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Here"s Why Oil Jumped 2.5% and Drove Energy Stocks Higher

A bullish EIA report had oil stocks APA Corporation (APA), Devon Energy (DVN), Diamondback Energy (FANG), Marathon Oil (MRO), Hess Corporation (HES), Occidental Petroleum (OXY) and ConocoPhillips (COP) all trading higher. U.S. oil prices rose on Sep 22 after a weekly report from the Energy Information Administration ("EIA") showed draws in crude and distillate stockpiles. On the New York Mercantile Exchange, WTI crude futures gained $1.74 or 2.5%, to settle at $72.23 a barrel.Below we review the EIA's Weekly Petroleum Status Report for the week ending Sep 17.Analyzing the Latest EIA ReportCrude Oil: The federal government’s EIA report revealed that crude inventories fell by 3.5 million barrels compared to the expectations of a 3.8-million-barrel decline per the analysts surveyed by S&P Global Platts. The combination of a sizeable increase in exports and a ramp-up in refinery activity accounted for the stockpile draw with the world’s biggest oil consumer even as domestic production recovered from the storm-led shut-ins in the Gulf of Mexico. This puts total domestic stocks at 414 million barrels — 16.3% less than the year-ago figure and 8% lower than the five-year average.The latest report also showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) were down 1.5 million barrels to 33.8 million barrels.Meanwhile, the crude supply cover was up from 27.5 days in the previous week to 27.6 days. In the year-ago period, the supply cover was 37 days.Let’s turn to the products now.Gasoline: Gasoline supplies increased for the first time in three weeks. The 3.5-million-barrel addition is attributable to seasonal trends as well as the hurricane fallout. Analysts had forecast that gasoline inventories would fall by 900,000 barrels. At 221.6 million barrels, the current stock of the most widely used petroleum product is 2.6% less than the year-earlier level and 3% below the five-year average range.Distillate: Distillate fuel supplies (including diesel and heating oil) fell for the fourth week in a row. The 2.6-million-barrel drop reflected the restart of refineries that were sidelined by Hurricane Ida. Meanwhile, the market looked for a supply decline of 1.4 million barrels. Current inventories — at 129.3 million barrels — are 26.5% below the year-ago level and 14% lower than the five-year average.Refinery Rates: Refinery utilization, at 87.5%, moved up 5.4% from the prior week due to the gradual restart of units in the U.S. Gulf that were shut by Hurricane Ida.Final WordsOil prices settled higher yesterday following another dip in crude and distillate inventories due to stronger consumption. Despite some disappointment with the latest gasoline number, the overallOil/Energy market is on the mend with a supportive macro backdrop and robust fundamentals. Widespread COVID-19 vaccine rollouts, the ongoing government stimulus and the OPEC+ supply curtailments have contributed to this positive setup.Crude supplies are now at their lowest levels since October 2018, with U.S. commercial stockpiles down some 18% since mid-March. There is also a marked improvement in fuel demand on the back of rebounding road and airline travel. With all the tailwinds, the U.S. benchmark briefly hit a more than six-year high of $76.98 in July.The bullish EIA report lifted the Energy Select Sector SPDR — an assortment of the largest U.S. energy companies — up 3.08% to be at the top of the S&P sector standings on Wednesday. Consequently, the biggest winners of the S&P 500 on Wednesday were mostly energy-related names like APA Corporation APA, Devon Energy DVN, Diamondback Energy FANG, Marathon Oil MRO, Hess Corporation HES, Occidental Petroleum OXY and ConocoPhillips COP.APA, carrying a Zacks Rank of #3 (Hold), topped the S&P 500 list with a gain of 7.19%. Other notable energy movers include Devon Energy (6.84%), Diamondback Energy (5.42%), Marathon Oil (5.35%), Hess (5.21%), Occidental Petroleum (5.19%) and ConocoPhillips (4.94%).You can see the complete list of today’s Zacks #1 Rank stocks here. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Devon Energy Corporation (DVN): Free Stock Analysis Report ConocoPhillips (COP): Free Stock Analysis Report Marathon Oil Corporation (MRO): Free Stock Analysis Report APA Corporation (APA): Free Stock Analysis Report Hess Corporation (HES): Free Stock Analysis Report Occidental Petroleum Corporation (OXY): Free Stock Analysis Report Diamondback Energy, Inc. (FANG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 23rd, 2021

Lumber prices are on the rise again after a brief reprieve this summer, adding to concerns of lingering inflation

Homebuilders like KB Homes have indicated to analysts that despite lumber's spectacular rise and fall, it's likely not going to lower the price of its new homes. Justin Sullivan/Getty Images Lumber prices have jumped 50% since mid-August, reviving an inflationary pressure that helped send home prices higher.While lumber prices are still 60% below their record high, they are well above pre-pandemic levels.The surge in lumber, energy, and even used car prices could lead to higher inflation and put pressure on the Fed for a policy change. Sign up here for our daily newsletter, 10 Things Before the Opening Bell.Lumber prices are back on the rise. The integral homebuilding material has surged about 50% from its mid-August bottom of $448 per thousand board feet. That's after falling about 60% from a record high of $1,733 in early May, as supply chain disruptions and an insatiable demand for homes drove an incredible boom and bust cycle for the commodity.Lumber prices are still 70% higher than their pre-pandemic levels of around $400 per thousand board feet. That price difference is being felt by everyday Americans. A report from the National Association of Home Builders earlier this year found that lumber's price surge added an average $36,000 to the cost of building a new home.And home builders like KB Home have indicated to analysts that despite lumber's spectacular rise and fall, it's likely not going to lower the price of its homes and pass along cost savings to the consumer after the company raised its prices to account for sky-high lumber prices, according to KB Home's second quarter earnings call."And what's your sense if the lumber costs start to go down and supply chain issues start to resolve themselves? Is it your sense that pricing is going to stay up here and margins are going to expand or is it your sense that somehow the prices are going to start to work your way back down as -- in other words, will builders pass along some of the cost savings when they will start to happen?" Alex Barron of Housing Research Center asked KB Home CEO Jeff Mezger."Our hope and expectation is, we'll take it to margin," Mezger responded, indicating that the company has no plans to pass along the cost savings derived from the steep 60% decline in lumber prices over the past five months.Lumber is a key building block of the US economy, and its rising prices have helped push up inflation to 30-year highs. So has a surge in energy prices, like oil and natural gas, and a resurgence in used car prices, which have hit new records as automakers deal with an ongoing shortage in semiconductor supply. While Fed Chairman Jerome Powell has stood by his view that inflationary pressures will be transitory as supply chain bottle necks eventually resolve, he may be forced to make a policy change if inflationary pressures last well into 2023 and beyond. Raising interest rates and ending the monthly taper program are two key levers Powell can use to combat inflation, but those changes could put pressure on stock prices, which have been conditioned to be on the receiving end of some form of monetary easing since the 2008 financial crisis. Yet, in a period of rising inflation, Wharton Professor Jeremy Siegel believes that stocks are one of the best assets to own as a hedge to rising prices. The thinking goes that businesses with real assets can pass along price increase to its customers, thus boosting profits, as KB Homes is doing now.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 8th, 2021

