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Category: topSource: redinewsMay 1st, 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. 32 min. ago

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

ETFs to Bet On as Fed Turns Hawkish, Signals Tapering

The Federal Reserve Chair Jerome Powell kept the interest rates near zero at 0-0.25% but signaled bond-buying tapering ahead followed by interest rate hikes as early as next year. In the FOMC meeting that concluded on Sep 22, the Federal Reserve Chair Jerome Powell kept the interest rates near zero at 0-0.25% but signaled bond-buying tapering ahead followed by interest rate hikes as early as next year.The central bank is expected to begin scaling back the monthly bond purchases as soon as November and complete the process by mid-2022. This is because it expects the Delta variant of the coronavirus, which has dented economic activity in the recent months, to have a short-lived effect on the recovery. Per the officials, the economy will likely make “substantial further progress” by the end of the year, a threshold needed for the central bank to begin slowing the pace of asset purchases (read: Buy the Dip With These Top-Ranked ETFs).Fed Chair Jerome Powell reiterated that he believes the U.S. economy has already surpassed the central bank's goals for inflation, and said a "reasonably good" September jobs report would indicate that the Fed's employment goals to begin tapering had been satisfied as well. Notably, the central bank has been buying $120 billion per month of Treasuries and mortgage-backed securities since the start of the COVID-19 crisis.The policy statement also revealed that nine of 18 Fed policymakers foresee a liftoff in interest rates next year, compared to seven policymakers in June. The median dot also projects three to four total rate hikes by the end of 2023. Through the end of 2024, the median FOMC member sees six to seven total rate hikes.Given this, investors should continue to focus on areas/sectors that will benefit the most from the Fed’s tightening policy. Here, we have detailed four of these and their ETFs below:FinancialsA rising interest rate scenario is highly profitable for the financial sector. This is because the steepening yield curve would bolster profits for banks, insurance companies, and discount brokerage firms. A broad way to play this trend is with Financial Select Sector SPDR Fund XLF, which has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.This is the most popular financial ETF in the space with AUM of $40 billion and an average daily volume of about 43 million shares. The fund follows the Financial Select Sector Index, holding 65 stocks in its basket. It is heavily concentrated on the top two firms, making up for double-digits share each while other firms hold no more than 7.2% share. In terms of industrial exposure, banks take the top spot at 37.5% while capital markets, insurance, and diversified financial services make up for double-digit exposure each. The fund charges 12 bps in annual fees and is up 27.5% in the year-to-date timeframe (read: 401(k) Balances at All-Time Highs: 6 ETFs to Buy).Consumer DiscretionaryConsumer discretionary stocks also seem good bets. This is because a tight policy is seemingly the result of a pickup in economic growth supported by solid job growth, wage growth and increased lending activity that result in higher spending power. One exciting pick in this space can be Vanguard Consumer Discretionary ETF VCR, which has a Zacks ETF Rank #1 with a Medium risk outlook (read: ETF Areas to Gain From the Upcoming Holiday Shopping Season).This fund follows the MSCI U.S. Investable Market Consumer Discretionary 25/50 Index and holds 296 stocks in its basket. It has heavy concentration on the top firm – Amazon AMZN – at 23.5% share while the other firms hold no more than 10% of the assets. The product has managed $6.7 billion in its asset base and charges 10 bps in annual fees. In terms of industrial exposure, Internet & direct marketing, retail takes the largest share at 27.6% while automobile manufacturers, restaurants, and home improvement retail round of the next three spots. The ETF trades in average daily volume of 59,000 shares and has gained 15.8% in the same timeframe.TechnologyIn a tight policy era, technology seems one of the safest sectors as most of the companies are sitting on a huge cash pile. The cash reserves will ensure that these companies are not plagued by any financial trouble even in a rising interest rate environment. While there are several ETFs to bet on, First Trust NASDAQ-100-Technology Sector Index Fund QTEC could be an intriguing option. It has a Zacks ETF Rank #1 with a High risk outlook.    This ETF tracks the NASDAQ-100 Technology Sector Index, holding 41 stocks in its basket with almost equal allocation. From an industry look, software and semiconductors dominate the list with 34.9% and 32.7% share, respectively, while production technology equipment and consumer digital services make up for the next two spots. QTEC is a large cap centric fund with AUM of $3.9 billion and average daily volume of around 66,000 shares. It charges 57 bps in annual fees and gained 19.6% so far this year.DollarTightening policy and higher rates would attract more capital to the country from foreign investors, thereby boosting the U.S. dollar against the basket of other currencies. Invesco DB US Dollar Index Bullish Fund UUP offers exposure to a dollar against a basket of six world currencies. This is done by tracking the Deutsche Bank Long USD Currency Portfolio Index - Excess Return plus the interest income from the fund’s holdings of U.S. Treasury securities. In terms of holdings, UUP allocates nearly 57.6% in euro and 25.5% collectively in the Japanese yen and British pound. The fund has so far managed an asset base of $487.9 million and sees an average daily volume of around 697,000 shares. It charges 76 bps in annual fees and has gained 3.5% so far this year. The fund has a Zacks ETF Rank #2 with a Medium risk outlook (read: U.S. Dollar to Gain Ahead? ETFs to Gain/Lose).  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 Amazon.com, Inc. (AMZN): Free Stock Analysis Report Financial Select Sector SPDR ETF (XLF): ETF Research Reports Invesco DB US Dollar Index Bullish ETF (UUP): ETF Research Reports Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports First Trust NASDAQ100Technology Sector ETF (QTEC): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks16 min. ago

Time To Buy The Dip?

S&P 500 dived, yet the slide was bought before the closing bell. Does the long lower knot mean the selling is over? It‘s too early to say as following similar momentuous days, it takes 1-3 days for the dust to clear usually. The selling pressure might not be over, and the question is how far […] S&P 500 dived, yet the slide was bought before the closing bell. Does the long lower knot mean the selling is over? It‘s too early to say as following similar momentuous days, it takes 1-3 days for the dust to clear usually. The selling pressure might not be over, and the question is how far will it reach on a fresh attempt – 4,350s look attainable. .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 The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (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 There, the fate of this correction would be decided, but we‘re on the verge of the historically more volatile part of Sep, and tomorrow‘s FOMC would up the ante. The dollar though was unable to rally, to keep intraday gains – on one hand a certain show of strength given the retreat in Treasury yields, on the other hand, proof of stiff headwinds as the world reserve currency isn‘t in a bull market. I‘m leaning towards the latter explanation. As stocks rebound in what may still turn out to be a dead cat bounce, commodities got clobbered too – just as cryptos did. Gold attracted safe haven demand as money flew to Treasuries as well. Miners with silver holding ground, are a good sign for the sector – the overwhelmingly negative sentiment looks getting long in the tooth. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook Half full body, half lower knot – such are the trickiest of candles. The fate of the downswing is being decided, and the bears need to break below 4,350s to regain initiative. I wouldn‘t be surprised to see stocks diverge from credit markets as buy the dip mentality hasn‘t spoken its last word. Credit Markets High yield corporate bonds haven‘t made a strong enough comeback – their behavior through Wednesday, is of key importance now. Gold, Silver and Miners Gold has a chance to prove its local bottom is in, even if miners aren‘t yet confirming. Should the rebound in stocks hold, silver alongside commodities stands to benefit the most. Crude Oil Oil stocks and oil dived in sympathy, but black gold looks quite resilient to wild price swings. The bounce appears to have paused for the day. Copper Copper doesn‘t look as stabilized as oil does at the moment – prices haven‘t yet meaningfully decelerated, and the buying power isn‘t convincing. Bitcoin and Ethereum Bitcoin and Ethereum are joining the selloff, and the golden cross is in danger of being invalidated fast. Breaking below the early Aug lows would mean a fresh downleg is here. Let‘s see first the degree of liquidity returning to cryptos. Summary Is the selling over, is it not? Still inconclusive, but time for the bears is running short. The selling doesn‘t appear to be over, but I‘m not calling for a break of yesterday‘s lows before tomorrow is over. The degree of commodities outperformance today will be insightful as to the overall rebound strength. Thank you for having read today‘s free analysis, which is available in full here 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. 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Category: blogSource: valuewalk13 hr. 16 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

JPMorgan (JPM) Hikes Dividend: Is the Stock Worth a Look?

