSCI Asia Pacific Index rose as much as 0.9%, with materials and communication stocks driving the benchmark. Tencent climbed 1.6%, after it bought a Japanese game studio and sold HengTen Networks shares. JD.com gained 5.2% after it received record Singles’ Day orders. Adding to sentiment were the mandate for China’s President Xi Jinping to potentially rule for life, which may mean policy continuity and fewer regulatory surprises and Goldman Sachs’ upgrade of offshore China stocks. A report that Didi Global is getting ready to relaunch apps in China further fueled optimism. “Investors are hoping that greenshoots of a loosening of reforms are upon us,” said Justin Tang head of Asian research at United First Partners. It’s clear “tech shares got a little boost from Singles’ Day and the anointing of Xi as forever leader.” JD.com Shines in Muted Singles Day After Sales Beat: Street Wrap South Korea and Japan benchmarks posted the top gains in the region. Australia’s shares also advanced, boosted by mining stocks. Japanese equities also rose, following gains in U.S. peers, erasing virtually all of their losses from earlier in the week. Electronics makers and telecoms were the biggest boosts to the Topix, which gained 1.3%. All 33 industry groups were in the green except energy products. Tokyo Electron and SoftBank Group were the largest contributors to a 1.1% rise in the Nikkei 225. The yen has weakened more than 1% against the dollar since Tuesday. “It’s a favorable environment for risk-taking thanks to China,” said Shogo Maekawa, a strategist at JP Morgan Asset Management in Tokyo, referring to Evergrande’s latest interest payment. Rising U.S. yields and a weaker yen “may serve as a trigger for foreign investors to re-evaluate Japanese equities and shift their focus to stocks here.” Indian stocks also rose, snapping three sessions of declines, boosted by gains in software exporter Infosys. The S&P BSE Sensex climbed 1.3% to 60,686.69 to a two-week high and completed a second successive week of gains with a 1% advance. The NSE Nifty 50 Index increased 1.3% on Friday. All 19 sub-indexes compiled by BSE Ltd. rose, led by a measure of technology companies. In earnings, of the 45 Nifty 50 companies that have announced results so far, 29 have either met or exceeded consensus analyst expectations, 15 have missed estimates, while one couldn’t be compared. Oil & Natural Gas Corp. and Coal India are among those scheduled to announce results today.  Expectations of the U.S. Fed raising interest rates earlier than expected after a surge in inflation weighed on most emerging markets this week. In India, consumer prices probably quickened for the first time in five months in October, according to economists in a Bloomberg survey. The data will be released on Friday after market hours.   In FX, the Bloomberg Dollar Spot Index was little changed, even as the dollar added to gains versus most its Group-of-10 peers, and Treasury yields rose across the curve on concern that rising U.S. inflation would warrant earlier rate hikes. The euro hovered around a more than a one-year low of $1.1450. The pound extended an Asia session advance and was the best performer among G-10 peers; the currency still heads for a third week of losses, having touched its lowest level since Christmas and options suggest the move may have legs to follow. Australian and New Zealand dollars are headed for back-to-back weekly declines as rising Treasury yields stoke further demand for the greenback; A 60% drop in the price of iron ore signals a blow to the Australian government’s efforts to stabilize the fiscal position following massive spending to support the economy through the coronavirus pandemic.Meanwhile, the ruble extended its losses, tracking a decline in Brent crude, as tensions flared up between Russia and Western nations over energy supplies and migrants. The currency tumbled as much as 1.1% to 72.4375 per dollar after the U.S. sounded out its EU allies that Russia may invade Ukraine. That made the ruble the worst performing currency in emerging markets.  In rates, Treasuries were off session lows, but cheaper by 2bp-3bp across belly of the curve which underperforms as reopened cash market catches up with Thursday’s slide in futures. Treasury 10-year yields around 1.566%, cheaper by 2bp on the day, while 5-year topped at 1.262% in early Asia session; curve is flatter amid belly-led losses, with 5s30s spread tighter by ~1bp on the day after touching 63.7bp, lowest since March 2020. On the 2s5s30s fly, belly cheapened 3.5bp on the day, re-testing 2018 levels that were highest since 2008. Bunds advanced, led by the front end, while Italian bonds slid across the curve, pushing the 10-year yield above 1% for the first time since Nov. 4, as money markets held on to aggressive ECB rate-hike bets. The Asia session was relatively calm, while during the European morning, Italian bonds lagged as futures continue to price in aggressive ECB policy. Treasury options activity in U.S. session has included downside protection on 5-year sector, where yields reached YTD high.     