Futures Slide, Nasdaq Plunges As Yields Surge And Oil Tops $80

Futures Slide, Nasdaq Plunges As Yields Surge And Oil Tops $80 For much of 2021, a vocal contingent of market bulls had claimed that there is no way the broader market could sell off as long as the gigacap tech "general" refused to drop. Well, it looks like that day is finally upon us because this morning US equity futures are sliding again, continuing their Monday drop as yields from the US to Germany again, the 10Y TSY rising as high as 1.55%, driven to an extent by Fed tapering fears but mostly by the surge in oil which has pushed Brent above $80, the highest price since late 2018. The dollar gained amid the deteriorating global supply crunch from oil to semiconductors. The surge in oil sparked a new round of stagflation fears, sending Nasdaq futures down 240 points or 1.3% as the yield on the benchmark 10-year U.S. Treasury climbed sharply. S&P 500 and Dow Jones futures also retreated, with spoos sliding below 4,400 as to a session low of 4,390. Rising bond yields prompted a shift from growth to cyclical stocks in the United States, in a move that analysts expect could become more permanent after a prolonged period of supressed bond yields. The premarket selloff was led by semiconductor stocks which tracked similar falls for European peers, as a rising 10-year Treasury yield puts pressure on the tech sector. Applied Materials Inc. led a slump in chip stocks in New York premarket trading while Nvidia was down 2.6%, AMD -2.1%, Applied Materials -2.9%, Micron -1.6%. Meanwhile retail trader favorite meme stock Naked Brand Group, an underwear and swimwear retailer, rises again after having surged 40% in the past two trading sessions after Chairman Justin Davis-Rice said in a letter to shareholders that he believes the company has found a “disruptive” potential acquisition in the clean technology sector. Frequency Electronics also soared after being awarded a contract by the Office of Naval Research to develop an atomic clock. Chinese stocks listed in the U.S. were mixed and semiconductor stocks declined. Here are some of the other notable U.S. movers today: iPower (IPW US) shares rise as much as 61% in U.S. premarket trading after the online hydroponics equipment retailer posted 4Q and FY21 earnings Alibaba (BABA US) rises 2.5% in U.S. premarket trading after the company’s shares listed in Hong Kong rose, adding to the Hang Seng Tech Index’s gains Frequency Electronics (FEIM US) soars 20% in U.S. premarket trading after being awarded a contract by the Office of Naval Research to develop an atomic clock Concentrix (CNXC) jumped 5.9% in Monday after hours trading after setting its first dividend payment and buyback program since being spun off from from Synnex in December Brookdale Senior Living (BKD US) shares fell in extended trading on Monday after announcing a $200 million convertible bond offering Altimmune (ALT US) rose as much as 4.2% in Monday postmarket trading on plans to announce results for an early stage study of ALT-801 in overweight people on Tuesday Ziopharm Oncology (ZIOP US) fell in extended trading after company said it cut about 60 positions, or a more than 50% reduction in personnel, to extend its cash runway into 1H 2023 Montrose Environmental Group (MEG US) was down 2.8% Monday postmarket after offering shares via JPMorgan, BofA Securities, William Blair The main catalyst for the stock selloff was the continued drop in Treasurys which sent the 10-year Treasury rising as high as 1.55% while shorter-dated rates surged toward pre-pandemic levels. This in turn was driven by the relentless meltup in commodities: overnight Brent roared above $80 a barrel - on its way to Goldman's revised $90 price target - on louder signs that demand is running ahead of supply and depleting inventories as the world finds itself in an unprecedented energy crisis. The international crude benchmark extended a recent run of gains to hit the highest since October 2018, while West Texas Intermediate also climbed. Oil’s latest upswing has come with a flurry of bullish price predictions from banks and traders, forecasts for surging demand this winter, and speculation the industry isn’t investing enough to maintain supplies. The jump to $80 also is adding inflationary pressure to the global economy at a time when prices of energy commodities are soaring. European natural gas, carbon permits and power rose to fresh records Tuesday, with little sign of the rally slowing. As Bloomberg notes, traders have begun reassessing valuations amid multiplying global risks, while Fed officials have communicated increasingly hawkish signals in recent days as supply-chain bottlenecks threaten to keep inflation elevated. China’s growth slowdown which saw Goldman lower its q/q Q3 GDP forecast to a flat 0.0%, and a debt crisis in the nation’s property market.have also fueled the risk-off shift. "Central bankers have set out how they want to normalize monetary policy for some time,” Chris Iggo, chief investment officer for core investments at AXA Investment Managers, said in a note. “That process could start soon. The realization of this has the potential to provoke some volatility in rates and equities." Elsewhere, European stocks also declined with the Stoxx Europe 600 dragged down most by technology shares. Europe’s Stoxx Tech Index drops as much as 2.8% to a five-week low after falling 1.5% on Monday having previously touched its highest level since 2000 earlier in the month. Single-stock downgrades also weighed. Stocks which performed particularly well this year are among the biggest fallers, with chip equipment makers BE Semi -4.6% and ASML -4.4%, and chipmaker Nordic Semi down 4.2%. Among other laggards, Logitech drops as much as 8.5% after being downgraded to underweight at Morgan Stanley. Earlier in the session, Asian stocks fell for the first time in four days as declines in technology names overshadowed a rally in energy shares.  The MSCI Asia Pacific Index dropped as much as 0.7%, with a jump in U.S. Treasury yields weighing on richly-valued tech stocks. That’s even as the region’s oil and gas shares climbed amid signs of a global energy crunch. Chipmakers Taiwan Semiconductor Manufacturing and Samsung Electronics were the biggest drags on the Asian benchmark. “The climb in yields led to the selling of growth stocks that have been strong, with investors rotating into names that are sensitive to business cycles - not unlike what happened in U.S. equities,” said Shutaro Yasuda, an analyst at Tokai Tokyo Research Center.  Asian equities have been recovering after being whipsawed by concerns over any fallout from China Evergrande Group’s debt troubles. As worries over the distressed property developer abate, the pace of rise in Treasury yields and global inflation data are being closely watched for clues on the U.S. Federal Reserve’s policy stance. Australia’s equity benchmark was among the biggest losers in Asia Tuesday, dragged down by losses in mining and healthcare stocks. Still, broad-based gains in oil explorers and refiners helped mitigate the Asian market’s retreat. In South Korea, importers and distributors of liquefied petroleum gas and liquefied natural gas rallied as the price of natural gas jumped. The future of Evergrande is being forensically scrutinized by investors after the company last Friday did not meet a deadline to make an interest payment to offshore bond holders. Evergrande has 30 days to make the payment before it falls into default and Shenzen authorities are now investigating the company's wealth management unit. Without making reference to Evergrande, the People's Bank of China (PBOC) said Monday in a statement posted to its website that it would "safeguard the legitimate rights of housing consumers". Widening power shortages in China, meanwhile, halted production at a number of factories including suppliers to Apple Inc and Tesla Inc and are expected to hit the country's manufacturing sector and associated supply chains. Analysts cautioned the ongoing blackouts could affect the country's listed industrial stocks. "What we see in China with the developers and the blackouts is going to be a negative weight on the Asian markets," Tai Hui, JPMorgan Asset Management's Asian chief market strategist told Reuters. "Most people are trying to work out the potential contagion effect with Evergrande and how far and wide it could go. We keep monitoring the policy response and we have started to see some shift towards supporting homebuyers which is what we have been expecting." In rates, as noted above, the selloff in Treasuries gathered pace in Asia, early Europe session leaving yields cheaper by 3.5bp to 5.5bp across the curve with 20s and 30s extending above 2% and 10-year through 1.50%. Treasury 10-year yields traded around 1.53%, cheaper by 4.5bp on the day after topping at 1.55%, highest since mid-June; in front- and belly, 2- and 5-year yields remain near cheapest levels in at least 18 months; in 10-year sector, gilts lag by 3bp vs. Treasuries while German yields are narrowly richer. Gilts underperformed further, where long-end yields are cheaper by up to 7.5bp on the day. Treasury futures volumes over Asia, early European session were at more than twice usual levels, with most activity seen in 10-year note contract; eurodollar futures volumes were also well above recent average. With recent aggressive move higher in yields, threat of convexity hedging has exacerbated moves as rate hike premium continues to filter into the curve after last week’s FOMC. Auctions conclude Tuesday with 7-year note sale, while busy Fed speaker slate includes Fed Chair Powell. In FX, the Bloomberg dollar index reached the highest level in more than a month as rising energy costs drove up Treasury yields for a fourth session. The dollar gained against all its peers; Japan’s currency slid for a fifth day against the greenback before a speech Tuesday from Fed Chair Jerome Powell who will say inflation is elevated and is likely to remain so in coming months, according to prepared remarks. Treasury two-year yields rose to the highest since March 2020. “Dollar-yen saw the clearest expression of Treasury yield increases and we attributed this divergence to the surge in energy prices,” says Christopher Wong, senior foreign-exchange strategist at Malayan Banking in Singapore. U.S. natural gas futures soared to their highest since February 2014 on concern over tight inventories. Brent oil topped $80 a barrel amid signs demand is outrunning supply. The euro slipped to hit its lowest level since Aug. 20, nearing the year-to-date low of $1.1664. The Treasury yield curve bear steepened; euro curves followed suit, with the yield on U.K. 10-year notes soaring past 1% for the first time since March 2020 on the prospects for Bank of England policy tightening. In commodities, Crude futures extend Asia’s gains. WTI rises as much as 1.6% to highs of $76.67 before stalling. Brent holds above $80. Spot gold trades around last week’s lows near $1,740/oz. Base metals are mixed: LME aluminum outperforming, rising as much as 1.1%; nickel and copper are in the red. Looking at the day ahead, one of the main highlights will be the appearance of Fed Chair Powell, and Treasury Secretary Yellen at the Senate Banking Committee. Otherwise, central bank speakers include ECB President Lagarde, Vice President de Guindos, and the ECB’s Schnabel, Panetta and Kazimir, along with the BoE’s Mann and the Fed’s Evans, Bowman and Bostic. US data highlights include the US Conference Board’s consumer confidence indicator for September and the FHFA house price index for July. Market Snapshot S&P 500 futures down 0.7% to 4,403.50 STOXX Europe 600 down 1.2% to 456.83 MXAP down 0.4% to 200.06 MXAPJ down 0.4% to 641.05 Nikkei down 0.2% to 30,183.96 Topix down 0.3% to 2,081.77 Hang Seng Index up 1.2% to 24,500.39 Shanghai Composite up 0.5% to 3,602.22 Sensex down 1.4% to 59,209.94 Australia S&P/ASX 200 down 1.5% to 7,275.55 Kospi down 1.1% to 3,097.92 Brent Futures up 0.8% to $80.15/bbl Gold spot down 0.4% to $1,742.61 U.S. Dollar Index up 0.20% to 93.57 German 10Y yield rose 2.7 bps to -0.196% Euro down 0.1% to $1.1681 Top Overnight News from Bloomberg Chinese authorities are striving to signal to traders that whatever happens to China Evergrande Group, its debt crisis won’t spiral out of control or derail the economy Brent oil roared above $80 a barrel, the latest milestone in a global energy crisis, on signs that demand is running ahead of supply and depleting inventories As the dust settles on Germany’s election, control over the finances of Europe’s largest economy could fall to a 42-year-old former tech entrepreneur who wants to lower taxes and tighten spending Wells Fargo agreed to pay $37 million in penalties and forfeiture to settle U.S. claims that it overcharged almost 800 commercial customers that used its foreign exchange services, the latest in a series of scandals at the bank A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mixed following on from a Wall Street lead where value outperformed growth and tech suffered as yields rose. ASX 200 (-1.5%) was the laggard with losses in healthcare, gold miners and tech frontrunning the declines which dragged the index beneath 7300. Nikkei 225 (-0.2%) was lacklustre and briefly approached 30k to the downside but then bounced off worse levels amid a softer currency, while the KOSPI (-1.1%) also declined following a suspected North Korean ballistic missile launch and with a recent South Korean court order to sell seized Mitsubishi Heavy assets as compensation for wartime forced labour, threatening a flare up of tensions between Japan and South Korea. Hang Seng (+1.2%) and Shanghai Comp. (+0.5%) were underpinned after the PBoC continued to inject liquidity ahead of the approaching National Day holidays and with Hong Kong led higher by strength in property names after the PBoC stated it will safeguard legitimate rights and interests of housing consumers which also provided Evergrande-related stocks further reprieve from their recent sell-off. Finally, 10yr JGBs retreated on spillover selling from T-notes after yields rose on the back of further Fed taper rhetoric and with prices not helped by the uninspiring 2yr and 5yr auctions stateside, while weaker results at the 40yr JGB auction also provided a headwind for prices. Top Asian News Top-Performing Global Luxury Stock Seen Cooling After 680% Gain China Power Price Hike Sought Amid Supply Crunch: Energy Update Macau Evacuates Airport Quarantine Hotel After Outbreak Iron Ore Dips Again as China Power Crisis Adds to Steel Curbs Bourses in Europe extended on the losses seen at the cash open and trade lower across the board (Euro Stoxx 50 -1.7%; Stoxx 600 -1.7%) as sentiment retreated from a mixed APAC handover as month-end looms alongside tier 1 data and a slew of central bank speakers. US equity futures have also succumbed to the mood in Europe alongside the surge in global yields – which takes its toll on the NQ (-1.5%) vs the ES (-0.8%), YM (-0.4%) and RTY (-0.3%). From a more technical standpoint, ESZ1 fell under its 50 DMA (4,431) and tested the 4,400 level to the downside, whilst NQZ1 briefly fell under 15k and the YMZ1 inches towards its 100 DMA (34,489). Back to Europe, the FTSE 100 (-0.4%) sees losses to a lesser extent vs its European peers as energy prices and yields keep the index oil giants and banks supported – with some of the top gainers including Shell (+2.8%), BP (+2.1%). Sectors in Europe are predominantly in the red, but Oil & Gas buck the trend. Sectors also portray more of a defensive bias, whilst the downside sees Tech, Real Estate, and Travel & Leisure at the foot of the bunch, with the former hit by the rise in yields, which sees the US 10yr further above 1.50%, the 20yr above 2.00% and the UK 10yr hitting 1.00% for the first time since March 2020. In terms of individual movers, Smiths Group (+3.8%) is at the top of the Stoxx 600 following encouraging earnings. ING (+0.3%) holds onto gains after sources noted SocGen's (-0.6%) interest in ING's retail banking arm. Finally, chip-maker ASM International (-3.5%) has succumbed to the broader tech weakness despite upping its guidance and announcing capacity expansion by early 2023. Top European News U.K. 10-Year Yield Rises Past 1% for First Time Since March 2020 Goldman’s Petershill Unit Valued at $5.5 Billion in U.K. IPO Go-Ahead Sinks as U.K. Takes Over Southeastern Rail Franchise Hedge Funds and Private Equity Are Targeting European Soccer In FX, It took a while for the index to breach resistance ahead of 93.500, but when US Treasuries resumed their bear-steepening run and the intensity of the moves in futures and cash picked up pace the break beyond the half round number was relatively quick and decisive. Indeed, the DXY duly surpassed its post-FOMC peak (93.526) and a prior recent high from August 19 (93.587) on the way to reaching 93.619 amidst almost all round Dollar gains, as 5, 10, 20 and 30 year yields all rallied through or further above psychological levels (such as 1%, 1.5% and 2% in the case of the latter two maturities). However, petro and a few other commodity currencies are displaying varying degrees of resilience in the face of general Greenback strength that is compounded by buy signals for September 30 rebalancing on spot month, quarter and half fy end. Ahead, trade data, consumer confidence, more regional Fed surveys, speakers and the 7 year auction. NZD/CHF/JPY/AUD - The Kiwi was already losing altitude above 0.7000 vs its US counterpart and 1.0400 against the Aussie on Monday, so the deeper retreat is hardly surprising to circa 0.6975 and 1.0415 awaiting some independent impetus that may come via NZ building consents tomorrow. Meanwhile, the Franc has recoiled towards 0.9300 in advance of comments from SNB’s Maechler and the Yen continues to suffer on the aforementioned rampant yield and steeper curve trajectory on top of a more pronounced 1+ sd portfolio hedge selling requirement vs the Buck, with Usd/Jpy meandering midway between 110.94-111.42 parameters irrespective of renewed risk aversion due to same bond rout dynamic. Back down under, Aud/Usd has faded from around 0.7311 to the low 0.7260 area, though holding up a bit better in wake of not quite as weak as forecast final retail sales overnight. CAD/EUR/GBP - All softer against their US rival, but the Loonie putting up a decent fight with ongoing help from WTI crude that has now topped Usd 76.50/brl, and Usd/Cad also has decent option expiry interest to keep an eye on given 1.2 bn rolling off at 1.2615 and an even heftier 3 bn at 1.2675 compared to current extremes spanning 1.2693-1.2652. Elsewhere, the Euro has lost its battle to stay afloat of multiple sub-1.1700 lows even though EGBs are tumbling alongside USTs and the same goes for Sterling in relation to the 1.3700 handle irrespective of the 10 year Gilt touching 1% for the first time since March 2020. SCANDI/EM - Brent’s advances on Usd 80 brl have been offset to an extent by soft Norwegian retail sales data, as the Nok pares more of its post-Norges Bank gains, while the Sek looks somewhat caught between stalls following a recovery in Swedish consumption, but big swing in trade balance from surplus to larger deficit. However, the Try is taking no delight from the costlier price of oil or remarks from Turkey’s Deputy Finance Minister contending that interest rates can move lower by reducing the current account and budget deficits, or conceding that Dollarisation is a problem and steps need to be taken to enhance confidence in the Lira. Conversely, the Cnh and Cny are still holding a firm line following another net injection of 2 week funds from the PBoC and the Governor saying that China will lengthen the period for the implementation of normal monetary policy, adding that it has conditions to keep a normal and upward yield curve, as it sees no need to purchase assets at present. In commodities, WTI and Brent futures have extended on the gains seen during APAC hours, which saw the Brent November contract topping USD 80/bbl, albeit the volume and open interest has migrated to the December contract – which topped out just before the USD 80/bbl mark. WTI November meanwhile advanced past the USD 76/bbl mark to a current peak at USD 76.67/bbl (vs low USD 75.21/bbl). Desks have been attributing the leg higher to tight supply – with the UK fuel situation further deteriorating amid a shortage of drivers coupled with panic buying. It's worth bearing in mind that the demand side of the equation has also seen supportive, with the US announcing the lifting of international travel curbs recently alongside the economic resilience to the Delta variant heading into the winter period. Traders would also be keeping an eye on the electricity situation in China, which in theory would provide tailwinds for diesel demand via generators, although this could be offset by a slowdown in economic activity due to power outages. There has also been growing noise for OPEC+ to hike output beyond the monthly plan of 400k BPD, with some African nations also struggling to ramp up production due to maintenance issues and lack of investments. Ministers recently noted that the plan would be maintained at next week's confab. As a reminder, the OPEC World Oil Outlook is set to be released at 13:30BST/08:30EDT, although the findings may be stale given the recent developments in crude dynamics. Major banks have also provided commentary on Brent following Goldman Sachs' bullish call recently, with Barclays upping its forecast for both benchmarks due to supply deficits, whilst Morgan Stanley maintained its forecast but suggested that the USD 85/bbl Brent scenario clearly exists. MS also noted that oil inventories continue to draw at high rates and suggest that the market is more undersupplied than generally perceived; the analysts see the market undersupplied into 2022 amid its expectation for further OPEC discipline. Nat gas also remains in focus, with prices +11% at one point, whilst Russia's Kremlin said Russia remains the safeguard of natural gas to Europe and Gazprom is ready to discuss new gas supply contracts with increased volumes to meet rising European demand. It's also worth being aware of the increasing likelihood of state intervention at these levels as nations attempt to save or at least cushion consumers and company margins. Elsewhere, precious metals are under pressure as the Buck remains buoyant, with spot gold still under USD 1,750/oz as it inches closer to the 11th August low of USD 1,722/oz. Spot silver remains within recent ranges above USD 22/oz. Overnight Chinese nickel and tin prices extended losses with traders citing subdued demand, whilst coking coal and coke futures leapt on tight supply. US Event Calendar 8:30am: Aug. Advance Goods Trade Balance, est. -$87.3b, prior -$86.4b, revised -$86.8b 8:30am: Aug. Retail Inventories MoM, est. 0.5%, prior 0.4%; Wholesale Inventories MoM, est. 0.8%, prior 0.6% 9am: July S&P CS Composite-20 YoY, est. 20.00%, prior 19.08% 9am: July S&P/CS 20 City MoM SA, est. 1.70%, prior 1.77% 9am: July FHFA House Price Index MoM, est. 1.5%, prior 1.6% 10am: Sept. Conf. Board Consumer Confidence, est. 115.0, prior 113.8 Expectations, prior 91.4 Present Situation, prior 147.3 10am: Sept. Richmond Fed Index, est. 10, prior 9 Central Bank Speakers 9am: Fed’s Evans Makes Welcome Remarks at Payments Conference 10am: Powell and Yellen Appear Before Senate Banking Panel 1:40pm: Fed’s Bowman Speaks at Community Bank Event 3pm: Fed’s Bostic Discusses the Economic Outlook 7pm: Fed’s Bullard Discusses U.S. Economy and Monetary Policy DB's Jim Reid concludes the overnight wrap What a difference a week makes. You hardly hear the word Evergrande now. We asked in a flash poll last week whether we would still be talking about it in a month or whether it would be a distant memory by then. Maybe we should have narrowed the time frame to a week! We’ve quickly moved on to rate hikes and rising bond yields as the topic de jour. A further rise in the Bloomberg Commodity Spot Index (+1.87%) to a fresh high for the decade helped reinforce the move. Indeed, sovereign bond yields moved higher once again yesterday amidst a sharp rise in inflation expectations, with those on 10yr Treasury yields rising +3.6bps to 1.487%, their highest level in over 3 months. Meanwhile the 2yr yield rose +0.8bps to 0.278%, its highest level since the pandemic began, which comes on the back of last week’s Fed meeting that prompted investors to price in an initial rate hike from the Fed by the end of 2022. The moves in Treasury yields were almost entirely driven by higher inflation breakevens, with 10yr breakevens up +3.7bps. That echoed similar moves in Europe, where the German 10yr breakeven (+4.7bps) hit a post-2013 high of 1.653%, and their Italian counterparts (+3.9bps) hit a post-2011 high. The biggest move was in the UK however, where the 10yr breakeven (+13.2bps) reached its highest level since 2008, which comes amidst a continued fuel shortage in the country, alongside another rise in UK natural gas futures, which were up +8.20% yesterday to £190/therm, exceeding the previous closing peak set a week earlier. We were waiting for the wind to blow in this country to get alternatives back on stream and boy did it blow yesterday but with no impact yet on gas prices. Lower real rates dampened the rise in yields across the continent, though yields on 10yr bunds (+0.5bps), OATs (+0.9bps), BTPs (+1.3bps) and gilts (+2.7bps) had all moved higher by the close of trade. Those spikes in commodity prices were evident more broadly yesterday, with energy prices in particular seeing a major increase. Brent crude oil prices were up +1.84% to $79.53/bbl, marking their highest closing level since late-2018, and this morning in trading they have now exceeded the $80/bbl mark with a further +0.94% increase. It was much the same story for WTI (+1.99%), which closed at $75.45/bbl, which was its own highest closing level since 2018 too. And those pressures in UK natural gas prices we mentioned above were seen across Europe more broadly, where futures were up +8.92%. With yields moving higher and inflationary pressures growing stronger, tech stocks struggled significantly yesterday, with the NASDAQ down -0.52%. The megacap tech FANG+ index fell -0.15% on the day, but was initially down as much as -1.7% in early trading. The NASDAQ underperformed the S&P 500, which was only down -0.28%, but that masked significant sectoral divergences, with interest-sensitive growth stocks struggling, just as cyclicals more broadly posted fresh gains. More specifically, energy (+3.43%), bank (+2.29%) and autos (+2.19%) led the S&P, while biotech (-1.65%) and software (-1.39%) shares were among the largest laggards. European equities were also pretty subdued, with the STOXX 600 down -0.19%, though the DAX was up +0.27% following the results of the German election, which removed the tail risk outcome of a more left-wing coalition featuring the SPD, the Greens and Die Linke. Staying on the political scene, we are now less than 72 hours away from a potential US government shutdown as it stands. As was expected, Republicans in the Senate blocked the House-passed measure to fund the government for another 2 months and raise the debt ceiling for 2 years. While Democrats have not put forward their alternative strategy if Republicans refuse to vote to lift the debt ceiling, their only option would be to attach it to the budget reconciliation plan that currently makes up much of the Biden economic agenda. In an effort to keep all party members on board, Speaker Pelosi moved the vote on the $550bn bipartisan infrastructure bill to Thursday in order to give all sides more time to finish the larger budget bill and pass both together. It is a going to be a very busy Thursday, since Congress will have to also pass the funding bill that day. Republicans and Democrats already agree on a funding bill to keep the government open that does not include the debt ceiling increase so it is just a matter of how exactly the debt ceiling provision goes through without a Republican Senate vote. Overnight in Asia, equity indices are seeing a mixed performance. On the one hand, most of the region including the Nikkei (-0.24%) and KOSPI (-0.80%) are trading lower as investors begin to price in tighter monetary policy from the Fed. However, the Hang Seng (+1.50%), Shanghai Composite (+0.53%) and CSI (0.38%) have all advanced after the People’s Bank of China said that they would ensure a “healthy property market”. Looking forward, US equity futures are pointing to little change, with those on the S&P 500 down just -0.05%, and 10yr Treasury yields have risen +1.9bps this morning to trade above 1.50% again. Back to the German election, where the aftermath yesterday saw various party leaders assess the results and stake their claims to participate in a new coalition. As a reminder, the SPD came in first place with 25.7%, but the CDU/CSU weren’t far behind on 24.1%, making it mathematically possible for either to form a government in a coalition with the Greens and the FDP. The SPD’s chancellor candidate, Finance Minister Olaf Scholz, appealed for the Greens and FDP to join him in forming a government, and told the media that he wanted to form a coalition before Christmas. Meanwhile Green co-leader Robert Habeck said that “Of course there is a certain priority for talks with the SPD and the FDP”, but said that this didn’t mean they wouldn’t speak with the CDU/CSU either. As the SPD were calling for an alliance, the tone sounded more negative from the CDU’s leadership, even though Armin Laschet said that he had not given up on the idea of forming a government. Notably, Laschet said that no party was able to draw a clear mandate from the result, including the SPD, and this echoed remarks from the CSU leader Markus Söder, who said that the conservatives had no mandate to form a government, though they could “make an offer out of a sense of responsibility for the country.” Meanwhile, attention will turn to the FDP and the Greens to see which way they’re leaning when it comes to forming a government. FDP leader Lindner said that he would hold preliminary talks with the Greens, after which they would be open to invitations from either the SPD or the CDU/CSU for further discussions. Back on the UK, there was an interesting speech from BoE Governor Bailey yesterday, where he echoed the line from the MPC minutes last week, saying that “all of us believe that there will need to be some modest tightening of policy to be consistent with meeting the inflation target sustainable over the medium-term”. However, he also said that their view was that “the price pressures will be transient”, and that “monetary policy will not increase the supply of semi-conductor chips … nor will it produce more HGV drivers.” He then further added that tighter policy “could make things worse in this situation by putting more downward pressure on a weakening recovery of the economy”. So a bit of a mixed message of backing rate hike expectations but warning about its impact on growth. Over in the US we heard from a host of Fed speakers with Governor Brainard saying that while “employment is still a bit short of the mark” of “substantial further progress”, she expects that the labour market will recover enough to start tapering asset purchases soon. Separately on the inflation debate, Minneapolis Fed President Kashkari argued that this year’s pickup in US inflation has been a byproduct of the supply disruptions associated with Covid and that policy makers should not react to it just yet. He cited the need to get US employment back up as the Fed’s “highest priority”. New York Fed President Williams agreed with his colleague, saying that “this process of adjustment may take another year or so to complete as the pandemic-related swings in supply and demand gradually recede.” And Chicago Fed President Evans is even worried about downside inflation risks, as he is " more uneasy about us not generating enough inflation in 2023 and 2024 than the possibility that we will be living with too much.” Lastly, news came out yesterday that Boston Fed President Rosengren will retire this week due to health concerns. He was due to step down in June regardless as there is a mandatory retirement age of 65. Dallas Fed President Kaplan also announced his retirement yesterday, which will take effect October 8th. Both officials have drawn scrutiny in recent days stemming from their recent disclosure of trading activity over the last year, though the activity did not violate the Fed’s ethics code even as Fed Chair Powell announced an official review of those rules. The Boston Fed President will be a voting member on the FOMC next year, and the Dallas Fed President in 2023. Running through yesterday’s data, the preliminary reading for US durable goods orders in August showed growth of +1.8% (vs. +0.7% expected), and the previous month was also revised up to show growth of +0.5% (vs. -0.1% previously). Meanwhile core capital goods orders grew by +0.5% (vs. +0.4% expected), and the previous month’s growth was revised up two-tenths. Finally, the Dallas Fed’s manufacturing activity index for September came in at 4.6 (vs. 11.0 expected) – its lowest reading since July 2020. To the day ahead now, and one of the main highlights will be the appearance of Fed Chair Powell, and Treasury Secretary Yellen at the Senate Banking Committee. Otherwise, central bank speakers include ECB President Lagarde, Vice President de Guindos, and the ECB’s Schnabel, Panetta and Kazimir, along with the BoE’s Mann and the Fed’s Evans, Bowman and Bostic. US data highlights include the US Conference Board’s consumer confidence indicator for September and the FHFA house price index for July. Tyler Durden Tue, 09/28/2021 - 07:52.....»»

Category: blogSource: zerohedgeSep 28th, 2021

4 Sector ETFs to Win Amid Rising Inflation

Inflation has been on an uphill ride this year thanks to the low-base effects from 2020. These sectors should benefit from higher inflation. Inflation has been on an uphill ride this year thanks to the low-base effects from 2020. Also, because economic recovery has picked up on widespread vaccination and fiscal stimulus, business restrictions have been relaxed and demand has jumped.The annual inflation rate in the United States rose to a 13-year high of 5.4% in September of 2021 from 5.3% in August and above market expectations of 5.3%. Faster price increases were recorded for cost of shelter (3.2% vs 2.8% in August); food (4.6% vs 3.7%, the highest since December of 2011), namely food at home (4.5% vs 3%); new vehicles (8.7% vs 7.6%); and energy (24.8% vs 25%), per trading economics.Against this backdrop, we suggest a few sector ETFs that can be worth investing at the time of rising inflation. Below we highlight those.Sectors to GainEnergy Energy sector tends to perform well in an inflationary environment. The revenues of energy stocks are dependent on energy prices, a key factor of inflation indices. Such firms surpassed inflation 71% of the time within a time span of 1973-2020 and delivered an annual real return of 9.0% per year on average.The operating backdrop of the sector too is bullish. Oil price has been on a tear with Brent hitting the highest level since October 2018 while WTI jumped to $80 per barrel — the highest since 2014. The rally has been driven by supply disruptions and storage drawdowns as well as growing demand with the easing of pandemic restrictions. VanEck Vectors Unconventional Oil & Gas ETF FRAK could be good play out here.Information Technology“The best businesses during inflation are the businesses that you buy once and then you don’t have to keep making capital investments subsequently,” Buffett said, as quoted on CNBC. Information Technology business normally does not require recurrent capital investments, which makes it an inflation-friendly investment. CNBC’s Jim Cramer said that big tech stocks are lucrative bets amid rising inflation and chances of higher interest rates.Cramer explained that big-tech names like Google-parent Alphabet (GOOGL) and Microsoft’s (MSFT) business model are not that responsive to changes in inflation, including the rise in prices for raw materials, chemicals and commodities like gas, plastics, packaging and so on. Technology Select Sector SPDR ETF XLK and Global X Social Media ETF (SOCL) look to be great bets here.Having said this, we would lie to note that one may witness occasional selloffs in the high-growth tech space in a rising rate environment. It is better to hold tech stocks with a medium-to-long-term view.Real EstateWarren Buffett also suggests owning real estate during times of inflation because the purchase is a “one-time outlay” for the investor, does not incur recurring costs and involves resale value. In a rising-inflation environment, real estate stocks act as good bets. Both, resale value of the property and rental income, rise with price inflation.Plus, an uptick in home prices is a boon for renters. Along with some analysts, we too believe that fast-rising home prices are likely to keep prospective homebuyers away from the ownership and direct them toward the rental market. Equity REITs outperformed inflation 67% of the time and offered an average real return of 4.7%.Some of the decent real estate ETF plays right now are Real Estate Select Sector SPDR ETF XLRE (yields 3.13% annually), U.S. Diversified Real Estate ETF (PPTY) (yields 4.90% annually) and VanEck Vectors Mortgage REIT Income ETF (MORT) (yields 7.29% annually).Consumer Staples These companies normally pass on cost increases to consumers to maintain profit margin. With consumer staples being a non-cyclical sector, the sheer necessities of staples can’t even deter consumers from buying those goods. Hence, the sector should hold up well in an inflationary environment. Consumer Staples outperformed inflation about 55% of the time during 1973-2020 with an average real return of about 2.3%. Consumer Staples Select Sector SPDR ETF XLP could thus be in investors’ cards. 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 Technology Select Sector SPDR ETF (XLK): ETF Research Reports Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports VanEck Vectors Unconventional Oil & Gas ETF (FRAK): ETF Research Reports Real Estate Select Sector SPDR ETF (XLRE): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks18 hr. 10 min. ago

Stitch Fix"s (SFIX) Digital Ploys Augur Well for Client Wins

Stitch Fix's (SFIX) Freestyle facility consistently gains momentum. It is on track with its efforts to boost assortments as well as improve client experience. Stitch Fix, Inc. SFIX looks well poised to cash in on the positive trends in the fashion space, thanks to its trendy digital actions. Being an online personal styling service retailer, the company strongly focuses on expanding its digital capabilities and personalized shopping to offer its clients the best-in-class service. Its efforts to boost client experience through Fix and direct buy (currently known as Freestyle) offerings are worth a mention. Let’s delve deeper.Freestyle Steals the ShowStitch Fix’s recently rolled-out Freestyle drive that offers quite a distinct shopping experience is believed to work wonders. This platform allows customers to discover and buy curated items according to their style, preferences, fit and size. Customers can buy items directly from Stitch Fix, irrespective of ordering a Fix first. The service offers an effective way to shop articles from a wider range of accessible categories.The Freestyle service caters to customer style needs across casual, workwear, occasion, active, athleisure, loungewear, sleepwear and more. It boasts a variety of unique and new features including Trending for You, Complete Your Looks, Featured Brands and Shop by Department. This looks to offer brands like Free People, Universal Standard, Vince, Madewell, Mother, Rag & Bone, The North Face, Club Monaco and Girlfriend Collective. Management looks forward to introducing styles from brands like Adidas, Good American, Vans, Levis, DKNY and Champion.More StrengthsStitch Fix is steadily making concerted efforts to boost assortments as well as improve client experience. The company is expanding its assortments to include more affordable products across categories. Management is on track with a significant transformation of its business in several areas including the expansion of Shop to the existing client base, the launch and scale of Fix Preview, and investments in systems and people.The company is constantly leveraging product innovation and evolving assortments, and using personalized experience to gain more clients. The expansion of personalized direct purchases for the clients is also impressive. Management is optimistic about Fix Preview, which offers an opportunity to view the proposed items for the company’s clients’ next Fix before its shipped.Management rolled out Fix Preview for its entire women's and men's clients across the United States and the U.K. The company’s Plus offering as well as its kids and UK businesses is also yielding fruitful results.All the aforementioned efforts have been fortifying the retailer’s active client base for a while now. Active clients rose 18% year over year to 4.2 million in fourth-quarter fiscal 2021. The company ended the second half of the fiscal year with about 300,000 total net additions. Net revenue per active client jumped nearly 4% year over year to $505. The company experienced positive trends in client engagement and retention with keep rates touching an all-time high.Stitch Fix crossed revenues worth $2 billion, annually, in fiscal 2021 for the first time. Net revenues also grew 22.8% from the last fiscal year’s figure to $2.1 billion. For fiscal 2022, management projects net revenue growth of 15% or higher than the prior fiscal year’s reported figure.Wrapping up, we expect Stitch Fix to be a gainer over the long haul given the strength in its digital initiatives, Freestyle in particular. Other renowned players doing well in the digital arena include Nordstrom JWN, Gap GPS and Abercrombie ANF. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Nordstrom, Inc. (JWN): Free Stock Analysis Report The Gap, Inc. (GPS): Free Stock Analysis Report Stitch Fix, Inc. (SFIX): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks18 hr. 10 min. ago