JPMorgan (JPM) increases its quarterly dividend by 11.1% to $1 per share. JPMorgan JPM has increased its regular quarterly dividend. The bank announced a dividend of $1 per share, representing a hike of 11.1% from the prior payout. The dividend will be paid out on Oct 31 to shareholders of record as of Oct 6.Based on last day’s closing price, the dividend yield currently stands at 2.6%.JPMorgan has a track record of increasing its dividends since 2011. From paying 5 cents a share as the quarterly dividend during the financial crisis, the company has come a long way in terms of capital strength.Last year, amid the coronavirus-induced economic slowdown, the Federal Reserve restricted dividends and share repurchases by JPMorgan along with other major banks to conserve liquidity. However, with the removal of restrictions, the Wall Street giant is expected to be able to continue to enhance shareholder value in the future through efficient capital deployments, given its earnings and capital strength.So far this year, shares of JPMorgan have gained 20.4% compared with 23.8% growth recorded by the industry. Image Source: Zacks Investment Research Investors, who are interested in this Zacks Rank #3 (Hold) stock, should first take a look at its fundamentals and growth opportunities mentioned below before making any investment decision.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Earnings Strength: Over the past three-five years, JPMorgan witnessed earnings growth of 13.6% compared with the industry average of 8.8%. In 2021, the company’s earnings are projected to grow 58.2%.Its long-term (three-five years) estimated earnings growth rate of 5% promises rewards for investors in the long run.Further, JPMorgan has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 33.3%.Superior Return on Equity (ROE): JPMorgan’s ROE is 19.26% compared with the industry average of 12.10%. This indicates that the company reinvests cash more efficiently compared with its peers.Impressive Expansion Strategy: JPMorgan has been expanding its footprint in new regions by opening branches. In 2018, it announced plans of entering 25 markets by opening 400 new branches by 2022-end. On this front, the bank has already added more than 220 new branches and has a presence in 48 of 50 U.S. states.Moreover, supported by a solid balance sheet position, the company has been growing through strategic acquisitions. Of late, it has been on an expansion spree and has announced several deals that are expected to help grow fee income and support the bank's plan to diversify revenues. In the current year, JPMorgan’s top line is expected to grow 2.4%.Elevated Expenses: The company’s operating expenses have witnessed a compound annual growth rate of 4.3% over the five-year period ended 2020. The upward trend continued in the first two quarters of 2021. As JPMorgan continues with strategic on-bolt acquisitions and invests to upgrade technology, expenses are likely to remain elevated.Margin Pressure: Over the past several quarters, JPMorgan’s net interest income growth has been hampered and its net yield on interest-earning assets has contracted because of the low interest rate environment. Notably, after slashing rates thrice in 2019, the Fed cut the interest rates to near zero in March 2020, with an aim to support the U.S. economy from the coronavirus-induced mayhem. Since the central bank has signaled no major change in the interest rate scenario anytime soon, JPMorgan’s margins are expected to remain under pressure.Competitive LandscapeMany finance companies have raised their dividend over the past few months.A few days ago, Fifth Third Bancorp FITB raised its quarterly cash dividend by 11%. The company will now pay out a dividend of 30 cents per share. The dividend will be paid out on Oct 15 to its shareholders of record as of Sep 30.While Spirit of Texas Bancshares, Inc. STXB announced a 33.3% hike in its dividend to 12 cents per share, Virtus Investment Partners, Inc. VRTS increased its regular quarterly cash dividend by 83%. 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 JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Fifth Third Bancorp (FITB): Free Stock Analysis Report Virtus Investment Partners, Inc. (VRTS): Free Stock Analysis Report Spirit of Texas Bancshares, Inc. (STXB): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 22nd, 2021

Here"s Why You Should Hold on to Pentair (PNR) Stock Now

Strong demand, positive movement in earnings estimates, focus on introducing new products and growing through acquisitions make Pentair (PNR) stock worth retaining in the portfolio. Pentair plc PNR has been riding on increased demand for swimming pools as consumers continue to enhance their at-home quality of life by investing in pools. Demand for pool maintenance remains strong. Focus on expanding digital transformation, innovation, technology and brand building, and making acquisitions in the areas of pool and residential and commercial water treatment remain key catalysts. Its ongoing transformation program to accelerate growth and drive margin expansion is expected to bear fruit in the long haul.Shares of Pentair have gained 25.6% in the past six months compared with the industry’s rally of 20.8%. Image Source: Zacks Investment ResearchThe company currently has a Zacks Rank #3 (Hold) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) 2 (Buy) or 3 offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.Let’s take a look into the factors that make this stock worth holding on to.Strong Q2 Results & Record Backlog: Pentair reported second-quarter 2021 adjusted earnings per share of 84 cents, which not only beat the Zacks Consensus Estimate of 80 cents but also its guidance of earnings per share in the range of 75 cents to 80 cents. The bottom line improved 42% year over year driven by strong order levels. The company also ended the quarter with record backlog levels.Upbeat Outlook for 2021: Backed by the trend in orders and record backlog, Pentair expects earnings per share in 2021 between $3.30 and $3.40. The mid-point of the range indicates year-over-year growth of 34%. Sales growth for the year is projected at approximately 21% to 23% on a reported basis. Pentair’s productivity improvement efforts and price increases implemented to counter the impact of cost inflation are likely to aid margins. Segment income guidance is expected to be up approximately 30% to 34%.Estimates North Bound: Over the past 60 days, the Zacks Consensus Estimate for earnings for both fiscal 2021 and 2022 has moved up 6%.Positive Earnings Surprise History: Pentair has outpaced the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 20.9%.Healthy Growth Prospects: The Zacks Consensus Estimate for earnings per share for fiscal 2021 for Pentair is currently pegged at $3.39, suggesting year-over-year growth of 35.6%. For fiscal 2022, the consensus mark for earnings is pegged at $3.70, indicating year-over-year improvement of 9.3%. The stock has an estimated long-term earnings growth rate of 14.7%.Growth Drivers in PlacePentair has been witnessing strong demand for swimming pools as consumers stayed home amid the pandemic, which triggered the desire to invest in their backyards. The momentum is strong even this year as consumers continue to enhance their at-home quality of life by investing in pools.  Several builders are reporting backlogs well into next year. Apart from pool construction, demand for pool maintenance remains strong. Considering that nearly 80% of the Consumer Solutions segment serves residential markets, this trend bodes well for the segment.In the first quarter of 2021, Industrial & Flow Technologies segment returned to growth for the first time in five quarters aided by strong performance in residential and recovery in commercial and industrial businesses. This segment is expected to continue performing well for the balance of the year.During second-quarter 2021, Pentair launched a Transformation program to accelerate growth and drive margin expansion. The program, structured in multiple phases, is expected to drive operational efficiency, streamline processes, and reduce complexity while meeting financial objectives. It will also be using automation to increase productivity. Pentair is projecting at least 300 basis points of margin expansion by 2025 through the program.Pentair is also investing in digital transformation, innovation and technology and acquisitions in the high-growth areas of pool and residential and commercial water treatment, which is commendable. In 2019, Pentair acquired Aquion, Inc. and Pelican Water Systems. Aquion offers a diverse line of products for the residential and commercial water treatment industry. Pelican provides residential whole home water treatment. In December 2020, the company completed the buyout of Rocean in a bid to expand its core water treatment solutions in the residential and commercial water business. In May 2020, Pentair completed the acquisition of assets of Ken’s Beverage, Inc, which provides the company a valuable national direct service network to expand its commercial water treatment business. It has recently entered into an agreement to buy Pleatco for $255 million in cash, in an effort to expand footprint in the aftermarket water and air filtration space.Stocks to ConsiderSome better-ranked stocks in the Industrial Products sector include Encore Wire Corporation WIRE, Lincoln Electric Holdings, Inc. LECO and The Manitowoc Company, Inc. MTW. All of these stocks sport a Zacks Rank #1.Encore Wire has a projected earnings growth rate of 332.6% for fiscal 2021. The company’s shares have gained 32% in the past six months.Lincoln Electric has an expected earnings growth rate of 45.1% for 2021. Over the past six months, the stock has appreciated 8%.Manitowoc has an estimated earnings growth rate of 314% for fiscal 2021. The company’s shares have gained 5% over the past six months. 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 Pentair plc (PNR): Free Stock Analysis Report The Manitowoc Company, Inc. (MTW): Free Stock Analysis Report Lincoln Electric Holdings, Inc. (LECO): Free Stock Analysis Report Encore Wire Corporation (WIRE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 22nd, 2021