In commodities, crude futures dip to lowest levels for the week: WTI drops 1.4% before finding support near $80, Brent dips 1% back onto a $81-handle. Spot gold drifts lower near $1,852/oz. Base metals are mixed: LME aluminum, nickel and tin post modest gains, copper and zinc lag. Looking at the day ahead, data releases from the US include the University of Michigan’s preliminary consumer sentiment index for November, as well as the JOLTS job openings for September. In the Euro Area, there’ll also be industrial production for September. From central banks, we’ll hear from New York Fed President Williams, ECB Chief Economist Lane, and the BoE’s Haskel. Market Snapshot S&P 500 futures little changed at 4,646.50 STOXX Europe 600 little changed at 485.18 MXAP up 0.8% to 199.85 MXAPJ up 0.6% to 653.35 Nikkei up 1.1% to 29,609.97 Topix up 1.3% to 2,040.60 Hang Seng Index up 0.3% to 25,327.97 Shanghai Composite up 0.2% to 3,539.10 Sensex up 1.3% to 60,697.82 Australia S&P/ASX 200 up 0.8% to 7,443.05 Kospi up 1.5% to 2,968.80 Brent Futures down 1.3% to $81.83/bbl Gold spot down 0.5% to $1,853.43 U.S. Dollar Index little changed at 95.20 German 10Y yield little changed at -0.23% Euro little changed at $1.1441 Top Overnight News From Bloomberg Inflation is soaring across the euro area, but it’s also diverging by the most in years in a further complication for the European Central Bank’s ongoing pandemic stimulus The White House is debating whether to act immediately to try to lower U.S. energy prices or hold off on dramatic measures in the hope markets settle, as President Joe Biden’s concern about inflation runs up against climate, trade and foreign policy considerations Reports U.S. is concerned that Russia may be planning to invade Ukraine are “empty and unfounded efforts to exacerbate tensions,” Kremlin spokesman Dmitry Peskov says on conference call Financial problems faced by institutions like China Evergrande Group are “controllable” and spillovers from the nation’s markets to the rest of the world are limited, a former central bank adviser said Hapag-Lloyd AG warned that a crunch in global container shipments could persist into next year, with labor negotiations, environmental pressures and disruptive weather combining to hamper goods flows Japan’s government plans to compile an economic stimulus package of more than 40 trillion yen ($350 billion) in fiscal spending, according to the Nikkei newspaper President Xi Jinping appeared more certain than ever to rule China well into the current decade, as senior Communist Party officials declared that the country had reached a new “historical starting point” under his leadership Italian President Sergio Mattarella tried to quash speculation that he could stay on for a second term, leaving Prime Minister Mario Draghi as the top contender for the role early next year A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mostly higher heading into the weekend as the region attempted to build on the somewhat mixed performance stateside, where price action was contained amid Veterans Day and with US equity futures also slightly picking up from the quasi-holiday conditions. ASX 200 (+0.8%) was lifted in which mining stocks and the tech industry spearheaded the broad gains across sectors aside from healthcare as Ramsay Health Care remained pressured after it recently announced a near-40% decline in Q1 net profit. Nikkei 225 (+1.1%) was underpinned with Japanese exporters benefitting from recent favourable currency flows and with the biggest stock movers influenced by a deluge of earnings. Hang Seng (+0.3%) and Shanghai Comp. (+0.2%) were indecisive with Hong Kong tech stocks encouraged after e-commerce retailers Alibaba and JD.com posted record Singles Day sales, despite a deceleration in revenue growth from the shopping festival to its slowest annual pace since its conception in 2009 amid a toned-down event due to Beijing’s tech crackdown and emphasis on common prosperity. Conversely, mainland bourses were indecisive following a neutral liquidity operation by the PBoC and after US President Biden recently signed the Secure Equipment Act which prevents companies deemed as security threats from receiving new equipment licences from US regulators, which comes ahead of Monday’s potential Biden-Xi virtual meeting. Finally, 10yr JGBs were lower due to a lack of momentum from US treasuries as cash bond markets were closed for the federal holiday, with demand for JGBs also hampered by the gains in stocks and lack of BoJ purchases in the government debt market. Top European News Macron and Draghi Have Plans to Fill the Void Left by Merkel Johnson Burns Through Political Capital Built Up With Tory MPs JPMorgan Hires Zahn as Head of DACH Equity Capital Markets Hapag-Lloyd CEO Says Global Shipping Crunch Could Extend in 2022 European equities (Stoxx 600 -0.1%) have seen a relatively directionless start to the session with the Stoxx 600 set to close the week out with modest gains of around 0.4%. Macro updates have been particularly sparse thus far with today’s data docket also relatively light (highlights include US JOLTS and Uni. of Michigan sentiment). The handover from the APAC region was a predominantly positive one as Japanese equities benefited from favourable currency dynamics and Chinese markets focused on the fallout from Singles Day which saw record sales for Alibaba and JD.com. Stateside, futures are also relatively directionless (ES -0.1%) ahead of aforementioned US data points and Fedspeak from NY Fed President Williams (voter), who will be speaking on heterogeneity in macroeconomics. The