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Stellar 2Y Auction Reeks Of Deflation With Strongest Metrics Of 2021

Stellar 2Y Auction Reeks Of Deflation With Strongest Metrics Of 2021 .....»»

Category: worldSource: nytMay 25th, 2021

Is Covenant Logistics (CVLG) Stock Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks. The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.Covenant Logistics (CVLG) is a stock many investors are watching right now. CVLG is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CVLG has a P/S ratio of 0.45. This compares to its industry's average P/S of 1.34.Finally, investors will want to recognize that CVLG has a P/CF ratio of 6.16. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 16.02. Over the past 52 weeks, CVLG's P/CF has been as high as 15.81 and as low as 4.31, with a median of 6.44.These figures are just a handful of the metrics value investors tend to look at, but they help show that Covenant Logistics is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CVLG feels like a great value stock at the moment. 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 Covenant Logistics Group, Inc. (CVLG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

Is Tenet Healthcare (THC) Stock Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks. The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.Tenet Healthcare (THC) is a stock many investors are watching right now. THC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 12.71 right now. For comparison, its industry sports an average P/E of 14.40. Over the past 52 weeks, THC's Forward P/E has been as high as 17.09 and as low as 7.43, with a median of 12.21.We should also highlight that THC has a P/B ratio of 6.68. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 15.95. Over the past 12 months, THC's P/B has been as high as 8.65 and as low as 3.62, with a median of 6.23.Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. THC has a P/S ratio of 0.4. This compares to its industry's average P/S of 1.18.Finally, investors should note that THC has a P/CF ratio of 5.81. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 8.15. Over the past year, THC's P/CF has been as high as 6.06 and as low as 2.79, with a median of 4.47.These are only a few of the key metrics included in Tenet Healthcare's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, THC looks like an impressive value stock at the moment. 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 Tenet Healthcare Corporation (THC): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksSep 21st, 2021

Should Value Investors Buy Reliance Steel (RS) Stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks. Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.One stock to keep an eye on is Reliance Steel (RS). RS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 9.58, which compares to its industry's average of 10.51. RS's Forward P/E has been as high as 16.92 and as low as 9.58, with a median of 14.71, all within the past year.Another notable valuation metric for RS is its P/B ratio of 1.62. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.21. Within the past 52 weeks, RS's P/B has been as high as 2.11 and as low as 1.29, with a median of 1.68.Finally, investors should note that RS has a P/CF ratio of 8.88. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.35. Over the past 52 weeks, RS's P/CF has been as high as 16.84 and as low as 8.88, with a median of 12.37.Value investors will likely look at more than just these metrics, but the above data helps show that Reliance Steel is likely undervalued currently. And when considering the strength of its earnings outlook, RS sticks out at as one of the market's strongest value stocks. 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 Reliance Steel & Aluminum Co. (RS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

Stellar 20Y Auction Thanks To Second Highest Indirects On Record

Stellar 20Y Auction Thanks To Second Highest Indirects On Record With Treasury yields resuming their slide this week on the back of Monday's sharp risk-off sentiment, and today's surprise reversal which sent yields back to unchanged even as stocks rebounded, there were some concerns today's 20Y auction (technically a 19-year-11-month reopening) would face some demand challenges. It did not, and in fact demand for today's $24 billion offering was one of the strongest since this auction was introduced last May. Starting at the top, the high yield of 1.795% stopped through the When Issued 1.797% by 0.2bps. It was the lowest yield for the tenor since January's 1.643%, and well below last month's 1.850%. The bid to cover of 2.36 was slightly below last month's 2.44, and just below the recent, six-auction average of 2.39. The internals were more solid, with Indirects at 64.2% taking down the most since July 2020 and the second highest on record. Directs took down 18.9%, or in line with the recent average of 19.1% leaving Dealers holding 16.9%. Overall, a remarkably solid 20Y auction made possible by near-record foreign demand, and indicates that nobody is worried about any hawkish surprises out of the Fed tomorrow.   Tyler Durden Tue, 09/21/2021 - 13:18.....»»

Category: blogSource: zerohedgeSep 21st, 2021

Darden (DRI) Stock Up on Q1 Earnings Beat & Upbeat View

Darden's (DRI) first-quarter fiscal 2022 results benefit from solid blended same-restaurant sales and new store openings. Darden Restaurants, Inc. DRI reported impressive first-quarter fiscal 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The bottom line beat the consensus mark for the 11th straight quarter and the top line outpaced the same for the third consecutive quarter. Moreover, the metrics increased on a year-over-year basis. The company also raised its 2022 outlook. Following the robust results and an upbeat view, the company’s shares moved up 3.8% in pre-market trading session.Earnings & RevenuesDuring the fiscal first quarter, the company reported adjusted earnings of $1.76 per share, beating the Zacks Consensus Estimate for earnings of $1.63 by 8%. In the prior-year quarter, the company had reported adjusted earnings per share (EPS) of 56 cents.Total sales during the quarter came in at $ 2,306 million, beating the consensus mark of $2,238 million by 3%. Moreover, sales increased 51% from the prior-year quarter’s level on solid blended same-restaurant sales of 47.5%. This along with the opening of 34 net new restaurants added to the positives.Darden Restaurants, Inc. Price, Consensus and EPS Surprise  Darden Restaurants, Inc. price-consensus-eps-surprise-chart | Darden Restaurants, Inc. Quote Sales by SegmentsDarden reports business under four segments — Olive Garden, LongHorn Steakhouse, Fine Dining that includes The Capital Grille and Eddie V's as well as Other Business.During the fiscal first quarter, sales at Olive Garden increased 38.3% year over year to $1,090.4 million. Comps in the segment rose 37.1% year over year compared with 61.9% growth reported in the previous quarter.Sales at Fine Dining increased 104.4% year over year to $168.8 million. Comps in the segment increased 84.6% year over year compared with 143.6% growth reported in the previous quarter.Sales at Other Business increased 71.4% year over year to $479.7 million. Moreover, comps in the Other Business increased 65.8% year over year compared with 160.7% growth reported in the previous quarter.At LongHorn Steakhouse, sales were up 50.5% year over year to $567.1 million. Comps in the segment surged 47% year over year compared with 107.5% growth reported in the previous quarter.Operating Highlights & Net IncomeIn the fiscal first quarter, total operating costs and expenses increased 37.7% year over year to $2,025.2 million. The upside was primarily driven by a rise in food and beverage costs, restaurant expenses and labor costs.Balance SheetAs of Aug 29, 2021, cash and cash equivalents came in at $947.8 million compared with $1,214.7 million as of May 30, 2021.Inventories during the fiscal first quarter came in at $210.9 million compared with $190.8 in the previous quarter. Long-term debt as of Aug 29, 2021, was $936.7 million compared with $929.8 million as of May 30, 2021.During the fiscal first quarter, Darden’s board of director repurchased approximately 1.3 million shares of its common stock worth approximately $186 million. At the end of first-quarter fiscal 2021, the company had approximately $277 million remaining under the $500-million repurchase authorization. Management sanctioned to repurchase an additional $750 million of its outstanding common stock, thereby bringing the total remaining repurchase authorization to approximately $1 billion.Meanwhile, the company declared a quarterly cash dividend of $1.10 per share. The dividend will be payable on Nov 1, 2021, to shareholders of record as of Oct 8, 2021.Updated Fiscal 2022 OutlookFor fiscal 2022, the company raised its sales expectations to approximately $9.4-$9.6 billion versus the previous forecast of approximately $9.2-$9.5 billion. The company expects total sales growth in the range of 7-9% from pre-COVID levels. Further, same-restaurant sales are expected to increase in the range of 27-30% on a year-over-year basis.EBITDA for fiscal 2022 is anticipated in the range of $1.54-$1.60 billion compared with the previous projection of $1.50-$1.59 billion. EPS from continuing operations are anticipated in the band of $7.25-$7.60 compared with the previous guidance of $7.00-$7.50. Meanwhile, effective tax rate for fiscal 2022 is anticipated in the range of 13-14%.The company expects to open 35-40 net new restaurants and projects total capital spending of $375-$425 million in fiscal 2022.Zacks Rank & Key PicksDarden currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Some better-ranked stocks in the same space include Chipotle Mexican Grill, Inc. CMG, Jack In The Box Inc. JACK and The Wendys Company WEN, each currently carrying a Zacks Rank #2 (Buy).Chipotle’s 2021 earnings are expected to surge 137.5%.Jack in the Box has a trailing four-quarter earnings surprise of 26.4%, on average.Wendys has a three-five-year EPS growth rate of 14%. 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 Jack In The Box Inc. (JACK): Free Stock Analysis Report Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report Darden Restaurants, Inc. (DRI): Free Stock Analysis Report The Wendys Company (WEN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks41 min. ago