Stock Market News for Sep 21, 2021

Wall Street tumbled on Monday as the three major stock indexes ended deep in negative territory. Wall Street tumbled on Monday as the three major stock indexes ended deep in negative territory. The possible bankruptcy of a large Chinese property developer, uncertainty of any shift in the Fed’s existing monetary policies and a discord in Washington over debt ceiling, led to a sharp fall in U.S. stock markets.How Did The Benchmarks Perform?The Dow Jones Industrial Average (DJI) fell 1.8% or 614.41 points to close at 33,970.47, marking its worst daily decline since Jul 19. Notably, just 1 components of the 30-stock index ended in the green while 29 in red. At its session low, the blue-chip index was down more than 970 points.The tech-heavy Nasdaq Composite finished at 14,713.90, sliding 2.2% or 330.06 points due to weak performance by large-cap technology stocks. This was the tech-laden index’s worst daily performance since May 12.Meanwhile, the S&P 500 moved down 1.7% to end at 4,357.73, reflecting its biggest single-day drop since May 12. The Energy Select Sector SPDR (XLE), the Financials Select Sector SPDR (XLF), the Consumer Discretionary Select Sector SPDR (XLY) and the Communications Services Select Sector SPDR (XLC) tanked 3.1%, 2.3%, 2.3% and 2%, respectively. All eleven sectors of the benchmark index closed in negative territory.The fear-gauge CBOE Volatility Index (VIX) jumped 23.6% to 25.71. At its session high, the fear-gauge climbed to 28.79, its highest since May. A total of 12.24 billion shares were traded on Monday, higher than the last 20-session average of 9.89 billion. Decliners outnumbered advancers on the NYSE by a 5.40-to-1 ratio. On Nasdaq, a 4.66-to-1 ratio favored declining issues.Global Stock Markets DeclineGlobal stock markets including U.S. stock markets fell sharply yesterday following news that a large Chinese 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.Fearing a recession in the Chinese property development market, metal stocks, especially the steel stocks suffered a blow. Shares of steel majors like Nucor Corp. NUE and ArcelorMittal MT plunged 7.6% and 7.8%, respectively. Nucor sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Crude oil prices have also dropped fearing a Chinese economic downturn that will weaken the global economic recovery. The global benchmark - the Brent crude price fell more than 1% while the U.S. benchmark – the WTI crude dropped nearly 2%. As a result, shares of APA Corp. APA and Devon Energy Corp. DVN plummeted 6.1% and 5.4%, respectively.Fearing a global slowdown, market participants have shifted funds from risky assets like equities to safe-haven government bonds. Consequently, bond prices rose and the yield on the benchmark 10-Year U.S. Treasury Note fell 6.1 basis points to around 1.308%. Lower market interest rate led to a fall in financial giants like The Goldman Sachs Group Inc. GS and JPMorgan Chase & Co. JPM that fell 3.4% and 3%, respectively.Fed’s FOMC Meeting and Government Debt Ceiling in FocusThe Federal Reserve will conduct its next FOMC meeting on Sep 21-22. After the close of the event, the Fed Chairman Jerome Powell will give a statement regarding the outcome of the meeting. Investors are keenly waiting for the central bank’s decision about any sort of tapering of its ongoing $120 billion per month bond-buy program.Investors are also concerned as the deadline to raise the government debt ceiling approaches. Lawmakers need to clear the bill to avoid any kind of government shut down. Moreover, the discontent among lawmakers about the Biden administration’s proposed $3.5 billion spending plan and new taxation rule is another concern.Economic DataThe National Association of Home Builders reported that its monthly confidence index increased one point to 76 in September, terminating a losing-streak of three consecutive months.Stocks That Have Made HeadlineConocoPhillips' $9.5B Accord to Boost Permian PresenceConocoPhillips COP announced an agreement to purchase all Royal Dutch Shell plc’s (RDS.A) assets in the Permian, the most prolific basin in the United States. (Read More) 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 The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Devon Energy Corporation (DVN): Free Stock Analysis Report ConocoPhillips (COP): Free Stock Analysis Report Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report APA Corporation (APA): Free Stock Analysis Report ArcelorMittal (MT): Free Stock Analysis Report Nucor Corporation (NUE): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksSep 21st, 2021

Key Highlights From Williams" (WMB) Latest Presentation

Despite being a fundamentally strong midstream operator, The Williams Companies (WMB) has largely underperformed the industry in a year's time. At a recent presentation, The Williams Companies WMB discussed its current business and growth prospects.Here’s a rundown of what the company had to say at the Barclays CEO Energy-Power Conference:The diversified midstream giant has a strong fundamental position in natural gas infrastructure in the United States, handling around 30% of the nation’s total volumes. Williams’ operations include the company’s crown jewel and the nation’s largest and fastest growing natural gas pipeline system, Transco. Williams has a market capitalization of more than $30 billion at a Sep 20 closing stock price of $24.97 per share.The adjusted EPS guidance range provided by the company suggests a roughly 14% CAGR from 2018 through 2021 (at the midpoint). Besides, it expects adjusted EBITDA at a CAGR of approximately 5% over that time. This provided some support to its leverage metrics, with debt to adjusted EBITDA set to come down from 4.80X in 2018 to below 4.20X by the end of this year. During the read-through of the presentation, it was quite clear that Williams’ adjusted EBITDA has increased in line with the volume of natural gas that it transmits and gathers. As it is, the stable fee-based business model allows the company to generate a relatively stable EBITDA hardly affected by the gyrations of commodity prices.Williams, which carries investment grade ratings from the major credit agencies such as the S&P, Moody's and Fitch, is working on a number of new infrastructure projects that are slated to come online over the next few years. This will help the company meet its growth objectives apart from providing long-term cash flow visibility.With an attractive yield of 6.6%, the Tulsa, OK-based company is also a favourite in the dividend investing community. Williams currently pays a quarterly dividend of 41 cents per share. That's after the company increased its payout by 2.5% earlier this year.On top of its improving financial position and focus on shareholder value, the company has strong 2021 guidance. Management predicts adjusted EBITDA to increase 3.8% compared to 2020, while available funds from operations (“AFFO”) is expected to witness a year-over-year rise of 5.6%. This robust AFFO should provide Williams with a strong dividend coverage ratio of 1.9 and assure investors about the safety of the payout.Zacks Rank & Stock PicksNotwithstanding these rafts of positive updates, Williams currently carries a Zacks Rank #4 (Sell) and its shares are only meant for the brave-of-heart. The stock has largely underperformed the industry in a year’s time (+20.8% versus +28.4%). The reason for the unfavourable rank stems from a growing debt burden, which is a concern for investors and restricts its credit profile. The company's debt-to-capitalization as of the end of the second quarter was 62%, not only quite high but also deteriorating from 61.6% three months ago. Image Source: Zacks Investment ResearchEarrings estimates have moved lower too. The Zacks Consensus Estimate for Williams’ 2021 earnings has come down from $1.20 to $1.18 over the past 60 days while next year’s number is off from $1.19 to $1.16.Some better-ranked players in the energy space are Continental Resources CLR, Imperial Oil IMO and Northern Oil and Gas NOG, each presently flaunting a Zacks Rank of 1.You can see the complete list of today’s Zacks #1 Rank stocks here.Continental Resources has an expected earnings growth rate of 436.75% for the current year.Imperial Oil has an expected earnings growth rate of 421.95% for the current year.Northern Oil and Gas has an expected earnings growth rate of 70.88% for the current year. 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 Williams Companies, Inc. The (WMB): Free Stock Analysis Report Imperial Oil Limited (IMO): Free Stock Analysis Report Continental Resources, Inc. (CLR): Free Stock Analysis Report Northern Oil and Gas, Inc. (NOG): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksSep 21st, 2021