latest BofA Flow Show revealed USD 7.3bln of inflows for US equities, whilst tech stocks saw outflows of USD 1.6bln; the largest outflow since June. In Europe, equities saw their largest outflows in seven weeks with USD 1.7bln of selling. In a separate note, BofA projects 10+% of downside by early next year for European stocks amid weakening growth momentum and rising bond yields. Sectors in Europe are mixed with outperformance seen in Personal & Household Goods with Richemont (+8.6%) shares boosted following better-than-expected Q3 results. LVMH (+1.4%) also gained at the open following reports that the Co. could consider opening duty-free stores in China. Telecom names are firmer with Deutsche Telekom (+2.6%) one of the best performers in the DAX after posting solid results and raising guidance. To the downside, commodity-exposed names are lagging peers with Basic Resources and Oil & Gas names hampered by price action in their underlying markets. FTSE-100 heavyweight AstraZeneca (-4.4%) sits at the foot of the index after Q3 profits fell short of expectations. Finally, Renault (+4.3%) is the best performer in the CAC after being upgraded to overweight from equalweight at Morgan Stanley with MS expecting the Co. to have a better year next year. Top Asian News JPMorgan Japan Stocks Downgrade Shows Doubts Before Stimulus Japan Stimulus Package to Top 40 Trillion Yen, Nikkei Reports Hon Hai Warns Chip Shortage Will Outweigh IPhone Boost to Sales AirAsia X Gets Over 95% Support From Creditors for Revamp In FX, it would be far too premature to suggest that the Buck’s winning streak is over, but having rallied so far in relatively short order some consolidation is hardly surprising, especially on a Friday in between a semi US market holiday and the weekend. Hence, the index is hovering just above 95.000 within a 95.078-266 range after a minor extension from yesterday’s peak to set a new 2021 best, and the Dollar is on a more mixed footing vs basket components plus other G10 and EM counterparts, awaiting the return of those not in on Veteran’s Day, JOLTS, preliminary Michigan sentiment and Fed’s Williams for some fresh or additional impetus and direction. GBP/CAD - The Pound and Loonie are flanking the major ranks even though the latest retreat in Brent and WTI is pretty uniform from a change on the day in Usd terms perspective, so it seems like Sterling is getting a boost from a downturn in the Eur/Gbp cross ahead of the UK-EU showdown on Brexit and Article 16, while Usd/Cad remains bullish on technical impulses before the BoC’s Q3 Senior Loan Officer Survey. Cable has bounced from just over 1.3350 to retest 1.3400 with Eur/Gbp probing 0.8550 to the downside, but Usd/Cad is probing 1.2600 irrespective of the Greenback stalling. AUD/JPY - Both fractionally firmer as the Buck takes another breather, though the Aussie is also deriving some traction from favourable Aud/Nzd tailwinds again. Aud/Usd has pared losses sub-0.7300 as the cross hovers around 1.0400, while Usd/Jpy has retreated from around 114.30 towards 1.9 bn option expiries at the 114.00 strike amidst reports that the Japanese Government's economic stimulus package will increase to Yen 40+ tn in fiscal spending, according to the Nikkei citing sources. EUR/NZD/CHF - The Euro is still hanging in following its close below a key technical level for a second consecutive session and fall further from the psychological 1.1500 mark, especially as better than forecast Eurozone ip has not prompted any upside, However, option expiry interest at 1.1450 (1.2 bn) may keep Eur/Usd afloat if only until the NY cut. Similarly, the Kiwi has not gleaned anything via a decent pick-up in NZ’s manufacturing PMI as Nzd/Usd clings to 0.7000+ status and the Franc remains under 0.9200 regardless of an acceleration in Swiss import and producer prices. SCANDI/EM - More transitory inflation remarks from Riksbank Governor Ingves are not helping the Sek fend off another dip through 10.0000 vs the Eur. but the Nok is getting protection from weaker oil prices via unusually large option expiries spanning the same big figure given 1.2 bn at 9.7500, 1.7 bn on the round number and 1 bn at 10.2000. Conversely, the Rub is underperforming as tensions rise around the Russian/Ukraine border and the Kremlin aims blame at the feet of the US alongside NATO, while the Try only just survived the latest assault on 10.00000 against the Usd in wake of below forecast Turkish ip and CBRT survey-based CPI projections for year end rising again. Elsewhere, the Mxn is softer following confirmation of a 25 bp Banxico hike on the basis that the verdict was not unanimous and some were looking for +50 bp, but the Zar retains an underlying bid after Thursday’s supportive SA MTBS and with Eskom reporting no load shedding at present, while the Cnh and Cny are holding gains in advance of the virtual Chinese/US Presidential meeting scheduled for Monday. In commodities, WTI and Brent are pressured in the European morning, experiencing more pronounced downside after a gradual decline occurred in APAC hours. However, the magnitude of today’s performance is comparably minimal when placed against that seen earlier in the week and particularly on Wednesday; in-spite of the earlier pronounced movements, benchmarks are currently set to end the week with losses of less than USD 1.00/bbl – albeit