PNC Financial (PNC) Q3 Earnings & Revenues Top Estimates

PNC Financial's (PNC) Q3 results reflect the impacts of strong fee income growth and net interest income. Lower loans and deposit balances have been spoilsports. PNC Financial PNC pulled off a third-quarter 2021 positive earnings surprise of 3.02% on substantial recapture of credit losses. Adjusted earnings per share (excluding pre-tax integration costs related to the BBVA USA acquisition) of $3.75 surpassed the Zacks Consensus Estimate of $3.64 and improved 42% sequentially.The third quarter was the first full quarter of the company benefiting from the BBVA USA acquisition, which was completed on Jun 1, 2021. As of Oct 12, 2021, the company completed the conversion of 2.6 million customers, 9,000 employees and nearly 600 branches across seven states, merging BBVA USA into PNC Bank.Fee income growth on higher asset management revenues, service charges on deposits and corporate services were tailwinds. However, higher expenses and a contraction of margin were negatives.Net income in the third quarter was $1.49 billion, lower than $1.5 billion in the prior-year quarter.Revenues Improve on Fee Income Growth, Expenses RiseTotal revenues in the reported quarter were $5.2 billion, up 21% year over year. The top line surpassed the Zacks Consensus Estimate of $5.03 billion.Net interest income improved 15% from the year-ago quarter to $2.86 billion. The upswing is attributable to interest-earning assets acquired with BBVA USA and higher securities balances, partially offset by lower securities yields. However, the net interest margin contracted 12 basis points to 2.27%, reflecting lower securities yields.Non-interest income grew 30% year over year to $2.34 billion on higher service charges on deposits, asset management, corporate services, and consumer services revenues.PNC Financial’s non-interest expenses totaled $3.59 billion, up 42% from the year-ago figure. The rise primarily resulted from the hike in operating and integration expenses related to the BBVA USA acquisition as well as increased business and marketing activities.The efficiency ratio was 69% compared with 59% in the year-ago quarter. A higher efficiency ratio indicates lower profitability.As of Sep 30, 2021, total loans were down 2% sequentially to $290.2 billion. Total deposits declined 1% to $448.9 billion.Credit Quality ImprovesNet loan charge-offs were $81 million, down 48% year over year. The company reported the recapture of credit losses of $203 million compared with provisions of $52 million in the year-earlier quarter. Allowance for loan and lease losses declined 6.9% to $5.36 billion on a year-over-year basis.Non-performing assets increased 21% year over year to $2.5 billion.Capital Position WeakAs of Sep 30, 2021, the Basel III common equity tier 1 capital ratio was 10.2% compared with 11.7% as of Sep 30, 2020.Return on average assets and average common equity came in at 1.06% and 10.95%, respectively, compared with 1.32% and 11.76% witnessed in the prior-year quarter.Capital Deployment ActivityIn the third quarter of 2021, PNC Financial returned $0.9 billion capital to shareholders through dividends on common shares of $0.5 billion and 2.1 million share repurchases amounting to $0.4 billion.Our ViewpointThe company displayed a strong performance in the quarter under review. A full quarter’s benefit from the BBVA USA acquisition bolstered results and drove fee income growth. Going forward, the company is well-poised to grow on the back of its diverse revenue mix. It remains on track to execute its goals, including technology initiatives, which bode well for the long term.With the gradual recovery of the economic backdrop, the company’s provisions are reducing, which is encouraging. However, a lower net interest margin and escalating expenses are headwinds.The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise  The PNC Financial Services Group, Inc price-consensus-eps-surprise-chart | The PNC Financial Services Group, Inc QuoteCurrently, PNC Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Earnings Release Dates of Other BanksKeyCorp KEY and BankUnited, Inc.  BKU are scheduled to release quarterly numbers on Oct 21, while Fifth Third Bancorp FITB will report results on Oct 19. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Fifth Third Bancorp (FITB): Free Stock Analysis Report The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report KeyCorp (KEY): Free Stock Analysis Report BankUnited, Inc. (BKU): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks18 hr. 10 min. ago

Stock Market News for Oct 15, 2021

U.S. stocks ended sharply higher on Thursday after upbeat earnings and better-than expected economic data gave a boost to investors??? confidence. U.S. stocks ended sharply higher on Thursday after upbeat earnings and better-than expected economic data gave a boost to investors’ confidence. The rally was driven by tech stocks as they continue to get support from a fall in Treasury yields. All the three major indexes ended in positive territory.How Did The Benchmarks Perform?The Dow Jones Industrial Average (DJI) rose 1.56% or 534.75 points to finish at 34,912.56 points.The S&P 500 added 1.71% or 74.46 points to close at 4,438.26 points, recording its biggest jump since March. The rally was driven by tech and materials stocks.The Technology Select Sector SPDR (XLK) gained 2.3%, while the Materials Select Sector SPDR (XLB) added 2.4%. All the 11 sectors of the benchmark index ended in positive territory.The tech-heavy Nasdaq jumped 1.73% or 251.79 points to end at 14,823.43 points. Shares of Apple, Inc. AAPL gained 2%, while Microsoft Corporation MSFT added 2.2%. Microsoft has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.The fear-gauge CBOE Volatility Index (VIX) was down 100% to 16.86. A total of 9.26 billion shares were traded on Thursday, lower than the last 20-session average of 10.8 billion. Advancers outnumbered decliners on the NYSE by a 3.58-to-1 ratio. On Nasdaq, a 1.97-to-1 ratio favored advancing issues.Investors Get Back Lost ConfidenceThe Dow ended flat on Wednesday, while the S&P 500 and Nasdaq recorded modest gains. On Thursday, all the three major indexes bounced back, as stocks rallied following upbeat earnings report from major banks.The third-quarter earnings season is fast gathering steam now. On Thursday, eight of the S&P 500 members reported their quarterly results, with all beating earnings expectations. Walgreens Boots Alliance, Inc.  WBA was the best performer in the S&P 500 and Dow, with its shares jumping 7.4%.Also, strong economic data that showed a massive drop in jobless claims and smaller-than-expected rise in producer price index helped boost investors’ confidence.Tech Stocks RallyOn Thursday, tech stocks rallied after getting a boost from falling rate. The 10-year Treasury yield has been falling for quite some time, typically helping high-growth stocks as lower rates raise the value of the companies’ earnings in the future.Economic DataThe Labor Department said on Thursday that initial jobless claims came in at 293,000 for the week ending Oct 9, a decline of 36,000 from the previous week and a new pandemic level low. This is the best level since Mar 14, 2020 when initial jobless claims had hit 256,000. This is also the first time that initial jobless claims have fallen below the 300,000 mark since the early days of the Covid-19 outbreak.The four-week moving average also fell to 334,250, a decline of 10,500 from the previous week’s revised average and the lowest since Mar 14.Besides, continuing claims declined by 134,000 to 2.59 million, yet another pandemic-era low. The previous week's numbers were revised upward by 13,000 from 2,714,000 to 2,727,000. The 4-week moving average came in at 2,737,750, a decline of 30,500 from the previous week's revised average.In other economic data, the producer price index (PPI) increased 0.5% in September compared to 0.7% in August. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Walgreens Boots Alliance, Inc. (WBA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks18 hr. 10 min. ago

Bet on Floating Rate ETFs As Yields Surge

Investors seeking to prepare for higher rates could flock to the bonds with yields that track broader interest rates ??? floating rate bonds. The U.S. Treasury yields has been on the rise given the prospect of the Fed’s policy tightening as well as persistent high inflation. The 10-year yields topped the 1.6% level last week, its highest since Jun 4 while yields on 20- and 30-year bonds also jumped to levels previously seen in June.The Fed has indicated that it will soon start rolling back on some of the monetary stimulus it provided during the pandemic crisis, primarily because inflation has met and exceeded the Fed’s 2% goal. The central bank is expected to begin scaling back the monthly bond purchases as soon as next month and complete the process by mid-2022. The policy statement also revealed that nine of 18 Fed policymakers Fed policymakers foresee a liftoff in interest rates next year compared to seven policymakers in June. The median dot also projects three to four total rate hikes by the end of 2023. Through the end of 2024, the median FOMC member sees six to seven total rate hikes (read: ETFs to Play Higher Benchmark Treasury Yields).Meanwhile, inflation, which measures the increase in the cost of living over time, is running at 5.3% — the highest in nearly 13 years — driven by surging consumer demand, rising energy prices, and supply chain-related shortages. Additionally, the latest preferred inflation gauge by Fed rose 3.6% in August from the year-ago month, representing the biggest jump since 1991. This has fueled concerns that price increases will last longer than expected and eventually hit consumer spending. Additionally, a spike in commodity prices, especially energy, as well as the wider reach of COVID-19 vaccinations has lifted inflationary expectations.That said, investors seeking to prepare for higher rates could flock to the bonds with yields that track broader interest rates – floating rate bonds.Why Floating Rate Bonds?Floating rate bonds are investment grade and do not pay a fixed rate to investors but have variable coupon rates that are often tied to an underlying index (such as LIBOR) plus a variable spread depending on the credit risk of the issuers.Since the coupons of these bonds are adjusted periodically, these are less sensitive to an increase in rates compared to traditional bonds. Unlike fixed coupon bonds, these do not lose value when the rates go up, making the bonds ideal for protecting investors against capital erosion in a rising rate environment.Investors currently have four floating rate bond ETFs in the market, any of which could make for a compelling choice (see: all Investment Grade Corporate Bond ETFs here).iShares Floating Rate Bond ETF FLOTThis ETF follows the Bloomberg Barclays US Floating Rate Note < 5 Years Index and holds 436 securities in its basket. The fund has an average maturity of 1.47 years and an effective duration of 0.09 years. It focuses on better quality notes with 83% of them rated A or higher. The product has amassed $6.8 billion in its asset base while trades in volume of 675,000 shares per day on average. It charges 20 bps in annual fees (read: Rising Yields Rattles Market: Inverse ETFs in Vogue).SPDR Barclays Investment Grade Floating Rate ETF FLRNThis ETF tracks the Barclays U.S. Dollar Floating Rate Note < 5 Years Index with an average maturity of 1.77 years and adjusted duration of 0.06 years. It holds 431 securities with the top-rated bonds (A or higher) accounting for 85% share. The fund has AUM of $2.4 billion and charges 15 bps in annual fees. Volume is solid at around 379,000 shares a day on average.Market Vectors Investment Grade Floating Rate ETF FLTRThis fund follows the Market Vectors Investment Grade Floating Rate Bond. Holding 222 securities, it has average years to maturity of 2.88 and modified duration of 0.03 years. The product has accumulated $729 million in its asset base and trades in an average daily volume of 217,000 shares. Expense ratio came in at 0.14%.Invesco Variable Rate Investment Grade ETF VRIGInvestors seeking an active approach could find VRIG an exciting pick. This fund seeks to invest at least 80% of its net assets in a portfolio of investment-grade, variable rate instruments that are U.S. dollar denominated and U.S. issued. It holds 188 bonds in its basket and has amassed $455.7 million in its asset base. The ETF trades in an average daily volume of 90,000 shares and charges 30 bps in annual fees. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report iShares Floating Rate Bond ETF (FLOT): ETF Research Reports VanEck Investment Grade Floating Rate ETF (FLTR): ETF Research Reports SPDR Bloomberg Barclays Investment Grade Floating Rate ETF (FLRN): ETF Research Reports Invesco Variable Rate Investment Grade ETF (VRIG): ETF Research Reports To read this article on Zacks.com click here......»»

Category: topSource: zacks18 hr. 10 min. ago

4 Mutual Funds to Combat the 13-Year High Inflation

Inflation rose to a 13-year high in September. This calls for investing in safe-haven options. Inflation has picked up dramatically so far this year. In fact, Americans are spending much more on items than they used to in 2020. Rapid vaccination, easing of restrictions and fiscal stimulus have brought the economy to the path of recovery from the pandemic, which has boosted demand. However, perked-up demand versus supply chain constraints is leading to a rise in inflation and threatening to affect consumer spending.Per the Labor Department’s reporton Oct 13, the consumer price index jumped 0.4% in September, a 5.4% rise over the last 12 months and matching the largest increase since 2008. This 13-year high inflation was pushed by an upward trend in the cost of food, a 4.6% rise in the last month and the highest since December of 2011. Cost of shelter has gone up 3.2%, while automobile and energy costs are up 8.7% and 24.8%, respectively.Items, namely apparel, furniture, hotel rooms, new and used cars, and food and energy, have witnessed a rise in cost as the highly contagious Delta variant of coronavirus continues to hamper factory operations and slow down production. Automobile prices, especially the cost of new cars, continue to rise due to the shortage of semiconductors and supply chain disruptions. Crude oil prices remain elevated due to the shortage of natural gas, which in turn pushed demand for other energy sources and ultimately pushed oil prices higher. Gas prices have jumped 42% over the past year and coal prices continue to hover near-record high.4 Mutual Fund PicksGiven the current scenario and the uptick in inflation, investors should consider safe-haven options like Real Estate Investment Trust (REIT), gold and utilities, which stand a better chance during this downturn. While these safe-haven options lag in gains compared to cyclical sectors, including energy and REIT, they offer better safety than technology and other growth stocks in present times.Hence, we have shortlisted four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). In addition, the minimum initial investment for these funds is within $5,000.We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also the likely future success of the fund.The question here is why should investors consider mutual funds? Reduced transaction costs and portfolio diversification without several commission charges associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).Fidelity Select Utilities Portfolio FSUTX aims for capital appreciation. This non-diversified fund invests majority of assets in common stocks of companies primarily engaged in the utilities industry and companies generating most of their revenues from utility operations.This Zacks Sector – Utilities has a history of positive total returns for more than 10 years. Specifically, FSUTX has returned 7.6% and 10.1% in the past three and five-year period, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.FSUTX has an annual expense ratio of 0.76%, below the category average of 0.94%.Franklin Gold and Precious Metals Fund Class A FKRCX aims for capital appreciation and current income is a secondary consideration. This non-diversified fund invests most assets in securities of gold and precious metals operation companies located globally.This Zacks sector - Precious Metal product has a history of positive total returns for more than 10 years. Specifically, FKRCX has returned 24.1% and 3% over the past three and five-year periods, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.FKRCX has an annual expense ratio of 0.93%, below the category average of 1.17%.Fidelity Real Estate Investment Portfolio FRESX fund aims for above-average income and long-term capital growth, consistent with reasonable investment risk. This non-diversified fund invests primarily in common stocks. The majority of FRESX’s assets are invested in securities of companies principally engaged in the real estate industry and other real estate-related investments.This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, FRESX has returned 9.9% and 6.6% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.FRESX has an annual expense ratio of 0.74% versus the category average of 1.08%.Calvert Global Energy Solutions Fund Class A CGAEX aims to track the performance of the Calvert Global Energy Research Index. The fund invests a majority of assets in companies whose primary business is sustainable energy solutions. The portfolio consists of companies engaged in facilitating the transition to a more sustainable economy by reducing greenhouse gas emissions and the expanded use of renewable energy sources.This Zacks Sector – Other product has a history of positive total returns for more than 10 years. CGAEX has three and five-year returns of 23.8% and 16.8%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.CGAEX has an annual expense ratio of 1.24%, below the category average of 1.26%.Want key mutual fund info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >> Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (FRESX): Fund Analysis Report Get Your Free (FKRCX): Fund Analysis Report Get Your Free (FSUTX): Fund Analysis Report Get Your Free (CGAEX): Fund Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacks18 hr. 10 min. ago