Evergrande Misses Debt Payments Due Monday As World"s Richest Banker Says China"s "Lehman Moment" Has Arrived

Evergrande Misses Debt Payments Due Monday As World's Richest Banker Says China's "Lehman Moment" Has Arrived Wall Street analysts have been churning out commentary this week proclaiming that while Evergrande's troubles pose a serious threat to the Chinese economy, it's potential collapse doesn't represent a "Lehman Moment". As Thursday's bond-interest deadline looms, analysts at Mizuho write 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." We touched on this earlier, with analysts at SocGen raising the odds of a "hard landing" - an "extended, severe property-led slowdown" - to 30%. The FT, meanwhile, shared Barclays' skeptical take on the Lehman scenario comparisons, arguing that Evergrande has little in common with the Lehman scenario aside from the timing (Lehman famously filed for bankruptcy in September 2008, 13 years ago. "China’s situation is very different. Not only are the property sectors’ linkages to the financial system not on the same scale as a large investment bank, but the debt capital markets are not the only, or even the primary, means of funding. The country is, to a large extent, a command-and-control economy. In an extreme scenario, even if capital markets are shut to all Chinese property firms (which is not occurring and is only a tail risk at this point), regulators could direct banks to lend to such firms, keeping them afloat and providing time for an extended ‘work-out’ if needed. The only way to get a widespread lenders’ strike in a strategically important part of the economy would be if there were a policy mistake, where the authorities allow the chips to fall where they may (perhaps to impose market discipline), regardless of the systemic implications. And we think that’s very unlikely; the lesson from Lehman was that moral hazard needs to take a back seat to systemic risk." And while that might sound reasonable enough, one of the world's richest bankers, Uday Kotak, the CEO and founder of Indian lender Kotak Mahindra Bank, begs to differ. He said in a tweet on Tuesday that Evergrande "seems like China's Lehman moment." Evergrande seems like China’s Lehman moment. Reminds us of IL&FS. Indian Government acted swiftly. Provided calm to financial markets. The Government appointed board estimates 61% recovery at IL&FS. Evergrande bonds in China trading ~ 25 cents to a $. — Uday Kotak (@udaykotak) September 21, 2021 Kotak also likened the crisis at Evergrande to the collapse of India’s Infrastructure Leasing & Financial Services Ltd. The Indian government chose him to oversee the restructuring of the distressed shadow lender three years ago after it defaulted on debt repayments. On Tuesday morning in New York, news that Evergrande had missed payments due Monday to at least two banks hit - not that this is such a surprise. The expectation is that the developer is suffering from a liquidity crisis that has left it unable to make payments on any of its massive $300BN+ debt pile. Amid all the chaos, Chinese markets have been closed Monday and Tuesday for China's mid-autumn festival. To try and keep the company's employees from walking out, Evergrande's chairman, Hui Ka Yuan, said China's biggest property developer would "walk out of its darkest moment" and deliver on its commitments. The letter was billed as an update to coincide with the holiday. Markets Insider translated the letter, which can be found below: Dear department leaders and colleagues, I am sending my sincerest well-wishes to you on the occasion of the Mid-Autumn Festival. May you and your families have a happy holiday, and stay safe and healthy. My sincerest regards to all our employees who are still fighting on the frontlines for our re-opening and resumption of production! At the moment, our company has encountered an unprecedented and mammoth difficulty. As a whole, our staff has also experienced a challenge they have never seen the likes of. The members of our leadership team have surmounted every difficulty, making a brave stand for their teams, and working night and day. They are the pillars that protect and ensure our company's stability. Here, I extend my deepest gratitude to all of you. I also thank your families, who have supported you and made silent sacrifices — they have my greatest respect. I have always been proud of our company's army of loyal, immensely hardworking staff, who persevere regardless of gains or losses. I firmly believe that Evergrande employees never yield, are never defeated, and only grow stronger in adversity. This is the greatest source of power that we have to overcome all difficulties and win this war. I further believe that through the collective work of our leadership team and all our employees — if we continue to fight, and persevere through this struggle — we will walk out of the darkness soon. If we do this, we'll be able to push toward a complete reopening and fulfill our promise to guarantee that properties reach the hands of our buyers. We will also be able to account to home buyers, investors, our collaborators, and financial institutions, with a solid response — that we are responsible, and can shoulder this burden. If we are united, we can move mountains! My colleagues, let's unite and demonstrate courage in the face of a hundred adversities, and a tough, solid spirit. Let us fulfill with all our strength the responsibility we have to our society, and build a better future together!" With Evergrande expected to miss the next round of payments on Thursday, here's a reminder of how its contagion might spread throughout the global financial system. As for the payments missed yesterday, Evergrande hadn’t made them as of late Tuesday local time, a handful of anonymous sources told Bloomberg. Banks were expecting Evergrande to miss the deadline after China’s housing ministry told them the company would be unable to pay on time. Now, it’s unclear whether banks will formally declare Evergrande in default. Some are waiting for the developer to propose a loan extension plan before deciding on next steps. Or perhaps for Beijing to step in and save the day, something top Chinese officials have suggested won't be happening this time around. Tyler Durden Tue, 09/21/2021 - 08:29.....»»

Category: blogSource: zerohedgeSep 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

Are You Looking for a High-Growth Dividend Stock? 3M (MMM) Could Be a Great Choice

Dividends are one of the best benefits to being a shareholder, but finding a great dividend stock is no easy task. Does 3M (MMM) have what it takes? Let's find out. Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.3M in FocusBased in St Paul, 3M (MMM) is in the Conglomerates sector, and so far this year, shares have seen a price change of 3.83%. The maker of Post-it notes, industrial coatings and ceramics is paying out a dividend of $1.48 per share at the moment, with a dividend yield of 3.26% compared to the Diversified Operations industry's yield of 0.31% and the S&P 500's yield of 1.41%.Looking at dividend growth, the company's current annualized dividend of $5.92 is up 0.7% from last year. In the past five-year period, 3M has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.85%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, 3M's payout ratio is 58%, which means it paid out 58% of its trailing 12-month EPS as dividend.MMM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $10.11 per share, with earnings expected to increase 15.68% from the year ago period.Bottom LineInvestors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, MMM is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold). 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 3M Company (MMM): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksSep 21st, 2021

