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Stocks tick higher as 10-year yield hovers near 1.6%

U.S. equity markets gained for a second day Tuesday as the 10-year Treasury yield held near a two-week low and money rotated into growth stocks......»»

Category: topSource: foxnewsMay 25th, 2021

Futures Rise On Taper, Evergrande Optimism

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

Category: blogSource: zerohedge1 hr. 8 min. ago

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

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

Category: blogSource: zerohedgeSep 21st, 2021

Should Franklin LibertyQ U.S. Equity ETF (FLQL) Be on Your Investing Radar?

Style Box ETF report for FLQL If you're interested in broad exposure to the Large Cap Blend segment of the US equity market, look no further than the Franklin LibertyQ U.S. Equity ETF (FLQL), a passively managed exchange traded fund launched on 04/26/2017.The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $1.18 billion, making it one of the larger ETFs attempting to match the Large Cap Blend segment of the US equity market.Why Large Cap BlendCompanies that fall in the large cap category tend to have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.CostsWhen considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.Annual operating expenses for this ETF are 0.15%, making it one of the cheaper products in the space.It has a 12-month trailing dividend yield of 1.77%.Sector Exposure and Top HoldingsETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.This ETF has heaviest allocation to the Information Technology sector--about 23.50% of the portfolio. Healthcare and Industrials round out the top three.Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 1.20% of total assets, followed by Adobe Inc (ADBE) and Eli Lilly + Co (LLY).The top 10 holdings account for about 10.92% of total assets under management.Performance and RiskFLQL seeks to match the performance of the LibertyQ US Large Cap Equity Index before fees and expenses. The U.S. Large Cap Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the Russell 1000 Index over the long term by applying a multi-factor selection process, which is designed to select equity securities from the Russell 1000 Index that have favorable exposure to four investment style factors quality, value, momentum and low volatility.The ETF has added about 17.14% so far this year and was up about 28.96% in the last one year (as of 09/23/2021). In the past 52-week period, it has traded between $33.63 and $45.19.The ETF has a beta of 0.90 and standard deviation of 21.48% for the trailing three-year period. With about 258 holdings, it effectively diversifies company-specific risk.AlternativesFranklin LibertyQ U.S. Equity ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FLQL is an excellent option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $300.17 billion in assets, SPDR S&P 500 ETF has $398.44 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.Bottom-LineRetail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center. 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 Franklin LibertyQ U.S. Equity ETF (FLQL): ETF Research Reports Eli Lilly and Company (LLY): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Adobe Inc. (ADBE): Free Stock Analysis Report SPDR S&P 500 ETF (SPY): ETF Research Reports iShares Core S&P 500 ETF (IVV): ETF Research Reports To read this article on Zacks.com click here......»»

Category: topSource: zacks1 hr. 8 min. ago

Global stocks and cryptocurrencies rally after the Fed provides clarity on tapering, while Evergrande fears subside for now

Stock markets were unfazed by the Federal Reserve saying it was likely to cut back its bond purchases soon - which most analysts read as November. Fed boss Jerome Powell said the central bank is likely to start tapering soon. Sarah Silbiger/Getty Images Global stocks and cryptocurrencies rallied Thursday after the Federal Reserve gave more details on its tapering plan. Analysts broadly said they expect the Fed to cut back bond purchases in November, with some scope for a delay. Fears about Chinese property developer Evergrande cooled, but an offshore $83.5 million interest payment loomed on Thursday. See more stories on Insider's business page. Global stocks and cryptocurrencies rose Thursday after the Federal Reserve provided more clarity on its plan for the withdrawal of stimulus, while fears around indebted Chinese property developer Evergrande cooled for the time being.S&P 500 futures were up 0.74% at 4.50 a.m. ET, after the index snapped a four-day losing streak to close 0.95% higher Wednesday. Dow Jones futures advanced 0.71%, while Nasdaq 100 futures also put on 0.71%, signaling gains when markets open later in the day.Asian stocks advanced overnight as worries receded about risks to the wider financial system from an Evergrande debt default. China's CSI 300 index of Shanghai and Shenzhen-listed stocks rose 0.65%, while Hong Kong's Hang Seng climbed 1.01%.In Europe, the pan-continental Stoxx 600 climbed 1.02% in early trading, while London's FTSE 100 gained 0.48%.Cryptocurrencies rallied across the board after tumbling along with stocks earlier in the week. Bitcoin was up 1% to $43,891, according to Bloomberg prices. Ether, cardano, binance coin and other altcoins all rose more sharply.Stocks climbed after the US Federal Reserve, the world's most powerful central bank, on Wednesday heavily suggested that it would start cutting back on its bond purchases from November, and finish the job by the middle of 2022. Some Fed policymakers also said they'd like to see interest rates start rising as soon as next year.Analysts said markets were reassured that Fed Chair Jerome Powell left the door open to maintaining stimulus if the US economy needs it, and by his cautious approach to movement on interest rates.Jim O'Sullivan, chief US macro strategist at TD Securities, said Powell gave an "unambiguous" signal that the Fed would start tapering bond purchases in November. O'Sullivan said he doesn't expect it to start hiking interest rates until 2023.Neil Wilson, chief market analyst at trading platform Markets.com, said: "Jay Powell continues to walk the line between guiding the market to expect tightening without unduly worrying investors."Read more: Meet the 8 strategists calling for a stock market correction by the end of the year as Wall Street turns bearish. Here are their key concerns and top recommendations for positioning against a market meltdown.Still in focus for investors is the $300 billion debt crunch faced by Evergrande, China's second-biggest property developer. Fears the company could collapse and send shockwaves across the global economy helped push US stocks to their worst losses since May on Monday.Yet those concerns were easing somewhat, after Evergrande unit Hengda said it had "resolved" an onshore interest payment via negotiation and the company reassured retail investors that they were a top priority. China's injection of 90 billion yuan ($13.9 billion) into the banking system also bolstered those hoping Beijing would step in to contain any shocks.Shares in Evergrande jumped 17.62% on Thursday, although they remain more than 80% lower for the year.But the property developer is still seen as in perilous position, and investors are closely watching a key test for Evergrande Thursday, when an $83.5 million interest payment on an offshore bond is due.The US bond market was little changed after the Fed meeting, a sign that the central bank hadn't ruffled feathers. The yield on the key 10-year US Treasury note was roughly flat at 1.336% on Thursday. Yields move inversely to prices.Oil prices continued to rise as the global economy reopened and supplies tightened. Brent crude was up 0.12% to $76.29, while WTI crude was 0.1% higher at $72.28 a barrel.Read the original article on Business Insider.....»»

Category: topSource: businessinsider3 hr. 52 min. ago

Rescued by the Fed Again?