LPL Financial (LPLA) Stock Up 3.5% as August Metrics Rise

Rise in brokerage and advisory assets balance will support LPL Financial's (LPLA) revenues going forward. Shares of LPL Financial Holdings Inc. LPLA rallied 3.5% in response to the release of its monthly assets data. The company’s total brokerage and advisory assets of $1.16 trillion at the end of August 2021 grew 2.4% from the prior month and 40.6% year over year. Of the total assets, brokerage assets were $552.3 billion and advisory assets totaled $604.6 billion.The increase was mainly driven by the impressive performance of the equity markets and brokerage assets from M&T Bank that onboarded in August.Total net new assets were $7.6 billion in the reported month. This included $1.3 billion of brokerage assets from M&T Bank that onboarded in the month. Net new assets were $10 billion and $3.1 billion in July 2021 and August 2020, respectively.LPL Financial reported $49.7 billion of total client cash balance, up 2.5% from July 2021 and 10.2% from August 2020. Of the total balance, $33.2 billion was insured cash and $8.2 billion was deposit cash while the remaining was money-market balance.Shares of LPL Financial have surged 41.4% so far this year, outperforming 29.1% growth recorded by the industry. Image Source: Zacks Investment ResearchThe company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Performance of Other Brokerage FirmsInteractive Brokers Group IBKR released the Electronic Brokerage segment’s performance metrics for August 2021. The segment, which deals with the clearance and settlement of trades for individual and institutional clients globally, reported a 24% year-over-year rise in client Daily Average Revenue Trades to 2,170,000.Tradeweb Markets Inc. TW reported total trading volume of $19.8 trillion in August 2021. Average daily volumes were $900.4 billion, up 20.6% year over year.Charles Schwab SCHW reported total client assets of $7.84 trillion in August 2021, up 3% from July 2021 and 75% from August 2020. Client assets receiving ongoing advisory services were $3.88 trillion, up 2% from the prior month and 71% year over year. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Charles Schwab Corporation (SCHW): Free Stock Analysis Report Interactive Brokers Group, Inc. (IBKR): Free Stock Analysis Report Tradeweb Markets Inc. (TW): Free Stock Analysis Report LPL Financial Holdings Inc. (LPLA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks1 hr. 57 min. ago

Zacks Earnings ESP: A Better Way to Find Earnings Surprises for Multi-Sector Conglomerates

Why investors should use the Zacks Earnings ESP tool to help find stocks that are poised to top quarterly earnings estimates. Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.The Zacks Earnings ESP, ExplainedThe Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.Should You Consider Danaher?Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Danaher (DHR) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $2.19 a share, just 28 days from its upcoming earnings release on October 21, 2021.Danaher's Earnings ESP sits at 2.82%, which, as explained above, is calculated by taking the percentage difference between the $2.19 Most Accurate Estimate and the Zacks Consensus Estimate of $2.13. DHR is also part of a large group of stocks that boast a positive ESP. All of these qualifying stocks can be filtered by ESP, Zacks Rank, % Surprise (Last Qtr.), and Reporting date.Don't forget to head to the Earnings ESP Home Page. There, you'll find lots more earnings-related investing strategies to help build a winning portfolio.Find Stocks to Buy or Sell Before They're ReportedUse the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out 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 Danaher Corporation (DHR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks1 hr. 57 min. ago

Why Sohu.com (SOHU) is a Top Value Stock for the Long-Term

The Zacks Style Scores offers investors a way to easily find top-rated stocks based on their investing style. Here's why you should take advantage. It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.Zacks Premium includes access to the Zacks Style Scores as well.What are the Zacks Style Scores?The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.The Style Scores are broken down into four categories:Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.Momentum ScoreMomentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.How Style Scores Work with the Zacks RankThe Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.#1 (Strong Buy) stocks have produced an unmatched +25.41% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.That's where the Style Scores come in.To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.Stock to Watch: Sohu.com (SOHU)Sohu.com is a leading provider of online advertising, media and gaming services in China. The company reported revenues of $749.9 million in 2020.SOHU is a #3 (Hold) on the Zacks Rank, with a VGM Score of B.It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 9; value investors should take notice.One analysts revised their earnings estimate upwards in the last 60 days for fiscal 2021. The Zacks Consensus Estimate has increased $1.78 to $2.43 per share. SOHU boasts an average earnings surprise of 211.2%.With a solid Zacks Rank and top-tier Value and VGM Style Scores, SOHU should be on investors' short list. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sohu.com Inc. (SOHU): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks1 hr. 57 min. ago

AutoNation (AN) Soars to 52-Week High, Time to Cash Out?