IDACORP (IDA) Rewards Shareholders With 5.6% Dividend Hike

IDACORP (IDA) raises quarterly dividend by 5.6%, and aims for a payout ratio between 60% and 70%. IDACORP Inc. IDA announced that the board of directors has approved a 5.6% increase in the quarterly dividend rate. The revised quarterly dividend will be 75 cents up from the previous quarterly rate of 71 cents. The company’s new annualized dividend rate is $3 and the current dividend yield is 2.9%, better than the Zacks S&P 500 composite’s 1.4%.IDACORP’s management has been annually raising the dividend rate and it belongs to an exclusive group of companies that have raised the dividend rate every year over the last decade. The board of directors approved a dividend increase this month, leading to a 150% total increase in annualized dividend over the aforesaid period.For the long term, the company’s management aims at upwardly revising the dividend rate by 5% or more. This would keep IDACORP near the upper end of the current target payout ratio between 60% and 70%.Can IDACORP Sustain Dividend Hikes?IDACORP’s regulated electric operations in Idaho generate a relatively stable earnings stream. Ongoing economic improvements in its service territories have helped the company in expanding the customer base. These factors are positively impacting its operating income.It projects capital expenditure to be $2 billion in the 2021-2025 time period. Owing to systematic investments for strengthening the generation portfolio, Idaho Power Hydroelectric Generation will be able to cater to the rising demand of the expanding customer base.The company has undertaken initiatives to enhance financial strength and improve the core business. An ongoing increase in the customer base results in an improvement in operating income and its steady performance paves the way for further increase in the annual dividend rate.Price MovementIn the past 12 months, IDACORP’s shares have outperformed the industry it belongs to.Image Source: Zacks Investment ResearchZacks Rank & Key PicksIDACORP currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Exelon Corporation EXC, Otter Tail Corporation OTTR and Black Hills Corporation BKH. While Exelon and Otter Tail sport a Zacks Rank #1 (Strong Buy), Black Hills has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Exelon, Otter Tail, and Black Hills have a long-term (three to five years) earnings growth rate of 2.99%, 4.7%, and 5.09%, respectively.The Zacks Consensus Estimate for 2021 earnings for Exelon and Otter Tail has increased 1.07% and 39.2%, respectively, in the past 60 days. Black Hills delivered an average surprise of 5.65% in the last four quarters. Its Zacks Consensus Estimate for 2021 earnings has been unchanged in the past 60 days. 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 Exelon Corporation (EXC): Free Stock Analysis Report IDACORP, Inc. (IDA): Free Stock Analysis Report Black Hills Corporation (BKH): Free Stock Analysis Report Otter Tail Corporation (OTTR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

Evergrande Misses Debt Payments Due Monday As Billionaire Banker Says China"s "Lehman Moment" Has Arrived

Evergrande Misses Debt Payments Due Monday As Billionaire Banker Says China's "Lehman Moment" Has Arrived Wall Street analysts have been churning out commentary this week proclaiming that while Evergrande's troubles pose a serious threat to the Chinese economy, it's potential collapse doesn't represent a "Lehman Moment". As Thursday's bond-interest deadline looms, analysts at Mizuho write 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." We touched on this earlier, with analysts at SocGen raising the odds of a "hard landing" - an "extended, severe property-led slowdown" - to 30%. The FT, meanwhile, shared Barclays' skeptical take on the Lehman scenario comparisons, arguing that Evergrande has little in common with the Lehman scenario aside from the timing (Lehman famously filed for bankruptcy in September 2008, 13 years ago. "China’s situation is very different. Not only are the property sectors’ linkages to the financial system not on the same scale as a large investment bank, but the debt capital markets are not the only, or even the primary, means of funding. The country is, to a large extent, a command-and-control economy. In an extreme scenario, even if capital markets are shut to all Chinese property firms (which is not occurring and is only a tail risk at this point), regulators could direct banks to lend to such firms, keeping them afloat and providing time for an extended ‘work-out’ if needed. The only way to get a widespread lenders’ strike in a strategically important part of the economy would be if there were a policy mistake, where the authorities allow the chips to fall where they may (perhaps to impose market discipline), regardless of the systemic implications. And we think that’s very unlikely; the lesson from Lehman was that moral hazard needs to take a back seat to systemic risk." And while that might sound reasonable enough, one of the world's richest bankers, Uday Kotak, the CEO and founder of Indian lender Kotak Mahindra Bank, begs to differ. He said in a tweet on Tuesday that Evergrande "seems like China's Lehman moment." Evergrande seems like China’s Lehman moment. Reminds us of IL&FS. Indian Government acted swiftly. Provided calm to financial markets. The Government appointed board estimates 61% recovery at IL&FS. Evergrande bonds in China trading ~ 25 cents to a $. — Uday Kotak (@udaykotak) September 21, 2021 Kotak also likened the crisis at Evergrande to the collapse of India’s Infrastructure Leasing & Financial Services Ltd. The Indian government chose him to oversee the restructuring of the distressed shadow lender three years ago after it defaulted on debt repayments. On Tuesday morning in New York, news that Evergrande had missed payments due Monday to at least two banks hit - not that this is such a surprise. The expectation is that the developer is suffering from a liquidity crisis that has left it unable to make payments on any of its massive $300BN+ debt pile. Amid all the chaos, Chinese markets have been closed Monday and Tuesday for China's mid-autumn festival. To try and keep the company's employees from walking out, Evergrande's chairman, Hui Ka Yuan, said China's biggest property developer would "walk out of its darkest moment" and deliver on its commitments. The letter was billed as an update to coincide with the holiday. Markets Insider translated the letter, which can be found below: Dear department leaders and colleagues, I am sending my sincerest well-wishes to you on the occasion of the Mid-Autumn Festival. May you and your families have a happy holiday, and stay safe and healthy. My sincerest regards to all our employees who are still fighting on the frontlines for our re-opening and resumption of production! At the moment, our company has encountered an unprecedented and mammoth difficulty. As a whole, our staff has also experienced a challenge they have never seen the likes of. The members of our leadership team have surmounted every difficulty, making a brave stand for their teams, and working night and day. They are the pillars that protect and ensure our company's stability. Here, I extend my deepest gratitude to all of you. I also thank your families, who have supported you and made silent sacrifices — they have my greatest respect. I have always been proud of our company's army of loyal, immensely hardworking staff, who persevere regardless of gains or losses. I firmly believe that Evergrande employees never yield, are never defeated, and only grow stronger in adversity. This is the greatest source of power that we have to overcome all difficulties and win this war. I further believe that through the collective work of our leadership team and all our employees — if we continue to fight, and persevere through this struggle — we will walk out of the darkness soon. If we do this, we'll be able to push toward a complete reopening and fulfill our promise to guarantee that properties reach the hands of our buyers. We will also be able to account to home buyers, investors, our collaborators, and financial institutions, with a solid response — that we are responsible, and can shoulder this burden. If we are united, we can move mountains! My colleagues, let's unite and demonstrate courage in the face of a hundred adversities, and a tough, solid spirit. Let us fulfill with all our strength the responsibility we have to our society, and build a better future together!" With Evergrande expected to miss the next round of payments on Thursday, here's a reminder of how its contagion might spread throughout the global financial system. As for the payments missed yesterday, Evergrande hadn’t made them as of late Tuesday local time, a handful of anonymous sources told Bloomberg. Banks were expecting Evergrande to miss the deadline after China’s housing ministry told them the company would be unable to pay on time. Now, it’s unclear whether banks will formally declare Evergrande in default. Some are waiting for the developer to propose a loan extension plan before deciding on next steps. Or perhaps for Beijing to step in and save the day, something top Chinese officials have suggested won't be happening this time around. Tyler Durden Tue, 09/21/2021 - 08:29.....»»