S&P 500 recovered only to dive again – carving out a base? The bulls are attempting to, but neither value, nor tech, nor the credit markets are convincing. The dust is settling though, and the bears are equally in need of a fresh reason to sell – the intraday tug of war is entirely reasonable […] S&P 500 recovered only to dive again – carving out a base? The bulls are attempting to, but neither value, nor tech, nor the credit markets are convincing. The dust is settling though, and the bears are equally in need of a fresh reason to sell – the intraday tug of war is entirely reasonable as Evergrande failed to spook the markets more. Just wait for what happens when the markets come face to face with another unacknowledged event of this magnitude. In our era, it‘s about the contagion effect, manic-depressive market psychology, and uncertainty of the impact. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2021 hedge fund letters, conferences and more It‘s not only about China real estate cooling down, spilling over to Hong Kong. Wtll the House approval on the bill to suspend fresh borrowing obstacles and avoid a partial shutdown do? What would the Senate say – and then everyone as the tax tsunami keeps approaching? Global liquidity isn‘t rising after all either. Fed taper is a side show, but still one that too many are glued to. The dollar would suffer if it doesn‘t materialize later today – and it won‘t be announced, which would make precious metals rejoice. Back to stocks, these are also likely to welcome no taper. The Fed has been already tightening (which means these days it was decreasing the pace of expansion) through the back door, bringing down inflation expectations in spite of the real world input costs, shipping rates and frail supply chains challenges on top of the job market issues. Transitory inflation is still the mainstream thesis – the shift to real assets will become more accentuated once the realization of a higher and entrenched inflation arrives. And it‘s not about real estate and owners‘ equivalent rent either. Commodities did welcome yesterday‘s reprieve, and Treasury yields are unlikely to clobber them the way perceived systemic risks could (did). In a decelerating real economy faced with numerous deflationary pressures, the slow and steady rising yields phase, is deferred for now. And when these do rise again, it may or may not be about returning economic growth, but forced by the systemic realities. Remember that rates are very low by historic comparisons, and the resilence to absorb a modest rise (think 10-year more than a bit above 2%) won‘t be there without consequences. Cashing in on the S&P 500 short profits yesterday, was reasonable from the total portfolio risk point of view (did I say a fresh high was reached?). Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook Daily hesitation followed by more downside, but volume is decreasing – stocks look readying an upswing attempt. Credit Markets High yield corporate bonds merely kept opening gains – there is still hesitation, and the window of opportunity for the bulls is narrow. Gold, Silver and Miners Positive price action of gold, joined by silver – the waiting miners reveal that a little consolidation is likely before the Fed speaks. Crude Oil Oil stocks show that the appetite for oil might be returning, and that‘s confirmed by the volume examination. Commodities such as oil and copper stand to benefit from calming the Evergrande and central bank jitters. Copper Copper gave up opening losses only to rebound before the closing bell. Volume could have been larger, but the beaten down red metal can keep rebounding at its own pace – the smaller volume is an indication it won‘t be a one-way path. Bitcoin and Ethereum Bitcoin and Ethereum haven‘t really recovered from the selloff, and the bears are holding the upper hand now. Summary My yesterday‘s question „Is the selling over, is it not?“ has the same answer „Still inconclusive, but time for the bears is running short.“ It looks like the markets are positioning for a return to risk-on based on today‘s FOMC, which is what quite a few would like to take as an opportunity to sell into strength. The point is the Fed won‘t surprise today, and the price gyrations are likely to continue, albeit at a lesser magnitude. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals. Thank you, Monica Kingsley Stock Trading Signals Gold Trading Signals Oil Trading Signals Copper Trading Signals Bitcoin Trading Signals www.monicakingsley.co mk@monicakingsley.co All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice. Updated on Sep 22, 2021, 9:27 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalk15 hr. 24 min. ago

Dow surges 338 points as Federal Reserve hints at pace of tapering and timing of rate hikes

The Federal Reserve held interest rates steady as expected at the end of its two-day policy meeting. Traders work on the floor of the New York Stock Exchange (NYSE) Spencer Platt/Getty Images The Dow Jones Industrial Average on Wednesday broke a four session losing streak. Stocks climbed as the Fed suggested the economy has recovered enough to withstand policy changes. The Fed said it expects to start tapering asset purchases "soon." See more stories on Insider's business page. Stocks surged Wednesday after the Federal Reserve said it will "soon" begin reducing stimulus measures, suggesting that the world's largest economy is in shape to withstand less support from the central bank.The Dow Jones Industrial Average jumped about 340 points and broke a string of four consecutive losses and the S&P 500 gained after falling in three of the past four sessions. The Federal Open Market Committee held interest rates near zero and held the size of its emergency asset purchases steady. The recovery in the economy since the pandemic outbreak led officials to say they are moving closer to reducing policy aid."If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted," the central bank said.Here's where US indexes stood at 4:00 p.m. on Wednesday: S&P 500: 4,395.62, up 0.95%Dow Jones Industrial Average: 34,258.32, up 1% (338.48 points)Nasdaq Composite: 14,896.85, up 1.02%"We weren't surprised to see the Fed tee up November as the likely beginning of tapering as they have previously highlighted the higher-than-expected inflation numbers and were only waiting for the job market to improve before beginning to reduce their bond purchases," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, in a note Wednesday. "Although there may be some additional turbulence this fall, we are constructive on the US economy in general and believe that any dips would be worth buying as the fundamentals are still sound and recession appears to be more than a year away at this point," he said. Around the markets, Facebook fell after saying changes to Apple's privacy policy in its latest iOS update have negatively impacted advertisers. Retail investors pushed $1.9 billion into US stocks during the Evergrande-driven selloff on Monday, data from VandaTrack show, the fourth-biggest day of net purchases since the start of the pandemic. Dogecoin fans stormed a poll by AMC CEO Adam Aron on Twitter asking if the theater chain should accept the meme-token as payment. Gold declined by 0.3% to $1,768.27 per ounce. The yield on the US 10-year Treasury note fell to 1.32%. Bond yields fall as prices rise. Oil prices popped higher. West Texas Intermediate crude gained 2.7% to $72.17 per barrel. Brent oil, oil's international benchmark, picked up 2.4% to $76.13. Bitcoin leapt 6.9%, trading near $43,410. Read the original article on Business Insider.....»»

Category: worldSource: nyt20 hr. 52 min. ago

Here is Why UnitedHealth (UNH) Should Grace Your Portfolio

A solid positioning in an ever-growing industry makes UnitedHealth (UNH) a top pick for strong investment gains. Making an industry leader part of your investment portfolio provides an overall stability and boosts profitability. Industry leaders by virtue of their dominant market position and robust balance sheet have higher capabilities to tide the economic swings and emerge unhurt. Thus, one should always keep such stocks at one’s disposal and if such a company belongs to a resilient industry such as health insurance then the degree of stability increases.  Today we will talk about the health insurance leader UnitedHealth  Group Inc. UNH, which has gained 16.8% year to date compared with the industry's growth of 14.8%, and why buying this stock can be a good investment move. Image Source: Zacks Investment ResearchFirst of all, the company has an exemplary track record of earnings outperformance and a look at the last 28 quarters show surprises in each period. Though past performances do not guarantee future results but the same does give a great deal of insights into the company’s ability to successfully navigate the ups and downs in the economy and business cycles, its enterprise risk management and its business resilience.UnitedHealth is a dynamic company, which has evolved constantly. Since the Affordable Care Act came into effect in 2010 and imposed a number of restrictions on health insurers. The company kept modifying and diversifying its business to align with the changes in the industry and has emerged successfully over the past decade. An investor holding its shares for the past 10 years would have lapped up a return of 766% compared with the S&P’s Index return of 288% over the same time frame.UnitedHealth looks well poised for growth for the foreseeable future. Let’s analyze the reasons here:A Well-Diversified Business: UnitedHealth is present across different verticals, right from selling its health insurance plans via its segment, UnitedHealthcare to other areas of health care, such as pharmacy management, information and technology-enabled health services business, ambulatory care systems etc. These services are provided by its unit named Optum. Most of the same has been built by making small and big acquisitions over the past several years. No other insurer matches the scale of diversification like UnitedHealth.The company’s flourishing business will continue to propel its earnings. It is on a continuous hunt for acquiring the best-fitting entity that can add to its capabilities. With a successful integration track record, the company will be able to reap synergies from its judicious takeovers.Large-Scale Presence in an Attractive Market: UnitedHealth holds the number one spot in the for-profit or private Medicare Advantage (MA) market with other players like Aetna, a unit of CVS, Anthem Inc. ANTM, Centene Corp. CNC and Cigna Corp. CI following close.UnitedHealthcare has the largest share of Medicare Advantage enrollment since 2010. Its share of Medicare Advantage enrollment has grown from 19% in 2010 to 27% in 2021. The MA market, which is the private version of the public Medicare plans, is expected to grow fast as it caters to the aging baby boomer population, which is growing each year. A large market share with many of its plans carrying star ratings should fetch the company impressive membership growth.  International Operations Augur Well: UnitedHealth is one of the few insurers that has presence outside the United States, which provides it with benefits of geographical diversification. Its global business continues to be an early-stage investment area and bodes well for the long term.Solid Growth Outlook: The company’s guidance raises enough optimism for the long haul. Its long-term earnings per share (EPS) growth view is projected at 13-16% per annum, on average, with about two-thirds (8-11%) of the same being driven by earnings from operations and one-third (3-5%) from capital deployment.Sturdy Capital Position: A consistent favorable cash flow enables it to pursue growth strategies, such as buyouts and capital management via dividend payments and share buybacks. The current dividend yield is 1.36%, which has grown at 25.16% rate per year for the past 10 years. With a payout ratio of 30%, dividend growth is well-cushioned by the company’s robust earnings.BottomlineThe stock currently carries a Zacks Rank #2 (Buy) and is sure to display a share price appreciation by virtue of its strong business and growth visibility. It should thus be part of one’s investment portfolio for solid gains. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report Cigna Corporation (CI): Free Stock Analysis Report Centene Corporation (CNC): Free Stock Analysis Report Anthem, Inc. (ANTM): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks21 hr. 52 min. ago

Everest Re (RE) Up 28% in a Year: Can It Retain the Momentum?