the range is in excess of USD 5.00/bbl. Newsflow this morning has been minimal and thus yesterday’s themes remain in-focus where a firmer USD likely continues to factor but more specifically COVID-19 concerns, with Germany’s Spahn on the wires, and geopolitics via Russia drawing attention. On the latter, tensions are becoming increasingly inflamed as the US said they are concerned that Russia could attack Ukraine and in response Russia said they are not a threat to anyone, but, says US military activity is aggressive and a threat. Moving to metals, spot gold and silver are softer on the session, but remain notably firmer on the week given the CPI-induced move. On this, UBS highlights the risk of additional inflation strength next year which could stoke further gold demand. Elsewhere, base metals are, broadly speaking, marginally softer given tentative APAC performance and the aforementioned COVID concerns, particularly those pertinent for China. In terms of associated bank commentary, SocGen looks for copper to average USD 9.2k/T and USD 8.0k/T in 2021 and 2022 respectively. US Event Calendar 10am: Sept. JOLTs Job Openings, est. 10.3m, prior 10.4m 10am: Nov. U. of Mich. 1 Yr Inflation, est. 4.9%, prior 4.8%; 5-10 Yr Inflation, prior 2.9% 10am: Nov. U. of Mich. Sentiment, est. 72.5, prior 71.7; Current Conditions, est. 77.2, prior 77.7; Expectations, est. 68.8, prior 67.9 DB's Henry Allen concludes the overnight wrap there wasn’t much to speak of in markets yesterday as US bond markets were closed for Veterans Day and investors elsewhere continued to digest the bumper CPI print from the previous session. We did see a bit of residual concern at the prospect of a faster tightening in monetary policy, and implied rates on Eurodollar futures continued to climb, gaining between +4bps and +8bps on contracts maturing through 2023. However, on the whole equities were relatively unfazed on both sides of the Atlantic, and the S&P 500 (+0.06%) stabilised after 2 successive declines thanks to a bounceback among the more cyclical sectors. Looking at those moves in more depth, interest-sensitive tech stocks were a big outperformer yesterday as both the NASDSAQ (+0.52%) and the FANG+ index (+0.98%) of megacap tech stocks moved higher. Material stocks in the S&P (+0.85%) were another sectoral winner, and the VIX index of volatility (-1.07pts) ticked down from its 4-week high on Wednesday. In Europe, the advance was even more prominent, where the STOXX 600 (+0.32%), the DAX (+0.10%) and the CAC 40 (+0.20%) all reached fresh records. Indeed, for the STOXX 600, that now marks the 13th advance in the last 15 sessions, with the index having risen by over +6% in the space of a month. As mentioned, it was a quieter day for sovereign bond markets with the US not trading, but the sell-off continued in Europe as yields on 10yr bunds (+1.7bps), OATs (+1.4bps) and BTPs (+2.7bps) all moved higher. We didn’t get any fresh news on the Fed officials either given the US holiday, but a Washington Post article yesterday said that officials from the White House had stayed in touch with Governor Brainard since her meeting with President Biden last week, albeit still emphasising that no final decision had yet been made. Separately, Bloomberg reported that senior Biden advisors did not view the recent trading scandal at the Federal Reserve as disqualifying Chair Powell. US Treasury markets have reopened overnight, with 10yr yields following their European counterparts higher, moving up +1.4bps to 1.563%. That’s been driven by a +2.4bps rise in the real yield, though 10yr real yields still remain close to their all-time lows since TIPS started trading back in 1997. Otherwise in Asia, markets are mostly trading higher with the KOSPI (+1.48%), Nikkei (+1.07%) and Hang Seng (+0.22%) all advancing, though the Shanghai Composite (-0.01%) is basically unchanged whilst the CSI (-0.31%) is trading lower. Data showed further signs of inflationary pressures in the region, with South Korea’s import price index up +35.8% in October on a year-on-year basis, the highest since 2008. Elsewhere in India, Prime Minister Modi is expected to announce an opening up of the sovereign bond market to retail investors today, which comes amidst rising inflation concerns as well. Looking ahead, futures are indicating a positive start in the US and Europe with those on the S&P 500 (+0.16%) and the DAX (+0.15%) pointing higher. Turning to the geopolitical scene, it was reported by Bloomberg that US officials had briefed their counterparts in the EU about a potential Russian invasion of Ukraine. It follows a build-up in Russian forces near the Ukrainian border that have been reported more widely, and echoes a similar situation back in the spring. The Russian ruble weakened -0.57% against the US dollar yesterday in response, with the declines occurring after the report came out. This comes amidst a number of broader tensions in the region, and natural gas prices in Europe were up +6.66% yesterday after Belarus’ President Lukashenko threatened to cut the transit of gas if the EU placed additional sanctions on his regime. Meanwhile on Brexit, there were potential signs of compromise in the dispute over Northern Ireland, with the Telegraph reporting that the EU was prepared to improve its offer when it came to reducing customs checks. However, the