AutoNation (AN) is at a 52-week high, but can investors hope for more gains in the future? We take a look at the company's fundamentals for clues. Have you been paying attention to shares of AutoNation (AN)? Shares have been on the move with the stock up 11.6% over the past month. The stock hit a new 52-week high of $127.22 in the previous session. AutoNation has gained 80% since the start of the year compared to the -5.4% move for the Zacks Retail-Wholesale sector and the 40.5% return for the Zacks Automotive - Retail and Whole Sales industry.What's Driving the Outperformance?The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 19, 2021, AutoNation reported EPS of $4.83 versus consensus estimate of $2.85 while it beat the consensus revenue estimate by 17.54%.For the current fiscal year, AutoNation is expected to post earnings of $15.32 per share on $25.58 billion in revenues. This represents a 115.17% change in EPS on a 25.44% change in revenues. For the next fiscal year, the company is expected to earn $12.72 per share on $25.7 billion in revenues. This represents a year-over-year change of -16.99% and 0.49%, respectively.Valuation MetricsAutoNation may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.AutoNation has a Value Score of A. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.In terms of its value breakdown, the stock currently trades at 8.2X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 9.6X versus its peer group's average of 9.2X. Additionally, the stock has a PEG ratio of 0.43. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.Zacks RankWe also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, AutoNation currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if AutoNation fits the bill. Thus, it seems as though AutoNation shares could still be poised for more gains ahead. 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 AutoNation, Inc. (AN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks1 hr. 57 min. ago

BJ"s (BJ) Soars to 52-Week High, Time to Cash Out?

BJ's (BJ) is at a 52-week high, but can investors hope for more gains in the future? We take a look at the company's fundamentals for clues. Have you been paying attention to shares of BJs Wholesale Club Holdings (BJ)? Shares have been on the move with the stock up 4.1% over the past month. The stock hit a new 52-week high of $59.81 in the previous session. BJs Wholesale Club Holdings has gained 58.2% since the start of the year compared to the -5.1% move for the Zacks Consumer Discretionary sector and the -13.6% return for the Zacks Consumer Services - Miscellaneous industry.What's Driving the Outperformance?The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 19, 2021, BJ's reported EPS of $0.82 versus consensus estimate of $0.65 while it beat the consensus revenue estimate by 8.35%.For the current fiscal year, BJ's is expected to post earnings of $2.9 per share on $16.01 billion in revenues. This represents a -6.15% change in EPS on a 3.78% change in revenues. For the next fiscal year, the company is expected to earn $3.15 per share on $17.01 billion in revenues. This represents a year-over-year change of 8.41% and 6.23%, respectively.Valuation MetricsThough BJ's has recently hit a 52-week high, what is next for BJ's? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.BJ's has a Value Score of C. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.In terms of its value breakdown, the stock currently trades at 20.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 13.5X versus its peer group's average of 6.1X. Additionally, the stock has a PEG ratio of 2.49. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.Zacks RankWe also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, BJ's currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if BJ's passes the test. Thus, it seems as though BJ's shares could still be poised for more gains ahead.How Does BJ's Stack Up to the Competition?Shares of BJ's have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including RentACenter (RCII), Hasbro (HAS), and Brunswick (BC), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for BJ's. Still, the fundamentals for BJ's are promising, and it still has potential despite being at a 52-week high. 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 BJs Wholesale Club Holdings, Inc. (BJ): Free Stock Analysis Report Hasbro, Inc. (HAS): Free Stock Analysis Report RentACenter, Inc. (RCII): Free Stock Analysis Report Brunswick Corporation (BC): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacks1 hr. 57 min. ago

AutoZone (AZO) Hits Fresh High: Is There Still Room to Run?

AutoZone (AZO) is at a 52-week high, but can investors hope for more gains in the future? We take a look at the company's fundamentals for clues. Shares of AutoZone (AZO) have been strong performers lately, with the stock up 4.4% over the past month. The stock hit a new 52-week high of $1694.27 in the previous session. AutoZone has gained 42% since the start of the year compared to the -5.4% move for the Zacks Retail-Wholesale sector and the 38.6% return for the Zacks Automotive - Retail and Wholesale - Parts industry.What's Driving the Outperformance?The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on September 21, 2021, AutoZone reported EPS of $35.72 versus consensus estimate of $30.2 while it beat the consensus revenue estimate by 7.61%.For the current fiscal year, AutoZone is expected to post earnings of $94.22 per share on $14.29 billion in revenues. This represents a -1.02% change in EPS on a -2.33% change in revenues. For the next fiscal year, the company is expected to earn $106.85 per share on $15.01 billion in revenues. This represents a year-over-year change of 13.4% and 5.07%, respectively.Valuation MetricsAutoZone may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.AutoZone has a Value Score of C. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of A.In terms of its value breakdown, the stock currently trades at 17.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 18.4X versus its peer group's average of 20X. Additionally, the stock has a PEG ratio of 1.57. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.Zacks RankWe also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, AutoZone currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if AutoZone meets the list of requirements. Thus, it seems as though AutoZone shares could have a bit more room to run in the near term.How Does AutoZone Stack Up to the Competition?Shares of AutoZone have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Caseys General Stores (CASY), Lithia Motors (LAD), and Costco Wholesale (COST), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.The Zacks Industry Rank is in the top 8% of all the industries we have in our universe, so it looks like there are some nice tailwinds for AutoZone, even beyond its own solid fundamental situation. 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 AutoZone, Inc. (AZO): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report Lithia Motors, Inc. (LAD): Free Stock Analysis Report Caseys General Stores, Inc. (CASY): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacks1 hr. 57 min. ago

Dillard"s (DDS) Hits 52-Week High, Can the Run Continue?