New business opportunities, rate increases, solid renewal retention, and higher limited partnership income continue to drive Everest Re (RE). Shares of Everest Re Group RE have gained 28.3% in a year compared with the industry’s growth of 23.1%. With a market capitalization of $10.1 billion, the average volume of Everest Re’s shares traded in the last three months was 0.3 million. Image Source: Zacks Investment ResearchNew business opportunities, rate increases, solid renewal retention, and higher limited partnership income continue to drive Everest Re.It has a decent track record of beating earnings estimates. It beat estimates in two of the last four quarters and missed in two, delivering an earnings surprise of 20.33%, on average.Will the Bullish Run Continue?The Zacks Consensus Estimate for 2021 and 2022 earnings has moved 21.3% and 6.3% north respectively in the last 60 days, reflecting analysts’ optimism.The Reinsurance and Insurance operations should benefit from increased exposure and new business opportunities with the recovery of the U.S. economy, continued double-digit rate increases, and strong renewal retention.Its strong gross written premium growth creates operating leverage. The company has an active catastrophe management process that deploys modeling and establishes risk limits to control catastrophic exposures. Everest Re aims low- 90 combined ratio.  The company outlined a three-year strategic plan to generate total shareholders return of more than 13% in 2023. The plan encompasses gross written premium to grow 10-15% CAGR in Group, 8-12% CAGR in Reinsurance, and 18-22% CAGR in Insurance. Return on invested assets is estimated to be in the range of 2.75%-3.25% while long-term debt leverage ratio is expected to be 15-20. The company aims to increase alternative fixed income, public and private equity.This Zacks Rank #1 (Strong Buy) company should benefit from its capital adequacy, financial flexibility, long-term operating performance, and traditional risk management capabilities.Dividend HistoryThis property and casualty insurer has a solid track of increasing dividend each year. Its dividend increased at a seven-year CAGR (2014-2021) of 10.9%. Its dividend yield of 2.3% betters the industry average of 0.4%.Discounted ValuationThe stock is still undervalued. Price to book value of 1.21X is cheaper than the industry average of 1.26X. It has an impressive Value Score of A. This style score helps to identify undervalued stocks that have a long history of showing superior returns. Back-tested results have shown that stocks with a Value Score of A or B combined with a Zacks Rank #1 or #2 (Buy) are the best investment options. Thus, before its valuation increases, it is wise to take a position in the stock.Other Stocks to ConsiderSome other top-ranked stocks in the same space include American Financial Group AFG, Cincinnati Financial Corporation CINF, and Fidelity National Financial FNF, all sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.American Financial Group delivered an earnings surprise of 45.73% in the last reported quarter.Cincinnati Financial delivered an earnings surprise of 80.81% in the last reported quarter.Fidelity National delivered an earnings surprise of 48.20% in the last reported quarter.  Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cincinnati Financial Corporation (CINF): Free Stock Analysis Report Everest Re Group, Ltd. (RE): Free Stock Analysis Report American Financial Group, Inc. (AFG): Free Stock Analysis Report Fidelity National Financial, Inc. (FNF): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 22nd, 2021

Forget The Taper: All Hell Will Break Loose If The Fed"s 2022 Dots Signal 1 Rate Hike