report also said that this would be contingent on the UK ending its demands to remove the European Court of Justice’s role in overseeing the agreement. There has been growing speculation in recent days that the UK could be about to trigger Article 16 of the Northern Ireland Protocol, which allows either side to take unilateral safeguard measures if the deal was causing serious issues. This would risk EU retaliation that could in theory even led to a suspension of the entire trade deal agreed last year, which is an option that has been talked up in recent weeks. For those wanting further reading on the issue, DB’s FX strategist Shreyas Gopal put out a note on Tuesday (link here) looking at the issues surrounding Article 16 and its implications for sterling. Another important thing to keep an eye on over the coming weeks will be any further signs of deterioration in the Covid-19 situation. Cases have been ticking up at the global level for around 4 weeks now, and a number of European countries (including Germany) have seen a major surge over the last few days. In the Netherlands, they actually set a record for the entire pandemic yesterday, and Prime Minister Rutte is due to hold a press conference today where it’s been speculated he’ll announce fresh restrictions. Separately in Austria, Chancellor Schallenberg said that a lockdown for the unvaccinated was “probably unavoidable”, and said that “I don’t see why two-thirds should lose their freedom because one-third is dithering”. On the data front, the only major release was the UK’s Q3 GDP reading yesterday, which surprised on the downside with growth of +1.3% (vs. +1.5% expected), even though Covid-19 restrictions were much easier in Q3 relative to Q2. To be fair, the monthly reading for September did surprise on the upside, with growth of +0.6% (vs. +0.4% expected), but it came as July and August saw downward revisions. On a monthly basis, the September reading meant the UK economy was just -0.6% beneath its pre-pandemic size in February 2020. To the day ahead now, and data releases from the US include the University of Michigan’s preliminary consumer sentiment index for November, as well as the JOLTS job openings for September. In the Euro Area, there’ll also be industrial production for September. From central banks, we’ll hear from New York Fed President Williams, ECB Chief Economist Lane, and the BoE’s Haskel. Tyler Durden Fri, 11/12/2021 - 07:48.....»»

Category: blogSource: zerohedgeNov 12th, 2021

What Awaits ZIM Integrated Shipping (ZIM) in Q3 Earnings?

Higher revenues are likely to boost ZIM Integrated Shipping's (ZIM) Q3 results. ZIM Integrated Shipping Services ZIM is slated to release third-quarter 2021 results on Nov 17, before market open.The Zacks Consensus Estimate for third-quarter earnings has been stable at $9.20 per share over the past 60 days. The consensus mark for revenues is currently pegged at $2.67 billion.Against this backdrop, let’s take a look at the factors that might have shaped the company’s September-quarter performance.With the gradual resumption of economic activities, the world trade picked up the pace, which in turn, is likely to aid the third-quarter results of shipping stocks like ZIM Integrated Shipping. This is because the shipping industry is responsible for transporting an enormous proportion of goods involved in world trade.Revenues in the to-be-reported quarter are expected to have increased sequentially, driven by improved revenues from containerized cargo, reflecting higher freight rates among other factors.The positive sentiment surrounding the containership market is a huge positive for ZIM Integrated Shipping and might have aided its top line in the soon-to-be-reported quarter. The containership market is being aided by ramped-up manufacturing activities in Asia besides other factors.On the flip side, escalated voyage operating expenses, mainly due to increased fuel costs, are likely to have hurt the bottom line in the September quarter.Earnings WhispersOur proven model does not predict an earnings beat for ZIM Integrated Shipping this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. However, that is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.Earnings ESP: ZIM Integrated Shipping has an Earnings ESP of 0.00% as the Most Accurate Estimate is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Zacks Rank: ZIM Integrated Shipping has a Zacks Rank #3, currently.Highlights of Q2 EarningsZIM Integrated Shipping’s second-quarter earnings of $7.38 per share surpassed the Zacks Consensus Estimate of $5.71. Total revenues of $2,382 million also surpassed the Zacks Consensus Estimate of $1,907.3 million.Sectorial SnapshotsLet’s look into some of the already released third-quarter 2021 earnings reports from companies within the Zacks Transportation sector.GATX Corporation’s GATX third-quarter 2021 earnings of $1.11 per share surpassed the Zacks Consensus Estimate of $1. Total revenues of $313.5 million inched up approximately 3% year over year, mainly owing to a 3.9% rise in lease revenues to $283.9 million.Lease revenues contributed 90.6% to the top line. Marine operating revenues at GATX contributed 1.6% to the top line. The balance came from other sources. The stock price has surged 35.1% in the past year. GATX carries a Zacks Rank #2 (Buy) at present.J.B. Hunt