Futures Jump On Profit Optimism As Oil Tops $85; Bitcoin Nears $60,000

Futures Jump On Profit Optimism As Oil Tops $85; Bitcoin Nears $60,000 One day after the S&P posted its biggest one-day surge since March, index futures extended this week’s gains, helped by a stellar bank earnings, while the latest labor market data and inflation eased stagflation fears for the time being. . The 10-year Treasury yield rose and the dollar was steady. Goldman Sachs reports on Friday. At 715 a.m. ET, Dow e-minis were up 147 points, or 0.42%, S&P 500 e-minis were up 16.5 points, or 0.37%, and Nasdaq 100 e-minis were up 42.75 points, or 0.28%. Oil futures topped $85/bbl, jumping to their highest in three years amid an energy crunch that’s stoking inflationary pressures and prices for raw materials. A gauge of six industrial metals hit a record high on the London Metal Exchange.  Energy firms including Chevron and Exxon gained about half a percent each, tracking Brent crude prices that scaled the 3 year high. Solid earnings in the reporting season are tempering fears that rising costs and supply-chain snarls will hit corporate balance sheets and growth. At the same time, the wider debate about whether a stagflation-like backdrop looms remains unresolved. “We don’t sign up to the stagflation narrative that is doing the rounds,” said Hugh Gimber, global strategist at the perpetually optimistic J.P. Morgan Asset Management. “The economy is being supported by robust consumer balance sheets, rebounding business investment and a healthy labor market.” “After a choppy start to the week, equity markets appear to be leaning towards a narrative that companies can continue to grow profits, despite the combined pressures of higher energy prices and supply chain disruptions,” said Michael Hewson, chief market analyst at CMC Markets in London. Bitcoin and the crypto sector jumped after Bloomberg reported late on Thursday that the Securities and Exchange Commission is poised to allow the first U.S. Bitcoin futures exchange-traded fund to begin trading in a watershed moment for the cryptocurrency industry. Bitcoin traded off session highs having tested $60k during Asian hours, but will likely rise to new all time highs shortly. Also overnight, Joe Biden signed a bill providing a short-term increase in the debt limit, averting the imminent threat of a financial calamity. But it only allows the Treasury Department to meets its financial obligations until roughly Dec. 3, so the can has been kicked for less than two months - brace for more bitter partisan battles in the coming weeks. This week’s move into rate-sensitive FAAMG growth names looked set to continue, with their shares inching up. Moderna rose 3.0% after a U.S. FDA panel voted to recommend booster shots of its COVID-19 vaccine for Americans aged 65 and older and high-risk people. Western Digital slipped 2.5% as Goldman Sachs downgraded the storage hardware maker’s stock to “neutral” from “buy”. Here are some of the key premarket movers on Friday morning: Virgin Galactic (SPCE US) shares slump as much as 23% in U.S. premarket trading as the firm is pushing the start of commercial flights further into next year after rescheduling a test flight, disappointing investors with the unexpected delay to its space tourism business plans Cryptocurrency-exposed stocks rise in U.S. premarket trading after a report that the Securities and Exchange Commission is poised to allow the first U.S. Bitcoin futures exchange-traded fund to begin trading.  Bit Digital (BTBT US) +6.7%, Riot Blockchain (RIOT US) +4.6%, Marathon Digital (MARA US) +3.6% Alcoa (AA US) shares jump 5.6% in thin volumes after co. reported profits that beat the average analyst estimate and said it will be paying a dividend to its shareholders Moderna (MRNA US) extends Thursday’s gains; Piper Sandler recommendation on Moderna Inc. to overweight from neutral, a day after co.’s Covid-19 booster got FDA nod for use in older, high-risk people Duck Creek Technologies (DCT US) shares fell 12% in Thursday postmarket trading after the software company projected 2022 revenue that fell short of the average analyst estimate 23andMe Holdings (ME US) soared 14% in Thursday postmarket trading after EMJ Capital founder Eric Jackson called the genetics testing company “the next Roku” on CNBC Corsair Gaming (CRSR US) shares fell 3.7% in post-market trading after it cut its net revenue forecast for the full year Early on Friday, China's PBOC broke its silence on Evergrande, saying risks to the financial system are controllable and unlikely to spread. Authorities and local governments are resolving the situation, central bank official Zou Lan said. The bank has asked lenders to keep credit to the real estate sector stable and orderly. In Europe, gains for banks, travel companies and carmakers outweighed losses for utilities and telecommunications industries, pushing the Stoxx Europe 600 Index up 0.3%. Telefonica fell 3.3%, the most in more than four months, after Barclays cut the Spanish company to underweight. Temenos and Pearson both slumped more than 10% after their business updates disappointed investors. Here are some of the biggest European movers today: Devoteam shares rise as much as 25% after its controlling shareholder, Castillon, increased its stake in the IT consulting group to 85% and launched an offer for the remaining capital. QinetiQ rises as much as 5.4% following a plunge in the defense tech company’s stock on Thursday. Investec upgraded its recommendation to buy and Berenberg said the shares now look oversold. Hugo Boss climbs as much as 4.4% to the highest level since September 2019 after the German apparel maker reported 3Q results that exceeded expectations. Jefferies (hold) noted the FY guidance hike also was bigger than expected. Mediclinic rises as much as 7.7% to highest since May 26 after 1H results, which Morgan Stanley says showed strong underlying operating performance with “solid metrics.” Temenos sinks as much as 14% after the company delivered a “mixed bag” with its 3Q results, according to Baader (sell). Weakness in Europe raises questions about the firm’s outlook for a recovery in the region, the broker said. Pearson declines as much as 12%, with analysts flagging weaker trading in its U.S. higher education courseware business in its in-line results. Earlier in the session, Asian stocks headed for their best week in more than a month amid a list of positive factors including robust U.S. earnings, strong results at Taiwan Semiconductor Manufacturing Co. and easing home-loan restrictions in China.  The MSCI Asia Pacific Index gained as much as 1.3%, pushing its advance this week to more than 1.5%, the most since the period ended Sept. 3. Technology shares provided much of the boost after chip giant TSMC announced fourth-quarter guidance that beat analysts’ expectations and said it will build a fabrication facility for specialty chips in Japan. Shares in China rose as people familiar with the matter said the nation loosened restrictions on home loans at some of its largest banks.  Conditions are good for tech and growth shares now long-term U.S. yields have fallen following inflation data this week, Shogo Maekawa, a strategist at JPMorgan Asset Management in Tokyo. “If data going forward are able to provide an impression that demand is strong too -- on top of a sense of relief from easing supply chain worries -- it’ll be a reason for share prices to take another leap higher.”  Asia’s benchmark equity gauge is still 10% below its record-high set in February, as analysts stay on the lookout for higher bond yields and the impact of supply-chain issues on profit margins.  Japanese stocks rose, with the Topix halting a three-week losing streak, after Wall Street rallied on robust corporate earnings. The Topix rose 1.9% to close at 2,023.93, while the Nikkei 225 advanced 1.8% to 29,068.63. Keyence Corp. contributed the most to the Topix’s gain, increasing 3.7%. Out of 2,180 shares in the index, 1,986 rose and 155 fell, while 39 were unchanged. For the week, the Topix climbed 3.2% and the Nikkei added 3.6%. Semiconductor equipment and material makers rose after TSMC said it will build a fabrication facility for specialty chips in Japan and plans to begin production there in late 2024.  U.S. index futures held gains during Asia trading hours. The contracts climbed overnight after a report showed applications for state unemployment benefits fell last week to the lowest since March 2020.  “U.S. initial jobless claims fell sharply, and have returned to levels seen before the spread of the coronavirus,” said Nobuhiko Kuramochi, a market strategist at Mizuho Securities in Tokyo. “The fact that more people are returning to their jobs will help ease supply chain problems caused by the lack of workers.” Australian stocks also advanced, posting a second week of gains. The S&P/ASX 200 index rose 0.7% to close at 7,362.00, with most sectors ending higher.  The benchmark added 0.6% since Monday, climbing for a second week. Miners capped their best week since July 16 with a 3% advance. Hub24 jumped on Friday after Evans & Partners upgraded the stock to positive from neutral. Pendal Group tumbled after it reported net outflows for the fourth quarter of A$2.3 billion. In New Zealand, the S&P/NZX 50 index fell 0.3% to 13,012.19 In rates, the U.S. 10-year Treasury yield rose over 3bps to 1.54%. Treasuries traded heavy across long-end of the curve into early U.S. session amid earning-driven gains for U.S. stock futures. Yields are higher by more than 3bp across long-end of the curve, 10- year by 2.8bp at about 1.54%, paring its first weekly decline since August; weekly move has been led by gilts and euro-zone bonds, also under pressure Friday, with U.K. 10-year yields higher by 3.3bp. Today's bear-steepening move pares the weekly bull-flattening trend. U.S. session features a packed economic data slate and speeches by Fed’s Bullard and Williams.   In FX, the Bloomberg Dollar Spot Index was little changed even as the greenback weakened against most of its Group-of-10 peers; the euro hovered around $1.16 while European and U.S. yields rose, led by the long end. Norway’s krone led G-10 gains as oil jumped to $85 a barrel for the first time since late 2018 amid the global energy crunch; the currency rallied by as much as 0.6% to 8.4015 per dollar, the strongest level since June. New Zealand’s dollar advanced to a three-week high as bets on RBNZ’s tightening momentum build ahead of Monday’s inflation data; the currency is outperforming all G-10 peers this week. The yen dropped to a three-year low as rising equities in Asia damped demand for low-yielding haven assets. China’s offshore yuan advanced to its highest in four months while short-term borrowing costs eased after the central bank added enough medium-term funds into the financial system to maintain liquidity at existing levels. In commodities, crude futures trade off best levels. WTI slips back below $82, Brent fades after testing $85. Spot gold slips back through Thursday’s lows near $1,786/oz. Base metals extend the week’s rally with LME nickel and zinc gaining over 2%. Today's retail sales report, due at 08:30 a.m. ET, is expected to show retail sales fell in September amid continued shortages of motor vehicles and other goods. The data will come against the backdrop of climbing oil prices, labor shortages and supply chain disruptions, factors that have rattled investors and have led to recent choppiness in the market. Looking at the day ahead now, and US data releases include September retail sales, the University of Michigan’s preliminary consumer sentiment index for October, and the Empire State manufacturing survey for October. Central bank speakers include the Fed’s Bullard and Williams, and earnings releases include Charles Schwab and Goldman Sachs. Market Snapshot S&P 500 futures up 0.3% to 4,443.75 STOXX Europe 600 up 0.4% to 467.66 German 10Y yield up 2.4 bps to -0.166% Euro little changed at $1.1608 MXAP up 1.3% to 198.33 MXAPJ up 1.2% to 650.02 Nikkei up 1.8% to 29,068.63 Topix up 1.9% to 2,023.93 Hang Seng Index up 1.5% to 25,330.96 Shanghai Composite up 0.4% to 3,572.37 Sensex up 0.9% to 61,305.95 Australia S&P/ASX 200 up 0.7% to 7,361.98 Kospi up 0.9% to 3,015.06 Brent Futures up 1.0% to $84.83/bbl Gold spot down 0.5% to $1,787.54 U.S. Dollar Index little changed at 93.92 Top Overnight News from Bloomberg China’s central bank broke its silence on the crisis at China Evergrande Group, saying risks to the financial system stemming from the developer’s struggles are “controllable” and unlikely to spread The ECB has a good track record when it comes to flexibly deploying its monetary instruments and will continue that approach even after the pandemic crisis, according to policy maker Pierre Wunsch Italian Ministry of Economy and Finance says fourth issuance of BTP Futura to start on Nov. 8 until Nov. 12, according to a statement The world’s largest digital currency rose about 3% to more than $59,000 on Friday -- taking this month’s rally to over 35% -- after Bloomberg News reported the U.S. Securities and Exchange Commission looks poised to allow the country’s first futures-based cryptocurrency ETF Copper inventories available on the London Metal Exchange hit the lowest level since 1974, in a dramatic escalation of a squeeze on global supplies that’s sent spreads spiking and helped drive prices back above $10,000 a ton A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded higher amid tailwinds from the upbeat mood across global peers including the best day for the S&P 500 since March after strong US bank earnings, encouraging data and a decline in yields spurred risk appetite. The ASX 200 (+0.7%) was positive as the tech and mining sectors continued to spearhead the advances in the index in which the former took impetus from Wall St where the softer yield environment was conducive to the outperformance in tech, although mining giant Rio Tinto was among the laggards following weaker quarterly production results. The Nikkei 225 (+1.8%) was buoyed as exporters benefitted from the JPY-risk dynamic but with Fast Retailing failing to join in on the spoils despite an 88% jump in full-year net as its profit guidance underwhelmed with just 3% growth seen for the year ahead, while Taiwan's TAIEX (+2.2%) surged with the spotlight on TSMC earnings which reached a record high amid the chip crunch and with the Co. to also build a factory in Japan that could receive JPY 500bln of support from the Japanese government. The Hang Seng (+1.5%) and Shanghai Comp. (+0.4%) were initially indecisive amid the overhang from lingering developer default concerns although found some mild support from reports that China is to relax banks' mortgage limits through the rest of 2021. Focus was also on the PBoC which announced a CNY 500bln MLF operation, although this just matched the amount maturing this month and there are mixed views regarding prospects of a looming RRR cut with ANZ Bank's senior China strategist recently suggesting the potential for a 50bps cut in RRR or targeted MLF as early as today, although a recent poll showed analysts had pushed back their calls for a RRR cut from Q4 2021 to Q1 2022. Finally, 10yr JGBs marginally pulled back from this week’s advances after hitting resistance at the 151.50 level, with demand hampered amid the firm gains in Japanese stocks and the lack of BoJ purchases in the market today. Top Asian News Hong Kong Probes Going Concern Reporting of Evergrande U.S. Futures Hold Gains as Oil Hits 3-Year High: Markets Wrap Toyota Cuts November Outlook by 15% on Parts Shortage, Covid Yango Group Wires Repayment Fund for Onshore Bond Due Oct. 22 Bourses in Europe have held onto the modest gains seen at the cash open (Euro Stoxx 50 +0.4%; Stoxx 600 +0.3%), but the region is off its best levels with the upside momentum somewhat faded heading into the US open, and amidst a lack of fresh newsflow. US equity futures have remained in positive territory, although the latest leg lower in bonds has further capped the tech-laden NQ (+0.2%), which underperforms vs the ES (+0.3%), YM (+0.3%) and RTY (+0.7%), with traders on the lookout for another set of earnings, headlined by Goldman Sachs at 12:25BST/07:25EDT. Back to Europe, bourses see broad-based gains, whilst sectors are mostly in the green with clear underperformance experienced in defensives, with Telecoms, Utilities, Healthcare and Staples at the foot of the bunch. On the flipside, Banks reap rewards from the uptick in yields, closely followed by Travel & Leisure, Autos & Parts and Retail. Renault (+4%) drives the gains in Autos after unveiling a prototype version of the Renault Master van that will go on sale next year. Travel & Leisure is bolstered by the ongoing reopening trade with potential tailwinds heading into the Christmas period. Retail meanwhile is boosted by Hugo Boss (+1.8%) topping forecasts and upgrading its guidance. Top European News Autumn Heat May Curb European Gas Demand, Prices Next Week Bollore Looking for Buyers for Africa Logistics Ops: Le Monde U.K. Offers Foreign Butchers Visas After 6,000 Pigs Culled Europe’s Car-Sales Crash Points to Worse Year Than Poor 2020 In FX, the Greenback was already losing momentum after a relatively tame bounce on the back of Thursday’s upbeat US initial claims data, and the index failed to sustain its recovery to retest intraday highs or remain above 94.000 on a closing basis. However, the Buck did reclaim some significant and psychological levels against G10, EM currencies and Gold that was relishing the benign yield environment and the last DXY price was marginally better than the 21 DMA from an encouraging technical standpoint. Nevertheless, the Dollar remains weaker vs most majors and in need of further impetus that may come via retail sales, NY Fed manufacturing and/or preliminary Michigan Sentiment before the spotlight switches to today’s Fed speakers featuring arch hawk Bullard and the more neutral Williams. GBP/NZD/NOK - Sterling has refuelled and recharged regardless of the ongoing UK-EU rift over NI Protocol, though perhaps in part due to the fact that concessions from Brussels are believed to have been greeted with welcome surprise by some UK Ministers. Cable has reclaimed 1.3700+ status, breached the 50 DMA (at 1.3716 today) and yesterday’s best to set a marginal new w-t-d peak around 1.3739, while Eur/Gbp is edging closer to 0.8450 having clearly overcome resistance at 1.1800 in the reciprocal cross. Similarly, the Kiwi continues to derive impetus from the softer Greenback and Aud/Nzd flows as Nzd/Usd extends beyond 0.7050 and the Antipodean cross inches nearer 1.0500 from 1.0600+ highs. Elsewhere, the Norwegian Crown is aiming to add 9.7500 to its list of achievements relative to the Euro with a boost from Brent topping Usd 85/brl at one stage and a wider trade surplus. CAD - The Loonie is also profiting from oil as WTI crude rebounds through Usd 82 and pulling further away from 1.5 bn option expiry interest between 1.2415-00 in the process, with Usd/Cad towards the base of 1.2337-82 parameters. EUR/AUD/CHF/SEK - All narrowly mixed and rangy vs the Greenback, or Euro in the case of the latter, as Eur/Usd continues to straddle 1.1600, Aud/Usd churn on the 0.7400 handle, the Franc meander from 0.9219 to 0.9246 and Eur/Sek skirt 10.0000 having dipped below the round number briefly on Thursday. In commodities, WTI and Brent front month futures remain on a firmer footing, aided up the overall constructive risk appetite coupled with some bullish technical developments, as WTI Nov surpassed USD 82/bbl (vs 81.39/bbl low) and Brent Dec briefly topped USD 85/bbl (vs 84.16/bbl low). There has been little in terms of fresh fundamental catalysts to drive the price action, although Russia's Gazprom Neft CEO hit the wires earlier and suggested that reserve production capacity could meet the increase in oil demand, whilst a seasonal decline in oil consumption is possible and the oil market will stabilise in the nearest future. On the Iranian JCPOA front, Iran said it is finalising steps to completing its negotiating team but they are absolutely decided to go back to Vienna discussions and conclude the negotiations, WSJ's Norman. The crude complex seems to have (for now) overlooked reports that the White House is engaged in diplomacy" with OPEC+ members regarding output. UK nat gas prices were higher as European players entered the fray, but prices have since waned off best levels after Russian Deputy PM Novak suggested that gas production in Russia is running at maximum capacity. Elsewhere, spot gold has been trundling amid yield-play despite lower despite the Buck being on the softer side of today’s range. Spot gold failed to hold onto USD 1,800/oz status yesterday and has subsequently retreated below its 200 DMA (1,794/oz) and makes its way towards the 50 DMA (1,776/oz). LME copper prices are on a firmer footing with prices back above USD 10,000/t – supported by technicals and the overall risk tone, although participants are cognizant of potential Chinese state reserves releases. Conversely, Dalian iron ore futures fell for a third straight session, with Rio Tinto also cutting its 2021 iron ore shipment forecasts due to dampened Chinese demand. US Event Calendar 8:30am: Sept. Retail Sales Advance MoM, est. -0.2%, prior 0.7% 8:30am: Sept. Retail Sales Ex Auto MoM, est. 0.5%, prior 1.8% 8:30am: Sept. Retail Sales Control Group, est. 0.5%, prior 2.5% 8:30am: Sept. Retail Sales Ex Auto and Gas, est. 0.3%, prior 2.0% 8:30am: Oct. Empire Manufacturing, est. 25.0, prior 34.3 8:30am: Sept. Import Price Index MoM, est. 0.6%, prior -0.3%; YoY, est. 9.4%, prior 9.0% 8:30am: Sept. Export Price Index MoM, est. 0.7%, prior 0.4%; YoY, prior 16.8% 10am: Aug. Business Inventories, est. 0.6%, prior 0.5% 10am: Oct. U. of Mich. 1 Yr Inflation, est. 4.7%, prior 4.6%; 5-10 Yr Inflation, prior 3.0% 10am: Oct. U. of Mich. Sentiment, est. 73.1, prior 72.8 10am: Oct. U. of Mich. Current Conditions, est. 81.2, prior 80.1 10am: Oct. U. of Mich. Expectations, est. 69.1, prior 68.1 DB's Jim Ried concludes the overnight wrap A few people asked me what I thought of James Bond. I can’t say without spoilers so if anyone wants my two sentence review I will cut and paste it to all who care and reply! At my age I was just impressed I sat for over three hours (including trailers) without needing a comfort break. By the time you email I will have also listened to the new Adele single which dropped at midnight so happy to include that review as well for free. While we’re on the subject of music, risk assets feel a bit like the most famous Chumbawamba song at the moment. They get knocked down and they get up again. Come to think about it that’s like James Bond too. Yesterday was a strong day with the S&P 500 (+1.71%) moving back to within 2.2% of its all-time closing high from last month. If they can survive all that has been thrown at them of late then one wonders where they’d have been without any of it. The strong session came about thanks to decent corporate earnings releases, a mini-collapse in real yields, positive data on US jobless claims, as well as a further fall in global Covid-19 cases that leaves them on track for an 8th consecutive weekly decline. However, inflation remained very much on investors’ radars, with a range of key commodities taking another leg higher, even as US data on producer prices was weaker than expected. Starting with the good news, the equity strength was across the board with the S&P 500 experiencing its best daily performance since March, whilst Europe’s STOXX 600 (+1.20%) also put in solid gains. It was an incredibly broad-based move higher, with every sector group in both indices rising on the day, with a remarkable 479 gainers in the S&P 500, which is the second-highest number we’ve seen over the last 18 months. Every one of the 24 S&P 500 industry groups rose, led by cyclicals such as semiconductors (+3.12%), transportation (+2.51%) and materials (+2.43%). A positive start to the Q3 earnings season buoyed sentiment, as a number of US banks (+1.45%) reported yesterday, all of whom beat analyst estimates. In fact, of the nine S&P 500 firms to report yesterday, eight outperformed analyst expectations. Weighing in on recent macro themes, Bank of America Chief, Brian Moynihan, noted that the current bout of inflation is “clearly not temporary”, but also that he expects consumer demand to remain robust and that supply chains will have to adjust. I’m sure we’ll hear more from executives as earnings season continues today. Alongside those earnings releases, yesterday saw much better than expected data on the US labour market, which makes a change from last week’s underwhelming jobs report that showed the slowest growth in nonfarm payrolls so far this year. In terms of the details, the weekly initial jobless claims for the week through October 9, which is one of the most timely indicators we get, fell to a post-pandemic low of 293k (vs. 320k expected). That also saw the 4-week moving average hit a post-pandemic low of 334.25k, just as the continuing claims number for the week through October 2 hit a post-pandemic low of 2.593m (vs. 2.670m expected). We should get some more data on the state of the US recovery today, including September retail sales, alongside the University of Michigan’s consumer sentiment index for October. That optimism has fed through into Asian markets overnight, with the Nikkei (+1.43%), the Hang Seng (+0.86%), the Shanghai Comp (+0.29%) and the KOSPI (+0.93%) all moving higher. That came as Bloomberg reported that China would loosen restrictions on home loans amidst the concerns about Evergrande. And we also got formal confirmation that President Biden had signed the debt-limit increase that the House had passed on Tuesday, which extends the ceiling until around December 3. Equity futures are pointing to further advances in the US and Europe later on, with those on the S&P 500 (+0.30%) and the STOXX 50 (+0.35%) both moving higher. Even with the brighter news, inflation concerns are still very much with us however, and yesterday in fact saw Bloomberg’s Commodity Spot Index (+1.16%) advance to yet another record high, exceeding the previous peak from early last week. That was partly down to the continued rise in oil prices, with WTI (+1.08%) closing at $81.31/bbl, its highest level since 2014, just as Brent Crude (+0.99%) hit a post-2018 high of $84.00/bbl. Both have posted further gains this morning of +0.58% and +0.61% respectively. Those moves went alongside further rises in natural gas prices, which rose for a 3rd consecutive session, albeit they’re still beneath their peak from earlier in the month, as futures in Europe (+9.14%), the US (+1.74%) and the UK (+9.26%) all moved higher. And that rise in Chinese coal futures we’ve been mentioning also continued, with their rise today currently standing at +13.86%, which brings their gains over the week as a whole to +39.02% so far. As well as energy, industrial metals were another segment where the recent rally showed no sign of abating yesterday. On the London metal exchange, a number of multi-year milestones were achieved, with aluminum prices (+1.60%) up to their highest levels since 2008, just as zinc prices (+3.73%) closed at their highest level since 2018. Separately, copper prices (+2.56%) hit a 4-month high, and other winners yesterday included iron ore futures in Singapore (+1.16%), as well as nickel (+1.99%) and lead (+2.43%) prices in London. With all this momentum behind commodities, inflation expectations posted further advances yesterday. Indeed, the 10yr US Breakeven closed +1.0bps higher at 2.536%, which is just 3bps shy of its closing peak back in May that marked its highest level since 2013. And those moves came in spite of US producer price data that came in weaker than expected, with the monthly increase in September at +0.5% (vs. +0.6% expected). That was the smallest rise so far this year, though that still sent the year-on-year number up to +8.6% (vs. +8.7% expected). That rise in inflation expectations was echoed in Europe too, with the 10yr UK breakeven (+5.6bps) closing at its highest level since 2008, whilst its German counterpart also posted a modest +0.7bps rise. In spite of the rise in inflation expectations, sovereign bonds posted gains across the board as the moves were outweighed by the impact of lower real rates. By the end of yesterday’s session, yields on 10yr Treasuries were down -2.6bps to 1.527%, which came as the 10yr real yield moved back beneath -1% for the first time in almost a month. Likewise in Europe, yields pushed lower throughout the session, with those on 10yr bunds (-6.3bps), OATs (-6.2bps) and BTPs (-7.1bps) all moving aggressively lower. To the day ahead now, and US data releases include September retail sales, the University of Michigan’s preliminary consumer sentiment index for October, and the Empire State manufacturing survey for October. Central bank speakers include the Fed’s Bullard and Williams, and earnings releases include Charles Schwab and Goldman Sachs. Tyler Durden Fri, 10/15/2021 - 07:50.....»»