Forget The Taper: All Hell Will Break Loose If The Fed's 2022 Dots Signal 1 Rate Hike For all the concerns about the Fed's tapering, the real news - and potential surprise - in today's FOMC announcement will be the dot plot. First, let's address the upcoming tapering where we mostly know where we stand. As we noted yesterday, at the conclusion of today's 2-day meeting, the FOMC is likely to provide the promised "advance notice" that tapering is coming, paving the way to announce the start of tapering at its November meeting, a move which was hinted in a recent trial balloon by the WSJ. Addressing this topic, Goldman recently said that the bank's standing forecast is that the FOMC will taper at a pace of $15bn per meeting, split between $10bn in UST and $5bn in MBS, ending in September 2022, although one possible alternative is for the Fed to accelerate the pace of tapering and cut each month instead of each meeting, thereby concluding its bond buying by next July. As Goldman's David Mericle wrote, "while the start date now appears set, the pace of tapering is an open question.Our standing forecast is that the FOMC will taper at a pace of $15bn per meeting, split between $10bn in UST and $5bn in MBS, ending in September 2022. But a number of FOMC participants have called instead for a faster pace that would end by mid-2022, and we now see $15bn per meeting vs. $15bn per month as a close call." Should the Fed react to the surging inflation and eventually announce a once-per-month taper, the QE over the next few months will look like this (market reaction notwithstanding, and it is very likely that should stocks tumble the Fed will be forced to put its tapering on hold or even reverse it and launch a brand new QE as Ray Dalio recently hinted). In terms of messaging, Goldman expects that the September FOMC statement will include language similar to that used in July 2017 to foreshadow the start of balance sheet normalization at the next meeting. For example, it might say something along the lines of: "The Committee expects to begin reducing the pace of its asset purchases relatively soon, provided that the economy evolves broadly as anticipated." Separately, Goldman does not expect the FOMC to reveal the pace this week, though the minutes to the September meeting might eventually provide a clue. We will skip over the Fed's economic projections (we discussed these in depth yesterday here), while providing an amusing interlued from UBS chief economist Paul Donovan... The Federal Reserve meets, and Fed Chair Powell (who is not an economist) will offer some comments on the economy. The fabled dot plot of individual FOMC members’ interest rate projections will also be updated—the sole purpose of this release is to increase confusion and misunderstanding in financial markets. ... and instead focus on the dots starting with a benign take, which once again comes from Goldman. Here, the bank warns that the dots are a close call because a single participant could tip the balance upward relative to the bank's forecasts, which are shown in Exhibit 6. Specifically, for 2022, only two participants would have to add a hike for the median to show a half-hike and three for the median to show a full hike. Still, the reason why Goldman does not see the 2022 dots relaying a half or full hike is that most of the potential marginal voters who could swing the balance are Governors at the Fed Board, and they are likely to join Chair Powell in submitting a no-hike baseline. After all, as Mericle notes, "it would be surprising if Powell showed a hike next year just weeks after his dovish speech at Jackson Hole reiterated his view that inflation pressures are likely to be transitory." In light of the above, Goldman expects the median dot to show no hikes in 2022, 2 hikes in 2023, and 3 hikes in 2024, anticipating that a quarterly pace of tightening back toward the neutral rate will be appropriate if everything goes well. While this would put the dots well above market pricing, Goldman does not expect much of a market reaction because the dots are a "modal forecast" corresponding to an economic baseline in which most participants will assume that the conditions for tightening will be met. In other words, the market will know that 2023 and 2024 are meaningless, but 2022 - which is closest - does matter. Indeed, Goldman's rates strategists recently showed that markets have tended to put little weight on the Fed’s three year ahead dots in the past. Before signing off, Goldman does warn that if it is wrong, the most likely surprise will be a hawkish one: The risks to our expectations for the September meeting are tilted in a hawkish direction.  Some Fed officials have expressed greater concern about inflation recently, reflecting stronger wage pressures, increases in some short-term measures of inflation expectations, and the possibility that supply chain disruptions could last well into next year.   The two most consequential hawkish risks would be if the FOMC reveals next week that it intends to taper at a faster pace or if the 2022 median dot shows a hike.  Surveys of our clients suggest that the majority of investors do not view either of these as the base case, meaning that either would be hawkish surprises to current market expectations.  The Fed leadership has historically preferred to avoid delivering hawkish surprises at FOMC meetings to the extent that it can, preferring the information to be priced in advance.  While the dots are sometimes out of the leadership’s control, in this case we think it can probably prevent either of these two potential hawkish surprises from materializing this week. But while Goldman does not see the 2022 dot moving higher, others are less sanguine. One among them is Standard Chartered's Steven Englander who agrees with Goldman on the taper, writing that "a November tapering decision will likely be signaled at the 22 September FOMC but without details on the pace of tapering or the path of subsequent policy rates hikes, except by inference." Here, however, Englander breaks with Goldman and agrees with us that the dots will be the focus of the market, the impact tempered by the relative market unimportance of Q4-2021 inflation and activity data releases compared to H1-2022 data releases. Cutting to the punchline, Englander thinks "the dots will suggest a more hawkish lean than is now priced in" and in a surprisingly hawkish forecast expects seven FOMC participants to indicate two 25bps hikes in 2022 – five a single hike and six no hikes. This would leave the median dot indicating a single 2022 hike, "but with a hawkish lean given so many participants pointing to two hikes."There is a risk that the hawkish 2022 skew could be even more pronounced, but we do not think the 2022 dots will show a two-hike median. We estimate that about 18bps is priced by end-2022, somewhat low given what we expect In a slightly different take from Standard Chartered's Steven Englander, he expects the dots will signal one 2022 hike (vs no hikes according to Goldman), and two added hikes in both 2023 and 2024. Specifically, he expects seven FOMC participants to indicate two 25bps hikes in 2022 – five a single hike and six no hikes. The would translate into the median dot representing a single 2022 hike, "but with a hawkish lean given so many participants pointing to two hikes" with Englander warning that "there is a risk that the hawkish 2022 skew could be even more pronounced, but we do not think the 2022 dots will show a two-hike median. We estimate that about 18bps is priced by end-2022, somewhat low given what we expect." Looking into the outer years, Englander expects the dots to point to another two hikes in each of 2023 and 2024, adding that "Neither hawks nor doves want to give an indication that aggressive policy moves may be needed – doves because they don’t want to augment any downside growth risks and hawks because they don’t want premature pricing of policy tightening to derail markets. Inflation and growth data will speak in H1-2022, and there is no point in gratuitously unsettling markets far in advance of the decisive data." Englander also takes a look at the FOMC composition in 2022, writing that "the 2022 regional Fed presidents who vote on FOMC are all pretty hawkish – Bullard, George, Mester and Rosengren. On the board, Waller is emerging as a hawk and even Vice Chair Clarida has begun to acknowledge inflation risks. The reliable doves are Powell, Williams, Brainard and Bowman. It is likely that a hawkish Quarles will be replaced because of his unpopularity on regulatory issues with Democrats, and one Board seat is unoccupied. But President Biden would have to appoint unambiguous doves to guarantee even a 50-50 split." Why does this matter? Well, it will matter most when there is ambiguity on the need to act: "Hawkish FOMC voters may read an intermediate outcome, say 2.7% core PCE, as signalling a need to act, while doves might wish to give inflation more time to dissipate on its own. It is possible that the FOMC could split 7-5 or 6-6, or even that Fed Chair Powell could be outvoted. This is a very unusual situation for the FOMC, where dissents have been isolated in recent decades. The Chair being in the minority has not happened since the 1980s. We think the FOMC will look hard for ways to avoid such difficult outcomes." Englander is not the only one expecting a hawkish risk: as Nomura's Charlie McElligott writes, "we see upside risk to the September “dot plot.” And while he thinks the median 2022 policy rate forecast will stay at the effective lower bound (ELB), he agrees with Goldman that the bar for a half or full hike is low. He also predicts that 2023 will continue to show two rate hikes, while 2024 – a new addition in September – will show an additional two hikes, similar to Englander, although he cautions that "concerns over inflation could result in more than four forecasted cumulative hikes by end-2024." What does this mean for stocks? Well, according to McElligott, whose note we discussed in detail earlier, the market is poised for a sharp move in either direction, but would need a “hawkish surprise”—particularly out of the ‘dot plot’, which would "drive some much-needed Rate Vol / upper left movement, via a UST selloff (today’s 133-00 TY straddle currently implying 4.65bps of yield move…so would need to see a larger magnitude selloff to indicate surprise vs mkt expectations)." And, as McElligott concludes, "IF…big IF…we got a “hawkish surprise” Fed, one should look at those duration-proxy “Secular Growth” Equities as the area again most at risk, and where we see a LOT of market interest in downside protection in said QQQ / ARKK / Unprofitable Tech proxies." Skew still remains “extreme” for sure, but in signs of a potential “pivot” off the worst of the extremes, we did at least finally see it soften yesterday—1m 25d Put Call Skew flattened by 50bps in SPX, while QQQ Skew flattened by ~ 30bps But no doubt, there is still “energy” there to overshoot in either direction with some very real accelerant flows remaining on account of Dealer options positioning: currently we see SPX / SPY Dealers short ~$9.2B of $Gamma (6.6%ile, flips positive above 4411) while $Delta remains negative at -$139.1B (11.2%ile, flips positive above 4400); similar for QQQ, with REALLY negative $Gamma at -$709.6mm (1.3%ile, flips up at 375.02) and negative $Delta at -$16.5B (2.7%ile, flips positive above $373.85) TL/DR: all hell could break loose if the Fed shocks the market hawkishly, and the median 2022 dot shows 1 rate hike. Tyler Durden Wed, 09/22/2021 - 12:05.....»»