Dillard's (DDS) is at a 52-week high, but can investors hope for more gains in the future? We take a look at the company's fundamentals for clues. Shares of Dillards (DDS) have been strong performers lately, with the stock up 2.8% over the past month. The stock hit a new 52-week high of $212.72 in the previous session. Dillards has gained 233.1% since the start of the year compared to the -5.4% move for the Zacks Retail-Wholesale sector and the 76.4% return for the Zacks Retail - Regional Department Stores industry.What's Driving the Outperformance?The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 12, 2021, Dillard's reported EPS of $8.81 versus consensus estimate of $2.45 while it beat the consensus revenue estimate by 24.83%.For the current fiscal year, Dillard's is expected to post earnings of $31.1 per share on $6.03 billion in revenues. This represents a 1239.19% change in EPS on a 40.3% change in revenues. For the next fiscal year, the company is expected to earn $10 per share on $6.1 billion in revenues. This represents a year-over-year change of -67.85% and 1.13%, respectively.Valuation MetricsDillard's may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.Dillard's has a Value Score of B. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of A.In terms of its value breakdown, the stock currently trades at 6.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 29.9X versus its peer group's average of 18.6X. Additionally, the stock has a PEG ratio of 0.53. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.Zacks RankWe also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Dillard's currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Dillard's passes the test. Thus, it seems as though Dillard's shares could have potential in the weeks and months to come.How Does Dillard's Stack Up to the Competition?Shares of Dillard's have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Kohls (KSS), Costco Wholesale (COST), and AutoZone (AZO), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.The Zacks Industry Rank is in the top 1% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Dillard's, even beyond its own solid fundamental situation. 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 Dillards, Inc. (DDS): Free Stock Analysis Report Kohls Corporation (KSS): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report AutoZone, Inc. (AZO): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks1 hr. 57 min. ago

Celestica (CLS) Soars to 52-Week High, Time to Cash Out?

Celestica (CLS) is at a 52-week high, but can investors hope for more gains in the future? We take a look at the company's fundamentals for clues. Have you been paying attention to shares of Celestica (CLS)? Shares have been on the move with the stock up 3.6% over the past month. The stock hit a new 52-week high of $9.6 in the previous session. Celestica has gained 17.2% since the start of the year compared to the 23.5% move for the Zacks Computer and Technology sector and the 27.7% return for the Zacks Electronics - Manufacturing Services industry.What's Driving the Outperformance?The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 26, 2021, Celestica reported EPS of $0.3 versus consensus estimate of $0.25 while it beat the consensus revenue estimate by 3.28%.For the current fiscal year, Celestica is expected to post earnings of $1.16 per share on $5.64 billion in revenues. This represents a 18.37% change in EPS on a -1.88% change in revenues.Valuation MetricsCelestica may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.Celestica has a Value Score of A. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of B.In terms of its value breakdown, the stock currently trades at 8.2X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 4.9X versus its peer group's average of 10.7X. Additionally, the stock has a PEG ratio of 0.8. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.Zacks RankWe also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Celestica currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Celestica passes the test. Thus, it seems as though Celestica shares could have a bit more room to run in the near term.How Does Celestica Stack Up to the Competition?Shares of Celestica have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Onto Innovation (ONTO), WESCO International (WCC), and Arrow Electronics (ARW), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.The Zacks Industry Rank is in the top 31% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Celestica, even beyond its own solid fundamental situation. 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 Celestica, Inc. (CLS): Free Stock Analysis Report WESCO International, Inc. (WCC): Free Stock Analysis Report Arrow Electronics, Inc. (ARW): Free Stock Analysis Report Onto Innovation Inc. (ONTO): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacks1 hr. 57 min. ago

Herc Holdings (HRI) Hits 52-Week High, Can the Run Continue?

Herc Holdings (HRI) is at a 52-week high, but can investors hope for more gains in the future? We take a look at the company's fundamentals for clues. Have you been paying attention to shares of Herc Holdings (HRI)? Shares have been on the move with the stock up 12% over the past month. The stock hit a new 52-week high of $144.46 in the previous session. Herc Holdings has gained 115.4% since the start of the year compared to the 4.5% move for the Zacks Transportation sector and the 26.1% return for the Zacks Transportation - Equipment and Leasing industry.What's Driving the Outperformance?The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 22, 2021, Herc Holdings reported EPS of $1.57 versus consensus estimate of $1.08.For the current fiscal year, Herc Holdings is expected to post earnings of $7.26 per share on $2.01 billion in revenues. This represents a 141.2% change in EPS on a 12.9% change in revenues. For the next fiscal year, the company is expected to earn $9.81 per share on $2.12 billion in revenues. This represents a year-over-year change of 35.17% and 5.38%, respectively.Valuation MetricsHerc Holdings may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.Herc Holdings has a Value Score of C. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.In terms of its value breakdown, the stock currently trades at 19.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 7.5X versus its peer group's average of 6X. Additionally, the stock has a PEG ratio of 0.4. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.Zacks RankWe also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Herc Holdings currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Herc Holdings fits the bill. Thus, it seems as though Herc Holdings shares could have a bit more room to run in the near term. 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 Herc Holdings Inc. (HRI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks1 hr. 57 min. ago

Encore Wire (WIRE) Hits Fresh High: Is There Still Room to Run?

Encore Wire (WIRE) is at a 52-week high, but can investors hope for more gains in the future? We take a look at the company's fundamentals for clues. Shares of Encore Wire (WIRE) have been strong performers lately, with the stock up 5.3% over the past month. The stock hit a new 52-week high of $93.55 in the previous session. Encore Wire has gained 50.3% since the start of the year compared to the 10.4% move for the Zacks Industrial Products sector and the 69.7% return for the Zacks Wire and Cable Products industry.What's Driving the Outperformance?The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 27, 2021, Encore Wire reported EPS of $8.82 versus consensus estimate of $1.14.Valuation MetricsEncore Wire may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.Encore Wire has a Value Score of C. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.In terms of its value breakdown, the stock currently trades at 5.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 19.7X versus its peer group's average of 17.4X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.Zacks RankWe also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Encore Wire currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Encore Wire fits the bill. Thus, it seems as though Encore Wire shares could have a bit more room to run in the near term.How Does Encore Wire Stack Up to the Competition?Shares of Encore Wire have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Brady (BRC), Albany International (AIN), and Ashtead Group (ASHTY), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.The Zacks Industry Rank is in the top 1% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Encore Wire, even beyond its own solid fundamental situation. 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 Encore Wire Corporation (WIRE): Free Stock Analysis Report Brady Corporation (BRC): Free Stock Analysis Report Albany International Corporation (AIN): Free Stock Analysis Report Ashtead Group PLC (ASHTY): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacks1 hr. 57 min. ago

Futures Rise On Taper, Evergrande Optimism

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

Category: blogSource: zerohedge1 hr. 57 min. ago

Rabobank: We"re In A Charlton Heston Movie, But Which One?