Transportation Services JBHT reported third-quarter earnings of $1.88 per share, surpassing the Zacks Consensus Estimate of $1.77. Total operating revenues of $3144.8 million outperformed the Zacks Consensus Estimate of $3002.1 million.The company exited the third quarter with cash and cash equivalents of $529.6 million compared with $313.3 million at the end of 2020. Long-term debt at J.B. Hunt was $944.9 million compared with $1.31 billion at 2020 end. The stock price has soared 52.4% over the past year. J.B. Hunt currently carries a Zacks Rank of 2.Old Dominion Freight Line’s ODFL third-quarter 2021 earnings per share of $2.47 outpaced the Zacks Consensus Estimate by 10 cents. The bottom line surged 44.4% year over year. This upside was driven by an improvement in the operating ratio (operating expenses as a percentage of revenues) on the back of higher revenues.Revenues at Old Dominion, currently a Zacks #2 Ranked stock, came in at $1400 million, surpassing the Zacks Consensus Estimate of $1,360.3 million and increasing 32.3% year over year. The uptick was backed by a 13.7% increase in LTL (Less-Than-Truckload) tons and a 15.7% rise in LTL revenue per hundredweight. Shares of Old Dominion have jumped 74.9% over the past year. Tech IPOs With Massive Profit Potential: Last years top IPOs surged as much as 299% within the first two months. With record amounts of cash flooding into IPOs and a record-setting stock market, this year could be even more lucrative. See Zacks’ Hottest Tech IPOs 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 ZIM Integrated Shipping Services Ltd. (ZIM): Free Stock Analysis Report J.B. Hunt Transport Services, Inc. (JBHT): Free Stock Analysis Report Old Dominion Freight Line, Inc. (ODFL): Free Stock Analysis Report GATX Corporation (GATX): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 11th, 2021

Shockwave Medical (SWAV) Gains 0.6% Post Q3 Earnings Beat

Shockwave Medical's (SWAV) third-quarter results reflect robust revenue growth and expansion in gross margin. Shares of Shockwave Medical, Inc. SWAV rose 0.6% on Nov 10, following the company's third-quarter 2021 results.The company reported third-quarter 2021 adjusted earnings per share (EPS) of 5 cents, comparing favorably with the Zacks Consensus Estimate of a loss of 7 cents. The company had reported a loss of 38 cents in the year-ago quarter.GAAP EPS in the quarter was 6 cents, against the year-ago quarter’s loss of 38 cents.Revenue DetailsThe company reported revenues of $65.2 billion, which shot up 233% from the prior-year quarter. The top line outpaced the Zacks Consensus Estimate by 5.1%.Sustained recovery from the impact of the pandemic, higher adoption of Shockwave products and introduction of the coronary product — Shockwave C2 — in the United States in February, contributed to the improvement.Q3 HighlightsInterestingly, DISRUPT PAD III observational study results of peripheral IVL were featured as a late breaking presentation at the VIVA21 conference.Apart from this, first one-year results, which is a new gender analysis and an OCT analysis from the Disrupt CAD coronary IVL clinical program, were presented in several sessions at the 32nd Transcatheter Cardiovascular Therapeutics (TCT) annual scientific symposium.ShockWave Medical, Inc. Price, Consensus and EPS Surprise ShockWave Medical, Inc. price-consensus-eps-surprise-chart | ShockWave Medical, Inc. QuoteFurther, Centers for Medicare & Medicaid Services (CMS) increased payment for above the knee peripheral IVL procedures as part of the calendar year 2022 Medicare Hospital Outpatient Prospective Payment System (OPPS) final rule.MarginsGross profit in the reported quarter was $54.2 million, up 278.7% year over year. As a percentage of revenues, gross margin in the quarter was 83%, up 1000 basis points (bps).Selling and marketing expenses amounted to $28.4 million, up 108.5% from the prior-year quarter. Research and development expenses totaled $13.7 million, up 74.1% on a year-over-year basis.Operating income totaled $2.8 million, against the year-ago quarter’s operating loss of $12.8 million.Financial PositionThe company exited the third quarter with cash, cash equivalents and investments of $91.2 million, compared with $84.3 million in the previous quarter.Cumulative net cash used in operating activities at the end of the third quarter totaled $5.8 million, compared with net cash used in the prior-year period of $58.8 million.2021 Revenue Outlook RaisedFor 2021, Shockwave Medical expects revenues to be $227-$228 million (up from the previously guided range of $218-$223 million), reflecting growth of 235-236% over the prior year period. The Zacks Consensus Estimate is currently pegged at $224.2 million.Wrapping UpShockwave Medical ended the third quarter on a strong note, wherein both earnings and revenues beat the consensus mark. The company exhibited significant revenue growth in the third quarter. Expansion in gross margin is encouraging.Management is optimistic about the continued clinical acceptance and penetration of Intravascular Lithotripsy (IVL) as demonstrated by its strong results in the quarter under review driven by the increasing adoption of coronary IVL in the United States.However, an increase in operating expenses remains a concern.Zacks RankCurrently, Shockwave Medical carries a Zacks Rank #4 (Sell).Earnings of Other MedTech Majors at a GlanceSome better-ranked stocks in the broader medical space that have already announced their quarterly results are Thermo Fisher Scientific Inc. TMO, West Pharmaceutical Services, Inc. WST, and AngioDynamics, Inc. ANGO.Thermo Fisher reported third-quarter 2021 adjusted EPS of $5.76, which beat the Zacks Consensus Estimate by 23.3%. Third-quarter revenues of $9.33 billion outpaced the consensus mark by 12%. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.For 2021, the consensus mark for earnings is currently pegged at $23.40 per share, indicating an improvement of 19.7% from the previous year. The same for revenues stands at $37.13 billion, suggesting growth of 15.3% from the year-ago reported figure. Thermo Fisher’s long-term earnings growth rate is projected at 14%.West Pharmaceutical reported third-quarter 2021 adjusted EPS of $2.06, which surpassed the Zacks Consensus Estimate by 13.2%. Third-quarter revenues of $706.5 million outpaced the Zacks Consensus Estimate by 3.2%. The company carries a Zacks Rank of 2 (Buy).For 2021, the consensus mark for earnings is currently pegged at $8.43 per share, indicating an increase of 77.1% from the previous year. The same for revenues stands at $2.81 billion, suggesting growth of 30.9% from the year-ago reported figure. West Pharmaceutical’s long-term earnings growth rate is projected at 27.6%.AngioDynamics reported first-quarter fiscal 2022 loss per share of 2 cents, narrower than the Zacks Consensus Estimate of a loss of 5 cents. Revenues of $76.9 million surpassed the Zacks Consensus Estimate by 8.4%. Presently, the company carries a Zacks Rank #2.For fiscal 2022, the Zacks Consensus Estimate for earnings is currently pegged at 2 cents per share, reflecting a decline of 60% from the previous year. The same for revenues stands at $313.3 million, suggesting growth of 7.7% from the year-ago reported figure. AngioDynamics’ earnings yield of 0.1% compares favorably with the industry’s (2.8%). Tech IPOs With Massive Profit Potential: Last years top IPOs surged as much as 299% within the first two months. With record amounts of cash flooding into IPOs and a record-setting stock market, this year could be even more lucrative. See Zacks’ Hottest Tech IPOs 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 AngioDynamics, Inc. (ANGO): Free Stock Analysis Report Thermo Fisher Scientific Inc. (TMO): Free Stock Analysis Report West Pharmaceutical Services, Inc. (WST): Free Stock Analysis Report ShockWave Medical, Inc. (SWAV): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksNov 11th, 2021

Red Robin (RRGB) Stock Down on Q3 Earnings & Revenues Miss

Red Robin Gourmet Burgers (RRGB) in third-quarter fiscal 2021 results hurt by concerns regarding the Delta variant, and staffing and supply chain challenges. Red Robin Gourmet Burgers, Inc. RRGB reported third-quarter fiscal 2021 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. Following the results, the company’s shares declined nearly 4% in the after-hour trading session on Nov 11.In this regard, Paul J. B. Murphy III, Red Robin’s president and CEO, said, "Our confidence is strengthened by the positive trajectory in our sales and traffic trends over the past eight weeks, despite softness earlier in the third quarter due to concerns about the Delta variant and continued staffing and supply chain challenges.”The company announced that it is likely to launch two fresh mobile apps — iOS and Android, a new website ordering experience and a new loyalty platform before the end of 2021. This is likely to drive traffic and average guest checks.Earnings & Revenue DiscussionDuring the fiscal third quarter, Red Robin reported an adjusted loss per share of 88 cents, wider than the Zacks Consensus Estimate of a loss of 45 cents. In the year-ago quarter, the company had reported an adjusted loss of $19 cents.Quarterly revenues of $275.4 million lagged the consensus mark of $278 million. However, the top line improved 37.4% year over year. The company benefited from increased guest traffic due to lifting of jurisdictional indoor dining restrictions.During the quarter under review, comparable restaurant revenues surged 34.3% year over year. The upside was primarily driven by 22.5% rise in guest count and 11.8% increase in average guest checks. The increase in average guest check can be attributed to a 3.5% rise in pricing and 8.4% rise in menu mix, which was marginally offset by a decrease of 0.1% due to higher discounts. Menu mix, during the fiscal third quarter, gained from higher sales of beverages and limited time menu offerings.Red Robin Gourmet Burgers, Inc. Price, Consensus and EPS Surprise Red Robin Gourmet Burgers, Inc. price-consensus-eps-surprise-chart | Red Robin Gourmet Burgers, Inc. QuoteOperating ResultsRestaurant-level operating profit margin was 12.5% for the fiscal third quarter compared with 8.6% reported in the prior-year quarter.During the fiscal third quarter, restaurant labor costs (as a percentage of restaurant revenues) declined 80 bps year over year to 36.9%. The downside was primarily due to staffing shortages and sales leverage. However, this was partially offset by higher wage rates, staffing costs and increased restaurant management compensation costs. Additionally, Red Robin incurred $3.1 million transitory labor and other operating