Category: personnelSource: nyt22 hr. 58 min. ago

US stock futures edge up after strong earnings lift S&P to its best day since March, as bitcoin tops $60,000

Some optimism returned to stock markets at the end of the week, as earnings season picked up pace. US politicians often place major bets on Wall Street. Angela Weiss/Getty Images US futures rose Friday after stocks notched their biggest gain since March the previous day. Strong earnings and falling US jobless claims cheered investors, while bond yields stayed below 1.6%. Elsewhere, bitcoin topped $60,000, and oil prices continued their relentless march higher. US futures rose Friday after stocks notched their biggest gain since March on the back of strong earnings the previous day.Meanwhile, bitcoin topped $60,000, leading to excitement that the cryptocurrency could hit a record high before the end of the year.S&P 500 futures were up 0.27%, Nasdaq 100 futures were 0.23% higher, and Dow Jones futures advanced 0.33% on Friday, indicating an upbeat start to regular trading later.The previous day, the S&P 500 logged its best performance since March, rising 1.71% as investors cheered strong earnings reports from banks and healthcare companies.European stocks climbed Friday, with the continent-wide Stoxx 600 index up 0.31%. In Asia overnight, China's CSI 300 rose 0.38%, and Japan's Nikkei 225 jumped 1.81%.A number of factors are supporting stocks, according to Deutsche Bank strategist Jim Reid. They include "decent corporate earnings releases, a mini-collapse in real yields, positive data on US jobless claims, as well as a further fall in global COVID-19 cases that leaves them on track for an 8th consecutive weekly decline," he said in a note.Bank of America's shares jumped more than 4% Thursday, after the US lender posted a sharp rise in third-quarter profit. Morgan Stanley, Citigroup and UnitedHealth Group also gained after their quarterly financial updates.Goldman Sachs is set to report earnings on Friday, while big names such as Tesla, Johnson & Johnson and Netflix will release their figures next week.A fall in weekly US jobless claims also helped stock-market sentiment on Thursday and Friday. They dropped to 293,000 last week, data showed Thursday, the lowest reading since March 2020 and below economists' expectations.US bond yields edged higher on Friday, with the yield on the key 10-year US Treasury note up 2.7 basis points to 1.546%. Yet the yield, which moves inversely to the price, was down on the week, having started above 1.6% on Monday.Elsewhere in markets, bitcoin briefly topped $60,000 for the first time since April on Friday as the rally in the world's biggest cryptocurrency continued. It then dipped to trade at around $59,440.Analysts said bitcoin jumped due to excitement around a Bloomberg report that a bitcoin futures exchange-traded fund is likely to be approved in the US soon. Such a product would open up the crypto market to a range of institutional investors.Naeem Aslam, chief market analyst at Avatrade, said it would be a "watershed moment for the crypto community as they have been waiting for this since 2018. The reflection of this optimism can also be seen by looking at the bitcoin price which is only 7% away from its all-time high."In the energy markets, oil continued its relentless march higher. Brent crude oil rose 0.86% to $84.72, a three-year high. WTI crude was trading at around a seven-year high, having risen 0.77% to $81.94.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 15th, 2021

Dow spikes 534 points as earnings season opens with a series of strong performances

US stocks are now higher for the week as initial third-quarter earnings reports easily beat Wall Street estimates. Lucas Jackson/Reuters US stocks soared nearly 2% on Thursday as third-quarter earnings season started off strong.Earnings reports from banks including Bank of America, Morgan Stanley, and Citigroup were ahead of expectations.Weekly jobless claims fell to a pandemic-era low, also helping boost investor sentiment.Sign up here for our daily newsletter, 10 Things Before the Opening Bell.US stocks jumped nearly 2% on Thursday as investors reacted positively to strong third-quarter earnings beats from banks including Bank of America, Morgan Stanley, and Citigroup.The bank stocks soared as much a 4% as a continued drop in provisions for credit losses and strength in the investment banking and wealth management sectors drove growth. Also boosting investor sentiments on Thursday was a strong weekly jobless claim reading of 293,000, representing a pandemic-era low and beating economist estimates. Continuing claims fell to 2.59 million, besting forecasts as well.The Dow Jones Industrial Average jumped over 500 points while the tech-heavy Nasdaq 100 led markets higher.Here's where US indexes stood at the 4:00 p.m. ET close on Thursday:S&P 500: 4,438.25, up 1.71% Dow Jones Industrial Average: 34,912.56, up 1.56% (534.75 points)Nasdaq Composite: 14,823.43, up 1.73%Cathie Wood's Ark Invest put its name behind a bitcoin futures ETF that was filed with the SEC on Wednesday, signalling that the futures-based crypto ETF may be eventually approved by the regulatory agency.Coding platform GitHub soared more than 20% in its IPO debut on Thursday, sporting a valuation of more than $11 billion. The company, which has seen a surge in growth amid the work-from-home trend, priced its IPO at $77 per share.Chinese brokerage firms fell sharply in Thursday trades as it became apparent that a new data privacy law in China will likely hamper the companies' ability to service mainland China investors unless they quickly adapt to the new rules.Citigroup saw its profits surge 48% in the third-quarter following the release of loss reserves and a strong period for equity and fixed income trading. Bank of America beat its earning estimates for the third-quarter, as record-high advisory fees and a $1.1 billion reserve release helped boost profits.Morgan Stanley posted a strong third-quarter earnings report as growth in its investment banking and wealth management divisions bested estimates.West Texas Intermediate crude oil rose as much as 1.16%, to $81.37 per barrel. Brent crude, oil's international benchmark, jumped 1.14%, to $84.13 per barrel.Gold jumped as much as 0.23%, to $1,798.80 per ounce.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 14th, 2021

Futures Surge As Banks Report Stellar Earnings; PPI On Deck

Futures Surge As Banks Report Stellar Earnings; PPI On Deck US equity futures, already sharply higher overnight, jumped this morning as a risk-on mood inspired by stellar bank earnings, overshadowed concern that supply snarls. a China property crunch, a tapering Fed and stagflation will weigh on the global recovery. Nasdaq futures jumped 1%, just ahead of the S&P 500 which was up 0.9%. 10-year Treasury yields ticked lower to about 1.5%, and with the dollar lower as well, oil jumped. Bitcoin and the broader crypto space continued to rise. Shares in Morgan Stanley, Citi and Bank of America jumped as their deal-making units rode a record wave of M&A. On the other end, Boeing shares fell more than 1% after a Dow Jones report said the plane maker is dealing with a new defect on its 787 Dreamliner. Here are some of the biggest other U.S. movers today: Occidental (OXY US) rises 1.6% in U.S. premarket trading after it agreed to sell its interests in two Ghana offshore fields for $750m to Kosmos Energy and Ghana National Petroleum Plug Power (PLUG US) rises 3.3% premarket, extending gains from Wednesday, when it announced partnership with Airbus SE and Phillips 66 to find ways to harness hydrogen to power airplanes, vehicles and industry Esports Entertainment (GMBL US) shares rise 16% in U.S. premarket trading after the online gambling company reported its FY21 results and reaffirmed its FY22 guidance Perrigo  (PRGO US) gains 2.8% in premarket trading after Raymond James upgrades to outperform following acquisition of HRA Pharma and recent settlement of Irish tax dispute AT&T (T US) ticks higher in premarket trading after KeyBanc writes upgrades to sector weight from underweight, saying it seems harder to justify further downside from here Avis Budget (CAR US) may be active after getting its only negative rating among analysts as Morgan Stanley cuts to underweight with risk/reward seen pointing toward downside OrthoPediatrics (KIDS US) dipped 2% Wednesday postmarket after it said 3Q revenue was hurt by the surge in cases of Covid-19 delta variant and RSV within children’s hospitals combined with staff shortage Investors continue to evaluate the resilience of economic reopening to supply chain disruptions, a jump in energy prices and the prospect of reduced central bank support. In the earnings season so far, executives at S&P 500 companies mentioned the phrase “supply chain” about 3,000 times on investor calls as of Tuesday -- far higher than last year’s then-record figure. “Our constructive outlook for growth means that our asset allocation remains broadly pro-risk and we continue to be modestly overweight global equities,” according to Michael Grady, head of investment strategy and chief economist at Aviva Investors. “However, we have scaled back that position marginally because of growing pains which could impact sales and margins.” Europe's Stoxx 600 index reached its highest level in almost three weeks, boosted by gains in tech shares and miners. The Euro Stoxx 50 rose over 1% to best levels for the week. FTSE 100 rises 0.75%, underperforming at the margin. Miners and tech names are the strongest sectors with only healthcare stocks in small negative territory. Here are some of the biggest European movers today: THG shares advance as much as 10%, snapping a four-day losing streak, after a non-executive director bought stock while analysts at Goldman Sachs and Liberum defended their buy recommendations. Steico gains as much as 9.9%, the most since Jan., after the insulation manufacturer reported record quarterly revenue, which Warburg says “leaves no doubt” about underlying market momentum. Banco BPM climbs as much as 3.6% and is the day’s best performer on the FTSE MIB benchmark index; bank initiated at buy at Jefferies as broker says opportunity to internalize insurance business offers 9%-16% possible upside to 2023 consensus EPS and is not priced in by the market. Hays rises as much as 4.3% after the recruiter posted a jump in comparable net fees for the first quarter. Publicis jumps as much as 3.7%, the stock’s best day since July, with JPMorgan saying the advertising company’s results show a “strong” third quarter, though there are risks ahead. Kesko shares rise as much as 6.1%. The timing of this year’s third guidance upgrade was a surprise, Inderes says. Ubisoft shares fall as much as 5.5% after JPMorgan Cazenove (overweight) opened a negative catalyst watch, citing short-term downside risk to earnings ahead of results. Earlier in the session, Asian stocks advanced, boosted by a rebound in technology shares as traders focused on the ongoing earnings season and assessed economic-reopening prospects in the region. The MSCI Asia Pacific Index gained as much as 0.7%, as a sub-gauge of tech stocks rose, halting a three-day slide. Tokyo Electron contributed the most to the measure’s climb, while Taiwan Semiconductor Manufacturing Co. closed up 0.4% ahead of its earnings release. India’s tech stocks rose following better-than-expected earnings for three leading firms in the sector. Philippine stocks were among Asia’s best performers as Manila began easing virus restrictions, which will allow more businesses in the capital to reopen this weekend. Indonesia’s stock benchmark rallied for a third-straight day, as the government prepared to reopen Bali to tourists. READ: Commodities Boom, Tourism Hopes Fuel Southeast Asia Stock Rally Ilya Spivak, head of Greater Asia at DailyFX, said FOMC minutes released overnight provided Asian markets with little direction, which may offer some opportunity for recouping recent losses. The report showed officials broadly agreed last month they should start reducing pandemic-era stimulus in mid-November or mid-December. U.S. 10-year Treasury yields stayed below 1.6%, providing support for tech stocks.  “Markets seemed to conclude the near-term narrative is on pause until further evidence,” Spivak said. Shares in mainland China fell as the country reported factory-gate prices grew at the fastest pace in almost 26 years in September. Singapore’s stock benchmark pared initial losses as the country’s central bank unexpectedly tightened policy. Hong Kong’s equity market was closed for a holiday In rates, Treasuries were steady to a tad higher, underperforming Bunds which advanced, led by the long end.  Fixed income is mixed: gilts bull steepen with short dates richening ~2.5bps, offering only a muted reaction to dovish commentary from BOE’s Tenreyro. Bunds rise with 10y futures breaching 169. USTs are relatively quiet with 5s30s unable to crack 100bps to the upside. Peripheral spreads widen slightly. In FX, the Turkish lira was again the overnight standout as it weakened to a record low after President Recep Tayyip Erdogan fired three central bankers. The Bloomberg Dollar Spot Index fell and the greenback slipped against all of its Group-of-10 peers apart from the yen, with risk-sensitive and resource-based currencies leading gains; the euro rose to trade above $1.16 for the first time in a week.  The pound rose to more than a two-week high amid dollar weakness as traders wait for a raft of Bank of England policy makers to speak. Sweden’s krona temporarily came off an almost eight-month high against the euro after inflation fell short of estimates. The euro dropped to the lowest since November against the Swiss franc as banks targeted large option barriers and leveraged sell-stops under 1.0700, traders said; Currency traders are responding to stagflation risks by turning to the Swiss franc. The Aussie advanced to a five-week high versus the greenback even as a monthly jobs report showed employment fell in September; the jobless rate rose less than economists forecast. The kiwi was a among the top performers; RBNZ Deputy Governor Geoff Bascand said inflation pressures were becoming more persistent China’s yuan declined from a four-month high after the central bank signaled discomfort with recent gains by setting a weaker-than-expected reference rate. In commodities, crude futures extend Asia’s gains with WTI up ~$1 before stalling near $81.50. Brent regains a $84-handle. Spot gold drifts through Wednesday’s highs, adding $4 to print just shy of the $1,800/oz mark. Base metals are well bid with LME copper and aluminum gaining as much as 3%.  Looking at the day ahead, we’ve got central bank speakers including the Fed’s Bullard, Bostic, Barkin, Daly and Harker, the ECB’s Elderson and Knot, along with the BoE’s Deputy Governor Cunliffe, Tenreyro and Mann. Data releases from the US include the September PPI reading along with the weekly initial jobless claims. Lastly, earnings releases will include UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Citigroup, US Bancorp and Walgreens Boots Alliance. Market Snapshot S&P 500 futures up 0.6% to 4,382.50 STOXX Europe 600 up 0.9% to 464.38 MXAP up 0.7% to 196.12 MXAPJ up 0.6% to 642.66 Nikkei up 1.5% to 28,550.93 Topix up 0.7% to 1,986.97 Hang Seng Index down 1.4% to 24,962.59 Shanghai Composite little changed at 3,558.28 Sensex up 0.7% to 61,190.63 Australia S&P/ASX 200 up 0.5% to 7,311.73 Kospi up 1.5% to 2,988.64 Brent Futures up 1.0% to $83.98/bbl Gold spot up 0.2% to $1,796.13 U.S. Dollar Index down 0.25% to 93.84 German 10Y yield fell 1.5 bps to -0.143% Euro little changed at $1.1615 Brent Futures up 1.0% to $84.13/bbl Top Overnight News from Bloomberg A flattening Treasury yield curve signals increasing concern Federal Reserve efforts to keep inflation in check will derail the recovery in the world’s largest economy China’s factory-gate prices grew at the fastest pace in almost 26 years in September, potentially adding to global inflation pressure if local businesses start passing on higher costs to consumers. Turkish President Recep Tayyip Erdogan fired monetary policy makers wary of cutting interest rates further, driving the lira to record lows against the dollar with his midnight decree Singapore’s central bank unexpectedly tightened its monetary policy settings, strengthening the local dollar, as the city-state joins policymakers globally concerned about risks of persistent inflation Shortages of natural gas in Europe and Asia are boosting demand for oil, deepening what was already a sizable supply deficit in crude markets, the International Energy Agency said A tropical storm that’s lashing southern China mixed with Covid-related supply chain snarls is causing a ship backlog from Shenzhen to Singapore, intensifying fears retail shelves may look rather empty come Christmas A more detailed look at global markets courtesy of Newsquawk A constructive mood was seen across Asia-Pac stocks with the region building on the mild positive bias stateside where the Nasdaq outperformed as tech and growth stocks benefitted from the curve flattening, with global risk appetite unfazed by the firmer US CPI data and FOMC Minutes that suggested the start of tapering in either mid-November of mid-December. The ASX 200 (+0.5%) traded higher as tech stocks found inspiration from the outperformance of US counterparts and with the mining sector buoyed by gains in underlying commodity prices. The Nikkei 225 (+1.5%) was the biggest gainer amid currency-related tailwinds and with the latest securities flow data showing a substantial shift by foreign investors to net purchases of Japanese stocks during the prior week. The KOSPI (+1.5%) conformed to the brightening picture amid signs of a slowdown in weekly infections, while the Singapore’s Straits Times Index (+0.3%) lagged for most of the session following weaker than expected Q3 GDP data, and after the MAS surprisingly tightened its FX-based policy by slightly raising the slope of the SGD nominal effective exchange rate (NEER). The Shanghai Comp. (U/C) was initially kept afloat but with gains capped after slightly softer than expected loans and financing data from China and with participants digesting mixed inflation numbers in which CPI printed below estimates but PPI topped forecasts for a record increase in factory gate prices, while there was also an absence of Stock Connect flows with participants in Hong Kong away for holiday. Finally, 10yr JGBs were higher after the recent curve flattening stateside and rebound in T-notes with the US longer-end also helped by a solid 30yr auction, although gains for JGBs were capped amid the outperformance in Tokyo stocks and mostly weaker metrics at the 5yr JGB auction. Top Asian News Chinese Developer Shares Fall on Debt Crisis: Evergrande Update Japan’s Yamagiwa Says Abenomics Fell Short at Spreading Wealth China Seen Rolling Over Policy Loans to Keep Liquidity Abundant Malaysia’s 2020 Fertility Rate Falls to Lowest in Four Decades Bourses in Europe have modestly extended on the upside seen at the European cash open (Euro Stoxx 50 +1.1%; Stoxx 600 +0.9%) in a continuation of the firm sentiment experienced overnight. US equity futures have also conformed to the broader upbeat tone, with gains seen across the ES (+0.7%), NQ (+0.8%), RTY (+0.8%) and YM (+0.7%). The upside comes despite a lack of overly pertinent newsflow, with participants looking ahead to a plethora of central bank speakers. The major indices in Europe also see a broad-based performance, but the periphery narrowly outperforms, whilst the SMI (Unch) lags amid the sectorial underperformance seen in Healthcare. Overall, the sectors portray somewhat of a cyclical tilt. The Basic Resources sector is the clear winner and is closely followed by Tech and Financial Services. Individual moves are scarce as price action is largely dictated by the macro picture, but the tech sector is led higher by gains in chip names after the world's largest contract chipmaker TSMC (+3.1% pre-market) reported strong earnings and upgraded its revenue guidance. Top European News German 2021 Economic Growth Forecast Slashed on Supply Crunch U.K. Gas Shipper Stops Supplies in Another Blow to Power Firms Christmas Toy Shortages Loom as Cargo Clogs a Major U.K. Port Putin Is Back to Building Financial Fortress as Reserves Grow In FX, the Dollar and index by default have retreated further from Tuesday’s 2021 peak for the latter as US Treasury yields continue to soften and the curve realign in wake of yesterday’s broadly in line CPI data and FOMC minutes that set the schedule for tapering, but maintained a clear differential between scaling down the pace of asset purchases and the timing of rate normalisation. Hence, the Buck is losing bullish momentum with the DXY now eying bids and downside technical support under 94.000 having slipped beneath an early October low (93.804 from the 5th of the month vs 93.675 a day earlier) and the 21 DMA that comes in at 93.770 today between 94.090-93.754 parameters before the next IJC update, PPI data and a heavy slate of Fed speakers. NZD/AUD - No real surprise that the Kiwi has been given a new lease of life given that the RBNZ has already taken its first tightening step and put physical distance between the OCR and the US FFR, not to mention that the move sparked a major ‘sell fact’ after ‘buy rumour’ reaction. However, Nzd/Usd is back on the 0.7000 handle with additional impetus via favourable tailwinds down under as the Aud/Nzd cross is now nearer 1.0550 than 1.0600 even though the Aussie is also taking advantage of the Greenback’s fall from grace to reclaim 0.7400+ status. Note, Aud/Usd may be lagging somewhat on the back of a somewhat labour report overnight as the employment tally fell slightly short of expectations and participation dipped, but the jobless rate fell and full time jobs rose. Moreover, RBA Deputy Governor Debelle repeated that circumstances are different for Australia compared to countries where policy is tightening, adding that employment is positive overall, but there is not much improvement on the wage front. CAD/GBP/CHF - The next best majors in terms of reclaiming losses vs their US counterpart, with the Loonie also encouraged by a firm bounce in oil prices and other commodities in keeping with a general recovery in risk appetite. Usd/Cad is under 1.2400, while Cable is now over 1.3700 having clearly breached Fib resistance around 1.3663 and the Franc is probing 0.9200 for a big figure-plus turnaround from recent lows irrespective of mixed Swiss import and producer prices. EUR/JPY - Relative laggards, but the Euro has finally hurdled chart obstacles standing in the way of 1.1600 and gradually gathering impetus to pull away from decent option expiry interest at the round number and just above (1.5 bn and 1 bn 1.1610-20), and the Yen regrouping around the 113.50 axis regardless of dovish BoJ rhetoric. In short, board member Noguchi conceded that the Bank may have little choice but to extend pandemic relief support unless it becomes clear that the economy has returned to a pre-pandemic state, adding that more easing may be necessary if the jobs market does not improve from pent-up demand, though he doesn't see and immediate need to top up stimulus or big stagflation risk. In commodities, WTI and Brent front month futures are continuing the grind higher seen since the European close yesterday as the risk tone remains supportive and in the aftermath of an overall bullish IEA oil market report. The IEA upgraded its 2021 and 2022 oil demand forecasts by 170k and 210k BPD respectively, which contrasts the EIA STEO and the OPEC MOMR – with the former upping its 2021 but cutting 2022 forecast, whilst the OPEC MOMR saw the 2021 demand forecast cut and 2022 was maintained. The IEA report however noted that the ongoing energy crisis could boost oil demand by 500k BPD, and oil demand could exceed pre-pandemic levels in 2022. On this, China has asked Russia to double electricity supply between November-December. The morning saw commentary from various energy ministers, but perhaps the most telling from the Russian Deputy PM Novak who suggested Russia will produce 9.9mln BPD of oil in October (in-line with the quota), but that Russia has no problem in increasing oil output which can go to 11.3mln BPD (Russia’s capacity) and even more than that, but output will depend on market situation. Long story short, Russia can ramp up output but is currently caged by the OPEC+ pact. WTI Nov extended on gain about USD 81/bbl to a current high of USD 81.41/bbl (vs 80.41/bbl low) while its Brent counter topped USD 84.00/bbl to a USD 84.24/bbl high (vs 83.18/bbl low). As a reminder, the weekly DoEs will be released at 16:00BST/11:00EDT on account of the Columbus Day holiday. Gas prices have also moved higher in intraday, with the UK Nat Gas future +5.5% at the time of writing. Returning to the Russian Deputy PM Novak who noted that Nord Stream 2 will be ready for work in the next few days, still expects certification to occur and commercial supplies of gas via Nord Stream 2 could start following certification. Elsewhere, spot gold and silver have been drifting higher as the Buck wanes, with spot gold topping its 200 DMA (1,7995/oz) and in striking distance of its 100 DMA (1,799/oz) ahead of the USD 1,800/oz mark. Over to base metals, LME copper is again on a firmer footing, owing to the overall constructive tone across the market. Dalian iron ore meanwhile fell for a second straight day in a continuation of the downside seen as Beijing imposed tougher steel output controls for winter. World Steel Association also cut its global steel demand forecast to +4.5% in 2021 (prev. forecast +5.8%); +2.2% in 2022 (prev. forecast 2.7%). US Event Calendar 8:30am: Sept. PPI Final Demand MoM, est. 0.6%, prior 0.7%; YoY, est. 8.6%, prior 8.3% 8:30am: Sept. PPI Ex Food and Energy MoM, est. 0.5%, prior 0.6%; YoY, est. 7.1%, prior 6.7% 8:30am: Sept. PPI Ex Food, Energy, Trade MoM, est. 0.4%, prior 0.3%; YoY, est. 6.5%, prior 6.3% 8:30am: Oct. Initial Jobless Claims, est. 320,000, prior 326,000; Continuing Claims, est. 2.67m, prior 2.71m 9:45am: Oct. Langer Consumer Comfort, prior 53.4 Central Banks 8:35am: Fed’s Bullard Takes Part in Virtual Discussion 9:45am: Fed’s Bostic Takes Part in Panel on Inclusive Growth 12pm: New York Fed’s Logan Gives Speech on Policy Implementation 1pm: Fed’s Barkin Gives Speech 1pm: Fed’s Daly Speaks at Conference on Small Business Credit 6pm: Fed’s Harker Discusses the Economic Outlook DB's Jim Reid concludes the overnight wrap Inflation dominated the conversation yet again for markets yesterday, after another upside surprise from the US CPI data led to the increasing realisation that we’ll still be talking about the topic for some time yet. Equities were pretty subdued as they looked forward to the upcoming earnings season, but investor jitters were evident as the classic inflation hedge of gold (+1.87%) posted its strongest daily performance since March, whilst the US dollar (-0.46%) ended the session as the worst performer among the G10 currencies. Running through the details of that release, headline US consumer prices were up by +0.4% on a monthly basis in September (vs. +0.3% expected), marking the 5th time in the last 7 months that the figure has come in above the median estimate on Bloomberg, though core prices were in line with consensus at +0.2% month-over-month. There were a number of drivers behind the faster pace, but food inflation (+0.93%) saw its biggest monthly increase since April 2020. Whilst some pandemic-sensitive sectors registered soft readings, housing-related prices were much firmer. Rent of primary residence grew +0.45%, its fastest pace since May 2001 and owners’ equivalent rent increased +0.43%, its strongest since June 2006. These housing gauges are something that Fed officials have signposted as having the potential to provide more durable upward pressure on inflation. The CPI release only added to speculation that the Fed would be forced to hike rates earlier than previously anticipated, and investors are now pricing in almost 4 hikes by the end of 2023, which is over a full hike more than they were pricing in just a month earlier. In response, the Treasury yield curve continued the previous day’s flattening, with the prospect of tighter monetary policy seeing the 2yr yield up +2.0bps to a post-pandemic high of 0.358%, whilst the 10yr decreased -4.0bps to 1.537%. That move lower in the 10yr yield was entirely down to lower real rates, however, which were down -7.4bps, suggesting investors were increasingly concerned about long-term growth prospects, whereas the 10yr inflation breakeven was up +3.3bps to 2.525%, its highest level since May. Meanwhile in Europe, 10yr sovereign bond yields took a turn lower alongside Treasuries, with those on bunds (-4.2bps), OATs (-4.0bps) and BTPs (-2.3bps) all falling. Recent inflation dynamics and issues on the supply-side are something that politicians have become increasingly attuned to, and President Biden gave remarks last night where he outlined efforts to address the supply-chain bottlenecks. This followed headlines earlier in the session that major ports in southern California would move to a 24/7 schedule to unclog delivery backlogs, and Mr. Biden also used the opportunity to push for the passage of the infrastructure plan. That comes as it’s also been reported by Reuters that the White House has been speaking with US oil and gas producers to see how prices can be brought lower. We should hear from Mr. Biden again today, who’s due to give an update on the Covid-19 response. On the topic of institutions that care about inflation, the September FOMC minutes suggested staff still remained optimistic that inflationary pressures would prove transitory, although Committee members themselves were predictably more split on the matter. Several participants pointed out that pandemic-sensitive prices were driving most of the gains, while some expressed concerns that high rates of inflation would feed into longer-term inflation expectations. Otherwise, the minutes all but confirmed DB’s US economists’ call for a November taper announcement, with monthly reductions in the pace of asset purchases of $10 billion for Treasuries and $5 billion for MBS. Markets took the news in their stride immediately following the release, reflecting how the build-up to this move has been gradually telegraphed through the year. Turning to equities, the S&P 500 managed to end its 3-day losing streak, gaining +0.30% by the close. Megacap technology stocks led the way, with the FANG+ index up +1.13% as the NASDAQ added +0.73%. On the other hand, cyclicals such as financials (-0.64%) lagged behind the broader index following flatter yield curve, and JPMorgan Chase (-2.64%) sold off as the company’s Q3 earnings release showed muted loan growth. Separately, Delta Air Lines (-5.76%) also sold off along with the broader S&P 500 airlines index (-3.51%), as they warned that rising fuel costs would threaten earnings over the current quarter. European indices posted a more solid performance than the US, with the STOXX 600 up +0.71%, though the sectoral balance was similar with tech stocks outperforming whilst the STOXX Banks index (-2.05%) fell back from its 2-year high the previous session. Overnight in Asia equities have put in a mixed performance, with the KOSPI (+1.17%) and the Nikkei (+1.01%) moving higher whilst the Shanghai Composite (-0.25%) and the CSI (-0.62%) have lost ground. Those moves follow the release of Chinese inflation data for September, which showed producer price inflation hit its highest in nearly 26 years, at +10.7% (vs. +10.5% expected), driven mostly by higher coal prices and energy-sensitive categories. On the other hand, the CPI measure for September came in slightly below consensus at +0.7% (vs. +0.8% expected), indicating that higher factory gate prices have not yet translated into consumer prices. Meanwhile, equity markets in the US are pointing to a positive start later on with S&P 500 futures up +0.32%. Of course, one of the drivers behind the renewal of inflation jitters has been the recent surge in commodity prices across the board, and we’ve seen further gains yesterday and this morning that will only add to the concerns about inflation readings yet to come. Oil prices have advanced yet again, with Brent Crude up +0.69% this morning to be on track to close at a 3-year high as it stands. That comes in spite of OPEC’s monthly oil market report revising down their forecast for world oil demand this year to 5.8mb/d, having been at 5.96mb/d last month. Elsewhere, European natural gas prices were up +9.24% as they continued to pare back some of the declines from last week, and a further two energy suppliers in the UK collapsed, Pure Planet and Colorado Energy, who supply quarter of a million customers between them. Otherwise, copper (+4.4x%) hit a 2-month high yesterday, and it up a further +1.01% this morning, Turning to Brexit, yesterday saw the European Commission put forward a set of adjustments to the Northern Ireland Protocol, which is a part of the Brexit deal that’s caused a significant dispute between the UK and the EU. The proposals from Commission Vice President Šefčovič would see an 80% reduction in checks on animal and plant-based products, as well as a 50% reduction in paperwork by reducing the documentation needed for goods moving between Great Britain and Northern Ireland. It follows a speech by the UK’s David Frost on Tuesday, in which he said that Article 16 of the Protocol, which allows either side to take unilateral safeguard measures, could be used “if necessary”. Mr. Frost is due to meet with Šefčovič in Brussels tomorrow. Running through yesterday’s other data, UK GDP grew by +0.4% in August (vs. +0.5% expected), and the July number was revised down to show a -0.1% contraction (vs. +0.1% growth previously). The release means that GDP in August was still -0.8% beneath its pre-pandemic level back in February 2020. To the day ahead now, and on the calendar we’ve got central bank speakers including the Fed’s Bullard, Bostic, Barkin, Daly and Harker, the ECB’s Elderson and Knot, along with the BoE’s Deputy Governor Cunliffe, Tenreyro and Mann. Data releases from the US include the September PPI reading along with the weekly initial jobless claims. Lastly, earnings releases will include UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Citigroup, US Bancorp and Walgreens Boots Alliance. Tyler Durden Thu, 10/14/2021 - 08:29.....»»