Rabobank: We're In A Charlton Heston Movie, But Which One? By Michael Every of Rabobank We're in a Charlton Heston movie: which one? A reference to Charlton Heston means I lose readers who, despite having the sum of human knowledge at their fingertips, don’t know much recent history. Yet we are all in a Heston movie regardless – we just don’t know which one yet. That’s because markets, who also have the sum of human knowledge at their fingertips, don’t know much recent history either. I will run through the news Heston-ally, and suggest what that means for the movie we are all in. Let’s start with the good news on Covid. Bad as it gets, we are not in 1971’s ‘The Omega Man’, about the last-survivor of a Sino-Soviet biological war. However, the Fed flagged QE tapering. Philip Marey expects a formal announcement in November, with the actual start in December. FOMC Chair Powell expects tapering to end around mid-2022, implying a $20bn reduction in QE per meeting. The Fed’s dot plot shifted upward and moved closer to a first rate hike in 2022, with the participants evenly split between zero and 1-2 hikes; after 2022, it’s a steady pace of 3 hikes per year. The economic projections suggest the FOMC is still confident inflation spikes will be over by Q4 2022 – despite a record 73 ships waiting at LA/LB ports. (For the full report, please see here.) The market reaction, after initial confusion, was short US yields up,…and longer yields down and USD up. Recall how Minsky debt dynamics work - the change in the change is what matters; recall how pyramid schemes work; and recall how each previous attempt to normalize away from QE in an economy stronger than it is now has worked out. Taper tantrum fears? Not in DM, because there is no sign of any strength – thus the flattening curve. But for EM, inflation, stagflation, and policy-error deflation all now stalk the land. (Brazil just hiked rates to 6.25%, as expected: see here for more). See the key scene of 1968’s ‘The Planet of the Apes’ – with a lag. In October we could also see both a US government shutdown and a debt default if the spending and debt bill approved by the House of Representatives yesterday does not pass the Senate. As Philip also notes, this is a game of chicken in which the Democrats try to force the Republicans to share the blame for suspending the debt limit in light of the midterm elections in 2022. He adds that this stand-off is completely unnecessary, and if the Republicans don’t blink, the Democrats can still raise the debt limit and adopt a spending patch through budget reconciliation. However, this will raise the internal pressure in the Democratic Party regarding Biden’s legislative agenda by adding another time constraint (see here). See the chariot race in 1959’s ‘Ben Hur’- but which charioteer is President Biden? “China’s Evergrande to be saved!” says Bloomberg, quoting someone else. “Saved” means being split into three firms and nationalized, with no indication of which investors get how much money back. Given today the struggling firm has to repay $83.5m to USD debt holders, who won’t want cement, unfinished flats, or a nudge-nudge-wink-wink, we shall soon find out. Few observers saw a direct risk of a Lehman moment, despite the dynamic referred to above at play, because there are no truly free actors in Chinese markets. However, this ‘salvation’ is in line with a “Marxification” of the economy. The implications for China and the world are something markets refuse to consider because it would give them indigestion. See the end of 1973’s ‘Soylent Green’ - when markets prefer to see the ‘soy’ and the ‘green’. Energy prices continue to soar, despite official assurances the authorities saw this coming, aren’t surprised, and have clear plans for what to do about it. UK energy firms are toppling, and European economies that were preaching the need for immediate shifts in climate policy are suddenly subsidizing fossil fuels again to prevent a looming 1970’s recessionary-style energy-price shock. Which means other people have to pay more instead. Russia is meanwhile laughing all the way to the bank. See 1976’s ‘The Two-Minute Warning’ - and if you are conversant in Cockney, see 1953’s ‘The Pony Express’. The Biden administration is reportedly to nominate Saule Omarova to run the Office of the Comptroller of the Currency, the bureau within the Treasury that charters, regulates, and supervises all national banks and thrift institutions and the federally licensed branches and agencies of foreign banks in the US. Omarova is a law professor who has criticized crypto, and advocates for the government to have a much larger role in banking. That comes after the SEC’s Gensler’s comments this week on stablecoins. See 1974’s ‘Earthquake’ or 1975’s imaginatively titled ‘Airport 1975’. US President Biden and French President Macron are attempting to build bridges burned over AUKUS. The French ambassador is now to return to DC, and Biden to come to Europe for talks next month. However, word on the street is that France, and French agriculture, now have the excuse to kick the planned Australia – EU FTA into the long grass even if the rest of the EU is in favour. The UK has also been sent scuttling from any thoughts of joining the USMCA. However, geopolitics leads and trade usually follows in today’s atmosphere. Japan’s outgoing PM Suga has also been exceptionally forthright, stating China’s rapidly growing military influence and unilateral changing of the status quo could present a risk to Japan. That’s ahead of a first in-person Quad meeting to be held on Friday at the White House. See 1976’s ‘The Last Hard Men’ (and for those who prefer fantasy to Western, see ‘“Orcs”, Elves/Hobbits, and Dragons’). In short, the overall market backdrop is perfect for Heston. Yes, the world has changed dramatically from the epoch where a card-carrying member of the NRA and the Republican Party could be a major Hollywood celebrity. But today is again epic; and gritty; and dystopian; with disease; and economic crises; energy crises; political crises; geopolitical crises; ideological crises; inflation; stagflation; and the backdrop of a shift in the global financial architecture. Not that this doesn’t mean most markets, and modern movies, don’t want to ignore it all and keep partying on as in 1992’s “Wayne’s World”, in which Heston also made a guest-appearance. Try doing that with less QE, less gas, less crypto, and more Marxism and geopolitical risks though. “It's been quite a ride. I loved every minute of it.” Charlton Heston (1923 - 2008) Tyler Durden Thu, 09/23/2021 - 10:25.....»»

Category: blogSource: zerohedge1 hr. 57 min. ago

Nomura Reveals "The Flow To Know" As Markets Reverse From Selling To "Big Rally"