Category: blogSource: zerohedgeSep 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

The S&P Stands Alone in Record Territory

The S&P Stands Alone in Record Territory The market liked what it heard out of the virtual Jackson Hole get-together on Thursday, allowing the major indices to cross over some impressive milestones intraday before a late slide left them mixed for the session. Rates will likely stay at historically low levels even longer than we originally thought, as Fed Chair Jerome Powell outlined a new policy today that would allow inflation to move moderately above 2% for some time. There are two things the market just can’t get enough of right now: progress in fighting the coronavirus and cheap money. Fortunately, we’ve been getting good developments on both fronts lately. In fact, just today we got news of a Covid test from Abbot Labs (ABT) that takes 15 minutes and costs $5! The stock was up 7.85% today. Stocks rose on the Fed news, sending the Dow into positive territory for the year and the S&P above 3500. But it was only momentary as stocks slipped into the close. Nevertheless, the S&P has now put together five straight sessions of new highs. It climbed 0.17% today to a record 3484.55. And the Dow rose 0.57% (or about 160 points) to 28,492.27. For a change of pace, the NASDAQ was the index left out of the upsurge this time. It slipped 0.34% (or nearly 40 points) to 11,625.34 to snap five days of record runs.  The FAANGs just didn’t have it today as they all dropped by well over 1%, especially Netflix (NFLX, -3.88%) and Facebook (FB, -3.52%). (Don’t feel too bad, though, since those stocks were up more than 11% and more than 8%, respectively, on Wednesday.) Another big part of Thursday was this week’s jobless claims report, which was a bit overshadowed by the Fed news. Approximately 1.06 million people filed last week, which was an improvement from the previous result. However, any reading of one million or more feels a bit disappointing these days after slipping below that mark two weeks ago. The major indices all head into Friday with solid gains for the week. The NASDAQ and S&P are both up by more than 2.5% after several record closes, while the Dow is up about 2%. Today's Portfolio Highlights: Technology Innovators: The super strong salesforce.com (CRM) results have Brian in the mood to add a software name. Therefore, he picked up Descartes Systems (DSGX), a leading provider of software-as-a-service logistics solutions. It has beaten the Zacks Consensus Estimate in three of the past four quarters. Earnings estimates are not exactly flying higher, but they are moving enough to make DSGX a Zacks Rank #2 (Buy). The editor is most impressed with earnings growth, which calls for a jump to 88 cents next year from 56 cents this year. Meanwhile, the portfolio also sold Veeco Instruments (VECO). See the complete commentary for more on today’s buy. Surprise Trader: Last time eGain (EGAN) reported earnings, it beat by 700%! And this provider of customer engagement solutions has a positive Earnings ESP of 50% for the quarter coming after the bell on Wednesday, September 2. However, Dave reminds us not to get too caught up in percentages, since small EPS numbers usually lead to huge surprises and ESPs. The important thing is that EGAN has a good record of beating expectations and appears set to do so again. Plus, earnings are expected to grow 15.6% this year. The editor added EGAN on Thursday with a 12.5% allocation, while also selling Nu Skin (NUS) for a nice 3.8% return in a little over three weeks. Read the full write-up for more. Income Investor: "The biggest market-driving headline was the Fed’s new policy change. "Dubbed “average inflation targeting,” this means that the central bank will allow inflation to run above its 2% goal. By doing this, the Fed won’t be under pressure to raise interest rates, which are near zero right now, once the unemployment rate begins to decline.  "A 2% inflation rate has been seen as indicative of a healthy economy for years now, but the U.S. has often lagged this target since the 2008 financial crisis. "Powell also made it clear the Fed’s concern for those in low- and moderate-income communities, as well as those who may not easily bounce back from the economic downturn seen this year. The job market should not be strong for just high-income earners or those that are well off, but for people who experienced job loss over the past few months." -- Maddy Johnson 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

NASDAQ Keeps Setting Records

NASDAQ Keeps Setting Records SPECIAL ALERT: The latest episode of the Zacks Ultimate Strategy Session will be available for viewing no later than this Wednesday, December 9. Kevin Matras, Sheraz Mian, Jeremy Mullin, Tracey Ryniec and Madeleine Johnson will cover the investment landscape from several angles in this informative event.    Don’t miss your chance to hear: ▪ Tracey and Madeleine Agree to Disagree on whether Black Friday, when consumers rush to stores to get deals the day after Thanksgiving, is over in 2020 as online shopping takes precedence ▪ Kevin answers your questions in Zacks Mailbag ▪ Sheraz and Jeremy choose one portfolio to give feedback for improvement ▪ And much more So be sure to mark your calendar then log on to Zacks.com and bookmark this page. Lazy start to the week with two of the major indices pulling back from all-time highs. However, the NASDAQ refused to go along with the sluggishness and continued pushing higher. The tech-heavy index rose another 0.45% (or about 55 points) to a new high of 12,519.95. That marks fresh records in three consecutive sessions and in four of the past five. Meanwhile, the S&P slipped 0.19% to 3691.96, while the Dow was off 0.49% (or about 148 points) to 30,069.79. The latter index snapped a four-day winning streak, but did manage to stay above 30K for a second straight session and only the third time ever. Stocks are coming back from a solid week that saw the NASDAQ rise 2.1%, while the S&P advanced 1.7% and the Dow improved 1%. Each of them finished at all-time highs. The theme of this week might be all about a stimulus package… or the lack thereof. While we’re waiting, stocks moved toward the safer names in tech on Monday.     Investors are hoping that the weaker-than-expected Government Employment Situation report on Friday will wake up Washington and underscore the need for more stimulus now despite all the good vaccine news of late.      “The market is waiting to hear some much-needed stimulus news. I would love to say I am shocked it is taking this long, but nothing on Capitol Hill shocks me anymore. The market is going to rally on news of that deal,” said Dave Bartosiak in today’s Surprise Trader. In the last few days, we’ve received a bipartisan plan worth approximately $900 billion, along with statements from Senate Majority Leader McConnell and Speaker Pelosi that they both want to see a deal as soon as possible. Despite all the setbacks in the past, the market does expect something to get done. Coronavirus cases continue to rise, the economic recovery is slowing and we’re still months away from the vaccines doing their jobs. Let’s hope investors get what they want this holiday season. Today's Portfolio Highlights: Income Investor: The logo for life insurance giant Prudential Financial (PRU) is the Rock of Gibraltar, and that message of strength and stability is a big reason why Maddy added this name on Monday. The company is highly diversified and has a very strong balance sheet, which adds some cushion amid all the uncertainty out there right now. It’s dividend is “one of the best in the sector” with a yield of 5.4% and a payout ratio at 34%. Best of all, PRU trades well below its peers and the broader market. The editor sees this name as “a strong, undervalued stock that is poised for a rebound from the pandemic”. Read the complete commentary for a lot more on this new addition.   Marijuana Innovators: This industry has been on a tear for the past few weeks, but Hexo Corp. (HEXO) hasn’t come along for the ride. Therefore, this consumer-packaged goods cannabis company is a “legitimate bargain”, according to Dave. Shares of the company struggled over the past week due to an upcoming reverse split. The editor finds such a pullback to be “pretty silly” and the move below $1 to be a “pure opportunity”. Get the whole story on this buy in the full write-up. Insider Trader: We don’t hear much about industrial names like Myers Industries (MYE), but Tracey is bringing this company to the forefront today by adding it to the portfolio. The company makes polymer products and distributes for the tire, wheel and under-vehicle service industry. It recently outlined a 9-year strategic vision that will involve looking at M&A. Perhaps this forward-looking plan is why we saw a rare cluster buy among MYE’s insiders. Late last month, the CEO and three directors bought shares. In addition, it has great cash flows and pays a 3% dividend yield. Tracey added MYE with an 8% allocation. By the way, Tracey also sold the idled Bristol-Myers (BMY) position for a 7.6% return since late June. The full write-up has more specifics on today’s moves. Blockchain Innovators: In addition to a recent upgrade to Zacks Rank #1 (Strong Buy) status, Alpha and Omega Semiconductor (AOSL) was also the best performing stock of the day among all ZU services. The company soared 14.5%. Dave added AOSL back on August 31, and it has been a big winner for the portfolio with a gain of more than 104% since inception. The stock is now one of the biggest movers over the past 30 days with a rise of more than 52%. By the way, Camtek (CAMT) also made the top 5 list with an advance of 6.45%. Black Box Trader: More than half of the portfolio was changed this week with six swaps, including a double-digit winner. The positions that were sold today included: • Owens & Minor (OMI, +16.7%) • Flex Ltd. (FLEX, +6.7%) • General Motors (GM, +6.6%) • Realogy Holdings (RLGY, +5.3%) • TRI Pointe Group (TPH) • DICK'S Sporting Goods (DKS) The new buys that filled these spots were: • Adient PLC (ADNT) • Big Lots (BIG) • Brinker Int'l (EAT) • Builders FirstSource (BLDR) • Flagstar Bancorp (FBC) • L Brands (LB) Read the Black Box Trader’s Guide to learn more about this computer-driven service. Counterstrike: "Very limited action today led to a mixed result with the S&P down 0.19% and the Nasdaq up 0.54%. Stimulus is coming, but the question is when and how much. Washington continues to stagnate, while COVID cases increase. "The bears have a great case for stocks to go lower, but they refuse to do so. There is just too much money out there with limited places to go, so stocks stay bid. "The day was pretty boring unless you were trading Tesla or a few other movers. I have this feeling that things really slow down into the end of the year. So expect these low volumes that we are seeing to continue." -- Jeremy Mullin Until Next Time, 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