Category: blogSource: zerohedgeSep 22nd, 2021

Top 5 High-Flying Stocks That Have Survived September Mayhem

We have narrowed down our search to five large-cap stocks that have gained nearly 5% or more than 5% month to date. These are: AVTR, PWR, ON, KLAC, and MRNA. September – historically the worst-performing month on Wall Street – is likely to maintain its trend this year too. The broad-market rally has stopped completely this month, with just seven days of trading left.The three major stock indexes — the Dow, the S&P 500, and the Nasdaq Composite — have tumbled 4.1%, 3.7%, and 3.4%, respectively. The small-cap-centric Russell 2000 is down 3.9%. The U.S. stock markets are currently suffering from several near-term concerns.Fed’s FOMC MeetingThe two-day FOMC meeting of the Federal Reserve started on Sep 21. The outcome of this meeting will impact financial markets immensely. At present, economists and financial researchers are divided whether the central bank will give any definite sign, if not the timeline, related to the tapering of its existing $120 billion per month bond-buy program.After its last FOMC meeting in June, Fed chairman Jerome Powell gave a signal that the Fed may start tapering this year although he maintained an extremely cautious view.However, the rapid spread of the Delta variant of coronavirus and a possible slowdown of U.S. economic growth, highly disappointing job additions in August, and a marginal decline in inflation rates in the last couple of months have compelled many experts to believe that the Fed may restrain itself from shifting from its ongoing ultra-dovish monetary policies.Evergrande CrisisGlobal stock markets including the U.S. stock markets fell sharply on Sep 20 following the news that a large China-based property developer, the China Evergrande Group, is in possible bankruptcy. The company faced a debt payment on its offshore bonds last week and said that it is suffering from unprecedented difficulties. It has more than $300 billion of offshore bonds.U.S. markets continued to suffer on Sep 21 due to the news as a section of investors believe that the default on debt servicing may have a rippling effect on the global financial sector. Moreover, a recession in the Chinese property development market will significantly reduce demand for metal and industrial products.Government Debt Ceiling in FocusOn Sep 21, the House of Representatives passed a bill in majority voting that will prevent a government shutdown and suspend the debt limit to prevent an economic disaster. However, the Republicans have threatened to block the bill in Senate.The Congress needs to pass a funding plan by Sep 30 to prevent a government shutdown. The clearance of the bill in the House will enable the government to run up to Dec 3 and suspend the debt ceiling till December 2022.Spread of the Delta VariantThe spread of the Delta variant remains a threat to the robust U.S. economic recovery. Some recently released economic data has shown that the Delta variant has taken a toll on the economy and it may get worse in the upcoming winter months. Investors remain concerned although the infection rate has dropped marginally this month.Not All Stocks Have Suffered This MonthDespite several immediate concerns and the historical downtrend of September, a number of stocks have popped this month. Among those winners, there are a handful of large-cap (market capital > $15 billion) stocks with a favorable Zacks Rank. Large-cap stocks generally have a solid business foothold. Investment in these stocks may be fruitful going forward.Our Top PicksWe have narrowed down our search to five large-cap stocks that have gained nearly 5% or more than 5% month to date. These stocks have strong growth potential for the rest of 2021 and have seen positive earnings estimate revisions in the past 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The chart below shows the price performance of our five picks in the past month.Image Source: Zacks Investment ResearchModerna Inc. MRNA is a biotechnology company, which develops therapeutics and vaccines based on messenger RNA for the treatment of infectious diseases, immuno-oncology, rare diseases, cardiovascular diseases, and auto-immune diseases.The company’s COVID-19 vaccine demonstrated strong uptake in multiple countries where it received authorization for temporary use in the past few months. It expects more than $19 billion in vaccine sales in 2021. Advance purchase agreements with several countries worth $20 billion in aggregate for 2022 are already in place.This Zacks Rank #2 company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past 30 days. The stock price has jumped 15.2% month to date.Quanta Services Inc. PWR is a leading national provider of specialty contracting services, and one of the largest contractors serving the transmission and distribution sector of the North American electric utility industry.The company expects utility, communications certain pipeline and industrial infrastructure services — which currently account for approximately 80-90% of revenues — to remain robust in 2021. Quanta Services’ optimism stems from healthy backlog levels which are expected to grow further. Also, rising renewable energy generation and associated demand bode well for the company.This Zacks Rank #2 company has an expected earnings growth rate of 19.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past 30 days. The stock price has climbed 12.5% month to date.Avantor Inc. AVTR provides products and services to customers in biopharma, healthcare, education and government, advanced technologies, and applied materials industries in the Americas, Europe, Asia, the Middle East, and Africa.The company offers materials and consumables, such as purity chemicals and reagents, lab products and supplies, formulated silicone materials, customized excipients, customized single-use assemblies, process chromatography resins and columns, analytical sample prep kits, education and microbiology products, and clinical trial kits.This Zacks Rank #1 company has an expected earnings growth rate of 51.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 7.1% over the past 60 days. The stock price has appreciated 8.6% month to date.ON Semiconductor Corp. ON is seeing strengthening demand across most end markets as evident from its booking trends over the last few quarters. It has a well-diversified business generating a significant percentage of revenues from each of the computing, consumer, industrial, communications, and automotive end markets.ON Semiconductor continues to gain traction among electric vehicle manufacturers. It witnessed a solid demand environment in the second quarter, particularly for its power and sensing products, which it expects will continue in the near term.This Zacks Rank #2 company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 0.4% over the past 30 days. The stock price has advanced 7.5% month to date.KLA-Tencor Corp. KLAC designs, manufactures, and markets process control and yield-management solutions for the semiconductor and related nano-electronics industries worldwide. KLA is benefiting from solid momentum across the process control market. Moreover, growing Foundry and Logic investments remain major positives.Its transition to advanced nodes and the insertion of EUV lithography are expected to drive growth in the near future. Enhanced wafer cleanliness and geometry specifications in the bare wafer market are driving demand for the company’s wafer products. Additionally, the Services business is likely to grow, driven by expanding installed base and higher utilization rates. High exposure to 5G infrastructure and the smartphone market is another positive.This Zacks Rank #2 company has an expected earnings growth rate of 32.7% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 12.5% over the past 60 days. The stock price has risen 4.9% month to date. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Quanta Services, Inc. (PWR): Free Stock Analysis Report KLA Corporation (KLAC): Free Stock Analysis Report Moderna, Inc. (MRNA): Free Stock Analysis Report ON Semiconductor Corporation (ON): Free Stock Analysis Report Avantor, Inc. (AVTR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 22nd, 2021

Consider These 3 Nuveen Mutual Funds for a Stable Portfolio

Below we share with you three top-ranked Nuveen mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy). Nuveen Investments, headquartered in Chicago, IL, was founded in 1898 by John Nuveen. The company seeks to provide financial services to its clients by using the multi-boutique structure. It provides these services through an independent team comprising Nuveen Asset Management, Winslow Capital and Symphony.The company is the number one farmland assets manager in the world and a leader in alternative investments. In its Multi-Asset Solutions, the company had $1.2 trillion of assets under management as of Jun 30, 2021. Nuveen offers a wide range of asset classes and products, ranging from equity and alternative funds to municipal and taxable fixed-income bond funds.Below we share with you three top-ranked Nuveen mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform peers in the future. Investors can click here to see the complete list of funds.Nuveen Missouri Municipal Bond Fund Class A FMOTX aims to offer a high level of current interest income that is exempted from regular federal, Missouri State and, in some cases, Missouri local income taxes, and is on par with capital preservation. The fund invests majority of assets in investment grade municipal bonds that are rated BBB/Baa or higher at the time of purchase by at least one independent rating agency or judged similarly by the fund’s adviser. The product may also invest a smaller portion of its assets in high-yield bonds. FMOTX has returned 4.7% over the past three years.Christopher L. Drahn is the fund manager of FMOTX since 2011.Nuveen All-American Municipal Bond Fund Class A FLAAX invests the lion’s share of its assets in municipal debt securities that are free from federal personal income tax. These muni bonds are rated Baa/BBB or higher. FLAAX may also invest around one-fifth of its assets in “junk” or high yield bonds. The fund seeks tax-exempted income. It has three-year annualized returns of 6%.FLAAX has an expense ratio of 0.70% compared with the category average of 0.73%.Nuveen Minnesota Municipal Bond Fund Class A FJMNX seeks to maximize tax-free current income. FJMNX invests a major portion of its assets in municipal bonds that pay interest which is free from regular federal and Minnesota state income tax. FJMNX has a three-year annualized return of 4.5%.As of the end of July 2021, FJMNX held 463 issues, with 2.29% of its assets invested in WESTERN MINN MUN PWR AGY MINN PWR SUPPLY REV 5%.To view the Zacks Rank and past performance of all Nuveen mutual funds, investors can click here to see the complete list of funds.Want key mutual fund info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >> Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (FLAAX): Fund Analysis Report Get Your Free (FMOTX): Fund Analysis Report Get Your Free (FJMNX): Fund Analysis Report To read this article on Zacks.com click here. Zacks Investment Research 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.....»»