Nomura Reveals 'The Flow To Know' As Markets Reverse From Selling To "Big Rally" In the end, despite a generally unexpected upward shift in the FOMC dots which pushed the median 2022 dot to indicate one rate hike next year (and another 2 each in 2023 and 2024), the outcome was not nearly the "hawkish surprise" that Nomura's Charlie McElligott warned could tip the market sharply lower... or higher (especially since the market believes that the Fed will end its hiking plans well before they are fully executed, giving the Fed just 1% of breathing room). Commenting on the FOMC announcement this morning, the Nomura quant summarized it as a “low surprises” yet still incrementally more "hawkish" Fed: November taper in-line Taper length marginal surprise with goal to end mid-year, but still implies near the “expected” $10B / $5B per month reduction Where a more “hawkish” dot plot is being viewed somewhat skeptically by the market on account of “a lot of hikes in a short period of time” with 6.5 hikes by end ’24, in addition to upcoming voter / non-voter member turnover which muddles dovish / hawkish balances of voters Continued “both sides of mouth” language from Powell, yet again going out of his way to separate the “end of tapering” from the beginning of rate hikes, while noting the policy rate as still accommodative) All-in, McElligott called the announcement a “low surprise” Fed, which cleared us of “event-risk” while avoiding any sort of “(hawkish) Rate Shock,” as 10Y yields continue their chop inside the well-established range "despite obvious impacts on curves of course, as front (Reds) through belly reprices further, while long end / duration rallied and closed at best levels on the day—because ultimately, taking multple steps closer to removing accomodation ultimately means “tighter financial conditions” that will moderate the economy down the road." Indeed, one look at the 10Y year today suggests that the market is finally waking up with the 10Y surging to 1.40%, the first time since July. So with a removal of the primary catalyst for larger rate volatility, the Nomura strategist notes this also "further closes the recent (and awesome) “window for volatility expansion” within the Equities Vol complex, which opened around last week’s Op-Ex cycle turn, and brought with it incredible (and long-awaited) Vol / Stock movement (SPX -4.1% in 3 days hi / lo)." This then takes us back to a point McElligott has made repeatedly in recent days, namely the “conditioned per back-test” appearance of “reflexive vol sellers” in arresting the crescendoing US Equities selloff peaking which were cratering Monday afternoon, which materialized most notably in the form of Put sellers harvesting rich downside Vols into the accelerating drawdown, in addition to funds monetizing their actual downside hedges, both of which Nomura pointed out before created lots of Delta to buy in the process which then rallied the tape off the lows into the closing bounce However, in a notable departure from this downside Vol harvesting and hedge monetization, one small, baby-step positive development observed by Nomura is that the SPX Put Skew has come off that prior 99.9%ile “boil” and inflected  into something at least a touch less extreme, with McElligott now seeing SPX 1m Put Skew @ 96.8%ile / 3m Put Skew @ 96.9%ile, down from near record highs. Additionally, the bank continues to see more profit-taking from “long vol” positions in the VIX ETN space, with the Net (long) Vega position over the past week having decreased by 8.1mm as traders monetized into the Vol spike. Perhaps most notably, we have also witnessed saw the appearance of some rare buyers of equity upside vol yesterday into the rally, when about an hour into yesterday’s US cash session, 3 large SPY Call Spreads traded, creating ~$1 billion of Delta to buy across aggregated hedges: Buyer of 43k SPY Oct 443/452 Call Spreads for $3.89 (463M delta, 670k vega) Buyer of 32k SPY Nov 448/460 Call Spreads for $4.36 (236M delta, 635k vega) Buyer of 26k SPY Dec 31st 448/470 Call Spreads for $7.91 (263M delta, 900k vega) There were several other bullish expressions, including someone taking bullish shots in the "utterly left-for-dead" China, with FXI Jan 42 Calls bought and the sale of 7700 EEM Jan 51 Puts. Yet despite the return of such scattered bullish flows, McElligott notes that there remains much angst in the Vol space (Skew still roofed as downside demand remaining extreme), versus still “pervasive skepticism” towards broad Equities upside index / ETF / sectors / industries (Call Skew still nuked) SPX (Mega-Cap US Eq) 1m Skew 98.8%ile, 3m Skew 99.1%ile; vs no upside love, with 1m Call Skew 0.5%ile, 3m Call Skew 1.3%ile QQQ (Nasdaq / Secular Growth / Tech) 1m Skew 99.0%ile, 3m Skew 96.7%ile; while 1m Call Skew just nowhere at 0.8%ile, 3m Call Skew 4.4%ile IWM (Russell / Small Cap) 1m Skew 86.6%ile; no love for upside tho with 1m Call Skew 16.5%ile FXI (China) 1m Skew 92.8%ile, 3m Skew 82.9%ile; but still seeing negligible desire for upside with 1m Call Skew 14.5%ile FWIW, the only “upside tail” / bid to Call Skew remains parked in those “inflation sensitive” idiosycratic spots like OIH / XOP / XLE / SMH Looking at this latest flow menu, McElligott notes that the bottom line here is that "we are seeing *some* normalization in select vol metrics (e.g. term structure in SPX and QQQ, or aforementioned “off the worst” levels in extreme Put Skew)…but we continue to price-in “stress” and definitely not giving anything close to an “all clear” just yet." This dynamic matters because it will continue to “drag up” trailing realized vol which can then continue to both constrain VaR/lead to netting- and gross-down behavior as well as drive further near-term de-allocation pressure from Vol Control. Indeed, and in keeping with McElligott's recent warning that vol-control has a lot to sell here, his Vol Control model estimates a sale of $9.8B SPX futs yesterday from the universe, in aggregate bringing total selling to $20.2B over the past 2 weeks. Yet while vol-control rebalancing flows remain a bearish concern, dealer Gamma is turning increasingly favorable. To be sure, we saw the impact of the still-extreme negative Dealer Gamma vs spot across SPX SPY, QQQ and IWM in the +2% rally off the yesterday morning lows, with what McElligott dubbed “spastic” accelerant flow which required more buying the higher spot went. But now that spot is higher and billions in Delta has been added, the market is in a far more comfortable spot; indeed, the latest options positioning analytics now shows that SPX / SPY Dealers are back in a more stable “long Gamma vs spot” position ($1.8B, 33.7%ile, flips below 4371)... ...while still “short Gamma vs spot” in QQQ, but getting close to home (-$499.9mm, 2.6%ile, but flips positive above 372.16, which is mere basis points away). It is this normalization in gamma that McElligott concludes sets us up for the “stability now, big rally later”: as stocks continue to rise, the positive feedback loop emerges as the resumption of “long Gamma” stabilization from Dealers beget more overwriting/ options selling flow from the usual suspects, which in turn leads to a reversal over the next few weeks out of what has been this local “realized vol rallying up to implied” dynamic that is behind much of the recent selling. When we do, expect to see the now traditional resumption of tighter daily ranges and lower rVol. Looking out; looking out 2 weeks to 1 month is when he expects "lumpy re-allocation flows from Vol Control types" who also join the bullish fray and the slow, steady and never-ending meltup makes a triumphal return. Tyler Durden Thu, 09/23/2021 - 12:10.....»»