Category: blogSource: zerohedgeOct 14th, 2021

5 Reasons for the Commodity Boom: ETFs to Play

After a decade of underperformance, commodities are experiencing a huge rally thanks to optimism over global economic growth, reflation trade, widespread vaccination, the chances of approval of more COVID-19 antiviral pills, rising consumer confidence and higher housing price. After a decade of underperformance, commodities are experiencing a huge rally thanks to optimism over global economic growth, reflation trade, widespread vaccination, the chances of approval of more COVID-19 antiviral pills, rising consumer confidence and higher housing price. The Dow Jones Commodity Index jumped about 70% in the year to June. Let’s delve a little deeper.Subdued Greenback The massive liquidity injections by the Fed and the resultant subduedness in the strength of the greenback as well as fiscal stimulus have also been driving the commodity prices. Investors should note that most of the commodities are priced in the U.S. dollar and hence outperforms when the U.S. dollar remains subdued.Rising Inflation a Plus for Commodities If this was not enough, reflation trade was palpable across the globe with the United States and Europe drawing attention lately. Commodities are often viewed as a hedge against inflation. Moreover, higher inflation is feared to weaken corporate earnings, which in turn, would hurt equity prices. In such a scenario, commodities may gain as an alternative investment.Environmental Concerns A Plus for Some MetalsA global push for carbon-free economy has also played its role in booting the commodity prices. The very socially responsible drive may cause a supply crunch in the commodity space, which is boosting prices. Lithium is one such commodity, which is proving to be a great beneficiary of the boom in the battery market.Demand for the materials used in electric cars and renewable-energy storage has surged lately, while miners are striving hard to boost supply.Aluminum prices increased to their highest level since 2008, and copper prices continued its latest rally. Tin prices have jumped 90% since the start of 2021 partly due to power rationing.Energy Rally On Cheap Valuation & Higher DemandMeanwhile, U.S. West Texas intermediate crude oil futures set a fresh seven-year high and crossed $82 per barrel. Supply crunch and higher fuel demand pushed the long-ailing oil prices higher providing a boost to inflation.Agricultural Boom on Weather & Other ConcernsMost of the agricultural commodities surged in the third quarter. Coffee prices are rising due to weather concerns in the top-producing country Brazil. Global coffee prices are forecast to touch $4.44 a kilogram due to Brazilian cold snap due to drought situation in growing region and supply chain issues.Meanwhile, cocoa production in the world's top grower Ivory Coast is expected to drop up to 11% in the 2021/2022 season that starts on Oct 1.  Raw sugar futures on ICE hit the highest since August-end boosted by falling supplies from Brazil and higher demand from the United States (read: 3 Top Areas of Q3 & Their Top ETFs).Cotton prices jumped to a 10-year high, touching the highest levels since July 2011. Demand for textiles surged due to the global economic reopening, while India — a major cotton exporter — constrained shipments to help its domestic partners, per a CNBC article. Droughts and heat waves, have weighed on cotton crops across the United States, which is the biggest exporter of the commodity in the world.Against this backdrop, below we highlight a few ETFs that can be played in such a scenario.Invesco DB Commodity Index Tracking ETF DBC The underlying DBIQ Optimum Yield Diversified Commodity Index Excess Return Index is a rules-based index composed of futures contracts on 14 of the most heavily traded and important physical commodities in the world. The fund charges 88 bps in fees.Global X Lithium & Battery Tech ETF LITThe underlying Solactive Global Lithium Index tracks the performance of the largest and most liquid listed companies that are active in the exploration and/ or mining of Lithium or the production of Lithium batteries. The fund charges 75 bps in fees.iPath Series B Bloomberg Aluminum Subindex Total Return ETN JJUThe Bloomberg Aluminum Subindex Total Return reflects the returns that are potentially available through an unleveraged investment in the futures contracts on aluminum. The product charges 45 bps in fees.Teucrium Corn ETF CORN         The CBOT Corn Futures Contract looks to reflect the daily changes of a weighted average of the closing prices for three futures contracts for corn that are traded on the CBOT. The expense ratio of the fund is 1.95%.iPath Series B Bloomberg Coffee Subindex Total Return ETN JOThe Bloomberg Coffee Subindex Total Return reflects the returns that are potentially available through an unleveraged investment in the futures contracts on coffee. The fund charges 45 bps in fees.iPath Bloomberg Softs Subindex Total Return ETN JJSThis fund follows the Bloomberg Softs Subindex Total Return, which consists of three softs commodities futures contracts (coffee, cotton and sugar). Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco DB Commodity Index Tracking ETF (DBC): ETF Research Reports iPath Series B Bloomberg Coffee Subindex Total Return ETN (JO): ETF Research Reports Global X Lithium & Battery Tech ETF (LIT): ETF Research Reports Teucrium Corn ETF (CORN): ETF Research Reports iPath Series B Bloomberg Aluminum Subindex Total Return ETN (JJU): ETF Research Reports iPath Series B Bloomberg Softs Subindex Total Return ETN (JJS): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 13th, 2021

Tech Sector Provides Solid Returns YTD: Will the Rally Last?

At this stage, a few technology behemoths with attractive valuation are MSFT, TXN, NVDA, ADBE, CRM, NOW, AMAT and AVGO. Wall Street has performed reasonably well so far this year despite facing the worst September in a decade. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have provided more than 13% returns. We have already entered the fourth quarter and it appears that this momentum will be maintained for the rest of the year, notwithstanding October’s historically recognized fluctuating trade pattern.Wall Street has maintained its impressive northbound journey after completing an astonishing bull run in the coronavirus-ridden 2020. However, the U.S. stock market’s driver has changed.In 2020, the technology sector drove Wall Street to get rid of the pandemic-led historically shortest bear market and formed a new bull market. In 2021, the cyclical sectors like financials, industrials, energy, materials and consumer discretionary took center stage.However, a closer look at the U.S. stock markets reveals that the technology sector has performed fairly well in 2021. At present, the Technology Select Sector SPDR (XLK) — one of the 11 broad sectors of the market’s benchmark the S&P 500 Index — has gained mostly in line with the benchmark itself.Year to date, the performance of the technology sector is well above several cyclical reopening sectors like consumer discretionary, industrials and materials. The tech rally is likely to continue going forward.Tech Meltdown TemporaryThe recent meltdown of the technology sector is a temporary phenomenon. The Fed has taken a $120 billion per month bond-buy program to ensure adequate liquidity in the system and tackle the pandemic-led economic devastations.It was clear from the very beginning that the central bank will remove this stimulus gradually as the U.S economic recovery moves forward to a reasonably strong footing. The logic that the technology sector will underperform other cyclical sectors may be true for a short period of time but in the long term, technology stocks will remain the best bet.  In fact, the fundamentals of the technology sector are rock solid. The growing demand for hi-tech superior products has been a catalyst for the sector in an otherwise tough environment. A series of breakthroughs in 5G wireless network, cloud computing, predictive analysis, AI, self-driving vehicles, digital personal assistants and IoT, have given a boost to the overall space.Tech Has Vast Potential — Buy on the DipThe leading emerging markets of Asia, Latin America, Africa and some European countries are still way behind in using digital technology compared to the developed world. While mobile phone penetration is nearly 90% in these countries, a large number of people are still using phones with old features, since voice communication and not data served most of their needs. Even those using smartphones, rarely utilize online digital features.   However, the outbreak of coronavirus quickly changed the lifestyle and lookout of these people. People were not entirely used to the digital platforms for their office work (work from home), ordering foods and other daily needs or transferring money and making payments. Moreover, online schooling, video conferencing and virtual networking have now become essential.The countries that are more digitized have been able to minimize their losses during the pandemic. These are major lessons to the other countries. Even those who are less inclined toward the digital technology and online platforms, either because they have to learn using smartphones or tablets or due to fear of data theft, are now feeling the massive advantage of the online platforms.The impact of a higher market interest rate is already factored in the technology sector’s valuation to a large extent. Share prices of several technology behemoths suffered a blow in September.These companies have highly established business models spread across the world, strong product pipelines, globally acclaimed brand recognition and robust financial positions, which help them to cope with a higher interest rate. Investment in these stocks should be fruitful going forward.Stocks in FocusThe technology sector is indispensable and the reopening of the U.S. and global economies will only act as a positive catalyst for this sector. At this stage, several stocks are available that looks attractive for future growth. However, picking them on the following three criteria will make the task easy.First, select U.S. technology giants (market cap > $100 billion) that have strong growth potential for the rest of 2021. Second, these stocks have seen positive earnings estimate revisions within the last 90 days for the next one year. Third, these stocks have robust upside left reflected by a solid long-term (3-5 years) growth rate.Eight stocks have fulfilled our selection criteria. These are: Microsoft Corp. MSFT, Texas Instruments Inc. TXN, NVIDIA Corp. NVDA, Adobe Inc. ADBE, Applied Materials Inc. AMAT, ServiceNow Inc. NOW, Broadcom Inc. AVGO and salesforce.com.inc. CRM. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Texas Instruments Incorporated (TXN): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report salesforce.com, inc. (CRM): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Adobe Inc. (ADBE): Free Stock Analysis Report Applied Materials, Inc. (AMAT): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis Report ServiceNow, Inc. (NOW): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksOct 13th, 2021

JPMorgan (JPM) Q3 Earnings Top on M&A Boom, Modest Loan Growth

Solid advisory business performance, rise in loan demand and large credit release aid JPMorgan's (JPM) Q3 earnings amid lower rates, normalizing trading business and soft mortgage banking performance. Robust advisory business, reserve release, and a modest rise in demand for loans drove JPMorgan’s JPM third-quarter 2021 earnings of $3.74 per share. The bottom line also handily outpaced the Zacks Consensus Estimate of $3.00.Results included credit reserve releases and tax benefit related to finalizing the company’s 2020 U.S. federal tax return. Excluding these, earnings came in at $3.03 per share. The company had earned $2.92 in the prior-year quarter.As projected by Marianne Lake, the co-CEO of the company’s CCB segment in mid-September, at an investors conference, markets revenues declined both year over year and sequentially. Also, as guided, equity markets revenues showed strength (up 30% year over year), while fixed income markets revenues disappointed, declining 20%.Also, mortgage fees and related income plunged 45% to $600 million.Operating expenses witnessed a slight rise. Further, Commercial Banking average loan balances were down 7% year over year.During the third quarter, the company reported net reserve releases of $2.1 billion on the back of continued improvement in “economic outlook.”Now coming to investment banking (“IB”) performance, equity and debt underwriting fees rose 41% and 3%, respectively. Continued stellar deal-making activities across the globe during the quarter led JPMorgan to record a 187% surge in advisory fees. So, IB fees jumped 52% from the prior-year quarter. This was in line with management’s expectation of “up year-on-year but down sequentially.”While lower rates continued to hurt the bank’s interest income, it was more than offset by a modest rise in loan balance (consumer, credit cards and wholesale portfolios) and steepening of the yield curve during the quarter.Among other positives, Asset & Wealth Management average loan balances grew 20% from the year-ago quarter. Debit and credit card sales volume increased 26%, reflecting a steadily improving consumer confidence and economic outlook.The overall performance of JPMorgan’s business segments, in terms of net income generation, was impressive. All segments, except Corporate, reported improvement in net income on a year-over-year basis.Net income increased 24% from the prior-year quarter to $11.7 billion. Excluding the above-mentioned significant items, net income stood at $9.6 billion.Loan Demand, Advisory Fees Aid Revenues, Costs RiseNet revenues as reported were $29.65 billion, up 1% from the year-ago quarter. This rise was largely driven by higher IB fees and an increase in the loan balance. The top line beat the Zacks Consensus Estimate of $29.45 billion.Net interest income inched up 1% year over year to $13.1 billion.Non-interest income also grew 2% to $16.6 billion, primarily driven by a robust IB performance, and higher lending- and deposit-related fees. These were partially offset by fall in mortgage banking and related fees, card income and principal transactions.Non-interest expenses (on managed basis) were $17.1 billion, up 1%. This upswing was mainly due to the continued investments in business, including marketing and technology, and rise in volume- and revenue-related expenses.Credit Quality ImprovesProvision for credit losses was a net benefit of $1.5 billion against the provision of $611 million in the prior-year quarter. Further, net charge-offs plunged 56% to $524 million.As of Sep 30, 2021, non-performing assets were $8.9 billion, down 23% from Sep 30, 2020 level.Solid Capital PositionTier 1 capital ratio (estimated) was 15% at the third quarter-end, on par with the prior-year quarter level. Tier 1 common equity capital ratio (estimated) was 12.9%, down from 13.1%. Total capital ratio was 16.9% (estimated) compared with 17.3% as of Sep 30, 2020.Book value per share was $86.36 as of Sep 30, 2021 compared with $79.09 in the corresponding period of 2020. Tangible book value per common share was $69.87 at the end of September, up from $63.96.Share Repurchase UpdateDuring the quarter, JPMorgan repurchased shares worth $5 billion.Our ViewpointNew branch openings, strategic acquisitions, global expansion plan and robust IB performance are likely to continue supporting JPMorgan’s revenues. Slight rise in loan balance is a major tailwind as the economy re-opens. However, lower rates, and disappointing trading and mortgage banking performance are near-term concerns. JPMorgan Chase & Co. Price, Consensus and EPS Surprise JPMorgan Chase & Co. price-consensus-eps-surprise-chart | JPMorgan Chase & Co. QuoteJPMorgan currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Earnings Date of Other Big BanksBank of America BAC, Citigroup C and Wells Fargo WFC are scheduled to come out with quarterly numbers on Oct 14. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report Wells Fargo & Company (WFC): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 13th, 2021