Category: topSource: zacksSep 22nd, 2021

Futures Bounce On Evergrande Reprieve With Fed Looming

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

Category: blogSource: zerohedgeSep 22nd, 2021

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

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

Category: topSource: businessinsiderSep 22nd, 2021

Stocks Pump"n"Dump As Crypto Slumps Ahead Of Taper-Talk, Debt-Ceiling Doubts

Stocks Pump'n'Dump As Crypto Slumps Ahead Of Taper-Talk, Debt-Ceiling Doubts "...it's that time of the month..." As infamous market-seer, W.D. Gann once noted, September 22nd (the Autumnal Equinox) is the most important date in markets - when markets are more likely to reverse than any other day of the year. For some reason, stocks, commodities and currencies have a curious tendency to make major tops or bottoms on this day. Source: Bloomberg Yesterday's late-day panic-bid off the 100DMA (S&P)... ...extended during the overnight session (extreme low liquidity in Asia due to holidays), then started to fade as Europe opened and plunged into the red as US opened. The European close sparked some renewed buying and then algos kept things green in the last hour. Dow and S&P ended the day in the red with Nasdaq and Small Caps marginally higher... So much for Turnaround Tuesday! "Most Shorted" Stocks were unable to hold yesterday's late-day squeeze-fest Source: Bloomberg Scott Minerd, Guggenheim Investments’ chief investment officer, warned that Monday's selloff was a “clear crack” in recent upward trend that could see the S&P 500 Index fall 10% decline to around 4,050, and as much as 20%, adding that Assets across the board are “richly priced” and that the market is ripe for a correction. Citing uncertainties around the impact of the Evergrande credit fallout and the potential for disappointing earnings and economic data as risk factors for an extended market pullback, Minerd told BloombergTV that "the next question we have to ask ourselves: How much further could it go if we get there?" “When you look at the technicals, you look at the charts, you look at the prospects that we’re going to disappoint on the earnings front because of the Covid slowdown, we’re ripe for a correction.” Breadth (% of S&P < 200DMA) has been a bloodbath... Source: Bloomberg That may help explain the surge in 'crash' protection... Source: Bloomberg While all eyes are anticipating tomorrow's Fed statement, Dot-Plot, and presser; today saw more pressure on the Dems to act alone on the debt ceiling and the market did not like it as the 'kink' in the T-Bill curve increased significantly... Source: Bloomberg Seasonals, Debt-Ceiling Doubts, a Taper-Tantrum, and Evergrande uncertainty... Treasuries were quiet today, ending basically unchanged across the curve, so the long-end remains around 4bps lower on the week, and short-end unch... Source: Bloomberg The Dollar traded in a narrow range today, ending the day very marginally lower... Source: Bloomberg Cryptos were monkeyhammered again today... Source: Bloomberg Bitcoin tested down to its 100DMA today, plunging to its lowest since early August... Source: Bloomberg ...and then bounced notably... Source: Bloomberg Precious metals extended gains today as crude and copper slipped lower... Source: Bloomberg Finally, this week's slide in U.S. stocks may help reset a historical tie between earnings and inflation that has been out of whack for months. As Bloomberg notes, the relationship is based on the S&P 500 Index’s earnings yield and the annual rate of change in the U.S. consumer-price index. While the yield is typically higher, the opposite has been true since April, according to monthly data compiled by Bloomberg.  Source: Bloomberg Real yields for the last four months were about minus 1.6% -- the lowest level since 1980 and half a percentage point away from another low, set in 1974. Tyler Durden Tue, 09/21/2021 - 16:01.....»»

Category: blogSource: zerohedgeSep 21st, 2021

Here"s Why Investing in Chubb (CB) is a Prudent Move Now

Sustained premium growth, focus on middle-market businesses and in cyber insurance and a strong capital poise Chubb (CB) for growth. Chubb Limited’s CB improving pricing, new business growth, high renewal rates, and sturdy financial position along with favorable growth estimates make it a good investment choice.It has a decent earnings surprise history. Its bottom line beat estimates in three of the last four quarters, the average being 7.14%.Zacks Rank & Price PerformanceChubb currently carries a Zacks Rank #2 (Buy). Quarter to date, the stock has gained 11.9%, outperforming the industry’s increase of 0.1%, the Finance sector’s rise of 0.7%, and the Zacks S&P 500 composite’s rise of 3.6%.Image Source: Zacks Investment ResearchGrowth ProjectionsThe Zacks Consensus Estimate for 2021 earnings is pegged at $12.29, indicating a 68.1% increase from the year-ago reported figure. The consensus estimate for 2022 earnings is pegged at $13.58, indicating an increase of 10.5% from the year-ago reported figure. The long-term earnings growth rate is currently pegged at 10%, better than the industry average of 9.2%.Return on Equity (ROE)The company’s ROE for the trailing 12 months is 8.7%, comparing favorably with the industry’s 5.7%, reflecting the company’s efficiency in utilizing shareholders’ fund.Estimate RevisionThe Zacks Consensus Estimate for 2021 has moved 6.9% north while the same for 2022 has moved up 6.7% in the past 60 days, reflecting analyst optimism.Style ScoreThe company has a favorable Value Score of B. This style score helps to identify undervalued stocks that have a long history of showing superior returns. Back-tested results have shown that stocks with a Value Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 are the best investment options.Business TailwindsBeing the world’s largest publicly traded property and casualty (P&C) insurer, its underwriting results have outperformed the average of its peers over the last 10 years.Chubb has one of the largest product portfolios in the global insurance industry, helping it deliver continued premium growth. Sturdy commercial P&C businesses, new business, positive rate increases across most lines and regions as well as strong renewal retention will help it retain the momentum.Chubb is looking to capitalize on the potential of middle-market businesses in cyber insurance that has immense room for growth.Increased corporate bond call activity, higher private equity distributions, and increased dividends on public equities, adjusted pre-tax net investment income will likely improve in the long term. The company estimates the quarterly run rate to be about $900 million.The insurer has a $5 billion share buyback authorization through June 2022 in its kitty.Solid Dividend HistoryThe company has been hiking dividends for the last 28 years. It has increased dividends at a seven-year (2014 – 2021) CAGR of 6.9%. Its yield of 1.7% is better than the industry average of 0.4%.Strong Capital PositionChubb boasts a strong capital position, with sufficient cash generation capabilities. Its balance sheet includes a $123 billion AA-rated portfolio of cash and investment assets. It has over $75 billion in capital, stemming from superior operating and investing performanceOther Stocks to ConsiderSome other top-ranked stocks in the same space include American Financial Group AFG, Cincinnati Financial Corporation CINF, and Everest Re Group RE, all sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.        American Financial Group delivered an earnings surprise of 45.73% in the last reported quarter.Cincinnati Financial delivered an earnings surprise of 80.81% in the last reported quarter.Everest Re Group delivered an earnings surprise of 62.56% in the last reported quarter.  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 Chubb Limited (CB): Free Stock Analysis Report Cincinnati Financial Corporation (CINF): Free Stock Analysis Report Everest Re Group, Ltd. (RE): Free Stock Analysis Report American Financial Group, Inc. (AFG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