Category: blogSource: zerohedge1 hr. 57 min. ago

Advertisers demand agencies prove their eco credentials

In this week's Insider Advertising newsletter we're covering sustainability metrics in RFPs, supply-chain issues for ad plans, and Facebook's comms. Hello and welcome back to Insider Advertising, your weekly look at the biggest stories and trends affecting Madison Avenue and beyond. I'm Lara O'Reilly, Insider's media and advertising editor. If this was forwarded to you, sign up here.As we gear up for the big holiday quarter, Facebook advertisers are already experiencing their nightmare before Christmas as Apple's recent privacy changes take effect. In a blog post Wednesday, Facebook said some advertisers' post-iOS 14 difficulties were hitting harder than they had expected. Some of those issues could be attributed to Facebook underreporting conversions on iOS devices by about 15%, the company said. Direct-to-consumer and so-called performance advertisers in particular are bracing for a bumpy Q4.Let's get you caught up on this week's other big advertising news:Marketers are pushing their ad agencies to be eco-friendlySupply-chain shortages are affecting ad plansFacebook is embarking on a more defensive comms approachIt's not easy being green Investors can make this happen, if they want to. Frank Bienewald/LightRocket via Getty Images It's been a little over five years since big brands like General Mills and HP made headlines by setting out requirements for their ad agencies to diversify their workforces.Now, an increasing number of advertisers are also asking agencies pitching for their business to lay out their sustainability commitments, the Insider correspondent Patrick Coffee reports, quoting one agency exec who said it's now part of every pitch.But while sustainability metrics are now front and center of many RFPs, I'd wager that few advertisers are at the point where they can audit compliance with the promises being made."It's an important part of any process, but many of the areas can be quite challenging on an ongoing basis," Ryan Kangisser, the managing partner of strategy at the media-advisory firm MediaSense, told me. What's more, as the coronavirus pandemic forced nearly all businesses to significantly rev up their e-commerce operations, some advertisers could do well with turning the mirror back on themselves. Global delivery volume records that were set last year are likely to be smashed once again in the holiday quarter."As e-commerce gets bigger, we all have to recognize the energy and power required to fuel all the e-commerce sites and clicks and transactions that are exponentially exploding at the moment," said Richard Robinson, a managing director of the pitch consultancy Oystercatchers.Yet, Robinson said, when brands are leaned on to ask who is ultimately responsible for sustainable e-commerce within their companies - The CMO? CDO? IT? Supply chain? - many execs still don't have a solid answer."The e-commerce kahuna is everyone's inconvenient secret at the moment," Robinson added.Hey big spenderAs e-commerce spending continues to soar through 2021 and beyond, so too is retailer spending on digital ads.Retail has long been the biggest-spending sector on digital ads in the US - which makes sense, as it's the category with the clearest visibility about whether the ads drove a sale. eMarketer; Taylor Tyson/Insider Insider Intelligence forecasts US retailer digital ad spending will blast through the $50 billion mark in 2022 - "a mark that no other industry will approach in the next couple of years," the Insider-owned research company's analysts wrote. In fact, Insider Intelligence doesn't predict any other single category will spend more than $20 billion in digital ads a year until 2023.In the meantime, retailers and e-commerce companies like Walmart, Target, and Instacart are busily building their own ad businesses and taking on the market leader Amazon by using their valuable first-party data to help advertisers target the shoppers most likely to buy their products. Insider Intelligence estimates that US retail media ad spending will grow almost 28% to reach $24 billion this year.You can't always get what you want FILE PHOTO: A General Motors assembly worker works on assembling a V6 engine, used in a variety of GM cars, trucks and crossovers, at the GM Romulus Powertrain plant in Romulus, Michigan, U.S. August 21, 2019. Rebecca Cook/File Photo Insider's senior reporter Lauren Johnson reports: Supply-chain issues are affecting ad spend, Ad Age reported, and it's not just mom and pops grappling to stock their shelves.Automakers like GM are also contending with big issues that make it hard to get their products to people, and big names are cutting advertising spend as a result, according to four agency sources who handle ad buying for the auto industry.One ad buyer said GM brands like Ford and Chevy, as well as the Dutch automaker Stellantis, cut ad spend earlier this year in response to computer-chip shortages that slashed production cycles, adding that car brands shifted their messaging from selling new vehicles to encouraging people to buy used cars at local dealerships. Representatives for Ford, Chevy, and Stellantis did not respond to requests for comment.Agency sources said that such cuts had hit mostly TV advertising and that in cases in which only some of a brand's products were unavailable, advertisers redirected digital ad spend to promote in-stock items with performance tactics like programmatic advertising that can track sales of products.Read more: KFC isn't advertising chicken tenders on TV because of supply-chain shortagesSorry seems to be the hardest word Facebook CEO Mark Zuckerberg in New York City on Friday, October 25, 2019. AP Photo/Mark Lennihan A few years ago, as sure as spring would turn to summer and summer to fall, it felt as if the latest Facebook mea culpa was only ever a few months away. (The Washington Post even made a handy timeline.) Yet while Facebook has been significantly ramping up its own ad spend of late, don't expect to see any more full-page apology ads from the social network in your favorite newspaper anytime soon.As The New York Times reported, amid the weight of negative scrutiny on the company, Facebook's communications execs are pressing on with a different strategy: No more apologies.That attack-dog approach has been in plain view following The Wall Street Journal's explosive "Facebook Files" investigative series, which uncovered a litany of serious issues on that platform that the company appears to be aware of but has failed to fully address.Facebook's vice president of global affairs, Nick Clegg, fired back with his "What the Wall Street Journal Got Wrong" blog post. Mark Zuckerberg, who personally hasn't responded to The Journal's reporting, instead wagged his finger at The Times for implying he had posted a video of himself riding an "electric surfboard" instead of a hydrofoil. Over on Twitter, a Facebook representative sought to play down The Times' reporting of "Project Amplify," the social network's initiative to show people positive stories about the company on the platform.Meanwhile, the heat on Facebook shows no sign of petering out:Another Facebook ad boycott could be around the cornerSenators said they'd investigate Facebook's internal research into Instagram's effects on the mental health of young usersOne of Wall Street's top internet analysts says Facebook and Instagram user satisfaction just dropped to all-time lowsRecommended readingWaze CMO Erin Clift has left amid leadership shake-up at the Google-owned company - InsiderRoku is rolling out a new tool to compete with Facebook and Google for the $16 billion local advertising market - InsiderAT&T CEO John Stankey says he's unhappy with the company's brand and is planning a more future-facing refresh - CNBCVideoAmp has begun testing its cross-platform TV- and video-measurement ratings alternative with five major ad holding companies - CampaignAudi is looking for a new ad agency to handle its $185 million ad business - InsiderTikTok insiders describe how parent company ByteDance's culture principles, called 'ByteStyles,' are used to reward and reprimand - InsiderSee you next week - and in the meantime please do continue sending your feedback and news tips for this newsletter to loreilly@insider.com Read the original article on Business Insider.....»»