3 Top-Ranked Dividend Aristocrats to Buy in Q4

With the stock market widely expected to gyrate all through Q4, it's prudent to invest in fundamentally sound dividend aristocrats like Procter & Gamble (PG), Walmart (WMT) & General Dynamics (GD). The month of October has a reputation of not being good for the stock market. Per a Barron’s article, historically, the S&P 500 had declined 0.4% in October, particularly after the broader index decreased more than 2% in the prior month, which by the way, did happen this time.Also, the October effect cannot be completely written off. It states that Wall Street had witnessed some of the worst declines in the month of October, including the great crash in 1987, and 1929’s Black Tuesday and Thursday.We may not witness huge crashes this October, but certainly, the month hasn’t been off to a good start for the stock market. In fact, the three major U.S. benchmarks have been dragged lower for the third successive trading session on Oct 12, and have witnessed choppy trading so far this month. Of course, there is a series of headwinds that is impacting the stock market’s upward journey and may well continue to do so this quarter.Investors now believe that the Fed may move away from its easy monetary policy soon, which actually helped the stock market stay afloat amid the coronavirus pandemic. The Fed may soon taper its bond-buying program and is widely expected to hike rates next year. Moreover, the European Central Bank is also expected to join the Fed in increasing its key interest rates in 2022. Thus, the possibility of higher interest dampens the prospects of growth-oriented tech stocks as it may impact the company’s ability to buy back stock and fund its growth.Adding to the woes is the current rise in energy prices. This is because an increase in energy prices leads to higher inflation, which curtails consumer spending, slows down economic growth, and drags stocks lower. On Oct 12, the U.S. crude benchmark – West Texas Intermediate, settled at $80.64 a barrel, its highest settlement value in almost seven years, citing a Wall Street Journal article. Similarly, coal price has hit a record high, the price of natural gas has jumped and Americans are  paying the highest at gas stations since 2014.Talking about inflation, the Fed’s preferred gauge of inflation, in reality, had already climbed the highest in 30 years on a yearly basis during the month of August. This rise in prices of essential goods would certainly have an impact on consumers’ outlays in the near future, something that doesn’t bode well for the economy vis-à-vis the stock market (read more: 3 of the Best Stocks to Buy as Inflation Threat Rises).By the way, the International Monetary Fund (IMF) has recently lowered its growth predictions for the world economy for this year. The spread of the more contagious Delta variant of the coronavirus and supply-chain disruptions across major economies compelled the IMF to cut the global growth forecast. Undoubtedly, such gloomy forecasts aren’t good for stocks in the near term.However, from an investment standpoint, investors shouldn’t shun equities completely at this time. Instead, they can opt to invest in dividend aristocrats. After all, these stocks boast solid fundamentals and are unfazed by any market gyrations. Furthermore, they have better quality business compared to just dividend payers. Let us, thus, take a look at the three top dividend aristocrats that should be added to your portfolio. These stocks also possess a Zacks Rank #1 (Strong Buy) or 2 (Buy).The Procter & Gamble Company PG provides branded consumer packaged goods to consumers. Procter & Gamble has paid out dividends for almost 130 years and has raised its payout for a whopping 64 successive years. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 0.2% over the past 60 days. The company’s expected earnings growth rate for the current year is nearly 5%.Walmart Inc. WMT has evolved from just being a traditional brick-and-mortar retailer into an omnichannel player. This company is known for raising its dividend for 48 consecutive years. It currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 5.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 15.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.General Dynamics Corporation GD engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. For 25+ straight years, the company has raised its dividend. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 0.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 4.5%. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report General Dynamics Corporation (GD): Free Stock Analysis Report Procter & Gamble Company The (PG): Free Stock Analysis Report Walmart Inc. (WMT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 13th, 2021

3 of the Best Stocks to Buy as Inflation Threat Rises

With the threat of inflation looming large, BRT Apartments (BRT), J & J Snack Foods (JJSF) & GoldMining (GLDG) are the stocks that are poised to gain the most. U.S. consumers at present have been splurging more on non-durable goods than they did last year. An increase in wages and healthy job additions for quite some time did boost consumer outlays. Citing a Wall Street Journal article, personal outlays on goods and services rose 0.8% in August. Consumers’ personal income too increased 0.2%, according to the Commerce Department. Consumers’ views about the state of the U.S. economy did improve last month, indicating that consumers may spend more in the near future (read more: 5 Top Consumer Discretionary Stocks to Buy for Q4).However, the U.S. economy is also facing the threat of higher energy prices at the moment. Notably, if energy prices continue to scale northward, it could easily push up the prices of essential commodities in the near future and dampen consumer spending. Therefore, inflation will lead to fewer consumer outlays, and will eventually slow down economic growth.Nonetheless, talking about higher energy prices, coal price is now at a record high, while heating oil has soared 68% so far this year, as mentioned in another Wall Street Journal article. The article further stated that the price of natural gas has almost doubled in the last six-month period to hit a seven-year high. Interestingly, prices at pumps are now a little over $3 a gallon, which is up almost a dollar in the past 12-month period. In fact, Americans are now paying more at gas stations than they have since 2014.What’s more, this year crude oil has surged 64% to a seven-year high. In reality, oil prices have jumped more than 16% since the beginning of last month. On Oct 11, the U.S. crude benchmark – West Texas Intermediate, touched a high of more than $82 a barrel, the highest level since 2014, citing a Financial Times article. Shortage of natural gas did increase the demand for various energy sources, ultimately leading to higher oil prices.Coming back to inflation, it’s worth pointing out that the Fed’s preferred gauge of inflation has actually jumped the most in the last three decades on a yearly basis, raising concerns that prices of essential goods will continue to increase in the near term and hit consumers’ outlays. Citing a MarketWatch article, the government had stated that the personal consumption expenditure (PCE) index increased 0.4% in August from a month earlier. Most importantly, the PCE index jumped to 4.3% in August from a year earlier, its highest rate since 1991.Thus, from an investment standpoint, it’s not congenial for investors to invest in growth stocks as inflation may easily impact their future cash flows. But there are stocks that benefit from a rise in inflation, which at present should be enticing enough for investors. For instance, real estate tends to gain from an increase in inflation. After all, inflation leads to an increase in property prices. Thus, one can invest in real estate through a real estate investment trust (REIT).Similarly, companies in the consumer staples sector benefit from an increase in inflation. This is because such companies have pricing power, meaning they can increase the prices of their commodities with inflation. At the same time, gold doesn’t tend to lose its shine amid rising inflation. The best way to invest in gold is through gold mining stocks.We have, hence, highlighted three noteworthy stocks from the aforesaid areas that stand to gain from a rise in inflation. These stocks currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.BRT Apartments Corp. BRT is a real estate investment trust. The Zacks Consensus Estimate for its current-year earnings has moved up 19.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 10.7%.J & J Snack Foods Corp. JJSF is an American manufacturer, marketer, and distributor of branded niche snack foods and frozen beverages for the food service and retail supermarket industries. The Zacks Consensus Estimate for its current-year earnings has moved up 6.8% over the past 60 days. The company’s expected earnings growth rate for the current year is almost 182%.GoldMining Inc. GLDG is a mineral exploration company. It is focused on the acquisition and development of gold assets principally in the Americas. The Zacks Consensus Estimate for its current-year earnings has moved up 650% over the past 60 days. The company’s expected earnings growth rate for the current year is 466.7%.  Time to Invest in Legal Marijuana If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027. After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%. You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.Today, Download Marijuana Moneymakers 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 BRT Apartments Corp. (BRT): Free Stock Analysis Report J & J Snack Foods Corp. (JJSF): Free Stock Analysis Report GoldMining Inc. (GLDG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 12th, 2021

"The Most Asymmetric Trade For The Coming Years" - Hedge Funds Flood Into Uranium Stocks

"The Most Asymmetric Trade For The Coming Years" - Hedge Funds Flood Into Uranium Stocks One month ago, we brought readers' attention to one of our favorite market sectors which we have been recommending ever since Dec 2020 - uranium - which we were confident was set for a powerful move higher as a result of an auspicious confluence of technicals and fundamentals: on one hand, as delineated in "A Bitcoin-Like Opportunity In Uranium?", the Sprott Physical Uranium Trust has emerged as a powerful buyer of physical uranium, which in a market as illiquid as uranium, would serve as a powerful catalyst to move prices of both the underlying commodity and various producers sharply higher (the subsequent upsizing of the Sprott Trust by $1 billion only assured that this price-indescriminate buying would continue). That's precisely what happened. On the other hand, the recent global energy crisis has once again turned global attention to nuclear power as an efficient alternative to unreliable "green" energy, with countries from Japan to Finland and France hinting they are making preparations to restart NPPs. In subsequent days we saw a record investor rush into uranium ETFs... ... coupled with a spike in retail buying as Uranium producer CCJ briefly became the most talked about stock on the Wall Street Bets forum. And while the sector did see a modest pullback in the second half of September as the initial excitement over the move in uranium died down, a new leg higher may now be starting. Only this time it's not retail investors that are seeking to spark upward momentum, but much more patient hedge funds that are piling in. As the FT wrote overnight, after years of stagnant prices, a 37% rally in prices for nuclear fuel uranium has helped attract investors back to the sector. Funds such as Ben Melkman’s New York-based Light Sky Macro, Anchorage Capital and Tribeca Investment Partners who have emerged as positive on the outlook for the raw material, as a global energy crunch highlights the role of nuclear power in a transition away from fossil fuels. The price of raw uranium rose to its highest level since 2012 at $50 a pound last month before giving up some of its impressive gains at the end of the month. The move - which was inspired by the buying momentum triggered by the Sprott Trust and subsequent retail influx - has attracted new, and much deeper pocketed investors into the market for the first time since before the financial crisis, when buying by investors drove the price from $20 a pound to a record high of $136 a pound in June 2007. "We’ve been patiently waiting for something to happen for a long time," Ben Cleary, of Tribeca Investment Partners whose fund is up 345% net of fees this year, told the FT. “Clearly there’s speculative money coming back into the sector, there were massive price moves in September.” Well yes, and we documented them all, but they were mostly retail money and ETF buying. The difference this time is that finally the institutions are waking up to what could be a historic surge, especially if the fake ESG lobby starts dumping the bloated FAAMG names and seeks refuge in such "soon to be green" sectors as uranium. Incidentally, the entire Uranium sector is a tiny fraction of Apple's market cap. Of course, first and foremost we have to again give props to Sprott’s Physical Uranium Trust - as we have done repeatedly in the past 2 months - which is one of the few that buys and stores physical uranium. however, most other funds add exposure through mining equities, which have rallied 58% this year. The rapid rise in natural gas and coal prices to fresh highs this month has exacerbated an energy crisis in Europe and China, and has “placed uranium back in the spotlight”, said Rob Crayfourd at CQS New City Investment Managers. And, echoing what we said a month ago, Crayfourd said that “the political fallout of this energy crisis will be a greater willingness in the west to extend the life of the existing reactor fleet. It has focused governments on the benefits of secure supply of energy from the nuclear fleet. We expect that to lend support [to prices].” For an example of just that look no further than French President Emmanuel Macron who today said that France would aim to become a leader in green hydrogen by 2030 and build new, smaller nuclear reactors as he unveiled a five-year investment plan on Tuesday aimed at fostering industrial champions and innovation. While the funds making their way into the uranium sectors are still relatively small, they are hardly inexperienced: Light Sky’s founder Melkman, who was previously a partner at hedge fund Brevan Howard, has gained more than 5% this year, said a person who had seen the numbers. “Light Sky Macro sees an immediate and sizeable opportunity in the uranium sector, making it one of our highest conviction views for 2021,” he wrote in a note to clients, seen by the Financial Times, earlier this year. A drawdown of inventory during the coronavirus pandemic has compounded tightening supply, while demand is expected to surge in the coming decades, added Melkman, who has been investing in the sector since 2018. “The growing focus on ‘green energy’ at a political level and the growing demand for [sustainable] assets in the investment community should turn uranium into one of the most asymmetric trades for the coming years,” he wrote, meaning that the possibility of potential gains far outweighs the risk of losses. Also profiting is Sean Benson, founder of London-based Tees River. His uranium fund, which buys equity stakes in uranium miners, is up 115% this year. Benson argued in an investor letter that a deficit of supply relative to demand and a “very supportive” climate change agenda mean that “the current uranium cycle is better than the last on every fundamental metric”. His Critical Resources fund, which invests about one-third of assets in uranium, is up 44% this year. Judging by the surge in uranium stocks today the market is finally starting to pay attention, and while the recent move may seem outsized at least when comped to recent history, when one considers just how much upside there could be in the sector should nuclear power make a triumphal return, we could be in the early stages of a truly staggering move higher. Tyler Durden Tue, 10/12/2021 - 14:10.....»»