September"s Weak History Turning True: 5 ETF Buying Zones

Given the myriad of woes, investors should stash their cash in some safe investing zones. September is once again proving to be a tough month for Wall Street with the major three indices in red within three weeks into the month. This suggests that historical trends may prove true this year. Concerns over accelerating coronavirus infections, Fed’s tapering talks, renewed inflation fears, signs of a slowdown in China and a potential high corporate tax rates have taken a toll on stock markets.Ongoing debates over the debt limit in Washington as well as the potential collapse of property developer China Evergrande have also led to risk-off trading. The White House warned that a failure by the U.S. Congress to extend the debt limit could push the economy into a recession and lead the country to default on its payment obligations. The U.S. House is set to vote this week on the debt ceiling. Meanwhile, China’s real estate juggernaut, which is under a major debt burden, facing a $150 million in bond payments later this week, could default on its payment. This would trigger turmoil across global markets.Additionally, the Q3 earnings trend has also lost momentum with the magnitude of positive revisions to the estimates notably below the comparable periods of the last three earnings seasons (read: September Turns Sour: Top ETF Areas of Last Week).Given the myriad of woes, investors should stash their cash in some safe investing zones. We have highlighted them below and their ETFs:Gold - SPDR Gold Trust ETF GLDGold is viewed as a safe haven in times of economic or political turmoil. Concerns over global economic slowdown have raised the appeal for the bullion as a store of value and hedge against market turmoil. As such, the ultra-popular product tracking this bullion like GLD could be an interesting pick. The fund tracks the price of gold bullion measured in U.S. dollars, and kept in London under the custody of HSBC Bank USA. It is an ultra-popular gold ETF with AUM of $56.3 billion and heavy volume of nearly 7 million shares a day. It charges 40 bps in fees per year from investors and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.Long-Dated Treasury - iShares 20+ Year Treasury Bond ETF TLTThe products tracking the long end of the yield curve often provide a safe haven. TLT provides exposure to long-term Treasury bonds by tracking the ICE U.S. Treasury 20+ Year Bond Index. It holds 31 securities in its basket and charges 15 bps in annual fees. TLT is one of the most popular and liquid ETFs in the bond space with AUM of $17.7 billion and an average daily volume of 15 million shares.Low Volatility - iShares Edge MSCI Min Vol USA ETF USMVThese products have the potential to outpace the broader market providing significant protection to the portfolio. These funds include more stable stocks that have experienced the least price movement. Further, these allocate more to defensive sectors that usually have a higher distribution yield than the broader markets. While there are several options, USMV with AUM of $28.2 billion and an average daily volume of 2.2 million shares is the most popular ETF. The fund offers exposure to stocks that have lower volatility characteristics relative to the broader U.S. equity market. It tracks the MSCI USA Minimum Volatility Index, holding 183 stocks in its basket. The product charges 15 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook (read: Growth Concerns to Drive Demand for Low-Volatility ETFs).Dividend - Vanguard Dividend Appreciation ETF VIGThe dividend-paying securities are the major sources of consistent income for investors when returns from the equity market are at risk. This is especially true as these stocks offer the best of both these worlds — safety in the form of payouts and stability in the form of mature companies that are less volatile to large swings in stock prices. The companies that offer dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis. While the dividend space has been crowded, ETFs with stocks having a strong history of dividend growth like VIG seem to be good picks. It holds 247 stocks in its basket with AUM of $65.8 million. The fund trades in volume of 2 million shares a day on average and charges 6 bps in annual fees. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Dividend Aristocrat ETFs Investing Guide).Long/Short - AGFiQ US Market Neutral Anti-Beta Fund BTALThe fund has the potential to generate positive returns regardless of the direction of the stock market as long as low-beta stocks outperform high beta stocks. It invests in low-beta securities and at the same time shorts high-beta stocks of approximately equal dollar amounts within each sector. It seeks to deliver the spread return between low and high-beta stocks. This can easily be done by tracking Dow Jones U.S. Thematic Market Neutral Anti-Beta Index. The ETF has AUM of $99.2 million and an expense ratio of 2.19%. It trades in an average daily volume of 37,000 shares. 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 iShares 20 Year Treasury Bond ETF (TLT): ETF Research Reports SPDR Gold Shares (GLD): ETF Research Reports Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports iShares MSCI USA Min Vol Factor ETF (USMV): ETF Research Reports AGFiQ US Market Neutral AntiBeta ETF (BTAL): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

Here"s Why Investors Should Retain CNA Financial (CNA) Stock

CNA Financial (CNA) holds the potential to reap benefits from its solid capital position, higher new business, strong rate and favorable acquisition ratio. CNA Financial Corporation CNA is well-poised for growth, driven by higher new businesses, strong rate and higher net earned premiums as well as effective capital deployment.Growth ProjectionsThe Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $3.95 and $4.28, indicating growth of 46.3% and 8.2%, respectively, from the year-ago reported figures. The expected long-term earnings growth rate is pegged at 5%.Estimate RevisionEstimates for 2021 and 2022 have moved up 1.8% and 0.7%, respectively, in the past 60 days, which reflects investors’ optimism.Earnings Surprise HistoryCNA Financial has a decent earnings surprise history. It beat estimates in each of the last four quarters, the average being 10.81%.Zacks Rank & Price PerformanceCNA Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 40.1% compared with the industry’s growth of 21.7%. Image Source: Zacks Investment Research Return on Equity (ROE)The company’s ROE for the trailing 12 months is 9.1%, better than the industry average of 5.7%, reflecting the company’s efficiency in utilizing shareholders’ funds.Business TailwindsCNA Financial remains well-poised to gain from higher new businesses, strong rate, lower net catastrophe losses, improved non-catastrophe current accident year underwriting results, higher net earned premium, which continue to contribute to premium growth across its Specialty, Commercial and International segments.By the virtue of strong investment income and lower level of catastrophe losses, earnings of the property and casualty insurer are likely to improve in the long run.The combined ratio has been improving largely due to lower net catastrophe losses as well as higher underlying underwriting profit.While the expense ratio should continue to gain from higher net earned premiums, lower acquisition costs and a favorable acquisition ratio; the loss ratio should benefit from improved non-catastrophe current accident year underwriting results and lower net catastrophe losses.Given higher income from limited partnerships, investment income is expected to improve despite the current low interest rate environment. The strong limited partnership returns across both P&C and life and group segments were significantly driven by private equity investments.The insurer maintains liquidity in the forms of cash and short-term investments, and has sufficient liquidity holdings to meet obligations and withstand significant business variability. Riding on improved current accident year underwriting profitability and a lower level of paid losses, operating cash flow continues to remain strong.Courtesy of solid financial strength, the insurer engages in capital deployment to enhance its shareholders’ value. Notably, its dividend payments have witnessed a CAGR of 24.1% in the past seven years (2014-2021) and currently yield 3.6%, which is better than the industry average of 0.4%. This makes the stock an attractive pick for yield-seeking investors.Stocks to ConsiderSome better-ranked players in the property and casualty industry are American Financial Group, Inc. AFG, Everest Re Group, Ltd. RE and Cincinnati Financial Corporation CINF, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The bottom line of American Financial surpassed estimates in each of the last four quarters, the average being 52.82%.Everest Re surpassed estimates in two of the last four quarters and missed in the other two, the average earnings surprise being 20.33%.Cincinnati Financial’s earnings surpassed estimates in three of the last four quarters and missed the mark on the remaining occasion, the average surprise being 36.01%. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cincinnati Financial Corporation (CINF): Free Stock Analysis Report Everest Re Group, Ltd. (RE): Free Stock Analysis Report CNA Financial Corporation (CNA): Free Stock Analysis Report American Financial Group, Inc. (AFG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

Is First Trust STOXX European Select Dividend ETF (FDD) a Strong ETF Right Now?

Smart Beta ETF report for FDD Designed to provide broad exposure to the European Equity ETFs category of the market, the First Trust STOXX European Select Dividend ETF (FDD) is a smart beta exchange traded fund launched on 08/27/2007.What Are Smart Beta ETFs?The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.Fund Sponsor & IndexBecause the fund has amassed over $287.84 million, this makes it one of the average sized ETFs in the European Equity ETFs. FDD is managed by First Trust Advisors. Before fees and expenses, this particular fund seeks to match the performance of the STOXX Europe Select Dividend 30 Index.The STOXX Europe Select Dividend 30 Index consists of 30 high dividend-yielding securities selected from the STOXX Europe 600 Index.Cost & Other ExpensesInvestors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.Annual operating expenses for FDD are 0.57%, which makes it on par with most peer products in the space.It's 12-month trailing dividend yield comes in at 3.80%.Sector Exposure and Top HoldingsETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.Looking at individual holdings, Glaxosmithkline Plc (GSK.LN) accounts for about 6.17% of total assets, followed by Sse Plc (SSE.LN) and Legal & General Group Plc (LGEN.LN).The top 10 holdings account for about 45.1% of total assets under management.Performance and RiskSo far this year, FDD has added about 10.57%, and is up roughly 35.36% in the last one year (as of 09/21/2021). During this past 52-week period, the fund has traded between $9.81 and $15.54.The fund has a beta of 0.99 and standard deviation of 25.52% for the trailing three-year period, which makes FDD a medium risk choice in this particular space. With about 31 holdings, it has more concentrated exposure than peers.AlternativesFirst Trust STOXX European Select Dividend ETF is a reasonable option for investors seeking to outperform the European Equity ETFs segment of the market. However, there are other ETFs in the space which investors could consider.JPMorgan BetaBuilders Europe ETF (BBEU) tracks MORNINGSTAR DEV EUROPE TARGET MKT EXP ID and the Vanguard FTSE Europe ETF (VGK) tracks FTSE Developed Europe All Cap Index. JPMorgan BetaBuilders Europe ETF has $8.72 billion in assets, Vanguard FTSE Europe ETF has $20.38 billion. BBEU has an expense ratio of 0.09% and VGK charges 0.08%.Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the European Equity ETFs.Bottom LineTo learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center. 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 First Trust STOXX European Select Dividend ETF (FDD): ETF Research Reports Vanguard FTSE Europe ETF (VGK): ETF Research Reports JPMorgan BetaBuilders Europe ETF (BBEU): ETF Research Reports To read this article on Zacks.com click here......»»