Category: topSource: businessinsider4 hr. 41 min. ago

The UK"s Green Gilt Is Marketing Puff & A Pointless Distraction

The UK's Green Gilt Is Marketing Puff & A Pointless Distraction Authored by Bill Blain via MorningPorridge.com, “Every decent con man knows a simple truth is more powerful than an elaborate lie..” he UK attracted a record £137 bln order book for its £10 bln Green Gilt. But what does the Green Gilt achieve? Its marketing puff. It may disguise how ill-considered and ultimately self-defeating the Government’s rush to looking green has been. No matter how well intentioned a Green Gilt is – its style over substance, papering over the cracks in a confused and contradictory long-term climate-change mitigation strategy.   It fills my heart with joy and makes me proud to be British that the UK Government just received £137 billion of orders for its debut Green Bond – a record historical amount for any UK bond or Green Bond. (US Readers… disinterested sarcasm alert.) Investors were apparently tumbling over themselves to place orders, but I can’t say many will be surprised or disappointed when they got less than 7% of their order. The £10 bln Green Gilt due in 2033 (12 year) will pay a 0.875% and was priced to yield 0.8721%… which is a bit more than the comparable 11year bond was paying at the time…. The proceeds of the new Green Gilt will specifically be earmarked to support green projects including zero-emission transport and offshore wind projects. I don’t quite understand how the spending programme will actually work. I was taught Government funding could not be “hypothecated” (allocated against a specific project or asset) because that would result in political bargaining against good and bad projects, akin to US Pork Barrelling where project money is spent to buy votes. I guess the government must have a very clever super-computer allocating the nice new green coloured pixelated money into a good digital pot that only green civil servants can open to save the planet, while nasty normal money raised from unclean gilts – to fund stuff like building nuclear submarines to sell to Australia to defend Australia’s export chains to China from China – go into a more general dirty digital wallet? (US Readers – mild sarcasm alert.) It would be churlish of me to suggest the only meaningful thing the £10 bln Gilt issue actually does… is reduce the remaining amount of Gilts the UK’s Debt Management Office has to fund this year by about…. let me see if I can work it out… about £10 bln. (Oh, less the marketing and placement fees the govt paid to the banks who lead the deal after persuading Chancellor Rishi Sunak that it would be a brilliant idea for the UK to issue Green Gilts.) It’s reckoned the “greenium” (the premium) the Green Gilt achieved in terms of a lower yield was about 2.5 pence in every hundred pounds – 2.5 basis points. This translates to a saving of around $28 mm pounds in interest rate costs through the life of the bond. Effectively, doing a Green Bond means we got 47 minutes of UK government spending for free! Fantastic…. (Barf…) Oh, and Alok Sharma will be terribly pleased. He is chairing COP26 in November, and will be able to smile and point out how the UK is saving the planet by issuing Green Bonds, and that our green bond is bigger and juicer than Italy’s Green Bond…. I would have been much more impressed if Richy-Rich Sunak had stood up and made honest pledges about how well-considered and properly connected government spending on climate mitigation is a critical objective across all government spending programmes. If he’s as smart as folk seem to think, he’d have been explaining to us that difficult decisions on what can be done immediately, tomorrow and long-term need to be taken. Some of these could look counter-intuitive at first – like a greater reliance on Gas for the next 30-years as the nation’s power infrastructure is re-invented for a carbon neutral age. Such an honest approach would have been way better way than gesture politics like a Green Gilt. Regular readers will be aware Green Bonds impress me slightly less than a raindrop on a rainy day. They are marketing chuff. Some evil banker came up with the idea and persuaded issuers that investors were just desperate to buy anything labelled green, while persuading these same institutional fund managers that their investors were equally desperate to invest in green funds. And thus was spawned the market… (The reality now is retail investors and small savers are faced with a growing plethora of notionally green, but lower yielding funds.) The madness is further illustrated by the number funds now adopting “do-goodyism”. Recently a large fund active in commodities turned down one of my alternative asset ideas on the basis its “too oily for us these days”. They said they’d rather go buy wind-farms because that’s what their investors want. I pointed out that since everyone now wants to own wind-farms to show-off how green they are, the minimal yields on windmills no longer reflect a sensible risk-return, while anything oil-related (even though its effectively carbon-neutral) offers a superb return and are fully climate mitigated! The reality – as any good bond fund manager knows – is green investments depend not on what the label says, but what the money is actually doing and how it is governed and managed. When it comes to the UK’s ability to manage and govern its green spending… Lord preserve us. The way in which the UK has rushed into Green spending and Climate Change mitigation has been about as joined up as a full stop on a blank page. Let’s take the current energy crisis where the UK has “sagely” reduced our gas storage reserves to 1% of yearly need. 3 cold winter days and the UK could run out of power. “Not a problem” says Government – “we can buy it from Yoorp”. No. You can’t. Yoorp is short of gas, and Russia will keep it that way. Ah, retorts the energy minister; “we have lots of windfarms and solar power”… yes, but when there is no wind, which happens when the UK is at the centre of a blocking high sucking in the coldest polar winds from Artic Siberia, windfarms don’t work. Oh, and neither does solar when the day is 8 hours long and its cloudy. (Don’t get me started on offshore wind: looks brilliant on the plans, the due diligence data room and financial projections till you discover trying to replace a broken or cracked turbine blade offshore is massively difficult in a storm, and that booking a boat to do the work from makes it economic to leave it broken till such a time as more boats become available – like next summer, or the summer after that… An engineer could have told you that, but engineers are too clever to work in fund management.) Of course, the UK does have utterly reliable and predictable alternative clean energy resources. The oceans around us produce some of the strongest tides on the planet. They are utterly regular – around the coast there is always tidal energy surging untamed around us. Yet, trying to secure investment for tidal energy projects is a nightmare. Planners aren’t interested in climate mitigation – only on what it might do to the local lug-worm population. Investors aren’t interested – they need their green investments today, so buy wind, no matter how expensive it is. Today, tidal power is between 3-5 times more expensive than wind energy. That will change as more project are tested and succeed – but that will take time and money.. which neither private funders or government show much interest in… In their rush to look green, sound green and be seen doing green they are spending on the immediate but less optimal projects like less-efficient-than-promised wind and socially-dirty lithium rather than building a long-term base in reliable renewables include tide and nuclear, encouraging cleaner energy storage systems (better batteries made from less toxic and socially destructive elements), and missing the opportunity to hydrogenise the economy! But none of that matters, because today The Chancellor will be celebrating a record UK Green Gilt issue, and the investment banks behind it will be counting the fees.. Tyler Durden Thu, 09/23/2021 - 05:00.....»»

Category: blogSource: zerohedge7 hr. 25 min. ago