Category: blogSource: zerohedgeOct 12th, 2021

Futures Rebound From Overnight Slide As Oil Keeps Rising

Futures Rebound From Overnight Slide As Oil Keeps Rising US equity-index futures erased earlier declines, rebounding from a loss of as much as 0.8% helped by the start of the European session and easing mounting concerns about stagflation from rising energy prices, signs of widening regulatory scrutiny by China, and the upcoming third-quarter earnings which is expected to post a sharply slower pace of growth and beats than recent record quarters. At 730am ET, Dow e-minis were up 5 points, or 0.1%, S&P 500 e-minis were up 7.25 points, or 0.16%, and Nasdaq 100 e-minis were up 46.75points, or 0.31%. Oiil rose 0.3% to $83.86/bbl while the dollar dipped and 10Y yield drifted back under 1.60%. Gains in tech stocks kept Nasdaq futures afloat on Tuesday, while energy names rose as Brent resumed gains, trading around $84/bbl on expectations that a power crisis from Asia to Europe will lift demand and tighten global balances. Higher oil prices and supply chain disruptions have set off alarm bells for businesses and consumers ahead of the third-quarter reporting season that kicks off on Wednesday with JPMorgan results.  "We believe that market participants could stay concerned over high energy prices translating into further acceleration in inflation, and thereby faster tightening by major central banks," said Charalambos Pissouros, head of research at JFD Group. In the pre-market, Tesla rose 0.7% after data showed the electric vehicle maker sold 56,006 China-made vehicles in September, the highest since it started production in Shanghai about two years ago. Oil firms including Exxon Mobil and Chevron Corp gained 0.1% and 0.3%, respectively, as Brent crude hit a near-three year high on energy crunch fears. Here are the notable movers: China’s Internet sector is one of the “most undervalued” in Morningstar’s coverage, says Ivan Su, an analyst, adding that Tencent (TCEHY US) and Netease (NTES US) are top picks MGM Resorts (MGM US) rises 2% in U.S. premarket trading after stock was upgraded to outperform from neutral and price target more than doubled to a Street-high $68 at Credit Suisse Quanterix (QTRX US) jumped 20% in Monday postmarket trading after the digital-health company announced that its Simoa phospho-Tau 181 blood test has been granted breakthrough device designation by the U.S. FDA as an aid in diagnostic evaluation of Alzheimer’s disease Relay Therapeutics (RLAY US) fell 7% in Monday postmarket trading after launching a $350 million share sale via Goldman Sachs, JPMorgan, Cowen, Guggenheim Securities Westwater Resources (WWR US) rose as much as 26% in Monday postmarket trading after its board of directors approved construction of the first phase of a production facility in Alabama for battery ready graphite products TechnipFMC (FTI US) in focus after co. was awarded a substantial long-term charter and services contract by Petrobras for the pipelay support vessel Coral do Atlântico Fastenal, which was one of the first companies to report Q3 earnings, saw its shares fall 2.4% in premarket trading on Tuesday, after the industrial distributor said the Covid-related boost was fading. The company said growth in the quarter was slightly limited by either slower expansion or contraction in sales of certain products related to the pandemic, when compared to the previous year quarter. While there was an uptick in sales of certain Covid-related supplies, the unit price of many products was down significantly, the company said in a statement.  Third-quarter sales and profit were in line with the average analyst estimate "While investors want to believe the narrative that stock markets can continue to move higher, this belief is bumping up against the reality of how the continued rise in energy prices, as well as supply-chain pressures, are likely to impact company profit margins,” said Michael Hewson, chief market analyst at CMC Markets in London. In Europe, losses led by basic resources companies and carmakers outweighed gains for utilities and tech stocks, pulling the Stoxx Europe 600 Index down 0.1%. Metals miner Rio Tinto was among the worst performers, dropping 2.7%. European equities climbed off the lows having lost over 1% in early trade. Euro Stoxx 600 was down -0.35% after dropping as much as 1.3% initially, led by basic resources companies and carmakers outweighed gains for utilities and tech stocks. The DAX is off 0.3%, FTSE 100 underperforms in a quiet morning for news flow. Miners, banks and autos are the weakest sectors after China reported a sharp drop in auto sales; utilities, tech and real estate post modest gains. European tech stocks slide, with the Stoxx Tech Index dropping as much as 1.4% in third straight decline, as another broker downgrades TeamViewer, while Prosus and chip stocks come under pressure. TeamViewer shares fall as much as 5.1% after Deutsche Bank downgrades the remote software maker to hold from buy following recent guidance cut. Asian stocks fell, halting a three-day rally as uncertainty over earnings deepened amid elevated inflation, higher bond yields and the risk of a widening Chinese crackdown on private industry. The MSCI Asia Pacific Index slid as much as 1.2%, led by technology and communication shares. Alibaba plunged 3.9% following a rally over the past week, while Samsung Electronics tumbled to a 10-month low after at least five brokers slashed their price targets, as China’s power crisis is seen worsening supply-chain disruptions. “Given the run-up in tech so far, it’s not difficult for investors to harvest profits first before figuring out if techs can maintain their growth when yields rise,” said Justin Tang, head of Asian research at United First Partners. Shares in Hong Kong and the mainland were among the worst performers after Chinese authorities kicked off an inspection of the nation’s financial regulators and biggest state-run banks in an effort to root out corruption. The MSCI Asia Pacific Index is down 12% from a February peak, with a global energy crunch lifting input prices and the debt crisis at China Evergrande Group weighing on the financial sector. Investors are waiting to see how this impacts earnings, according to Jun Rong Yeap, a market strategist at IG Asia.  “Increasing concerns on inflation potentially being more persistent have started to show up,” he said. “This comes along with the global risk-off mood overnight, as investors look for greater clarity from the earnings season on how margins are holding up, along with the corporate economic outlook.” Japan’s Topix index also fell, halting a two-day rally, amid concerns about a global energy crunch and the possibility of a widening Chinese crackdown on private industry. The Topix fell 0.7% to 1,982.68 at the 3 p.m. close in Tokyo, while the Nikkei 225 declined 0.9% to 28,230.61. SoftBank Group Corp. contributed the most to the Topix’s drop, decreasing 2.4%. Out of 2,181 shares in the index, 373 rose and 1,743 fell, while 65 were unchanged. “Market conditions were improving yesterday, but pushing for higher prices got tough when the Nikkei 225 approached its key moving averages,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.  The Nikkei’s 75-day moving average is about 28,500 and the 200-day moving average is about 28,700, so some investors were taking profits, he said. Japan’s spot power price increased to the highest level in nine months, as the global energy crisis intensifies competition for generation fuel before the winter heating season. In FX, the Bloomberg Dollar Spot Index reversed an overnight gain as the greenback slipped against all of its Group-of-10 peers. Risk sensitive Scandinavian currencies led gains, followed by the New Zealand and Australian dollars. The pound was little changed while speculators ramped up wagers on sterling’s decline at the fastest rate in more than two years, Commodity Futures Trading Commission data show, further breaking the link between anticipated rate increases and currency gains. The yen steadied after three days of declines. The Turkish lira extended its slide to a record low after President Recep Tayyip Erdogan hinted at a possible military offensive into neighboring Syria. Fixed-income was quiet by recent standards: Treasury futures were off lows of the day, improving as S&P 500 futures pare losses during European morning, and as cash trading resumed after Monday’s holiday. The 10Y yield dipped from 1.61% to 1.59% after hitting 1.65% based on futures pricing on Monday, but the big mover was on the front end, where 2-year yields climbed as much as 4bps to 0.35% the highest level since March 2020 reflecting increased expectations for Fed rate hikes, as Treasury cash trading resumed globally. Two coupon auctions during U.S. session -- of 3-and 10-year notes -- may weigh on Treasuries however.  Treasury and gilt curves bull-flatten with gilts outperforming at the back end. Bunds have a bull-steepening bias but ranges are narrow. Peripheral spreads tighten a touch with long-end Italy outperforming peers. In commodities, Crude futures drift higher in muted trade. WTI is up 0.25% near $80.70, Brent trades just shy of a $84-handle. Spot gold remains range-bound near $1,760/oz. Base metals are mixed with LME lead and nickel holding small gains, copper and aluminum in the red. Looking at the day ahead, central bank speakers include the Fed’s Vice Chair Clarida,Bostic and Barkin, as well as theECB’s President Lagarde, Makhlouf, Knot, Villeroy, Lane and Elderson. Data highlights from the US include the JOLTS job openings for August, and the NFIB’s small business optimism index for September which came in at 99.1, below last month's 100.1. The IMF will be releasing their latest World Economic Outlook. Market Snapshot S&P 500 futures little changed at 4,351.50 STOXX Europe 600 down 0.6% to 454.90 MXAP down 0.9% to 194.41 MXAPJ down 1.0% to 635.42 Nikkei down 0.9% to 28,230.61 Topix down 0.7% to 1,982.68 Hang Seng Index down 1.4% to 24,962.59 Shanghai Composite down 1.2% to 3,546.94 Sensex little changed at 60,149.85 Australia S&P/ASX 200 down 0.3% to 7,280.73 Kospi down 1.4% to 2,916.38 German 10Y yield fell 6 bps to -0.113% Euro up 0.1% to $1.1565 Brent Futures up 0.4% to $84.01/bbl Gold spot up 0.2% to $1,757.84 U.S. Dollar Index little changed at 94.29 Top Overnight Headlines from Bloomberg The EU drew record demand for its debut green bond, in the sector’s biggest-ever offering. The bloc registered more than 135 billion euros ($156 billion) in orders Tuesday for a sale of 12 billion euros of securities maturing in 2037 Investors are dumping negative-yielding debt at the fastest pace since February as concerns about inflation and reduced central bank stimulus propel global interest rates higher French President Emmanuel Macron unveiled a 30-billion-euro ($35 billion) plan to create the high-tech champions of the future and reverse years of industrial decline in the euro area’s second-largest economy British companies pushed the number of workers on payrolls above pre-coronavirus levels last month, an indication of strength in the labor market that may embolden the Bank of England to raise interest rates. As the Biden administration and governments around the world celebrate another advance toward an historic global tax accord, an obscure legal question in the U.S. threatens to tear it apart Chinese property developers are suffering credit rating downgrades at the fastest pace in five years, as a recent slump in new-home sales adds to concerns about the sector’s debt woes German investor confidence declined for a fifth month in October, adding to evidence that global supply bottlenecks and a surge in inflation are weighing on the recovery in Europe’s largest economy Social Democrat Olaf Scholz’s bid to succeed Angela Merkel as German chancellor is running into its first test as tensions emerge in talks to bridge policy differences with the Greens and pro-business Free Democrats A more detailed breakdown of global markets from Newsquawk Asian equity markets traded mostly lower following the indecisive mood stateside where the major indices gave back initial gains to finish negative amid lingering inflation and global slowdown concerns, with sentiment overnight also hampered by tighter Beijing scrutiny and with US equity futures extending on losses in which the Emini S&P retreated beneath its 100DMA. ASX 200 (-0.3%) was subdued as weakness in energy, tech and financials led the declines in Australia and with participants also digesting mixed NAB business survey data. Nikkei 225 (-0.9%) was on the backfoot after the Japan Center for Economic Research noted that GDP contracted 0.9% M/M in August and with retailers pressured after soft September sales updates from Lawson and Seven & I Holdings, while the KOSPI (-1.4%) was the laggard on return from holiday with chipmakers Samsung Electronics and SK Hynix subdued as they face new international taxation rules following the recent global minimum tax deal. Hang Seng (-1.4%) and Shanghai Comp. (-1.3%) adhered to the downbeat picture following a continued liquidity drain by the PBoC and with Beijing scrutinising Chinese financial institutions’ ties with private firms, while default concerns lingered after Evergrande missed yesterday’s payments and with Modern Land China seeking a debt extension on a USD 250mln bond to avoid any potential default. Finally, 10yr JGBs eked minimal gains amid the weakness in stocks but with demand for bonds limited after the recent subdued trade in T-note futures owing to yesterday’s cash bond market closure and following softer results across all metrics in the 30yr JGB auction. Top Asian News Alibaba Stock Revival Halted on Concerns of Rising Bond Yields Iron Ore Rally Pauses as China Steel Curbs Cloud Demand Outlook China’s Star Board Sees Rough Start to Fourth Quarter: ECM Watch Citi Lists Top Global Stock Picks for ‘Disruptive Innovations’ European bourses kicked the day off choppy but have since drifted higher (Euro Stoxx 50 -0.4%; Stoxx 600 Unch) as the region remains on standby for the next catalyst, and as US earnings season officially kicks off tomorrow – not to mention the US and Chinese inflation metrics and FOMC minutes. US equity futures have also nursed earlier losses and reside in relatively flat territory at the time of writing, with broad-based performance seen in the ES (Unch), NQ (+0.2%), RTY (-0.2%), YM (Unch). From a technical standpoint, some of the Dec contracts are now hovering around their respective 100 DMAs at 4,346 for the ES, 14,744 for the NQ, whilst the RTY sees its 200 DMA at 2,215, and the YM topped its 21 DMA at 34,321. Back to Europe, cash markets see broad-based downside with the SMI (-0.1%) slightly more cushioned amid gains in heavyweight Nestle (+0.6%). Sectors kicked off the day with a defensive bias but have since seen a slight reconfiguration, with Real Estate now the top performer alongside Food & Beverages, Tech and Healthcare. On the flip side, Basic Resources holds its position as the laggard following yesterday's marked outperformance and despite base metals (ex-iron) holding onto yesterday's gains. Autos also reside at the bottom of the bunch despite constructive commentary from China's Auto Industry Body CAAM, who suggested the chip supply shortage eased in China in September and expected Q4 to improve, whilst sources suggested Toyota aims to make up some lost production as supplies rebound. In terms of individual movers, GSK (+2.3%) shares spiked higher amid reports that its USD 54bln consumer unit has reportedly attracted buyout interest, according to sources, in turn lifting the FTSE 100 Dec future by 14 points in the immediacy. Elsewhere, easyJet (-1.9%) gave up its earlier gains after refraining on guidance, and despite an overall constructive trading update whereby the Co. sees positive momentum carried into FY22, with H1 bookings double those in the same period last year. Co. expects to fly up to 70% of FY19 planned capacity in FY22. In terms of commentary, the session saw the Germany ZEW release, which saw sentiment among experts deteriorate, citing the persisting supply bottlenecks for raw materials and intermediate products. The release also noted that 49.1% of expects still expect inflation to rise further in the next six months. Heading into earnings season, experts also expect profits to go down, particularly in export-tilted sectors such a car making, chemicals and pharmaceuticals. State-side, sources suggested that EU antitrust regulators are reportedly likely to open an investigation into Nvidia's (+0.6% Pre-Mkt) USD 54bln bid from Arm as concessions were not deemed sufficient. Top European News Soybeans Near 10-Month Low as Supply Outlook Expected to Improve EasyJet Boosts Capacity as Travel Rebound Gathers Pace Currency Traders Are Betting the BOE Is About to Make a Mistake Citi Lists Top Global Stock Picks for ‘Disruptive Innovations’ In FX, the Buck has reclaimed a bit more lost ground in consolidatory trade rather than any real sign of a change in fundamentals following Monday’s semi US market holiday for Columbus Day and ahead of another fairly light data slate comprising NFIB business optimism and JOLTS. However, supply awaits the return of cash Treasuries in the form of Usd 58 bn 3 year and Usd 38 bn 10 year notes and Fed commentary picks up pace on the eve of FOMC minutes with no less than five officials scheduled to speak. Meanwhile, broad risk sentiment has taken a knock in wake of a late swoon on Wall Street to give the Greenback and underlying bid and nudge the index up to fresh post-NFP highs within a 94.226-433 band. NZD/AUD - A slight change in fortunes down under as the Kiwi derives some comfort from the fact that the Aud/Nzd has not breached 1.0600 to the upside and Nzd/Usd maintaining 0.6950+ status irrespective of mixed NZ electric card sales data, while the Aussie takes on board contrasting NAB business conditions and confidence readings in advance of consumer sentiment, with Aud/Usd rotating either side of 0.7350. EUR/CAD/GBP/CHF/JPY - All rangy and marginally mixed against their US counterpart, as the Euro straddles 1.1560, the Loonie meanders between 1.2499-62 with less fuel from flat-lining crude and the Pound tries to keep sight of 1.3600 amidst corrective moves in Eur/Gbp following a rebound through 0.8500 after somewhat inconclusive UK labour and earnings data, but hardly a wince from the single currency even though Germany’s ZEW survey missed consensus and the institute delivered a downbeat assessment of the outlook for the coming 6 months. Elsewhere, the Franc continues to hold within rough 0.9250-90 extremes and the Yen is striving to nurse outsize losses between 113.00-50 parameters, with some attention to 1 bn option expiries from 113.20-25 for the NY cut. Note also, decent expiry interest in Eur/Usd and Usd/Cad today, but not as close to current spot levels (at the 1.1615 strike in 1.4 bn and between 1.2490-1.2505 in 1.1 bn respectively). SCANDI/EM - The Nok and Sek have bounced from lows vs the Eur, and the latter perhaps taking heed of a decline in Sweden’s registered jobless rate, but the Cnh and Cny remain off recent highs against the backdrop of more Chinese regulatory rigour, this time targeting state banks and financial institutions with connections to big private sector entities and the Try has thrown in the towel in terms of its fight to fend off approaches towards 9.0000 vs the Usd. The final straw for the Lira appeared to be geopolitical, as Turkish President Erdogan said they will take the necessary steps in Syria and are determined to eliminate threats, adding that Turkey has lost its patience on the attacks coming from Syrian Kurdish YPG controlled areas. Furthermore, he stated there is a Tal Rifaat pocket controlled by YPG below Afrin and that an operation could target that area which is under Russian protection. However, Usd/Try is off a new ATH circa 9.0370 as oil comes off the boil and ip came in above forecast. In commodities, WTI and Brent front-month futures are choppy and trade on either side of the flat mark in what is seemingly some consolidation and amid a distinct lack of catalysts to firmly dictate price action. The complex saw downticks heading into the European cash open in tandem with the overall market sentiment at the time, albeit the crude complex has since recovered off worst levels. News flow for the complex has also remained minimal as eyes now turn to any potential intervention by major economies in a bid to stem the pass-through of energy prices to consumers heading into winter. On that note, UK nat gas futures have been stable on the day but still north of GBP 2/Thm. Looking ahead, the weekly Private Inventory data has been pushed back to tomorrow on account of yesterday's Columbus Day holiday. Tomorrow will also see the release of the OPEC MOMR and EIA STEO. Focus on the former will be on any updates to its demand forecast, whilst commentary surrounding US shale could be interesting as it'll give an insight into OPEC's thinking on the threat of Shale under President Biden's "build back better" plan. Brent Dec trades on either side of USD 84/bbl (vs prev. 83.13-84.14 range) whilst WTI trades just under USD 81/bbl after earlier testing USD 80/bbl to the downside (USD 80-80.91/bbl range). Over to metals, spot gold and silver hold onto modest gains with not much to in the way of interesting price action, with the former within its overnight range above USD 1,750/oz and the latter still north of USD 22.50/oz after failing to breach the level to the downside in European hours thus far. In terms of base metals, LME copper is holding onto most of yesterday's gains, but the USD 9,500/t mark seems to be formidable resistance. Finally, Dalian and Singapore iron ore futures retreated after a four-day rally, with traders citing China's steel production regaining focus. US Event Calendar 6am: Sept. SMALL BUSINESS OPTIMISM 99.1,  est. 99.5, prior 100.1 10am: Aug. JOLTs Job Openings, est. 11m, prior 10.9m 11:15am: Fed’s Clarida Speaks at IIF Annual Meeting 12:30pm: Fed’s Bostic Speaks on Inflation at Peterson Institute 6pm: Fed’s Barkin Interviewed for an NPR Podcast DB's Jim Reid concludes the overnight wrap It’s my wife’s birthday today and the big treat is James Bond tomorrow night. However, I was really struggling to work out what to buy her. After 11.5 years together, I ran out of original ideas at about year three and have then scrambled round every year in an attempt to be innovative. Previous innovations have seen mixed success with the best example being the nearly-to-scale oil portrait I got commissioned of both of us from our wedding day. She had no idea and hated it at the closed eyes big reveal. It now hangs proudly in our entrance hall though. Today I’ve bought her a lower key gamble. Some of you might know that there is a US website called Cameo that you can pay famous people to record a video message for someone for a hefty fee. Well, all her childhood heroes on it were seemingly too expensive or not there. Then I saw that the most famous gymnast of all time, Nadia Comăneci, was available for a reasonable price. My wife idolised her as a kid (I think). So after this goes to press, I’m going to wake my wife up with a personalised video message from Nadia wishing her a happy birthday, saying she’s my perfect ten, and praising her for encouraging our three children to do gymnastics and telling her to keep strong while I try to get them to play golf instead. I’m not sure if this is a totally naff gift or inspired. When I purchased it I thought the latter but now I’m worried it’s the former! My guess is she says it’s naff, appreciates the gesture, but calls me out for the lack of chocolates. Maybe in this day and age a barrel of oil or a tank of petrol would have been the most valuable birthday present. With investor anticipation continuing to build ahead of tomorrow’s CPI release from the US, yesterday saw yet another round of commodity price rises that’s making it increasingly difficult for central banks to argue that inflation is in fact proving transitory. You don’t have to be too old to remember that back in the summer, those making the transitory argument cited goods like lumber as an example of how prices would begin to fall back again as the economy reopened. But not only have commodity aggregates continued to hit fresh highs since then, but lumber (+5.49%) itself followed up last week’s gains to hit its highest level in 3 months. Looking at those moves yesterday, it was a pretty broad-based advance across the commodity sphere, with big rises among energy and metals prices in particular. Oil saw fresh advances, with WTI (+1.47%) closing above $80/bbl for the first time since 2014, whilst Brent Crude (+1.53%) closed above $83/bbl for the first time since 2018. Meanwhile, Chinese coal futures (+8.00%) hit a record after the flooding in Shanxi province that we mentioned in yesterday’s edition, which has closed 60 of the 682 mines there, and this morning they’re already up another +6.41%. So far this year, the region has produced 30% of China’s coal supply, which gives you an idea as to its importance. And when it came to metals, aluminium prices (+3.30%) on the London Metal Exchange rose to their highest level since the global financial crisis, whilst Iron Ore futures in Singapore jumped +7.01% on Monday, and copper was also up +2.13%. The one respite on the inflation front was a further decline in natural gas prices, however, with the benchmark European future down -2.73%; thus bringing its declines to over -47% since the intraday high that was hit only last Wednesday. With commodity prices seeing another spike and inflation concerns resurfacing, this proved bad news for sovereign bonds as investors moved to price in a more hawkish central bank reaction. Yields in Europe rose across the continent, with those on 10yr bunds up +3.0bps to 0.12%, their highest level since May. The rise was driven by both higher inflation breakevens and real rates, and leaves bund yields just shy of their recent post-pandemic closing peak of -0.10% from mid-May. If they manage to surpass that point, that’ll leave them closer to positive territory than at any point since Q2 2019 when they last turned negative again. It was a similar story elsewhere, with 10yr yields on OATs (+2.6bps), BTPs (+3.9bps) and gilts (+3.1bps) likewise reaching their highest level in months. The sell-off occurred as money markets moved to price in further rate hikes from central banks, with investors now expecting a full 25 basis point hike from the Fed by the end of Q3 2022. It seems like another era, but at the start of this year before the Georgia Senate race, investors weren’t even pricing in a full hike by the end of 2023, whereas they’re now pricing in almost 4. So we’ve come a long way over 2021, though pre-Georgia the consensus CPI forecast on Bloomberg was just 2.0%, whereas it now stands at 4.3%, so it does fit with the story of much stronger-than-expected inflation inducing a hawkish response. Yesterday’s repricing came alongside a pretty minimal -0.15% move in the Euro versus the dollar, but that was because Europe was also seeing a similar rates repricing. Meanwhile, the UK saw its own ramping up of rate hike expectations, with investors pricing in at least an initial 15bps hike to 0.25% happening by the December meeting in just two months’ time. Overnight in Asia, stocks are trading in the red with the KOSPI (-1.46%), Shanghai Composite (-1.21%), Hang Seng (-1.20%), the Nikkei (-0.93%) and CSI (-0.82%) all trading lower on inflation concerns due to high energy costs and aggravated by a Wall Street Journal story that Chinese President Xi Jinping is increasing scrutiny of state-run banks and big financial institutions with inspections. Furthermore, there were signs of a worsening in the Evergrande debt situation, with the firm missing coupon payments on a 9.5% note due in 2022 and a 10% bond due in 2023. And there were fresh indications of a worsening situation more broadly, with Sinic Holdings Group Co. saying it doesn’t expect to pay the principal or interest on a $250m bond due on October 18. Separately in Japan, Prime Minister Fumio Kishida said on Monday that he will raise pay for public workers and boost tax breaks to firms that boost wages to try and improve the country’s wealth distribution. Back to yesterday, and the commodity rally similarly weighed on thin-volume equity markets, though it took some time as the S&P 500 had initially climbed around +0.5% before paring back those gains to close down -0.69%. Before the late US sell-off, European indices were subdued, but the STOXX 600 still rose +0.05%, thanks to an outperformance from the energy sector (+1.49%), and the STOXX Banks Index (+0.13%) hit a fresh two-year high as the sector was supported by a further rise in yields. On the central bank theme, we heard from the ECB’s chief economist, Philip Lane, at a conference yesterday, where he said that “a one-off shift in the level of wages as part of the adjustment to a transitory unexpected increase in the price level does not imply a trend shift in the path of underlying inflation.” So clearly making a distinction between a more persistent pattern of wage inflation, which comes as the ECB’s recent forward guidance commits them to not hiking rates “until it sees inflation reaching two per cent well ahead of the end of its projection horizon and durably for the rest of the projection horizon”, as well as having confidence that “realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term”. Turning to the political scene, Brexit is likely to be in the headlines again today as the UK’s Brexit negotiator David Frost gives a speech in Lisbon where he’s expected to warn that the EU’s proposals on the Northern Ireland Protocol are insufficient. That comes ahead of a new set of proposals that are set to come from the EU tomorrow, with the two sides disagreeing on the extent of border controls required on trade from Northern Ireland with the rest of the UK. Those controls were put in place as part of the Brexit deal to prevent a hard border being put up between Northern Ireland and the Republic of Ireland, whilst also preserving the integrity of the EU’s single market. But the UK’s demands for adjustments have been met with opposition by the EU, and speculation has risen that the UK could trigger Article 16, which allows either side to take unilateral safeguard measures, if the protocol’s application “leads to serious economic, societal or environmental difficulties that are liable to persist, or to diversion of trade”. On the data front, there wasn’t much data to speak of with the US holiday, but Italy’s industrial production contracted by -0.2% in August, in line with expectations. To the day ahead now, andcentral bank speakers include the Fed’s Vice Chair Clarida,Bostic and Barkin, as well as theECB’s President Lagarde, Makhlouf, Knot, Villeroy, Lane and Elderson. Data highlights from the US include the JOLTS job openings for August, and the NFIB’s small business optimism index for September. In Europe, there’s also UK unemployment for August and the German ZEW Survey for October. Lastly, the IMF will be releasing their latest World Economic Outlook.     Tyler Durden Tue, 10/12/2021 - 07:56.....»»

Category: personnelSource: nytOct 12th, 2021

US stocks fall as higher energy prices collide with lowered growth forecasts

US stocks erased early morning gains and closed lower as concerns about stagflation grew among investors. A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 9, 2020. REUTERS/Bryan R Smith Bryan R Smith/Reuters US stocks closed lower on Monday as fears of rising oil prices and slower growth hit investors.Rising prices and slower growth are the prime ingredients of stagflation, which has historically been a poor environment for stock returns.Since 1960, periods of rising inflation and weak GDP growth led to a median S&P 500 quarterly return of -2.1%, according to Goldman Sachs.Sign up here for our daily newsletter, 10 Things Before the Opening Bell.US stocks closed lower on Monday, erasing early morning gains as investors grapple with a continued rise in inflationary pressures and the outlook for slower economic growth.Energy prices continued their rise, with oil rising to a seven-year high above $80 per barrel as an ongoing supply crunch overseas helps boost prices for both oil and natural gas. Goldman Sachs cut its US GDP forecast for the third month in a row due to an ongoing economic drag from the COVID-19 delta variant and the global semiconductor crunch.Rising prices and slower economic growth are the necessary ingredients for stagflation, which has historically led to a weak median quarterly S&P 500 return of -2.1%, according to Goldman.Here's where US indexes stood at the 4:00 p.m. ET close on Monday:S&P 500: 4,361.12, down 0.69%Dow Jones Industrial Average: 34,496.78, down 0.72% (249.47 points)Nasdaq Composite: 14,486.20, 0.64%Crypto mining manufacturer Bitmain said it will stop shipping its equipment to China following the government's crackdown on cryptocurrency mining.Ether co-founder Vitalik Buterin said "shame on bitcoin maximalists" who support El Salvador's president in forcing businesses to accept the cryptocurrency.JPMorgan CEO Jamie Dimon called bitcoin "worthless" at a conference on Monday and questioned its 21 million fixed supply. SoFi surged as much as 14% after Morgan Stanley initiated the fintech company with an "overweight" rating and said the stock could surge 54% from Friday's close.Wedbush reiterated its bullish view on cybersecurity provider Palo Alto Networks, arguing the stock could rise 22% from current levels as it sees increased cyber security spending by the government.Bank of America said Starbucks is poised to surge 21% as its loyalty rewards program drives growth and protects the coffee retailer from competition. West Texas Intermediate crude oil rose as much as 1.85%, to $80.82 per barrel. Brent crude, oil's international benchmark, jumped 1.61%, to $83.72 per barrel.Gold fell as much as 0.14%, to $1,754.90 per ounce.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 11th, 2021