costs in the fiscal third quarter due to staffing issues.Meanwhile, other operating costs declined 10 bps year over year to 19%. During the quarter under review, cost of sales declined 20 bps year over year to 23.2%. Occupancy costs fell 290 bps year over year to 8.3%. The decrease was primarily due to savings from permanently-closed restaurants, restructuring of lease payments, rent concessions and sales leverage.Adjusted earnings before interest expenses, income taxes, depreciation and amortization during the fiscal third quarter amounted to $8.2 million against a loss of $0.7 million in the year-ago quarter.Other Financial InformationAs of Oct 3, 2021, Red Robin had cash and cash equivalents of $17.8 million compared with $25.6 million as of Jul, 2021 and $16.1 million as of Dec 27, 2020. Long-term debt as of Oct 3, 2021 stood at $147.5 million compared with $145.1 million as of Jul, 2021 and $161 million as of Dec 27, 2020.Inventories during the quarter were $23.8 million compared with $23.7 million as of Jul 11, 2021.GuidanceRed Robin provided limited guidance. For 2021, the company continues to expect capital expenditures in the range of $45 million to $55 million. This includes investments related to restaurants, infrastructure and systems capital maintenance, digital guest, operational technology solutions and off-premises execution enhancements.The company announced Donatos expansion to approximately 120 restaurants in 2021. It expects to open approximately 40 restaurants in the fourth quarter of fiscal 2021.For 2021, the company expects selling, general and administrative costs in the range of $120 million to $130 million.Red Robin currently carries a Zacks Rank #5 (Strong Sell).Peer ReleasesPapa John’s International, Inc. PZZA reported robust third-quarter fiscal 2021 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. During the fiscal third quarter, the company reported adjusted earnings of 83 cents per share, which surpassed the Zacks Consensus Estimate of 69 cents by 20.3%. The bottom line surged 137.1% from 35 cents in the prior-year quarter. Quarterly revenues of $512.8 million beat the consensus mark of $501 million by 2.3%. The top line increased 8.4% on a year-over-year basis.Papa John’s benefited from solid comparable sales in North America on account of strong customer retention and innovation strategies. The company witnessed a rise in company-owned restaurant revenues, franchise royalties and commissary sales. International revenues benefited from higher franchise royalties and unit growth. This Zacks Rank #2 (Buy) company’s shares have gained 35.5% in the past three months compared with the industry’s growth of 5.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Cheesecake Factory Incorporated CAKE reported third-quarter fiscal 2021 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. In the quarter under review, adjusted earnings per share (EPS) was 65 cents, which lagged the Zacks Consensus Estimate of 70 cents. In the prior-year quarter, the company had reported an adjusted loss of 33 cents per share. The upside was primarily driven by improvements in labor and other operating expenses.Cheesecake Factory gained from solid off-premise sales growth. Quarter-to-date (through Nov 2), the off-premise model contributed 28% to total sales. Off-premise average weekly sales have doubled compared with fiscal 2019 levels. Shares of Cheesecake Factory have declined 21.3% in the past six months, against the industry’s growth of 5.7%. Cheesecake Factory carries a Zacks Rank #4 (Sell).YUM! Brands, Inc. YUM reported strong third-quarter 2021 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Both the metrics improved year over year. During third-quarter 2021, the company’s adjusted earnings of $1.22 beat the Zacks Consensus Estimate of $1.06. In the prior-year quarter, the company had reported adjusted earnings of $1.01. Quarterly revenues of $1,606 million outpaced the consensus mark of $1,584 million. The top line improved 11% year over year.YUM! Brands’ results in the quarter benefited from strong digital sales, robust unit development and a diversified global business model. The company strengthened its digital capabilities with the acquisition of Dragontail, which provides AI-based integrated kitchen order management and delivery technologies. The initiative paves the path for strengthening store operations and enhancing customer experience. During the third quarter, it reported digital sales of more than $5 billion. Shares of this Zacks Rank #3 (Hold) company have gained 8.2% in the past six months. Tech IPOs With Massive Profit Potential: Last years top IPOs surged as much as 299% within the first two months. With record amounts of cash flooding into IPOs and a record-setting stock market, this year could be even more lucrative. See Zacks’ Hottest Tech IPOs 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 Yum Brands, Inc. (YUM): Free Stock Analysis Report The Cheesecake Factory Incorporated (CAKE): Free Stock Analysis Report Red Robin Gourmet Burgers, Inc. (RRGB): Free Stock Analysis Report Papa John's International, Inc. (PZZA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 11th, 2021

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

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

Category: personnelSource: nytNov 11th, 2021