NASDAQ Drops Another 2.7% as Bond Yields Rise Again

NASDAQ Drops Another 2.7% as Bond Yields Rise Again SPECIAL ALERT: Remember, we need your input to make next week’s new Zacks Ultimate Strategy Session episode the best it can be. There are two ways you can participate: 1) Zacks Mailbag: In this regular segment, Kevin Matras answers your questions ranging from current market conditions, general investing wisdom, usage of the Zacks Rank or any resources of Zacks.com and more. Pretty much anything goes.   2) Portfolio Makeover: Sheraz Mian and Daniel Laboe review a customer portfolio to give feedback for improvement. No need to send us personal information such as dollar value of holdings. Simply email us with all of the tickers you own. Just make sure to email your submissions for either one, or both, by Thursday morning, March 4. Email now to mailbag@zacks.com. March started out so positively with a solid rally across the board, but stocks have since pulled back in two consecutive sessions as bond yields move higher. The NASDAQ has now given back all of its 3% surge from two days ago… and then some. The 10-year Treasury yield rose on Wednesday after steadying in the previous two sessions and came awfully close to 1.5% at its peak. Investors are still stinging a bit from the surge past 1.6% last Thursday. If yields are going up, then you can bet that tech is going down. Case in point, the NASDAQ plunged 2.7% (or about 361 points) to 12,997.75. Along with yesterday’s nearly 1.7% slip, the index has now squandered the 3% rally on Monday and closed beneath 13,000 for the first time since January 15. The FAANGs really took their lumps with Netflix (NFLX) plunging 4.95%, while Apple (AAPL), Amazon (AMZN) and Alphabet (GOOG) all dropped more than 2%. Facebook (FB) slipped 1.39%. Meanwhile, Microsoft (MSFT) was off 2.7%. The S&P dropped 1.31% to 3819.72, while the Dow managed better than its counterparts since recovery names are performing pretty well at the moment. The index still slipped 0.39% (or about 121 points) to 31,270.09 despite being in the green for most of the session. These indices are still up for the week thanks to the Monday rally, but not by much. The ADP report showed that private payrolls added 117,000 jobs in February, which was well below expectations north of 200K. The result is all the more disappointing since last month’s print of 174K was three times better than forecasts. On the brighter side, its further proof that the $1.9 trillion stimulus bill in the Senate is still needed, though its kind of a moot point now as the relief is widely expected to pass sometime this month. This isn’t the last we’ll be hearing about jobs this week. Tomorrow comes jobless claims, per usual, and then Friday brings the government employment situation report. Today's Portfolio Highlights: Home Run Investor: The portfolio had a busy Wednesday as it swapped out two positions, which involved selling SailPoint Technologies (SAIL) for a nice 88% return after slipping to a Zacks Rank #4 (Sell). Brian also sold Merit Medical Systems (MMSI) after going nowhere in the service in three months. The new buys are Radius Health (RDUS) and Primoris Services (PRIM). RDUS is a Zacks Rank #2 (Buy) that will maintain the service's healthcare exposure after dropping MMSI. The editor was most impressed with the huge move in estimates for next year to 88 cents from 45 cents, which would mark a return to profitability. PRIM is a Zacks Rank #1 (Strong Buy) construction name that beat in three of the last four quarters. Earnings estimates are rising here too and Brian considers it to be “a bargain”. Read the full write-up for more specifics on today’s action. Insider Trader: Rates for rental cars are still low at the moment, but that will change once travel picks up later this year. Therefore, Tracey added Avis Budget Group (CAR) on Wednesday, a recovery play that’s up 60% in the past month. However, that epic advance did not keep the CFO from buying 6200 shares last week. In fact, this was his second buy of the month. When insiders buy rising stocks, Tracey finds it an especially bullish signal. The editor sold the weak MannKind (MNKD) position today and used its proceeds to buy CAR. The allocation comes to about 7%. Read the full write-up for more. Surprise Trader: The tail end of earnings season is when we get a lot of retailers going to the plate, which is where Dave went for today’s addition. He picked up Zumiez (ZUMZ), a member of the highly-ranked (Top 26%) retail – apparel & shoes industry. The company has a positive Earnings ESP for the quarter being reported after the bell on Thursday, March 11. Last time it beat by over 52%. The editor added ZUMZ on Wednesday, while also selling Travere (TVTX) for a slight loss. Read the full write-up for more. Healthcare Innovators: The market correction is raging right now and could get even more intense moving forward, so Kevin decided to sell a few positions on Wednesday. The big winner was Guardant Health (GH), which was sold for an approximately 80% profit in more than a year. The editor still thinks there’s upside to this diagnostics company, but it has slipped to a Zacks Rank #5 (Strong Sell) due to its guidance. He also cut his losses by selling Vaxart (VXRT) and Quidel (QDEL) today.   Counterstrike: Amid the market’s “wacky” movement of late, Jeremy has been patient when it comes to new moves. But on Wednesday, he felt comfortable enough to buy twice and sell once. The editor picked up Anaplan (PLAN) and The Trade Desk (TTD) with allocations of 5% and 4%, respectively. PLAN is a Zacks Rank #2 (Buy) cloud platform for business applications, which is down sharply despite a strong quarterly report. TTD provides a technology platform for advertising, and it’s getting beaten up during all this tech weakness. The editor thinks both of these names are poised to bounce back moving forward. He also sold BJ’s Wholesale Club (BJ) today for a small loss. See the full write-up for more specifics on all of these moves. TAZR Trader: Vaccine makers have been getting shellacked during all the praise for Johnson & Johnson’s recent single-dose treatment, but Kevin sees a buying opportunity. For example, Novavax (NVAX) has plunged 20% after its report, but a few firms have been raising their price targets on this biotech. The editor thinks this pessimism for vaccine makers is overdone and was willing to add NVAX on Wednesday with a small, 5% allocation to start. Read his full write-up for more. Have a Great Evening, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