Category: topSource: zacksSep 21st, 2021

Should iShares MSCI USA SmallCap Min Vol Factor ETF (SMMV) Be on Your Investing Radar?

Style Box ETF report for SMMV Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the iShares MSCI USA SmallCap Min Vol Factor ETF (SMMV) is a passively managed exchange traded fund launched on 09/07/2016.The fund is sponsored by Blackrock. It has amassed assets over $842.13 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.Why Small Cap BlendThere's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.CostsWhen considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.Annual operating expenses for this ETF are 0.20%, putting it on par with most peer products in the space.It has a 12-month trailing dividend yield of 1.19%.Sector Exposure and Top HoldingsEven though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.This ETF has heaviest allocation to the Healthcare sector--about 20.50% of the portfolio. Financials and Information Technology round out the top three.Looking at individual holdings, Cubesmart Reit (CUBE) accounts for about 1.65% of total assets, followed by American Homes Rent Reit Class A (AMH) and Aptargroup Inc (ATR).The top 10 holdings account for about 12.62% of total assets under management.Performance and RiskSMMV seeks to match the performance of the MSCI USA Small Cap Minimum Volatility (USD) Index before fees and expenses. The MSCI USA Small Cap Minimum Volatility (USD) Index comprises of small-capitalization U.S. equities that, in the aggregate, have lower volatility characteristics relative to the small-capitalization U.S. equity market.The ETF return is roughly 11.37% so far this year and was up about 26.80% in the last one year (as of 09/21/2021). In the past 52-week period, it has traded between $28.50 and $39.03.The ETF has a beta of 0.85 and standard deviation of 21.35% for the trailing three-year period. With about 359 holdings, it effectively diversifies company-specific risk.AlternativesIShares MSCI USA SmallCap Min Vol Factor ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SMMV is a sufficient option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.The iShares Russell 2000 ETF (IWM) and the iShares Core S&P SmallCap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $63.22 billion in assets, iShares Core S&P SmallCap ETF has $67.57 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.Bottom-LineAn increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center. 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 iShares MSCI USA SmallCap Min Vol Factor ETF (SMMV): ETF Research Reports CubeSmart (CUBE): Free Stock Analysis Report AptarGroup, Inc. (ATR): Free Stock Analysis Report iShares Russell 2000 ETF (IWM): ETF Research Reports American Homes 4 Rent (AMH): Free Stock Analysis Report iShares Core S&P SmallCap ETF (IJR): ETF Research Reports To read this article on Zacks.com click here......»»

Category: topSource: zacksSep 21st, 2021

Dow Finishes Strong with Gain of More Than 2%

Dow Finishes Strong with Gain of More Than 2% The market avoided another late-session selloff and posted solid gains for Tuesday… and it didn’t even need tech to lead the way! The major indices actually rose throughout the day and finished around their highs, which was the complete opposite of Monday. The Dow soared by 2.13% (or nearly 557 points) to 26,642.59. The index had a gain very similar to this yesterday before the selloff ruined it. But there was no third act craziness today. It now has a three-day winning streak since it was the only index to finish slightly higher on Monday. The S&P more than made up for the selloff as it jumped 1.34% to 3197.52 after sliding 0.94% the day before. The NASDAQ finished higher as well, though underperformed its counterparts again as tech remains out of favor for the moment. The index rose 0.94% (or about 98 points) to 10,488.58. That’s a great result, though it recovered less than half of yesterday’s 2.13% plunge. It feels all the more unfulfilling since it’s the mighty NASDAQ, which has been leading this market higher for weeks now despite rising coronavirus cases and delays in reopenings. Earnings season unofficially began today with some reports from the big banks. As usual, JPMorgan (JPM) got most of the attention as the country’s biggest bank. It beat expectations on the top and bottom lines due, in part, to an increase in trading revenues. However, JPM shares only improved 0.57%. Other banks that reported today included Citigroup (C, -3.93%) and Wells Fargo (WFC, -4.57%). The reports were pretty good for the most part despite the market's reactions, but clearly showed just how ugly the second-quarter was amid this pandemic shutdown. Other financial names scheduled for the coming days include Goldman Sachs (GS) tomorrow and Bank of America (BAC) on Thursday. We’ll also be getting our first FAANG report on Thursday, as Netflix (NFLX) is scheduled to come to the plate. Today's Portfolio Highlights: Income Investor: Good tech stocks with stable dividend yields aren’t exactly easy to find, but Maddy located one on Tuesday by adding Garmin (GRMN). The high-tech recreational device maker came to prominence with navigation systems for cars, but has since diversified its line-up to include products for boats, airplanes, personal fitness and much more. Shares are up more than 50% since the coronavirus low on March 23 and the editor is confident that its annual yield of 2.5% is secure. Earnings and sales are on the rise and should continue moving upwards as people head outdoors to breakup the monotony during this pandemic shutdown. Read the full write-up for a lot more on today’s addition. Stocks Under $10: The portfolio has a few open positions to fill and Brian got to work on Tuesday with the addition of toymaker Funko (FNKO). If you have a good memory, you may remember that the service pulled a 130% return out of this name back in 2018… and now the stock is much lower than the last time it was added. FNKO is a Zacks Rank #2 (Buy) that has beaten the Zacks Consensus Estimate in each of the last four quarters with an average surprise of 47%. Earnings estimates are moving higher for this year and next, and the editor thinks its valuation is “reasonable”. In addition to all this, Brian likes FNKO because its less volatile than tech/biotech names, so it adds stabilization to the portfolio. Read the full write-up for more about this new pick.  Surprise Trader: This earnings season will be all about the new “stay-home economy” in this portfolio. Dave considers networking hardware to be part of that space, so he added NETGEAR (NTGR) on Tuesday with a 12.5% allocation. The company beat the Zacks Consensus Estimate in 13 of the past 14 quarters, including the last five in a row. It topped by more than 16% last time, and has a positive Earnings ESP of 6.67% for the quarter coming after the bell on Wednesday, July 22. Shares of NTGR jumped 40% from the low in mid-March, but still has plenty of room to run before its all-time highs above $75. Read the full write-up for more on this new addition.  Marijuana Innovators: Things are looking up for the Canadian producers, which puts Aphria (APHA) in a good position. This medical cannabis company offers sativa, indica and hybrid medical marijuana products, as well as cannabis oils. Dave added APHA on Tuesday. Make sure to read his complete commentary for all the specifics on this new addition. Zacks Short List: The portfolio swapped out two names in this week's adjustment. The stocks that were short-covered included The TJX Cos. (TJX, +2.7%) and Xylem (XYL), while the new additions were Sunrun (RUN) and Tiffany (TIF). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide. Insider Trader: "Stocks rebounded today after the big bank earnings reports were better than expected. "This is what is going to happen all earnings season. Everyone knows Q2 was awful. But if a company's numbers are better than the grim outlook, then, see, it's not that bad." -- Tracey Ryniec All the Best, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021