NASDAQ Ends Three-Week Skid Despite Rising Yields

NASDAQ Ends Three-Week Skid Despite Rising Yields Soaring bond yields kept the Dow and NASDAQ on separate paths on Friday, but it wasn’t enough to spoil the week. The major indices all finished these five days with solid gains… and even a couple new all-time highs. The Dow rose 0.90% (or about 293 points) today to 32,778.64, while the S&P was up 0.10% to 3943.34. Those are new closing records for both; the third straight for the former index and the second straight for the latter. Unsurprisingly, the Dow had the strongest week with an advance of 4%, as it is benefiting from the recovery rally amid a new, massive stimulus and accelerated vaccine rollout. The S&P was up 2.6% for the week. The NASDAQ slipped 0.59% (or around 78 points) on Friday to 13,319.86. However, the index broke a three-week losing streak by rising 3% over the five days, thanks to sharp rallies of 3.7% on Tuesday and 2.5% yesterday. It’s been a crazy week for the NASDAQ, which began with a 2.4% plunge on Monday that put the index in correction territory. But now it’s down less than 6% from its closing high from mid-February. Tech’s big problem today was the 10-year Treasury yield soaring well past 1.6% on Friday. It moved above that mark on Monday, but pulled back and moderated in the subsequent few sessions. The major news of the week was passage of the $1.9 trillion covid relief package. Talk about warp speed! The plan was approved by the Senate last weekend with the House following on Wednesday. And then the President signed it yesterday with the first $1400 checks probably going out this weekend. The market is very optimistic right now, though rising rates and inflation fears continue to bother many investors. With earnings season pretty much over and little economic data on the schedule, next week’s Fed meeting could move the market. The Committee keeps saying that the economy is still far from the goals that would necessitate a change in policy, but you never know what investors will focus on in the language. Today's Portfolio Highlights: Headline Trader: The biggest story in the market right now is the economic reopening, so you can probably tell what Dan was thinking when he added Home Depot (HD) on Friday with a 6% allocation. This home improvement giant has traded sideways over the past six months, but it might be ready to break out again as Americans get those $1400 checks as part of the $1.9 trillion stimulus plan. HD is a stable cyclical play with secular characteristics and a “reasonable” valuation. The editor considers this cyclical diversification play to be a “no-brainer” in the current environment. Read the full write-up for a lot more on today’s addition. Blockchain Innovators: The semiconductor – general industry space is in the Top 16% of the Zacks Industry Rank, which was where Dave went for today’s addition. He picked up Amtech Systems (ASYS), which makes capital equipment used by customers that manufacturer semiconductors. It’s a hardware play with some pretty impressive growth expectations for both the top and bottom lines. For example, current year EPS growth is set for 157%, while sales growth is seen at 14.5%. Expectations for next year are solid as well. The full write-up has more on this buy. Be on the lookout for another addition early next week. Meanwhile, Camtek (CAMT) made the top movers list today with an advance of 10.6%. Insider Trader: The upcoming economic reopening has invigorated insiders, so Tracey added two new stocks on Friday. S&T Bancorp (STBA) is a community bank that should benefit from a return to normal and the rising 10-year Treasury yield. A director bought 2300 shares earlier this week, while a different director bought 2000 back on February 17. These insider buys are all the more encouraging since STBA shares are up 23.5% over the past month. The other buy today was Carrol’s Restaurant Group (TAST), the largest franchisee of Burger King with 1010 restaurants. The $1400 stimulus checks should really help this company’s stalled out shares. On Monday, a director (and 10% owner) bought 75,000 shares. The editor will be adding these names with allocations of between 6.5% and 7.5% each after splitting the proceeds from selling Conagra Brands (CAG, +9.9%) and Myers Industries (MYE, +8.9%). Read the full write-up for a lot more on today’s action. ETF Investor: Spending on consumer items and services is likely to surge in the weeks ahead as the vaccine rollout continues and the stimulus checks are sent. In order to capitalize on this return to normalcy, Neena added the Invesco DWA Consumer Cyclicals Momentum ETF (PEZ) on Friday. This fund selects and weights US consumer cyclical stocks by price momentum. About a third of its 30 stocks are restaurants, hotels and leisure names, which will be among the biggest beneficiaries of the rebound. PEZ has a “reasonable” expense ratio of 60 basis points and over $97 million in assets. The editor strongly suggests using a limit order. To make room for PEZ, the portfolio sold SPDR Gold MiniShares Trust (GLDM) for a 14.6% return. The full write-up has more on today’s moves. Surprise Trader: The homebuilders have been successful in the portfolio of late, so Dave went “back to the well” on Friday by adding Lennar (LEN). This Zacks Rank #2 (Buy) has beaten earnings expectations for seven straight quarters now and has a positive Earnings ESP of 7.99% for the report coming after the bell on Tuesday March 16. Last time it beat by approximately 18.5%. The editor added LEN today with a 12.5% allocation, while also selling Purple Innovations (PRPL) for a loss. Read the complete commentary for more. In other news, this portfolio had a top performer on Friday as Golden Entertainment (GDEN) rose 11.3%. Value Investor: Even with stocks hitting new highs all over the place, there’s still value out there if you know where to look. Fortunately, Tracey does know where to find them! On Friday, she added Micron (MU), which fulfills this portfolio’s need for some semiconductor exposure. Last week, this Zacks Rank #2 (Buy) raised its EPS and sales guidance during a fiscal second quarter update. The editor thinks this is a sign that a new “up” cycle has begun. Check out the full commentary for all the specifics on the MU addition, including a detailed look at its value characteristics.   Have a Great Weekend! 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

S&P, Dow Close at New Highs After Soaring Over 1%

S&P, Dow Close at New Highs After Soaring Over 1% The market got the strong Friday rally that it really needed to finish this volatile week with a positive flourish. The major indices all gained more than 1% today and two of them closed at all-time highs.   For the third straight session, most of the action came late in the day. Fortunately, the past two finishes have been to the upside, which mitigated or completely reversed previous sluggishness. The biggest winner on Friday was the S&P, which jumped 1.66% to 3974.54. It was the biggest winner of the week as well by climbing 1.6% over the five days. The Dow advanced 1.39% (or a little more than 450 points) to 33,072.88, giving it a weekly advance of 1.4%. Both of these indices reached fresh record closes for the first time since Wednesday, March 17.   The NASDAQ had a rougher road recently, though it rallied into the close as well and increased 1.24% (or around 161 points) to 13,138.72. Its weekly loss was 0.6%, but that’s rather impressive since the index lost 3% on Tuesday and Wednesday combined. However, this does mark a second straight losing week as tech remains under pressure while the market prepares for the economy to reopen. The inflation-obsessed market got some relief today when core personal consumption expenditures rose 1.4% in February year over year, which was an inch below expectations of 1.5%. Meanwhile, the 10-year Treasury yield was up a bit on Friday, but remained below 1.7% all week. Fed Chair Jerome Powell was all over the place in recent days trying to convince skittish investors to calm down. He testified in front of Congress, along with Treasury Secretary Janet Yellen, on Tuesday and Wednesday, while also making comments on Monday and yesterday. His overall message was that the economy is improving significantly, but remains far from the goals that would require a change in policy. This week turned out a lot better than we thought it would a few days ago, and now there are only three more trading days in March. It should come as no surprise that the Dow and S&P both have solid gains for the month so far, but the NASDAQ is still in the red… but only slightly! Let’s see if we can finish the month with as much enthusiasm as we ended this week. Today's Portfolio Highlights: Insider Trader: It’s always bullish to see insider buying when a company has the wind at its back. That’s happening at Veritiv (VRTV), a Zacks Rank #1 (Strong Buy) provider of business-to-business solutions. The company reported a record fourth quarter earlier this month thanks to a hot packaging segment. Shares are up 69% in the past month to new 2-year highs, but that didn’t stop a director from buying 5,000 shares earlier this week. Apparently, he sees more upside for VRTV. Tracey added this stock on Friday with a 10% allocation, but warns that it’s likely to be volatile given its small-cap stature. Read the full write-up for a lot more on the addition of VRTV. TAZR Trader: Shares of Baidu (BIDU) plunged 30% this week on fears that the Holding Foreign Companies Accountable Act may lead to a delisting of Chinese companies on U.S. exchanges. There was obviously a lot of panic out there, but Kevin doesn’t think the delisting is as imminent as some feared. Therefore, the pullback presents a fantastic opportunity to buy more of BIDU, an AI-focused player in Chinese big data that is currently up nearly 30% in the portfolio. Remember that this stock is a play on the burgeoning autonomous driving space. Speaking of fantastic opportunities, the editor also took advantage of a couple other “incredible values” by adding Quidel Corp. (QDEL) and Invitae Corp. (NVTA). Read the full write-up for more on all of today’s moves.   Marijuana Innovators: The portfolio bought several names during the “clean sweep” of state legalization referendums back in November. One of those buys was GrowGeneration (GRWG), an owner and operator of specialty retail hydroponic and organic gardening stores. Well, the move accomplished exactly what Dave wanted, but he’s not convinced it will continue with as much gusto moving forward. Therefore, the editor sold GRWG for a more than 90% return in less than five months. The full write-up has more on this move. Have a Great Weekend! 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